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EX-5.1 - LEGAL OPINION - NXT Nutritionals Holdings, Inc.fs1a0610ex5i_nxt.htm
EX-23.1 - ACCOUNTANTS CONSENT - NXT Nutritionals Holdings, Inc.fs1a0610ex23i_nxt.htm
EX-10.14 - ENDORSEMENT AGREEMENT - NXT Nutritionals Holdings, Inc.fs1a0610ex10xiv_nxt.htm


SECURITIES AND EXCHANGE COMMISSION
==================================
FORM S-1 /A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
==================================
 
NXT Nutritionals Holdings, Inc.
(Exact Name of Small Business Issuer in its Charter)

Delaware
 
2060
   
(State or other Jurisdiction of Incorporation)
 
(Primary Standard Classification Code)
 
(IRS Employer Identification No.)
 
 56 Jackson Street
Holyoke, MA 01040
Tel. No.: (413) 533-9300
 (Address and Telephone Number of Registrant’s Principal
Executive Offices and Principal Place of Business)

Corporation Service Company
2711 Centerville Road Suite 400
Wilmington, DE 19808
Tel. No.: (302) 636-5401
 (Name, Address and Telephone Number of Agent for Service)
 
Copies of communications to:

Gregg E. Jaclin, Esq.
Kristina L. Trauger Esq.
Joy Z. Hui, Esq.
Anslow & Jaclin, LLP
195 Route 9 South, Suite 204
Manalapan, NJ 07726
Tel. No.: (732) 409-1212
 Fax No.: (732) 577-1188
 
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
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x
       
 
 
 
CALCULATION OF REGISTRATION FEE
 
Title of Each Class Of Securities to be Registered
 
Amount to be
Registered (1)
   
Proposed Maximum
Aggregate
Offering Price
per share
   
Proposed Maximum
Aggregate
Offering Price
   
Amount of
Registration fee (3)
 
                         
Common Stock, $0.001 par value per share, issuable upon conversion of senior secured convertible notes
   
6,517,904
   
$
1.00 (2)
   
$
6,517,904
   
$
464.73
 
                                 
Common Stock, $0.001 par value per share, issuable upon exercise of the Series C warrants
   
6,517,904
   
$
1.25 (2)
   
$
8,147,380
   
$
580.91
 
                                 
TOTAL
   
13,035,808
           
$
14,665,284
   
$
1,045.64
 

 (1)      This Registration Statement covers the resale by our selling shareholders of (1) up to 6,517,904 shares of common stock issuable upon conversion of the principal amount of the 0% original issue discount senior secured convertible notes (the “Notes”) at a conversion price of $1.00 per share, and (2) up to 6,517,904 shares of common stock issuable upon exercise of outstanding Series C warrants (the “Series C Warrants”) at an exercise price of $1.25 per share, that were issued in connection with the private placement closed on February 26, 2010.  In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of additional shares of Common Stock that shall be issuable pursuant to Rule 416 to prevent dilution resulting from stock splits, stock dividends or similar transactions.

(2)       Calculated pursuant to Rule 457 (g).

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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE.
 
(3)       Previously paid
 
 
 
 
 
 
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission (“SEC”) is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
 
 
PRELIMINARY PROSPECTUS
 
Subject to completion, dated  June 17,  2010

 
NXT NUTRITIONALS HOLDINGS, INC.

13,035,808 SHARES OF COMMON STOCK

This prospectus relates to the resale by selling security holders of 13,035,808 shares of our common stock, $0.001 par value, including (i) 6,517,904 shares of common stock issuable upon conversion of the principal amount of the Notes and (ii) 6,517,904 shares of common stock issuable upon exercise of the Series C Warrants, which were issued in the private placement closed on February 26, 2010.

We are not selling any shares of our common stock in this offering and, as a result, we will not receive any proceeds from the sale of the common stock covered by this prospectus.  All of the net proceeds from the sale of our common stock will go to the selling security holders. We may, however, receive proceeds in the event that some or all of the Warrants held by the selling security holders are exercised for cash.

The selling security holders may sell common stock from time to time at prices established on the OTCBB or as negotiated in private transactions, or as otherwise described under the heading “Plan of Distribution.” The common stock may be sold directly or through agents or broker-dealers acting as agents on behalf of the selling security holders. The selling security holders may engage brokers, dealers or agents who may receive commissions or discounts from the selling security holders. We will pay all the expenses incident to the registration of the shares; however, we will not pay for sales commissions or other expenses applicable to the sale of our common stock registered hereunder.

Our common stock is quoted on the OTCBB under the symbol “NXTH.OB.” On June 15 , 2010, the closing bid price of our common stock was $0. 19  per share. These prices will fluctuate based on the demand for our common stock.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page  4 to read about factors you should consider before investing in shares of our common stock.

 NEITHER THE SECURITIES & EXCHANGE COMMISSION (“SEC”) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
  
 
The Date of This Prospectus is:                 , 2010
 
 
 
TABLE OF CONTENTS
 
 
PAGE
1
3
4
10
10
10
10
14
16
18
18
24
24
24
26
32
32
Executive Compensation 40
Security Ownership of Certain Beneficial Owners and Management 40
Transactions with Related Persons, Promoters, and Certain Control Persons 42
Financial Statements F-1
II-1
II-1
II-2
II-3
 
Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision.

You should rely only on information contained in this prospectus.  We have not authorized any other person to provide you with different information.  This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted.  The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.
 
 
 
This summary highlights selected information contained elsewhere in this prospectus.  This summary does not contain all the information that you should consider before investing in the common stock.  You should carefully read the entire prospectus, including “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Financial Statements, before making an investment decision. In this Prospectus, the terms “NXT Nutritionals,” “Company,” “we,” “us” and “our” refer to NXT Nutritionals Holdings, Inc.
 
OVERVIEW
 
We were originally incorporated in the state of Delaware on April 25, 2006 to search for available properties in north central British Columbia.
 
On February 12, 2009, we entered into a share exchange agreement (the “Share Exchange Agreement”) with NXT Nutritionals, Inc. (“NXT Nutritionals”) and the shareholders of NXT Nutritionals (the “NXT Shareholders”), pursuant to which, we acquired all of the issued and outstanding common stock of NXT Nutritionals from the NXT Shareholders. As a result of the closing of the Share Exchange, NXT Nutritionals became our wholly-owned subsidiary. Operating through NXT Nutritionals, we are engaged in developing and marketing of a proprietary, patent-pending, all–natural, healthy sweetener sold under the brand name SUSTA™ and other food and beverage products. SUSTA™ is being sold as a stand-alone product and it is the common ingredient for all of our products.  We also market and sell Healthy Dairy® which is enhanced by the revolutionary taste and nutritious ingredients contained in SUSTA™. Our mission is to provide consumers with unique, healthy, delicious products that promote a healthier lifestyle and combat obesity and diabetes.
 
Our initial focus will be to bring SUSTA™ to the retail marketplace nationwide, expand the Healthy Diary® product line from the east coast to nationwide reach, and eventually to expand the Healthy Dairy® to include product lines such as cup yogurt and ice cream.
  
SUSTA™ Natural Sweetener
 
SUSTA™ is an all natural, healthy sweetener that has minimal calories and low glycemic index.  It is a proprietary blend of inulin fiber, fructose, botanical extracts, natural flavors, vitamins, minerals, and probiotics that is patented in New Zealand and patent-pending in the U.S. and Canada.
 
 
 
 
SUSTA ™ is used in coffees, teas, other beverages, cereals, foods and any other foods that require a sweetener. SUSTA™ is targeted at individuals craving sweeteners but not the calories from sugar, and is a better choice than sugar for people with diabetes because it has approximately one-half gram per serving of fructose and a glycemic index that is one-third of regular sugar.   Not only does SUSTA™ sweeten the taste of food without all of the side effects of sugars or chemicals, it also contains healthy probiotics.
 
We will market SUSTA™ in three primary categories:
 
 
·  
SUSTATM as a table top sweetener alternative to sugar and other sweeteners,
·  
SUSTATM as an ingredient used in beverages, cereals, baked goods, dairy products, candy and chewing gum, and
·  
NXT/SUSTATM branded products including Healthy Dairy® and other SUSTA™ branded products to be launched by the Company.  
 
Brand awareness of SUSTA™ will be driven by our aggressive marketing campaign and our massive incent trial program.  
 
Healthy Dairy® Yogurt Smoothies
 
We have developed a line of SUSTA™ -enhanced, non-fat reduced-calorie yogurt smoothies which are marketed as Healthy Dairy®.  Healthy Dairy® which combines appealing packaging, the health benefits of SUSTATM, and great taste, is offered in 5 different flavors: strawberry, peach, mixed berry, tropical fruit, and strawberry-banana. Healthy Dairy® contains cultured pasteurized skim milk, real fruit, pure cane sugar, soluble fiber, tapioca starch, natural flavors, phytosterols (plant sterols), SUSTA™, antioxidant botanicals, and many beneficial vitamins totaling 170 calories per bottle. Healthy Dairy® contains SUSTA™ and important nutrients that promote health and wellness with outstanding taste and sweetness with significantly fewer calories than our  key competitors.
 
Private Offerings
 
On August 27, 2009, we completed a private offering of an aggregate subscription amount of $3,173,000 through the issuance of investment units to certain accredited investors.  Each investment unit had a purchase price of $50,000 and consisted of (i) a three year convertible debenture (the “Debentures”) in the amount of sixty five thousand dollars ($65,000) convertible into shares of our common stock at a conversion price of $.40 per share, (ii) five year Series A warrants to purchase 100% of the common stock underlying the Debenture at an exercise price of $.40 per share (the “Series A Warrants”), and (iii) five year Series B warrants to purchase 100% of the common stock underlying the Debenture at an exercise price of $0.60 per share (the “Series B Warrants”).
 
On February 26, 2010, we closed on a private placement offering by raising total gross proceeds of $5,667,743, through the sale of (i) 0% Original Issue Discount Senior Secured Convertible Notes (the “Notes”) convertible into shares of our common stock at a conversion price of $1.00 per share, and (ii) a number of five-year warrants (the “Series C Warrants”) exercisable into a number of shares of common stock equal to 100% of the number of common shares underlying the Notes at an exercise price of $1.25 per share to certain accredited investors. The principal amount of each Note is 115% of the subscription proceeds received.  
 
Where You Can Find Us

Our principal executive office is located at 56 Jackson Street, Holyoke, MA 01040 and our telephone number is (413) 553-9300.  Our internet address is http://www.nxtnutritionals.com/.
 
 
 
The Offering

Common stock offered by selling security holders
 
13,035,808 shares of common stock. This includes (i) 6,517,904  shares of common stock issuable upon conversion of the principal amount of the Notes, and (ii) 6,517,904  shares of common stock issuable upon exercise of the Series C Warrants.
     
Common stock outstanding before the offering
 
45,131,068 common shares as of June 17 , 2010.
     
 
Common stock outstanding after the offering
 
45,131,068  shares.
     
Terms of the Offering
 
The selling security holders will determine when and how they will sell the common stock offered in this prospectus.
     
Termination of the Offering
 
The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), or any other rule of similar effect.

Use of proceeds
 
We are not selling any shares of the common stock covered by this prospectus, and, as a result, will not receive any proceeds from this offering. We may, however, receive proceeds in the event that some or all of the Warrants held by the selling security holders are exercised for cash. The proceeds from the exercise of such Warrants, if any, will be used for working capital and other general corporate purposes.
 
OTCBB Trading Symbol
 
“NXTH. OB”
 
Risk Factors
 
The common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See “Risk Factors” beginning on page 4.
 

The following table provides summary consolidated financial statement data as of and for each of the fiscal years ended December 31, 2009 and 2008 and the unaudited financial information for the three months ended March 31, 2010 and 2009. The financial statement data as of and for each of the fiscal years ended December 31, 2009 and 2008 have been derived from our audited consolidated financial statements. The results of operations for past accounting periods are not necessarily indicative of the results to be expected for any future accounting period. The data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our consolidated financial statements and the related notes included in this prospectus, and the unaudited financial statements and related notes included in this prospectus.

Statement s of Operation s
 
     
For the Three Months Ended
     
For the Years Ended December 31,
 
     
March 31, 2010
      2009       2008  
                                 
Sales - net of slotting fees and discounts
  $ 108,734       202,910     $ 905,728     $ 2,265,851  
                                 
Cost of sales
    120,724       246,605       969,352       1,873,996  
                                 
Gross profit (loss)
    (11,990 )     (43,695 )     (63,624 )     391,855  
                                 
General and administrative expenses
    849,770       1,525,248       6,906,598       1,200,719  
                                 
Loss from operations
    (861,760 )     (1,568,943 )     (6,970,222 )     (808,864  
                                 
Interest expense
    (1,633,430 )     (33,268 )     (1,016,718 )     (55,395  
                                 
Derivative expense    
(8,590,802
)      -         -        -  
                                 
Change in fair market value of derivative liability    
7,876,004
       -         -        -  
                                 
Loss on extinguishment of debt
    -       -       (15,603,501 )     -  
                                 
Registration rights expense
    (28,339 )     -       (362,453 )     -  
                                 
Net loss
  $ (3,238,327 )     (1,602,211 )   $ (23,952,894 )   $ (864,259  
 
 
 
Statement s of Cash Flow s
 
        For the Three Months Ended March 31,    
For the Years Ended December 31,
 
      2010     2009    
2009
   
2008
 
                           
 Net Cash Used in Operating Activities
  $ (741,205 ) $ (627,429 )   $
(2,115,070
)
  $
(837,546
)
 Net Cash Provided By Financing Activities
    4,725,755     1,113,127      
1,909,326
     
1,042,925
 
                               
Net Increase (Decrease) in Cash
    3,984,550     485,698      
(205,744
)
   
205,379
 
                               
Cash - Beginning of Period
    68,454     274,198      
274,198
     
68,819
 
                               
Cash - End of Period
  $ 4,053,004   $
759,896
   
$
68,454
   
$
274,198
 


The shares of our common stock being offered for resale by the selling security holders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all or part of your investment.  You should carefully consider the risks described below and the other information in this process before investing in our common stock.

Risks Relating to Our Business
 
OUR LIMITED OPERATING HISTORY MAY NOT SERVE AS AN ADEQUATE BASIS TO JUDGE OUR FUTURE PROSPECTS AND RESULTS OF OPERATIONS.
 
We have a relatively limited operating history. Although we were incorporated on April 25, 2006. we did not begin operation in our current business until we entered into a Share Exchange Agreement with NXT Nutrionals and its shareholders on February 12, 2009.  Such limited operating history and the unpredictability of the sweetener, and food and beverage industry makes it difficult for investors to evaluate our businesses and future operating results. An investor in our securities must consider the risks, uncertainties, and difficulties frequently encountered by companies in new and rapidly evolving markets. The risks and difficulties we face include challenges in accurate financial planning as a result of limited historical data and the uncertainties resulting from having had a relatively limited time period in which to implement and evaluate our business strategies as compared to older companies with longer operating histories. 

WE MAY NEED ADDITIONAL FINANCING TO EXECUTE OUR BUSINESS PLAN. IF WE DO NOT OBTAIN ADDITIONAL FINANCING IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
 
The revenues from the sales of our beverage products and the projected revenues from the sales of these products are not adequate to support our expansion and product development programs at this time. We will need substantial additional funds to:
 
 
 
 
·  
effectuate our business plan and expand our product line;
·  
file, prosecute, defend and enforce our intellectual property rights; and
·  
produce and market our products.

There are no assurances that future funding will be available on favorable terms or at all. If additional funding of up to $5,000,000  is not obtained, we will need to reduce, defer or cancel development programs, planned initiatives, or overhead expenditures to the extent necessary. The failure to fund our capital requirements could have a material adverse effect on our business, financial condition and results of operations. Moreover, the sale of additional equity securities to raise financing could result in additional dilution to our stockholders and the incurrence of indebtedness would result in increased debt service obligations that could result in operating and financing covenants that would restrict our operations.
 
NEWLY DEVELOPED PRODUCTS MAY NOT BE COMPATIBLE WITH MARKET NEEDS RESULTING IN AN ADVERSE EFFECT ON OUR SALES AND EARNINGS.

