-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RP+7w4EMFlhStX3PjfJVRAq0vpviIaynKGT63KLrStdESWY+Kc2w+C7L3bZGVjXF zCfw10KIWoBwZuLGS7/AGw== 0001173473-06-000211.txt : 20060920 0001173473-06-000211.hdr.sgml : 20060920 20060920171945 ACCESSION NUMBER: 0001173473-06-000211 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060920 DATE AS OF CHANGE: 20060920 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALPHA NUTRACEUTICALS INC CENTRAL INDEX KEY: 0000837852 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 330300193 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19644 FILM NUMBER: 061100684 BUSINESS ADDRESS: STREET 1: 23548 CALABASAS RD STREET 2: SUITE 205 CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8182242145 MAIL ADDRESS: STREET 1: 23548 CALABASAS RD STREET 2: SUITE 205 CITY: CALABASAS STATE: CA ZIP: 91302 FORMER COMPANY: FORMER CONFORMED NAME: SIERRA ROCKIES CORP DATE OF NAME CHANGE: 19970604 FORMER COMPANY: FORMER CONFORMED NAME: GALLERY RODEO INTERNATIONAL DATE OF NAME CHANGE: 19941118 FORMER COMPANY: FORMER CONFORMED NAME: TJB ENTERPRISES INC DATE OF NAME CHANGE: 19911010 10KSB 1 form10ksb123105.htm FORM10KSB (12/31/05) Form10KSB (12/31/05)
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005

[ ]
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: 000-19644

ALPHA NUTRA, INC.
(Name of small business issuer as specified in its charter)

Nevada
20-1778374
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
2038 Corte Del Nogal, Suite 110
Carlsbad, CA 92008
________________________________________________________________________
(Address of principal executive offices, including zip code)
 
Registrant’s telephone number, including area code:    (888) 772-1288 (U.S. only)
Securities registered pursuant to Section 12(b) of the Act:                    None
Securities registered pursuant to Section 12(g) of the Act:                  $.001 par value common stock
___________________
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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   No  X
 
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ____ No  X 

The issuer’s revenues for the most recent fiscal year were $2,525,242.

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $293,971 as of December 31, 2005 based upon the $.55 share price at which the common equity was sold.

As of December 31, 2005 there were 534,494 shares of our common stock were issued and outstanding.

Documents Incorporated by Reference: None.

Transitional Small Business Disclosure Format: No.


PART I

Item 1. Description of Business

Alpha Nutra, Inc., a Nevada corporation, sells vitamins and nutritional supplements as well as other health related products. We entered into this business on January 1, 2004 as part of a Plan of Reorganization approved by the United States Bankruptcy Court for the Southern District of California.

On June 30, 2005, we entered into a Stock and Asset Exchange Agreement with GMGH International, LLC and Golden Tones International, LLC whereby we sold our operating companies: Avidia Nutrition and Let’s Talk Health, Inc. We retained ownership of our wholly owned subsidiary, AlphaNutra.com, which currently has no business operations. We are currently looking to acquire new revenue generating divisions in the nutritional supplement industry.

Historical Developments of Company

We were organized in 1988, under the name, “TJB Enterprises, Inc.” as a blind pool/blank check company formed for the purposes of seeking a merger with a private, operating company. On September 24, 1991, TJB Enterprises, Inc. consummated an Agreement and Plan of Reorganization whereby it acquired 100% of the outstanding stock of Gallery Rodeo of Beverly Hills, Inc., a California corporation, Gallery Rodeo of Lake Arrowhead, Inc., a California corporation, and Gallery Rodeo of Taos, Inc., a New Mexico corporation. Concurrent with this transaction, we changed our name to “Gallery Rodeo International, Inc.” We operated as a fine art retailer and publisher between 1991 and 1996, although we also acquired hotel and gaming properties. Effective May 9, 1996, we sold our art subsidiaries in order to concentrate on hotel, gaming and related businesses, and on September 20, 1996 we changed our name to “Sierra-Rockies Corporation.”

We subsequently lost our real estate holdings and in May 1998 filed a Voluntary Petition for a Chapter 11 Proceeding under the United States Bankruptcy Code in the United States Bankruptcy Court, Central District of California. We were unable to complete a Plan of Reorganization and eventually withdrew our Petition. We once again filed a Voluntary Petition for a Chapter 11 Proceeding in 2001, and once again withdrew the Petition after failing to complete a Plan of Reorganization. On January 2, 2003, we filed our third Voluntary Petition and on November 6, 2004 our Plan of Reorganization was approved by the Honorable James Meyer, Judge, United States Bankruptcy Court, Southern District of California.

The approved Plan of Reorganization provided that: our non-controlling shareholders that held shares prior to the reorganization would receive one new unit for every 100 old common shares of the company that they previously held. Each unit consisted of one common share, one “A” warrant to purchase one common share at an exercise price $2.50, and one “B” warrant to purchase one common share at an exercise price of $10.00. The “A” warrant will expire if unexercised on December 31, 2004, and the “B” warrant will expire if unexercised on December 31, 2005. The total number of units issued to these former shareholders was 117,029 units.

Our creditors were issued 570,001 units (a unit is defined above) in exchange for the dismissal of all of their claims against us.

The grant of additional units was ordered to former management (up to 76,000 units), to the bankruptcy attorney (up to 50,000 units), and to administrative lenders (up to 300,000 units). An additional 56,802 “A” warrants and 56,802 “B” warrants were issued to former control persons.

We were ordered to acquire the business of LTH by issuing 3,000,000 shares of common stock to the shareholders of LTH. This transaction was completed on January 1, 2004.

In order to better reflect our new business, on January 8, 2004, we changed our name from Sierra-Rockies Corporation to Alpha Nutraceuticals, Inc.

On or about October 8, 2004, we entered into a share exchange agreement with Tempo Laboratories, Inc. to acquire 100% of the issued and outstanding stock of Tempo in exchange for the issuance of 1,320,000 shares of our common stock to the Tempo shareholders. Shortly thereafter, the parties to the agreement became parties to a lawsuit entitled Mankosa v. Donsbach (CA Sup. Ct. Case No. GIC 843131) concerning the terms of the agreement and various representations made by the parties. As of the date of this Report, the lawsuit is pending.

On October 22, 2004, we formed a wholly owned Nevada subsidiary for the purpose of changing our domicile to the state of Nevada. On December 15, 2004, we merged with and into Alpha Nutraceuticals, Inc., a Nevada Corporation, changing our state of domicile to the state of Nevada.

