UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2008
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission file number 0-52864
Total Nutraceutical Solutions
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(Exact name of registrant as specified in its charter)
Nevada 26-0561199
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(State of incorporation) (I.R.S. Employer ID No.)
2811 Reidville Road, Suite 23, Spartanburg, SC 29301
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(Address of principal executive offices)(Zip Code)
Issuer's telephone number, including area code: (864) 316-2909
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [X] No
Indicate by checkmark whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
past 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
Indicate by checkmark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
[ ] Large accelerated filer [ ] Accelerated filer
[ ] Non-accelerated filer [X] Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes[_] No [X]
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity,
as of the last business day of the registrant's most recently completed fiscal
year.:
The aggregate market value of the issuer's common stock held by non-affiliates
of the registrant as of February 13, 2009, was approximately $18,297,300,
based on $0.56, the price at which the registrant's common stock was last
sold on that date.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date:
As of March 30, 2009, there were 49,673,750 shares of the issuers Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
INDEX
Title Page
ITEM 1. BUSINESS 5
ITEM 2. PROPERTIES 23
ITEM 3. LEGAL PROCEEDINGS 23
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 23
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 24
ITEM 6. SELECTED FINANCIAL DATA 26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 26
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 33
ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES 33
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 36
ITEM 11. EXECUTIVE COMPENSATION 39
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, 43
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 44
AND DIRECTOR INDEPENDENCE
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 45
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 46
2
FORWARD-LOOKING STATEMENTS
This document contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact are "forward-looking statements" for purposes
of federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or other financial items; any statements of
the plans, strategies and objections of management for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; any statements or
belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words "may," "could," "estimate,"
"intend," "continue," "believe," "expect" or "anticipate" or other similar
words. These forward-looking statements present our estimates and assumptions
only as of the date of this report. Accordingly, readers are cautioned not to
place undue reliance on forward-looking statements, which speak only as of
the dates on which they are made. We do not undertake to update forward-
looking statements to reflect the impact of circumstances or events that
arise after the dates they are made. You should, however, consult further
disclosures we make in future filings of our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Although we believe that the expectations reflected in any of our forward-
looking statements are reasonable, actual results could differ materially
from those projected or assumed in any of our forward-looking statements. Our
future financial condition and results of operations, as well as any forward-
looking statements, are subject to change and inherent risks and
uncertainties. The factors impacting these risks and uncertainties include,
but are not limited to:
o inability to raise additional financing for working capital;
o inability to identify nutraceutical products that fit into our organization;
o deterioration in general or regional economic, market and political
conditions;
o the fact that our accounting policies and methods are fundamental to how
we report our financial condition and results of operations, and they may
require management to make estimates about matters that are inherently
uncertain;
o adverse state or federal legislation or regulation that increases the costs
of compliance, or adverse findings by a regulator with respect to existing
operations;
o changes in U.S. GAAP or in the legal, regulatory and legislative
environments in the markets in which we operate;
3
o inability to efficiently manage our operations;
o inability to achieve future operating results;
o ability to recruit and hire key employees;
o inability of management to effectively implement our strategies and
business plans; and
o other risks and uncertainties detailed in this report.
In this form 10-K references to "Total Nutraceutical Solutions",
"the Company", "we," "us," and "our" refer to Total Nutraceutical Solutions.
AVAILABLE INFORMATION
We file annual, quarterly and special reports and other information with the
SEC. You can read these SEC filings and reports over the Internet at the
SEC's website at www.sec.gov. You can also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 100
F Street, NE, Washington, DC 20549 on official business days between the
hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for
further information on the operations of the public reference facilities. We
will provide a copy of our annual report to security holders, including
audited financial statements, at no charge upon receipt to of a written
request to us at Total Nutraceutical Solutions, 2811 Reidville Road, Suite 23,
Spartanburg, SC 29301.
4
PART I
ITEM 1. BUSINESS
History and Organization
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The Company was organized July 19, 2007 (Date of Inception) under the laws
of the State of Nevada, as Generic Marketing Services, Inc. ("Generic
Marketing Services"). The Company was incorporated as a subsidiary of Basic
Services, Inc., ("Basic Services"), a Nevada corporation.
Basic Services has been engaged in the development of generic pharmaceutical
Products its management decided to focus its attention on generic product
development, and spin off its marketing segment. Basic Services formed a
subsidiary, which solely focused on marketing products, as compared to
developing products. On December 31, 2007, Basic Services decided to spin off
its subsidiary.
On October 8, 2008, the Company filed amended Articles with the Secretary of
State of the State of Nevada to change its corporate name to "Total
Nutraceutical Solutions."
Our Business
- ------------
Total Nutraceutical Solutions "(the Company") is an emerging nutraceutical
company with a focus on discovering, formulating and marketing products
composed primarily of organic natural mushrooms that contain bioactive
nutrients for potential health benefits. The Company develops production and
analytic technologies for food and nutritional supplements composed primarily
of mushrooms and their mycelial biomasses. Novel clinical models and
biomarkers will be used to show nutritional and clinical efficacy of our
products. In addition to preventative healthcare formulations and nutritional
approaches to a wide variety of human conditions and illnesses, the Company
also develops and acquires breakthrough nutritional tools and products in the
fields of animal husbandry and livestock feeds.
Business Strategy
- -----------------
We have had limited nutraceutical business activities. We are a development
stage entity in the process of establishing a business engaged in the contract
manufacture, distribution, and sale of nutraceutical products that are made
entirely of naturally occurring dietary substances. These naturally occurring
dietary substances have not been chemically altered, and we believe these
products have both health benefits and mass appeal to people wanting natural
and non-toxic nutritional-based healthcare.
5
We anticipate that the company will sell directly to consumers products that
have been designed by the company and produced by outside contract
manufacturers. Management is currently working on its own formulations to
produce, manufacture and market a line of over-the-counter products,
specifically nutraceutical products. Management defines nutraceutical as "a
food or naturally occurring food supplement thought to have a beneficial
effect on human and/or animal health." The Company had not developed nor
produced any products at the close of its fiscal year. Emphasis has been
placed on raising sufficient capital to develop these products. On October 8,
2008, the Company closed a private offering whereby the Company raised
$530,000 in exchange for 5,30,000 unregistered shares of its common stock.
These funds will be used to develop and market nutraceutical products.
Our nutraceutical business activities to date have been minimal and have
included the acquisition of certain intellectual property pursuant to research
agreements in association with Pennsylvania State University. These research
endeavors resulted in the filing of U.S. Provisional Patent Application No.
60/782,204, entitled "Identification of Selenoergothioneine as a Natural
Organic Form of Selenium from Cultivated Mushrooms." We purchased an option
assignment to license from Pennsylvania State University the technologies
associated with this intellectual property. We view this intellectual
property as one of the cornerstones to our business.
Marketing Strategy
- ------------------
We believe our potential for growth involves the development of nutraceutical
product(s) that can be marketed and sold through physicians and health care
professionals, retail channels in North America and through distributors
internationally, in addition to wholesalers and multi-level marketing groups.
Retail channels would include independent and chain health food stores,
pharmacies, internet sales, grocery and drug chains and other direct to
consumer retailers.
Brand Awareness
- ---------------
The market for nutraceuticals is highly competitive, with many well-known
brands. Our ability to compete effectively and generate revenue will be based
upon our ability to differentiate awareness of our products from those of our
competitors. However, advertising, packaging and labeling of such products
will be limited by various regulations. Our success will be dependent upon
our ability to convey this message to consumers.
The nutraceutical industry is subject to rapid change. New products are
constantly introduced to the market. Our ability to remain competitive
depends on our ability to develop and manufacture new products in a timely
and cost effective manner, to accurately predict market transitions, and to
effectively market our products. Our future financial results will depend to
a great extent on the successful introduction of several new products. We
cannot be certain that we will be successful in selecting, developing,
contract manufacturing and marketing new products.
6
The success of new product introductions depends on various factors, including,
but not limited to the following:
o proper new product selection;
o availability of raw materials;
o pricing of raw materials;
o timely delivery of new products;
o regulatory allowance of the products;
o successful sales and marketing efforts; and
o customer acceptance of new products.
We face challenges in developing new products, primarily with funding
development costs and diversion of management time. On a regular basis, we
will evaluate opportunities to develop new products through product line
extensions and product modifications. There is no assurance that we will
successfully develop product line extensions or integrate newly developed
products into our business. In addition, there are no assurances that newly
developed products will contribute favorably to our operations and financial
condition. Our failure to develop and introduce new products on a timely
basis could adversely affect our future operating results.
Industry
- --------
The nutritional supplements industry is intensely competitive. It includes
companies that manufacture and distribute products which are generally
intended to enhance the body's performance as well as to enhance well being.
Nutritional supplements include vitamins, minerals, dietary supplements,
herbs, botanicals and compounds derived therefrom. Opportunities in the
nutritional supplements industry were enhanced by the enactment of the
Dietary Supplement Health and Education Act of 1994 ("DSHEA"). Under DSHEA,
vendors of dietary supplements are now able to educate consumers regarding
the effects of certain component ingredients. However, they are subject to
many regulations regarding labeling and advertising of such products. See
"Government Regulation" below.
Total Nutraceutical Solutions Funding Requirements
- --------------------------------------------------
The Company opened a private placement offering to sell to selected offerees
a minimum of 1,200,000 Units and a maximum of 3,000,000 Units, at an
offering price of $0.50 per Unit. Each Unit is comprised of two shares of the
Company's Common Stock, $0.001 par value, and two, three year callable
Warrants - an "A" Warrant to purchase one share of Common Stock at an
exercise price of $0.75 per share and a "B" Warrant to purchase one share of
Common Stock at an exercise price of $1.00 per share.
7
The minimum offering is 1,200,000 Units. All subscription funds for the
purchase of Units will be kept in a non-interest bearing attorney escrow
account. These funds will be released and available to the Company after the
minimum of $600,000 in subscription investments is received in escrow. If the
minimum of 1,200,000 Units is not reached in this Offering by the Offering
closing date, offerees have sole discretion to release funds to the Company,
in writing, pursuant to the terms of this offering or to demand a complete
refund of their monies related to this offering. The proceeds from this
offering will be utilized for operating expenses and for the purchase of
certain business assets from Golden Gourmet Mushrooms, Inc.
At December 31, 2008 no shares had been sold under this private placement
offering.
Future funding could result in potentially dilutive issuances of equity
securities, the incurrence of debt, contingent liabilities and/or
amortization expenses related to goodwill and other intangible assets, which
could materially adversely affect the Company's business, results of
operations and financial condition. Any future acquisitions of other
businesses, technologies, services or product(s) might require the Company to
obtain additional equity or debt financing, which might not be available on
terms favorable to the Company, or at all, and such financing, if available,
might be dilutive.
Recent Event
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The Company announced on February 17, 2009 that it signed an agreement with
Hokto Kinoko Co. to acquire mushroom spent substrate from the Hokto facility
in San Marcos, CA. The 250,000 square foot growing facility for fresh
specialty mushrooms has the potential at full capacity to produce 20-25 tons
of spent substrate per day. The Company plans to develop and market this
material as an animal feed additive with nutritional value via collaborative
research with the Department of Food Science at Pennsylvania State University.
Mushroom substrate waste is defined as the spent substrate (growing media)
and all mushroom residuals resulting from cleaning the growing bottles after
the harvest of mushroom fruit bodies at the growing facility. The Hokto
state-of-the-art facility, the largest of its kind in the United States, will
produce the following mushrooms: Brown Beech (Buna Shimeji), White Beech
(Bunapi)(tm), King Trumpet (Pleurotus eryngii), and Maitake.
8
Competition
- -----------
The market for nutraceuticals is highly competitive. This market includes
manufacturers, distributors and physicians. Numerous manufacturers and
distributors will compete with the Company for customers throughout the United
States, Canada and internationally in the packaged nutritional supplement
industry selling products to retailers such as mass merchandisers, drug store
chains, independent pharmacies and health food stores. Most all of our
competitors are substantially larger and more experienced than us and have
longer operating histories, and have materially greater financial and other
resources than us. We may not be able to successfully compete with them in
the marketplace.
The principal competition in the health food store distribution channel that
we will face comes from a limited number of large nationally known
manufacturers and many smaller manufacturers of dietary supplements. Some of
the main competitors include, but are not limited to, Beyond a Century, Dr.
Whittaker, Unigen Pharma, Dr's Best, Metagenics, Twin Labs, Herbalife,
Nutrilite, and Isagenix. We also face competition in the health food store
distribution channels from private label dietary supplements offered by health
and natural food store chains. In addition, we anticipate that there will be
competition from sellers that utilize internet commerce.
The market is highly sensitive to the introduction of new products. As a
result, in order to be competitive, we will need to successfully introduce new
products that are accepted by our future customers.
We also face competition from many large drug companies. Many of these drug
companies are substantially larger and more experienced than us, have longer
operating histories, and have materially greater financial and other resources
than us. These drug companies also have substantially greater political
influence and regulatory support for the use of their products.
Patent, Trademark, License and Franchise Restrictions and Contractual
Obligations and Concessions
- ----------------------------------------------------------------------
We regard our patents, trademarks, copyrights, domain names, trade dress,
trade secrets, proprietary technologies, and similar intellectual property as
important to our success, and we rely on patent, trademark and copyright law,
trade-secret protection, and confidentiality and/or license agreements with
our employees, customers, partners, suppliers and others to protect our
proprietary rights.
