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| UPNT.OB > SEC Filings for UPNT.OB > Form 10-K on 31-Mar-2009 | All Recent SEC Filings |
31-Mar-2009
Annual Report
We are a start-up, internet-based eCommerce company that offers and sells a new natural energy and health drink called Active UpLift® in two different flavors.
During 2008, we also finished our development of a new "energy spray" product and are now ready to start production. Our first placement of this product will be in local Maverick Stores to test the retail sales market. This new product will come in four flavors and should be available no later that early in the second quarter of 2009. As a result of these efforts, research and development expenses increased $6,300 to $7,300 in 2008 from only $1,000 during 2007.
In addition to offering our products for sale on-line, it is also our intention to do what is necessary to continue to get our new products carried in retail grocery and health food stores around the country. In this regard, we have made substantial progress over the last year. As a result of our significant retail store placement successes, we do not anticipate relying on the Internet for the majority of our business. Our website is www.upliftnutrition.comand it is hosted by www.godaddy.com.
Our first product, Active UpLift®, was only suitable for offer and sale in interstate commerce, and on a retail basis, as recently as a year ago. As a result, we were not able to generate virtually any revenue during 2007. During 2008, we generated or realized $4,300 in revenue net of discounts and coupons from the sale of Active UpLift®.
As of December 31, 2008, we had shipped 130 cases of Active UpLift® for placement in 105 Ralphs grocery stores. As of the date of this document, we have shipped another 125 cases of Active UpLift® to a distribution center in Oklahoma to be placed in 135 Albertsons grocery stores throughout Colorado and Arizona. We have also shipped 37 cases of both flavors of ActiveUplift® to several Harmons grocery stores in the State of Utah. What product is not sold can be returned to us by the retailer and the retailer's account with us credited accordingly. If all of this product is sold in the Ralphs, Albertsons and Harmons stores, we expect to generate total revenue of $26,300.
Each of the foregoing store placements requires a certain amount of money to be spent on advertising. Accordingly, at the end of 2008 we had completed 'in store' demos in all the store locations that carry our product for sale.. We have been and are scheduling more local and regional sporting events such as runs conventions and other events that are heavily attended and in which we will act as major sponsors. We have also placed ads in regional magazines and periodicals throughout our market regions. What we anticipate budgeting for this type of expense is set forth in the discussion below concerning our budget for 2009. These promotional activities included not only advertising dollars but contribution of product samples, give aways, coupons and retail store cooperative advertising that increased our marketing expense $64,800 to $82,800 from $18,000 for the years ended December 31, 2008 and 2007, respectively. Of the $64,800 increase, $48,000 represents product used in demonstrations, free samples, and give aways in connection with sponsorship of events; $8,600 was paid as sponsorship fees, with the remaining $8,200 representing an increase in printing related to coupons and other advertising costs.
We have issued over 26,000 coupons for discounts on products purchased at various retailers. However, we have only experienced a redemption rate of less than 1%. In addition, all coupons issue to date expired as of September 30, 2008 with the exception of approximately 300 coupons which, based on our experience, would not be considered a significant cost.
General administrative expense increased $22,000 to $44,300 from $22,300 for the period ended December 31, 2008 and 2007, respectively. The majority of the increase was a result of $6,100 in cost related to executive business reimbursements, $8,000 in meals & entertainment, travel and miscellaneous business expenses and $6,300 in research and development costs.
For the year ended December 31, 2008, we also incurred $12,400 in a provision
for non-collectible receivables related to a contractual receivable for
reimbursement of a business expenditure recorded during the 3rd quarter of 2008.
In December, management determined that collection of the receivable would be
unlikely without legal action and therefore the amount recoverable would not
justify the legal expense. As a result, management recorded an allowance for
the entire balance.
Cost of Goods sold increased of $6,200 to $12,600 for the year ended December 31, 2008 from $6,400 for the year ended December 31, 2007. This increase is a result of an increase in cost of goods sold in relation to the increase in sales, however, the largest part of the increase is a result of the Company's decision to write off box inventory of approximately $6,000 upon design receipt and distribution of new box inventory.