On January 27, 2005, we changed our name to Alpha Nutra, Inc.

On June 30, 2005, we entered into a Stock and Asset Exchange Agreement with GMGH International, LLC and Golden Tones International, LLC whereby we exchanged 100% of the Avidia Nutrition interests and Let’s Talk Health, Inc. shares of common stock held by us for 100% of the Alpha Nutra, Inc. shares of common stock held by GMGH, Golden Tones and each of the respective owners of GMGH and Golden Tones. The 10,465,333 shares of common stock we received from GMGH, Golden Tones and the owners were retired. Accordingly, following the exchange, GMGH and Golden Tones owned 100% of Avidia Nutrition and Let’s Talk Health, Inc. We retained ownership of our AlphaNutra.com business.

On June 30, 2005, we entered into a settlement agreement with Business Consulting Group Unlimited, Inc., a Nevada company, pursuant to which BCGU forgave the outstanding debt we owed BCGU in exchange for our payment to BCGU of $47,500 and 500,000 restricted shares of our common stock.

On July 30, 2005, our board of directors appointed Messrs. Mark L. Baum and James B. Panther to our board of directors.

On August 26, 2005, directors Louis J. Paulsen, Robert Bliss and Jim Cartmill resigned from their positions directors of the company. The resignations were not because of any disagreements with the company on matters relating to its operations, policies and practices.

Business Operations Prior to 2003

We were inactive from 1998 through 2003. Our only activity in 2003 was the maintenance of our voluntary bankruptcy petition and negotiations with LTH resulting in the Plan of Reorganization which was, on November 6, 2003, approved by the United States Bankruptcy Court for the Southern District of California. Our current business, which we entered into on January 1, 2004, pursuant to the court approved Plan of Reorganization, is described below.

Business Operations Prior to June 30, 2006.

Alpha Nutra, Inc. sells vitamins, nutritional supplements, and health related devices. The vitamins and supplements include both generic vitamins and special proprietary formulations. Products are currently sold directly to consumers who order them via the mail, telephone and internet. Alpha is seeking to grow by becoming a manufacturer as well as a sales company, and to sell through multiple distribution pipelines including retail stores and the offices of health care professionals, especially chiropractors and nutritionists. This strategy will be dependent upon our success in acquiring manufacturing, marketing and distribution companies currently engaged in various aspects of this industry.

The Nutritional Supplement Industry

Based on estimates in recent market reports, management believes that the U.S. retail market for vitamins, minerals and other supplements, including sports nutrition products and nutritionally enhanced foods and diet products, was approximately $50 billion in 2000. Of this total, supplement sales (including vitamins, herbs and minerals, also known as “VMS Products,” accounted for approximately $17 billion. The VMS Products category grew significantly during the 1990’s due in part to widespread publicity surrounding the purported benefits of herbs such as echinacea, garlic, ginseng, gingko, saw palmetto and St. Johns’s Wort.

As the “baby boomer” population ages and life expectancies and discretionary income increases, more emphasis is being placed on the quality of a person’s health and wellness. People want to live well as they live longer. The Consumer Health Care Products Association, the “CHPA,” presented evidence of the strength of the Self-Care Movement in a recent survey. Among the respondents: 73% would rather treat themselves at home then see a doctor, and 96% say they are generally confident about health care decisions they make for themselves.

Statistics on the graying of America and the enormous impact of the aging baby boomers abound. This will have a disproportionate effect on health care expenditure and even more so on nutritional supplement sales, because of the popularity of those products with older people. It is estimated that the population of those 65 years and older will double to nearly 25% of the U.S. population by the year 2030. Up to 85% of elderly people have diseases that
could be alleviated with nutritional interventions such as changes in dietary patterns or supplement use. Nutritional supplement use is prevalent among the elderly, ranging from 30% to more than 70%, depending on the population studied and the frequency of supplement use. A national survey just published by the National Nutritional Foods Association revealed that 65% of adults aged 50 or older say they consider nutritional supplements to be essential for people their age. In another study, 27% of household expenditures on Vitamins, Minerals and Supplements were by people aged over 60. Management therefore expects that over the long-term, nutritional supplement sales will grow at more than 5% per year, thus generating retail sales growth of $1 billion per year for the industry.

A related trend is the growth in use of Complementary and Alternative Medicine Services, “CAM.” A recent survey showed that 42% of Americans now routinely use CAM therapies. 80% of spending on CAM services is out-of-pocket, non-reimbursable dollars and consumers make almost twice as many visits to CAM practitioners as they do to primary care practitioners. A powerful recent trend has been the establishment of so-called Integrative Medicine practices, in which practitioners use both traditional and alternative methods. A central feature of CAM and Integrative Medicine is a search for alternatives to drug therapy and in many cases this leads practitioners to recommending and in some cases selling nutritional supplements. We believe this trend, which is driven by consumer demand will further reinforce the growth in sales of consumer health products such as nutritional supplements.

Not all product categories within nutritional supplements are of equal interest. While over 100 million Americans report taking a supplement regularly and up to 170 million say they have taken a supplement at some time
in the last year, many are simply taking a multivitamin or a simple letter vitamin. While vitamin sales should not be overlooked, the real growth in the future is likely to be in products developed to address a particular health condition or to enhance performance. In 2000, when vitamin sales grew at only 1%, specialty supplements such as sports nutrition products grew at 12% and 10% respectively. Alpha Nutra is particularly focused upon specialty supplements, which require superior scientific research, but which also command the industry’s most attractive margins.

Vitamins and other nutritional supplements are sold primarily through seven channels of distribution: health food stores, drug stores, supermarkets and other grocery stores, discount stores, mail order, direct sales organizations, and CAM practitioners. Mass market retailers (drug stores, grocery stores and discount stores) account for approximately 40% of sales while health food stores, mail order, direct sales organizations, and health practitioners account for approximately 60% of sales.

Our Business Strategy

The domestic nutritional supplement industry is highly fragmented with a number of small competitors involved in manufacturing and marketing vitamins and other nutritional supplement products to health food retailers and distributors. Most of these companies are relatively small businesses operating on a local or regional basis. If we are able to acquire a manufacturing facility and several of these small local or regional firms, we will then have the foundation to aggressively expand sales. We believe that we are well positioned to participate in the consolidation of this market. We will target companies which management believes are undervalued and/or where current ownership is looking to retire. We hope to acquire a manufacturing facility which will not only produce our own vitamins and supplements but will manufacture private labeled products for third party distributors.