On November 24, 2008, the Company announced that it acquired from The Penn
State Research Foundation (PSRF) an option to license an invention entitled
"Rapid Generation of Vitamin D2 from Mushrooms and Fungi Using Pulsed UV-light"
(The Invention). A U.S. Provisional Patent Application was filed on April 23,
2008 and names Professor Robert B. Beelman, and Graduate Student Michael
Kalaras as co-inventors, Department of Food Science, Pennsylvania State
University ("PSU").
9
The PSU scientists recently studied the effect of Pulsed UV light treatment on
increasing Vitamin D2 levels in four commonly consumed U.S. mushroom
varieties. Pulsed UV light is a technology that delivers energy from light at
a high peak power in a short amount of time. A Steripulse(r)- XL 3000 (Xenon
Corporation, Wilmington MA) was used for Pulsed UV light exposure. This study
demonstrated that after a very short exposure time of about 1 sec (system
generates 3 pulses per second) the Vitamin D2 content of these mushroom
varieties increased from very little to upwards of 800% DV/serving. Previous
studies using continuous UV light has been shown to take several minutes of
exposure to obtain similar values.
Vitamin D is a fat-soluble vitamin that has many physiologic roles including
maintaining blood levels of phosphorus and calcium, promotion of bone
mineralization and calcium absorption, maintaining a healthy immune system,
and regulating cell differentiation and growth. Recent studies have also shown
a link between vitamin D deficiency and diseases such as cancer, chronic heart
disease, inflammatory bowel disease and even mental illness.
Research and Development Activities and Costs
- ---------------------------------------------
The Company's CEO and Chairman of the Board, Marvin S. Hausman, M.D.,
beginning in 2006, developed certain intellectual property pursuant to research
agreements dated May 1, 2006 and May 20, 2006 in association with Pennsylvania
State University. These research endeavors resulted in the filing of U.S.
Provisional Patent Application No. 60/782,204, entitled "Identification of
Selenoergothioneine as a Natural Organic Form of Selenium from Cultivated
Mushrooms." On September 4, 2008, the company acquired from Northwest Medical
Research Partners Inc., which is controlled by Dr. Hausman, the director and
CEO of the Company, in exchange for 3,500,000 shares of common unregistered
restricted stock, an Assignment and Assumption Agreement, effective December
31, 2008, pursuant to which the Company has assumed the obligations of NW
Research Partners to maintain the patent prosecution and perform preclinical
and clinical research associated with the intellectual property and has an
option to license from Pennsylvania State University the technologies
associated with the intellectual property.
10
Government Regulation
- ---------------------
In both the United States and foreign jurisdictions, we will be subject to
compliance with laws, governmental regulations, administrative
determinations, court decisions and similar constraints. Although the
products we plan to produce and distribute are not deemed to be drugs, they
are deemed to be dietary supplements and therefore are subject to all
regulations regarding products ingested by consumers and dietary supplements.
Such laws, regulations and other constraints exist at the federal, state and
local levels in the United States and at all levels of government in foreign
jurisdictions. These regulations include constraints pertaining to (i) the
manufacturing, processing, formulating, packaging, labeling, distributing and
selling (ii) advertising of products and product claims (iii) transfer
pricing, and (iv) method of use.
In the United States, the formulation, manufacturing, packaging, storing,
labeling, advertising, distribution and sale of products are subject to
regulation by various governmental agencies, which include, among others (i)
the Food and Drug Administration ("FDA"), (ii) the Federal Trade Commission
("FTC"), and (iii) the Consumer product Safety Commission. The most active
regulation has been administered by the Food and Drug Administration, which
regulates the formulation, manufacture and labeling of products pursuant to
the Federal Food, Drug and Cosmetic Act ("FDCA") and regulations promulgated
thereunder. Most importantly, the FDA has guidelines under the Dietary
Supplement Health and Education Act (DSHEA) to enable the manufacturing,
advertising, marketing, and sale of dietary supplements. In addition, the
FTC has overlapping jurisdiction with the FDA to regulate the interstate
labeling, promotion, advertising and sale of dietary supplements, over the
counter drugs, and foods.
Compliance with applicable FDA and any state or local statutes is crucial.
Although we believe that we will be in compliance with applicable statutes,
should the FDA amend its guidelines or impose more stringent interpretations
of current laws or regulations, we may not be able to comply with these new
guidelines. As a marketer of products that are ingested by consumers, we are
always subject to the risk that one or more of our products that currently are
not subject to regulatory action may become subject to regulatory action.
Such regulations could require the reformation of certain products to meet
new standards, market withdrawal or discontinuation of certain products not
able to be reformulated, imposition of additional record keeping requirements,
expanded documentation regarding the properties of certain products, expanded
or different labeling and/or additional scientific substantiation. Failure to
comply with applicable requirements could result in sanctions being imposed on
us, or the contract manufacturers of any of our products, including but not
limited to fines, injunctions, product recalls, seizures and criminal
prosecution.
11
The FDCA generally regulates ingredients added to foods and requires that
such ingredients making up a food product are themselves safe for their
intended uses. In this regard, generally when a company adds an ingredient to
a food, the FDCA requires that the ingredient either be determined by the
Company to be generally regarded as safe ("GRAS") by qualified experts or go
through FDA's review and approval process as a food additive.
The FDCA has been amended with respect to dietary supplements by the Dietary
Supplement Health and Education Act of 1994 ("DSHEA"). The DSHEA provides a
statutory framework governing the safety, composition and labeling of dietary
supplements. It regulates the types of statements that can be made concerning
the effect of a dietary supplement. The DSHEA generally defines the term
"dietary supplement" to include products that contain a "dietary ingredient"
which may include vitamins, minerals, herbs or other botanicals, amino acids,
and metabolites. Under the DSHEA, a dietary supplement manufacturer is
responsible for ensuring that a dietary supplement is safe before it is
marketed. Under DSHEA, dietary ingredients that were on the market before
October 15, 1994 may be sold without FDA pre-approval and without notifying
the FDA. On the other hand, a new dietary ingredient (one not lawfully on the
market before October 15, 1994), requires proof that it has been present in
the food supply as an article used for food without being chemically altered,
or evidence of a history of use or other evidence of safety establishing that
it is reasonably expected to be safe. With respect to products or supplements
that are manufactured and distributed on our behalf, we intend to comply with
and will endeavor to bring our operations into compliance with regulatory
requirements relating to such products or supplements. However, the FDA may
not accept the evidence of safety for any new dietary ingredients that we may
decide to use, and the FDA's refusal to accept such evidence could result in
regulation of such dietary ingredients as adulterated, until such time as
reasonable expectation of safety for the ingredient can be established to the
satisfaction of the FDA.
With respect to labeling, DSHEA permits "statements of nutritional support"
for dietary supplements without FDA pre-approval. Such statements may
describe how particular dietary ingredients affect the structure, function or
general well being of the body, or the mechanism of action by which a dietary
ingredient may affect body structure, function or well being (but may not
state that a dietary supplement will diagnose, mitigate, treat, cure or
prevent a disease). A company making a statement of nutritional support must
possess substantiating evidence for the statement, and disclose on the label
that the FDA has not reviewed that statement and that the product is not
intended to diagnose, treat, cure or prevent a disease.
12
The DSHEA allows the dissemination of "third party literature", publications
such as reprints of scientific articles linking particular dietary,
ingredients with health benefits. Third party literature may be used in
connection with the sale of dietary supplements to consumers. Such a
publication may be so used if, among other things, it is not false or
misleading, no particular brand of dietary supplement is promoted and a
balanced view of available scientific information on the subject matter is
presented. There can be no assurance, however, that all pieces of third party
literature that may be disseminated in connection with our products will be
determined by the FDA to satisfy each of these requirements, and any such
failure could subject the product involved to regulation as a new drug or as a
"misbranded" product, causing us to incur substantial fines and penalties.
The products covered by the Patent and product related activities may also be
subject to regulation by other regulatory agencies, including but not limited
to the Federal Trade Commission ("FTC"), the Consumer Products Safety
Commission, the United States Department of Agriculture, the United States
Postal Service, the United States Environmental Protection Agency and the
Occupational Safety and Health Administration. Advertising of dietary
supplement products is subject to regulation by the FTC under the Federal
Trade Commission Act ("FTCA"). The FTCA prohibits unfair methods of
competition and unfair or deceptive trade acts or practices in or affecting
commerce. Furthermore, the FTCA provides that the dissemination or the causing
to be disseminated of any false advertising 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. Pursuant to this FTC requirement, we are required to have
adequate substantiation of all material advertising claims made for products
covered by the Patent. Failure to adequately substantiate claims may be
considered either deceptive or unfair practices.
The FTC has recently issued a guidance document to assist supplement marketers
of dietary supplement products in understanding and complying with the
substantiation requirement.
The FTC is authorized to use a variety of processes and remedies for
enforcement, both administratively and judicially including 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 may be deemed necessary. State and local authorities
can also regulate advertising and labeling for dietary supplements and
conventional foods.
13
Our activities are also regulated by various agencies of the states and
localities in which products are sold. The products and product-related
activities may also be regulated by the applicable regulatory agencies in
other countries in which the products are sold. In foreign markets, prior to
commencement of operations and prior to making sales, we may be required to
obtain approval, license or certification from the country's agency governing
health. The approval process can be lengthy and costly and may require
reformulation of products or labeling. Our failure to comply with foreign
regulations could result in products being rejected for sale in such country.
We believe that current and reasonably foreseeable governmental regulation
will have minimal impact on our business.
Compliance With Environmental Laws
- ----------------------------------
We are not aware of any environmental laws that have been enacted, nor are we
aware of any such laws being contemplated for the future, that impact issues
specific to our business. In our industry, environmental laws are anticipated
to apply directly to the owners and operators of companies. They do not apply
to companies or individuals providing consulting services, unless they have
been engaged to consult on environmental matters. We are not planning to
provide environmental consulting services.
Employees
- ---------
We have no full-time employees at the present time. Our officers and
directors are responsible for all planning, developing and operational duties,
and will continue to do so throughout the early stages of our growth.
We have no intention of hiring employees until the business has been
successfully launched.
14
Item 1A. Risk Factors.
RISK FACTORS RELATING TO OUR COMPANY
------------------------------------
1. SINCE WE ARE A DEVELOPMENT MARKETING SERVICES COMPANY, WE HAVE GENERATED
NO REVENUES, AN INVESTMENT IN THE SHARES OFFERED HEREIN IS HIGHLY RISKY AND
COULD RESULT IN A COMPLETE LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN
OUR BUSINESS PLAN.
Our company was incorporated on July 19, 2007, and we have a limited
operating history in the nutraceutical business. We have realized no revenues.
We have no solid operating history upon which an evaluation of our future
prospects can be made. Our only nutraceutical business activities to date
have been acquisition of certain intellectual property pursuant to research
agreements in association with Pennsylvania State University. We are subject
to all of the business risks and uncertainties associated with any new
business enterprise. In light of our lack of any operating history, there can
be no assurance that we will be able to implement any aspect of our business
plan or establish a successful business.
2. IF OUR BUSINESS PLAN IS NOT SUCCESSFUL, WE MAY NOT BE ABLE TO CONTINUE
OPERATIONS AS A GOING CONCERN AND OUR STOCKHOLDERS MAY LOSE THEIR ENTIRE
INVESTMENT IN US.
As discussed in the Notes to Financial Statements included in this annual
report, at December 31, 2008 we had working capital of $273,271. We had a net
loss of approximately $(121,535) for the period July 19, 2007 (inception) to
December 31, 2008.
These factors raise substantial doubt that we will be able to continue
operations as a going concern, and our independent auditors included an
explanatory paragraph regarding this uncertainty in their report on our
financial statements for the period July 19, 2007 (inception) to December 31,
2008. Our ability to continue as a going concern is dependent upon our
generating cash flow sufficient to fund operations and reducing operating
expenses. Our business plans may not be successful in addressing these issues.
If we cannot continue as a going concern, our stockholders may lose their
entire investment in us.
3. WE EXPECT LOSSES IN THE FUTURE BECAUSE WE HAVE GENERATED NO REVENUE.
We have generated no revenues, we are expect losses over the next twelve (12)
months since we have no revenues to offset the expenses associated in executing
our business plan. We cannot guarantee that we will ever be successful in
generating revenues in the future. We recognize that if we are unable to
generate revenues, we will not be able to earn profits or continue operations
as a going concern. There is no history upon which to base any assumption as
to the likelihood that we will prove successful, and we can provide investors
with no assurance that we will generate any operating revenues or ever achieve
profitable operations.
15
4. WE HAVE NO OPERATING HISTORY AS AN INDEPENDENT PUBLIC COMPANY AND WE
MAY BE UNABLE TO OPERATE PROFITABLY AS A STAND-ALONE COMPANY.
In order to establish our business, we will need to rely on the sales of the
products and will incur expenses for advertising, information systems, rent
and additional personnel to support these activities in addition to the salary
expenses already mentioned. We therefore expect to incur substantial
operating losses for the foreseeable future. Our ability to become profitable
depends on our ability to have successful operations and to generate and
sustain sales, while maintaining reasonable expense levels, all of which are
uncertain in light of our absence of any prior operating history.
