Attached files
As filed with the Securities and Exchange Commission on ______, 2011
Commission File No. 333- 122009
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
Amendment No. 5
Registration Statement Under
THE SECURITIES ACT OF 1933
NAPRODIS, INC.
--------------------------------
(Exact name of registrant as specified in charter)
Nevada 2834 33-0903494
--------------------------- ----------------------- ----------------
(State or other jurisdiction (Primary Standard Classi- (IRS Employer
of incorporation) fication Code Number) I.D. Number)
13250 Gregg St., Suite F
Poway, CA 92064
(858) 486-8655
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(Address and telephone number of principal executive offices)
13250 Gregg St., Suite F
Poway, CA 92064
-----------------------------------------
(Address of principal place of business or intended principal place of business)
Paul Petit
13417 Orange Blossom Lane
Poway, CA 92064
(858) 486-8655
----------------------------------------
(Name, address and telephone number of agent for service)
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
William T. Hart, Esq.
Hart & Trinen, LLP
1624 Washington Street
Denver, Colorado 80203
303-839-0061
As soon as practicable after the effective date of this Registration Statement
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
---------- ----------- --------- ------------- --------------
Common stock (2) 3,500,000 $0.15 $525,000
-------------------------------------------------------------------------------
Common Stock (3) 1,150,000 $0.15 $172,500
-------------------------------------------------------------------------------
Total $697,500 $39
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(1) Offering price computed in accordance with Rule 457 (c).
(2) Shares of common stock offered by the Company.
(3) Shares of common stock offered by selling shareholders
Pursuant to Rule 416, this Registration Statement includes such
indeterminate number of additional securities as may be required for issuance as
a result of any stock dividends, stock splits or similar transactions.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
NAPRODIS, INC.
Common Stock
4,650,000 shares
By means of this prospectus we are offering for sale up to 3,500,000
shares of common stock at a price of $0.15 per share.
The shares we are offering will be sold directly by our executive
officers. We will not pay any commissions or other form of remuneration in
connection with the sale of these shares.
The offering of our shares is being conducted on a "self-underwritten"
basis. There is no minimum number of shares required to be sold. All proceeds
from the sale of these shares will be delivered directly to us and will not be
deposited in any escrow account. If all shares are sold, we will receive gross
proceeds of $525,000. We plan to end the offering on September 30, 2011.
However, we may, at our discretion, end the offering sooner or extend the
offering until October 31, 2011.
If and when our common stock becomes quoted on the OTC Bulletin Board or
listed on a securities exchange, and after we terminate our offering, a number
of our shareholders may also offer to sell, by means of this prospectus, up to
1,150,000 shares of our common stock at a price of $0.15 per share. The shares
owned by the selling shareholders may be sold at prices and terms then
prevailing or at prices related to the then-current market price, or in
negotiated transactions.
We will not receive any proceeds from the sale of the common stock by the
selling stockholders. We will pay for the expenses of this offering, which are
estimated to be $120,000, of which approximately $109,000 has been paid as of
the date of this prospectus.
As of the date of this prospectus there was no public market for our
common stock. As of the date of this prospectus, an application had not been
made to have our common stock quoted on the OTC Bulletin Board.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. FOR A
DESCRIPTION OF CERTAIN IMPORTANT FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS
PROSPECTUS.
The date of this prospectus is ____________, 2011
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
DESCRIPTIVE INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE
INVESTORS SHOULD CAREFULLY READ THE ENTIRE PROSPECTUS AND SHOULD CONSIDER, AMONG
OTHER FACTORS, THE MATTERS SET FORTH UNDER THE "RISK FACTORS."
Naprodis, Inc.
We were incorporated in Nevada in June 1999. Since September 2000 we have
been in the business of developing, manufacturing and marketing nutritional and
personal care products. Our executive offices are located at 13250 Gregg St.
Suite F Poway, CA 92064. Our telephone number is (858) 486-8655.
As of May 31, 2011, we had 4,990,000 outstanding shares of common stock.
Our website is: www.naprodis.com.
The Offering
By means of this prospectus:
We are offering to sell up to 3,500,000 shares of common stock at a price
of $.15 per share.
If and when our common stock becomes quoted on the OTC Bulletin Board or
listed on a securities exchange, and after we terminate our offering, a number
of our shareholders may offer to sell, by means of this prospectus, up to
1,150,000 shares of common stock at a price of $0.15 per share. The shares owned
by the selling shareholders may be sold at prices and terms then prevailing or
at prices related to the then-current market price, or in negotiated
transactions.
We intend to use the net proceeds from the sale of the shares we are
offering for general and administrative expenses, purchase of inventory,
research and development, marketing, and new equipment.
The purchase of the securities offered by this prospectus involves a high
degree of risk. Risk factors include our history of losses and the need for
additional capital. See "Risk Factors" beginning on page 3 of this prospectus
for additional Risk Factors.
Forward Looking Statements
This prospectus contains various forward-looking statements that are based
on our beliefs as well as assumptions made by and information currently
available to us. When used in this prospectus, the words "believe", "expect",
"anticipate", "estimate" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
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uncertainties and assumptions which could cause actual results to differ
materially from our projections or estimates. Factors which could cause actual
results to differ materially are discussed at length under the heading "Risk
Factors". Should one or more of the enumerated risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected. Investors
should not place undue reliance on forward-looking statements, all of which
speak only as of the date made.
RISK FACTORS
The securities being offered involve a high degree of risk. Prospective
investors should consider the following risk factors which affect our business
and this offering. These risk factors discuss all material risks which pertain
to an investment in our Company. If any of the risks discussed below
materialize, our common stock could decline in value or become worthless.
Risk Factors Related to this Offering
As of the date of this prospectus there was no public market for our
common stock and if no public market develops, purchasers of the shares offered
by this prospectus may be unable to sell their shares. Although we plan to have
our shares quoted on the OTC Bulletin Board after the termination of our
offering, we may not be successful in this regard. Even if a public market for
our common stock develops, trading may be sporadic and the quoted price for our
common stock could be volatile.
Should a market for our common stock ever develop, disclosure requirements
pertaining to penny stocks may reduce the level of trading activity in the
market for our shares and investors may find it difficult to sell their shares.
Trades of our common stock, should a market ever develop, will be subject to
Rule 15g-9 of the Securities and Exchange Commission, which rule imposes certain
requirements on broker/dealers who sell securities subject to the rule to
persons other than established customers and accredited investors. For
transactions covered by the rule, brokers/dealers must make a special
suitability determination for purchasers of the securities and receive the
purchaser's written agreement to the transaction prior to sale. The Securities
and Exchange Commission also has rules that regulate broker/dealer practices in
connection with transactions in "penny stocks". Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in that security is provided by the exchange or system). The penny
stock rules require a broker/ dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized risk disclosure
document prepared by the Commission that provides information about penny stocks
and the nature and level of risks in the penny stock market. The broker/dealer
also must provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker/dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. The bid and offer quotations, and
the broker/dealer and salesperson compensation information, must be given to the
customer orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customer's confirmation.
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Because there is no public market for our common stock, the price for the
shares we are offering was arbitrarily established, does not bear any
relationship to our assets, book value or net worth, and may be greater than the
price which investors in this offering may receive when they resell our shares.
Accordingly, the offering price of our common stock should not be considered to
be any indication of the value of our shares. The factors considered in
determining the offering price include our future prospects and the likely
trading price for our common stock if a public market ever develops.
Even if all shares offered by this prospectus are sold, our President and a
company affiliated with one of our directors will own approximately 35% of our
outstanding shares and will be able to excersice significant control over our
operations. As a result, investors in this offering may not be able to elect any
of our directors or adopt any resolution at any meeting of our shareholders.
Refer to the "Principal Shareholders" section of this prospectus for more
information.
The issuance of preferred stock could be detrimental to the holders of our
common stock. Our directors have the authority, without shareholder approval, to
issues shares of preferred stock in one or more series and to establish the
voting powers, preferences, rights, qualifications, limitations and restrictions
of each series of preferred stock. Our directors may issue preferred stock with
multiple votes per share and dividend rights which would have priority over any
dividends paid to the holders of our common stock. The issuance of preferred
stock with these rights may make the removal of management difficult even if the
removal would be considered beneficial to our shareholders generally, and would
have the effect of limiting shareholder participation in transactions such as
mergers or tender offers if these transactions are not favored by our
management.
The price of the stock purchased by investors may be negatively impacted
because there is no minimum amount of shares to be sold pursuant to this
offering.
Risk Factors Related to our Business
Our failure to obtain capital may significantly restrict our proposed
operations. We need additional capital to expand our business. Our offering is
being conducted on a "best efforts" basis. There is no minimum amount which is
required to be raised in our offering and all proceeds from the sale of the
shares will be delivered to us. If only a small number of shares are sold the
amount received from this offering may provide us little benefit. In addition,
the price of the stock purchased by investors may be negatively impacted because
there is no minimum amount of shares which are required to be sold pursuant to
this offering. Even if all shares offered are sold, we may need additional
capital. Our issuance of equity or equity-related securities to raise capital
will dilute the ownership interest of existing shareholders.
We rely on one customer, Plant Devas Inc., for a significant amount of our
sales and the loss of this customer would hurt our business. During the year
ended August 31, 2010 and the six months ended February 28, 2011, this customer
accounted for approximately 91% and 92%, respectively, of our total revenue.
This customer could at any time choose to buy products from any of our
competitors, which would negatively impact our revenue.
Our future sales could be affected by a number of factors which are beyond
our control. We may have difficulty increasing our sales as the business of
developing and distributing nutritional and personal care products is highly
competitive. Many of our competitors are substantially larger than we are and
have greater financial resources and broader name recognition. Nutrition and
personal care products may be purchased from a wide variety of sources including
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retail outlets and the internet. In addition, the nutritional supplement market
may not be as large as we think and expected growth in this market may not
continue. A decline in the sales of nutritional supplements could have a
material averse effect on our business.
None of our products are protected by patents and competitors could
potentially copy our products. The labeling regulations governing our
nutritional supplements require that the ingredients of our products be
precisely and accurately indicated on product containers. Accordingly, patent
protection for nutritional supplements often is impractical given the large
number of manufacturers which produce nutritional supplements having many active
ingredients in common. Additionally, the nutritional supplement industry is
characterized by rapid change and frequent reformulations of products as the
body of scientific research and literature refines current understanding of the
application and efficacy of certain substances and interactions among various
substances. Our efforts to protect our trade secrets and other intellectual
property may not be successful. In addition third parties may assert claims
against us for infringement of the proprietary rights of others. If an
infringement claim is asserted, we may be required to obtain a license of such
rights, pay royalties on a retrospective or prospective basis or terminate the
manufacturing and marketing of our products that are alleged to have infringed.
Claims from third parties or litigation involving infringement claims could
result in substantial costs and diversion of management and other resources and
could have a material adverse effect on our business, financial condition and
operating results.
The failure to comply with government regulations could subject us to
penalties. The primary statutes regulating our products are the Food, Drug, and
Cosmetic Act and the Dietary Supplement Health and Education Act of 1994. We
must also adhere to federal regulations known as current Good Manufacturing
Practices, which are enforced by the Food and Drug Administration. If we do not
comply with applicable regulatory requirements, we may be subject to injunction
and fines, or be forced to remove a product from the market.
The loss of our president would adversely affect our business. We depend
on the services of our founder, Dr. Paul Petit who serves as our President and
Chief Executive Officer. We do not have an employment agreement with Dr. Petit
and we do not carry key man life insurance on Dr. Petit. The loss or limitation
of Dr. Petit's services would have a material adverse effect upon our business,
financial condition and results of operations.