Liquidity and Capital Requirements
As of our fiscal year ended December 31, 2008, we had $4,200 in cash. As of the
date of this annual report, we have approximately $583 in our checking account.
What we have in our checking or bank account at any given time is insignificant
inasmuch as our working capital is provided by our majority shareholder. Though
we are accruing 8% interest per annum on the amounts provided by our majority
shareholder, these advances do not require interest payments at the present time
and, unless or until we become profitable, we do not believe that it likely that
our agreement with our majority shareholder, Uplift Holdings, would be modified
to require such. Uplift Holdings' loans are considered or designated by us as
"advances," inasmuch as they do not require that we pay interest payments unless
demand is made to do so. While we accrue interest or keep track of what it is,
at present, we have no way of paying any interest payments to Uplift Holdings.
As of December 31,
We will be able to satisfy our cash requirements for not only the next 12 months but at least for the next two (2) years in that our majority shareholder has committed itself to advancing what funds are necessary for us to carry out and pursue our business plan, a commitment that will also satisfy all our cash requirements and keep us current in our 1934 Exchange Act reporting obligations for at least the next 2 years. We believe that this time period is consistent with the disclosure in our PLAN OF OPERATION described below in that we believe that within 2 years, we should be able to successfully carry out our business plan. If a determination is made by management within the next two years that we will NOT be successful and that our business plan is or will be a failure for reasons which we can only imagine, our majority shareholder will likely elect not to advance us any more funds. See the section titled "PLAN OF OPERATION" below. Having said this, we are unable to guarantee that at the expiration of two years from now, and assuming that our business plan is NOT by then successful, that our majority shareholder will continue to advance us sufficient money to allow us to continue in our reporting obligations. We do not mean to imply, however, that our majority shareholder will NOT continue to advance us funds beyond the next 2 years, particularly if it appears that we will indeed be able to successfully carry out our business plan if we continue beyond the next 2 years. If our majority shareholder does not desire to loan or advance us sufficient funds to continue for the simple reason that the prospects of our business plan look bleak, we may be required to look at other business opportunities, the form of which we cannot predict at this time, as to do so would be highly speculative on our part. It is possible, however, that we would consider a private placement of our shares, the form of which we also cannot predict at this time.
Our Budget over the Next 12 Months
The amount of money necessary to implement and carry out our business plan over
the next twelve months is as follows: The cost of maintaining our website hosted
by www.godaddy.com is currently a mere $9.95 per month. Over the next year, we
have budgeted between $8,000 and $10,000 to be spent in legal fees. With respect
to our annual "in-house" accounting and outside, independent auditor fees and
costs, we have budgeted as much as $8,000 to $10,000. We are also budgeting
Edgarization costs and fees of at least $250 per quarter and $600 for our annual
report. In the normal course of our business and having now completed the
registration process with the Commission, we anticipate spending at least $1,000
per year on Edgarization costs and expenses. We have also budgeted approximately
$1,000 per year in annual transfer agent fees and costs, part of which is our
annual stock transfer agent maintenance fee. Other transfer agent costs and fees
will ordinarily be the obligation of each shareholder submitting his or her
shares for transfer. We maintain a products liability insurance policy at a
cost of $3,500 per year. This policy is to be renewed in February 2009. The
terms of the policy covers any and all existing or new products that we may take
to market throughout the year. Because we are now a fully reporting company, we
anticipate that as much as $190,000 per year shall be necessary to satisfy our
minimal cash requirements. We anticipate spending approximately $100,000 on
advertising, $30,000 on insurance and other operational expenditures, $40,000 on
new product inventory and $20,000 for legal and accounting fees and expenses.
These are just estimates at the present time and we can make no absolute
assurance that these amounts of money will be so spent during 2009.
