Attached files
As filed with the Securities and Exchange Commission on ______, 2012
Commission File No. 333- 122009
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
Amendment No. 6
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
---------------------------------
(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
14336 Mountain Road
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
-----------------------------------------------------------------------------
(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 June 30, 2012. However, we
may, at our discretion, end the offering sooner or extend the offering until
July 31, 2012.
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 $125,000, of which approximately $114,000 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 ___________, 2012
1
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 December 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,
2
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.
3
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 exercise 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.
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.
In October 2011 we lost Plant Devas Inc., our largest customer. During the
year ended August 31, 2011, this customer accounted for approximately 85% of our
total revenue. The loss of this customer has had a negative impact on our
business.
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
retail outlets and the internet. In addition, the nutritional supplement market
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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 August 31, 2011 we had 4,990,000 outstanding shares of common stock,
which had a negative net tangible book value as of that date of approximately
$(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.
5
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 December 31, 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
Negative net tangible book value per share
as of December 31, 2011 $(0.01) $(0.01) $(0.01) $(0.01)
Offering price, per share $0.15 $0.15 $0.15 $0.15
Net tangible book value after offering $0.00 $0.01 $0.03 $0.05
Dilution to investors in this offering $0.15 $0.14 $0.12 $0.10
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 $125,000.
As of December 31, 2011 we had paid approximately $114,000 of these expenses
with cash which we received from the private sale of our common stock ($115,000)
and loan proceeds. 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, 2011 and 2010, approximately 94%,
and 89%, 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
December 31, 2012 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 December 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, 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.
Occupancy Costs I We doubled the square footage of our
facility.
Salaries and wages I We hired new employees and increased
compensation paid to existing employees.
Freight I Increase in sales.
Other general and D Company-wide cost reductions.
administrative expenses
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The following is an explanation of our material sources and (uses) of cash
during the years ended August 31, 2011 and 2010:
August
-------------------
2011 2010
---- ----
Cash (used) provided by operations $(54,437) $(26,558)
Purchase of equipment - (43,097)
Sale of common stock - 21,000
Advances from related parties 61,323 48,061
--------- ---------
Increase (Decrease) in cash during the period 6,886 $ (594)
========= =========
In October 2011, our largest customer, which accounted for approximately
85% of our sales during the year ended August 31, 2011, decided to manufacture
for its own account the products which they had previously been buying from us.
Other than the foregoing, 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 $125,000.
As of December 31, 2011 we had paid approximately $114,000 of these expenses
with cash which we received from the private sale of our common stock ($115,000)
and loan proceeds. The remaining expenses of this offering will be paid from the
proceeds of this offering or cash from generated from our operations. . We
expect cash generated by our future operations will support our business, as it
is currently conducted, for the twelve month period following the date of this
prospectus.
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.
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Although we sell more than 400 products, sales of the following products
represented 29% of our gross product sales during the year ended August 31,
2011, and 18% of our gross product sales during the year ended August 31, 2010.
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
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)
Although our skin care product segment accounts for the bulk of our sales,
during the year ended August 31, 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, 2011 and
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2010, approximately 94% and 89% 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.
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.
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During the periods presented the percent of our sales through each
distribution channel were:
Year Ended Year Ended
August 31, 2011 August 31, 2010
--------------- ---------------
Private Label Resellers 92% 91%
Bulk Distribution 6% 7%
Internet 1% 1%
Retail 1% 1%
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
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.
12
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 2011 exceeded $9
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.
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
13
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.
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.
14
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.
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 December 31, 2011 we had eight full time employees and one part time
employee.
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.
15
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
PlaceTypeInstitute of PlaceNameTechnology in CityplaceAngers,
country-regionFrance, Dr. Petit has not had any practical experience in
accounting and financial reporting during the past five years.
Jean-Philippe Petit has been our Vice President and 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 Bank 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.
16
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.
Stock Option All Other
Name and Principal Salary Bonus Awards Awards Compensation
Position Period (1) (2) (3) (4) (5) Total
------------------ ------ ------ ----- ------ ------ ------------ -----
Paul Petit, 2011 $68,329 $68,329
President and 2010 $73,200 -- -- -- -- $73,200
Chief Executive 2009 $76,115 -- -- -- -- $76,115
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, 2012 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.
17
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.