Since we have no formal agreements with our and suppliers, the terms of
these informal agreements may change and negatively affect our gross profit. For
example, our suppliers could increase the price for materials, thereby
increasing our cost of goods sold.
DILUTION AND COMPARATIVE SHARE DATA
As of May 31, 2011 we had 4,990,000 outstanding shares of common stock,
which had a book value as of that date of less than $0.01 per share. If all
shares we are offering are sold (of which there can be no assurance), investors
will own 3,500,000 shares or approximately 41% of our common stock, for which
they will have paid $525,000 and our present shareholders will own approximately
59% of our common stock. If less than all shares offered are sold, the
percentage ownership of the investors in this offering will be less and the
dilution to the investors will be greater than if all shares offered were sold.
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The following table illustrates per share dilution and the comparative
stock ownership of our stockholders as compared to the investors in this
offering, based upon the number of shares sold.
Shares outstanding as of Febraury 28, 2011 4,990,000 4,990,000 4,990,000 4,990,000
Shares to be sold in this offering 500,000 1,000,000 2,000,000 3,500,000
Shares to be outstanding upon completion
of offering 5,490,000 5,990,000 6,990,000 8,490,000
Tangible book value per share at as of
Febraury 28, 2011 nil nil nil nil
Offering price, per share $0.15 $0.15 $0.15 $0.15
Net tangible book value after offering $0.01 $0.02 $0.04 $0.06
Dilution to investors in this offering $0.14 $0.13 $0.11 $0.09
Gain to existing shareholders $0.01 $0.02 $0.04 $0.06
Equity ownership by investors in this offering 9% 17% 29% 41%
Equity ownership by present shareholders
after this offering 91% 83% 71% 59%
We do not have any outstanding options, warrants or similar securities
which could allow for the purchase of additional shares of our common stock.
USE OF PROCEEDS
The following table shows the intended use of the proceeds of this
offering, depending upon the number of shares sold:
Gross Offering Proceeds
----------------------------------------
$ 75,000 $150,000 $300,000 $525,000
General and administrative expenses 4,000 18,000 97,000 195,000
Purchase of raw materials 25,000 50,000 95,000 125,000
Marketing 20,000 40,000 60,000 125,000
Research and development 5,000 6,000 7,000 14,000
Manufacturing equipment and
building improvements 10,000 25,000 30,000 55,000
Offering Expenses 11,000 11,000 11,000 11,000
--------- ---------- --------------------
$ 75,000 $150,000 $300,000 $525,000
======== ======== ======== ========
If less than $75,000 is raised in this offering, the offering proceeds
will be allocated in the following priority:
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o Offering Expenses 11,000
o General and administrative expenses 4000
o Purchase of raw materials 25,000
o Research and development 4,000
o Marketing 15,000
o Manufacturing equipment and building improvements 5,000
The total estimated expenses of this offering are approximately $120,000.
As of December 31, 2010 we had paid approximately $109,000 of these expenses
with cash which we received from the private sale of our common stock
($115,000). The remaining expenses of this offering will be paid from the
proceeds of this offering and cash generated from our operations.
During the twelve months ended August 31, 2010 and 2009 and the six months
ended February 28, 2011, approximately 89%, 85% and 90% , respectively, of our
revenues were derived from the sale of products which we manufactured. If at
least $150,000 is raised in this offering, we will purchase additional equipment
and improve our manufacturing facility so that we eventually will be able to
manufacture products which would represent approximately 90% of our gross sales.
None of the proceeds from this offering will be used to pay any amounts
owed to any officer or director or to any entity affiliated with any officer or
director.
The projected expenditures shown above are only estimates or
approximations and do not represent a firm commitment by us. To the extent that
the proposed expenditures are insufficient for the purposes indicated,
supplemental amounts required may be drawn from other categories of estimated
expenditures, if available. Conversely, any amounts not expended as proposed
will be used for general working capital.
We anticipate that our capital requirements for the twelve months ending
August 31, 2011 will be approximately $150,000. See "Management's Discussion and
Analysis and Plan of Operation" for more information concerning our anticipated
capital requirements.
There is no commitment by any person to purchase any of the shares of
common stock which we are offering and there can be no assurance that any shares
will be sold.
As of the date of this prospectus we did not have any commitments from any
person to provide us with any additional capital and there can be no assurance
that additional capital will be available to us in the future.
Pending expenditure of the proceeds of the offering substantially in the
manner described above, we will make temporary investments in interest-bearing
savings accounts, certificates of deposit, United States government obligations
and/or money market instruments.
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MARKET FOR COMMON STOCK.
Our common stock is not quoted on any exchange and there is no public
trading market.
As of May 31, 2011, we had 4,990,000 outstanding shares of common
stock and nine shareholders of record. We do not have any outstanding options,
warrants or other arrangements providing for the issuance of additional shares
of our capital stock.
Holders of our common stock are entitled to receive dividends as may be
declared by our Board of Directors. The Board of Directors is not obligated to
declare a dividend. No dividends have ever been declared and we do not
anticipate or intend upon paying dividends for the foreseeable future.
Our Articles of Incorporation authorize our Board of Directors to issue up
to 10,000,000 shares of preferred stock. The provisions in the Articles of
Incorporation relating to the preferred stock allow our directors to issue
preferred stock with multiple votes per share and dividend rights which would
have priority over any dividends paid with respect to the holders of our common
stock. The issuance of preferred stock with these rights may make the removal of
management difficult even if the removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if these
transactions are not favored by our management.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATIONS
Material changes of certain items in our Statement of Operations for the
year ended August 31, 2010, as compared to the same period last year, are
discussed below.
Increase (I)
Item or Decrease (D) Reason
Revenues I We moved to a new manufacturing facility
on April 1, 2010 which improved our
manufacturing capability. The increase
in revenue is solely the result of an
increase in sales volume, not prices.
Salaries and wages I We hired six additional employees during
the year to fill and ship orders.
Other general and I Increased administrative activity
administrative expenses associated with increased sales, the
management of more employees, and the
launch of our new personal care products
line during fiscal 2010. However, sales
of personal care products were minimal
during the year ended August 31, 2010.
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Material changes of certain items in our Statement of Operations for the
six month period ended February 28, 2011, as compared to the same period last
year, are discussed below.
Increase (I)
Item or Decrease (D) Reason
Revenues I We moved to a new manufacturing
facility on April 1, 2010, which
improved our manufacturing
capability. The increase in revenue is
solely the result of an increase in
sales volume, not prices.
Salaries and wages I We hired six additional employees during
the six months ended February 28, 2011
to fill and ship orders.
Other general and I Increased administrative activity
administrative expenses associated with increased sales, the
management of more employees and the
launch of our new personal care products
line during the period 2010. However,
sales of personal care products were
minimal during the six months ended
February 28, 2011.
The following is an explanation of our material sources and (uses) of cash
during the years ended August 31, 2010 and 2009 and the six-months ended
February 28, 2011:
August February 28,
2010 2009 2011
---- ---- ----
Cash (used) provided by operations $(26,558) $18,136 $(27,731)
Purchase of equipment (43,097) (13,275) --
Sale of common stock 21,000 --
Bank overdraft -- (5,182) 5,797
Advances from related party 48,061 9,755
Cash on hand at beginning of period 594 8,302
We do not know of any trends, events or uncertainties that have had, or are
reasonably expected to have, a material impact on our sales, revenues or income
from continuing operations, or liquidity and capital resources.
The total estimated expenses of this offering are approximately $120,000.
As of June 15, 2011 we had paid approximately $109,000 of these expenses with
cash which we received from the private sale of our common stock ($115,000). The
remaining expenses of this offering will be paid from the proceeds of this
offering or cash from generated from our operations. As of June 15, 2011 we had
cash on hand of approximately $12,000. We expect cash on hand and cash generated
by our operations will support our business, as it is currently conducted, for
the twelve month period following the date of this prospectus.
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For at least one year following the date of this prospectus we will have
expenses, which we estimate will be at least $25,000, associated with preparing
reports on Forms 10-Q and 10-K.
If less than $150,000 is raised from this offering, we will attempt to
raise additional capital through the private sale of our equity securities or
borrowings from third party lenders. We do not have any commitments or
arrangements from any person to provide us with any additional capital. If
additional financing is not available when needed, we may need to change our
business plan. We do not have any plans, arrangements or agreements to sell or
merge with another company.
BUSINESS
General
We were incorporated in Nevada in June 1999.
Since September 2000 we have been in the business of selling nutritional
and personal care products. We distribute our products primarily through private
label resellers and through spas, beauty salons, health professionals, and
health and beauty stores. As of the date of this prospectus our products were
being sold in the United States and Canada along with several foreign countries.
We rely upon referrals from our customers and our website to market our
products. We are not a blank check company required to comply with Rule 419 of
the Securities and Exchange Commission.
Although we sell more than 400 products, sales of the following products
represented 18% of our gross product sales during the years ended August 31,
2010, 13% of our gross product sales during the year ended August 31, 2009, and
19% of our gross product sales during the six months ended February 28, 2011.
Product Name Description
------------- ------------
Aromune Water-based drink additive. Aromune contains oils
which can potentially enhance the immune response of
the body.
Tendonet Liniment Oil which is applied to skin to reduce
inflammations
Regenerative Cream Moisturizing face cream
Product Name Description
Bronarome Throat spray to treat infections
Green Clay Clay applied to skin to drain and detoxify
tumors, abscesses and cysts.
Sulfate-Free Shampoo Organic and Ecocert approved ingredients with no
sulfates
Wet Shave Paste Men's shaving cream.
Oblige by Nature New line of organic Personal Care Products
Kinarome New line of Aromatherapy products (4 products)
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Although our skin care product segment accounts for the bulk of our sales,
during the year ended August 31, 2010, and the six months ended February 28,
2011, no single product accounted for more than 5% of our revenue.
We manufacture all of the products listed above, with the exception of the
Regenerative Cream and Eye cream. These two products are supplied to us by
unrelated third parties.
Our products include nutritional supplements that are made from vitamins,
minerals, herbs and other substances for which there is a long history of human
consumption. Some of our products contain innovative ingredients or combinations
of ingredients. Although we believe all of our products to be safe when taken as
directed, there is little long-term experience with human consumption of certain
of these product ingredients or combinations of ingredients in concentrated
form. We conduct research and test the formulation and production of our
products, but we have not performed or sponsored any clinical studies relating
to our products. Furthermore, because we are highly dependent on consumers'
perception of the efficacy, safety and quality of our products, as well as
similar products distributed by other companies, we could be adversely affected
in the event those products should prove or be asserted to be ineffective or
harmful to consumers or in the event of adverse publicity associated with
illness or other adverse effects resulting from consumers use or misuse of our
products or a competitor's similar products.
Manufacturing and Product Supply
Our manufacturing facility is located in Poway, California and consists of
12,000 square feet of space. During the twelve months ended August 31, 2010,
2009, and the six months ended February 28, 2011, approximately 89%, 85% and 90%
respectively, of our gross product sales, with the exception of sales of raw
materials, were derived from the sale of products which we manufactured.
We believe that our ability to manufacture a significant portion of our
products is an advantage for the following reasons:
o We are able to better control the quality of raw materials and the
purity and potency of finished products.
o We can more reliably monitor the manufacturing process to reduce the
risk of product contamination, and
o We believe we can continually lower the costs associated with
manufacturing our products.
We use Manley Herbals to supply most of our products. Manley Herbals is
located in San Francisco and is not affiliated with us. We do not have any
written agreements with Manley Herbals.