We may not be able to successfully put in place the financial, administrative
and managerial structure necessary to operate as fully reporting independent
public company, and the development of such structure will require a
significant amount of management's time and other resources.
5. WE FACE SUBSTANTIAL UNCERTAINTIES IN ESTABLISHING OUR BUSINESS.
To date, our only material business activities have been the acquisition of
intellectual property from Penn State. We have obtained funding, and started
the process of developing nutraceutical product(s). We have not generated any
income and have generated minimal revenue.
We believe that in order to establish a successful business we must, among
other things, hire personnel to run our day-to-day operations, develop a
distribution network and establish a customer base. If we are unable to
accomplish one or more of these goals, our business may fail.
6. OUR BUSINESS IS SENSITIVE TO PUBLIC PERCEPTION. IF ANY PRODUCT WE DEVELOP
PROVES TO BE HARMFUL TO CONSUMERS OR IF SCIENTIFIC STUDIES PROVIDE UNFAVORABLE
FINDINGS REGARDING THEIR SAFETY OR EFFECTIVENESS, THEN OUR IMAGE IN THE
MARKETPLACE WOULD BE NEGATIVELY IMPACTED.
Our results of operations may be significantly affected by the public's
perception of our Company and similar companies. In addition, our business
could be adversely affected if any of our future products prove to be harmful
to consumers or if scientific studies provide unfavorable findings regarding
the safety or effectiveness of our products or any similar products.
Moreover, the U.S. FDA could potentially regulate our industry in the future
and adversely affect our marketing ability and success. While quality control
testing is conducted on the ingredients in such products, we are highly
dependent upon consumers' perception of the overall integrity of the dietary
supplements business. The safety and quality of products made by competitors
in our industry may not adhere to the same quality standards that ours do, and
may result in a negative consumer perception of the entire industry. If our
future products suffer from negative consumer perception, it is likely our
sales will slow and we will have difficultly generating revenues.
16
7. IF OUR FUTURE PRODUCTS DO NOT HAVE THE HEALTHFUL EFFECTS INTENDED, OUR
BUSINESS MAY SUFFER.
In general, our future products will consist of food, nutritional supplements
which are classified in the United States as "dietary supplements" which we
believe do not require approval from the FDA or other regulatory agencies
prior to sale. Although many of the ingredients in such products are
vitamins, minerals, herbs and other substances for which there is a long
history of human consumption, they contain innovative ingredients or
combinations of ingredients. Although we believe all of such products and the
combinations of ingredients in them are safe when taken as directed by the
Company, there is little long-term experience with human or other animal
consumption of certain of these innovative product ingredients or combinations
thereof in concentrated form. The products could have certain side effects if
not taken as directed or if taken by a consumer that has certain medical
conditions. In addition, such products have been proven to be more effective
when taken in accordance with certain instructions which include certain
dietary restrictions. Therefore, such products may not be effective if such
instructions are not followed. Furthermore, there can be no assurance that
any of the products, even when used as directed, will have the effects
intended or will not have harmful side effects. If any of such products were
shown to be harmful or negative publicity resulted from an individual who was
allegedly harmed by one product, it could hurt our business, profitability
and growth prospects.
8. WE MAY NOT BE ABLE TO RAISE SUFFICIENT CAPITAL OR GENERATE ADEQUATE
REVENUE TO MEET OUR OBLIGATIONS AND FUND OUR OPERATING EXPENSES.
Failure to raise adequate capital and generate adequate sales revenues to meet
our obligations and develop and sustain our operations could result in
reducing or ceasing our operations. Additionally, even if we do raise
sufficient capital and generate revenues to support our operating expenses,
there can be no assurances that the revenue will be sufficient to enable us
to develop business to a level where it will generate profits and cash flows
from operations. These matters raise substantial doubt about our ability to
continue as a going concern. Our independent auditors currently included an
explanatory paragraph in their report on our financial statements regarding
concerns about our ability to continue as a going concern.
17
9. WE MAY NOT BE ABLE TO COMPETE WITH LARGER SALES CONTRACT COMPANIES, THE
MAJORITY OF WHOM HAVE GREATER RESOURCES AND EXPERIENCE THAN WE DO.
The market for nutraceuticals is highly competitive. Numerous manufacturers
and distributors compete with us for customers throughout the United States,
Canada and internationally in the packaged nutritional supplement industry
selling products to retailers such as mass merchandisers, drug store chains,
independent pharmacies, and health food stores. Many of our competitors are
substantially larger and more experienced than we are. In addition, they have
longer operating histories and have materially greater financial and other
resources than we do. They therefore have the advantage of having established
reputations, brand names, track records, back office and managerial support
systems and other advantages that we will be unable to duplicate in the near
future. Many of these competitors are private companies, and therefore, we
cannot compare our revenues with respect to the sales volume of each
competitor. If we cannot compete in the marketplace, we may have difficulty
selling our products and generating revenues. Additionally, competition may
drive down the prices of our products, which could adversely affect our cost
of goods sold and our profitability, if any.
We are also subject to competition from many drug companies due to the fact
that our product has what we believe to be health benefits that certain drugs
are created to produce.
We are also subject to competition in the attraction and retention of
employees. Many of our competitors have greater financial resources and can
offer employees compensation packages that are difficult for us to compete
with.
10. WE DEPEND UPON OUR EXECUTIVE OFFICERS AND KEY PERSONNEL.
Our performance depends substantially on the performance of our executive
officers. Our chief executive officer is the inventor of the process and
formulas used to contract manufacture the future products to be sold by us.
We anticipate that he will be the developer of any additional products that we
plan to add to our product line. The loss of services of our chief executive
officer could have a material adverse effect on our business, revenues, and
results of operations or financial condition. We do not maintain key person
life insurance on the lives of our officers or key employees.
The success of our business in the future will depend on our ability to
attract, train, retain and motivate high quality personnel. Competition for
talented personnel is intense, and we may not be able to continue to attract,
train, retain or motivate other highly qualified technical and managerial
personnel in the future. In addition, market conditions may require us to pay
higher compensation to qualified management and technical personnel than we
currently anticipate. Any inability to attract and retain qualified
management and technical personnel in the future could have a material
adverse effect on our business, prospects, financial condition, and/or
results of operations.
18
11. OUR SUCCESS IS DEPENDENT UPON OUR ABILITY TO PROTECT AND PROMOTE OUR
PROPRIETARY RIGHTS.
Our success will depend in large part on our ability to protect and promote
our proprietary rights to our formulas and proprietary processes and
ingredients.
Our ability to compete effectively depends, to a significant extent, on our
ability to maintain the proprietary nature of our intellectual property.
There can be no assurance that the scope of the steps we take to protect all
of our interests cant be circumvented, or that it will not violate the
proprietary rights of others, or that we will not be prevented from using our
product if challenged. In fact, even if broad enough, others may still
infringe upon our rights, which will be costly to protect. Furthermore, the
laws of other countries may less effectively protect our proprietary rights
than U.S. laws. Infringement of our rights by a third party could result in
uncompensated lost market and revenue opportunities.
12. WE ARE AT RISK FOR PRODUCT LIABILITY CLAIMS AND REQUIRE ADEQUATE
INSURANCE TO PROTECT US AGAINST SUCH CLAIMS. IF WE ARE UNABLE TO SECURE THE
NECESSARY INSURANCE COVERAGE AT AFFORDABLE COST TO PROTECT OUR BUSINESS
AGAINST ANY CLAIMS, THEN OUR EXPOSURE TO LIABILITY WILL GREATLY INCREASE AND
OUR ABILITY TO MARKET AND SELL OUR PRODUCTS WILL BE MORE DIFFICULT SINCE
CERTAIN CUSTOMERS RELY ON THIS INSURANCE IN ORDER TO DISTRIBUTE OUR PRODUCTS .
We are constantly at risk that consumers and users of our products will bring
lawsuits alleging product liability. Even though we do not manufacture
products, a consumer could bring a lawsuit against us alleging product
liability due to our ownership of the product(s). We are not aware of any
claims pending against us that would adversely affect our business. While we
will continue to attempt to take what we consider to be appropriate
precautions, these precautions may not protect us from significant product
liability exposure in the future. We currently do not have any product
liability insurance and there can be no assurance that even if we were to
attempt to obtain such insurance that we will be able to obtain, retain
coverage or that this coverage will be cost-justified or sufficient to satisfy
any future claims. If we are sued, we may not have sufficient resources to
defend against the suit or to pay damages. A material lawsuit could negatively
impact our business.
19
13. OUR OFFICERS/DIRECTORS OWN A CONTROLLING INTEREST IN OUR VOTING STOCK AND
INVESTORS WILL NOT HAVE ANY VOICE IN OUR MANAGEMENT, WHICH COULD RESULT IN
DECISIONS ADVERSE TO OUR GENERAL SHAREHOLDERS.
Our officers/directors, in the aggregate, beneficially own approximately or
have the right to vote approximately 41.1% of our outstanding common stock.
As a result, these stockholders, acting together, will have the ability to
control matters submitted to our stockholders for approval including:
a) election of our board of directors;
b) removal of any of our directors;
c) amendment of our Articles of Incorporation or bylaws; and
d) adoption of measures that could delay or prevent a change in control or
impede a merger, takeover or other business combination involving us.
As a result of their ownership and positions, these individuals have the
ability to influence all matters requiring shareholder approval, including the
election of directors and approval of significant corporate transactions. In
addition, the future prospect of sales of significant amounts of shares held by
our director and executive officer could affect the market price of our common
stock if the marketplace does not orderly adjust to the increase in shares in
the market and the value of your investment in the company may decrease.
Management's stock ownership may discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us, which in turn
could reduce our stock price or prevent our stockholders from realizing a
premium over our stock price.
RISKS RELATING TO OUR COMMON SHARES
-----------------------------------
14. WE MAY, IN THE FUTURE, ISSUE ADDITIONAL COMMON SHARES, WHICH WOULD REDUCE
INVESTORS' PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE.
Our Articles of Incorporation authorize the issuance of 70,000,000 shares of
common stock and 5,000,000 preferred shares. The future issuance of common
stock may result in substantial dilution in the percentage of our common stock
held by our then existing shareholders. We may value any common stock issued
in the future on an arbitrary basis. The issuance of common stock for future
services or acquisitions or other corporate actions may have the effect of
diluting the value of the shares held by our investors, and might have an
adverse effect on any trading market for our common stock.
20
15. OUR COMMON SHARES ARE SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND
THE TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN
OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes
the definition of a "penny stock," for the purposes relevant to us, as any
equity security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions.
For any transaction involving a penny stock, unless exempt, the rules require:
(a) that a broker or dealer approve a person's account for transactions in
penny stocks; and (b) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must: (a) obtain financial information and investment
experience objectives of the person; and (b) make a reasonable determination
that the transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prescribed by the Commission relating to the penny
stock market, which, in highlight form: (a) sets forth the basis on which the
broker or dealer made the suitability determination; and (b) that the broker or
dealer received a signed, written agreement from the investor prior to the
transaction. Generally, brokers may be less willing to execute transactions in
securities subject to the "penny stock" rules. This may make it more difficult
for investors to dispose of our Common shares and cause a decline in the market
value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in
both public offerings and in secondary trading and about the commissions
payable to both the broker-dealer and the registered representative, current
quotations for the securities and the rights and remedies available to an
investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in
penny stocks.
16. BECAUSE WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS ON OUR COMMON STOCK,
OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR SHARES UNLESS
THEY SELL THEM.
We intend to retain any future earnings to finance the development and
expansion of our business. We do not anticipate paying any cash dividends on
our common stock in the foreseeable future. Unless we pay dividends, our
stockholders will not be able to receive a return on their shares unless they
sell them. There is no assurance that stockholders will be able to sell
shares when desired.
21
17. WE MAY ISSUE SHARES OF PREFERRED STOCK IN THE FUTURE THAT MAY ADVERSELY
IMPACT YOUR RIGHTS AS HOLDERS OF OUR COMMON STOCK.
Our articles of incorporation authorize us to issue up to 5,000,000 shares of
preferred stock. Accordingly, our board of directors will have the authority
to fix and determine the relative rights and preferences of preferred shares,
as well as the authority to issue such shares, without further stockholder
approval. As a result, our board of directors could authorize the issuance of
a series of preferred stock that would grant to holders preferred rights to our
assets upon liquidation, the right to receive dividends before dividends are
declared to holders of our common stock, and the right to the redemption of
such preferred shares, together with a premium, prior to the redemption of the
common stock. To the extent that we do issue such additional shares of
preferred stock, your rights as holders of common stock could be impaired
thereby, including, without limitation, dilution of your ownership interests
in us. In addition, shares of preferred stock could be issued with terms
calculated to delay or prevent a change in control or make removal of
management more difficult, which may not be in your interest as holders of
common stock.