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, 2011: $12,021
Year ended August 31, 2010: $12,999
Year ended August 31, 2009: $ 5,122
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, 2011: $ -
Year ended August 31, 2010: $17,758
Year ended August 31, 2009: $ 8,756
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.
18
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, 2011, we owed $90,901 to Phybiosis, $4,418 to S.A.R.L.
Naprodis, and $108,732 to three of our officers. 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 our officers bears interest at 5% per year. There are no
written agreements with respect to these loans.
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%
19
(1) S.A.R.L. Naprodis is a French corporation. Alain S. Petit owns 40% of
S.A.R.L. Naprodis. The remaining 60% of S.A.R.L. Naprodis is owned by
persons who are not affiliated with us.
OFFERING BY NAPRODIS
By means of this prospectus we are offering to the public up to 3,500,000
shares of our common stock at a price of $0.15 per share. We arbitrarily
determined the $0.15 offering price and this price does not bear any
relationship to our assets, book value or any other generally accepted criteria
of value for investment.
We will offer the shares through our officers, Paul Petit and Alain Petit,
on a "best efforts" basis. Paul Petit and Alain Petit are not registered with
the Securities and Exchange Commission as brokers or dealers. Paul Petit and
Alain Petit are not required to be registered as brokers or dealers since
neither Paul Petit or Alain Petit are engaged in the business of buying or
selling securities for others.
In addition, Paul Petit and Alain Petit will be relying on the exemption
provided by Rule 3a4-1 of the Securities and Exchange Commission with respect to
their participation in this offering. Rule 3a4-1 provides, in part, that an
officer of an issuer of securities will not be deemed to be a broker solely by
reason of his participation in the sale of the securities of the issuer if the
officer:
(1) Is not subject to a statutory disqualification, as that term is defined
in Section 3(a)(39) of the Securities Exchange Act of 1934, at the time of his
participation;
(2) Is not compensated in connection with his participation by the payment
of commissions or other remuneration based either directly or indirectly on
transactions in securities;
(3) Is not at the time of his participation an associated person of a
broker or dealer;
(4) The officer primarily performs, or is intended primarily to perform at
the end of the offering, substantial duties for or on behalf of the issuer
otherwise than in connection with transactions in securities;
(5) The officer was not a broker or dealer, or an associated person of a
broker or dealer, within the preceding twelve months; and
(6) The officer does not participate in selling an offering of securities
for any issuer more than once every twelve months.
Paul Petit and Alain Petit meet the requirements of Rule 3a4-1 since
neither Paul Petit nor Alain Petit:
o Are subject to a statutory disqualification, as that term is defined
in Section 3(a)(39) of the Securities Exchange Act of 1934;
20
o Will be compensated in connection with their participation in the
offering by the payment of commissions or other remuneration based
either directly or indirectly on the sale of our common stock; and
o Are an associated person of a broker or dealer.
In addition, both Paul Petit and Alain Petit:
o Perform, and will perform at the end of the offering, substantial
duties for or on behalf of us otherwise than in connection with the
offering;
o Have not been a broker or dealer, or an associated person of a broker
or dealer, within the preceding twelve months, and
o Have not participated in selling an offering of securities for any
issuer during the past twelve months.
We will not employ any brokers or sales agents to sell these shares and we
will not compensate any officer or third party for their participation in this
offering. There is no firm commitment by any person to purchase or sell any of
these shares and there is no assurance that any such shares offered will be
sold. All proceeds from the sale of the shares will be promptly delivered to us.
We plan to end the offering on September 30, 2011 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 --
21
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
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
22
"distribution" of the shares owned by the selling shareholder, such selling
shareholder, any "affiliated purchasers", and any broker/dealer or other person
who participates in the distribution may be subject to Rule 102 under the
Securities Exchange Act of 1934 ("1934 Act") until their participation in that
distribution is completed. Rule 102 makes it unlawful for any person who is
participating in a distribution to bid for or purchase stock of the same class
as is the subject of the distribution. A "distribution" is defined in Rule 102
as an offering of securities "that is distinguished from ordinary trading
transactions by the magnitude of the offering and the presence of special
selling efforts and selling methods". We have also advised the selling
shareholders that Rule 101 under the 1934 Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of the common stock in connection with this offering.