If we can raise approximately $525,000 from this offering, or from other
sources, we plan to purchase additional equipment and improve our manufacturing
facility so that we eventually will be able to manufacture products which would
represent approximately 90% of our gross sales.
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None of the ingredients to any of our products is proprietary. Most of the
raw ingredients used in the manufacture of our products are available from a
number of suppliers. We have not generally experienced difficulty in obtaining
necessary quantities of raw ingredients for our products and we believe that
alternative sources of raw materials are readily available. We do not have any
agreements with any company to supply us with the raw ingredients we need to
manufacture our products.
We can customize our products depending on the preferences of our
customers. To customize a product, we will normally add or remove essential oils
or botanic extracts from our standard products. For large customers, we can
produce any product desired from raw materials available to us.
Distribution
We sell our products through the following channels:
Private Label Resellers - Our products are sold to spas, beauty salons
and other companies that repackage
the products under their own label.
Bulk Distribution - Raw materials used in our products are sold
to spas, beauty salons, health professionals,
and health and beauty stores.
Internet - Sales are made through our website,
www.naprodis.com.
Retail - Mainly health food stores.
During the periods presented the percent of our sales through each
distribution channel were:
Year Ended Year Ended Six Months Ended
August 31, 2010 August 31, 2009 February 28, 2011
---------------- --------------- -----------------
Private Label Resellers 91% 89% 92%
Bulk Distribution 7% 8% 4%
Internet 1% 2% 2%
Retail 1% 1% 2%
During the twelve months ended August 31, 2010 we began to:
o sell our products to large health food store chains which have a
regional or national presence; and
o manufacture and sell shampoo, conditioners and skin care products to
beauty salons, which resell the products under their own label.
Competition
The business of developing and distributing nutritional and personal care
products is highly competitive. Numerous manufacturers, distributors and
retailers compete for consumers. We compete with these entities by emphasizing
the underlying science, value and high quality of our products. However, many of
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our competitors are substantially larger than we are and have greater financial
resources and broader name recognition. Our market is highly sensitive to the
introduction of new products that may rapidly capture a significant share of
those markets.
The nutritional supplement market may not be as large as we think and
expected growth in this market may not continue. Market data and projections are
inherently uncertain and subject to change. In addition, underlying market
conditions are subject to change based on economic conditions, consumer
references and other factors that are beyond our control. A slow-down in sales
of nutritional supplements could have a material adverse effect on our business,
financial condition or results of operations.
The nutritional supplement market is characterized by:
o Large selections of essentially similar products that are difficult to
differentiate,
o Retail consumer emphasis on value pricing,
o Constantly changing formulations based on evolving scientific
research,
o Low entry barriers resulting from low brand loyalty, rapid change,
widely available manufacturing, low regulatory requirements and ready
access to large distribution channels, and
o A lack of uniform standards regarding product ingredient sources,
potency, purity, absorption rate and form.
We may not be able to effectively compete in this intensely competitive
environment. In addition, nutritional and personal care products can be
purchased in a wide variety of channels of distribution, including retail
stores. Our products are relatively few compared to the wide variety of products
offered by many of our competitors. As a result, our ability to remain
competitive depends in part upon the successful introduction of new products and
enhancements of existing products.
Leading competitors in the nutritional and personal care product market
include Herbalife International, Inc., Nature's Sunshine Products, Inc., Twinlab
Corporation, Weider Nutrition, NBTY and Nu Skin International, Inc. We believe
that sales of organic nutritional and personal care products in 2010 exceeded
$1.65 billion. At the present time, we are an insignificant participant in this
market.
Intellectual Property
Our products are not protected by any patents or federal or state
trademarks.
However, we claim certain product names, and unregistered trademarks under
common law. Common law trademark rights do not provide the same level of
protection afforded by registration of a trademark. In addition, common law
trademark rights are limited to the geographic area in which the trademark is
actually used. We believe these trademarks, whether registered or claimed under
common law, constitute valuable assets, adding to the recognition of our
products. We therefore believe that these proprietary rights have been and will
continue to be important in enabling us to compete.
13
We also own certain trade secrets that we try to protect, primarily those
pertaining to the raw materials and formulas for some of our products. There can
be no assurance that our trade secrets will not otherwise become known to or
independently developed by competitors.
Research and Development
During the past two years our research and development expenses have been
less than $1,500.
However, we believe that in order to be competitive we will need to commit
to continuous product innovation and improvement through research. Our research
efforts will combine in-house research, published research, and clinical studies
and will involve the following:
o Investigation of the in vitro activity of new natural extracts,
o Identification and research of combinations of nutrients that may be
suitable for new products,
o Analysis of the benefits of existing and newly identified nutritional
supplements,
o Improvement of existing products following new discoveries in
nutrition, and
o Improvements to our manufacturing process.
Government Regulation
The manufacturing, packaging, labeling, advertising, promoting,
distributing, and the selling of our products are subject to regulation by
numerous governmental agencies in the United States and other countries. In the
United States, the FDA regulates our products under the Food, Drug, and Cosmetic
Act ("FD&C") and regulations promulgated under the act. Our products are also
subject to regulation by, among others, the Consumer Product Safety Commission,
the US Department of Agriculture, and the Environmental Protection Agency.
Advertising of our products is regulated by the Federal Trade Commission ("FTC")
under the FTC Act. The manufacturing, labeling, and advertising of products are
also regulated by various governmental agencies in each foreign country in which
we distribute products.
The majority of our products are regulated as dietary supplements under
the FD&C. Dietary supplements are also regulated under the Dietary Supplement
Health and Education Act of 1994 ("DSHEA").
Under these regulations, a dietary supplement that contains a new dietary
ingredient (defined as an ingredient not on the market before October 15, 1994)
must have a history of use or other evidence of safety establishing that it is
reasonably expected to be safe. The manufacturer must notify the FDA at least 75
days before marketing products containing new dietary ingredients and provide
the FDA with the information upon which the manufacturer based its conclusion
that the product has a reasonable expectation of safety.
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We believe that we currently manufacture our dietary supplement products
according to the standards of the FDA's drug-level Good Manufacturing Practices.
However, we may be required to expend additional capital and resources on
manufacturing controls in the future in order if more stringent GMP's are
adopted.
Other products we market include cosmetics and products deemed to be
over-the-counter ("OTC") drugs. In general, our cosmetic products currently are
not subject to pre-market approval by the FDA. However, cosmetics are subject to
regulation by the FDA under the FD&C adulteration and misbranding provisions.
Cosmetics also are subject to specific labeling regulations, including warning
statements if the safety of a cosmetic is not adequately substantiated or if the
product may be hazardous, as well as ingredient statements and other packaging
requirements under the Fair Packaging and Labeling Act. Cosmetics that meet the
definition of a drug (i.e., that are intended to treat or prevent disease or
affect the structure or function of the body), such as medicated shampoos, are
regulated as drugs. OTC drug products may be marketed if they conform to the
requirements of the OTC monograph that is applicable to that drug. Drug products
not conforming to monograph requirements require an approved New Drug
Application ("NDA") before marketing. Under these provisions, if the agency were
to find that a product or ingredient of one of our OTC drug products is not
generally recognized as safe and effective or does not include it in a final
monograph applicable to one of our OTC drug products, we will have to
reformulate or cease marketing that product until it is the subject of an
approved NDA or until the time, if ever, that the monograph is amended to
include the product. If the rule becomes final, we would have to stop marketing
the product as currently formulated. Whether or not an OTC drug product conforms
to a monograph or is subject to an approved NDA, the drug must comply with other
requirements under the FD&C including GMP's, labeling, and the FD&C misbranding
and adulteration provisions.
Advertising of products is subject to regulation by the FTC under the FTC
Act. The FTC Act prohibits unfair methods of competition and unfair or deceptive
acts or practices in or affecting commerce. The FTC Act also provides that the
dissemination of or causing to be disseminated any false advertisement
pertaining to drugs or foods, which would include dietary supplements, is an
unfair or deceptive act or practice. Under the FTC's Substantiation Doctrine, an
advertiser is required to have a "reasonable basis" for all objective product
claims before the claims are made. Failure to adequately substantiate claims may
be considered either deceptive or unfair practices. Pursuant to this FTC
requirement, we are required to have adequate substantiation for all material
advertising claims made for our products. Although we believe our product claims
comply with the law, we may need to revise some product labeling at a future
date.
The FTC may enforce compliance with the law in a variety of ways, both
administratively and judicially, using compulsory process, cease and desist
orders, and injunctions. FTC enforcement can result in orders requiring, among
other things, limits on advertising, corrective advertising, consumer redress,
divestiture of assets, rescission of contracts, and such other relief as the
agency deems necessary to protect the public. Violation of these orders could
result in substantial financial or other penalties. We have not been the subject
of any action by the FTC, but any action in the future by the FTC could
materially adversely affect our ability to successfully market its products.
15
In markets outside the United States, prior to commencing operations or
marketing products, we may be required to obtain approvals, licenses, or
certifications from a country's ministry of health or comparable agency.
Approvals or licensing may be conditioned on reformulation of our products for
the market or may be unavailable with respect to certain products or product
ingredients. We must also comply with local product labeling and packaging
regulations that vary from country to country.
We cannot predict the nature of any future laws, regulations,
interpretations, or applications, nor can we determine what effect additional
governmental regulations or administrative orders, when and if promulgated,
would have on our business in the future. They could include, however,
requirements for the reformulation of certain products to meet new standards,
the recall or discontinuation of certain products that cannot be reformulated,
additional record keeping, expanded documentation of the properties of certain
products, expanded or different labeling, and additional scientific
substantiation. Any or all of these requirements could have a material adverse
effect on our business, financial condition and results of operations.
Employees
As of May 31, 2011 we had 11 full time employees and 11 part time
employees.
Facilities
Our offices and manufacturing facility are located at 13250 Gregg St.
Suite F, Poway, CA 92064 and consist of 12,000 square feet which we rent for
approximately $12,000 per month. The lease on this space expires on February
2015. The space we currently occupy is expected to be adequate to meet our
foreseeable future needs.
MANAGEMENT
Name Age Title
---- --- ------------
Dr.Paul F. Petit 59 President, Principal Financial
Officer, Principal Accounting Officer and a
Director
Jean-Philippe Petit 28 Vice President, Principal Operating Officer
Alain S. Petit 47 Vice President and IT Director
Kelley A. Thompson 47 Production Manager
Dr. Paul Petit has served as our President, Chief Executive Officer and as
a director since September 2000. Prior to his association with us, Dr. Petit was
employed with S.A.R.L. NAPRODIS France. Dr. Petit is a Certified Chiropractic
Sport Physician, a Phyto-aromatherapist, a Naturopath and a Psychologist. Dr.
Petit was in private practice in France from 1978 to 1985, was Director of the
"Centre Chiropractique de l'Anjou" in France from 1985 to 1994, and was an
independent parapharmaceutical consultant from 1994 to 1997. Dr. Petit was
Director of Technical Services and Research at Phybiosis between 1997 and 2000.
Although Dr Petit received a degree in finance and accounting from the Institute
of Technology in Angers, France, Dr. Petit has not had any practical experience
in accounting and financial reporting during the past five years.
16
Jean-Philippe Petit has been our Vice President and Chief Operating Officer
since 2008. Between 2007 and the time he became our Chief Operating Officer,
Mr.Petit studied English in the United States. During 2006 and 2007 Mr. Petit
worked for S.A.R.L. Naprodis. Mr. Petit received his Engineering degree in
Chemistry in 2006.
Alain S. Petit has been our Vice President and a director since 2000.