Last November 2008, we contracted with a professional web designing company to completely redesign our website and prepare a more aggressive marketing campaign through the website. As a result, we will be starting a new internet marketing campaign called 'try it free' which will give anyone interested in our products the opportunity to try them for free. All that is required is that they pay a small shipping and handling fee of $6.95. We will also have a new 'auto ship' program on our website which will eliminate shipping and handling charges if the customer goes on a monthly 'auto ship' program for at least one month. This particular budget item is in addition to those in the preceding paragraph.
Now that we are supplying our product to at least 3 retail grocery store chains, it is incumbent upon us to come up with a retail store budget. In this regard, we have learned that most retail stores require a certain amount of advertising to coincide with their carrying our product in their store. Having only recently obtained retail opportunities with at least 3 retail grocery store chains, we are committed to devoting enough capital to advertising in order to satisfy any such retailer. In this regard, we anticipate spending $100,000 during 2009 coordinating a marketing/advertising campaign with retail stores that carry our product. As of the date of this document, we have now shipped product to over 350 retail outlet stores throughout the West. We have thus had to prepare a plan for marketing and advertising that coincides with these significant new developments. Throughout the last half of 2008, we undertook an 'in store' demo campaign at all of our then-existing product locations. This took almost 6 months to complete and helped increase sales. While doing these campaigns, we were also re-designing our website to take better advantage of the rapidly growing internet sales market. As of now, we are continuing to plan and schedule 'in-store' demonstrations at a certain number of stores each Saturday. These demonstrations have been intended to give potential buyers a taste of our product; we also intend to talk to them and educate them about the proactive effects of Active UpLift®. In selected regions we have followed these efforts up with an aggressive advertising campaign that have included disseminating written print material in publications, sponsoring regional sporting events, and using each such chain store's coupon advertising campaigns.
For information on the cost of manufacturing and packaging our product, reference is made to our PLAN OF OPERATION section below.
Our majority stockholder is currently our sole source of financing. This stockholder has agreed to finance us and our business plan through at least the next 2 years, provided that our business plan has every potential or prospect for success during that period. In this regard, we have a
Contingency Planning.
We have few assets and limited capital, with no operations and no current sources of income. Any funding for emergencies is anticipated to be advanced by our majority shareholder.
Off-Balance Sheet Arrangements.
None; not applicable.
Effect of Current Economic Conditions
Obviously, current economic conditions are hurting all businesses, not to mention retail outlets and retail sales overall. Since much of the effects of the current recession have only become apparent in the last few months, we are not in a position at this time to predict the recession's effects on our overall business plan and plan of operation, not to mention our 2009 sales. No retail company that we know of is making any such predictions. We suspect that sales in 2009 will be slower than they might otherwise be, simply because that is what is happening to everyone else. Accordingly, absent other factors, we suspect that sales during 2009 will not grow or "take off" as they otherwise might.
It is also our belief that Active UpLift® is considered a 'boutique' product that will sell well as long as the economy does well and the public has extra expendable income. Although we are still experiencing sales on a regular basis, the current recession may likely have a negative effect on future Active UpLift® sales. That is why we have spent so much time developing our new energy spray product. Contrary to what Active UpLift® may be considered, the particular market that we will seek to attract with our new energy spray is considered to an 'impulse' market.
PLAN OF OPERATION
Our principal business plan is to promote, market and sell our new powdered
natural energy and health drink, Active UpLift®, through traditional retail
distributors, who, in turn, will supply our product to retail health and food
stores. We feel that our best markets will be large food store chains and
specialty health food outlets. This assumption has proven to be correct so far
in that we now have relationships with 3 large retailers and their distributors.
We intend to compliment this marketing strategy by continuously offering this
product and other newly developed products on and through the Internet. Because
Active Uplift® is a new and improved product and we are essentially a start-up
enterprise, the dietary supplement and nutrition industry is in large part
unfamiliar, at this stage, with Active Uplift®, not to mention our other new
products ..Having said this, and with the direct help of our consultant, Mr.
Bruce Miller, discussed immediately below, as of December 31, 2008, we had
shipped 130cases of Active UpLift® for placement in 105 Ralphs grocery stores.