DESCRIPTION OF SECURITIES
Our authorized capital consists of 60,000,000 shares of common stock and
10,000,000 shares of preferred stock. As of December 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
23
preferred stock with multiple votes per share and dividend rights which would
have priority over any dividends paid to the holders of our common stock. The
issuance of preferred stock with these rights may make the removal of management
difficult even if the removal would be considered beneficial to our shareholders
generally, and would have the effect of limiting shareholder participation in
transactions such as mergers or tender offers if these transactions are not
favored by our management. As of the date of this prospectus we had not issued
any shares of preferred stock.
Transfer Agent
Transhare Corporation
4626 S. Broadway
Englewood, CO 80113
Phone: 303-662-1112
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, 2011 and 2010, and the statements of
operations, stockholders' equity, and cash flows for the two years ended August
31, 2011, 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.
24
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,
2011 and 2010 and the related statements of income, shareholders' equity and
cash flows for the years ended August 31, 2011 and 2010. 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 (placecountry-regionUnited 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,
2011 and 2010 and the results of its operations and its cash flows for the years
ended August 31, 2011 and 2010 in conformity with United States generally
accepted accounting principles.
As discussed in Note 6 to the financial statements, the 2010 financial
statements have been restated to correct a misstatement.
The Company has determined that it is not required to have, nor was I engaged to
perform, an audit of the effectiveness of its documented internal controls over
financial reporting.
/ s / John Kinross Kennedy
John Kinross-Kennedy
Certified Public Accountant
Irvine, California
January 4, 2012
NAPRODIS, INC.
BALANCE SHEET
as of August 31,
--------------------------------------------------------------------------------
ASSETS 2011 2010
--------------- ---------------
(Restated)
(Note 6)
Current Assets
Cash and cash equivalents $ 15,726 $ 8,840
Accounts Receivable 49,407 43,915
Inventory 126,410 108,628
Prepaid Expenses - 1,010
--------------- ---------------
191,543 162,393
Property and equipment,
net of accumulated depreciation 44,433 58,037
Other Assets
Deposits 10,159 10,159
--------------- ---------------
TOTAL ASSETS $ 246,135 $ 230,589
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and accrued expenses 63,346 58,355
Accrued payroll and payroll taxes 13,918 12,605
Accrued Interest 21,217 13,710
Customer Deposits 2,104 -
Payables to related party 95,319 78,855
Officer Loans 108,732 63,873
--------------- ---------------
304,636 227,398
--------------- ---------------
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
August 31, 2011 and 2010 4,990 4,990
Additional paid-in capital 131,260 131,260
Accumulated Deficit (194,751) (133,059)
--------------- ---------------
(58,501) 3,191
--------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 246,135 $ 230,589
=============== ===============
The accompanying notes are an integral part of these financial statements
2
NAPRODIS, INC.
INCOME STATEMENT
For the years ended August 31,
-------------------------------------------------------------------------------
2011 2010
--------------- -------------
Revenues $ 1,073,831 $ 904,687
--------------- -------------
Cost of Sales, (exclusive of depreciation,
included in General and Administrative
Expenses) 159,053 154,354
Selling Expenses 25,783 25,783
General and Administrative Expenses
Occupancy Costs 126,330 78,290
Salaries and wages 539,546 442,389
Freight 104,474 72,299
Legal and professional fees 10,590 15,790
Other general and administrative expenses 203,544 231,091
--------------- -------------
Total general and administrative expenses 984,484 839,859
--------------- -------------
Net Income before other income
and expenses (69,706) (89,526)
Interest expense 8,014 (1,274)
--------------- -------------
Net Income (61,692) (90,800)
=============== =============
Basic and Dilutive earnings per share $ (0.01) $ (0.02)
=============== =============
Weighted average number
of shares outstanding 4,990,000 4,175,353
=============== =============
The accompanying notes are an integral part of these financial statements
3
NAPRODIS, INC.