Our business is particularly subject to changing consumer trends and preferences.  Our continued success depends in part on our ability to anticipate and respond to these changes, and we may not respond in a timely or commercially appropriate manner to such changes.  If we fail to invest in extensive market research on consumer health needs in each market we target, we may face limited market acceptance of our products, which could have a material adverse effect on our sales and earnings.
 
WE MAY ENCOUNTER SUBSTANTIAL COMPETITION IN OUR BUSINESS AND FAILURE TO COMPETE EFFECTIVELY MAY ADVERSELY AFFECT OUR ABILITY TO GENERATE REVENUE.
 
We believe that existing and new competitors will continue to improve their products and to introduce new products with competitive price and performance characteristics. We expect that we will be required to continue to invest in product development and productivity improvements to compete effectively in our markets. Our competitors could develop more efficient products or undertake more aggressive and costly marketing campaigns than ours, which may adversely affect our marketing strategies and could have a material adverse effect on our business, results of operations and financial condition.

 Important factors affecting our ability to compete successfully include:
 
·  
the taste and flavor of products;
·  
trade and consumer promotions;
·  
rapid and effective development of new, unique cutting edge products;
·  
attractive and different packaging;
·  
branded product advertising; and
·  
pricing

In periods of reduced demand for our products, we can either choose to maintain market share by reducing our selling prices to meet competition or maintain selling prices, which would likely sacrifice market share. Sales and overall profitability would be reduced in either case. In addition, we cannot assure that additional competitors will not enter our existing markets, or that we will be able to compete successfully against existing or new competition.
 
WE RELY ON THE SERVICES OF CERTAIN KEY PERSONNEL.  IF WE FAIL TO KEEP THEM EMPLOYED IT MAY HAVE A MATERIAL ADVERSE EFFECT ON FULFILLING OUR BUSINESS PLAN.
 
Our business relies on the efforts and talents of our President and Chief Executive Officer, Francis McCarthy. The loss of Mr. McCarthy’s service could adversely affect the operations of our business. Although we have entered into a two year employment agreement with Mr. McCarthy and Mr. McCarthy has not indicated any intention of leaving us, the loss of his service for any reason could have a very negative impact on our ability to fulfill on our business plan.
 
 
 
WE MAY NOT BE ABLE TO HIRE AND RETAIN QUALIFIED PERSONNEL TO SUPPORT OUR GROWTH AND IF WE ARE UNABLE TO RETAIN OR HIRE SUCH PERSONNEL IN THE FUTURE, OUR ABILITY TO IMPROVE OUR PRODUCTS AND IMPLEMENT OUR BUSINESS OBJECTIVES COULD BE ADVERSELY AFFECTED.
 
If one or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, and our business may be disrupted and our financial condition and results of operations may be materially and adversely affected. Competition for senior management and senior technology personnel is intense, the pool of qualified candidates is very limited, and we may not be able to retain the services of our senior executives or senior technology personnel, or attract and retain high-quality senior executives or senior technology personnel in the future. Such failure could materially and adversely affect our future growth and financial condition.

PRODUCT LIABILITY CLAIMS AGAINST US COULD RESULT IN ADVERSE PUBLICITY AND POTENTIALLY SIGNIFICANT MONETARY DAMAGES.
 
As with other food producers, we are also exposed to risks associated with product liability claims if the consumption of our products results in injury or illness. We cannot predict what impact such product liability claims or resulting negative publicity would have on our business or on our brand image. The successful assertion of product liability claims against us could result in potentially significant monetary damages, diversion of management resources and require us to make significant payments and incur substantial legal expenses, although we do carry product liability insurance for potential product liability claims.   Even if a product liability claim is not successfully pursued to judgment by a claimant, we may still incur substantial legal expenses defending against such a claim. Finally, serious product quality concerns could result in governmental action against us, which, among other things, could result in the suspension of production or distribution of our products, loss of certain licenses, or other governmental penalties.

WE COMPETE IN AN INDUSTRY THAT IS BRAND-CONSCIOUS, AND UNLESS WE ARE ABLE TO ESTABLISH AND MAINTAIN BRAND NAME RECOGNITION OUR SALES MAY BE NEGATIVELY IMPACTED.

Our business is substantially dependent upon awareness and market acceptance of our products and brand by our targeted consumers. In addition, our business depends on acceptance by our independent distributors and consumers of our brand. Although we believe that we have made progress towards establishing market recognition for our brand in the industry, it is too early in the product life cycle of the brand to determine whether our products and brand will achieve and maintain satisfactory levels of acceptance by independent distributors, grocery stores, retailers and consumers.

WE RELY PRIMARILY ON THIRD-PARTY DISTRIBUTORS AND INDEPENDENT RETAILERS, AND THIS COULD NEGATIVELY  AFFECT OUR ABILITY TO EFFICIENTLY AND PROFITABLY DISTRIBUTE AND MARKET OUR PRODUCTS, MAINTAIN OUR EXISTING MARKETS AND EXPAND OUR BUSINESS INTO OTHER GEOGRAPHIC MARKETS.
 
Except for the sales through the internet, we do not sell our products directly to our end customers. We primarily rely on third-party distributors and retailers for the sale and distribution of our products. To the extent that our distributors are distracted from selling our products or do not expend sufficient efforts in managing and selling our products, our sales will be adversely affected. Our ability to maintain our distribution network and attract additional distributors will depend on a number of factors, many of which are outside our control. Some of these factors include: (i) the level of demand for our brand and products in a particular distribution area; (ii) our ability to price our products at levels competitive with those offered by competing products and (iii) our ability to deliver products in the quantity and at the time ordered by distributors.
 
There can be no assurance that we will be able to meet all or any of these factors in any of our current or prospective geographic areas of distribution. Furthermore, shortage of adequate working capital may make it impossible for us to do so. Our inability to achieve any of these factors in a geographic distribution area will have a material adverse effect on our relationships with our distributors in that particular geographic area, thus limiting our ability to maintain and expand our market, which will likely adversely affect our revenues and financial results.
 
 
 
 
OUR FUTURE SUCCESS RELIES UPON SUSTA™, ALL-NATURAL, PATENT-PENDING, HEALTHY SWEETENER. THERE IS NO ASSURANCE THAT THESE PATENTS WILL BE GRANTED. EVEN IF THEY ARE GRANTED, THERE IS NO ASSURANCE THAT WE WILL HAVE THE RESOURCES TO ENFORCE THE PATENTS THROUGH LITIGATION OR OTHERWISE. THE LOSS OF EXCLUSIVE RIGHT TO SUSTA tm COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
We believe that our business does not infringe upon the valid proprietary rights of others, but there can be no assurance that third parties will not assert infringement claims against us. If infringement claims are brought against us, there can be no assurance that we will have the financial resources to defend against such claims or prevent an adverse judgment against us. In the event of an unfavorable ruling on any such claim, there can be no assurance that a license or similar agreement to utilize the intellectual property rights in question relied upon by us in the conduct of our business will be available to us on reasonable terms, if at all. In the event of an unfavorable ruling on any such claim, there can be no assurance that a license or similar agreement to utilize the intellectual property rights in question relied upon by us in the conduct of our business will be available to us on reasonable terms, if at all.
 
 SUSTA™ is patent-pending in the United States and Canada. There can be no assurance any of these pending patents will be granted or, even if they are, that we will have the resources to enforce these patents through litigation or otherwise. In addition, patents granted by the United States Patent Office do not guarantee that competitors in overseas locations will not imitate our products, or patent similar products in other nations.  The failure to obtain the patent to SUSTAmay have a material adverse effect on our business operations.
 
WE MAY NEED ADDITIONAL CAPITAL TO FUND OUR FUTURE OPERATIONS AND, IF IT IS NOT AVAILABLE WHEN WE NEED IT, WE MAY NEED TO REDUCE OUR PLANNED DEVELOPMENT AND MARKETING EFFORTS, WHICH MAY REDUCE OUR SALES REVENUES.
 
We believe that our existing working capital and cash available from operations will enable us to meet our working capital requirements for at least the next 12 months. The development and marketing of new products and the expansion of distribution channels and associated support personnel requires a significant commitment of resources. In addition, if the markets for our products develop more slowly than anticipated, or if we fail to establish significant market share and achieve sufficient net revenues, we may continue to consume significant amounts of capital. As a result, we could be required to raise additional capital of up to $5,000,000 . We cannot assure that additional capital, if required, will be available on acceptable terms, or at all. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned product development and marketing efforts, which could harm our business, financial condition and operating results.

WE MAY NEVER PAY ANY DIVIDENDS TO SHAREHOLDERS.
 
We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our Common Stock in the foreseeable future.
 
The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.

Risks Related to Our Common Stock
 
OUR COMMON STOCK IS QUOTED ON THE OTC BULLETIN BOARD WHICH MAY HAVE AN UNFAVORABLE IMPACT ON OUR STOCK PRICE AND LIQUIDITY.
 
Our Common Stock is quoted on the OTC Bulletin Board.  The OTC Bulletin Board is a significantly more limited market than the New York Stock Exchange or Nasdaq system.  The quotation of our shares on the OTC Bulletin Board may result in a less liquid market available for existing and potential stockholders to trade shares of our Common Stock, could depress the trading price of our Common Stock and could have a long-term adverse impact on our ability to raise capital in the future.
 
 
 
THERE IS LIMITED LIQUIDITY ON THE OTCBB.
 
When fewer shares of a security are being traded on the OTCBB, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information. Due to lower trading volumes in shares of our Common Stock, there may be a lower likelihood of one's orders for shares of our Common Stock being executed, and current prices may differ significantly from the price one was quoted at the time of one's order entry.
 
OUR COMMON STOCK IS THINLY TRADED, SO YOU MAY BE UNABLE TO SELL AT OR NEAR ASKING PRICES OR AT ALL IF YOU NEED TO SELL YOUR SHARES TO RAISE MONEY OR OTHERWISE DESIRE TO LIQUIDATE YOUR SHARES.
 
Currently our Common Stock is quoted in the OTC Bulletin Board market and the trading volume we will develop may be limited by the fact that many major institutional investment funds, including mutual funds, as well as individual investors follow a policy of not investing in Bulletin Board stocks and certain major brokerage firms restrict their brokers from recommending Bulletin Board stocks because they are considered speculative, volatile and thinly traded. The OTC Bulletin Board market is an inter-dealer market much less regulated than the major exchanges and our Common Stock is subject to abuses, volatility and shorting. Thus there is currently no broadly followed and established trading market for our Common Stock. An established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded there.
 
The trading volume of our Common Stock has been and may continue to be limited and sporadic. As a result of such trading activity, the quoted price for our Common Stock on the OTC Bulletin Board may not necessarily be a reliable indicator of its fair market value. Further, if we cease to be quoted, holders would find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our Common Stock and as a result, the market value of our Common Stock likely would decline.

OUR COMMON STOCK IS SUBJECT TO PRICE VOLATILITY UNRELATED TO OUR OPERATIONS.
 
The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our Common Stock.

YOU MAY BE UNABLE TO SELL YOUR COMMON STOCK AT OR ABOVE YOUR PURCHASE PRICE, WHICH MAY RESULT IN SUBSTANTIAL LOSSES TO YOU.

The following factors may add to the volatility in the price of our common stock: actual or anticipated variations in our quarterly or annual operating results; government regulations, announcements of significant acquisitions, strategic partnerships or joint ventures; our capital commitments; and additions or departures of our key personnel.  Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance.  We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our common stock will sustain its current market price, or as to what effect that the sale of shares or the availability of common stock for sale at any time will have on the prevailing market price.
 
 
IF WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTC BULLETIN BOARD, WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO SELL OUR SECURITIES AND THE ABILITY OF SHAREHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET.

Companies trading on the OTC Bulletin Board, such as Revolutions Medical Corporation, must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the OTC Bulletin Board.  If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board.  As a result, the market liquidity for our securities could be adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.
 
INVESTMENT IN OUR COMPANY MAY BE SUBSJECT TO DILUTION CAUSED BY CONVERSION OF OUR OUTSTANDING CONVERTIBLE DEBENTURE AND/OR EXERCISE OF OUR OUTSTANDING SERIES A AND SERIES B WARRANTS.

In connection with a private offering closed on August 27, 2009, we issued a number of 3-year convertible debentures, representing an aggregate principal amount of $3,173,000, which are convertible into shares of our Common Stock at $ 0 .40 per share at any time during the term of the convertible debentures, a number of Series A Warrants to purchase 100% of the underlying shares of Common Stock of the convertible debenture at an exercise price of $ 0 .40 per share and a number of Series B Warrants to purchase 100% of the underlying shares of Common Stock of the convertible debenture at an exercise price of $ 0 .60 per share. Upon conversion or exercise of the convertible debenture or the Series A and Series B Warrants, in whole or in part, your investment in the Company will be subject to significant dilution.

WE MAY ISSUE ADDITIONAL SERIES C WARRANTS TO PAY OFF LIQUIDATED DAMAGES ACCRUED, WHICH WILL CAUSE DILUTON TO YOUR INVESTMENT.

In connection with the private offering closed on August 27, 2009, we have not filed the registration statement by the required filing date of October 27, 2009 and are subject to liquidated damages in the amount of 1.0% of the aggregate amount invested in the private offering for every 30-day period or portion thereof, subject to the maximum amount of 9% of the purchase price in the offering.

Our Management intends to negotiate with the investors in the private offering to obtain (1) their waiver of the liquidated damages, and/or (ii) their consent to the issuance of Series C Warrants as payment for the liquidated damages.  If we issue to those investors Series C Warrants to pay off the liquidated damages, your ownership interest in the Company will be diluted upon their exercise of the Series C Warrants for Common Stock.

OUR COMMON STOCK ARE CLASSIFIED AS A “PENNY STOCK” AS THAT TERM IS GENERALLY DEFINED IN THE SECURITIES EXCHANGE ACT OF 1934 TO MEAN EQUITY SECURITIES WITH A PRICE OF LESS THAN $5.00. OUR COMMON STOCK WILL BE SUBJECT TO RULES THAT IMPOSE SALES PRACTICE AND DISCLOSURE REQUIREMENTS ON BROKER-DEALERS WHO ENGAGE IN CERTAIN TRANSACTIONS INVOLVING A PENNY STOCK.
 
The SEC has adopted regulations which generally define so-called "penny stocks" to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. As of April 7, 2010, the closing sale price of our common stock was $0.52 per share and, therefore, it is designated a "penny stock." As a "penny stock," our Common Stock may become subject to Rule 15g-9 under the Exchange Act of 1934, or the "Penny Stock Rule." This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and "accredited investors" (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses).

For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased.  In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
 
 
 
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:
 
      The basis on which the broker or dealer made the suitability determination, and
 
      that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
 
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
 
Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our Common Stock, if and when our Common Stock becomes publicly traded. In addition, the liquidity for our Common Stock may decrease, with a corresponding decrease in the price of our Common Stock. Our Common Stock, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their common stock.

There can be no assurance that our Common Stock will qualify for exemption from the Penny Stock Rule. In any event, even if our Common Stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of a penny stock if the SEC determines that such a restriction would be in the public interest.


We will not receive any proceeds from the sale of common stock by the selling security holders. All of the net proceeds from the resale of our common stock will go to the selling security holders as described below in the sections entitled “Selling Security Holders” and “Plan of Distribution”.  We have agreed to bear the expenses relating to the registration of the common stock for the selling security holders.

A portion of the shares of common stock covered by this prospectus are issuable upon exercise of the Warrants. We may receive proceeds in the event some or all of the Warrants held by the selling security holders are exercised for cash. Any proceeds received from the exercise of the warrants will be used for working capital and other general corporate purposes.

  
The prices at which the shares or common stock covered by this prospectus may actually be sold will be determined by the prevailing public market price for shares of common stock, by negotiations between the selling security holders and buyers of our common stock in private transactions or as otherwise described in “Plan of Distribution.”
 

The common shares being offered for resale by the selling security holders consist of 13,035,808 shares of our common stock held by 47 holders who were investors in our private placement of $5,667,743, through the sale of the Notes and (ii) a number of Series C Warrants exercisable into a number of shares of common stock equal to 100% of the number of common shares upon conversion of the principal amount of the Notes, that we closed on February 26, 2010.  The principal amount of each Note is 115% of the subscription proceeds received.
 