18. WE HAVE INCURRED INCREASED COSTS AS A RESULT OF BEING A PUBLIC COMPANY.
As a public company, we have incurred significant legal, accounting and other
expenses that we did not incur as a private company. In addition, the
Sarbanes-Oxley Act of 2002, as well as related rules adopted by the Securities
and Exchange Commission, has imposed substantial requirements on public
companies, including certain corporate governance practices and requirements
relating to internal control over financial reporting. We expect these rules
and regulations to increase our legal and financial compliance costs and to
make some activities more time-consuming and costly. In addition, in the
future we will be required to document, evaluate, and test our internal control
procedures under Section 404 of the Sarbanes-Oxley Act and the related rules
of the Securities and Exchange Commission which will be costly and time
consuming. Effective internal controls are necessary for us to produce
reliable financial reports and are important in helping prevent financial
fraud. If we are unable to achieve and maintain adequate internal controls,
our business and operating results could be harmed.
22
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
Our corporate headquarters are located at 2811 Reidville Road, Suite 23,
Spartanburg, SC 29301. We believe our current office space is adequate for
our immediate needs; however, as our operations expand, we may need to locate
and secure additional office space.
Item 3. Legal Proceedings.
From time to time, we may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in
these or other matters may arise from time to time that may harm our
business.
We are not presently a party to any material litigation, nor to the knowledge
of management is any litigation threatened against us, which may materially
affect us.
Item 4. Submission of Matters to a Vote of Security Holders.
We did not submit any matters to a vote of our security holders during the past
fiscal year.
23
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.
(a) Market Information
Total Nutraceutical Solutions common stock, $0.001 par value, is traded on
the OTC-Bulletin Board under the symbol: TNUS. The stock was cleared for
trading on the OTC-Bulletin Board on November 1, 2007.
Since the Company has been cleared for trading, through March 30, 2009,
there have been limited trades of the Company's stock. There are no
assurances that a market will ever develop for the Company's stock.
The table below sets forth the high and low bid prices of our common stock for
each quarter shown, as provided by the NASD Trading and Market Services
Research Unit. Quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
FISCAL 2008 HIGH LOW
- -------------------------------- ---- ----
Quarter Ended March 31, 2008 0.30 0.30
Quarter Ended June 30, 2008 0.30 0.30
Quarter Ended September 30, 2008 0.30 0.30
Quarter ended December 31, 2008 0.51 0.30
(b) Holders of Common Stock
As of March 30, 2009, there were approximately 115 holders of record of
our Common Stock and 49,673,750 shares outstanding.
(c) Dividends
In the future we intend to follow a policy of retaining earnings, if any, to
finance the growth of the business and do not anticipate paying any cash
dividends in the foreseeable future. The declaration and payment of future
dividends on the Common Stock will be the sole discretion of board of
directors and will depend on our profitability and financial condition,
capital requirements, statutory and contractual restrictions, future
prospects and other factors deemed relevant.
(d) Securities Authorized for Issuance under Equity Compensation Plans
24
Recent Sales of Unregistered Securities
- ---------------------------------------
On July 10, 2008, the Company issued 40,000,000 unregistered shares of its
common stock, par value $0.001, from its treasury to fifteen individuals in
exchange for $40,000 cash. The Company relied on the exemption from
registration provided by Section 4(2) and Rule 506 of Regulation D under the
Securities Act of 1933, as amended. The offer and sale did not involve a
public offering and there was not any general solicitation or general
advertising involved in the offer or sale.
In August 2008, the Company issued 3,000,000 unregistered shares of its
common stock and in September 2008, the Company issued 2,050,000 unregistered
shares of its common stock, in December 2008, the Company issued 250,000
unregistered shares of its common stock, par value $0.001, from its treasury
to individuals in exchange for $530,000 cash. This offering also included
one warrant for every two shares purchased. The warrant is exercisable at
$0.25, callable at the option of the company at $0.001, if the stock traded
at $0.50 per share for 20 consecutive days.
The Company relied on the exemption from registration provided by Section
4(2) and Rule 506 of Regulation D under the Securities Act of 1933, as
amended. The offer and sale did not involve a public offering and there was
not any general solicitation or general advertising involved in the offer or
sale.
In September 2008, the Company issued 3,500,000 unregistered restricted
shares of its common stock, par value $0.001, from its treasury to Northwest
Medical Research Partners, Inc., in exchange for an Assignment and Assumption
Agreement, pursuant to which the Company has assumed the obligations of NW
Research Partners to maintain the patent prosecution associated with the
intellectual property and has an option to license from Pennsylvania State
University the technologies associated with the intellectual property.
These shares will not be registered under the Securities Act of 1933, as
amended (the "Act") and were issued in the reliance upon the exemption from
registration provided by section 4(2) of the Act, on the basis that the
transaction does not involve a public offering.
There have been no other issuances of common or preferred stock at
December 31, 2008.
Issuer Purchases of Equity Securities
- -------------------------------------
We did not repurchase any of our equity securities during the years ended
December 31, 2008 or 2007.
25
Cancellation of Shares
- ----------------------
On or about November 1, 2008, Marvin Hausman, M.D., Chief Executive Officer
of the Company returned to the Treasury and the Company cancelled 10,000,000
shares of its common stock, $0.001 par value per share, that had been issued
and outstanding in the name of Marvin Hausman, M.D.
Item 6. Selected Financial Data.
Not applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview of Current Operations
- ------------------------------
Total Nutraceutical Solutions, was organized by the filing of Articles of
Incorporation with the Secretary of State of the State of Nevada on July 19,
2007. On October 8, 2008, the Company filed amended Articles with the
Secretary of State of the State of Nevada to change its corporate name to
Total Nutraceutical Solutions.
We are a developmental stage company which plans to create and execute sales
and marketing programs with the goal of demonstrating our ability to maximize
our sales performance for nutraceutical products. Management is currently
working on its own formulations to produce, manufacture and market is own line
of over-the-counter products, specifically nutraceutical products. The
Company has not developed nor produced any products at the close of its
fiscal year. Emphasis has been placed on raising sufficient capital to
develop these products.
Our nutraceutical business activities have been minimal and have included the
acquisition of certain intellectual property pursuant to research agreements
in association with Pennsylvania State University. These research endeavors
resulted in the filing of U.S. Provisional Patent Application No. 60/782,204,
entitled "Identification of Selenoergothioneine as a Natural Organic Form of
Selenium from Cultivated Mushrooms." We purchased an option assignment to
license from Pennsylvania State University the technologies associated with
the intellectual property. This intellectual property is one of the
cornerstones of our business.
26
Results of Operations for the year ended December 31, 2008
- ----------------------------------------------------------
We earned no revenues since our inception on July 19, 2007 through December 31,
2008. We do not anticipate earning any significant revenues until such time
as we can bring to the market a nutraceutical product(s). We are presently in
the development stage of our business and we can provide no assurance that we
will be successful in developing any nutraceutical product(s).
For the period since inception through December 31, 2008, we generated no
income. Since our inception on July 19, 2007 we experienced a net loss of
$(121,535). Our loss was attributed to accounting and legal fees, consulting
fees travel expenses and stock transfer agent fees. For the year ending
December 31, 2008, we lost $(121,135) versus a loss of $(400) for the same
period last year. We anticipate our operating expenses will increase as we
start to develop and market nutraceutical product(s). We anticipate our
ongoing operating expenses will also increase since we are a reporting
company under the Securities Exchange Act of 1934.
Revenues
- --------
We generated no revenues for the period from July 19, 2007 (inception)
through December 31, 2008. We do not anticipate generating any revenues for at
least 6-12 months.
Going Concern
- -------------
Our independent auditors included an explanatory paragraph in their report on
the accompanying financial statements regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional
note disclosures describing the circumstances that lead to this disclosure by
our independent auditors.
Summary of any product research and development that we will perform for the
term of our plan of operation.
- ----------------------------------------------------------------------------
We acquired certain intellectual property pursuant to research agreements in
association with Pennsylvania State University. These research endeavors
resulted in the filing of U.S. Provisional Patent Application No. 60/782,204,
entitled "Identification of Selenoergothioneine as a Natural Organic Form of
Selenium from Cultivated Mushrooms." We purchased an option assignment to
license from Pennsylvania State University the technologies associated with
the intellectual property. This intellectual property is the cornerstone of
our business.
27
Expected purchase or sale of plant and significant equipment
- -------------------------------------------------------------
We do not anticipate the purchase or sale of any plant or significant
equipment; as such items are not required by us at this time.
Significant changes in the number of employees
- -----------------------------------------------
As of December 31, 2008, we did not have any employees. We are dependent upon
our officers and directors for our future business development. As our
operations expand we anticipate the need to hire additional employees,
consultants and professionals; however, the exact number is not quantifiable
at this time.
Liquidity and Capital Resources
- -------------------------------
Our balance sheet as of December 31, 2008 reflects cash of $273,171, current
assets of $498,700 and current Liabilities of $58,420. Cash and cash
equivalents from inception to date have been sufficient to provide the
operating capital necessary to operate to date. Management believes it has
sufficient funds to remain operational for the next twelve months.
Notwithstanding, we anticipate generating losses and therefore we may be
unable to continue operations in the future. We anticipate we will require
additional capital up to approximately $600,000 and we intend to raise the
monies by selling equity in our Company. We are in the process of trying to
raise capital through a private offering. (See Financial Footnote No. 4.)
There can be no assurance that additional capital will be available to us.
We currently have no agreements, arrangements or understandings with any
person to obtain funds through bank loans, lines of credit or any
other sources.
Off-Balance Sheet Arrangements
- ------------------------------
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results or operations,
liquidity, capital expenditures or capital resources that is material to
investors.
Critical Accounting Policies and Estimates
- ------------------------------------------
Revenue Recognition: We recognize revenue from product sales once all of the
following criteria for revenue recognition have been met: pervasive evidence
that an agreement exists; the services have been rendered; the fee is fixed
and determinable and not subject to refund or adjustment; and collection of
the amount due is reasonable assured.
28
New Accounting Standards
- ------------------------
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 163, "Accounting for Financial Guarantee Insurance Contracts-and
interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how
Statement 60 applies to financial guarantee insurance contracts, including
the recognition and measurement of premium revenue and claims liabilities.
This statement also requires expanded disclosures about financial guarantee
insurance contracts. SFAS No. 163 is effective for fiscal years beginning on
or after December 15, 2008, and interim periods within those years. SFAS No.
163 has no effect on the Company's financial position, statements of
operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS
No. 162 sets forth the level of authority to a given accounting pronouncement
or document by category. Where there might be conflicting guidance between
two categories, the more authoritative category will prevail. SFAS No. 162
will become effective 60 days after the SEC approves the PCAOB's amendments
to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no
effect on the Company's financial position, statements of operations, or cash
flows at this time.
In March 3008, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities-an
amendment of FASB Statement No. 133. This standard requires companies to
provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entity's
financial position, financial performance, and cash flows. This Statement is
effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008, with early application encouraged.
The Company has not yet adopted the provisions of SFAS No. 161, but does not
expect it to have a material impact on its consolidated financial position,
results of operations or cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
options in accordance with SFAS No. 123 (R), Share-Based Payment. In
particular, the staff indicated in SAB 107 that it will accept a company's
election to use the simplified method, regardless of whether the company has
sufficient information to make more refined estimates of expected term. At
the time SAB 107 was issued, the staff believed that more detailed external
information about employee exercise behavior (e.g., employee exercise
patterns by industry and/or other categories of companies) would, over time,
become readily available to companies. Therefore, the staff stated in SAB 107
29
that it would not expect a company to use the simplified method for share
option grants after December 31, 2007. The staff understands that such
detailed information about employee exercise behavior may not be widely
available by December 31, 2007. Accordingly, the staff will continue to
accept, under certain circumstances, the use of the simplified method beyond
December 31, 2007. The Company currently uses the simplified method for
"plain vanilla" share options and warrants, and will assess the impact of SAB
110 for fiscal year 2009. It is not believed that this will have an impact on
the Company's consolidated financial position, results of operations or cash
flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements-an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as
equity in the consolidated financial statements. Before this statement was
issued, limited guidance existed for reporting noncontrolling interests. As a
result, considerable diversity in practice existed. So-called minority
interests were reported in the consolidated statement of financial position
as liabilities or in the mezzanine section between liabilities and equity.
This statement improves comparability by eliminating that diversity. This
statement is effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008 (that is, January 1,
2009, for entities with calendar year-ends). Earlier adoption is prohibited.
The effective date of this statement is the same as that of the related
Statement 141 (revised 2007). The Company will adopt this Statement beginning
March 1, 2009. It is not believed that this will have an impact on the
Company's consolidated financial position, results of operations or cash
flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations. This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141.
This Statement establishes principles and requirements for how the acquirer:
(a) recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in
the acquiree; (b) recognizes and measures the goodwill acquired in the
business combination or a gain from a bargain purchase; and (c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. This
statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it
before that date. The effective date of this statement is the same as that of
the related FASB Statement No. 160, Noncontrolling Interests in Consolidated
Financial Statements. The Company will adopt this statement beginning March
1, 2009. It is not believed that this will have an impact on the Company's
consolidated financial position, results of operations or cash flows.