STATEMENT OF CASH FLOWS
For the years ended August 31,
--------------------------------------------------------------------------------
2011 2010
------------- -----------
(Restated)
Cash Flows from Operating Activities
Net Income (61,692) (90,800)
Adjustments to reconcile net loss to net cash
used by operations:
Depreciation 13,604 6,628
Changes in operating assets and liabilities:
Accounts Receivable (5,492) 43,285
Accounts Payable and accrued expenses 4,991 7,297
Accrued payroll and payroll taxes 1,313 1,673
Accrued Interest 7,507 1,160
Inventory (17,782) 4,194
Prepaid expenses 1,010 5,000
Deposits (4,995)
Customer Deposits 2,104 -
------------- -----------
Net Cash (used by) provided by operating
activities (54,437) (26,558)
------------- -----------
Cash Flows from Investing Activities
Purchase of Property and Equipment - (43,097)
------------- -----------
Cash Flows from Financing Activities
Proceeds of payable to related party 16,464 16,657
Issue of stock for cash - 21,000
Proceeds of note payable to related party 44,859 31,404
------------- -----------
Net Cash provided by financing activities 61,323 69,061
------------- -----------
Net increase (decrease) in cash 6,886 (594)
Cash and cash equivalents, beginning of period 8,840 9,434
------------- -----------
Cash and cash equivalents, end of period $ 15,726 $ 8,840
============= ============
Supplemental disclosure of cash flow information
Income taxes paid $ - $ -
============= ============
Interest paid $ - $ -
============= ============
The accompanying notes are an integral part of these financial statements
4
NAPRODIS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the period August 31, 2005 to August 31, 2011
--------------------------------------------------------------------------------
(Restated)
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
Issued 840,000 shares
for cash at at $0.025
per share 840,000 840 20,160 21,000
Net income for the year (90,800) (90,800)
---------- ---------- ---------- ----------- --------------
Balances at August 31, 2010 4,990,000 4,990 131,260 (133,059) 3,191
Net income for the year (61,692) (61,692)
---------- ---------- ---------- ----------- --------------
Balances at August 31, 2011 4,990,000 $ 4,990 $ 131,260 $ (194,751) $ (58,501)
========== ========== ========== =========== ==============
The accompanying notes are an integral part of these financial statements
5
NOTE 1- BASIS OF PRESENTATION AND NATURE OF BUSINESS
Nature of Business
Naprodis, Inc. (the "Company") was incorporated in the state of Nevada on June
4, 1999, and chose August 31 as its fiscal year end. 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
Basis of Accounting
-------------------
These financial statements have been prepared using the basis of accounting
generally accepted in the United States of America. Under this basis of
accounting, revenues are recorded as earned and expenses are recorded at the
time liabilities are incurred.
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.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ from those
estimates. Significant estimates made by management are, among others,
realizability of long-lived assets and deferred taxes.
The financial statements presented include all adjustments which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for the period presented in accordance with
the accounting principles generally accepted in the United States of America.
All adjustments are of a normal recurring nature
6
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. 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.
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 August 31,
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
------------ ----------- ------------- ------------
Officer Loans $ 108,732 $ 108,732
------------ ----------- ------------- ------------
$ - $ 108,732 $ - $ 108,732
============ =========== ============= ============
Accounts Receivable
-------------------
Accounts receivable are presented net realizable value consisting of the
carrying amount less an allowance for uncollectible accounts, as needed. The
Company maintains allowances for doubtful accounts for estimated losses. The
Company reviews the accounts receivable on a periodic basis and uses the
allowance method to account for uncollectible accounts receivable balances.
Under the allowance method, if needed, an estimate of uncollectible customer
balances is made based upon specific account balances that are considered
uncollectible. Factors used to establish an allowance include the age of the
balance, credit quality, payment history, current credit-worthiness of the
customer and current economic trends. There is no allowance for doubtful
accounts as of August 31, 2011;`(August 31, 2010 - $Nil).
7
Inventories
-----------
Inventory is recorded as lower of cost (first in, first out) or market value.
When required, a provision is made to reduce excess and obsolete inventory to
estimated net value. A periodic inventory system is maintained by 100% count.
Inventory at August 31, 2011 and 2010 consisted of raw materials, work in
process, and finished goods as follows:
August 31,
----------------------
2011 2010
----------- ----------
Raw materials $ 79,338 $ 103,596
Work in process 186 563
Finished goods 3,081 4,469
----------- ----------
Total inventory $ 126,410 $ 108,628
=========== ==========
Deposits
--------
Deposits represent amounts paid under the Company's office and laboratory space
lease.
Property and Equipment
----------------------
Equipment is stated at cost less accumulated depreciation and depreciated using
straight line methods over the estimated useful lives of the related assets
ranging from 7 to 10 years. Maintenance and repairs are expensed currently. The
cost of normal maintenance and repairs is charged to operations as incurred.
Major overhaul that extends the useful life of existing assets is capitalized.
When equipment is retired or disposed, the costs and related accumulated
depreciation are eliminated and the resulting profit or loss is recognized in
income. Expenditures for maintenance and repairs are charged to operations as
incurred; additions, renewals and betterments are capitalized.