 

The following table sets forth the name of the selling security holders, the number of shares of common stock beneficially owned by each of the selling stockholders as of June 17 , 2010 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders.
 
Name
Shares Beneficially
Owned Prior To Offering
Shares to
be Offered
Amount Beneficially
Owned After Offering
Percent Beneficially
Owed after Offering
General Associates LLC (1)
695,158
695,158
0
0%
J&J  Rosenbaum Family Trust (2)
1,023,500
1,023,500
0
0%
Daniel Blacker & Stefanie Lisa Schwartz (3)
57,500
57,500
0
0%
Kevin L. Bouchillon (4)
230,000
230,000
0
0%
Adam C. Bricker (5)
230,000
230,000
0
0%
Brian Clavin (6)
230,000
230,000
0
0%
Paul Daugherty (7)
115,000
115,000
0
0%
W. Glenn Kelly (8)
57,500
57,500
0
0%
Eric Motz (9)
115,000
115,000
0
0%
Steven L. Rathjen (10)
172,500
172,500
0
0%
Edward L. Rucinski (11)
349,600
349,600
0
0%
Ian Sadler (12)
115,000
115,000
0
0%
Robert W. Semple (13)
230,000
230,000
0
0%
Jim Sheffield (14)
115,000
115,000
0
0%
David Squire (15)
1,150,000
1,150,000
0
0%
Sean Weir (16)
115,000
115,000
0
0%
Daniel Charnoff (17)
23,000
23,000
0
0%
Scott Cunningham (18)
115,000
115,000
0
0%
James C. Donohue IV (19)
230,000
230,000
0
0%
John M. Gamberoni (20)
23,000
23,000
0
0%
Golden Opportunity Consulting LLC (21)
345,000
345,000
0
0%
Adam Krasnoff (22)
31,050
31,050
0
0%
Frank Lin (23)
46,000
46,000
0
0%
Gene Monaco (24)
460,000
460,000
0
0%
Joseph R. Piscitelli Jr (25)
34,500
34,500
0
0%
Kevin Scherer (26)
345,000
345,000
0
0%
Hideo Takada (27)
230,000
230,000
0
0%
Paul Hennessy (28)
57,500
57,500
0
0%
John Trafford (29)
115,000
115,000
0
0%
Adam Uttley (30)
115,000
115,000
0
0%
 
 
Todd A. Dunbar (31)
92,000
92,000
0
0%
Robert Pash (32)
115,000
115,000
0
0%
Edward Gibbons (33)
23,000
23,000
0
0%
Robert Kayman (34)
230,000
230,000
0
0%
Adams, Terry (35)
230,000
230,000
0
0%
Cranshire Capital LP (36)
230,000
230,000
0
0%
Genesis Asset Opportunity Fund LP (37)
2,300,000
2,300,000
0
0%
Gordon, Bruce T. (38)
115,000
115,000
0
0%
Greenberg, Mark (39)
460,000
460,000
0
0%
Heller Capital Investments (40)
230,000
230,000
0
0%
Keller, Kenton (41)
575,000
575,000
0
0%
McLoughlin, Michael V. (42)
345,000
345,000
0
0%
Northern Aviation LLC (43)
115,000
115,000
0
0%
Octagon Capital Partners (44)
230,000
230,000
0
0%
The Stacy Grp, LLC (45)
115,000
115,000
0
0%
Warren H. Watkins Trust  (46)
230,000
230,000
0
0%
Richards, Donald J. (47)
230,000
230,000
0
0%
 
(1)  Consists of 347,579 shares of our Common Stock underlying the Note and 347,579 shares of our Common Stock underlying the Series C Warrant issued to General Associates, LLC. William Howe is the Principal of General Associates LLC. William Howe, acting alone, has voting and dispositive power over the shares beneficially owned by General Associates, LLC.
(2)  Consisting of 511,750 shares of our Common Stock underlying the Note and 511,750 shares of our Common Stock underlying the Series C Warrant issued to J&J Rosenbaum Family Trust. Joshua Rosenbaum and Julia Rosenbaum, husband and wife, are the trustees of J&J Rosenbaum Family Trust. Joshua Rosenbaum and Julia Rosenbaum have voting and dispositive power over the shares beneficially owned by J&J  Rosenbaum Family Trust and has investment control of its shares of our common stock.
(3)  Consisting of 28,750 shares of our Common Stock underlying the Note and the 28,750 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholders. The common shares held by the respective holders as tenant by entirety.
(4) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(5) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(6) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(7) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(8) Consisting of  28,750 shares of our Common Stock underlying the Note and 28,750 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(9) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(10) Consisting of 86,250 shares of our Common Stock underlying the Note and 86,250  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(11)_Consisting of 174,800 shares of our Common Stock underlying the Note and 174,800 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(12) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
 
 
(13) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(14) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(15) Consisting of 575,000 shares of our Common Stock underlying the Note and 575,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(16) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(17) Consisting of 11,500 shares of our Common Stock underlying the Note and 11,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(18) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(19) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(20) Consisting of 11,500 shares of our Common Stock underlying the Note and 11,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(21) Consisting of 172,500 shares of our Common Stock underlying the Note and 172,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder. Richard J. Golden is the principal of Golden Opportunity Consulting, LLC. Richard J. Golden, acting alone, has voting and dispositive power over the shares beneficially owned by Golden Opportunity Consulting.
(22) Consisting of 15,525 shares of our Common Stock underlying the Note and 15,525  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(23) Consisting of 23,000 shares of our Common Stock underlying the Note and 23,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(24) Consisting of 230,000 shares of our Common Stock underlying the Note and 230,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(25) Consisting of 17,250 shares of our Common Stock underlying the Note and 17,250  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(27) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(28) Consisting of 28,750 shares of our Common Stock underlying the Note and 28,750 shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(29) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(30) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(31) Consisting of 46,000 shares of our Common Stock underlying the Note and 46,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(32) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(33) Consisting of 11,500 shares of our Common Stock underlying the Note and 11,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(34) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(35) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(36) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder. Downsview Capital, Inc. ("Downsview") is the general partner of Cranshire Capital, L.P. ("Cranshire") and consequently has voting control and investment discretion over securities held by Cranshire.  Mitchell P. Kopin ("Mr. Kopin"), President of Downsview ,has voting control over Downsview. As a result of the foregoing, each of Mr. Kopin and Downsview may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the shares of common stock beneficially owned by Cranshire.
(37) Consisting of 1,150,000 shares of our Common Stock underlying the Note and 1,150,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder. Daniel Saks, Ethan Benovitz and Jaime Hartman are the managing members of Genesis Asset Opportunity Fund LP. Daniel Saks, Ethan Benovitz and Jaime Hartman have shared voting and dispositive power over the shares beneficially owned by Genesis Asset Opportunity Fund LP.
 
 
(38) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.   (39) Consisting of 230,000 shares of our Common Stock underlying the Note and 230,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(40) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.  Ronald I. Heller is the principal of Heller Capital Investments. Ronald I. Heller, acting alone, has voting and dispositive power over the shares beneficially owned by Heller Capital Investments.
(41) Consisting of 287,500 shares of our Common Stock underlying the Note and 287,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(42) Consisting of 172,500 shares of our Common Stock underlying the Note and 172,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
(43) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder. Paul D’Aghese is the manager of Northern Aviation LLC. Paul D’Aghese, acting alone, has voting and dispositive power over the shares beneficially owned by Northern Aviation LLC.
(44) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder. Steven Hart is the general partner of Octagon Capital Partners. Steven Hoa, acting alone, has voting and dispositive power over the shares beneficially owned by Octagon Capital Partners.
(45) Consisting of 57,500 shares of our Common Stock underlying the Note and 57,500  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder. Solomon Eisenberg is the principal of The Stacy Group, LLC. Solomon Eisenberg, acting alone, has voting and dispositive power over the shares beneficially owned by The Stacy Group, LLC.
(46) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.  Warren H. Watkins is the trustee of Warren H. Watkins Trust. Warren H. Watkins, acting alone, has voting and dispositive power over the shares beneficially owned by Warren H. Watkins Trust and has investment control of its shares of our common stock.
(47) Consisting of 115,000 shares of our Common Stock underlying the Note and 115,000  shares of our Common Stock underlying the Series C Warrant issued to the selling stockholder.
 
To our knowledge, none of the selling shareholders or their beneficial owners:

-
has had a material relationship with us other than as a shareholder at any time within the past three years; or
-
has ever been one of our officers or directors or an officer or director of our predecessors or affiliates 
-  
are broker-dealers or affiliated with broker-dealers. 
 
 
This prospectus relates to the resale of up to 13,035,808 shares, including (i) 6,517,904 shares of common stock issuable upon conversion of the Notes, and (ii) 6,517,904 shares of common stock issuable upon exercise of the Series C Warrants, each held by certain selling security holders.

Each selling stockholder of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions.  These sales may be at fixed or negotiated prices.  A Selling Stockholder may use any one or more of the following methods when selling shares:
 
 
·  
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
 
·  
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
·  
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
·  
an exchange distribution in accordance with the rules of the applicable exchange;
 
·  
privately negotiated transactions;
 
·  
settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
 
·  
in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
 
·  
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
 
·  
a combination of any such methods of sale; or
 
·  
any other method permitted pursuant to applicable law.
 
The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
 
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales.  Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
 
In connection with the sale of the common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume.  The selling stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities.  The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
 
The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales.  In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.  Each selling stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
 
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares.  The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
 
 
Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder.  The selling stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders.
 
We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for us to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.  The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares of Common Stock covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
 
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution.  In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any other person.  We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
 

We are authorized to issue 200,000,000 shares of our common stock, par value $ 0 .001 and 50,000,000 shares of preferred stock, par value $ 0 .001. As of June 17 , 2010,  45,131,068 shares of common stock were issued and outstanding and no shares of Preferred Stock were issued and outstanding, including shares issued pursuant to the closing of the Share Exchange Agreement.
 
 (a)           Common Stock. The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Our certificate of incorporation and by-laws do not provide for cumulative voting rights in the election of directors. Accordingly, holders of a majority of the shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election. Holders of common stock are entitled to receive ratably such dividends as may be declared by the Board out of funds legally available therefore. In the event of our liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in the assets remaining after payment of liabilities. Holders of common stock have no preemptive, conversion or redemption rights.
 
(b)           Preferred Stock. Our board of directors has the authority, within the limitations and restrictions in our amended articles of incorporation, to issue 50,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of any series, without further vote or action by the stockholders. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in our control without further action by the stockholders. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of our common Stock, including voting rights, of the holders of our common Stock. In some circumstances, this issuance could have the effect of decreasing the market price of our common stock. We currently have no plans to issue any shares of preferred stock.
 
(c)           Debenture and Series A and Series B Warrant.

On August 27, 2009, we completed a private offering of an aggregate subscription amount of $3,173,000 through the issuance of investment units to certain accredited investors.  Each investment unit had a purchase price of $50,000 and consisted of (i) a three year convertible debenture  in the amount of sixty five thousand dollars ($65,000) convertible into shares of our common stock at a conversion price of $.40 per share, (ii) five year Series A Warrants to purchase 100% of the common stock underlying the Debenture at an exercise price of $.40 per share, and (iii) five year Series B Warrants to purchase 100% of the common stock underlying the Debenture at an exercise price of $0.60 per share.
 
 
The face value amount of $65,000 of the Debentures is inclusive of all accrued interest through the Maturity Date at a rate of ten percent (10%) per annum
 
The Debentures have “full ratchet” anti-dilution protection for issuance of our common stock, or securities exercisable for or convertible into our common stock, at an issuance price, exercise price or conversion price of less than $0.40 per share. The Warrants have “full ratchet” anti-dilution protection for issuances of our common stock, or securities exercisable for or convertible into our common stock, at an issuance price, exercise price or conversion price of less than the exercise price per share of the Warrants.
 
(d)              Note and Series C Warrant
 
On February 26, 2010, we closed a private placement offering by total gross proceeds of $5,667,743, through the sale of (i) 0% Original Issue Discount Senior Secured Convertible Notes convertible into shares of the Company’s common stock at a conversion price of $1.00 per share and (ii) a number of five-year “Series C Warrants” exercisable into a number of shares of common stock equal to 100% of the number of common shares underlying the Notes at an exercise price of $1.25 per share to certain accredited investors.  The principal amount of each Note is 115% of the subscription proceeds received.  The Notes are secured by all of the assets of the Company.

The Company shall have the optional redemption right to redeem some or all of the then outstanding principal amount of the Notes (the “Principal Amount”) in the event of a change of control, provided, that such change of control occurs after the earlier of the date that (1) all of the Registrable Securities (defined below) have been registered for resale pursuant to a Registration Statement (defined below) or (b) all of the Registrable Securities (defined below) may be sold pursuant to Rule 144 promulgated under the Securities Act of 1933 (the “Securities Act”) (the “Effective Date”).  In addition, on the first day of each month, commencing immediately upon the earlier of (1) the first such date immediately following the Effective Date, and (2) August 26, 2010 (the “Monthly Redemption Date”), the Company shall redeem 1/9 of the outstanding Principal Amount in cash or in shares of the Company’s common stock at a conversion price equal to the lesser of (1) the Conversion Price or (2) 85% of the average of the VWAPs for 20 consecutive trading days ending on the trading day immediately prior to the applicable Monthly Redemption Date, provided that certain conditions are met.

In the event of default as set forth in the Notes (the “Event of Default”), at the Investor’s election, the then outstanding Principal Amount, plus accrued but unpaid liquidated damages and other amounts owing through the date of the Event of Default shall become due and payable in cash in the amount equal to (1) 105% of the then outstanding Principal Amount and (2) all other amounts, costs, expenses and liquidated damages due in respect of the Notes.

The number of common shares to be received upon the exercise or conversion of the Warrants and Notes are subject to adjustment upon the occurrence of certain events, such as stock splits, stock dividends, our recapitalization or the issuance of shares at a lower price per share than the Conversion Price.

We agreed to register 100% of the common shares underlying the Notes and Warrants (the “Registrable Securities”) on a Form S-1 (the “Registration Statement”) to be filed with the Securities and Exchange Commission (the “SEC”) within thirty (30) calendar days after the Closing Date (the “Filing Date”) and use our best efforts to have it declared effective within 180 calendar days after the Closing Date.  Upon the occurrence of any event that shall incur liquidated damages (the “Event”), including, but not limited to, that the initial Registration Statement is not filed prior to the Filing Date, we fail to file a pre-effective amendment and otherwise respond in writing to SEC comments on the Registration Statement within thirty (30) calendar days upon receipt of such comments, and the initial Registration Statement including the Registrable Securities permitted by Rule 415 is not declared effective by the Effectiveness Date, (A) we shall pay to each Investor an amount in cash, as partial liquidated damages, equal to 0.5% of the aggregate purchase price paid by each Investor on each Event Date defined in the Registration Rights Agreement (the “Event Date”), and (B) on each monthly anniversary of the Event Date until the Event is cured, we shall pay to each Investor an amount in cash, equal to 1.0% of the aggregate purchase price paid by such Investor, subject to the maximum amount of 6.0% of the aggregate subscription amount paid by such Investor pursuant to the Securities Purchase Agreement.
 
 
(e)           Agent Warrants
 
Garden State Securities, Inc., acted as our exclusive placement agent in connection with the private placement closed on February 26, 2010. For the placement agent services in connection with the offering of total , we paid (i) a cash commission equal to (y) 10% of the aggregate gross proceeds of the securities sold to investors, other than investors referred by us and (z) 5% of the aggregate gross proceeds of the securities sold to investors referred by us , (ii) a non-accountable expense allowance equal to 3% of the gross proceeds of the securities sold to investors not referred by us, and (iii) issued five-year warrants to purchase a total of 1,174,681 shares of our common stock, which equal (y) 20% of the shares of common stock underlying the Notes sold in this offering to investors, other than investors referred by us, and (z) 5% of the shares of Common Stock underlying the Notes sold in this offering to investors referred by us, all of which shall be exercisable on a cashless basis at an exercise price of $1.25 per share (subject to adjustment as provided therein) (“Agent Warrants”). We also agreed to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act. The Agent Warrants will have piggy-back registration rights.