Future acquisitions could be financed by internally generated funds, institutional financing, public or private placement of our debt or equity securities, or a combination of these. There can, however, be no assurance that we will be able to make acquisitions on favorable terms or provide adequate financing.

Our Products

We offer a total of 79 vitamin and nutritional supplement products. The best selling among these include:

Orachel

This encapsulated supplement is believed to be effective in reducing plaque in the arteries and increasing blood circulation.

  Oxygen with Colloidal Silver

This liquid supplement is considered a highly efficient anti-microbial agent. Colloidal silver is made up of very fine particles of silver in perfect suspension. It disables the enzyme system of bacteria, fungi, and viruses without harming the human body. Stabilized oxygen is a patented hydrogen peroxide formula used to create better oxygen carrying capacity in hemoglobin and also fight bacteria, fungi, and viruses in the blood stream.

Prosta-Plex

This encapsulated mixture of Saw Palmetto and other herbs is used to relieve benign prostatic hypertrophy (BPH or enlarged prostate), a common condition in men over fifty.

Prosta-Sol

This encapsulated formula is used to reduce Prostate-Specific Antigen (PSA) levels in men with levels above 4.0. LTH currently offers, and the Reorganized Debtor expects to continue to offer, a money back guarantee that use of this product will reduce PSA levels within three months. Proposed management also plans to undertake double blind, clinical studies on this product and publish the results.

Agua Vitae

This liquid supplement is a complete formula of mega-vitamins, minerals, herbs, amino acids, enzymes, and plant-derived colloidal trace minerals.

Energizer Drink

This liquid supplement is a mixture of vitamins and minerals with L-Carnitine, a catalyst for energy production at the cellular level.

In addition, we currently sell 73 other nutritional supplements. Included among these are: Acidophilus, allergy supplements, B- 12/Folic Acid, various calcium formulations, colloidal minerals, CoQ-10, DHEA, protein powders, Echinacea, various enzyme formulations, Flaxseed/MCT Oil, Ginseng, Grapeseed Extract, Ginkgo Biloba, L-Tyrosine, L-Lysine, Melatonin, food grade Hydrogen Peroxide, Pantothenic Acid, Silymarin, Vitamins A, C, and E, and Wheat Germ. Nutritional supplement sales currently account for approximately 79% of total sales.

We also sell a variety of health related devices including: Water Filters and Purifiers; Infrared Heat Devices; Magnetic Pads, Bands, and Shoe Inserts; Ozone Generators; and Hyperbaric Oxygen Chambers. These sales currently account for approximately 21% of sales.

Product Risks

Although many of the ingredients in our products are vitamins, minerals, herbs and other substances which have a long history of human consumption, there can be no assurance that consumers will not have an adverse reaction to any of these products.

We have not conducted extensive scientific research of our products with human subjects. It is possible that use of our products may cause undesirable side effects. If one of our present or future products is found to have adverse side effects, it could seriously impact our business. Management believes that it can limit the potential impact of a product liability suit by diversifying the product line. We would also like to obtain and carry product liability insurance, although no such insurance is in place at this time. However, even with insurance coverage, if we were to be found liable in a product liability suit, the outcome could have a serious adverse affect on operations.

Principal Markets

Products are currently sold directly to consumers throughout the United States who order them via the mail, telephone and internet. If we are successful in acquiring a manufacturer of nutritional supplements it will seek to enter the private label manufacturing business, making supplements for and selling them to other retailers.

Major Customers

Because the Company sells its products primarily to individual end users, no single customer accounts for a significant percentage of sales. Should we begin manufacturing and selling supplements on a wholesale basis to competitors this situation could change.

Manufacturing

We recently announced our intent to acquire Tempo Laboratories, Inc., a California corporation, “Tempo,” a manufacturer of vitamins and nutritional supplements. The acquisition has not yet been completed and there can be no assurance that it will be completed. If we are successful in completing this acquisition it will be an important first step in our growth plans. Tempo is a small manufacturer, but has sufficient capacity to meet our current needs and to support growth to 4 or 5 times our current size. If we are not able to complete the acquisition of Tempo, we will continue its search for a manufacturer because we believe that the acquisition of a manufacturing facility will be an important key to business growth and increased profitability. Until such time as we can manufacture our own products, we will continue to use third party manufacturers. Management believes that there are well over one hundred (100) manufacturers in the U.S. that could manufacture our products.

Competition

We compete with other distributors of vitamins, minerals, herbs, and other nutritional supplements. The nutritional supplement industry is highly fragmented and competition for the sale of nutritional supplements and other health care products comes from many sources. These products are sold primarily through mass market retailers (drug store chains, supermarkets, and large chain discount retailers), health and natural food stores, direct sales channels (mail order, network marketing and internet distribution companies), and CAM practitioners.

Management believes competition in this industry is based on, among other things, reputation, price, delivery, product quality and safety, innovation, and customer service. Management believes that we compete favorably with other companies because of our staff, our comprehensive approach to customer service, and our commitment to innovation and quality. Our future position in the industry will likely depend on, but not be limited to, the following:

• the continued acceptance of our products by our customers and consumers;

• our ability to continue to develop high quality, innovative products;

• our ability to attract and retain qualified personnel;

• the effect of any future governmental regulations on our products and business;

• the results of, and publicity from, product safety and performance studies performed by governments and other research institutions;

• the continued growth of the global nutrition industry; and

• our ability to react to changes within the industry and consumer demand, financially and otherwise.

The nutritional supplement industry is highly competitive and we expect the level of competition to remain high over the near term. We do not believe it is possible to accurately estimate the number or size of our competitors. The industry has undergone consolidation in the recent past and we expect that trend to continue in the near term.

Government Regulation

Our business is subject to varying degrees of regulation by a number of government authorities in the United States, including the United States Food and Drug Administration (FDA), the Federal Trade Commission (FTC), and the Consumer Product Safety Commission. We will be subject to additional agencies and regulations if it enters the manufacturing business. Various agencies of the state and localities in which we operate and in which our products are sold also regulate our business, such as the California Department of Health Services, Food and Drug Branch. The areas of our business that these and other authorities regulate include, among others:

• product claims and advertising;

• product labels;

• product ingredients; and

• how we package, distribute, import, export, sell and store our products.