Recovery of Long-lived assets
-----------------------------
The Company adopted FASB ASC Topic 360: Property Plant and Equipment, sub topic
360-10-35-15: Impairment or Disposal of Long Lived Assets (SFAS 142 and 144).
ASC 360-10-35-15 requires recognition of impairment losses on long-lived assets
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amounts. No impairment has been applied to the company's long lived assets.
Recognition of Revenue
----------------------
The Company's revenue recognition policies are in compliance with ASC 605-13
(Staff accounting bulletin (SAB) 104). Sales revenue is recognized at the date
of completion of services to customers when a formal arrangement exists, the
price is fixed or determinable, the delivery of services is completed, no other
significant obligations of the Company exist and collectability is 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 does not grant
8
price adjustments after a sale is complete. The Company warrants its products
sold on the internet with a right of exchange. Returns of unused merchandise are
pre-authorized. Sales are presented net of discounts and allowances. The Company
accounts for sales taxes by excluding such taxes from revenue and cost of
revenue. Components of Revenue:
2011 2010
---- ----
Service 57.06% 59.47%
Personal Care 24.47% 25.51%
Other 18.47% 15.02%
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. The cost
of depreciation is excluded, and is included in general and administrative
expense.
Concentration of Credit Risk
----------------------------
Credit risk arises from the potential that a counterpart will fail to perform
its obligations. The Company is exposed to credit risk related to its accounts
receivable and manufacturing risk related to source of raw materials. It is
management's opinion that the Company is not exposed to significant credit risk
associated with its accounts receivable, nor manufacturing risk related to its
suppliers.
Revenues and Accounts Receivable: For the year ended August 31, 2011, the
Company had one customer whose sales amounted to approximately 85% of total
revenue. Of total accounts receivable at August 31, 2011, approximately 89% was
due from this customer.
Product Purchases and Accounts Payable: The Company purchases approximately 8%
of its products from two companies that are related parties (See Note 3).
Earnings (loss) per share
-------------------------
The Company computes net earnings (loss) per common share in accordance with
FASB ASC 260 (SFAS No. 128 "Earnings per Share" and SAB No. 98). Under the
provisions of ASC 260, the basic net earnings (loss) per common share is
computed by dividing the net earnings (loss) available to common stock
outstanding during the period. Net earnings (loss) per share on a diluted basis
is computed by dividing the net earnings (loss) for the period by the weighted
average number of common and dilutive common stock equivalent shares outstanding
during the period.
9
The Company has no potentially dilutive securities outstanding as of August 31,
2011.
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 carry
forwards. As of August 31, 2011 the Company had federal and state net operating
loss carryforwards of approximately $133,000, ($196,000 in 2010) that can be
used to offset future taxable income. The carryforwards will begin to expire in
2014 unless utilized in earlier years.
Interest and penalties on tax deficiencies recognized in accordance with ACS
accounting standards are classified as income taxes in accordance with ASC Topic
740-10-50-19.
The income tax effect of temporary differences between financial and tax
reporting gives rise to the deferred tax asset at August 31, 2011 and 2010 as
follows:
August 31, August 1,
2011 2010
-----------------------------
Deferred tax asset, beginning $ 47,000 $ 15,000
Provision of current year's operating loss 22,000 32,000
-----------------------------
Deferred tax asset, ending $ 69,000 $ 47,000
=============================
Valuation allowance, beginning $ (47,000) $ (15,000)
Current year's loss provision
$ (22,000) $ 32,000
-----------------------------
Valuation allowance, ending $ (69,000) $ (47,000)
=============================
Deferred tax asset, net $ - $ -
=============================
Tax at statutory rate - Federal 34% 34%
State tax expense net of Federal tax 6% 6%
Changes in valuation allowance 40% 40%
-----------------------------
Tax expense $ - $ -
=============================
Recent Accounting Pronouncements
--------------------------------
On December 1, 2010 the Company adopted guidance issued by the FASB ASU 2010-15
on the consolidation of variable entities. The new guidance requires revised
valuations of whether entities represent variable interest entities, ongoing
assessments of control over such entities and additional disclosures for
variable interests. Adoption of the new guidance did not have a material impact
on our financial statements.
10
A variety of proposed or otherwise potential accounting standards are currently
under study by standard setting organizations and various regulatory agencies.