Between 2000 and 2001 Mr. Petit provided consulting advice in the areas of
computer networking, internet applications and information technology. Since
2002 Mr. Petit has been employed by Capital One in Richmond, Virginia
in their computer information technology department.
Kelley A. Thompson has been our production manager since May 2003.
Directors serve for one-year terms and are elected annually by our
stockholders. Our executive officers are appointed by and serve at the pleasure
of the board of directors.
Dr. Petit may be considered a "promoter," as that term is defined in the
rules and regulations of the Securities and Exchange Commission. Our directors
are elected to hold office until the next annual meeting of shareholders and
until their successors have been elected and qualified. Our executive officers
are elected by the Board of Directors and hold office until resignation or
removal by the Board of Directors.
Dr. Paul Petit and Alain Petit are brothers. Dr. Paul Petit is the husband
of Kelley Thompson.
Jean-Philippe Petit is the son of Paul Petit.
Paul Petit, Jean-Philippe Petit and Kelly Thompson devote 100% of their
time to our business. Alain Petit allocates approximately 10% of his time to our
business.
Our two directors have served as directors for a significant period of
time. Consequently, each director's long-standing experience benefits us as well
as our shareholders.
Executive Compensation
The following table sets forth in summary form the compensation received
by our Chief Executive Officer. None of our officers have ever received in
excess of $100,000 in compensation during any fiscal year.
17
Stock Option All Other
Name and Principal Salary Bonus Awards Awards Compensation
Position Period (1) (2) (3) (4) (5) Total
----------------- ------ ------ ----- ----- ------ ------------ -------
Paul Petit, 2010 $73,200 -- -- -- -- $73,200
President and 2009 $76,115 -- -- -- -- $76,115
Chief Executive 2008 $33,000 -- -- -- -- $33,000
Officer
We do not have any consulting or employment agreements with any of our
officers or directors. We may in the future compensate our officers for past
services. However, we have not determined what amount may be paid in this
respect and none of the proceeds from this offering will be used to pay our
officers for compensation which is accrued but unpaid as of the date of this
prospectus. As of the date of this prospectus, we have no immediate plans to pay
compensation for past services.
Our board of directors may increase the compensation paid to our officers
depending upon a variety of factors, including the results of our future
operations.
The following table shows the amount which we expect to pay to our
executive officers during the twelve months ending August 31, 2011 and the
amount of time these officers expect to devote to our business.
Percentage of Time
Projected to be Devoted
Name Compensation to Our Operations
--------- ------------ -------------------
Paul Petit $95,000 100%
Jean-Philippe Petit $60,000 100%
Alain Petit -- 10%
Kelley Thompson $60,000 100%
Stock Options. We have not granted any stock options as of the date of this
prospectus. In the future, we may grant stock options to our officers,
directors, employees or consultants.
Long-Term Incentive Plans. We do not provide our officers or employees
with pension, stock appreciation rights, long-term incentive or other plans and
have no intention of implementing any of these plans for the foreseeable future.
Employee Pension, Profit Sharing or other Retirement Plans. We do not have
a defined benefit, pension plan, profit sharing or other retirement plan,
although we may adopt one or more of such plans in the future.
Compensation of Directors. Our directors do not receive any compensation
pursuant to any standard arrangement for their services as directors. Although
our bylaws permit us to pay our directors for attending meetings, we do not
compensate our directors for attending meetings.
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Transactions with Related Parties and Recent Sales of Securities
In June 1999 we issued 1,200,000 restricted shares of common stock to Paul
Petit and 1,800,000 restricted shares of common stock to S.A.R.L. Naprodis for
services related to our organization as a corporation. The services were valued
at $100 in the case of Dr. Petit and $150 in the case of S.A.R.L. Naprodis.
Between August and December 2003 we sold 1,150,000 shares of common stock
in a private offering at a price of $0.10 per share. By means of this prospectus
the purchasers of these shares are offering their shares for sale to the public.
See "Selling Shareholders" for more information.
Many of our products are sold under the brand name "Phybiosis." Phybiosis
is the name of a partnership that between 1991 and 2000 sold nutritional and
personal care products similar to those which we sell. After Phybiosis
discontinued sales in 2000 Phybiosis had inventory of raw materials on hand
which we purchase from time-to-time as the need arises. Purchases from Phybosis
during periods indicated were:
Year ended August 31, 2010: $12,999
Year ended August 31, 2009: $ 5,122
Year ended August 31, 2008: $ 7,636
Paul Petit and Alain Petit, two of our officers and directors, are the
partners of Phybiosis.
S.A.R.L. Naprodis is a French corporation which owns 43% of our
outstanding shares. S.A.R.L. Naprodis supplies us with minor quantities of the
oils, clay and salt which we use in the manufacture of our products.
Purchases from S.A.R.L. Naprodis during periods indicated were:
Year ended August 31, 2010: $17,758
Year ended August 31, 2009: $ 8,756
Year ended August 31, 2008: $15,596
Alain Petit owns 40% of S.A.R.L. Naprodis. The remaining 60% of S.A.R.L.
Naprodis is owned by persons who are not affiliated with us.
We purchase raw materials from Phybiosis and S.A.R.L. Naprodis at their
cost. We pay the shipping charges for any raw materials purchased from S.A.R.L.
Naprodis.
S.A.R.L. NAPRODIS has not purchased products from us during the past
three years.
As of August 31, 2010, we owed $65,879 to Phybiosis, $12,976 to S.A.R.L.
Naprodis, and $63,873 to our president, Dr. Paul Petit. The loans are unsecured
and are payable on demand. The loans from Phybiosis and S.A.R.L. Naprodis do not
bear interest. The loan from Dr.Petit bears interest at 5% per year. There are
no written agreements with respect to these loans.
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PRINCIPAL SHAREHOLDERS
The following table shows the ownership of our common stock as of the date
of this prospectus by each shareholder known by us to be the beneficial owner of
more than 5% of our outstanding shares of common stock, each director and
executive officer and all directors and executive officers as a group. Except as
otherwise indicated, each shareholder has sole voting and investment power with
respect to the shares they beneficially own.
Shares
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class
Paul Petit 1,200,000 24%
13250 Gregg St., Suite F
Poway, CA 92064
Jean-Philippe Petit -- --
13250 Gregg St., Suite F
Poway, CA 92064
Alain S. Petit -- (1) --
5409 Bennett Lane
Glen Allen, VA 23059
Kelly A. Thompson -- --
13250 Gregg St., Suite F
Poway, CA 92064
S.A.R.L. Naprodis 1,800,000 (1) 36%
Le Haut Marais
49370 St. Clement de la Place
France
*All Executive Officers and
Directors as a group (4 persons) 3,000,000 60%
(1) S.A.R.L. Naprodis is a French corporation. Alain S. Petit owns 40% of
S.A.R.L. Naprodis. The remaining 60% of S.A.R.L. Naprodis is owned by
persons who are not affiliated with us.
OFFERING BY NAPRODIS
By means of this prospectus we are offering to the public up to 3,500,000
shares of our common stock at a price of $0.15 per share. We arbitrarily
determined the $0.15 offering price and this price does not bear any
relationship to our assets, book value or any other generally accepted criteria
of value for investment.
20
We will offer the shares through our officers, Paul Petit and Alain Petit,
on a "best efforts" basis. Paul Petit and Alain Petit are not registered with
the Securities and Exchange Commission as brokers or dealers. Paul Petit and
Alain Petit are not required to be registered as brokers or dealers since
neither Paul Petit or Alain Petit are engaged in the business of buying or
selling securities for others.
In addition, Paul Petit and Alain Petit will be relying on the exemption
provided by Rule 3a4-1 of the Securities and Exchange Commission with respect to
their participation in this offering. Rule 3a4-1 provides, in part, that an
officer of an issuer of securities will not be deemed to be a broker solely by
reason of his participation in the sale of the securities of the issuer if the
officer:
(1) Is not subject to a statutory disqualification, as that term is
defined in Section 3(a)(39) of the Securities Exchange Act of 1934, at the time
of his participation;
(2) Is not compensated in connection with his participation by the payment
of commissions or other remuneration based either directly or indirectly on
transactions in securities;
(3) Is not at the time of his participation an associated person of a
broker or dealer;
(4) The officer primarily performs, or is intended primarily to perform at
the end of the offering, substantial duties for or on behalf of the issuer
otherwise than in connection with transactions in securities;
(5) The officer was not a broker or dealer, or an associated person of a
broker or dealer, within the preceding twelve months; and
(6) The officer does not participate in selling an offering of securities
for any issuer more than once every twelve months.
Paul Petit and Alain Petit meet the requirements of Rule 3a4-1 since
neither Paul Petit nor Alain Petit:
o Are subject to a statutory disqualification, as that term is defined
in Section 3(a)(39) of the Securities Exchange Act of 1934;
o Will be compensated in connection with their participation in the
offering by the payment of commissions or other remuneration based
either directly or indirectly on the sale of our common stock; and
o Are an associated person of a broker or dealer.
In addition, both Paul Petit and Alain Petit:
o Perform, and will perform at the end of the offering, substantial
duties for or on behalf of us otherwise than in connection with the
offering;
o Have not been a broker or dealer, or an associated person of a broker
or dealer, within the preceding twelve months, and
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o Have not participated in selling an offering of securities for any
issuer during the past twelve months.
We will not employ any brokers or sales agents to sell these shares and we
will not compensate any officer or third party for their participation in this
offering. There is no firm commitment by any person to purchase or sell any of
these shares and there is no assurance that any such shares offered will be
sold. All proceeds from the sale of the shares will be promptly delivered to us.
We plan to end the offering on September 30, 2011. However, we may at our
discretion end the offering sooner or extend the offering to October 31, 2011.
We have the right to refuse to accept subscriptions from any person for
any reason whatsoever. No subscription shall be deemed to be binding upon us
until accepted in writing by our President.
SELLING SHAREHOLDERS
The persons listed in the following table plan to offer the shares shown
opposite their respective names by means of this prospectus. The selling
shareholders acquired their shares from us in a private offering at a price of
$0.10 share.
We will not receive any proceeds from the sale of the shares by the
selling shareholders. The selling shareholders may resell the shares they
acquire by means of this prospectus from time to time in the public market. We
will pay all costs of registering the shares offered by the selling
shareholders, estimated to be $5,000. The selling shareholders will pay all
sales commissions and other costs of the sale of the shares offered by them.
Shares to Share
Be Sold Ownership
Shares in this After
Name Owned Offering Offering
Trevor Haywood 250,000 250,000 --
Alan A. Ligi 250,000 250,000 --
Socorro Austria 100,000 100,000 --
Archie Pavek 250,000 250,000 --
Kraig M. Butrum 100,000 100,000 --
Dr. Gary Chin 100,000 100,000 --
Dr. Stanley C. Lee 100,000 100,000 --
No selling shareholder has held any position or had any material
relationship with us or our predecessors or affiliates.
Manner of Sale.
If and when our common stock becomes quoted on the OTC Bulletin Board the
shares of common stock owned by the selling shareholders may be offered and sold
by means of this prospectus from time to time as market conditions permit. The
shares owned by the selling shareholders may be sold in the over-the-counter
market, or otherwise, at prices and terms then prevailing or at prices related
22
to the then-current market price, or in negotiated transactions. These shares
may be sold by one or more of the following methods, without limitation:
o a block trade in which a broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker/dealer.
In competing sales, brokers or dealers engaged by the selling shareholders
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from selling shareholders in amounts to be
negotiated.