The FDA, in particular, regulates the formulation, manufacturing, packaging, storage, labeling, promotion, distribution and sale of vitamins and other nutritional supplements in the United States, while the FTC regulates marketing and advertising claims. The FDA issued a final rule called “Statements Made for Dietary Supplements Concerning the Effect of the Product on the Structure or Function of the Body,” which includes regulations requiring companies, their suppliers and manufacturers to meet Good Manufacturing Practices in the preparation, packaging, storage and shipment of their products. Management is committed to meeting or exceeding the
standards set by the FDA.

The FDA has also issued regulations governing the labeling and marketing of dietary and nutritional supplement products. They include:

• the identification of dietary or nutritional supplements and their nutrition and ingredient labeling;

• requirements related to the wording used for claims about nutrients, health claims, and statements of nutritional support;

• labeling requirements for dietary or nutritional supplements for which “high potency” and “antioxidant” claims are made;

• notification procedures for statements on dietary and nutritional supplements; and

• pre-market notification procedures for new dietary ingredients in nutritional supplements.

The Dietary Supplement Health and Education Act of 1994 (DSHEA) revised the provisions of the Federal Food, Drug and Cosmetic Act concerning the composition and labeling of dietary supplements and defined dietary supplements to include vitamins, minerals, herbs, amino acids and other dietary substances used to supplement diets. DSHEA generally provides a regulatory framework to help ensure safe, quality dietary supplements and the dissemination of accurate information about such products. Under DSHEA, companies must provide evidence that a dietary supplement is reasonably safe. The FDA is generally prohibited from regulating active ingredients in dietary
supplements as drugs unless product claims, such as claims that a product may heal, mitigate, cure or prevent an illness, disease or malady, trigger drug status.

We are also subject to a variety of other regulations in the United States, including those relating to taxes, labor and employment, import and export, and intellectual property.

Intellectual Property

We intend to protect our proprietary formulations by maintaining them as trade secrets. Management believes this to be more effective than patents which reveal formulations to the world while providing little protection against slight variations in those formulations. We maintain confidentiality agreements regarding these trade secrets with certain employees and other parties. Although we regard trade secrets as important, we do not view them as essential to our success.

Employees

As of December 31, 2005, we have no employees.

We have not entered into a collective bargaining agreement with any union.  We have not experienced any work stoppages and consider the relations with the individuals working for us to be good.

Current Nature of Operations

As of July 1, 2005, following the sale of Lets Talk Health, Inc. and Avidia Nutrition, we have no ongoing business operations. We are currently looking to acquire new revenue generating divisions in the nutritional supplement industry.

Item 1A. Risk Factors and Cautionary Statement Regarding Forward-Looking Information

RISK FACTORS

You should carefully consider the risks described below, as well as the other information in this report, when evaluating our business and future prospects. Should any of the following risks actually occur, our business, financial condition and results of operations could be seriously harmed. In that event, the market price of our common stock could decline and investors could lose all or a portion of the value of their investment in our common
stock.

Our operating results will vary and there is no guarantee that we will earn a profit. Fluctuations in our operating results may adversely affect the share price of our common stock.

We have experienced losses in the past and may incur losses in the future. Our operating results may fluctuate from year to year due to any of numerous factors described in this report. At times, these fluctuations may be significant. Fluctuations in our operating results may adversely affect the share price of our common stock.

A significant or prolonged economic downturn could have a material adverse effect on our results of operations.

Our sales are affected by the level of consumer demand for our products. A significant or prolonged economic downturn may adversely affect the disposable income of many consumers and may lower demand for the products we produce. A decline in consumer demand due to economic conditions could have a material adverse effect on our revenues and profit margins.

Our industry is highly competitive and we may be unable to compete effectively. Increased competition could adversely affect our financial condition.

The market for our products is highly competitive. Many of our competitors are substantially larger and have greater financial resources and broader name recognition than we do. Our larger competitors may be able to devote greater resources to research and development, marketing and other activities that could provide them with a competitive advantage. Our market has relatively low entry barriers and is highly sensitive to the introduction of new products that may rapidly capture a significant market share. Increased competition could result in price reductions, reduced gross profit margins, or loss of market share, any of which could have a material adverse effect on our financial condition and results of operations. There can be no assurance that we will be able to compete in this intensely competitive environment.

We may not be able to raise additional capital or obtain additional financing if needed.

Our cash from operations may not be sufficient to meet our working capital needs and/or to implement our business strategies. We do not currently have a line of credit or similar financing in place, and there can be no assurance that debt financing can be obtained if needed. In recent years, it has been difficult for companies to raise equity capital due to a variety of factors including the overall poor performance of the stock markets and the economic slowdown in the United States and other countries. Thus, there is no assurance we would be able to raise additional capital if needed. To the extent we do raise additional capital, the ownership position of existing shareholders could be diluted. Similarly, there can be no assurance that additional financing will be available if needed or that it will be available on favorable terms. Our inability to raise additional capital or to obtain additional financing if needed would negatively affect our ability to implement our business strategies and meet our goals. This, in turn, would adversely affect our financial condition and results of operations.
 
We may not be able to acquire new revenue generating divisions

We have recently sold our two major revenue producing divisions, Avidia Nutrition, Inc. and Lets Talk Health, Inc. We are currently looking to acquire new revenue generating divisions in the nutritional supplement industry. If we cannot acquire these new revenue generating divisions, our revenues will suffer substantially.

We are significantly influenced by our officers, directors and entities affiliated with them.

In the aggregate, ownership of Alpha Nutra, Inc. shares by management, and /or entities affiliated with management, represents a majority of our present issued and outstanding shares of common stock. These shareholders, if acting together, will be able to significantly influence all matters requiring approval by shareholders, including the election of directors and the approval of mergers or other business combinations.


The failure of our suppliers to supply products in sufficient quantities, at a favorable price, and in a timely fashion could adversely affect the results of our operations.

We buy our products, vitamins, nutritional supplements, and health care devices, from a limited number of suppliers. The loss of a major supplier could adversely affect our business operations. Although we believe that we could establish alternate sources for our products, any delay in locating and establishing relationships with other sources could result in product shortages and back orders for our products, with a resulting loss of sales and customers. In certain situations we may be required to alter our products or to substitute different materials from alternative sources.

A shortage of raw materials or an unexpected interruption of supply could also result in higher prices for products using those materials. 

Although we may be able to raise our prices in response to significant increases in the cost of raw materials, we may not be able to raise prices sufficiently or quickly enough to offset the negative effects of the cost increases on our results of operations. Further, there can be no assurance that suppliers will provide the products needed by us in the quantities requested or at a price we are willing to pay. Because we do not control the manufacture of these products, we are also subject to delays caused by conditions outside of our control, including weather, transportation interruptions, strikes by supplier employees, and natural disasters or other catastrophic events.