 
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
 
The financial statements included in this prospectus and the registration statement have been audited by Berman & Company P. C. to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

The validity of the issuance of the common stock hereby will be passed upon for us by Anslow & Jaclin, LLP, Manalapan, New Jersey.

INFORMATION ABOUT THE REGISTRANT

We were originally incorporated in the state of Delaware on April 25, 2006 to search for available properties in north central British Columbia. In May 2006, we entered into an agreement which was negotiated at arm’s length with Ana Simpson to acquire a 100% interest in the DON 2 claim. The claim is located in the Omineca Mining Division approximately 200 km north northeast of Smithers and 400 km northwest of Prince George.  
 
Pursuant to a unit purchase agreement as of October 31, 2008, NXT Nutritionals, a Delaware corporation, acquired 100% of the membership interest in NXT, LLC and Healthy Dairy, LLC, two limited liability companies incorporated in the State of Delaware. In exchange, NXT Nutritionals issued a total of 14,000,000 shares of its common stock to the unit holders of the Healthy Dairy and NXT, LLC and 6,000,000 shares of its common stock to Healthy Brands, LLC as a consultant to Healthy Dairy and NXT, LLC. As a result of the closing of the unit purchase, NXT, LLC and Healthy Dairy, LLC became the wholly owned subsidiaries of NXT Nutritionals, Inc.
 
On February 12, 2009, we entered into a share exchange agreement with NXT Nutritionals and the shareholders of NXT Shareholders, pursuant to which, we acquired all of the issued and outstanding common stock of NXT Nutritionals from the NXT Shareholders. In exchange, we issued to the NXT Shareholders 22,480,000 shares of our common stock, representing 63.06% of our outstanding shares of common stock (the “Share Exchange”).
 
Pursuant to the Share Exchange Agreement, Brian Renda resigned as our sole officer and director, and Francis McCarthy, Richard M. Jordan, Joshua Rosenbaum, Mark A. Giresi and Theodore Mandes, II were appointed to our board of directors on the Closing Date. Pursuant to a board resolution on the Closing Date and the Share Exchange Agreement, Francis McCarthy was appointed as our President and Chief Executive Officer, and David Briones was appointed as our Chief Financial Officer.
 
As a result of the closing of the Share Exchange, NXT Nutritionals became our wholly-owned subsidiary. Operating through NXT Nutritionals, we are engaged in developing and marketing of a proprietary, patent-pending, all–natural, healthy sweetener sold under the brand name SUSTA™ and other food and beverage products. SUSTA™ is being sold as a stand-alone product and it is the common ingredient for all of our products.  We also market and sell Healthy Dairy® which is enhanced by the revolutionary taste and nutritious ingredients contained in SUSTA™. Our mission is to provide consumers with unique, healthy, delicious products that promote a healthier lifestyle and combat obesity and diabetes.
 

Our initial focus will be to bring SUSTA™ to the retail marketplace nationwide, expand the Healthy Diary® product line from the east coast to nationwide reach, and eventually to expand the Healthy Dairy® to include product lines such as cup yogurt and ice cream.
  
Our current corporate structure is illustrated in the figure below:
 
 
 
PRODUCTS
 
SUSTA™ Natural Sweetener
 
SUSTA™ is an all natural, healthy sweetener that has minimal calories and low glycemic index.  It is a proprietary blend of inulin fiber, fructose, botanical extracts, natural flavors, vitamins, minerals, and probiotics that is patented in New Zealand and patent-pending in the U.S. and Canada.
 
SUSTA ™ is used in coffees, teas, other beverages, cereals, and any other food that requires a sweetener. SUSTA™ is targeted at individuals craving sweeteners but not the calories from sugar, and is a better option than sugar for people with diabetes because it has approximately one-half gram per serving of fructose and a glycemic index that is one-third of regular sugar.   
 
 
SUSTA™ sweetens the taste of food without all of the side effects of sugars or chemicals, it also contains healthy probiotics consisting of 100 million bacillus coagulas spores per serving.  In addition, SUSTA ™ contains a vital dietary fiber and antioxidants and key cellular nutrients such as B-Vitamins, Chromium, and Fiber which lead to an increased metabolism by making insulin more effective through the direction of sugars to energy rather than fat, and steering sugar into energy metabolism. The Dietary Fiber in SUSTA ™ is soluble with over 1 gram per serving and the antioxidant sources are from nutrients consisting primarily of Vitamin-C, Mineral Selenium, Chromium, Cinnamon, Bitter Melon, Goji, and Grape Seed.  These nutrients provide a full spectrum of Flavanol and bioactive compounds at a 20:1 ratio of concentration. Lastly, SUSTA™ simultaneously supports a healthy heart, bones, and immune system by converting Fiber into short chain fatty acids which further accelerates the absorption of important minerals such as Zinc, Calcium, and Magnesium from food.   
 
We will market SUSTA™ in three primary categories:
 
·  
SUSTATM as a table top sweetener alternative to sugar and other sweeteners,
·  
SUSTATM as an ingredient used in beverages, cereals, baked goods, dairy products, candy and chewing gum, and
·  
NXT/SUSTATM branded products including Healthy Dairy® and other SUSTA™ branded products to be launched by the Company.  

Brand awareness of SUSTA™ will be driven by our aggressive marketing campaign and our massive incent trial program.  Additionally, more traditional levers in the retail sales channel like advertising, trade incentives, price promotions, couponing, and demonstrations will be employed. We target consumer food and beverage companies to incorporate SUSTA™ into their products to provide a healthy alternative to sugar, artificial sweeteners and other natural sweeteners that do not provide the nutritional and health benefits of SUSTA™.
 
Healthy Dairy® Yogurt Smoothies

We have developed a line of SUSTA™ -enhanced, non-fat reduced-calorie yogurt smoothies which are marketed as Healthy Dairy®.  Healthy Dairy® which combines appealing packaging, the health benefits of SUSTATM, and great taste, is offered in 5 different flavors: strawberry, peach, mixed berry, tropical fruit, and strawberry-banana. Healthy Dairy® contains cultured pasteurized skim milk, real fruit, pure cane sugar, soluble fiber, tapioca starch, natural flavors, phytosterols (plant sterols), SUSTA™, antioxidant botanicals, and many beneficial vitamins totaling 170 calories per bottle. Healthy Dairy® contains SUSTA™ and important nutrients that promote health and wellness with outstanding taste and sweetness with significantly fewer calories than the Company’s key competitors.
 
Product Sales
 
Below is a breakdown of the sales for NXT Nutritionals for the 2009 and 2008 annual reporting periods and also the first quarter 2010 and 2009. The sales amounts are broken down by product, Healthy Dairy ("HD") and Susta for each period when applicable.
 
HD 2009 Sales:
  $ 862,202.40  
SUSTA 2009 Sales:
    170 794.23  
Total 2009 Sales:
  $ 1,032,996.63  
         
HD 2008 Sales:
  $ 2,907,169.50  
         
HD Q1 2010 Sales:
  $ 45,176.40  
SUSTA Q1 2010 Sales:
    65,061.08  
Total Q1 2010 Sales:
  $ 110,237.48  
         
HD Q1 2009 Sales: 
  $ 237,240.00  
 
OPERATIONS
The Company operates as a sales and marketing company that out-sources the distribution and manufacturing of its products. Our officers and directors are seasoned veterans of the food and beverage industry that support and supervise an in house staff and a national broker system. We drive sales to the grocery system and create marketing programs to drive consumer trial and purchase. Additionally we have hired a public relations company to drive brand awareness.
 
Research and development is performed by contract with one of the Company’s founders Dr. Richard Kozenko and Vickie Babcock, a food technologist. The R & D team also performs quality control of the products for the Company.
 
Our internal staff performs the duties of accounts receivable and payable under the supervision of both the CEO and CFO. They also arrange for the purchase of raw materials and the production of product.
 
SUSTA Natural sweetener is blended and packaged by a contract packer Subco Foods, Inc., which operates three production facilities in the Mid West. The Healthy Dairy Smoothies are made at Noga Dairy, Inc. in Farmingdale New York.
 
Both SUSTA and Healthy Dairy are distributed by a group of distributors that include C&S Wholesale Grocers, Inc. (“C&S”), White Rose Food (“White Rose”), Bozzuto’s, Inc. (“Bozzuto’s”) and United Natural Foods, Inc. (“UNFI”).  The Company also sells direct to several grocery chains.
 
MARKET OPPORTUNITIES

With a significant growth market, SUSTA™ is much more than a next generation standalone sweetener. We will use this all-natural product as the basis for a growing line of healthy food products. Healthy Dairy® is a SUSTA™-enhanced product. With SUSTA™ as the base sweetener, there is virtually no end to the development of products that we can produce or license that will have immediate appeal to the growing number of refined averse and health conscious consumers.
 
 
20

 
SUSTA™ Natural Sweetener

SUSTA™ is well-positioned to be a competitive natural alternative sweetener in the U.S. table top sweetener market. The rise in type-II diabetes and the epidemic proportion of obesity result in an increased market demand for minimal calorie, natural and healthy sweeteners. SUSTA™ is uniquely formulated to take advantage of this demand, and is targeted at individuals craving sweeteners but not the calories from sugar, and is a better option than sugar for people with diabetes because it has approximately one-half gram per serving of fructose and a glycemic index that is one-third of regular sugar. Our target demographics include:
 
·
Diabetics, individuals on diets, and those proactively managing obesity. Given today’s environment, with the increase in obesity and diabetes, this is a mass market product.
 
·
The most important group is that of head-of-household moms that bring healthy choices into the household. These moms, who range in age from 20 to 50 years old, make the key food purchase decisions for the household, are employed, and are concerned about health and fitness for their families.
 
·
Not far behind in terms of focus are consumers who shun synthetic sweeteners.  This list is headed by consumers who have an affinity for natural products, many of whom are fanatical as it relates to purchasing natural products. Consumers are increasingly aware that “you are what you eat” – this awareness has led to a change in consumer behavior as evidenced by the growth of the organic and all natural food sector.
 
·
And finally, SUSTA™ aimed at those that have active lifestyles and are wellness advocates who tend to be sports enthusiasts, such as runners, bikers, climbers, walkers, devoted exercisers.
 
Healthy Dairy® Yogurt Smoothies

Healthy Dairy®, now sold in thousands of stores in 14 states. The drinkable yogurt market is a 6% share ($221 Million) of the $3.5 Billion yogurt market that is growing annually by 5% in the U.S. and 10% globally leaving much room for sustainable growth. In addition, the Healthy Dairy® production line can be extended to launch new products such as Healthy Dairy® yogurt cups and Healthy Dairy® ice creams which will generate more market opportunities for the Company.

MARKETING STRATEGY
 
Our initial efforts are focused on launching SUSTA™ into the U.S. table top sweetener market, and targeted at the natural sweeteners segment that is less entrenched and has less formidable competitors. Brand awareness of SUSTA™ will be driven by an aggressive marketing and public relations campaign and a massive sampling program. Additionally, more traditional levers like advertising, trade incentives, price promotions, couponing, and demonstrations will be employed. Because of the health benefits of SUSTA™, especially for diabetics, we will partner with a number of health organizations, including the American Diabetes Association. Consumers will be able to buy SUSTA™ products online with a percentage of each sale allocated toward such charitable organization with whom we partner. We have engaged several high profile celebrities, including Shaquille O’Neal, Eddie George , and Blair Underwood, as our spokespersons who we anticipate will help drive awareness of SUSTA™ by appearing in commercials, making public appearances, heading our cause marketing campaign and appearing on popular television shows.
 
Because an increasing number of consumers are learning and searching for information on the internet rather than via traditional advertising on TV or in print media, we will take advantage of social networking sites to enhance SUSTA™ brand awareness. Health Forum and SUSTA™ recipes contests will be part of our on-line strategy.

We have also developed a medical advisory board consisting of Dr. Paul S. Auerbach and James R. Gavin III, MD, PhD whose mission is to advise us on scientific advances regarding our products as well as to communicate the health benefits of SUSTA™ to consumers.

DISTRIBUTION
 
SUSTA™ Natural Sweetener

We intend to capture market share in the mainstream grocery channel that we have already begun penetrating with our Healthy Dairy® over the last two years, with several thousand locations up and down the East Coast. Leading brokers in the country, including C&S, White Rose, Bozzuto’s and UNIF , have agreed to carry SUSTA™. Management believes that our established relationships with these groups, through existing Healthy Dairy® sales, will allow us to quickly scale up our marketing efforts with SUSTA.

Healthy Dairy® Yogurt Smoothies

Healthy Dairy® recognizes the importance of the distribution and selling functions to a sustainable business and therefore implemented the following actions:
 
·
Contracted distribution with C&S who has provided first-class warehousing & distribution services for over 85 years to many U.S. customers. With over 60 warehouse facilities throughout the United States, C&S serve some of the largest supermarket chains in the nation.  C&S ensures fair grocery prices for retailers and consumers by:

o  
Purchasing goods directly from the manufacturer
o  
Storing stock in vast secure warehouse facilities
 
 

 
o  
Distributing products to independent grocery stores, supermarkets & military bases
o  
Passing on great savings to consumers assuring quality products at the best prices
 
The chart below indicates the stores currently carrying SUSTA™ and Healthy Dairy®:



COMPETITION

SUSTA™ Natural Sweetener

SUSTA™’s major competitors in the table top sweetener market are:
 
Splenda
61% market share
Equal
13% market share
Sweet’n Low  
13% market share
Other
13% market share includes a variety of competitors – best known brands/producers in this segment include NutraSweet, ADM, & Cargill
 
(Source: IRI – Information Resources International)
 
Although we compete against all of the products and companies listed, there are major differences between our SUSTA™ and the competitive field in the retail marketplace for alternative sweeteners. SUSTA™ is an all-natural, low calorie sweetener that contains a proprietary blend of probiotics with 100 million Lacto Bacillus Coagulas Spores per 2 gram serving.  SUSTA™ also contains botanical extracts including Cinnamon, Bitter Melon, Goji and Grape Seed which provide a full spectrum of Flavanol and bioactive compounds at a 20:1 ratio of concentration.  SUSTA™ also contains Dietary Soluble Fiber at over 1 gram per serving and antioxidant sources from nutrients such as Vitamin-C primarily with Mineral Selenium and Chromium that is unique in the retail marketplace today.
 
SUSTA™ as a nutritional sweetener aids in digestion and supports the immune system, is rich in fiber, nutrients, antioxidants and probiotics and is low glycemic. SUSTA™ is like a sugar-shield in the food we eat because the presence of fiber will create less fatty lipids and make blood sugar more stable. SUSTA™ works with the body naturally to help tame and transform problem-making, fast absorbing sugars and carbohydrates, into slower absorbing, healthier protected energy because the fiber in SUSTA™ changes the nature of how sugar is metabolized in the liver by reducing levels of blood lipids as compared to controls. In addition, the fiber in SUSTA™ influences gut hormones to reduce the release of gut glucagon which in turn lowers the release of glucagon which is designed to raise blood sugar . SUSTA™ provides vital dietary fiber, antioxidants and key cellular nutrients that are needed for a smoother running, more calorie efficient metabolism. And importantly, SUSTA™ nutrition supports the health of the bones, heart, and immune system by converting fiber into short chain fatty acids which further accelerates the absorption of important minerals such as zinc, calcium, and magnesium from food.

Management views Splenda, Equal, Sweet’N Low and Truvia (the most prominent of the all natural brands based on the Stevia plant) as its main competitors. We will position SUSTA™ as a healthy, all natural, low calorie alternative to sugar and artificial sweeteners with our “Naturally Healthy, Naturally Sweet” campaign.
 
 
While McNeil Nutritionals has established Splenda as the dominant brand in the space, our management believes that with our differentiation marketing plan, which includes celebrity marketing, public relations, a major cause marketing program, and a massive sampling program, we will be ideally positioned to a) start off by taking market share from other all-natural sweeteners that do not have the features and health benefits of SUSTA™, and b) after establishing SUSTA™, we will begin to take market share from Splenda and the other major artificial sweetener brands. Executing this plan on a nationwide basis will be contingent on the Company’s ability to continue to raise capital.
 