The selling shareholders and any broker/dealers who act in connection with
the sale of the shares may be deemed to be "underwriters" within the meaning of
ss.2(11) of the Securities Acts of 1933, and any commissions received by them
and any profit on any resale of the shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. We have agreed
to indemnify the selling shareholders and any securities broker/dealers who may
be deemed to be underwriters against certain liabilities, including liabilities
under the Securities Act as underwriters or otherwise.
If any selling shareholder enters into an agreement to sell his shares to
a broker-dealer as principal, and the broker-dealer is acting as an underwriter,
we will file a post-effective amendment to the registration statement, of which
this prospectus is a part, identifying the broker-dealer, providing required
information concerning the plan of distribution, and otherwise revising the
disclosures in this prospectus as needed. We will also file the agreement
between the selling shareholder and the broker-dealer as an exhibit to the
post-effective amendment to the registration statement.
We have advised the selling shareholders that they and any securities
broker/dealers or others who may be deemed to be statutory underwriters will be
subject to the prospectus delivery requirements under the Securities Act of
1933. We have also advised each selling shareholder that in the event of a
"distribution" of the shares owned by the selling shareholder, such selling
shareholder, any "affiliated purchasers", and any broker/dealer or other person
who participates in the distribution may be subject to Rule 102 under the
Securities Exchange Act of 1934 ("1934 Act") until their participation in that
distribution is completed. Rule 102 makes it unlawful for any person who is
participating in a distribution to bid for or purchase stock of the same class
as is the subject of the distribution. A "distribution" is defined in Rule 102
as an offering of securities "that is distinguished from ordinary trading
transactions by the magnitude of the offering and the presence of special
selling efforts and selling methods". We have also advised the selling
shareholders that Rule 101 under the 1934 Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of the common stock in connection with this offering.
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DESCRIPTION OF SECURITIES
Our authorized capital consists of 60,000,000 shares of common stock and
10,000,000 shares of preferred stock. As of May 31, 2011, we had 4,990,000
outstanding shares of common stock. We have not issued any shares of preferred
stock and we do not have any plans to issue any shares of preferred stock.
Common Stock
All shares of common stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of common stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and non-assessable shares. Cumulative voting in the election of
directors is not permitted; which means that the holders of a majority of the
issued and outstanding shares of common stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose. In that event, the holders of the remaining shares of common
stock will not be able to elect any directors. In the event of our liquidation,
each shareholder is entitled to receive a proportionate share of the assets
available for distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any, to be distributed to
holders of the preferred stock. All shares of our common stock issued and
outstanding are fully-paid and non-assessable. The shares offered by this
prospectus, when issued, will be fully-paid and non-assessable.
Holders of shares of common stock are entitled to share pro rata in
dividends and distributions with respect to the common stock when, as and if
declared by the Board of Directors out of funds legally available for dividends.
This is after requirements with respect to preferential dividends on, and other
matters relating to, the preferred stock, if any, have been met. We have not
paid any dividends on our common stock and intend to retain earnings, if any, to
finance the development and expansion of our business. Future dividend policy is
subject to the discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, capital requirements and our
financial condition.
Preferred Stock
Shares of preferred stock may be issued from time to time in one or more
series as may be determined by our directors. Our directors have the authority
to establish the voting powers, preferences, rights, qualifications, limitations
and restrictions of each series of preferred stock. Our directors may issue
preferred stock with multiple votes per share and dividend rights which would
have priority over any dividends paid to the holders of our common stock. The
issuance of preferred stock with these rights may make the removal of management
difficult even if the removal would be considered beneficial to our shareholders
generally, and would have the effect of limiting shareholder participation in
transactions such as mergers or tender offers if these transactions are not
favored by our management. As of the date of this prospectus we had not issued
any shares of preferred stock.
24
Transfer Agent
As of May 31, 2011 we did not have a transfer agent for our common stock.
LEGAL PROCEEDINGS
We know of no legal proceedings to which we are a party or to which any of
our property is the subject that are pending, threatened or contemplated.
EXPERTS
Our balance sheets as of August 31, 2010 and 2009, and the statements of
operations, stockholders' equity, and cash flows for the two years ended August
31, 2010, have been included in this prospectus in reliance on the report of
John Kinross-Kennedy, an independent registered public accountant given on the
authority of Mr. Kinross-Kennedy as an expert in accounting and auditing.
INDEMNIFICATION
Pursuant to Section 78.751 of the Nevada Revised Statutes, we may
indemnify our officers and directors for various expenses and damages resulting
from their acting in these capacities. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
officers or directors pursuant to those provisions, we have been informed that
in the opinion of the U.S. Securities and Exchange Commission the
indemnification is against public policy as expressed in the Securities Act of
1933, and is therefore unenforceable.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-1 (together with all amendments and exhibits) under the
Securities Act of 1933, as amended, with respect to the Securities offered by
this prospectus. This prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. For further information, reference is made to the Registration
Statement which may be read and copied at the Commission's Public Reference Room
at 100 F Street, NE, Washington, DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The registration statement is also available at www.sec.gov, the
website of the Securities and Exchange Commission.
25
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
John Kinross-Kennedy, CPA
17848 Skypark Circle
Irvine, CA 92614-6401
(949) 955-2522. Fax (949)724-3817
jkinross@zamucen.com
Member:
American Institute of CPAs
California Society of CPAs
To: The Board of Directors and Shareholders
Naprodis, Inc.
13250 Gregg Street, Suite F
Poway, California 92064
I have audited the accompanying balance sheet of Naprodis, Inc. as of August 31,
2010 and 2009 and the related statements of income, shareholders' equity and
cash flows for the years ended August 31, 2010 and 2009. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States), (PCAOB). Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Naprodis, Inc. as of August 31,
2010 and 2009 and the results of its operations and its cash flows for the years
ended August 31, 2010 and 2009 in conformity with United States generally
accepted accounting principles.
John Kinross-Kennedy
Certified Public Accountant
Irvine, California
December 8, 2010
Naprodis Accnt Report 12-9-10
NAPRODIS, INC.
BALANCE SHEET
as at August 31,
-------------------------------------------------------------------------------
ASSETS 2010 2009
--------- --------
Current Assets
Cash and cash equivalents $ 8,840 $ 9,434
Accounts Receivable 43,915 87,200
Inventory 108,628 112,822
Prepaid Expenses 1,010 6,010
-------- --------
162,393 215,466
Property and equipment,
net of accumulated depreciation 58,037 21,568
Other Assets
Deposits 10,159 5,164
-------- --------
TOTAL ASSETS $230,589 $242,198
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses 58,355 51,058
Accrued payroll and payroll taxes 12,605 10,932
Accrued Interest 13,710 12,550
Payables to related parties 142,728 94,667
-------- --------
227,398 169,207
-------- --------
Stockholders' Equity (Deficit)
Preferred stock, $0.001 par value,
10,000,000 shares authorized, 0 shares
issued - -
Common Stock, $0.001 par value,
authorized 60,000,000 shares; issued
and outstanding 4,990,000 as at
August 31, 2010 and 4,150,000 as at
August 31, 2009 4,990 4,150
Additional paid-in capital 131,260 111,100
Accumulated Deficit (133,059) (42,259)
-------- --------
3,191 72,991
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $230,589 $242,198
======== ========
The accompanying notes are an integral part of these financial statements
1
NAPRODIS, INC.
INCOME STATEMENT
For the years ended
August 31,
-------------------------------------------------------------------------------
2010 2009
--------------- -------------
Revenues $ 904,687 $ 784,442
Cost of Sales (exclusive of depreciation) 154,354 138,564
---------- ---------
Gross Profit 750,333 645,878
---------- ---------
Expenses
Occupancy Costs 78,290 63,978
Salaries and wages 442,389 314,682
Freight 72,299 71,251
Legal and professional fees 15,790 10,387
Other general and administrative expenses 231,091 174,823
---------- ---------
Total general and administrative expenses 839,859 635,121
---------- ---------
Net Income before other income
and expenses (89,526) 10,757
Interest expense (1,274) (1,538)
---------- ---------
Net (Loss) Income (90,800) 9,219
========== =========
Basic and Dilutive (loss) earnings per
share $ (0.02) $ -
========== =========
Weighted average number
of shares outstanding 4,290,000 4,150,000
========== =========
The accompanying notes are an integral part of these financial statements
2
NAPRODIS, INC.
STATEMENT OF CASH FLOWS
For the years ended
August 31,
-------------------------------------------------------------------------------
2010 2009
------ ------
Cash Flows from Operating Activities
Net Income (90,800) 9,219
Adjustments to reconcile net loss to net
cash used by operations:
Depreciation 6,628 11,616
Accounts Receivable 43,285 22,572
Accounts Payable and accrued expenses 7,297 26,310
Accrued payroll and payroll taxes 1,673 (63,135)
Accrued Interest 1,160 1,538
Inventory 4,194 12,156
Prepaid expenses 5,000 (2,140)
Deposits (4,995)
------- --------
Net Cash (used by) provided by operating
activities (26,558) 18,136
------- --------
Cash Flows from Investing Activities
Purchase of Property and Equipment (43,097) (13,275)
------- --------
Net Cash (used by) investing activities (43,097) (13,275)
------- --------
Cash Flows from Financing Activities
Bank overdraft - (5,182)
Sale of common stock 21,000 -
Proceeds of payable to related party 16,657 15,755
Proceeds (repayment of note payble to
related party 31,404 (6,000)
------- --------
Net cash (provided by) financing activities 196,061 4,573
Net increase (decrease) in cash (594) 9,434
Cash and cash equivalents, beginning of period 9,434 --
------- --------
Cash and cash equivalents, end of period $ 8,840 $ 9,434
======= ========
Supplemental disclosure of cash flow information
Income taxes paid $ - $ -
======= ========
Interest paid $ - $ -
======= ========
The accompanying notes are an integral part of these financial statements
3
NAPRODIS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the period August 31, 2005 to August 31, 2010
Common Stock Additional Stockholders'
---------------------- Paid-in Accumulated Equity (Deficit)
Shares Amount Capital Deficit Total
----------------------- ---------- ----------- ---------------
Balances, August 31, 2005 4,150,000 $ 4,150 $ 111,100 $ (76,806) $ 38,444
Net loss for the year ended
August 31, 2006 (73,705) (73,705)
--------- ------- ---------- ---------- ---------
Balances, August 31, 2006 4,150,000 $ 4,150 $ 111,100 $ (150,511) $ (35,261)
Net loss for the year ended
August 31, 2007 (73,388) (73,388)
--------- ------- ---------- ---------- ---------
Balances at August 31, 2007 4,150,000 $ 4,150 111,100 (223,899) $(108,649)
Net income for the year
Ended August 31, 2008 172,421 172,421
--------- ------- ---------- ---------- ---------
Balances at August 31, 2008 4,150,000 $ 4,150 $ 111,100 $ (51,478) $ 63,772
Net income for the year
ended August 31, 2009 9,219 9,219
--------- ------- ---------- ---------- ---------
Balances at August 31, 2009 4,150,000 $ 4,150 $ 111,100 $ (42,259) $ 72,991
Sale of common stock for cash 840,000 840 20,160 21,000
Net loss for the year ended
August 31, 2010 (90,800) (90,800)
--------- ------- ---------- ---------- ---------
Balances at August 31, 2010 4,990,000 $ 4,990 $ $131,260 $ (133,059) $ 3,191
========= ======= ========== ========== =========
The accompanying notes are an integral part of these financial statements
4
NAPRODIS, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2010
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Naprodis, Inc. (the "Company") was incorporated in the state of Nevada on June
4, 1999. The Company is a pharmaceutical manufacturer, supplying natural raw
materials and natural health care products to the health supplement and beauty
product industry. The Company also markets its own line of beauty products from
its offices and laboratory in Poway, California.