30
In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities-Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available
to all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not
report net income. SFAS No. 159 is effective as of the beginning of an
entities first fiscal year that begins after November 15, 2007. Early
adoption is permitted as of the beginning of the previous fiscal year
provided that the entity makes that choice in the first 120 days of that
fiscal year and also elects to apply the provisions of SFAS No. 157 Fair
Value Measurements. The Company will adopt SFAS No. 159 beginning March 1,
2008 and is currently evaluating the potential impact the adoption of this
pronouncement will have on its consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
This statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. This statement applies under other
accounting pronouncements that require or permit fair value measurements, the
Board having previously concluded in those accounting pronouncements that
fair value is the relevant measurement attribute. Accordingly, this statement
does not require any new fair value measurements. However, for some entities,
the application of this statement will change current practice. This
statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. Earlier application is encouraged, provided that the reporting entity
has not yet issued financial statements for that fiscal year, including
financial statements for an interim period within that fiscal year. The
Company will adopt this statement March 1, 2008, and it is not believed that
this will have an impact on the Company's consolidated financial position,
results of operations or cash flows.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
31
Item 8. Financial Statements and Supplementary Data.
Index to Financial Statements
Financial Statement
-------------------
PAGE
----
Independent Auditors' Report F-1
Balance Sheets F-2
Statements of Operations F-3
Statements of Changes in Stockholders' Equity F-4-6
Statements of Cash Flows F-7
Notes to Financials F-8
32
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
------------------------
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Board of Directors
Total Nutraceutical Solutions
(A Development Stage Company)
We have audited the accompanying balance sheets of Total Nutraceutical
Solutions (A Development Stage Company) as of December 31, 2008 and 2007, and
the related statements of operations, stockholders' equity and cash flows for
the year then ended December 31, 2008, since inception on July 19, 2007 to
December 31, 2007, and since inception on July 19, 2007 through December 31,
2008. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Total Nutraceutical Solutions
(A Development Stage Company) as of December 31, 2008 and 2007, and the related
statements of operations, stockholders' equity and cash flows for the year then
ended December 31, 2008, since inception on July 19, 2007 to December 31, 2007,
and since inception on July 19, 2007 through December 31, 2008, in conformity
with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, as of December 31, 2008, the Company has not recognized
any revenues to date and has accumulated operating losses of approximately
$130,526. These factors raise substantial doubt about its ability to continue
as a going concern. Management's plans concerning these matters are also
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Moore & Associates, Chartered
- ---------------------------------
Moore & Associates Chartered
Las Vegas, Nevada
March 6, 2009
6490 WEST DESERT INN ROAD, NV 89146 (702) 253-7499 Fax (702) 253-7501
F-1
Total Nutraceutical Solutions
(A Development Stage Company)
Balance Sheets
Balance Sheets
December 31, December 31,
2008 2007
------------ ------------
Assets
Current Assets
Cash $ 273,171 $ -
Inventory 200,000 -
Prepaids 25,529 -
------------ ------------
Total Current Assets 498,700 -
------------ ------------
Total Assets $ 498,700 $ -
============ ============
Liabilities and Stockholder's Equity
Current Liabilities:
Accounts Payable $ 6,495 $ -
Related Party Payable 35,387 -
Notes Payable 16,539 -
------------ ------------
Total Current Liabilities $ 58,420 $ -
------------ ------------
Stockholder's Equity
Preferred stock, $.001 par value, 5,000,000
shares authorized: no shares issued or
outstanding $ - $ -
Common stock, $.001 par value, 70,000,000
shares authorized: 49,673,750 and 10,873,750
issued and outstanding at 12/31/2008 and
12/31/2007 respectively 49,674 10,874
Additional Paid-In Capital 510,776 (10,474)
Other Comprehensive Income (Loss) 1,366 -
Deficit Accumulated During Development Stage (121,535) (400)
------------ ------------
Total Stockholder's Equity 440,280 -
------------ ------------
Total Liabilities and Stockholder's Equity $ 498,700 $ -
============ ============
The accompanying notes are an integral part of these financial statements.
F-2
Total Nutraceutical Solutions
(A Development Stage Company)
Statements of Operations
Statements of Operations
Period Period
from July 19, from July 19,
For the 2007 (Date of 2007 (Date of
Year Ending Inception) to Inception) to
December 31, December 31, December 31,
2008 2007 2008
------------- ------------- -------------
Revenue $ 0 $ 0 $ 0
------------- ------------- -------------
Expenses
Consulting fees 38,967 0 38,967
Advertising and Promotion 270 0 270
General and Administrative 7,321 400 7,721
Accounting 7,220 0 7,220
Legal 24,247 24,247
Insurance 2,321 2,321
Travel 30,874 30,874
Stock Transfer Agent 7,335 0 7,335
Interest 104 104
Miscellaneous 2,478 2,478
------------- ------------- -------------
Total Expenses $ 121,135 $ 400 $ 121,535
------------- ------------- -------------
Net income (loss) before
income taxes $ (121,135) $ (400) $ (121,535)
Provision for income tax 0 0 0
------------- ------------- -------------
Net income (loss) $ (121,135) $ (400) $ (121,535)
============= ============= =============
Basic and fully diluted
loss per share $ (0.00) $ (0.00) $ (0.01)
============= ============= =============
Basic and fully diluted weighted
average shares outstanding 35,046,354 5,436,875 23,364,236
============= ============= =============
The accompanying notes are an integral part of these financial statements.
F-3
Total Nutraceutical Solutions
(A Development Stage Company)
Statements of Stockholder's Equity
Statements of Stockholder's Equity
Other Accumulated
Comp- Deficit
Common Additional Stock rehen- During
Stock Par Paid Subscriptions sive Development
Shares Value In Capital Receivable Income Stage Total
---------- --------- ---------- ---------- ------ ---------- ----------
Balance-
July 19,
2007 (Date
Of
Inception) - $ - $ - $ - $ - $ - $ -
Contrib-
uted
Capital 400 400
Shares
issued to
Basic
Services
stock-
holders 10,873,750 10,874 (10,874) -
Net loss
for year
ending
12/31/2007 (400) (400)
---------- --------- ---------- ---------- ------ ---------- ----------
Balance-
December
31,
2007 10,873,750 $ 10,874 $ (10,474) $ - $ - $ (400) $ -
Net loss
for period
ending
3/31/2008 -
---------- --------- ---------- ---------- ------ ---------- ----------
F-4
Total Nutraceutical Solutions
(A Development Stage Company)
Statements of Stockholder's Equity (Continued)
Other Accumulated
Comp- Deficit
Common Additional Stock rehen- During
Stock Par Paid Subscriptions sive Development
Shares Value In Capital Receivable Income Stage Total
---------- --------- ---------- ---------- ------ ---------- ----------
Balance-
March
31,
2008 10,873,750 $ 10,874 $ (10,474) $ - $ - $ (400) $ -
Net loss
for period
ending
6/30/2008 100 100
---------- --------- ---------- ---------- ------ ---------- ----------
Balance-
June
30,
2008 10,873,750 $ 10,874 $ (10,474) $ - $ - $ (300) $ 100
Shares
issued-
July
2008 40,000,000 40,000 - 40,000
Contri-
buted
Capital 50 50
Shares
issued-
August
2008 3,000,000 3,000 297,000 300,000
Shares
issued-
September
2008 2,050,000 2,050 202,950 (105,000) 100,000
Shares
issued
for
agreement-
September
2008 3,500,000 3,500 (3,500) -
F-5
Total Nutraceutical Solutions
(A Development Stage Company)
Statements of Stockholder's Equity (Continued)
Other Accumulated
Comp- Deficit
Common Additional Stock rehen- During
Stock Par Paid Subscriptions sive Development
Shares Value In Capital Receivable Income Stage Total
---------- --------- ---------- ---------- ------ ---------- ----------
Net loss
for period
ending
9/30/2008 (18,245) (18,245)
---------- --------- ---------- ---------- ------ ---------- ----------
Balance-
September
30,
2008 59,423,750 $ 59,424 $ 486,026 $(105,000) $ - $ (18,545) $ 421,905
Subscr-
iption
receivable
payment-
October
2008 105,000 105,000
Shares
returned
to
Treasury-
November
2008 (10,000,000) (10,000) (10,000)
Shares
issued-
December
2008 250,000 250 24,750 1,366 26,366
Net loss
for
period (102,990) (102,990)
---------- --------- ---------- ---------- ------ ---------- ----------
Balance-
December
31,
2008 49,673,750 $ 49,674 $ 510,776 $ - $1,366 $(121,535) $ 440,280
========== ========= ========== ========== ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-6
Total Nutraceutical Solutions
(A Development Stage Company)
Statements of Cash Flows
Statements of Cash Flows
Period Period
from July 19, from July 19,
For the 2007 (Date of 2007 (Date of
Year Ending Inception) to Inception) to
December 31, December 31, December 31,
2008 2007 2008
------------- ------------- -------------
OPERATING ACTIVITIES:
Net Loss $ (121,135) $ (400) $ (121,535)
Inventory (200,000) - (200,000)
Prepaids (25,529) - (25,529)
Increase (decrease) in
Related Party Payable 35,387 - 35,387
Increase (decrease) in
Accounts Payable 6,495 - 6,495
------------- ------------- -------------
Net Cash (Used) Provided
by Operating Activities (304,783) (400) (305,183)
------------- ------------- -------------
INVESTING ACTIVITIES:
Investment in Software
Resellers Agreement - - -
------------- ------------- -------------
Net Cash (Used) Provided
by Investing Activities - - -
------------- ------------- -------------
FINANCING ACTIVITIES:
Notes Payable 16,539 - 16,539
Proceeds from sale of
common stock 38,800 10,874 49,674
Proceeds from additional paid
in Capital 521,250 (10,474) 510,776
Proceeds from other
comprehensive income 1,366 - 1,366
------------- ------------- -------------
Net Cash Provided by (Used
in) Financing Activities 577,954 400 578,354
------------- ------------- -------------
Net change in cash 273,171 - 273,171
Cash, Beginning of Period - - -
------------- ------------- -------------
Cash, End of Period $ 273,171 $ - $ 273,171
============= ============= =============
Supplement Cash Flow Information
Interest Expense Paid $ 104 $ - $ 104
============= ============= =============
The accompanying notes are an integral part of these financial statements.
F-7
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 1 - General Organization and Business
The Company was organized July 19, 2007 (Date of Inception) under the laws of
the State of Nevada, as Generic Marketing Services, Inc. The Company was
incorporated as a subsidiary of Basic Services, Inc., ("Basic"), a Nevada
corporation. The Company filed a Certificate of Amendment to its Articles of
Incorporation with the Nevada Secretary of State in November 2008 to change
its corporate name from Generic Marketing Services to Total Nutraceutical
Solutions. The Company was incorporated to conduct any legal business. The
Company plans to develop a sales staff to market generic pharmaceutical
products.
NOTE 2 - Summary of Significant Accounting Practices
The Company had cash assets of $273,171 and current liabilities of $58,420 as
of December 31, 2008. The relevant accounting policies are listed below.
Basis of Accounting
- -------------------
The basis is United States generally accepted accounting principles. These
statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein.
Earnings per Share
- ------------------
The basic earnings (loss) per share is calculated by dividing the Company's
net income (loss) available to common shareholders by the weighted average
number of common shares during the year. The diluted earnings (loss) per
share is calculated by dividing the Company's net income (loss) available to
common shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number of shares
outstanding is the basic weighted number of shares adjusted as of the first
of the year for any potentially dilutive debt or equity. At December 31, 2008
and December 31, 2007 the Company had no dilutive common stock equivalents
outstanding.
Dividends
- ---------
The Company has not yet adopted any policy regarding payment of dividends. No
Dividends have been paid during the periods shown.
F-8
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 2 - Summary of Significant Accounting Practices - Continued
Year-end
- --------
The board of directors approved a change in fiscal year-end financials to
December 31.
Advertising
- -----------
Advertising is expensed when incurred. Advertising costs incurred were $270
at December 31, 2008. There was no advertising cost incurred at December 31,
2007.
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 revenue
and expenses during the reporting period. Actual results could differ from
those estimates.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents consists of cash on deposit and term deposits with
a maturity of less than three months from the date of purchase.
Organizational costs
- --------------------
Costs of startup activities, including organizational and incorporation costs
are expensed as incurred.
Fair Value of Financial Instruments
- -----------------------------------
The carrying value of cash, and accounts payable and accrued liabilities
approximate their fair value because of their short maturity of these
instruments.
F-9
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 2 - Summary of Significant Accounting Practices - Continued
Fair Value Measurements
- -----------------------
The Company has partially adopted Financial Accounting Standards Board (FASB)
SFAS No. 157, Fair Value Measurements (SFAS 157), pursuant to the provisions
of FSP FAS 157-2, which deferred the effective date of SFAS 157 for non-
financial assets and liabilities. The provisions of SFAS 157 are applicable
to all of the Company's financial assets and liabilities that are measured
and recorded at fair value. SFAS 157 defines fair value, establishes a new
framework for measuring fair value, and expands related disclosure. Fair
value is defined 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.
SFAS 157 establishes a fair value hierarchy that gives the highest priority
to observable inputs and the lowest priority to unobservable inputs. The
three levels of fair value hierarchy defined by SFAS 157 are described below:
Level 1 Quoted market prices available in active markets for identical
assets or liabilities as of the reporting date. The Company's
Level 1 assets include cash equivalents.
Level 2 Pricing inputs other than quoted prices in active markets included
in Level 1, which are either directly or indirectly observable as
of the reporting date. The Company has no Level 2 assets or
liabilities.