Healthy Dairy® Yogurt Smoothies
 
Healthy Dairy® contains plant sterols, which may reduce the risk of heart disease and help lower cholesterol when combined with a low saturated fat and cholesterol diet.

We  believe that today’s consumers who are concerned about living longer and healthier lives will increasingly switch to Healthy Dairy® as consumer awareness of our products increases upon the launch of our advertising, celebrity marketing and public relations campaigns. Our product has high nutritional content, no fat and is low in  calories.

INTELLECTUAL PROPERTY
 
Patent
 
Following years of research and development, SUSTA™ has been developed into a proprietary formulation that is patented in New Zealand and patent-pending in United States and Canada.  A patent for the formulation was granted in Australia but has subsequently lapsed.  The Company intends to pay the fee to have the patent reinstated in the near future.   The patent for SUSTA™ is held by NXT, LLC, a wholly owned subsidiary of NXT Nutritionals, Inc.

BRIEF SUMMARY OF THE INVENTION
 
The present invention provides a carbohydrate modifying formulation or agent of synergistic ingredients, pertaining to the metabolism of mono and disaccharides.  Metabolically, the formulation of the invention slows the absorption of sugars, modifies the release of insulin, and stabilizes blood sugar response.  Additionally, the oral ingestion of the formulation of the invention prevents or reduces the formation of dental caries by inhibiting the metabolic capability of dental plaque-forming bacteria to convert sugars into erosive, tooth-decaying acids.
 
The formulations of the invention provide direct and indirect positive effects on sugar metabolism and blood sugar response.  Thus, the formulations of the invention, when consumed in normal amounts, do not adversely contribute or aggravate such conditions as obesity, diabetes, or dietary-based, hormone related hyperactivity such as that often described in young children.
 
A formulation of the invention may be in liquid or dry form.  That is, it may be in the form of a powder that comprises or contains the formulation, or in the form of a liquid, either an aqueous liquid or a non-aqueous liquid.  In one preferred aspect, the invention provides a finished, water-based beverage, into which the formulation of the invention is incorporated.  Moreover, the invention provides a finished water-based beverage, which is acidified and which includes a formulation of the invention.
 
The invention also includes a method of slowing absorption of sugars, for instance, from the intestine of a subject (including but not limited to a human individual), that comprises administering to the subject, or making available for ingestion by the mammal, a formulation of the invention. The formulation becomes effective when in an aqueous medium, which may be provided extrinsically, for instance by oral or intravenous administration or ingestion of an aqueous liquid containing the formulation, or intrinsically, for instance by ingestion of a solid formulation of the invention which is acted on by the body’s digestive secretions and conveyed to and through the body’s digestive system (an aqueous environment).
 
Additional objects and advantages of the invention will be apparent from the detailed description as follows:
 
 
DETAILED DESCRIPTION OF THE INVENTION AND THE PREFERRED EMBODIMENTS
 
The present invention provides a formulation having desirable properties built upon synergistic ingredients; maintaining low simple sugar levels; and slowing down the normally rapid absorption of simple sugars from the gut.  This objective best optimizes energy levels by thwarting the potential destabilizing effects on blood sugar and inulin response, by preferably utilizing a polysaccharide matrix of complex carbohydrates and soluble gum fibers.
 
The invention provides numerous advantages not found in other agents including, but not limited to, limiting the effects of excessive use of ingredients, such as sugar, that may promote greater oxidative stress and actually reduce energy.  Ingredients are preferably chosen from among those that neutralize and inhibit free radical production and oxidative stress and, therefore, help to protect the cellular energy generating mechanisms.  Moreover, presently preferred ingredients are those that assist in the cellular utilization and burning of fuels for energy.  The composition of the invention also provides multiple tiered uses of various timed caloric energy fuels plus the sweetness system disclosed herein for longer, sustained energy.
 
Trademark
 
NXT Nutritionals also owns several registered trademarks, including Healthy Dairy®, which applies to its all natural line of dairy products including our Healthy Dairy® non fat yogurt smoothies, and SUSTA: Turns Calories into Healthy Energy®. The Healthy Dairy® trademark is held by Healthy Dairy, LLC, a wholly owned subsidiary of NXT Nutritionals. The SUSTA: Turns Calories into Healthy Energy® trademark is held by NXT, LLC, a wholly owned subsidiary of NXT Nutritionals.


Our principal executive offices are located at 56 Jackson Street, Holyoke, MA 01040.  Currently we do not own any real property. Our office rental expense on a monthly basis is $450. Healthy Dairy, LLC, and NXT, LLC now operate out of our principal executive office.


We are not currently aware of any pending legal proceedings against us.


There is no public market for the Notes and the Series C Warrants.  Our shares of common stock are trading on the Over the Counter Bulletin Board (“OTC Bulletin Board”) under the trading symbol “NXTH.OB.” The OTC Bulletin Board is a significantly more limited market than the New York Stock Exchange or Nasdaq system.  The quotation of our shares on the OTC Bulletin Board may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.

The following table sets forth, for the periods indicated, the high and low bid prices for our common stock on the OTC Bulletin Board as reported by various OTCBB market makers. The quotations do not reflect adjustments for retail mark-ups, mark-downs, or commissions and may not necessarily reflect actual transactions.
 
 Quarter Ended
    High Bid ($)    
Low Bid ($)
 
First Quarter ended March 31, 2010
   
$
3.22
   
 
0.52
 
Fourth Quarter ended December 31, 2009
   
 
3.46
     
1.15
 
Third Quarter ended September 30, 2009
     
1.86
     
0.71
 
Second Quarter ended June 30, 2009
     
2.00
     
0.51
 
From March 11 to  March 31, 2009
     
1.45
     
0.25
 
 
 

 
Holders

As of April 16, 2010, there were approximately 62 holders of record of our common stock. This does not reflect the number of persons or entities who held stock in nominee or "street" name through various brokerage firms.

Dividends

To date, we have never declared or paid any cash dividends on our capital stock.  We currently intend to retain any future earnings for funding growth and therefore, do not expect to pay any dividends in the foreseeable future. Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion. 

Transfer Agent and Registrar
 
Our independent stock transfer agent is Corporate Stock Transfer, Inc. at 3200 Cherry Creek South Drive, Suite 430, Denver, Colorado 80209.
 

CONDITION AND RESULT OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form S-1 . The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

OVERVIEW
 
Operating through NXT Nutritionals, we are engaged in developing and marketing of a proprietary, patent-pending, all–natural, healthy sweetener sold under the brand name SUSTA™ and other food and beverage products. SUSTA™ is being sold as a stand-alone product and it is the common ingredient for all of our products.  We also market and sell Healthy Dairy® which is enhanced by the revolutionary taste and nutritious ingredients contained in SUSTA™. Our mission is to provide consumers with unique, healthy, delicious products that promote a healthier lifestyle and combat obesity and diabetes.
 
 
We are focused on expanding the distribution of SUSTA™ to the retail marketplace nationwide, expanding the Healthy Diary® product line from the east coast to nationwide reach, and eventually expanding the Healthy Dairy® to include product lines such as cup yogurt and ice cream.   We will continue to seek additional distributors of our products to expand the access to our products to our end customers.

We have undertaken an aggressive marketing campaign and trial program.  Additionally, more traditional levers in the retail sales channel like advertising, trade incentives, price promotions, couponing, and demonstrations are being employed.  We are targeting consumer food and beverage companies to incorporate SUSTA™ into their products to provide a healthy alternative to sugar, artificial sweeteners and other natural sweeteners that do not provide the nutritional and health benefits of SUSTA™.  We also plan to continue to utilize our several high profile celebrity spokespersons, including Shaquille O’Neal, Eddie George, and Blair Underwood, to help drive awareness of SUSTA™ by appearing in commercials, making public appearances, heading our cause marketing campaign and appearing on popular television shows.
 
We have funded our operations to date on private placement offerings of our securities.  On August 27, 2009, we completed a private offering of an aggregate subscription amount of $3,173,000 through the issuance of investment units to certain accredited investors.  Each investment unit had a purchase price of $50,000 and consisted of (i) a three year Debentures in the amount of sixty five thousand dollars ($65,000) convertible into shares of our common stock at a conversion price of $.40 per share, (ii) five year Series A Warrants to purchase 100% of the common stock underlying the Debenture at an exercise price of $.40 per share, and (iii) five year Series B Warrants to purchase 100% of the common stock underlying the Debenture at an exercise price of $0.60 per share.
 
On February 26, 2010, we closed on a private placement offering by raising total gross proceeds of $5,667,743, through the sale of (i) 0% Original Issue Discount Senior Secured Convertible Notes convertible into shares of our common stock at a conversion price of $1.00 per share, and (ii) a number of five-year Warrants exercisable into a number of shares of common stock equal to 100% of the number of common shares underlying the Notes at an exercise price of $1.25 per share to certain accredited investors. The principal amount of each Note is 115% of the subscription proceeds received.  
 
The Company continues to explore potential expansion opportunities in the industry in order to boost sales, while leveraging distribution systems to consolidate lower costs.
 
 
RESULTS OF OPERATIONS
 
The following table sets forth the summary income statement for the years ended December 31, 2009 and 2008:
 
   
Year ended
 
   
December 31,
2009
   
December 31,
2008
 
Sales - Net of slotting fees and discounts 
 
$
905,728
   
$
               2,265,851
 
Gross Profit (Loss)
 
$
(63,624
 
$
391,855
 
General and Administrative Expenses
 
$
6,906,598
   
$
1,200,719
 
Interest Expense
 
$
(1,016,718
)
 
$
                 (55,395
)
Loss on Extinguishment of debt   $ (15,603,501    -  
Registration rights expense   (362,453 )   $  -  
Net Loss
 
$
(23,952,894
)
 
$
(864,259
)
Loss per Share - Basic and Diluted
  $
(0.66
)
  $
(0.03
)

For the years ended December 31, 2009 and 2008, the Company reported a net loss of $(23,952,894), or $(0.66) per share and a net loss of $(864,259) or $(0.03) per share, respectively. The increase in net loss between the years ended December 31, 2009 and 2008 was due to a decrease in Sales, net of slotting fees and discounts, in the amount of $1,360,123 coupled with an increase in general and administrative expenses of $5,705,879, an increase in interest expense of $961,323, and extinguishment of debt of $15,603,501
 
Revenue: Sales decreased approximately 60% to $905,728 during the year ended December 31, 2009, down from $2,265,851 during the year ended December 31, 2008.  The decrease is primarily attributable to low sales from two of the Company’s major distributors, cumulatively accounting for over $730,000 of the fluctuation from the prior year. The single serve yogurt smoothie market has declined significantly  and the Company’s decline in sales reflects this decline as we had gross yogurt smoothie sales of approximately $2.9 million for the year ended December 31, 2008 as compared to approximately $0.9 million in gross yogurt smoothie sales for the year ended December 31, 2009.  The Company also launched the natural sweetener product (SUSTA) on April 30, 2009.  The Company has experienced limited sales (approximately $0.2 million)  on the SUSTA product.
 
Gross Profit: Gross profit decreased significantly during the year ended December 31, 2009 as compared to the year ended December 31, 2008.  This decrease is primarily attributable to offering significant discounts and favorable terms with our distributors and customers in an effort to maintain and increase brand awareness, and increased slotting fees.  The Company also realized an increase in the cost of raw materials during the year ended December 31, 2009 as compared to the year ended December 31, 2008.
 
General and Administrative Expense: General and administrative expenses increased 475% during the year ended December 31, 2009, up to $6,906,598 from $1,200,719 during the year ended December 31, 2008.  The increase in general and administrative expenses is primarily attributable to a significant increase in professional and consulting fees associated with the Company complying with SEC reporting requirements , stock based compensation to consultants and celebrities endorsements. This increase is comprised of stock based compensation of $727,000 rewarded for consulting  services provided by third party consultants, and $750,000 to new Board members of the Company, an increase $292,000 for accounting and auditing services, an increase of $145,000 for legal services, and an approximate increase of $128,500 for services of a stock transfer agent and printing fees. The Company also issued stock based compensation to two celebrities for the use of their name and likeness during 2009, resulting in a significant expense of $2,720,000.
 
Other Income and Expenses: Other income and expenses increased by approximately $(16,927,277) to $(16,982,672) for the year ended December 31, 2009 as compared to $(55,395) for the year ended December 31, 2008. The increase is primarily attributable to the loss on extinguishment of ($15,603,501)  recognized when bridge investors converted into the new offering which was closed on August 27, 2009, liquidated damages incurred ($362,453) , to the interest on the Company’s notes to related parties, interest accrued on convertible notes, amortization of debt discount of the discounts incurred on the issuance of the convertible notes, and amortization of debt issuance costs incurred on the raise of convertible notes.
 
Provision for Income Taxes: Deferred income taxes are determined based on the tax effect of items subject to differences in book and taxable income. The Company had no income tax provision for the years ended December 31, 2009 and 2008. There is approximately $19,208,000 of net operating loss carry-forwards, which expire in 2029. See Note 8 of the 2009 and 2008 consolidated  financial statements for tables and a reconciliation of the provision for income taxes to the statutory federal rate (34%) for continuing operations.
 
 
Going Concern: As shown in the accompanying financial statements, the Company incurred a net loss of $(23,952,894) during the year ended December 31, 2009, and as of that date, the Company’s current liabilities exceeded its current assets by $1,535,693. Those factors raise substantial doubt about the Company’s ability to continue as a going concern.
 
Management of the Company plans to address this concern by doing the following:
  
Raising additional capital convertible note offerings
   
Securing favorable raw material and manufacturing rates with our vendors
   
Continuing to increase brand awareness for Healthy Dairy Yogurt Smoothies and the SUSTA Brand.
 
The ability of the Company to continue as a going concern is dependent on its ability to do all or most of the above listed steps. As illustrated above, the Company has already been successful in setting its plan in action and looks forward to further progress as the year progresses.
 
The following table sets forth the summary income statement for the three months ended March 31, 2010 and 2009:
 
   
Three months ended
 
   
March 31, 2010
   
March 31, 2009
 
Revenue – net of slotting fees and discounts
 
$
108,734
   
$
       202,910
 
Gross Profit (Loss)
 
$
(11,990
 
$
      (43,695
Operating Expense
 
$
849,770
   
$
    1,525,248
 
Other Income (Expense)
 
$
(2,376,567
)
 
$
      (33,268)
)
Net Loss
 
$
(3,238,327
)
 
$
(1,602,211
)
Earnings (Loss) per Share
 
$
(0.08
)
 
$
         (0.05
 
For the three months ended March 31, 2010 and 2009, the Company reported a net loss of $(3,238,327), or $(0.08) per share and net loss of $(1,602,211) or $(0.05) per share, respectively. The change in net loss between the three months ended March 31, 2010, 2010 and 2009 was primarily attributable to following significant events:  During the three months ended March 31, 2009, the Company completed a reverse acquisition with a public shell company.  The Company incurred significant fees to complete this transaction.  The Company also issued approximately $943,000 in stock based compensation during the three months ended March 31, 2009 as compared to $211,150 during the comparable three months ended March 31, 2010.  Other income and expenses increased dramatically as a result of the fair market accounting associated with embedded derivatives in the 2010 secured convertible note offering.  The Company also incurred a significant increase in interest expense during the three months ended March 31, 2010 as compared to the comparable three months ended March 31, 2009.  This is a result of a significant increase in convertible debt outstanding.
 
Revenue: Sales decreased approximately 46% to $108,734 during the three months ended March 31, 2010, down from $202,910 during the corresponding three months ended March 31, 2009.  This decrease of approximately $192,000 is due to low product awareness and demand in the current market.  The decrease is primarily attributable to low sales from the Company’s yogurt smoothie product during 2010 as compared to 2009.  The Company also launched the natural sweetener product (SUSTA) on April 30, 2009.  The Company had experienced limited sales on the SUSTA product during 2009, but approximately 55% or $60,000 of 2010 sales was derived from the natural sweetener product.
 