Our business is subject to the effects of adverse publicity, which could negatively affect our sales and revenues.

Our business can be affected by adverse publicity or negative public perception about our industry, our competitors, or our business generally. This adverse publicity may include publicity about the nutritional supplements industry generally, the safety and quality of nutritional supplements or their ingredients in general, or our products or ingredients specifically. It may also include publicity regarding regulatory investigations, regardless of whether these investigations involve us or the business practices or products of our competitors. There can be no assurance that we will be able to avoid any adverse publicity or negative public perception in the future. Any adverse publicity or negative public perception will likely have a material adverse effect on our business, financial condition, and results of operations. Our business, financial condition, and results of operations also could be adversely affected if any of our products or any similar products distributed by other companies are alleged to be or are proved to be harmful to consumers or to have unanticipated health consequences.

We could be exposed to product liability claims or other litigation, which may be costly and could materially and adversely affect our operations.

We could face financial liability due to product liability claims if the use of our products results in significant loss or injury. Additionally, the sale of our products involves the risk of injury to consumers from tampering by unauthorized third parties or product contamination. We could be exposed to future product liability claims that, among others: our products contain contaminants; we provide consumers with inadequate instructions about product use; or we provide inadequate warning about side effects or interactions of our products with other substances.

We do not have product liability insurance coverage.

The cost of product liability this coverage has increased dramatically in recent years, while the availability of adequate insurance coverage has decreased. We currently do not have product liability coverage and there can be no assurance that product liability insurance will be available at an economically reasonable cost or that we will be able to obtain such insurance, or adequate insurance, at all. Additionally, it is possible that one or more of our insurers could exclude from our coverage certain ingredients used in our products. In such event, we may have to stop using those ingredients or stop offering those products. A substantial increase in our product liability risk or the loss of product lines could have a material adverse effect on our results of operations and financial condition.

We are subject to political and economic risks.

As we expand into markets outside the United States our business will become increasingly subject to political and economic risks in those markets. Our future growth may depend, in part, on our ability to expand into markets outside the United States. There can be no assurance that we will be able to expand our presence in markets outside the United States, enter new markets on a timely basis, or that new markets outside the United States will be profitable. There are significant regulatory and legal barriers in markets outside the United States that we must overcome. We will be subject to the burden of complying with a wide variety of national and local laws, including multiple and possibly overlapping and conflicting laws. We also may experience difficulties adapting to new cultures, business customs and legal systems. Our sales and operations outside the United States will be subject to political, economic and social uncertainties including, among others:

• changes and limits in import and export controls;

• increases in custom duties and tariffs;

• changes in government regulations and laws;

• coordination of geographically separated locations;

• changes in currency exchange rates;

• economic and political instability; and

•currency transfer and other restrictions and regulations that may limit our ability to sell certain products or   repatriate profits to the United States.

Any changes related to these and other factors could adversely affect our business, profitability and growth prospects.

Our products are subject to extensive government regulation, which could limit or prevent the sale of our products in some markets and could increase our costs.
 
The packaging, labeling, advertising, promotion, distribution, and sale of our products are subject to regulation by numerous national and local governmental agencies in the United States and in other countries. Failure to comply with FDA regulations may result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines, and criminal prosecutions. Any action of this type by the FDA could materially adversely affect our ability to successfully market our products. In addition, if the FTC has reason to believe the law is being violated (for example, if it believes we do not possess adequate substantiation for product claims), it can initiate an enforcement action. FTC enforcement could result in orders requiring, among other things, limits on advertising, consumer redress, divestiture of assets, rescission of contracts, and such other relief as may be deemed necessary. Violation of these orders could result in substantial financial or other penalties. Any action by the FTC could materially adversely affect our ability to successfully market our products.

In markets outside the United States, before commencing operations or marketing our products, we may be required to obtain approvals, licenses, or certifications from a country’s ministry of health or comparable agency. 

Before commencing operations or marketing our products, we may be required to obtain approvals, licenses, or certifications from a country’s ministry of health or comparable agency. Approvals or licensing may be conditioned on reformulation of products or may be unavailable with respect to certain products or product ingredients. We must also comply with product labeling and packaging regulations that vary from country to country. Furthermore, the regulations of these countries may conflict with those in the United States and with each other. The cost of complying with these various and potentially conflicting regulations can be substantial and can adversely affect our results of operations. We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations or administrative orders, when and if adopted, would have on our business. They could include requirements for the reformulation of certain products to meet new standards, the recall or discontinuance of certain products, additional record keeping, expanded or different labeling, and additional scientific substantiation. Any or all of these requirements could have a material adverse effect on our operations.

If we are unable to attract and retain qualified management personnel, our business will suffer.

Our management personnel are primarily responsible for our day-to-day operations. We believe our success depends largely on our ability to attract, maintain and motivate highly qualified management personnel. Competition for qualified individuals can be intense, and we may not be able to hire additional qualified personnel in a timely manner and on reasonable terms. Our inability to retain a skilled professional management team could adversely affect our ability to successfully execute our business strategy and achieve our goals.

We will face additional risks if we are able to acquire or develop a manufacturing capability.

If we begin to manufacture our own vitamins and nutritional supplements we will be dependent on the uninterrupted and efficient operation of our manufacturing facility. Manufacturing operations are subject to power failures, the breakdown, failure or substandard performance of equipment, the improper installation or operation of equipment, natural or other disasters, and the need to comply with the requirements or directives of governmental agencies, including the FDA. There can be no assurance that the occurrence of these or any other operational problems would not have a material adverse effect on our business, financial condition and results of operations. Furthermore, there can be no assurance that we would be able to obtain insurance to cover these and all other risks associated with manufacturing at a reasonable cost or, if obtained, that it will be adequate to cover any losses that we may incur from an interruption in our manufacturing operations.

We may be unable to protect our intellectual property rights or may inadvertently infringe on the intellectual property rights of others.

We possess and may possess in the future, certain proprietary trade secrets and similar intellectual property. There can be no assurance that we will be able to protect our intellectual property adequately. In addition, the laws of certain foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. Litigation in the United States or abroad may be necessary to enforce our intellectual property rights, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement. This litigation, even if successful, could result in substantial costs and diversion of resources and could have a material adverse effect on our business, results of operation and financial condition. If any such claims are asserted against us, we may seek to obtain a license under the third party’s intellectual property rights. There can be no assurance, however, that a license would be available on terms acceptable or favorable to us, if at all.