Level 3 Pricing inputs that are generally observable inputs and not
corroborated by market data.
Quoted Significant
Prices in Other Significant Balance
Active Markets for Observable Unobservable as of
identical assets Inputs Inputs December 31,
(Level 1) (Level 2) (Level 3) 2008
------------------ ---------- ------------ -------------
Cash $ 273,171 $ 0 $ 0 $ 273,171
Accounts Payable $ 41,882 $ 0 $ 0 $ 41,882
Note Payable $ 16,539 $ 0 $ 0 $ 16,539
Because of the short term nature of these assets and liabilities the carrying
value approximates the fair value at December 31, 2008.
F-10
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 2 - Summary of Significant Accounting Practices - Continued
Provision for Taxes
- -------------------
Income taxes are provided based upon the liability method of accounting
pursuant to SFAS No. 109 "Accounting for Income Taxes." Under this approach,
deferred income taxes are recorded to reflect the tax consequences on future
years of differences between the tax basis of assets and liabilities and
their financial reporting amounts at each year end. A valuation allowance is
recorded against deferred tax assets if management does not believe the
Company has met the "more likely than not" standard imposed by SFAS No. 109
to allow recognition of such an asset.
Revenue recognition
- -------------------
The Company recognizes revenue on an accrual basis as it invoices for
services. Revenue is generally realized or realizable and earned when all of
the following criteria are met: 1) persuasive evidence of an arrangement
exists between the Company and our customer(s); 2) services have been
rendered; 3) our price to our customer is fixed or determinable; and 4)
collectability is reasonably assured. For the period from July 19, 2007
(inception) to December 31, 2008, the Company has not recognized any
revenues.
Foreign Currency Translation
- ----------------------------
The Company's financial statements are reported in U.S. dollars. The value
of exchange transactions are translated into U.S. dollars at rates in effect
at the time of the transaction execution. Translation adjustments are
recorded in Other Comprehensive Income (Loss). In December 2008, the Company
sold 250,000 shares of unrestricted common stock for $25,000 to a foreign
investor. As a result of this transaction, there was $1,366 recorded in
other comprehensive income at December 31, 2008.
F-11
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 3 - Going concern
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. As of December 31, 2008,
the Company has not recognized any revenues to date and has accumulated
operating losses of approximately $121,535 since inception. The Company's
ability to continue as a going concern is contingent upon the successful
completion of additional financing arrangements and its ability to achieve
and maintain profitable operations. While the Company is expending its best
efforts to achieve the above plans, there is no assurance that any such
activity will generate funds that will be available for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might arise from this uncertainty.
NOTE 4 - Stockholders' equity
The Company is authorized to issue 70,000,000 shares of its $0.001 par value
common stock and 5,000,000 shares of its $0.001 par value preferred stock.
At December 31, 2008 there are no shares of preferred stock issued or
outstanding.
In August 2007, record shareholders of Generic Marketing Services common
stock were entitled to receive a special stock dividend of Generic Marketing
Services, Inc., a Nevada corporation, a wholly owned subsidiary of Basic
Services, Inc. This subsidiary was formed to focus on marketing
pharmaceutical and over-the-counter products, as compared to developing
products. This spin off will allow both companies to focus on their
different business plans and not compete in accessing funding in capital
markets.
In October 2007, the shareholders of record received one (1) common share,
par value $0.001, of Generic Marketing Services common stock for every share
of Basic Services, Inc. common stock owned. The Generic Marketing Services
stock dividend is based on 10,873,750 shares of Basic Services, Inc. common
stock that were issued and outstanding as of the record date. Subsequently,
10,873,750 shares were issued to the shareholders of Generic Marketing
Services, Inc.
F-12
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 4 - Stockholders' equity - Continued
In July 2008, the Company issued 40,000,000 unregistered shares of its common
stock, par value $0.001, from its treasury to fifteen individuals in exchange
for $40,000 cash. These shares were sold to further capitalize the Company,
in order to execute its business plan.
In August 2008, the Company issued 3,000,000 unregistered shares of its
common stock and in September 2008, the Company issued 2,050,000 unregistered
shares of its common stock, in December 2008, the Company issued 250,000
unregistered shares of its common stock, par value $0.001, from its treasury
to individuals in exchange for $530,000 cash. This offering also included
one warrant for every two shares purchased. The warrant is exercisable at
$0.25, callable at the option of the company at $0.001, if the stock traded
at $0.50 per share for 20 consecutive days.
The Company relied on the exemption from registration provided by Section
4(2) and Rule 506 of Regulation D under the Securities Act of 1933, as
amended. The offer and sale did not involve a public offering and there was
not any general solicitation or general advertising involved in the offer or
sale.
In September 2008, the Company issued 3,500,000 unregistered restricted
shares of its common stock, par value $0.001, from its treasury to Northwest
Medical Research Partners, Inc., in exchange for an Assignment and Assumption
Agreement, pursuant to which the Company has assumed the obligations of NW
Research Partners to maintain the patent prosecution associated with the
intellectual property and has an option to license from Pennsylvania State
University the technologies associated with the intellectual property.
These shares will not be registered under the Securities Act of 1933, as
amended (the "Act") and were issued in the reliance upon the exemption from
registration provided by section 4(2) of the Act, on the basis that the
transaction does not involve a public offering.
On or about November 1, 2008, Marvin Hausman, M.D., Chief Executive Officer
of the Company returned to the Treasury and the Company cancelled 10,000,000
shares of its common stock, $0.001 par value per share, that had been issued
and outstanding in the name of Marvin Hausman, M.D.
F-13
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 4 - Stockholders' equity - Continued
There have been no other issuances of common or preferred stock at
December 31, 2008.
The Company opened a private placement offering to sell to selected offerees
a minimum of 1,200,000 Units and a maximum of 3,000,000 Units, at an
offering price of $0.50 per Unit. Each Unit is comprised of two shares of the
Company's Common Stock, $0.001 par value, and two, three year callable
Warrants - an "A" Warrant to purchase one share of Common Stock at an
exercise price of $0.75 per share and a "B" Warrant to purchase one share of
Common Stock at an exercise price of $1.00 per share.
The minimum offering is 1,200,000 Units. All subscription funds for the
purchase of Units will be kept in a non-interest bearing attorney escrow
account of The Law Offices of Thomas C. Cook, Ltd., counsel for the Company.
These funds will be released and available to the Company after the minimum
of $600,000 in subscription investments is received in escrow. If the
minimum of 1,200,000 Units is not reached in this Offering by the Offering
closing date, offerees have sole discretion to release funds to the Company,
in writing, pursuant to the terms of this Offering or to demand a complete
refund of their monies related to this Offering. The proceeds from this
offering will be utilized for operating expenses and for the purchase of
certain business assets from Golden Gourmet Mushrooms, Inc.
At December 31, 2008 no shares had been sold under this private placement
offering.
NOTE 5 - Related Party Transactions
The Company does not lease or rent any property. Office services are
provided without charge by a director. Such costs are immaterial to the
financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the
resolution of such conflicts.
The Company has posted a related party payable for CEO and Board Chairman
Marvin Hausman related to travel expenses of $22,387 and consulting of
$13,000 for services performed at December 31, 2008.
F-14
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 6 - Provision for Income Taxes
Income taxes are provided based upon the liability method of accounting
pursuant to Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (hereinafter "SFAS No. 109"). Under this approach,
deferred income taxes are recorded to reflect the tax consequences in future
years of differences between the tax basis of assets and liabilities and
their financial reporting amounts at each year-end. A valuation allowance is
recorded against deferred tax assets if management does not believe the
Company has met the "more likely than not" standard imposed by SFAS No. 109
to allow recognition of such an asset.
Effective December 1, 2008, the Company adopted the Financial Accounting
Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in
Income Taxes-an interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return.
Additionally, FIN 48 provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. The adoption of FIN 48 did not have a material impact on the
Company's financial position, results of operation or liquidity. The current
Company policy classifies any interest recognized on an underpayment of
income taxes as interest expense and classifies any statutory penalties
recognized on a tax position taken as selling, general and administrative
expense.
The Company has not taken a tax position that, if challenged, would have a
material effect on the financial statements for the fiscal year ended
December 31, 2008, or during the prior three years applicable under FIN 48.
As a result of the adoption of FIN 48, we did not recognize any adjustment to
the liability for uncertain tax position and therefore did not record any
adjustment to the beginning balance of accumulated deficit on the balance
sheet.
At December 31, 2008, the Company had deferred tax assets of approximately $
41,300 principally arising from net operating loss carry forwards for income
tax purposes calculated at an expected rate of 34%. As management of the
Company cannot determine that it is more likely than not that the Company
will realize the benefit of the deferred tax assets, a valuation allowance
equal to the deferred tax assets was present at December 31, 2008.
F-15
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 6 - Provision for Income Taxes - Continued
The Company's deferred tax assets are estimated as follows:
December 31, 2008
Net operating loss carry forward (121,535)
Deferred tax asset 41,300
----------
Deferred tax asset valuation allowance (41,300)
----------
Net deferred tax asset -
At December 31, 2008 the Company has net operating loss carry forward of
approximately $121,535 which expires in the years 2027 and 2028.
NOTE 7 - Operating Leases and Other Commitments
The Company has no lease or other obligations.
NOTE 8 - Inventory
The Company states inventory at the lower of cost or market. Cost is
computed on the first-in, first-out method. Inventory consisted of only one
class of raw material, mushroom powder, at December 31, 2008.
NOTE 9 - Exclusive Option Agreements
The Company's new CEO and Chairman of the Board, Marvin S. Hausman, M.D.,
beginning in 2006, developed certain intellectual property pursuant to
research agreements dated May 1, 2006 and May 20, 2006 in association with
Pennsylvania State University. These research endeavors resulted in the
filing of U.S. Provisional Patent Application No. 60/782,204, entitled
"Identification of Selenoergothioneine as a Natural Organic Form of Selenium
from Cultivated Mushrooms." On September 4, 2008, the company acquired from
Northwest Medical Research Partners Inc., which is controlled by Dr. Hausman,
the newly appointed director and CEO of the Company, in exchange for
3,500,000 shares of common unregistered restricted stock, an Assignment and
F-16
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 9 - Exclusive Option Agreements - Continued
Assumption Agreement, effective July 31, 2008, pursuant to which the Company
has assumed the obligations of NW Research Partners to maintain the patent
prosecution and perform preclinical and clinical research associated with the
intellectual property and has an option to license from Pennsylvania State
University the technologies associated with the intellectual property.
Pennsylvania State University filed PSU Invention Disclosure No. 2008-3438,
which is entitled "Rapid Generation of Vitamin D2 from Mushrooms and Fungi
Using Pulsed UV-light". In October 2008, the company acquired from
Pennsylvania State University, in exchange for $5,000, an Exclusive Option
Agreement, effective November 21, 2008, pursuant to which the Company has
assumed the obligations to maintain the patent prosecution and perform
preclinical and clinical research associated with the intellectual property
and has an option to license from Pennsylvania State University the
technologies associated with the intellectual property.
Total Nutraceutical Solutions entered into an Option to Purchase Assets
Agreement on November 21, 2008 to acquire certain business assets ("Mushroom
Matrix Assets") from Golden Gourmet Mushrooms, Inc. ("GGM"), an unrelated
Nevada corporation. GGM at the time of closing will receive $350,000 in cash
and 2,500,000 shares of The Company's restricted Common Stock and an
agreement by the Company to pay to GGM an ongoing royalty of 4% of net sales
for a period of 10 years (subject to certain limitations). The acquisition
of the Mushroom Matrix Assets is contingent upon closing a private placement
offering currently open. In the event that the Minimum of that offering is
not raised, all funds held in Escrow will be returned to the Investors in
this Offering, and if, following the Closing, the acquisition of the Mushroom
Matrix Assets is not consummated for any reason, the Company will return to
the Investors all funds previously taken from Escrow at the Closing.
NOTE 10 - Note Payable
On November 21, 2008 the Company entered into a short term financing
agreement for $27,850 for Director's and Officer's Insurance. Repayment is
to be paid over twelve months, at 6.7% interest. In addition to principle
payments, the Company paid $104 of interest on this note at December 31,
2008.
F-17
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 11 - Recent Accounting Pronouncements
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 163, "Accounting for Financial Guarantee Insurance Contracts-and
interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how
Statement 60 applies to financial guarantee insurance contracts, including
the recognition and measurement of premium revenue and claims liabilities.
This statement also requires expanded disclosures about financial guarantee
insurance contracts. SFAS No. 163 is effective for fiscal years beginning on
or after December 15, 2008, and interim periods within those years. SFAS No.
163 has no effect on the Company's financial position, statements of
operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS
No. 162 sets forth the level of authority to a given accounting pronouncement
or document by category. Where there might be conflicting guidance between
two categories, the more authoritative category will prevail. SFAS No. 162
will become effective 60 days after the SEC approves the PCAOB's amendments
to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no
effect on the Company's financial position, statements of operations, or cash
flows at this time.
In March 3008, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities-an
amendment of FASB Statement No. 133. This standard requires companies to
provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entity's
financial position, financial performance, and cash flows. This Statement is
effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008, with early application encouraged.
The Company has not yet adopted the provisions of SFAS No. 161, but does not
expect it to have a material impact on its consolidated financial position,
results of operations or cash flows.