REVENUE RECOGNITION
Revenue is recognized when there is persuasive evidence of an arrangement,
shipment has occurred, price has been fixed or is determinable, and collectible
can be reasonably assured. Revenue from wholesale customers is shown net of any
discounts and is recognized at the time title passes and risk of loss is
transferred to the customer, i.e. FOB "freight on board". Discounts to wholesale
customers are based on trade terms, typically 5% to 15%.
E-commerce revenue is recognized upon receipt of payment and shipment to the
customer. The Company accounts for sales taxes by excluding such taxes from
revenue and cost of revenue.
SHIPPING AND HANDLING COSTS
Shipping and handling charges billed to customers are included in general
revenue. Costs associated with shipping goods to customers that are not billed
are reflected as Selling Costs.
COST OF GOODS SOLD
Cost of Goods Sold includes the expenses incurred to acquire and produce
inventory for sale, including product costs, freight in and import costs, as
well as changes in reserves for inventory shrinkage and obsolescence. Costs of
goods sold does not include depreciation.
INVENTORIES
Inventory is recorded as lower of cost (first in, first out) or market. When
required, a provision is made to reduce excess and obsolete inventory to
estimated net value. Inventory at August 31, 2010 and 2009 consists of raw
materials, work in process, and finished goods as follows:
2009 2008
Raw materials $ 103,596 $ 111,680
Work in process 563 202
Finished goods 4,469 1,000
--------- ---------
Total inventory $ 108,628 $ 112,882
========= =========
5
DEPOSITS
Deposits represent amounts paid under the Company's office and laboratory space
lease.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ from those
estimates. Significant estimates made by management are, among others,
reliability of long-lived assets and deferred taxes.
The financial statements presented include all adjustments which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for the period presented in accordance with
the accounting principles generally accepted in the United States of America.
All adjustments are of a normal recurring nature
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, cash equivalents include all
highly liquid debt instruments with original maturities of three months or less
which are not securing any corporate obligations.
CONCENTRATION OF CREDIT RISK
Cash and cash equivalents: The Company maintains its cash deposits in one bank
account, which at times may exceed federally insured limits.
Revenues and Accounts Receivable: For the years ended August 31, 2010 and 2009,
the Company had one customer whose sales amounted to approximately 92% (85% in
2009) of total revenue. Of total accounts receivable at August 31, 2010,
approximately 98% (96% in 2009) was due from this customer.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts on accounts receivable is changed to
operations in amounts sufficient to maintain the allowance for uncollectible
accounts at a level management believes is adequate to cover any probable
losses. Management determines the adequacy of the allowance based on historical
write-off percentages and the current status of accounts receivable. Accounts
receivable are charged off against the allowance when collectability is
6
determined to be permanently impaired. As of August 31, 2010, and 2009 there was
no allowance for doubtful accounts recorded, as all of the Company's receivables
were considered collectible.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are calculated using the
straight-line method with useful lives used in computing depreciation ranging
from 5 to 7 years. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Expenditures for maintenance and repairs are charged to operations as incurred;
additions, renewals and betterments are capitalized.
LONG-LIVED ASSETS
The Company accounts for long-lived assets under the FASB ASC 340-10 Other
Assets and Deferred Costs, (SFAS 142 and 144: "Accounting for Goodwill and Other
Intangible Assets" and "Accounting for Impairment or Disposal of Long-Lived
Assets") . In accordance with ASC 340, long-lived assets, goodwill and certain
identifiable intangible assets held and used by the Company are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset will not be recoverable. For purposes of evaluating
the recoverability of long-lived assets, goodwill and intangible assets, the
recoverability test is performed using undiscounted net cash flows related to
the long-lived assets. No impairment has been applied to the company's long
lived assets.
BASIC AND DILUTED INCOME (LOSS) PER SHARE
Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per
Share for the periods presented. Basic net loss per share is based upon the
weighted average number of common shares outstanding. Diluted net loss per share
is based on the assumption that all dilative convertible shares and stock
options were converted or exercised. Dilution is computed by applying the
treasury stock method. Under this method, options and warrants are assumed
exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds obtained thereby we used to purchase common stock at the average
market price during the period.
The Company has no potentially dilutive securities outstanding as of August 31,
2010.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Financial Accounting Standards Board issued ASC (Accounting Standards
Codification) 820-10 (SFAS No. 157), "Fair Value Measurements and Disclosures"
for financial assets and liabilities. FASB ASC 820-10 provides a framework for
measuring fair value and requires expanded disclosures regarding fair value
measurements. FASB ASC 820-10 defines fair value as the price that would be
received for an asset or the exit price that would be paid to transfer a
liability in the principal or most advantageous market in an orderly transaction
7
between market participants on the measurement date. FASB ASC 820-10 also
establishes a fair value hierarchy which requires an entity to maximize the use
of observable inputs, where available. The following summarizes the three levels
of inputs required by the standard that the Company uses to measure fair value:
- Level 1: Quoted prices in active markets for identical assets or
liabilities.
- Level 2: Observable inputs other than Level 1 prices, such as quoted
prices for similar assets or liabilities; quoted prices in markets
that are not active, or other inputs that are observable or can be
corroborated by observable market data for substantially the full term
of the related assets or liabilities.
- Level 3: Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets or
liabilities.
The carrying amounts of the Company's financial liabilities as at September 30,
2010 were measured against the three levels of inputs required by the standard
to measure fair value:
Level 1 Level 2 Level 3
------- ------- -------
Quoted Observable Unobservable
Prices Inputs Inputs Total
------------ ----------- ------------- ------------
Note Payable to
Related Party $ 63,873 $ 63,873
--------- --------- ---------- --------
$ - $ 63,873 $ - $ 63,873
========= ========= ========== ========
PROVISION FOR INCOME TAXES
The Company utilizes FASB ASC 740, "Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the tax basis of assets and
liabilities and their financial reporting amounts based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established if it is
more likely than not that some portion or all of the deferred tax asset will not
be realized. The Company generated a deferred tax credit through net operating
loss carryforwards. As of August 31, 2010 the Company had federal and state net
operating loss carryforwards of approximately $ 196,000 ($117,000 in 2009) that
can be used to offset future taxable income. The carryforwards will begin
expiring in 2014 unless utilized in earlier years.
The tax effects of the temporary differences that give rise to the Company's
estimated deferred tax assets and liabilities are as follows:
8
2010 2009
-----------------------
Statutory tax rate 34% 34%
Net operating loss carryforwards $66,600 $40,000
Valuation allowance for deferred tax assets (66,600) (40,000)
------- -------
$ 0 $_______
=======
NOTE 2 - PROPERTY AND EQUIPMENT
A summary as of August 31, 2010 and 2009 is as follows:
2010 2009
Machinery and Equipment $ 48,001 $ 40,936
Automobile 28,800 6,800
Furniture and Fixtures 10,292 454
-------- --------
87,093 48,190
Less accumulated depreciation (29,056) (26,622)
-------- --------
Property and equipment, net $ 58,037 $ 21,568
======== ========
NOTE 3 - OPERATING LEASES
The Company leased office and warehouse space under a lease that expired January
31, 2010. On February 1 the Company moved to new premises under a five year
lease. The future minimum payments for lease and common area costs are as
follows:
2011 $ 79,908
2012 79,908
2013 79,908
2014 79,908
2015 6,659
--------
$326,295
========
The Company also leases office equipment under leases expiring February 28,
2015. The future minimum lease payments are as follows:
2011 $ 7,776
2012 7,776
2013 7,002
2014 3,108
2015 1,554
--------
$ 27,216
========
9
NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS
In May 2009, the FASB issued new guidance for accounting for subsequent events.
The new guidance, which is now part of ASC 855-10, Subsequent Events (formerly,
SFAS No. 165, Subsequent Events) is consistent with existing auditing standards
in defining subsequent events as events or transactions that occur after the
balance sheet date but before the financial statements are issued or are
available to be issued, but it also requires the disclosure of the date through
which an entity has evaluated subsequent events and the basis for that date. The
new guidance defines two types of subsequent events: "recognized subsequent
events" and "non-recognized subsequent events." Recognized subsequent events
provide additional evidence about conditions that existed at the balance sheet
date and must be reflected in the company's financial statements. Non-recognized
subsequent events provide evidence about conditions that arose after the balance
sheet date and are not reflected in the financial statements of a company.
Certain non-recognized subsequent events may require disclosure to prevent the
financial statements from being misleading. The new guidance was effective on a
prospective basis for interim or annual periods ending after June 15, 2009. The
Company adopted the provisions of ASC 855-10 as required.
In June 2009, the FASB issued new guidance which is now part of ASC 105-10
(formerly Statement of Financial Accounting Standards No. 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles). ASC 105-10 replaces FASB Statement No. 162, "The
Hierarchy of Generally Accepted Accounting Principles", and establishes the FASB
Accounting Standards Codification as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with generally accepted
accounting principles. ASC 105-10 is effective for interim and annual periods
ending after September 15, 2009. The adoption of ASC 105-10 did not have a
material impact on the Company's financial statements.
In January 2010, the FASB issued ASU No. 2010-01, amending SFAS No. 168, "The
FASB Accounting Standards Codification(TM) and the Hierarchy of Generally
Accepted Accounting Principles." This Standard codified in ASC 105 is being
modified to include the authoritative and non-authoritative levels of GAAP. This
amendment is effective for financial statements issued for interim and annual
periods ending after September 15, 2009. ASU No. 2010-01 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.
In February 2010, the FASB issued ASU No. 2010-09, "Subsequent Events ( ASC
Topic 855), Amendments to Certain Recognition and Disclosure Requirements." This
Standard update requires a SEC Filer to (1) evaluate subsequent events through
the date that the financial statements are issued or available to be issued, (2)
defines "SEC Filer" as an entity that is required to file or furnish its
financial statements with either the SEC or, with respect to an entity subject
to Section 12(i) of the Securities Exchange Act of 1934, as amended, the
appropriate agency under that Section, (3) not be bound to disclosing the date
through which subsequent events have been evaluated, (4) note the definition of
10
public entity is not longer defined nor necessary for Topic 855, (5) note the
scope of the reissuance disclosure requirements is refined to include revised
financial statements only. These Updates are effective for interim or annual
periods ending after June 15, 2010. ASU No. 2010-09 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.
NOTE 5 - PAYABLES TO/ADVANCES FROM RELATED PARTIES
August 31,
------------------
2010 2009
---- ----
$142,728 $94,667
As of August 31, 2010, the Company owed $69,997 to Phybiosis, $8,858 to S.A.R.L.
Naprodis, and $63,873 to the Company's president, Dr. Paul Petit. The amounts
owed are unsecured and are payable on demand. The amounts owed to Phybiosis and
S.A.R.L. Naprodis do not bear interest. The advance from Dr.Petit bears interest
at 5% per year.
Phybiosis is a partnership that, from time-to-time, sells raw materials to the
Company. Two of the Company's officers and directors are the partners of
Phybiosis. Purchases from Phybosis during periods indicated were:
Year ended August 31, 2010: $12,999
Year ended August 31, 2009: $ 5,122
S.A.R.L. Naprodis is a French corporation which owns 43% of the Company's
outstanding shares. S.A.R.L. Naprodis supplies the Company with minor quantities
of raw materials which the Company uses in the manufacture of its products. A
director of the Company owns 40% of S.A.R.L. Naprodis.
Purchases from S.A.R.L. Naprodis during periods indicated were:
Year ended August 31, 2010: $17,758
Year ended August 31, 2009: $ 8,756
The Company purchases raw materials from Phybiosis and S.A.R.L. Naprodis at
their cost. The Company pays the shipping charges for any raw materials
purchased from S.A.R.L. Naprodis.