Since then we have shipped another 145 cases of Active UpLift® to be placed in
137 Albertsons grocery stores throughout Colorado, Arizona, Texas and Florida.
We have also shipped 37 cases of our new Apple-Cinnamon hot drink product to
Harmons grocery stores in the State of Utah.
As we disclosed in last year's annual report, in 2007 we retained, as a consultant, the services of Bruce Miller, a retired executive with Smiths Foods, to head up our marketing campaign. Since then, Mr. Miller has been in the one responsible for placing our principal product, Active UpLift®, in over 200 stores throughout the west. Having just begun our operations at the tail end of 2007, we feel that this is a remarkable accomplishment in such a short period of time. As a result, we also feel that Mr. Miller has become a very valuable asset in the overall plan to take us into profitability.
In mid 2008, we undertook the redesign of the Raspberry Lemonade display box and Mr. Miller was asked to help us with the re-design. As a result, Mr. Miller suspended his plans and efforts to expand our presence in other retail stores until this task was completed. Now that that has been completed, Mr. Miller has resumed his marketing efforts. As of the date of this document, he has been successful in establishing a relationship with Henry's Health Food Stores located in California and Texas. Because of his efforts, we expect, though cannot guarantee, to ship some product to Henry's within the next six weeks.
Our Website
In approximately September 2006, our current website was completed and became fully operational. This is not to suggest that we do not continuously make changes, improvements and modifications to our website. We do. Our website address is: www.upliftnutrition.com. As set forth above, our website is hosted by one of the largest website hosts in the United States, namely, www.godaddy.com. This costs us a mere $9.95 per month. Because www.godaddy.com is one of the largest website hosts in existence, we feel comfortable that the chances of our
Mixing and Packaging
We currently use a Weber County, Utah, company known as Harmony Concepts to mix
our Active UpLift® product from pharmacopoeia grade raw ingredients.
"Pharmacopoeia grade" is a measure of an ingredient's purity and sterility.
After Active UpLift® product been processed, it is sent in airtight containers
to Rocky Mountain Co-Pak, also Salt Lake City company, who packages the mix or
powder into individual foil packets. From there, the foil packets are packed
into display or colored retail boxes that we created and designed for such
purpose. As stated elsewhere herein, each display or colored retail box did
contain 15 but now contains 14 individual packets of product. This was done to
reduce our costs. Ten (10) of these colored retail boxes comprise a shipping
box. This is currently done at a cost of 8 cents per foil packet. Fourteen (14)
of these individual packets are then placed into each of our colored retail
display boxes. These "14 packets per box" are placed into the shipping
containers that hold 10 of our colored retail display boxes each. This is how
the product is currently shipped, packaged and otherwise prepared for shipment.
There is an 18-month shelf life after Active UpLift® is packaged. As a result,
we are reluctant to manufacture, package and store too much product at one time.
We need to be able to adjust our product ordering and packaging to the actual
sales we have secured and in realistic anticipation of what orders may be over
the next short period of time.
Since we are currently anticipating getting more retail orders than Internet
orders, something of which we can make no assurance, we have since obtained
pricing from American Co-Pack in Los Angeles, a large product packaging company.
While Rocky Mountain Co-Pak charges about 8 cents to fill each foil packet,
American Co-Pack, in the event of large orders on the nature of 250,000 or more,
will be able to perform this service much cheaper. American Co-Pack, when and
if the occasion arises, will also be able to ship product in large pallets to
retail grocery distributors around the country. Until we receive the
anticipated retail orders, we plan in the meantime, to continue shipping drums
of mixed product to Rocky Mountain Co-Pak, as needed, which will hold the same
in its warehouse until we give them further instructions.
These manufacturer/packagers sign a non-disclosure, non-compete agreement with us and thus, we are assured that they will not disclose our formula to anyone else. We also feel comfortable in this regard in that these companies' success is dependent on their ability to keep their customers' formulas secret.