F-18
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 11 - Recent Accounting Pronouncements - Continued
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
options in accordance with SFAS No. 123 (R), Share-Based Payment. In
particular, the staff indicated in SAB 107 that it will accept a company's
election to use the simplified method, regardless of whether the company has
sufficient information to make more refined estimates of expected term. At
the time SAB 107 was issued, the staff believed that more detailed external
information about employee exercise behavior (e.g., employee exercise
patterns by industry and/or other categories of companies) would, over time,
become readily available to companies. Therefore, the staff stated in SAB 107
that it would not expect a company to use the simplified method for share
option grants after December 31, 2007. The staff understands that such
detailed information about employee exercise behavior may not be widely
available by December 31, 2007 or December 31, 2008. Accordingly, the staff
will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007 and December 31, 2008. The Company
currently uses the simplified method for "plain vanilla" share options and
warrants, and will assess the impact of SAB 110 for fiscal year 2009. It is
not believed that this will have an impact on the Company's consolidated
financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements-an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as
equity in the consolidated financial statements. Before this statement was
issued, limited guidance existed for reporting noncontrolling interests. As a
result, considerable diversity in practice existed. So-called minority
interests were reported in the consolidated statement of financial position
as liabilities or in the mezzanine section between liabilities and equity.
This statement improves comparability by eliminating that diversity. This
statement is effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008 (that is, January 1,
2009, for entities with calendar year-ends). Earlier adoption is prohibited.
The effective date of this statement is the same as that of the related
Statement 141 (revised 2007). The Company will adopt this Statement
beginning March 1, 2009. It is not believed that this will have an impact on
the Company's consolidated financial position, results of operations or cash
flows.
F-19
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 11 - Recent Accounting Pronouncements - Continued
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations. This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141.
This Statement establishes principles and requirements for how the acquirer:
(a) recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in
the acquiree; (b) recognizes and measures the goodwill acquired in the
business combination or a gain from a bargain purchase; and (c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. This
statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it
before that date. The effective date of this statement is the same as that of
the related FASB Statement No. 160, Noncontrolling Interests in Consolidated
Financial Statements. The Company will adopt this statement beginning March
1, 2009. It is not believed that this will have an impact on the Company's
consolidated financial position, results of operations or cash flows.
In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities-Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available
to all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not
report net income. SFAS No. 159 is effective as of the beginning of an
entities first fiscal year that begins after November 15, 2007. Early
adoption is permitted as of the beginning of the previous fiscal year
provided that the entity makes that choice in the first 120 days of that
fiscal year and also elects to apply the provisions of SFAS No. 157 Fair
Value Measurements. The Company adopted SFAS No. 159 beginning March 1,
2008. It has no effect on the Company's financial position, statements of
operations, or cash flows at this time.
F-20
Total Nutraceutical Solutions
(Formerly known as Generic Marketing Services, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 2008
NOTE 11 - Recent Accounting Pronouncements - Continued
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements This
statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP), and expands
disclosures about fair value measurements. This statement applies under other
accounting pronouncements that require or permit fair value measurements, the
Board having previously concluded in those accounting pronouncements that
fair value is the relevant measurement attribute. Accordingly, this statement
does not require any new fair value measurements. However, for some entities,
the application of this statement will change current practice. This
statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. Earlier application is encouraged, provided that the reporting entity
has not yet issued financial statements for that fiscal year, including
financial statements for an interim period within that fiscal year. The
Company adopted this statement March 1, 2008. It has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.
NOTE 12 - Subsequent Events
None
F-21
Item 9. Changes in and Disagreements With Accountants On Accounting and
Financial Disclosure.
None.
Item 9A(T). Controls and Procedures.
Evaluation of disclosure controls and procedures
- ------------------------------------------------
Management is responsible for establishing and maintaining adequate internal
control over financial reporting and for the assessment of the effectiveness
of those internal controls. As defined by the SEC, internal control over
financial reporting is a process designed by our principal executive
officer/principal financial officer, to provide reasonable assurance regarding
the reliability of financial reporting and the reparation of the financial
statements in accordance with U. S. generally accepted accounting principles.
As of the end of the period covered by this report, we initially carried out
an evaluation, under the supervision and with the participation of our
President (who is also our principal financial and accounting officer), of
the effectiveness of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our President and chief financial
officer initially concluded that our disclosure controls and procedures were
not effective.
Management's Report On Internal Control Over Financial Reporting
- ----------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial
reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the
Securities Exchange Act of 1934 as a process designed by, or under the
supervision of, the company's principal executive and principal financial
officers and effected by the company's board of directors, management and
other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures that:
- - Pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
company;
33
- - Provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America and that
receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and
- - Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate. All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation. Because of the inherent limitations of
internal control, there is a risk that material misstatements may not be
prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of the
financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
As of December 31, 2008 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") and SEC guidance on conducting such assessments. Based
on that evaluation, they concluded that, during the period covered by this
report, such internal controls and procedures were not effective to detect
the inappropriate application of US GAAP rules as more fully described below.
This was due to deficiencies that existed in the design or operation of our
internal controls over financial reporting that adversely affected our
internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public
Company Accounting Oversight Board were: (1) lack of a functioning audit
committee resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures; (2) inadequate
segregation of duties consistent with control objectives; and (3) ineffective
controls over period end financial disclosure and reporting processes. The
aforementioned material weaknesses were identified by our President in
connection with the review of our financial statements as of December 31, 2008.
34
Management believes that the material weaknesses set forth in items (2) and
(3) above did not have an effect on our financial results. However,
management believes that the lack of a functioning audit committee resulted in
ineffective oversight in the establishment and monitoring of required
internal controls and procedures, which could result in a material
misstatement in our financial statements in future periods.
This annual report does not include an attestation report of the
Corporation's registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation
by the Corporation's registered public accounting firm pursuant to temporary
rules of the SEC that permit the Corporation to provide only the management's
report in this annual report.
Management's Remediation Initiatives
- ------------------------------------
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control
objectives and will increase our personnel resources and technical accounting
expertise within the accounting function when funds are available to us.
And, on August 28, 2008, we appointed outside directors to our board of
directors who shall appoint an audit committee resulting in a fully
functioning audit committee who will undertake the oversight in the
establishment and monitoring of required internal controls and procedures
such as reviewing and approving estimates and assumptions made by management
when funds are available to us.
Management believes that the appointment of the outside directors, who shall
appoint a fully functioning audit committee, will remedy the lack of a
functioning audit committee.
We anticipate that these initiatives will be at least partially, if not
fully, implemented by December 31, 2009. Additionally, we plan to test our
updated controls and remediate our deficiencies by December 31, 2009.
Changes in internal controls over financial reporting
- -----------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
Item 9B. Other Information.
None.
35
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth certain information regarding our current
directors and executive officers. Our executive officers serve one-year
terms.
Name Age Position Appointed
- -------------------- --- ------------------ ------------------
Marvin S. Hausman, M.D. 67 Chairman/CEO August 28, 2008
Frank Arnone 61 Director/President July 19, 2007
Phil A. Sobol MD 54 Director August 28, 2008
Elliot A. Shelton Esq. 58 Director August 28, 2008
- ------------------------------------------------------------------------------
Biography of Marvin S. Hausman MD, Chairman and CEO
- ----------------------------------------------------
Dr. Hausman received his MD degree from New York University School of Medicine
in 1967 and is a Board Certified Urological Surgeon. He has 30 years of drug
development and clinical care experience at various pharmaceutical companies,
including working in conjunction with Bristol-Myers International,
Mead-Johnson Pharmaceutical Co., and E.R. Squibb.
Dr. Hausman has recently resigned as President, Chief Executive Officer,
Acting Principal Accounting and Financial Officer and Chairman of the Board of
Oxis International, Inc. and as a director. Dr. Hausman served as a director
and as Chairman of the Board of Axonyx from 1997 until the merger of Axonyx
into Torrey Pines Therapeutics in October 2006, and had served as President
and Chief Executive Officer of Axonyx from 1997 until September 2003 and March
3005, respectively. Dr. Hausman was a co-founder of Medco Research Inc., a
pharmaceutical biotechnology company specializing in adenosine products which
was subsequently acquired by King Pharmaceuticals. He has also served as a
director of Arbios Technologies, Los Angeles, CA from 2003-2005 and of Regent
Assisted Living, Inc., Portland, OR, from 1996-2001.
Dr. Hausman has done residencies in General Surgery at Mt. Sinai Hospital in
New York, and in Urological Surgery at U.C.L.A. Medical Center in Los Angeles.
He also worked as a Research Associate at the National Institutes of Health,
Bethesda, Maryland. He has been a Lecturer, Clinical Instructor and Attending
Surgeon at the U.C.L.A. Medical Center Division of Urology and Cedars-Sinai
Medical Center, Los Angeles. He has been a Consultant on Clinical/
Pharmaceutical Research to various pharmaceutical companies, including
Bristol-Meyers International, Mead-Johnson Pharmaceutical Company, Medco
Research, Inc., and E.R. Squibb.
36
Dr. Hausman is President of Northwest Medical Research Partners, Inc. a firm
specializing in the identification and acquisition of breakthrough
pharmaceutical and nutraceutical products and which has assigned certain
intellectual property to the Company in consideration for 3,500,000 shares of
the Company's common stock. He is also a scientific consultant to Golden
Gourmet Mushrooms of San Marcos, CA, and has developed a novel product called
Mushroom Matrix, a potent natural organic antioxidant mushroom complex for use
in humans and animals.
Biography of Frank Arnone, President and Director
- -------------------------------------------------
Frank Arnone received his Bachelor of Arts in Marketing from Long Island
University in 1972. He has over 25 years of experience in consumer marketing
at various restaurant companies at both the regional and national level.
While working in this industry his emphasis was on brand development, research
and design of new products and the implementation of advertising and media
planning.
He is the founder and president of Sir Toms Tobacco Emporium a small retail
chain which focuses' on specialty products for the male consumer.
Biography of Philip A. Sobol, M.D., Director
- --------------------------------------------
Dr. Sobol is a practicing Orthopedic Surgeon who is the managing director of
Sobol Orthopedic Medical Group, Inc., of Southern California. Dr. Sobol is
certified by the American Board of Orthopedic Surgery and a Fellow of the
American Academy of Orthopedic Surgery. Dr. Sobol currently serves as a
director of Duska Therapeutics, Inc. Since 2004 he has been a member of
S&B Surgery Center Board of Directors, and from 1984 until 1993 he was an
Assistant Clinical Professor at the University of Southern California. Dr.
Sobol received his BA degree from the University of Rochester, Rochester, New
York and a Medical Doctorate degree from the University of Southern
California, Los Angeles, California.
Biography of Elliot L. Shelton, Director
- ----------------------------------------
Mr. Shelton received his law degree from Pepperdine University in 1975 and from
1975 until the present has practiced law in the State of California. He has
been Of Counsel, from September 1998 to date, to Fenigstein and Kaufman, a
Professional Corporation, and the President of Elliot L. Shelton, a
Professional Corporation. From 1999 to the present, he has been President and
Director of the Assisted Living foundation of America, a non-profit
corporation. Mr. Shelton has worked as a partner in several law firms,
including Mitchell, Silberberg & Knupp, Shea & Gould and, Gold, Marks, Ring &
Pepper.
37
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires our executive officers and directors, and persons
who beneficially own more than ten percent of our common stock, to file
initial reports of ownership and reports of changes in ownership with the
SEC. Executive officers, directors and greater than ten percent beneficial
owners are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. Based upon a review of the copies of such
forms furnished to us and written representations from our executive officers
and directors, we believe that as of the date of this report they were not
current in his 16(a) reports.
Board of Directors
- ------------------
Our board of directors currently consists of: Marvin S. Hausman, M.D., Frank
Arnone, Phil A. Sobol M.D. and Elliot A. Shelton Esq.. Our directors serve
one-year terms.
Audit Committee
- ---------------
The company does not presently have an Audit Committee. No qualified
financial expert has been hired because the company is too small to afford
such expense.
Code of Ethics
- --------------
We have not adopted a Code of Ethics for the Board and any salaried
employees.
38
Limitation of Liability of Directors
- ------------------------------------
Pursuant to the Nevada General Corporation Law, our Articles of Incorporation
exclude personal liability for our Directors for monetary damages based upon
any violation of their fiduciary duties as Directors, except as to liability
for any breach of the duty of loyalty, acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, or any
transaction from which a Director receives an improper personal benefit. This
exclusion of liability does not limit any right which a Director may have to
be indemnified and does not affect any Director's liability under federal or
applicable state securities laws. We have agreed to indemnify our directors
against expenses, judgments, and amounts paid in settlement in connection
with any claim against a Director if he acted in good faith and in a manner
he believed to be in our best interests.
Nevada Anti-Takeover Law and Charter and By-law Provisions
- ----------------------------------------------------------
The anti-takeover provisions of Sections 78.411 through 78.445 of the Nevada
Corporation Law apply to Total Nutraceutical Solutions. Section 78.438 of the
Nevada law prohibits the Company from merging with or selling more than 5% of
our assets or stock to any shareholder who owns or owned more than 10% of any
stock or any entity related to a 10% shareholder for three years after the
date on which the shareholder acquired the Total Nutraceutical Solutions
shares, unless the transaction is approved by Total Nutraceutical Solutions'
Board of Directors. The provisions also prohibit the Company from completing
any of the transactions described in the preceding sentence with a 10%
shareholder who has held the shares more than three years and its related
entities unless the transaction is approved by our Board of Directors or a
majority of our shares, other than shares owned by that 10% shareholder or any
related entity. These provisions could delay, defer or prevent a change in
control of Total Nutraceutical Solutions.