NOTE 6 - LOSS CONTINGENCIES, LEGAL PROCEEDINGS
There were no loss contingencies or legal proceedings against the Company with
respect to matters arising in the ordinary course of business. Neither the
Company nor any of its officers or directors is involved in any other litigation
either as plaintiffs or defendants, and have no knowledge of any threatened or
pending litigation against them or any of the officers or directors.
11
NOTE 7 - SEGMENTED INFORMATION
Although the Company sells more than 400 products, only the Company's skin
care product line accounted for more than 10% of the Company's revenues for the
fiscal years ended August 31, 2010 and 2009.
The following presents certain information concerning the Company's skin
care product segment:
Year ended August 31, 2010:
--------------------------------------------------------------------
All
Other
Skin Care Segments Total
---------- ---------- ------------
Revenue $813,006 $91,682 $904,687
Interest revenue - - -
Interest expense - 1,274 1,274
Depreciation and
Amortization - 6,628 6,628
Segment profit (loss) 28,243 (119,043) (90,800)
Segment assets (1) 8,312 222,277 230,589
Expenditures for
segment assets 116,312 32,805 149,112
-------------------------------------------------------------------
Year ended August 31, 2009:
-------------------------------------------------------------------
All
Other
Skin Care Segments Total
---------- ---------- ------------
Revenue $689,552 $94,890 $784,442
Interest revenue - - -
Interest expense - 1,538 1,538
Depreciation and
Amortization - 11,616 11,616
Segment profit (loss) 35,402 (26,183) 9,219
Segment assets (1) 8,750 234,448 242,198
Expenditures for
segment assets 107,305 23,555 130,860
-------------------------------------------------------------------
(1) Inventory is the only asset that can be segmented since the remaining
assets of the Company are used for all of the Company's products.
12
NOTE 8 - SUBSEQUENT EVENTS
Events subsequent to August 31, 2010 have been evaluated through the date these
statements were available to be issued. No subsequent events were required to be
disclosed.
13
NAPRODIS, INC.
INTERIM FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)
NAPRODIS, INC.
BALANCE SHEET
as at February 28, 2011 and August 31,2010
--------------------------------------------------------------------------------
February 28, August 31,
ASSETS 2011 2010
------------- -----------
(Unaudited)
Current Assets
Cash and cash equivalents $ 538 $ 8,840
Accounts Receivable 34,292 43,915
Inventory 109,374 108,628
Prepaid Expenses 1,010 1,010
------------- -----------
145,214 162,393
Property and equipment,
net of accumulated depreciation 53,680 58,037
Other Assets
Deposits 10,159 10,159
TOTAL ASSETS $ 209,053 $ 230,589
============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank Ovderdraft 5,797 -
Accounts Payable and accrued expenses 56,277 58,355
Accrued payroll and payroll taxes 12,716 12,605
Accrued Interest 14,347 13,710
Payables to related party 75,085 78,855
Note payable to related party 81,275 63,873
------------- -----------
245,497 227,398
------------- -----------
Stockholders' Equity (Deficit)
Preferred stock, $0.001 par value,
10,000,000 shares authorized,
0 shares issued - -
Common Stock, $0.001 par value,
authorized 60,000,000 shares; issued
and outstanding 4,990,000 as at
February 28, 2011 and
4,990,000 as at August 31, 2010 4,990 4,990
Additional paid-in capital 131,260 131,260
Accumulated Deficit (172,694) (133,059)
------------- -----------
(36,444) (3,191)
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 209,053 $ 230,589
============= ===========
The accompanying notes are an integral part of these financial statements
1
NAPRODIS, INC.
INCOME STATEMENT
For the six months ended
February 28,
--------------------------------------------------------------------------------
(Unaudited)
2011 2010
------------- -----------
Revenues $ 518,291 $ 406,904
Cost of Sales 73,787 40,761
------------- -----------
Gross Profit $ 518,291 $ 366,143
Expenses
Occupancy Costs 69,222 34,320
Salaries and wages 222,700 139,608
Freight 51,114 30,827
Legal and professional fees 14,550 6,025
Other general and administrative
Expenses 199,314 168,945
------------- -----------
Total general and administrative
expenses 556,900 379,725
------------- -----------
Net Income before other income
and expenses (38,609) (13,582)
Interest expense 1,026 770
------------- -----------
Net Income (39,635) (14,352)
============= ===========
Basic and Dilutive earnings per share $ (0.01) $ (0.00)
============= ===========
Weighted average number
of shares outstanding 4,990,000 4,150,000
============= ===========
The accompanying notes are an integral part of these financial statements
2
NAPRODIS, INC.
STATEMENT OF CASH FLOWS
For the six months ended February 28,
--------------------------------------------------------------------------------
(Unaudited)
2011 2010
------------- -----------
Cash Flows from Operating Activities
Net Income (39,635) (14,352)
Adjustments to reconcile net loss to net
cash used by operations:
Depreciation 4,357 5,808
Change in operating assets and
liabilities:
Accounts Receivable 9,623 36,365
Accounts Payable and accrued expenses (2,078) (7,018)
Accrued payroll and payroll taxes 111 23
Accrued Interest 637 385
Inventory (746) (34,133)
Prepaid expenses - 5,000
Deposits -
Net Cash provided by operating
activities (27,731) (7,922)
------------- -----------
Cash Flows from Investing Activities
Purchase of Property and Equipment - (4,200)
Capital Contributed
------------- -----------
Net Cash (used by) investing
activities - (4,200)
------------- -----------
Cash Flows from Financing Activities
Bank overdraft 5,797 -
Proceeds (repayment) of payable to
related party (3,770) 5,707
Proceeds (repayment) of note payable to
related party 17,402 1,503
Net Cash (used by) financing activities 19,429 7,210
------------- -----------
Net increase (decrease) in cash (8,302) (4,912)
Cash and cash equivalents, beginning of period 8,840 9,230
------------- -----------
Cash and cash equivalents, end of period $ 538 $ 4,318
============= ===========
Supplemental disclosure of cash flow
information
Income taxes paid $ - $ -
============= ===========
Interest paid $ - $ -
============= ===========
The accompanying notes are an integral part of these financial statements
3
NOTE 1- BASIS OF PRESENTATION AND NATURE OF BUSINESS
Basis of Presentation
These unaudited interim financial statements as of and for the six months ended
February 28, 2011 reflect all adjustments which, in the opinion of management,
are necessary to fairly state the Company's financial position and the results
of its operations for the periods presented, in accordance with the accounting
principles generally accepted in the United States of America. All adjustments
are of a normal recurring nature.
These unaudited interim financial statements should be read in conjunction with
the Company's financial statements and notes thereto included in the Company's
fiscal year end August 31, 2010 report. The Company assumes that the users of
the interim financial information herein have read, or have access to, the
audited financial statements for the preceding period, and that the adequacy of
additional disclosure needed for a fair presentation may be determined in that
context. The results of operations for the six month period ended February 28,
2011 are not necessarily indicative of results for the entire year ending August
31, 2011.
Nature of Business
Naprodis, Inc. (the "Company") was incorporated in the state of Nevada on June
4, 1999. The Company is a pharmaceutical manufacturer, supplying natural raw
materials and natural health care products to the health supplement and beauty
product industry. The Company also markets its own line of beauty products from
its offices and laboratory in Poway, California.
Summary of Significant Accounting Policies
REVENUE RECOGNITION
Revenue is recognized when there is persuasive evidence of an arrangement,
shipment has occurred, price has been fixed or is determinable, and collectible
can be reasonably assured. Revenue from wholesale customers is recognized at the
time title passes and risk of loss is transferred to the customer, i.e. FOB
"freight on board". Discounts are based on trade terms. E-commerce revenue is
recognized upon receipt of payment and shipment to the customer. The Company
accounts for sales taxes by excluding such taxes from revenue and cost of
revenue.
SHIPPING AND HANDLING COSTS
Shipping and handling charges billed to customers are included in general
revenue. Costs associated with shipping goods to customers that are not billed
are reflected as Selling Costs.
4
COST OF GOODS SOLD
Cost of Goods Sold includes the expenses incurred to acquire and produce
inventory for sale, including product costs, freight in and import costs, as
well as changes in reserves for inventory shrinkage and obsolescence.
INVENTORIES
Inventory is recorded as lower of cost (first in, first out) or market. When
required, a provision is made to reduce excess and obsolete inventory to
estimated net value. Inventory at February 28, 2011 and August 31, 2010
consisted of raw materials, work in process, and finished goods as follows:
February 28, August 31,
2011 2010
------------ -----------
Raw materials $ 107,142 $ 103,596
Work in process 1,014 563
Finished goods 1,219 4,469
--------- ---------
Total inventory $ 109,375 $ 108,628
========= =========
DEPOSITS
Deposits represent amounts paid under the Company's office and laboratory space
lease.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ from those
estimates. Significant estimates made by management are, among others,
realizability of long-lived assets and deferred taxes.
The financial statements presented include all adjustments which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for the period presented in accordance with
the accounting principles generally accepted in the United States of America.
All adjustments are of a normal recurring nature.
5
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, cash equivalents include all
highly liquid debt instruments with original maturities of three months or less
which are not securing any corporate obligations.
CONCENTRATION OF CREDIT RISK
Cash and cash equivalents: The Company maintains its cash deposits in one bank
account, which at times may exceed federally insured limits.
Revenues and Accounts Receivable: For the six months ended February 28, 2011,
the Company had one customer whose sales amounted to approximately 85% of total
revenue. Of total accounts receivable at February 28, 2011, approximately 98%
was due from this customer.
Product Purchases and Accounts Payable: The Company purchases approximately 42%
of its products from two companies that are related parties (See Note 5).
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts on accounts receivable is changed to
operations in amounts sufficient to maintain the allowance for uncollectible
accounts at a level management believes is adequate to cover any probable
losses. Management determines the adequacy of the allowance based on historical
write-off percentages and the current status of accounts receivable. Accounts
receivable are charged off against the allowance when collectability is
determined to be permanently impaired. As of February 28, 2011 there was no
allowance for doubtful accounts recorded, as all of the Company's receivables
were considered collectible.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are calculated using the
straight-line method with useful lives used in computing depreciation ranging
from 5 to 7 years. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Expenditures for maintenance and repairs are charged to operations as incurred;
additions, renewals and betterments are capitalized.
6
E>
LONG-LIVED ASSETS
The Company accounts for long-lived assets under the FASB ASC 340-10 Other
Assets and Deferred Costs, (SFAS 142 and 144: "Accounting for Goodwill and Other
Intangible Assets" and "Accounting for Impairment or Disposal of Long-Lived
Assets") . In accordance with ASC 340, long-lived assets, goodwill and certain
identifiable intangible assets held and used by the Company are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset will not be recoverable. For purposes of evaluating
the recoverability of long-lived assets, goodwill and intangible assets, the
recoverability test is performed using undiscounted net cash flows related to
the long-lived assets. No impairment has been applied to the company's long
lived assets.
BASIC AND DILUTED INCOME (LOSS) PER SHARE
Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per
Share for the periods presented. Basic net loss per share is based upon the
weighted average number of common shares outstanding. Diluted net loss per share
is based on the assumption that all dilative convertible shares and stock
options were converted or exercised. Dilution is computed by applying the
treasury stock method. Under this method, options and warrants are assumed
exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds obtained thereby we used to purchase common stock at the average
market price during the period.