Gross Profit: Gross profit decreased significantly during the three months ended March 31, 2010 as compared to the three months ended March 31, 2009.  This decrease is primarily attributable to offering significant discounts and favorable terms with our distributors and customers in an effort to maintain and increase brand awareness as well.  The Company also realized an increase in the cost of raw materials during the three months ended March 31, 2010 as compared to March 31, 2009.
 
General and Administrative Expense: General and administrative expenses decreased 44% during the three months ended March 31, 2010, as compared to the three months ended March 31, 2009.  During the three months ended March 31, 2009, the Company completed a reverse acquisition with a public shell company.  The Company incurred significant fees to complete this transaction.  The Company also issued approximately $943,000 in stock based compensation during the three months ended March 31, 2009 as compared to $211,150 during the comparable three months ended March 31, 2010.
 
Other Income and Expenses: Other income and expenses increased by approximately 2,343,299 to $(2,376,567) for the three months ended March 31, 2010 as compared to $(33,268) during the corresponding three months ended March 31, 2009.  Other income and expenses increased dramatically as a result of the fair market accounting associated with embedded derivatives in the 2010 secured convertible note offering.  The Company also incurred a significant increase in interest expense during the three months ended March 31, 2010 as compared to the comparable three months ended March 31, 2009.  This is a result of a significant increase in convertible debt outstanding.
 

Going Concern:  As shown in the accompanying financial statements, the Company incurred a net loss of $(3,238,327) during the three months ended March 31, 2010, and as of that date, the Company’s current liabilities exceeded its current assets by $3,662,447. Those factors raise substantial doubt about the Company’s ability to continue as a going concern. Management of the Company plans to address this concern by doing the following:
 
·  
Raising additional capital convertible note offerings
  
·  
Securing favorable raw material and manufacturing rates with our vendors
 
·  
Continuing to increase brand awareness for Healthy Dairy Yogurt Smoothies.
 
The ability of the Company to continue as a going concern is dependent on its ability to do all or most of the above listed steps. As illustrated above, the Company has already been successful in setting its plan in action and looks forward to further progress as the year progresses.

Liquidity and Capital Resources
 
The following table summarizes total current assets, liabilities and working capital at December 31, 2009 compared to December 31, 2008.
 
   
Year ended
       
   
December 31,
2009
   
December 31,
2008
   
Increase/(Decrease)
 
Current Assets
 
$
291,206
   
$
582,925
   
$
(291,719
Current Liabilities
 
$
1,826,899
   
$
2,286,851
   
$
(459,952
)
Working Capital (Deficit)
 
$
(1,535,693
)
 
$
(1,703,926
)
 
$
(168,233
 
As of December 31, 2009, we had a working capital deficit of $1,535,693 as compared to a working capital deficit of $1,703,926 as December 31, 2008, a decrease of $168,233. The decrease is primarily a result of the Company incurring increased expenses for professional and consulting fees.  The Company’s sales have decreased by approximately $1,360,000 and the corresponding accounts receivable balance has decreased by $135,527. The decrease is also a result of a decrease in related party loans and convertible notes along with an decrease in cash of $205,744, an decrease in accounts receivable of $135,527, an increase in inventory of $82,552, and a decrease of prepaid expenses of $33,000. 
 
Net cash used for operating activities for the years ended December 31, 2009 and 2008 was $(2,115,070) and $(837,546), respectively. The Net Loss for the years ended December 31, 2009 and 2008 was $(23,952,894) and $(864,2 59 ) respectively.
 
Net cash obtained through all financing activities for year ended December 31, 2009 was $1,909,326 as compared to $1,042,925 for the year ended December 31, 2008.
 
Management anticipates being able to fund the Company’s foreseeable liquidity requirements through the $5.7M secured convertible note offering the company closed in February 2010. The Company continues to explore potential expansion opportunities in the industry in order to boost sales, while leveraging distribution systems to consolidate lower costs.
 
The following table summarizes total current assets, liabilities and working capital at March 31, 2010 compared to December 31, 2009.
 
   
March 31, 2010
   
December 31, 2009
   
Increase/Decrease
 
Current Assets
 
$
4,306,111
   
$
291,206
   
$
4,014,905
 
Current Liabilities
 
$
7,968,558
   
$
1,826,899
   
$
6,141,659
 
Working Capital (Deficit)
 
$
(3,662,447
)
 
$
(1,535,693
)
 
$
(2,126,754
)
 
As of March 31, 2010, we had a working capital deficit of $3,662,447 as compared to a working capital deficit of $1,535,693 as of December 31, 2009, a decrease of $(2,126,754).
 
The decrease is primarily a result of the Company incurring increased expenses for professional and consulting fees.  The Company’s sales have decreased and the corresponding accounts receivable balance has decreased significantly. The Company also recorded a significant current liability for the embedded derivatives within the secured convertible note offering.
 
 
Net cash used for operating activities for the three months ended March 31, 2010 and 2009 was $(741,205) and $(627,429), respectively.
 
Net cash obtained through all financing activities for the three months ended March 31, 2010 was $4,725,755 as compared to $1,113,127 for the three months ended March 31, 2009.
 
The Company continues to explore potential expansion opportunities in the industry in order to boost sales, while leveraging distribution systems to consolidate lower costs.
 
Recent Accounting Pronouncements
 
In April 2009, the FASB issued guidance now codified as FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” which amends previous guidance to require disclosures about fair value of financial instruments in interim as well as annual financial statements in the current economic environment. This pronouncement was effective for periods ending after June 15, 2009. The adoption of this pronouncement did not have a material impact on the Company’s business, financial condition or results of operations; however, these provisions of FASB ASC Topic 820 resulted in additional disclosures with respect to the fair value of the Company’s financial instruments.
 
In May 2009, the FASB issued guidance now codified as FASB ASC Topic 855, “Subsequent Events,” which establishes general standards of accounting for, and disclosures of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This pronouncement was effective for interim or fiscal periods ending after June 15, 2009. The adoption of this pronouncement did not have a material impact on the Company’s business, results of operations or financial position; however, the provisions of FASB ASC Topic 855 resulted in additional disclosures with respect to subsequent events.
 
In June 2009, the Financial Accounting Standards Board (FASB) issued guidance now codified as FASB Accounting Standards Codification (ASC) Topic 105, “Generally Accepted Accounting Principles,” as the single source of authoritative non-governmental U.S. GAAP. FASB ASC Topic 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the FASB Codification will be considered non-authoritative. These provisions of FASB ASC Topic 105 were effective for interim and annual periods ending after September 15, 2009 and, accordingly, were effective for the Company for the current fiscal reporting period. The adoption of this pronouncement did not have an impact on the Company’s business, financial condition or results of operations, but will impact the Company’s financial reporting process by eliminating all references to pre-codification standards. On the effective date of FASB ASC Topic 105, the Codification superseded all then-existing non-SEC accounting and reporting standards, and all other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative.
 
In January 2010, the Financial Accounting Standards Board ("FASB") issued updated guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. This update also requires a reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, this update clarifies certain existing disclosure requirements. For example, this update clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities rather than each major category of assets and liabilities. This update also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. This update will become effective for the Company with the interim and annual reporting period beginning January 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for the Company with the interim and annual reporting period beginning January 1, 2011. The Company will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update will not have a material effect on the Company's consolidated financial statements. 
 
 
In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 amends ASC 820, “Fair Value Measurements” ("ASC 820") to require a number of additional disclosures regarding fair value measurements. The amended guidance requires entities to disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The ASU also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The amended guidance was effective for financial periods beginning after December 15, 2009, except the requirement to disclose Level 3 transactions on a gross basis, which becomes effective for financial periods beginning after December 15, 2010. ASU 2010-06 did not have a significant effect on the Company’s consolidated financial position or results of operations.

Critical Accounting Policies
 
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.  
 
Our significant accounting policies are summarized in Note 2 of our consolidated  financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.
 
We believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:
 
Use of Estimates, Going Concern Consideration – The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.  Among the estimates we have made in the preparation of the financial statements is an estimate of our projected revenues, expenses and cash flows in making the disclosures about our liquidity in this report.  As an early stage company, many variables may affect our estimates of cash flows that could materially alter our view of our liquidity and capital requirements as our business develops.  Our consolidated financial statements have been prepared assuming we are a “going concern”.  No adjustment has been made in the consolidated financial statements which could result should we be unable to continue as a going concern.
 
Share-Based Compensation - US GAAP requires public companies to expense employee share-based payments (including options, restricted stock units and performance stock units) based on fair value.  We must use our judgment to determine key factors in determining the fair value of the share-based payment, such as volatility, forfeiture rates and the expected term in which the award will be outstanding.

Derivative Financial Instruments - Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.
 
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

Beneficial Conversion Features - For convertible debt issued in 2009, the convertible feature of the convertible notes (See Note 5) indicated a rate of conversion that was below market value. As a result, the Company recorded a "beneficial conversion feature" ("BCF") and related debt discount.

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount from the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt. Upon issuance, the convertible debt instruments had an effective conversion rate per share in excess of the market price per share.

Revenue recognition - The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104 for revenue recognition and records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured.  There is no stated right of return for products.   Sales are recognized upon shipment of products to customers.
 
Sales are recognized upon shipment of products to customers. The Company allows deductions in the form of credits for products unsold during its shelf life which is on average 3 to 4 months. The Company’s reserve for accounts receivable takes these potential future credits into consideration.   Expenses such as slotting fees, sales discounts, and reclamation are accounted for as a direct reduction to revenues.
 
 
OFF-BALANCE SHEET ARRANGEMENTS:
 
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).
  
 
On February 12, 2009, we dismissed Gately & Associates, LLC ("Gately") as our independent registered public accounting firm following the change in control of the Company on the closing of the Share Exchange on February 12, 2009. The Company engaged Gately to audit its financial statements for the period from April 25, 2006 (inception) to December 31, 2007. The decision to change accountants was approved and ratified by the Company’s Board of Directors. The report of Gately on the financial statements of the Company for the period from April 25, 2006 (inception) ended December 31, 2007 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principle. Additionally, during period from the Company’s inception (April 25, 2006) to December 31, 2007, there were no disagreements with Gately on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
 
While Gately was engaged by the Company, there were no disagreements with Gately on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure with respect to the Company, which disagreements if not resolved to the satisfaction of Gately would have caused it to make reference to the subject matter of the disagreements in connection with its report on the Company’s financial statements for period from April 25, 2006 (inception) to December 31, 2007.
 
We engaged Berman & Company P.A. as the Company’s independent registered public accounting firm as of February 12, 2009.


Directors and Executive Officers

The following table sets forth the names and positions of our new executive officers and directors as of April 7, 2010. Executive officers are elected annually by our board of directors. Each executive officer holds his office until he resigns, is removed by the Board, or his successor is elected and qualified. Directors are elected annually by our stockholders at the annual meeting. Each director holds his office until his successor is elected and qualified or his earlier resignation or removal.
 
Name
Age
Position
Date of Appointment
Francis McCarthy
63
Director, President, Secretary and Chief Executive Officer
February 12, 2009
       
David Briones
34
Chief Financial Officer
February 12, 2009
       
Mark A. Giresi
52
Director and Chief Operating Officer
February 12, 2009
       
Richard  M. Jordan
55
Director, Executive Vice President and General Manager
February 12, 2009
       
Theodore Mandes, II
61
Director
February 12, 2009
       
David Deno
52
Director
April 3, 2009
       
Dr. Paul S. Auerbach
59
Director
June 3, 2009
       
Ann McBrien
50
Director
October 19, 2009
 
 
The following summarizes the occupation and business experience for our officers, directors, key employees and advisory board:
 
Francis (Michael) McCarthy, President, Secretary, Chief Executive Officer/ Director
 
NXT Nutritionals, Inc. is led by entrepreneur and food and beverage industry veteran Francis McCarthy, an executive with over 25 years of experience in the sector. He is the former Vice President of Pepsi-Cola’s Fountain Solutions from 1992 to 1995. While at Pepsi, he was responsible for the development and integration of their Citrus Hill juice products. Michael was also instrumental in the negotiation and subsequent integration of Hawaiian Punch into the Pepsi-Cola system. The results of this assimilation increased fountain sales more than five hundred percent. He was also a key component in a national sales effort that was successful in landing several large national accounts. He was also part of a special acquisition team that was working to increase Pepsi-Cola’s fountain presence.
As an entrepreneur, Mr. McCarthy has been the driving force behind the development of numerous beverage products. He was responsible for the development of Juice Creations, a product that was successfully launched in Massachusetts and then expanded nationally. After selling his business, Juice Creations, to Pepsi-Cola, Mr. McCarthy built the Juice Creations product line into a $63 million business in the first year after Pepsi Cola’s acquisition.
 
After his career at Pepsi-Cola, from 1996 to 2001 he was instrumental in the growth of Al’s beverage Company from a small independent manufacturer to one of the largest independent Royal Crown Cola fountain manufacturers in the United States. In his position as Chief Operating Officer  of Al’s Beverage Company, Mr. McCarthy was responsible for building and operation of one of the most modern independent fountain plants in the country.
 
Mr. McCarthy continued to work as an independent consultant for Proctor & Gamble and Pepsi-Cola from 2001until 2003, when he began work with NXT, LLC and Healthy Dairy, LLC, the subsidiaries of NXT Nutritionals.
 
David Briones, Chief Financial Officer
 
Since January 2006 , Mr. Briones has managed the Public Company and Hedge Fund practices at Bartolomei Pucciarelli, LLC (“BP”).  Within that capacity, Mr. Briones performs audit services, outsourced CFO functions, and/or consults clients through difficult SEC comment periods particularly through application of complex accounting principles for a vast public company client base.  BP is a registered firm with the Public Company Accounting Oversight Board.  BP is an independent member of the BDO Seidman Alliance.

Mr. Briones has also served as the chief financial officer of Clear-Lite Holdings, Inc. since August 3, 2009.  Prior to joining BP, Mr. Briones was an auditor with PricewaterhouseCoopers LLP in New York, New York.  Mr. Briones specialized in the financial services group, and most notably worked on the MONY Group, Prudential Financial, And MetLife initial public offerings.
 
Mr. Briones has a Bachelor of Science in Accounting from Fairfield University, Fairfield, Connecticut.  David's professional interests are complemented by a strong commitment to philanthropy and humanitarian causes. His volunteer efforts have benefited such organizations as Habitat for Humanity, New York Cares and Junior Achievement.

Mark A. Giresi, Chief Operating Officer, General Counsel and Director
 
Mark A. Giresi is a retail executive with almost 25 years of experience in various operations and legal roles in the United States and internationally. From September 2007 through February 2008 , he served as Executive Vice President, for Limited Brands, Inc., a $9 billion dollar specialty retail business trading under the Victoria’s Secret, Bath & Body Works, White Barn Candle Co., and Henri Bendel brands. In that role, he led the development of the Company’s International growth strategy and the day-to-day management of the growth of Victoria’s Secret and Bath & Body Works outside of the United States.  Between May 2005 and August 2007 he served as Executive Vice President of Retail Operations, responsible for the Company’s Real Estate, Store Design and Construction, Visual Merchandising, Store Operations, and Loss Prevention and Brand Protection functions.  He was on the Executive Committee of the Company, responsible for its strategy and the overall business performance of its branded specialty retail businesses. Mr. Giresi joined Limited Brands in February, 2000 as Vice President of Store Operations. From August, 2001 until May, 2005 he served as Senior Vice President, Chief Stores Officer for the Company’s almost 4,000 retail stores.
 
 
Prior to joining Limited Brands, Mr. Giresi was Senior Vice President of U.S. Franchise Operations and Development for Burger King Corporation, responsible for the restaurant operations and support to almost 8,000 franchise-owned and operated stores together with all real estate investments in the U.S. business.  From 1993 through 1998 he held the position of Senior Vice President, Worldwide General Counsel and Secretary for Burger King.  During that time, he was also a member of the Board of Directors of Restaurant Services, Inc., the independent purchasing cooperative for the U.S. Burger King System.  He began his career with Burger King as a real estate attorney in 1985 and has published numerous articles and spoken on various franchise and intellectual property law topics. Mr. Giresi was a member of the first United States – South Africa Commercial Law Delegation established by the United States Department of Commerce and the government of South Africa.
 