Our stock price could fluctuate significantly.

Our stock price has changed radically in the past four months. This is largely the result of moving from bankruptcy to the acquisition of a viable business. In the future we expect that the trading price of our stock could be subject to fluctuations in response to:

• broad market fluctuations and general economic conditions;

• fluctuations in our financial results;

• future offerings of our common stock or other securities or the exercise of warrants;

• the general condition of the nutritional supplement industry;

• increased competition;

• regulatory action;

• adverse publicity; and

• product and other public announcements.

The stock market has historically experienced significant price and volume fluctuations. There can be no assurance that an active market in our stock will develop, and if it develops there can be no assurance that the price of our common stock will not decline.

Cautionary Statement Concerning

Forward-Looking Statements

Some of the statements in this annual report are forward looking statements, which are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance. Forward-looking statements are only predictions. The forward-looking events discussed in this annual report, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. For these statements, we claim the protection of the “bespeaks caution” doctrine. The forward-looking statements speak only as of the date hereof, and we expressly disclaim any obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after the date of this filing.

Item 2. Description of Property

We currently share office space with Business Consulting Group Unlimited, Inc. at 2038 Corte Del Nogal, Suite 110, Carlsbad, California 92011. We do not have a lease and we are currently not paying rent.

Item 3. Legal Proceedings

On January 2, 2003 we filed a Voluntary Petition for Bankruptcy under Chapter 11 of the United States Bankruptcy Code as case number 03-00039-JM. On November 6, 2004 our Plan of Reorganization was approved by the Honorable James Meyers, Judge, United States Bankruptcy Court, Southern District of California. The Plan became effective on November 30, 2003 and the acquisition of LTH as required under the Plan was completed on January 1, 2004. Details of this Plan were reported on our Current Report on Form 8-K filed with the SEC on January 16, 2004.

On or about October 8, 2004, we entered into a share exchange agreement with Tempo Laboratories, Inc. to acquire 100% of the issued and outstanding stock of Tempo in exchange for the issuance of 1,320,000 shares of our common stock to the Tempo shareholders. Shortly thereafter, the parties to the agreement became parties to a lawsuit entitled Mankosa v. Donsbach (CA Sup. Ct. Case No. GIC 843131) concerning the terms of the agreement and various representations made by the parties. As of the date of this Report, the lawsuit is pending.


Item 4. Submission of Matters to a Vote of Security Holders

On January 27, 2005, our board recommended, and our shareholders approved the changing of our name to Alpha Nutra, Inc.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.
 
Our common stock trades on the Pink Sheets under the symbol “APNA.” The following table shows the high and low bid prices for our common stock for each quarter since January 1, 2003 as reported by the OTC Bulletin Board. We consider our stock to be “thinly traded” and any reported sale prices may not be a true market-based valuation of the stock. Some of the bid quotations from the OTC Pink Sheets set forth below may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

January 1, 2005 to December 31, 2005 (Pink Sheets)
   
High Bid
Low Bid
First Quarter
  
.55
.55
Second Quarter
  
.55
.55
Third Quarter
  
.55
.55
Fourth Quarter
  
.55
.55
       
January 1, 2004 to December 31, 2004 (Pink Sheets)
   
High Bid
Low Bid
First Quarter
  
.55
.55
Second Quarter
  
.55
.55
Third Quarter
  
.55
.55
Fourth Quarter
  
.55
.55


As of December 31, 2005, there were approximately 246 record holders of our common stock.

We have not paid any cash dividends since our inception and do not contemplate paying dividends in the foreseeable future. It is anticipated that earnings, if any, will be retained to retire debt and for the operation of the business.

Shares eligible for future sale could depress the price of our common stock, thus lowering the value of a buyer’s investment. Sales of substantial amounts of common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for shares of our common stock.

Our revenues and operating results may fluctuate significantly from quarter to quarter, which can lead to significant volatility in the price and volume of our stock. In addition, stock markets have experienced extreme price and volume volatility in recent years. This volatility has had a substantial effect on the market prices of securities of many smaller public companies for reasons unrelated or disproportionate to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.

Securities authorized for issuance under equity compensation plans

We do not have any equity compensation plans approved or not approved by our security holders.
 
   
(a)
  
(b)
  
(c)
Plan Category
  
Number of securities to be issued upon exercise of outstanding options, warrants and rights
  
Weighted-average exercise price of outstanding options, warrants and rights
  
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders (1)
  
-0-
  
n/a
  
-0-
Equity compensation plans not approved by security holders (2)
  
-0-
  
n/a
  
-0-
             
Total
  
-0-
  
n/a
  
-0-

(1) We do not have any equity compensation plans approved by the security holders.

(2) We do not have any equity compensation plans not approved by the security holders.

Item 6. Management’s Discussion and Analysis or Plan of Operation

The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes included in this report. The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.

Various risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from expectations include, but are not limited to, those set forth under the section “Risk Factors” set forth in this report.

The forward-looking events discussed in this prospectus, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. For these statements, we claim the protection of the “bespeaks caution” doctrine. All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.

Background

We were inactive from 1998 through 2003. Our only activity in 2003 was the maintenance of our voluntary bankruptcy petition and negotiations with LTH resulting in the Plan of Reorganization which was, on November 6, 2003, approved by the United States Bankruptcy Court for the Southern District of California. Our current business, which we entered into on January 1, 2004, pursuant to the court approved Plan of Reorganization, is described below.

Current Nature of Operations

As of July 1, 2005, following the sale of Lets Talk Health, Inc. and Avidia Nutrition, we have no ongoing business operations.

Operating Companies

We currently operate through our wholly owned subsidiary, AlphaNutra.com. However, AlphaNutra.com has no current operations.

Results of Operations.

Net Sales. Net sales consist of product sales net of allowances for product returns. Revenues are recognized when the related product is shipped.

The level of our sales depends on many factors, including:

- the number of customers that we are able to attract;

- the frequency of customers' purchases;

- the quantity and mix of products that customers purchase;

                - the price that we charge for our products; and

- the level of customer returns that we experience.

Sales for 2005 totaled $2,525,242.