The Company has no potentially dilutive securities outstanding as of February
28, 2011.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Financial Accounting Standards Board issued ASC (Accounting Standards
Codification) 820-10 (SFAS No. 157), "Fair Value Measurements and Disclosures"
for financial assets and liabilities. FASB ASC 820-10 provides a framework for
measuring fair value and requires expanded disclosures regarding fair value
measurements. FASB ASC 820-10 defines fair value as the price that would be
received for an asset or the exit price that would be paid to transfer a
liability in the principal or most advantageous market in an orderly transaction
between market participants on the measurement date. FASB ASC 820-10 also
establishes a fair value hierarchy which requires an entity to maximize the use
of observable inputs, where available. The following summarizes the three levels
of inputs required by the standard that the Company uses to measure fair value:
- Level 1: Quoted prices in active markets for identical assets or
liabilities.
- Level 2: Observable inputs other than Level 1 prices, such as quoted
prices for similar assets or liabilities; quoted prices in markets
that are not active, or other inputs that are observable or can be
corroborated by observable market data for substantially the full term
of the related assets or liabilities.
7
- Level 3: Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets or
liabilities.
The carrying amounts of the Company's financial liabilities as at February 28,
2011 were measured against the three levels of inputs required by the standard
to measure fair value:
Level 1 Level 2 Level 3
-------- ---------- ------------
Quoted Observable Unobservable
Prices Inputs Inputs Total
-------- ---------- ------------- ------
Note Payable to Related Party $ 81,275 $81,275
-------- ---------- ------------- -------
$ - $ 81,275 - 81,275
======== ========== ============= =======
PROVISION FOR INCOME TAXES
The Company utilizes FASB ASC 740, "Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities are
determined based on the difference between the tax basis of assets and
liabilities and their financial reporting amounts based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company generated a deferred tax credit through net operating loss
carryforwards. As of February 28, 2011 the Company had federal and state net
operating loss carryforwards of approximately $ 236,000 that can be used to
offset future federal income tax. The federal and state net operating losses are
reduced by a valuation allowance, when, in the opinion of management,
utilization is not reasonably assured.
NOTE 2 - PROPERTY AND EQUIPMENT
A summary as of February 28, 2011 and August 31, 2010 is as follows:
February 28 August 31,
2011 2010
----------- ----------
Machinery and Equipment $ 48,001 $ 48,001
Automobile 28,800 28,800
Furniture and Fixtures 10,292 10,292
-------- ----------
87,093 87,093
Less accumulated depreciation (33,413) ( 29,056)
--------- ----------
Property and equipment, net $ 53,680 $ 58,037
========= ==========
8
NOTE 3 - OPERATING LEASES
The Company leased office and warehouse space under a lease that expired January
31, 2010. On February 1, 2011 the Company moved to new premises under a five
year lease. The future minimum payments for lease and common area costs are as
follows, for the fiscal years ending August 31,
2011 $ 46,613
2012 79,908
2013 79,908
2014 79,908
2015 33,295
---------
$399,540
NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS
In May 2009, the FASB issued new guidance for accounting for subsequent events.
The new guidance, which is now part of ASC 855-10, Subsequent Events (formerly,
SFAS No. 165, Subsequent Events) is consistent with existing auditing standards
in defining subsequent events as events or transactions that occur after the
balance sheet date but before the financial statements are issued or are
available to be issued, but it also requires the disclosure of the date through
which an entity has evaluated subsequent events and the basis for that date. The
new guidance defines two types of subsequent events: "recognized subsequent
events" and "non-recognized subsequent events." Recognized subsequent events
provide additional evidence about conditions that existed at the balance sheet
date and must be reflected in the company's financial statements. Non-recognized
subsequent events provide evidence about conditions that arose after the balance
sheet date and are not reflected in the financial statements of a company.
Certain non-recognized subsequent events may require disclosure to prevent the
financial statements from being misleading. The new guidance was effective on a
prospective basis for interim or annual periods ending after June 15, 2009. The
Company adopted the provisions of ASC 855-10 as required.
In June 2009, the FASB issued new guidance which is now part of ASC 105-10
(formerly Statement of Financial Accounting Standards No. 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles). ASC 105-10 replaces FASB Statement No. 162, "The
Hierarchy of Generally Accepted Accounting Principles", and establishes the FASB
Accounting Standards Codification as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with generally accepted
accounting principles. ASC 105-10 is effective for interim and annual periods
ending after September 15, 2009. The adoption of ASC 105-10 did not have a
material impact on the Company's financial statements.
9
In January 2010, the FASB issued ASU No. 2010-01, amending SFAS No. 168, "The
FASB Accounting Standards Codification(TM) and the Hierarchy of Generally
Accepted Accounting Principles." This Standard codified in ASC 105 is being
modified to include the authoritative and non-authoritative levels of GAAP. This
amendment is effective for financial statements issued for interim and annual
periods ending after September 15, 2009. ASU No. 2010-01 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.
In February 2010, the FASB issued ASU No. 2010-09, "Subsequent Events ( ASC
Topic 855), Amendments to Certain Recognition and Disclosure Requirements." This
Standard update requires a SEC Filer to (1) evaluate subsequent events through
the date that the financial statements are issued or available to be issued, (2)
defines "SEC Filer" as an entity that is required to file or furnish its
financial statements with either the SEC or, with respect to an entity subject
to Section 12(i) of the Securities Exchange Act of 1934, as amended, the
appropriate agency under that Section, (3) not be bound to disclosing the date
through which subsequent events have been evaluated, (4) note the definition of
public entity is not longer defined nor necessary for Topic 855, (5) note the
scope of the reissuance disclosure requirements is refined to include revised
financial statements only. These Updates are effective for interim or annual
periods ending after June 15, 2010. ASU No. 2010-09 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.
NOTE 5 - NOTE PAYABLE TO RELATED PARTY
February 28, August 31,
2011 2010
------------ -------------
$81,275 $ 63,873
A note payable to related party Paul Petit, Chief Executive Officer and
stockholder of the Company, is payable on demand and bears interest at 5% per
annum.
NOTE 6 - LOSS CONTINGENCIES, LEGAL PROCEEDINGS
There were no loss contingencies or legal proceedings against the Company with
respect to matters arising in the ordinary course of business. Neither the
Company nor any of its officers or directors is involved in any other litigation
either as plaintiffs or defendants, and have no knowledge of any threatened or
pending litigation against them or any of the officers or directors.
NOTE 7 - SEGMENTED INFORMATION
Although the Company sells more than 400 products, only the Company's skin care
product line accounted for more than 10% of the Company's revenues for the six
months ended February 28, 2011 and 2010.
10
The following presents certain information concerning the Company's
skin care product segment.
Six months ended February 28, 2011:
--------------------------------------------------------------------
All
Other
Skin Care Segments Total
---------- ---------- ------------
Revenue $481,265 $37,026 $518,291
Interest revenue - - -
Interest expense - 1,026 1,026
Depreciation and
Amortization - 4,357 4,357
Segment profit (loss) 7,478 47,113 (39,635)
Segment assets (1) 7,169 201,884 209,053
Expenditures for
segment assets 46,461 15,487 61,948
-------------------------------------------------------------------
Six months ended February 28, 2010:
-------------------------------------------------------------------
All
Other
Skin Care Segments Total
---------- ---------- ------------
Revenue $362,431 $44,473 $406,904
Interest revenue - - -
Interest expense - 770 770
Depreciation and
Amortization - 5,808 5,808
Segment profit (loss) 10,799 (25,151) (14,352)
Segment assets (1) 8,609 221,980 230,589
Expenditures for
segment assets 29,078 7,269 36,347
-------------------------------------------------------------------
(1) Inventory is the only asset that can be segmented since the remaining
assets of the Company are used for all of the Company's products.
NOTE 8 - SUBSEQUENT EVENTS
Events subsequent to February 28, 2011 have been evaluated through May 13, 2011,
the date these statements were available to be issued, to determine whether they
should be disclosed. Management found no subsequent events to be disclosed.
11
>
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY ...................................................
FORWARD LOOKING STATEMENTS ...........................................
RISK FACTORS .........................................................
DILUTION AND COMPARATIVE SHARE DATA...................................
USE OF PROCEEDS ......................................................
MARKET FOR COMMON STOCK ..............................................
MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATION ...........................................
BUSINESS..............................................................
MANAGEMENT ...........................................................
PRINCIPAL SHAREHOLDERS................................................
OFFERING BY NAPRODIS .................................................
SELLING SHAREHOLDERS..................................................
DESCRIPTION OF SECURITIES.............................................
LEGAL PROCEEDINGS.....................................................
EXPERTS ..............................................................
INDEMNIFICATION ......................................................
AVAILABLE INFORMATION.................................................
FINANCIAL STATEMENTS..................................................
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this prospectus, and
if given or made, such information or representations must not be relied upon as
having been authorized by Naprodis. This prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, any of the securities offered in
any jurisdiction to any person to whom it is unlawful to make an offer by means
of this prospectus.
Until _______, 2011 all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by us in
connection with the issuance and distribution of the securities being
registered. No expenses will be charged to the selling shareholders.
SEC Filing Fee $ 41
Blue Sky Fees and Expenses 1,000
Printing and Engraving Expenses 500
Legal Fees and Expenses 40,000
Accounting Fees and Expenses 70,000
Miscellaneous 8,549
--------
TOTAL $120,000
========
All expenses other than the SEC filing fee are estimated.
Item 14. Indemnification of Officers and Directors
Section 78.751 of the Nevada Revised Statutes and Article VIII of our
bylaws provide that we may indemnify any and all of our officers, directors,
employees or agents or former officers, directors, employees or agents, against
expenses actually and necessarily incurred by them, in connection with the
defense of any legal proceeding or threatened legal proceeding, except as to
matters in which such persons shall be determined to not have acted in good
faith and in our best interest.
Item 15. Recent Sales of Unregistered Securities.
During the two months ended July 31, 2010 we sold 840,000 shares of our
common stock to a group of private investors for $21,000. We relied upon the
exemption provided by Section 4(2) of the Securities Act of 1933 with respect to
the sale of these shares. The persons who acquired these shares were
sophisticated investors. The persons who acquired these shares acquired the
shares for their own accounts. The certificates representing the shares of
common stock bear legends stating that the shares may not be offered, sold or
transferred other than pursuant to an effective registration statement under the
Securities Act of 1933, or pursuant to an applicable exemption from
registration. The shares are "restricted" securities as defined in Rule 144 of
the Securities and Exchange Commission. We did not pay any commissions in
connection with the sale of these shares
With the exception of the foregoing, we have not sold any unregistered
securities since December 2003.
1
Item 16. Exhibits
The following Exhibits are filed with this Registration Statement:
Exhibit
Number Exhibit Name
3.1 Articles of Incorporation, as amended *
3.2 Bylaws *
5 Opinion of Counsel
23.1 Consent of Attorneys
23.2 Consent of Accountants
* Filed with original registration statement
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section l0 (a)(3) of the
Securities Act:
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
2
(3) To remove from registration by means of a post-effective amendment any
of the securities that remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of l933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
3
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser bye means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
4
SIGNATURES
In accordance with the requirements of the Securities Act of l933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Poway,
State of California on the 23rd day of June, 2011.
NAPRODIS, INC.
By: /s/ Paul Petit
-------------------------------
Paul Petit, Principal Executive Officer
In accordance with the requirements of the Securities Act of l933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Paul Petit Principal Executive, June 23, 2011
------------------------ Financial and Accounting
Paul Petit Officer and a Director
/s/ Alain S. Petit Director June 23, 2011
--------------------------
Alain S. Petit
5
NAPRODIS, INC.
FORM S-1
EXHIBIT