Due to the tentative and preliminary nature of those proposed standards, the
Company's management has not determined whether implementation of such standards
would be material to its financial statements.
NOTE 2 - PROPERTY AND EQUIPMENT
August 31, August 31,
2011 2010
Accumulated Net Book Accumulated Net Book
Cost Depreciation Value Cost Depreciation Value
----------------------------------------------------------------------
Laboratory equipment,
computers & software $ 48,001 $ 29,300 $ 18,701 $ 48,001 $ 22,567 $ 25,434
Office furniture 10,292 3,732 6,560 10,292 2,081 8,211
Automobiles 28,800 9,628 19,172 28,800 4,408 24,392
----------------------------------------------------------------------
$ 115,990 $ 39,374 $ 44,433 $ 69,864 $ 58,037
======================================================================
Depreciation: August 31, 2011 - $13,604; (August 31, 2010 $6,628).
NOTE 3 - PAYABLES TO RELATED PARTY
The following payables to companies that are related by common ownership are
payable on demand, have no terms of repayment or maturity date and accrue
interest at 5% per annum:
August 31,
----------------------
2011 2010
----------- ----------
Solde Naprodis Inc. $ 4,418 $ 12,976
Phybiosis Inc. 90,901 65,879
----------- ----------
$ 95,319 $ 78,855
NOTE 4 - OFFICER LOANS
Loans from the following officers of the Company are payable on demand, have no
terms of repayment or maturity date and accrue interest at 5% per annum:
August 31,
----------------------
2011 2010
----------- ----------
Paul Petit $ 85,757 $ 62,459
Alain Petit 351 206
Kelley Thompson 22,587 1,208
----------- ----------
$ 108,732 $ 63,873
=========== ==========
11
NOTE 5 - 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 6 - RESTATEMENT
Subscriptions Received was reclassified to Stockholders' Equity on the balance
sheet of August 31, 2010. The newly appointed stock transfer agent detected an
error in the Company's stock register. There was no effect on Net Profit/Loss.
The reclassification was reflected also on the Statement of Equity and Statement
of Cash Flows.
As Originally Effect On
Reported As Restated Net (Loss) Net Equity
Common Stock 4,150 4,990 0 840
Additional Paid-in Capital 111,100 131,260 0 20,160
Subscriptions Received 21,000 0 0 (21,000)
-- ------
Total Effect on Net Income (Loss) 0
Total Effect on Liabilities (21,000)
Total Effect on Net Equity 21,000
NOTE 7 - 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 8 - 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 revenue for the year
ended August 31, 2011. The following presents certain information concerning the
Company's skin care product segment:
12
Year ended August 31, 2011
--------------------------
All
Other
Skin Care Segments Total
---------- ---------- ------------
Revenue $976,707 $97,124 $1,073,831
Interest Revenue - - -
Interest Expense - 8,014 8,014
Depreciation and Amortization - 13,604 13,604
Segment profit (loss) 12,955 (74,647) (61,692)
Segment assets (1) 2,580 123,830 126,410
Expenditures for Segment assets (1) 144,425 19,297 163,722
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) 8,307 100,321 108,628
Expenditures for segment assets 131,438 13,722 145,160
(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 activities.
All other segments are:
o Body Care
o Hair Care
o Dietary Supplements
o Raw Materials which include:
* Essential Oils
* Hydrolates
* Clays
* Celtic Sea Salt
* Fatty Vegetal Oils
* Sea Algae
NOTE 9 - CAPITAL STOCK
On July 30, 2010, 840,000 shares of common stock were issued for subscriptions
received of $21,000 at $0.025 per share.
13
The Company's authorized capital stock consists of 60,000,000 shares of Common
Stock at par value $0.001 per share. As of August 31, 2011 the Company had
4,990,000 shares of Common Stock issued and outstanding, (4,990,000 as of August
31, 2010).
NOTE 10 - SUBSEQUENT EVENTS
Events subsequent to August 31, 2011 have been evaluated through November 21,
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.
14
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.
15
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
23.1 Consent of Accountants
* Filed with original registration statement
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section l0 (a)(3) of the
Securities Act:
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
16
(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
17
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.
18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Poway, State of
California on the 6th day of January, 2012.
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, January 6, 2012
Paul Petit Financial and Accounting
Officer and a Director
/s/ Alain S. Petit Director January 6, 2012
--------------------------
Alain S. Petit
NAPRODIS, INC.
FORM S-1
EXHIBITS