Cost of Goods Sold. Cost of goods sold consists primarily of the costs of products sold to customers. In the future, we may expand or increase the discounts we offer to our customers and may otherwise alter our pricing structures and policies. These changes would negatively reduce our gross margins. In addition to pricing strategy, our gross margins will fluctuate based on other factors, including:

- the cost of our products, including the extent of purchase volume discounts we are able to obtain from our suppliers;

- promotions or special offers that we offer to attract new customers; and

- the mix of products within each brand category that our customers purchase.

Cost of goods sold for 2005 was $1,442,868.

Liquidity and Capital Resources

As of December 31, 2005, we have $0 cash on hand and accounts receivable of $0. Given our current commitments and working capital, we cannot support our operations for the next 12 months without additional capital.

The amount and timing of our future capital requirements will depend upon many factors, including the level of funding received by us, anticipated private placements of our common stock, the level of funding obtained through other financing sources, and the timing of such funding. In the event we are unable to raise additional capital, we will be unable to continue operations.

We intend to retain any future earnings to retire any existing debt, finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes.

As of December 31, 2005, we had total liabilities of $0 including total current liabilities of $0 and total long term liabilities of $0.
 
Recent Accounting Pronouncements.

In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS 151, Inventory Costs - an amendment of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No 43, Chapter 4, “Inventory Pricing,” to clarify the accounting of abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that “…under some circumstances, items such as idle facility expenses, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period changes…” This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This Statement is effective for inventory costs incurred during fiscal year beginning after June 15, 2005. Management does not believe that the adoption of this Statement will have any immediate material impact upon the company.

In December 2004, the FASB issued SFAS No. 152, “Accounting for Real Estate Time-Sharing Transactions - an amendment of FASB Statements No. 66 and 67” (“SFAS 152”) The amendments made by Statement 152 amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provide in AICPA Statement of Position (SOP”) 04-2, Accounting No. 67, Accounting for Costs of Initial Rental Operation of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. This Statement is effective for financial statement for fiscal year beginning after June 15, 2005, with earlier application encouraged. Management does not anticipate that the implementation of this standard will have a material impact on its financial position, results of operations or cash flows.

On December 16, 2004, the FASB, published Statement of Financial Accounting Standards No. 123 (Revised 2004), Shared-Based Payment (“SFAS 123R”). SFAS 123R requires that compensation costs related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions with the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employees share purchase plans. The provisions of SFAS 123R are effective as of the first interim period that begins after June 15, 2005. Accordingly, we will implement the revised standard in the third quarter of fiscal year 2005. Currently, we account for our share-based payment transactions under the provisions of APB 25, which does not necessarily require the recognition of compensation cost in the financial statements. Management is assessing the implications of this revised standard, which may materially impact our results of operations in the third quarter of fiscal year 2005 and thereafter.

On December 16, 2004, the FASB, issued Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets, an amendment of APB No. 29, Accounting for Nonmonetary transactions (“SFAS 153”). This statement amends APB Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive asets and replaces it with a general exception of exchanges of nonmonetary assets that do not have commercial substance. Under SFAS 153, if a nonmonetary exchange of similar productive assets meets a commercial substance criterion and fair value is determinable, the transaction must be accounted for at fair value resulting in recognition of any gain or loss. SFAS 153 is effective for nonmonetary transactions in fiscal periods that begin after June 15, 2005. Management does not anticipate that the implementation of this standard will have a material impact on its financial position, results of operations or cash flows.


Please see the “F” pages at the end of this Report.

Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 8A. Controls and Procedures.

We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-14(c) as of the end of the period covered by this Annual Report on Form 10-KSB. Based on that evaluation, they concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to them to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 8B. Other Information.

On June 30, 2005, we entered into a settlement agreement with Business Consulting Group Unlimited, Inc., a Nevada company, pursuant to which BCGU forgave the outstanding debt we owed BCGU in exchange for our payment to BCGU of $47,500 and 500,000 restricted shares of our common stock.

On July 30, 2005, our board of directors appointed Messrs. Mark L. Baum and James B. Panther to our board of directors.

On August 26, 2005, directors Louis J. Paulsen, Robert Bliss and Jim Cartmill resigned from their positions as a director of the company. The resignations were not because of any disagreements with the company on matters relating to its operations, policies and practices.

PART III

Item 9.
Directors, Executive Officers, Promoters And Control Persons; Compliance With Section 16(A) Of The Exchange Act

Executive Officer and Directors

Our current executive officers and directors, the positions held by them, and their ages are as set forth below. Each Director will hold his position until the next annual meeting of shareholders or until his successor is duly elected and qualified. Officers serve at the direction of the Board of Directors.

Name
  
       Age
  
Position
         
Mark L. Baum
  
         34
  
Director, President, CFO
         
James B. Panther, II
  
         33
  
Director, Secretary


Mark L. Baum, Esq.
Director, President and Chief Financial Officer

Mr. Baum is our President, Chief Financial Officer and one of our directors. He is not a full time employee and has other outside commitments. In 2002, Mr. Baum founded Business Consulting Group Unlimited, Inc., a Southern California-based merchant banking firm. Mr. Baum is a licensed attorney in the State of California and the principal attorney for The Baum Law Firm, PC a firm which he founded in 1998 and has been operating on an ongoing basis. Mr. Baum has more than 11 years experience in creating, financing and growing development stage enterprises in a variety of industries. Mr. Baum has participated in numerous public spin-offs, venture fundings, private-to-public mergers, corporate restructurings, asset acquisitions and asset divestitures. Mr. Baum’s law practice focuses on securities laws and related issues for small-cap and micro-cap publicly reporting companies. Mr. Baum is also a director of PNG Ventures, Inc. a publicly traded company.

James B. Panther, II
Director, Secretary

Mr. Panther is our Secretary and one of our directors. Mr. Panther, II is not a full time employee and has other outside commitments. His career has focused on managing fund raising, financing, M & A, and advisory services in a merchant banking environment. In addition to acting as our President, Chief Executive Officer, and director, Mr. Panther, II heads, and is a principal of, Business Consulting Group Unlimited, Inc.’s Capital Markets Group where he brings a combination of corporate finance, operational, and strategic experience to the firm since joining in 2001. BCGU currently owns 375,000 shares of our common stock. Prior to BCGU, Mr. Panther, II was Managing Director of Brighton Capital Partners, LLC, a merchant banking firm, from 1998 to 2001. Prior to joining Brighton Capital Partners, LLC, Mr. Panther, II was Managing Partner of Bristol Partners from 1994 to 1998 where he was responsible for portfolio investments. Mr. Panther, II holds B.A. in Finance from Boston College and a General Course Degree in Economics from the University of Granada, Granada, Spain.  He is fluent in English and Spanish. 