Mr. Giresi has served on several philanthropic and business association boards, including the Board of Directors of the Beacon Council, the business development agency for Miami-Dade County, Florida, the Miami Philharmonic, the International Franchise Association and the Boys and Girls Clubs of Columbus, Ohio where he served as the Treasurer and a member of the Executive and Human Resources Committees. Since 2005 he has served on the Board of Directors of UFood Grille, a publicly-traded, franchised restaurant business, and since 1995 on the audit committee of Fiduciary Trust International of the South, an investment management firm.
  
Mr. Giresi is a past recipient of the Italian-American businessman of the year by the National Italian American Foundation in South Florida. In 2004, he received the Champions Award from Safe Horizons, a leading domestic violence prevention organization in New York City.  He is an attorney at law of the State of New Jersey. He earned a law degree in 1983 from Seton Hall University and a Bachelor of Science degree in accounting in 1980 from Villanova University.  

Richard M. Jordan, Executive Vice President, General Manager and  Director

Richard Jordan is a second-generation member in the food industry, now with over twenty four years experience. He received a Bachelor of Science Degree in Advertising and Marketing from Arizona State University, and holds a Masters Degree from Cornell University in Business and Supermarketing.
 
After graduating from college, Richard began his career in the food industry with Nabisco Foods, Inc. After three years with Nabisco, Richard was promoted through various positions, achieving the position of Sales Manager, was honored as Salesman of the year for Nabisco Brands and served as assistant to the Vice President of Sales and Marketing.
 
In 1983 Richard joined The New York State Food Merchants Association, a lobbying and trade relations firm, accepting the position of Director of Trade Relations. In 1987 he was promoted to the office of Executive Vice President and General Manager,  he held this  position until 1991.
 
Richard then served at Jordan Associates Inc., a food brokerage firm, where he oversaw the Northeast and Middle Atlantic States. Since 2005 Mr . Jordan was Director of Sales for Healthy Dairy, LLC, now a wholly owned subsidiary of NXT Nutritionals, Inc. In addition to being past President of The Catholic Institute of the Food Industry, Richard chairs a committee on the Food Industry for Covenant House. He also sits on the advisory committee for the Deborah Heart and Lung Foundation and the Calvary Hospital.
 
Theodore Mandes, II, Director
 
Theodore Mandes, II is an experienced entrepreneur, executive and investor. Mr. Mandes played professional golf until 1975, and then entered the business world as an account executive in the ladies apparel business. After a successful stint in New York, he founded Mandes and Associates. It was during this time that Mr. Mandes honed his marketing skills to make his company one of the largest agents to the trade. During his career in the apparel business, Mr. Mandes developed divisions of Federated Department Stores, May co. JC Penny and other multiple store groups into multi-million dollar accounts for many of the major wholesale companies that his firm represented.
 
 
As an investor, Director and entrepreneur, Mr. Mandes has consistently recognized and understood trends well ahead of the rest of the market, from new innovations in apparel to developing inserts and needs for diabetic patients with conditions like peripheral neuropathy.
 
In 1994 , he founded Bioform, Inc. with Stephen Warner, a pedorthic foot care company that dealt with orthopedic foot problems but also addressed the needs of diabetics. While developing this opportunity, the urgent need to address the alarming increase in the incidence of obesity and diabetes in the United States became apparent to Mr. Mandes.
 
Mr. Mandes sits on the Board of Directors of the Raymond F. Kravis Center and the Palm Beach Counties performing arts center. He also developed and chairs the Palm Beach Wine Auction, the most productive fundraising event for the performing arts center's award winning education department. His mission "is to further advance the educational experience of our youth - it is more than just a cause it is an ongoing obligation." Over 85,000 students have attended live performance camps and other workshops every year for the past 16 years.
 
David Deno, Director

Since December of 2009 , David Deno has served as the Chief Financial Officer of the international division of Best Buy Co., Inc., a specialty retailer of consumer-electronics and related products and services, since December 2009. Prior to that he was a Managing Director with Obelysk Capital, a private equity firm, from May 2009 to December 2009. From January 2008 to February 2009, Mr. Deno was the President and then CEO of Quiznos LLC, an operator of quickserve restaurants. From June 2006 to February 2009, he was a Managing Director with CCMP Capital Advisors, LLC, a private equity firm . Prior to this, he had a 15-year career with YUM! Brands, Inc. where between 1999 and 2004 he served first as Chief Financial Officer and later as Chief Operating Officer . Mr. Deno was instrumental in growing YUM Brands and building shareholder value after its spinoff from PepsiCo in 1997.  Mr. Deno also held senior positions in YUM's International and Pizza Hut divisions. Prior to joining YUM, David worked for Burger King Corporation for 8 years in various finance, real estate, and operations assignments.
 
David Deno has also served on the Board of Directors for Peet’s Coffee since August 2006.
 
Dr. Paul S. Auerbach, Director

Since 2005, Dr. Paul S. Auerbach has served as Professor of Surgery in the Division of Emergency Medicine at Stanford University School of Medicine.  Between 2003 through 2004, Dr. Auerbach served as the Chief Operating Officer of KAI Pharmaceuticals, Inc., a developmental and discovery pharmaceutical company.  From 1999 through 2003 he was a partner at Delphi Ventures, a venture capital firm which specializes in early-stage healthcare investing. Between 1997 and 1999, Dr. Auerbach was the Chief Operating Officer of MedAmerica, a medical practice support and consulting company.  Dr. Auerbach currently serves as a member of the Board of Directors for Pacific Partners Management Services, Inc. From 2007 through 2009, Dr. Auerbach was a Member on the Board of Directors for VitalWear and from 2008 through 2009, Dr. Auerbach also served on the Board of Directors for Med-Vantage.
 
In addition Dr. Auerbach is a founder and past president of the Wilderness Medical Society, editor of the definitive medical reference text Wilderness Medicine, 5th Edition, and author of Medicine for the Outdoors, which is a leading book on outdoor health for laypersons. Dr. Auerbach practices emergency medicine, teaches, performs research, and advises numerous agencies and organizations, including serving as an advisory board member to the AARP “Fat 2 Fit” Community Challenge. Dr. Auerbach has been hailed as a Hero of Emergency Medicine by the American College of Emergency Physicians. He also serves on the National Medical Committee for the National Ski Patrol. Dr. Auerbach is a recipient of numerous awards including the DAN America Award from the Divers Alert Network, Outstanding Contribution in Education Award from the American College of Emergency Physicians, a NOGI Award in 2006 from the Academy of Underwater Arts and Sciences, Diver of the Year for Science in 2008 from Beneath the Sea, and DAN/Rolex Diver of the Year in 2009.
 
Dr. Auerbach is a graduate of Duke University and Duke University School of Medicine, as well as the Stanford Graduate School of Business.

Ms. Ann McBrien, Director
 
Ms. McBrien has over 25 years of experience as an entrepreneur, and as a leader in national and international organizations.   Ms. McBrien was the first female Vice President of Sales in Procter & Gamble history (1999). Ms. McBrien was a Vice President for Global Operations and Global Health Care Sales for Procter & Gamble for 20 years.  She was responsible for the development of global pricing and promotion plans linking the largest customers and brands with a winning strategy. She was responsible for over $8 billion in sales and over 300 people globally.  She also led the development of merchandising programs for global customers and led major global restructure of Customer Business Development organization.
 
 
From 2009 to the present, Ms. McBrien has worked as a Tremor Consultant with Procter & Gamble, connecting corporations with word of mouth marketing.  Since 2008, Ms. McBrien has also worked for AM Marketing & Sales Concepts, LLC, where she coaches senior managers in delivery of concepts and ideas, strategic plan development and sales presentation.
 
From  2002 to 2006 , Ms. McBrien co-founded OT OverTime, LLC, where she initiated the acquisition of a brand from Procter & Gamble, secured funding to launch a line of products nationally, and secured sales to Target, Kroger and regional chains. The company’s first year sales were over $2 million.
 
Ms. McBrien also served on the board of directors of Marriott Grande Ocean from 2001 through 2007.
 
Ms. McBrien received her BS in finance at the University of Illinois.  She was part of the Mortar Board Honor program, president of Illini Pride and president of Kappa Kappa Gamma.  
 
Medical Advisory Board

Dr. Paul S. Auerbach, Chairman

See Dr. Auerbach’s biography information above.

James R. Gavin III, MD, PhD
 
Dr. James R. Gavin is clinical professor of medicine at Emory University School of Medicine in Atlanta, Georgia, and Clinical Professor of Medicine at the Indiana University School of Medicine, Indianapolis, Indiana.  He currently serves as Chief Executive Officer and Chief Medical Officer of Healing Our Village, Inc.  Prior to this, he served as president and chief executive officer of MicroIslet, Inc., San Diego, California, from January 2006 to July, 2007, and was president of the Morehouse School of Medicine in Atlanta from 2002-2004. He served as senior scientific officer at the Howard Hughes Medical Institute (HHMI) from 1991 to 2002 and as director of the HHMI–National Institutes of Health Research Scholars Program from 2000 to 2002. Before joining the senior staff of HHMI, Dr Gavin was a professor and chief of the Diabetes Section, acting chief of the Section on Endocrinology, Metabolism, and Hypertension, and William K. Warren Professor for Diabetes Studies at the University of Oklahoma Health Sciences Center, Oklahoma City, Oklahoma. He previously served as an associate professor of medicine at Washington University School of Medicine in St. Louis, Missouri. Dr Gavin served as a lieutenant commander in the US Public Health Service from 1971 to 1973 and continues to serve as a reserve officer.
 
Dr Gavin belongs to a number of organizations, including the Institute of Medicine of the National Academy of Sciences, the American Diabetes Association (ADA), the American Association of Clinical Endocrinologists (AACE), the Endocrine Society, the American Society of Clinical Investigation, the American Association of Physicians, the Alpha Omega Alpha Medical Honor Society, the Sigma Pi Phi Leadership Fraternity, the 100 Black Men of Atlanta, and the Atlanta Rotary Club. He is a past president of the ADA and was voted Clinician of the Year in Diabetes by the ADA in 1991. He has served on many advisory boards and on the editorial boards of the American Journal of Physiology and the American Journal of Medical Sciences. He is on the board of trustees for Emory University, Livingstone College, and is Trustee Emeritus for the Robert Wood Johnson Foundation. In addition, he is national program director of the Harold Amos Faculty Development Program of the Robert Wood Johnson Foundation. Dr Gavin is Chairman Emeritus of the National Diabetes Education Program and a past member of the Board of Scientific Councilors for the Intramural Research Program of NIDDK at the NIH. He also serves as chairman of the Data Safety Monitoring Board for the VA Cooperative Diabetes Study (VADT).
 
Dr Gavin has published more than 200 articles and abstracts in such publications as Science, Journal of Applied Physiology, Diabetes, and the American Journal of Physiology. He is coauthor of two books: Healing Our Village: A Self-Care Guide for Diabetes Control (written with L. Coleman) and Dr. Gavin’s Health Guide for African Americans(written with S. Landrum). He hosted the “Powerpoint” health talk-radio show for public radio station WCLK, 91.9 FM, Atlanta from 2005-2006.

Among the many honors Dr Gavin has received are the Daniel Hale Williams Award, the E.E. Just Award, the Herbert Nickens Award, the Daniel Savage Memorial Award, the Emory University Medal for Distinguished Achievement, the Banting Medal for Distinguished Service from the ADA, the Distinguished Alumni Award from the Duke University School of Medicine, the F.C. Greenwood Award from the RCMI of NCRR at NIH and the Internist of the Year Award from the National Medical Association. He is also a recipient of the 2009 Living Legend in Diabetes Award from the American Association of Diabetes Educators.

Dr Gavin graduated from Livingstone College in Salisbury, North Carolina, with a degree in chemistry.  He earned his PhD in biochemistry from Emory University and his MD from Duke University School of Medicine, Durham, North Carolina. He completed his internship, residency and clinical fellowship training at Barnes Hospital of Washington University in St. Louis.
 
 
Employment Agreements
 
Employment Agreement with Mr. Giresi

On January 26, 2010, we entered into a three year employment agreement with Mark Giresi such that he will serve as our Chief Operating Officer. Pursuant to the agreement, Mr. Giresi will receive a monthly based compensation of Twenty Thousand Dollars ($20,000) payable in equal biweekly installment (the “Biweekly Installment”), provided, however, 50% of each Biweekly Installment shall be deferred and payable in its entirety on the earlier to occur of (1) the termination of the Employment Term or (2) a change in control, in addition to stock awards and stock options as set forth in the agreement.

In addition, pursuant to the employment agreement we agree to grant Mr. Giresi restricted stock awards (the “Stock Awards”) as follows:

(i) During the first year of Mr. Giresi’s initial employment term, we shall grant him on or before February 28, 2010 (A) 400,000 shares of our Common Stock of which 40,000 shall fully vest on July 1, 2010 and an additional 40,000 shares shall fully vest on the first day of each calendar month thereafter; (B) 500,000 shares of our Common Stock, of which 40,000 shall fully vest on May 1, 2011; an additional 40,000 shares shall vest on each of June 1, August 1, September 1, October 1, 2011; and the remaining 220,000 shares shall fully vest on December 1, 2011.

(ii) During the second year of the initial employment term, we shall grant Mr. Giresi on or before January 1, 2011 500,000 shares of Common Stock which shall fully vest on December 31, 2011.

(iii) During the third year of the initial employment, we shall grant Mr. Giresi on or about January 1, 2012 500,000 shares of Common Stock which shall fully vest on December 31, 2012.

Prior to December 1, 2011, the Stock Awards granted to Mr. Giresi shall be subject to a resale restriction as follows: (A) no more than 40,000 shares of the Stock Awards may be sold in any one month period and (B) no more than 10,000 shares of the Stock Award may be sold on any day during the Employment Term.  After that date, there will be no resale restriction imposed on Executive.  In the event of a change of control of the Company, this resale restriction shall no longer be in effect.
In addition to the Stock Awards, we shall also be eligible to participate in and to receive annual stock options pursuant to our Equity Incentive Plan in such amount as determined by the Board at a level commensurate with the Mr. Giresi’s position with us.

A copy of the employment agreement was filed as exhibit to a Form 8-K on January 27, 2010 and is incorporated herein by reference.
 
 
Employment Agreement with Francis McCarthy

On February 12, 2009, we entered into a three year employment agreement with Francis McCarthy such that he will serve as our President and Chief Executive Officer.  The employment agreement provides for an annual salary of $120,000, and bonuses as approved by the board of directors.  A copy of the employment agreement was filed as exhibit to a Form 8-K on February 12, 2009 and is incorporated herein by reference.
 
Employment Agreement with David Briones

On February 12, 2009, we entered into a two year employment agreement with David Briones such that he will serve as our Chief Financial Officer.  The Company also has a consulting agreement with Bartolomei Pucciarelli, LLC, a related party to Mr. Briones, to provide accounting and tax services pursuant to which Mr. Briones will receive a total of 200,000 of our common shares over a two year time period.  A copy of the employment agreement was filed on a Form 8-K on February 12, 2009 and is incorporated herein by reference.
 
Family Relationships
 
None.
 
Conflicts of Interest
 
Certain potential conflicts of interest are inherent in the relationships between our officers and directors, and us.
 
From time to time, one or more of our affiliates may form or hold an ownership interest in and/or manage other businesses both related and unrelated to the type of business that we own and operate. These persons expect to continue to form, hold an ownership interest in and/or manage additional other businesses which may compete with ours with respect to operations, including financing and marketing, management time and services and potential customers. These activities may give rise to conflicts between or among the interests of us and other businesses with which our affiliates are associated. Our affiliates are in no way prohibited from undertaking such activities, and neither we nor our shareholders will have any right to require participation in such other activities.
  
Further, because we intend to transact business with some of our officers, directors and affiliates, as well as with firms in which some of our officers, directors or affiliates have a material interest, potential conflicts may arise between the respective interests of us and these related persons or entities. We believe that such transactions will be effected on terms at least as favorable to us as those available from unrelated third parties.
 