Our Colored Retail Boxes and Bar Codes
When we first acquired Nu Mineral Health, we used the original colored retail box for our Active Uplift® product that the Ramptons and Nu Mineral Health had designed back in 2005. Since acquiring Nu Mineral Health, we have updated our colored retail box for Active Uplift®. The Ramptons and Nu Mineral Health paid over $5,000 for the original display box design and, last year, we paid an additional $3,000 to have it additionally modified. Our boxes are made by a local company called International Paper Box Company. Currently, it charges us between 28 and 45 cents per Active Uplift® box, depending upon volume. We are not dependent upon this company for this purpose and there are several other companies than can manufacture our box for us.
During the third quarter of 2008 and as we disclose above, we redesigned Raspberry Lemonade box once again. This was a complete re-design with color changes and graphics changes. We have now completed the change over to the new boxes in most retail stores and are just waiting for customer feedback before we start the redesign of the Apple Cinnamon box. The Apple Cinnamon box will likely look the same as the new, Raspberry Lemonade box but will be red instead of purple.
Last year, we purchased our own bar codes so we would be able to better control our product inventory. This also enables us to have more codes ready in the event that we introduce new products to the market. The Bar Codes were applied for at a cost of $750 for 2,000 individual identifying numbers.
As of the end of 2008, we completed the design and packaging of our new 'energy spray' product. We have used very bright colors and will identify each of the four flavors with a different bright color. Grape, for example, will be colored purple to reflect the purple color of grapes and Cinnamon flavor will be colored bright red to represent the hot taste of cinnamon. We have also designed a plastic display box with the same bright colors that will represent each flavor with its own distinct, bright color.
Processing Orders
Active Uplift® comes in our colored, retail box that now contains 14 foil
packets. Each packet contains the powder that is mixed with water to make one
(1) Active UpLift® drink. One box of our product sells for $15.95 on-line, plus
shipping and handling.
Our modified website has an active and operational shopping cart that accepts American Express, Visa, MasterCard, Discover Card and other, less known credit cards, including PayPal. Once an order is placed on-line, we receive an email from our credit card processing company. We then go in our website Control Panel and process the order. From there, we can print off U.S. Postal Service labels, etc. Our website is
For larger orders, and large retail distributor orders in particular, we anticipate getting invoices faxed or emailed to us directly. At that time, we determine how to fill the order depending upon the size and location of the order. Retail distributor orders are NOT processed through our website but directly with and through us. During 2008, we received orders directly from Ralphs, Albertsons, Harmons and Maverick convenience stores. These are specialty orders and were therefore NOT handled through our website.
As a requirement of retailers placing orders with us, we sign distributor agreements with either the stores directly or with their respective distribution warehouse or agent where the product will be stored until the retail stores actually need and retrieve it from that location. All of these agreements are similar in content, purpose, and effect. Those we have received and signed have a 'let out' clause. What this means is that if we don't advertise and market the product to help start and support sales and the product doesn't sell, the retail store has the right to send it back to us and charge us back for the product sent back. During fiscal 2008, we had no charge-backs or returns of merchandise. In the event that our products do not sell, the standard distributorship agreement we have entered into with Ralphs' and Albertsons' distributors allows them to charge the product back to us and then return it to us at our cost. As of the end of 2008, we had received no "charge-backs" or requests for return of merchandise. As the date of this document, we still had not received any product returns or "charge-backs."
Shipping and Handling
When we receive an on-line or Internet order, we typically print off a U.S. Postal Service label. Our system allows us to input proper postage on the label, which is $4.95 per shipping box. This allows us to send the package to our customer by Priority Mail. Currently, we have sufficient inventory on hand to ship on-line orders directly from Roy, Utah, our corporate headquarters.
For those on-line orders we process and ship directly from our Sandy, Utah warehouse, our mailing label is placed on a shipping box at the warehouse or outlet where we store Active UpLift® product. Upon advice of our intellectual property counsel, we also place our own return address label on the package which contains or is conspicuously identified by the inscription "Active . . .
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