Item 11. Executive Compensation.
The following table sets forth summary compensation information for the
fiscal year ended December 31, 2008 for our Chief Executive Officer, who was
appointed on August 14, 2008. We did not have any executive officers as of
the year end of December 31, 2008 who received any compensation.
39
Compensation
- ------------
As a result of the Company's current limited available cash, no officer
or director received any salary since July 19, 2007 (inception) of the
company through the fiscal years ending December 31, 2008 and December 31,
2007. We intend to pay salaries when cash flow permits.
Summary Compensation Table
- --------------------------
All
Fiscal Other
Year Compen-
Ending Salary Bonus Awards sation Total
Name and Principal Position Dec. 31 ($) ($) ($) ($) ($)
- ------------------------------------------------------------------------------
Marvin Hausman, MD CEO/Dir 2008 -0- -0- -0- 35,387 35,387
Frank Arnone Pres/Dir. 2008 -0- -0- -0- -0- -0-
2007 -0- -0- -0- -0- -0-
Phil A. Sobol, MD Dir. 2008 -0- -0- -0- -0- -0-
Elliot A. Shelton, Esq. Dir 2008 -0- -0- -0- -0- -0-
Footnote for All Other Compensation includes: payment to
Marvin Hausman, M.D., of $22,387 in reimbursement for travel expenses
and $13,000 for consulting services.
We do not have any employment agreements with our officers/directors. We do
not maintain key-man life insurance for any our executive officers/directors.
We do not have any long-term compensation plans or stock option plans.
40
Stock Option Grants
- -------------------
The Company's CEO and Chairman of the Board, Marvin S. Hausman, M.D.,
beginning in 2006, developed certain intellectual property pursuant to
research agreements dated May 1, 2006 and May 20, 2006 in association with
Pennsylvania State University. These research endeavors resulted in the
filing of U.S. Provisional Patent Application No. 60/782,204, entitled
"Identification of Selenoergothioneine as a Natural Organic Form of Selenium
from Cultivated Mushrooms." On September 4, 2008, the company acquired from
Northwest Medical Research Partners Inc., which is controlled by Dr. Hausman,
the newly appointed director and CEO of the Company, in exchange for
3,500,000 shares of common unregistered restricted stock, an Assignment and
Assumption Agreement, effective July 31, 2008, pursuant to which the Company
has assumed the obligations of NW Research Partners to maintain the patent
prosecution and perform preclinical and clinical research associated with the
intellectual property and has an option to license from Pennsylvania State
University the technologies associated with the intellectual property.
Pennsylvania State University filed PSU Invention Disclosure No. 2008-3438,
which is entitled "Rapid Generation of Vitamin D2 from Mushrooms and Fungi
Using Pulsed UV-light". In October 2008, the company acquired from
Pennsylvania State University, in exchange for $5,000, an Exclusive Option
Agreement, effective November 21, 2008, pursuant to which the Company has
assumed the obligations to maintain the patent prosecution and perform
preclinical and clinical research associated with the intellectual property
and has an option to license from Pennsylvania State University the
technologies associated with the intellectual property.
Total Nutraceutical Solutions. entered into an Option to Purchase Assets
Agreement on November 21, 2008 to acquire certain business assets ("Mushroom
Matrix Assets") from Golden Gourmet Mushrooms, Inc. ("GGM"), an unrelated
Nevada corporation. GGM at the time of closing will receive $350,000 in cash
and 2,500,000 shares of The Company's restricted Common Stock and an
agreement by the Company to pay to GGM an ongoing royalty of 4% of net sales
for a period of 10 years (subject to certain limitations). The acquisition
of the Mushroom Matrix Assets is contingent upon closing a private placement
offering currently open. In the event that the Minimum of that offering is
not raised, all funds held in Escrow will be returned to the Investors in
this Offering, and if, following the Closing, the acquisition of the Mushroom
Matrix Assets is not consummated for any reason, the Company will return to
the Investors all funds previously taken from Escrow at the Closing.
Outstanding Equity Awards at Fiscal Year-Ending December 31, 2008
- -----------------------------------------------------------------
We did not have any outstanding equity awards as of December 31, 2008.
41
Option Exercises for Fiscal Year-Ending December 31, 2008
- ---------------------------------------------------------
There were no options exercised by our named executive officer in
fiscal year ending December 31, 2008.
Potential Payments Upon Termination or Change in Control
- --------------------------------------------------------
We have not entered into any compensatory plans or arrangements with respect
to our named executive officer, which would in any way result in payments to
such officer because of his resignation, retirement, or other termination of
employment with us or our subsidiaries, or any change in control of, or a
change in his responsibilities following a change in control.
Director Compensation
- ---------------------
We did not pay our directors any compensation during fiscal years ending
December 31, 2008 or December 31, 2007.
42
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
The following table presents information, to the best of our knowledge, about
the ownership of our common stock on March 30, 2009 relating to those
persons known to beneficially own more than 5% of our capital stock and by
our named executive officers and directors. The percentage of beneficial
ownership for the following table is based on 55,923,750 shares of common
stock outstanding.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and does not necessarily indicate
beneficial ownership for any other purpose. Under these rules, beneficial
ownership includes those shares of common stock over which the stockholder
has sole or shared voting or investment power. It also includes shares of
common stock that the stockholder has a right to acquire within 60 days after
March 30, 2009 pursuant to options, warrants, conversion privileges or
other right. The percentage ownership of the outstanding common stock,
however, is based on the assumption, expressly required by the rules of the
Securities and Exchange Commission, that only the person or entity whose
ownership is being reported has converted options or warrants into shares of
Total Nutraceutical Solutions' common stock.
Amount
Title Name and Address of shares Percent
of of Beneficial held by of
Class Owner of Shares Position Owner Class(1)
- ----------------------------------------------------------------------------
Common Marvin S. Hausman, M.D. Chairman/CEO 10,000,000 (2) 20.1%
Common Frank Arnone Pres./Director 500,000 1.0%
Common Phil A. Sobol, MD Director 1,000,000 (3) 2.0%
Common Elliot A. Shelton, Esq. Director 2,000,000 4.0%
- ---------------------------------------------------------------------------
All Executive Officers, Directors
as a Group (4 persons ) 13,500,000 27.1%
(1) Such figures are based upon 49,673,750 shares of our common stock
outstanding as of March 30, 2009. Except as otherwise noted in these
footnotes, the nature of beneficial ownership for shares reported in this
table is sole voting and investment power.
(2) This number does not include 3,500,000 common shares owned by the children
of Marvin S. Hausman, M.D. This number does not include 3,500,000 common
shares owned by Northwest Medical Research Partners Inc., which is
controlled by Marvin S. Hausman, M.D.
(3) This number does include 500,000 common shares owned by the Philip and
Debra Sobol Trust.
43
We are not aware of any arrangements that may result in "changes in control"
as that term is defined by the provisions of Item 403(c) of Regulation S-B.
We believe that all persons named have full voting and investment power with
respect to the shares indicated, unless otherwise noted in the table. Under
the rules of the Securities and Exchange Commission, a person (or group of
persons) is deemed to be a "beneficial owner" of a security if he or she,
directly or indirectly, has or shares the power to vote or to direct the
voting of such security, or the power to dispose of or to direct the
disposition of such security. Accordingly, more than one person may be deemed
to be a beneficial owner of the same security. A person is also deemed to be
a beneficial owner of any security, which that person has the right to
acquire within 60 days, such as options or warrants to purchase our common
stock.
Item 13. Certain Relationships and Related Transactions, and Director
Independence.
The company's President has contributed office space for our use. There is no
charge to us for the space. Our officer will not seek reimbursement for past
office expenses.
Through a Board Resolution, the Company hired the professional services of
Moore & Associates, Chartered, Certified Public Accountants, to perform
audited financials for the Company. Moore & Associates, Chartered own no
stock in the Company. The company has no formal contracts with its
accountants, they are paid on a fee for service basis.
The company has acquired from Northwest Medical Research Partners Inc., which
is controlled by Marvin S. Hausman, M.D., the director and CEO of the Company,
in exchange for 3,500,000 shares of common restricted stock, an Assignment and
Assumption Agreement, effective July 31, 2008, pursuant to which the Company
has assumed the obligations of NW Research Partners to maintain the patent
prosecution associated with the intellectual property and has an option to
license from Pennsylvania State University the technologies associated with
the intellectual property.
44
Item 14. Principal Accountant Fees and Services.
Moore & Associates, Chartered served as our principal independent public
accountants for fiscal years ending December 31, 2008 and July 31, 2007.
Aggregate fees billed to us for the years ended December 31, 2008 and 2007 by
Moore & Associates were as follows:
For the Years Ended
December 31,
-------------------
2008 2007
-------------------
(1) Audit Fees(1) $4,500 $3,000
(2) Audit-Related Fees $4,500 $3,000
(3) Tax Fees -0- -0-
(4) All Other Fees -0- -0-
Total fees paid or accrued to our principal accountant
(1) Audit Fees include fees billed and expected to be billed for services
performed to comply with Generally Accepted Auditing Standards (GAAS),
including the recurring audit of the Company's financial statements for such
period included in this Annual Report on Form 10-K and for the reviews of the
quarterly financial statements included in the Quarterly Reports on Form 10-
QSB filed with the Securities and Exchange Commission.
Audit Committee Policies and Procedures
- ---------------------------------------
We do not have an audit committee; therefore our President pre-approves
all services to be provided to us by our independent auditor. This process
involves obtaining (i) a written description of the proposed services, (ii)
the confirmation of our Principal Accounting Officer that the services are
compatible with maintaining specific principles relating to independence, and
(iii) confirmation from our securities counsel that the services are not
among those that our independent auditors have been prohibited from
performing under SEC rules. Our director(s) then makes a determination to
approve or disapprove the engagement of Moore & Associates for the proposed
services. In the fiscal year ending December 31, 2008, all fees paid to
Moore & Associates were unanimously pre-approved in accordance with
this policy.
Less than 50 percent of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees.
45
PART IV
Item 15. Exhibits, Financial Statement Schedules.
The following information required under this item is filed as part of
this report:
(a) 1. Financial Statements
Page
----
Management's Report on Internal Control Over Financial Reporting 33
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity F-4
Statements of Cash Flows F-5
(b) 2. Financial Statement Schedules
None.
46
(c) 3. Exhibit Index
Incorporated by reference
-------------------------
Filed Period Filing
Exhibit Exhibit Description herewith Form ending Exhibit date
- -------------------------------------------------------------------------------
3.1 Articles of Incorporation, SB-2 3.1 08/06/2007
as currently in effect
- -------------------------------------------------------------------------------
3.2 Bylaws SB-2 3.2 08/06/2007
as currently in effect
- -------------------------------------------------------------------------------
3.3 Amended Articles of Merger 8-K 3.3 10/13/2008
Incorporation as currently
in effect
- -------------------------------------------------------------------------------
10.1 Exclusive Option Agreement 8-K 10.1 09/04/2008
dated May 1, 2006, between
The Penn State Research
Foundation and Northwest
Medical Research Inc.
- -------------------------------------------------------------------------------
10.2 Assignment Agreement to the 8-K 10.2 09/04/2008
Option Agreement, dated
July 31, 2008, among The Penn
State Research Foundation,
Northwest Medical Research Inc.
and Generic Marketing
Services, Inc.
- -------------------------------------------------------------------------------
10.3 Assignment and Assumption 8-K 10.3 09/04/2008
Agreement, dated July 31, 2008,
between Northwest Medical
Research Inc. and Generic
Marketing Services, Inc.
- -------------------------------------------------------------------------------
23.1 Consent Letter from Moore X
and Associates Chartered
- -------------------------------------------------------------------------------
31.1 Certification of Chief X
Executive Officer,
pursuant to Section
302 of the Sarbanes-Oxley
Act
- -------------------------------------------------------------------------------
31.2 Certification of Chief X
Financial Officer,
pursuant to Section
302 of the Sarbanes-Oxley
Act
- -------------------------------------------------------------------------------
31.2 Certification of Chief X
Executive Officer,
pursuant to Section
906 of the Sarbanes-Oxley
Act
- -------------------------------------------------------------------------------
31.2 Certification of Chief X
Financial Officer,
pursuant to Section
906 of the Sarbanes-Oxley
Act
- -------------------------------------------------------------------------------
47
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Total Nutraceutical Solutions
- ----------------------------------
Registrant
By: /s/ Marvin Hausman, M.D.
------------------------
Marvin Hausman, M.D.
Chief Executive Officer
Chairman of the Board
Date: March 30, 2009
--------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons on behalf of the Registrant and in the capacities and on
the dates indicated have signed this report below.
Name
By: /s/ Marvin Hausman, M.D.
------------------------
Marvin Hausman, M.D.
Chief Executive Officer
Chairman of the Board
Date: March 30, 2009
--------------
48