With respect to transactions involving real or apparent conflicts of interest, we have adopted policies and procedures which require that: (i) the fact of the relationship or interest giving rise to the potential conflict be disclosed or known to the directors who authorize or approve the transaction prior to such authorization or approval, (ii) the transaction be approved by a majority of our disinterested outside directors, and (iii) the transaction be fair and reasonable to us at the time it is authorized or approved by our directors.
 
Term of Office
 
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. 
 
All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. We have not compensated our directors for service on our board of directors, any committee thereof, or reimbursed for expenses incurred for attendance at meetings of our board of directors and/or any committee of our board of directors. Officers are appointed annually by our board of directors and each executive officer serves at the discretion of our board of directors. We do not have any standing committees. Our board of directors may in the future determine to pay directors’ fees and reimburse directors for expenses related to their activities.
 
 
None of our officers and/or directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past five (5) years.
 
Involvement in Certain Legal Proceedings
     
To our knowledge, during the past ten (10) years, none of our directors, executive officers, promoters, control persons, or nominees has been:
 
§
the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
 
§
convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
 
§
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
 
§
found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.
  
The Audit Committee

Members: David Deno and Mark Giresi

We have a separately-designated standing audit committee established as contemplated by Section 10A of the Exchange Act. The board of directors has determined that Mr. Deno is an “audit committee financial expert”, as that term is defined by the SEC in Item 407(d) of Regulation S-K. Stockholders should understand that this designation is an SEC disclosure requirement relating to Mr. Deno’s experience and understanding of certain accounting and auditing matters, which the SEC has stated does not impose on the director so designated any additional duty, obligation or liability than otherwise is imposed generally by virtue of serving on the audit committee and/or the board of directors. The audit committee’s responsibilities include, among other things, (i) assisting the board of directors in its oversight of our compliance with all applicable laws and regulations, which includes oversight of the quality and integrity of our financial reporting, internal controls, and audit functions, and (ii) direct and sole responsibility for the appointment, retention, compensation, and monitoring of the performance of our independent registered public accounting firm.
 
Potential Conflicts of Interest

We are not aware of any current or potential conflicts of interest with any of our executives or directors.

Compliance With Section 16(A) Of The Exchange Act.
 
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and are required to furnish copies to the Company. To the best of the Company’s knowledge, any reports required to be filed were timely as of the date hereof.
 
 

 

The following table shows for the periods indicated, compensation awarded to or paid to, or earned by, our officer and director.
 
Name and
principal position
Year
 
Salary ($)
 
Bonus
($)
 
Stock
Awards
 
Option
Awards
($)
 
Non-Equity
Incentive Plan
Compensation
($)
 
Nonqualified
Deferred
Compensation
Earnings ($)
 
All Other
Compensation
($)
 
Total ($)
 
                                             
Francis McCarthy,
2009
 
$
121,250
 
-
   
-
 
-
   
-
 
-
 
$18,000
 
$
139,250
 
President, CEO 
2008
   
30,423
 
   
610,000(1)
 
  —
   
 
 
 
$
36,523
 
                                             
David Briones,
2009
 
$
 -
 
-
   
-
 
-
   
-
 
-
 
-
 
$
-
 
CFO (2)
2008
   
-
 
-
   
-
 
-
   
-
 
-
 
-
 
$
-
 
 
(1)  
On August 18, 2008, we issued 610,000 shares of our common stock valued at $.01 per share in the share exchange of the above mentioned officers and directors as compensation for founder services.
   
(2)  
The CFO’s accounting firm is paid cash for services rendered at a fixed rate of $39,000 per year and 200,000 shares of the Company’s common stock vesting 25,000 shares per quarter.  During the year ended December 31, 2009, the first 100,000 shares of the stock award vested.

Outstanding Equity Awards at Fiscal Year End

Currently, there are no outstanding equity awards.
 
Option Plan
 
Currently, there are no stock options and no common shares set aside for any stock option plan.
 
Director Compensation

Our directors will not receive a fee for attending each board of directors meeting or meeting of a committee of the board of directors. All directors will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with attending board of director and committee meetings.

Option Grants

We do not maintain any equity incentive or stock option plan.  Accordingly, we did not grant options to purchase any equity interests to any employees or officers, and no stock options are issued or outstanding to any officers.  We do, however, anticipate adopting a non-qualified stock option plan where we will be granting our officers options to purchase Common Shares pursuant to the terms of their employment agreements.  But, no such plan has been finalized or adopted.

The following table sets forth each person known by us to be the beneficial owner of five percent or more of our common stock, all directors individually and all of our directors and officers as a group. Except as noted, each person has sole voting and investment power with respect to the shares shown.
 
 
The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of  April 16, 2010 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possesses sole voting and investment power with respect to the shares shown. As of June 17 , 2010, we have  45,131,068 shares of Common Stock issued and outstanding.
 
 
 
 
Name
 
Number of Shares
Beneficially Owned (1)
   
Percent of Shares (2)
Francis McCarthy, President, CEO and Director (2)
   
4,136,000*
     
9.16
%
David Briones, CFO (2)
   
     
0.00
%
Richard M. Jordan, Director (2)
   
         250,000*
     
0.55
%
 David Deno, Director
   
975,000(3) 
     
2.11
 %
Mark A. Giresi, Chief Operating Officer and Director (2)
   
           1,008,750(4)
     
2.22
%
 Dr. Paul S. Auerbach, Director
   
243,750(5) 
     
0.54
Theodore Mandes, II, Director (2)
   
           1,065,000*
     
2.36
%
 Ann McBrien, Director
   
     
0.00
Officers and Directors as a Group (8)
   
           7,678,500
     
16.48
%
 
* Subject to a Lock-Up Agreement dated February 12, 2009, pursuant to which the stockholders have agreed not to sell or otherwise dispose of their shares of our Common Stock for a period of 18 months from the close of the Share Exchange Agreement on February 12, 2009.

 (1)  
A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days (such as through exercise of stock options or warrants). Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.
 
(2)  
For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of April 16, 2010.  For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of April 16, 2010 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.  The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.
   
(3) Includes 325,000 shares of Common Stock underlying the convertible debenture, 325,000 shares of Common Stock underlying the Series A Warrant, and 325,000 shares of Common Stock underlying the Series B Warrant, issued to Mr. Deno in the private placement closed on August 27, 2009.
   
(4) Includes 81,250 shares of Common Stock underlying the convertible debenture, 81,250 shares of Common Stock underlying the Series A Warrant, and 81,250 shares of Common Stock underlying the Series B Warrant, issued to Mr. Giresi in the private placement closed on August 27, 2009.  The remaining 765,000 shares are subject to the Lock-Up Agreement dated February 12, 2009, pursuant to which Mr. Giresi agreed not to sell the shares for a period of 18 months from the close of the Share Exchange Agreement dated February 12, 2009.
   
(5) Includes 81,250 shares of Common Stock underlying the convertible debenture, 81,250 shares of Common Stock underlying the Series A Warrant, and 81,250 shares of Common Stock underlying the Series B Warrant, issued to Mr. Auerbach in the private placement closed on August 27, 2009.
 
 
 
On January 26, 2010, with the majority written consent of our board of directors, we entered into an employment agreement with Mark A. Giresi, pursuant to which Mr. Giresi was appointed as our Chief Operating Officer.  As the date hereof, Mr. Giresi also serves on our board of directors. A copy of the employment agreement was filed as an exhibit to a Form 8-K filed with the SEC on January 27, 2010 and is incorporated herein by reference.

In December 2009, Mark Giresi , a Director loaned the Company $25,000. The loan bore no interest, was not secured and was due on demand. The Company repaid the $25,000 in February 2010.
 
On March 7, 2008, the Company entered into a loan agreement with Ed Tubel, a former related party to borrow an amount up to $388,500, of which $120,274 was advanced, with no stated terms during December 2007. An additional $268,226 was advanced during 2008. These loans bear interest at 6% with a default rate of interest of 12%.  The loans are secured by all assets of the Company.  These loans are due on March 7, 2010. The Company repaid $90,000 of these advances in May 2009, and an additional $90,000 was repaid in February 2010.  The remaining balance of is currently in default.
 
Disclosure of Commission Position on Indemnification of Securities Act Liabilities.

Our directors and officers are indemnified as provided by the Delaware corporate law and our Bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person 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 registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
 
We have been advised that in the opinion of the SEC indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.


 
PAGE
F-2
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2010 (UNAUDITED) AND DECEMBER 31, 2009 (AUDITED)
     
PAGE
F-3
CONSOLIDATED  STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND MARCH 31, 2009 (UNAUDITED)
     
PAGE
F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND MARCH 31, 2009 (UNAUDITED)
     
PAGE
F-5/F-25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     
PAGE
F-26
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     
PAGE
F-27
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008
     
PAGE
F-28
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
     
PAGE
F-29
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT  FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
     
PAGE
F-30
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
     
PAGE
F-31/F-50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     
 
 
 

 
 
 
 
 
NXT NUTRITIONALS HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2010
(UNAUDITED )
 
 
 
 
 
 
 
 
 
 
NXT Nutritionals Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2010 and 2009
(unaudited)
 
   
Page(s)
 
         
Consolidated Balance Sheets as of March 31, 2010 (unaudited)
  and December 31, 2009 (audited) –
    1  
         
Consolidated Statements of Operations for the Three Months Ended 
  March 31, 2010 and March 31, 2009 (unaudited) –   
    2  
         
Consolidated Statements of Cash Flows for the Three Months ended
  March 31, 2010 and 2009 (unaudited) – 
    3  
         
Notes to the Consolidated Financial Statements (unaudited)       4-20  
 
 
NXT Nutritionals Holdings, Inc. and Subsidiaries
 
Consolidated Balance Sheets
 
   
   
March 31, 2010
   
December 31, 2009
 
   
(unaudited)
   
(audited)
 
Assets
 
             
Assets:
           
Cash
  $ 4,053,004     $ 68,454  
Accounts receivable
    83,488       72,642  
Inventories
    169,619       150,110  
Total Current Assets
    4,306,111       291,206  
                 
Debt Issuance Costs - net
    706,284       46,590  
                 
Total Assets
  $ 5,012,395     $ 337,796  
                 
Liabilities and Stockholders' Deficit
 
                 
Liabilities:
               
Accounts payable and accrued expenses
  $ 549,058     $ 607,695  
Loans payable - related parties
    600,626       715,626  
Loans payable - other
    -       100,000  
Accrued interest payable - related parties
    45,541       41,125  
Registration rights payable
    390,792       362,453  
Derivative liabilities
    6,382,541       -  
Total Current Liabilities
    7,968,558       1,826,899  
                 
Convertible notes payable - net of debt discount
    1,791,513       1,830,605  
Total Long-Term Liabilities
    1,791,513       1,830,605  
                 
Total Liabilities
    9,760,071       3,657,504  
                 
Stockholders' Deficit
               
Preferred stock, $0.001 par value, 50,000,000 shares authorized,
               
   none issued and outstanding
    -       -  
Common stock, $0.001 par value, 200,000,000 shares authorized,
               
    45,834,568 and 39,971,745 shares issued and outstanding
    45,835       39,972  
Additional paid in capital
    26,461,581       24,657,084  
Accumulated deficit
    (31,255,092 )     (28,016,765 )
Total Stockholders' Deficit
    (4,747,676 )     (3,319,708 )
                 
Total Liabilities and Stockholders' Deficit
  $ 5,012,395     $ 337,796  
                 
 
See accompanying notes to financial statements.
 

NXT Nutritionals Holdings, Inc. and Subsidiaries
 
Consolidated Statements of Operations
 
(unaudited)
 
   
   
For the Three Months Ended March 31,
 
   
2010
   
2009
 
             
Sales - net of slotting fees and discounts
  $ 108,734     $ 202,910  
                 
Cost of sales
    120,724       246,605  
                 
Gross loss
    (11,990 )     (43,695 )
                 
General and administrative expenses
    849,770       1,525,248  
                 
Loss from operations
    (861,760 )     (1,568,943 )
                 
Other Income (Expenses)
     -       -  
                 
     Interest expense
    (1,633,430 )     (33,268 )
     Derivative expense
    (8,590,802 )     -  
     Change in fair market value of derivative liability
    7,876,004       -  
     Registration rights expense
    (28,339 )     -  
                 
          Total Income (Expenses)
    (2,376,567 )     (33,268 )
                 
Net loss
  $ (3,238,327 )   $ (1,602,211 )
                 
Net Loss per Common Share - Basic and Diluted
  $ (0.08 )   $ (0.05
                 
Weighted Average Number of Common Shares Outstanding
    42,701,420       35,217,846  
                 
 
See accompanying notes to financial statements.
 

NXT Nutritionals Holdings, Inc. and Subsidiaries
 
Consolidated Statements of Cash Flows
 
(unaudited)
 
   
   
For the Three Months Ended March 31,
 
   
2010
   
2009
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
  $ (3,238,327 )   $ (1,602,211 )
  Adjustments to reconcile net loss to net cash used in operating activities:
               
       Amortization of debt issue costs
    67,294       4,100  
       Amortization of debt discount
    1,560,158       43,135  
       Stock based compensation
    211,150       663,000  
       Warrants issued as consulting fee
    -       280,000  
       Derivative expense
    8,590,802       -  
       Change in fair value of derivative liability
    (7,876,004 )        
       Registration rights expense
    28,339       -  
Changes in operating assets and liabilities:
               
  (Increase) Decrease in:
               
    Accounts receivable
    (10,846 )     123,347  
    Inventory
    (19,509 )     (100,874 )
  Increase (Decrease) in:
               
    Accounts payable and accrued expenses
    (58,678 )     (62,956 )
    Accrued interest payable - related parties
    4,416       4,156  
    Accrued interest payable - convertible notes
    -       20,874  
         Net Cash Used in Operating Activities
    (741,205 )     (627,429 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from  loans payable - other
    -       125,000  
Proceeds from issuance of convertible notes
    5,667,743       1,548,000  
Debt issuance costs paid in cash
    (726,988 )     (50,500 )
Payment on loans
    (215,000 )     (309,373 )
Payments on convertible notes
    -       (200,000 )
        Net Cash Provided By Financing Activities
    4,725,755       1,113,127  
                 
Net Increase (Decrease) in Cash
    3,984,550       485,698  
                 
Cash and Cash Equivalents - Beginning of Year
    68,454       274,198  
                 
Cash and Cash Equivalents - End of Year
  $ 4,053,004     $ 759,896  
                 
SUPPLEMENTARY CASH FLOW INFORMATION:
               
Cash Paid During the Year for:
               
    Income Taxes
  $ -     $ -  
    Interest
  $ -     $ 8,439  
                 
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
                 
Reclassification from prepaid to inventory
  $ -     $ 33,000  
Debt discount recorded on convertiable notes
  $ 5,667,743     $ 1,103,000  
Original issue discount
  $ 850,201     $ -  
Conversion of note payable in recapitalization
  $ -     $ 25,000  
Conversion of convertible note payable to common stock
  $ 1,599,210     $ -  
 
See accompanying notes to financial statements.
 
 
NXT Nutritionals Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2010 and 2009
(unaudited)
 
Note 1 Nature of Operations and Basis of Presentation
 
NXT Nutritionals Holdings, Inc. ("Holdings), (formerly known as Goldvale Resources, Inc.) is a Delaware corporation incorporated in 2006.  On February 12, 2009, Holdings acquired NXT Nutritionals, Inc. (the “Company”, or “NXT Nutritionals”) a Delaware corporation incorporated in 2008. See Note 4 for information regarding the reverse acquisition and recapitalization with a public shell corporation.

The Company is a developer of proprietary, patent pending, healthy alternative sweeteners. The foundation and common ingredient for all of the Company’s products is the all-natural sweetener SUSTA®. SUSTA® will also be sold as a stand-alone sweetener.  The Company also sells non-fat yogurt smoothie products.
 
Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the years ended December 31, 2009 and 2008.  The interim results for the period ended March 31, 2010 are not necessarily indicative of results for the full fiscal year.
 
Note 2 Summary of Significant Accounting Policies
 
Principles of consolidation

All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: the fair value of warrants granted, estimates of the probability and potential magnitude of contingent liabilities and the valuation allowance for deferred tax assets due to continuing operating losses.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.

Risks and uncertainties

The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company's operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.

NXT Nutritionals Holdings, Inc. and Subsidiaries