Information about our Board and its Committees.

Audit Committee

We do not currently have an Audit Committee.

Compensation Committee

We do not currently have a Compensation Committee.

Advisory Board

We do not currently have an Advisory Board.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock. Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. To our knowledge, based solely on review of the copies of such reports furnished to us for the period ended December 31, 2005, the Section 16(a) reports required to be filed by our executive officers, directors and greater-than-10% stockholders were filed on a timely basis.
Code of Ethics

We do not currently have a Code of Ethics.

Item 10. Executive Compensation

The following table sets forth the cash compensation paid to the Chief Executive Officer and to all other executive officers for services rendered, and to be rendered, through the fiscal years ending December 31, 2005 and 2004.

   
Annual Compensation
  
Long-Term Compensation
                             
                       
 
Common Shares
    
                       
Underlying Options
  
 
All
               
 
Other Annual
  
Restricted
Stock
  
Granted
  
Other
Compen-
Name and Position
  
Year
  
Salary
  
Bonus
  
Compensation
  
Awards ($)
  
(# of Shares)
  
sation
                             
James B. Panther, II
  
2005
  
-0-
  
-0-
  
-0-
  
-0-
  
------
  
-0-
Director
                            
Secretary
                            
                             
Mark L. Baum
  
2005
  
-0-
  
-0-
  
-0-
  
-0-
  
------
  
-0-
Director
                            
President and CFO
                            
                             
Louis J. Paulsen
  
2004
  
$60,000
 
-0-
  
-0-
  
-0-
  
------
  
-0-
Director,
                            
President and
                            
Chief Executive Officer
                            
                             
James L. Cartmill
  
2004
  
$60,000
  
-0-
  
-0-
  
-0-
  
------
  
-0-
Director, Secretary
                           
                             
Robert J. Bliss
  
2004
  
-0-
  
-0-
  
-0-
  
-0-
  
------
  
-0-
Director
                            

Option Grants and Exercises

There were no option grants or exercises by any of the executive officers named in the Summary Compensation Table above.

Employment and Consultant Agreements

None.

Compensation of Directors

We currently do not compensate our directors.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth certain information regarding the beneficial ownership of the 932,502 issued and outstanding shares of our common stock as of December 31, 2005 by the following persons:

(1) each person who is known to be the beneficial owner of more than five percent (5%) of our issued and outstanding shares of common stock;

(2) each of our directors and executive officers; and
 
(3) all of our directors and executive officers as a group.

 
Name And Address
Number Of Shares Beneficially Owned
 
Percentage Owned
     
     
James B. Panther, II (1)
500,000(2)
54%(4)
Mark L. Baum (1)
500,000(3)
54%(4)
     
                All directors and officers as a group
500,000
54%
     

                (1) 2038 Corte Del Nogal, Suite 110, Carlsbad, CA 92011.
 
(2)
A total of 500,000 shares are held in the name of Business Consulting Group Unlimited, Inc. which Mr. Panther, II is a 50% owner.
 
(3)
A total of 500,000 shares are held in the name of Business Consulting Group Unlimited, Inc. which Mr. Baum is a 50% owner.
 
(4)
Business Consulting Group Unlimited, Inc. owns a total of 500,000 shares or approximately 54% of our issued and outstanding common stock.
 
Item 12. Certain Relationships and Related Transactions.

Related Transactions

None

Our Subsidiaries.

None

Transactions with Promoters

None.

Item 13. Exhibits.

Exhibit
  
Description
     
3.1.1
  
Articles of Incorporation filed as an exhibit to our Current Report on Form 8-K filed with the Commission on January 16, 2004 and incorporated herein by reference.
     
3.1.2
  
Certificate of Amendment to Articles of Incorporation filed as an exhibit to our Quarterly Report on Form 10-QSB filed with the Commission on September 20, 2006 and incorporated herein by reference.
     
3.2.1
  
Bylaws (Attached as an exhibit to Amendment No. 2 to our Registration Statement on Form 10 filed with the SEC on April 6, 1992.
     
31.1
  
Certification of Mark L. Baum pursuant to Rule 13a-14(a)
     
32.2
  
Certification of Mark L. Baum pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 
Item 14. Principal Accountant Fees and Services.

Appointment of Auditors
 
Our Board of Directors selected Armando C. Ibarra, Certified Public Accountants, APC, as our auditors for the year ended December 31, 2005.

Audit Fees
                 
               Armando C. Ibarra, Certified Public Accountants, APC, billed us $5,000 in fees for our annual audit for the year ended December 31, 2005 and for the review of our quarterly financial statements for that year.
 
              Armando C. Ibarra, Certified Public Accountants, APC, billed us $8,200 in fees for our annual audit for the year ended December 31, 2004 and for the review of our quarterly financial statements for that year.
Audit-Related Fees
 
      We did not pay any fees to Armando C. Ibarra, Certified Public Accountants, APC for assurance and related services that are not reported under Audit Fees above, during our fiscal years ending December 31, 2005 and December 31, 2004.

Tax and All Other Fees
 
We did not pay any fees to Armando C. Ibarra, Certified Public Accountants, APC for tax compliance, tax advice, tax planning or other work during our fiscal years ending December 31, 2005 and December 31, 2004.

Pre-Approval Policies and Procedures

We have implemented pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, our board of directors pre-approves all services to be provided by Armando C. Ibarra, Certified Public Accountants, APC the estimated fees related to these services.

With respect to the audit of our financial statements as of December 31, 2005, and for the year then ended, none of the hours expended on Armando C. Ibarra, Certified Public Accountants, APC’s engagement to audit those financial statements were attributed to work by persons other than Armando C. Ibarra, Certified Public Accountants, APC’s full-time, permanent employees.



SIGNATURES
 
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ALPHA NUTRA, INC.

By: /s/ Mark L. Baum
Mark L. Baum
President and Chief Financial Officer
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.


Signatures
Title
Date
     
/s/ Mark L. Baum
Mark L. Baum
Director, President, and Chief Financial Officer
September 20, 2006
     
/s/ James B. Panther, II
James B. Panther
Director, Secretary
September 20, 2006





ALPHA NUTRA, INC.
 
Page
   
Consolidated Balance Sheets (Assets) at December 31, 2005 and December 31, 2004
F-1
   
Consolidated Balance Sheets (Liabilities and Stockholder’s Equity (Deficit)) at December 31, 2005 and December 31, 2004
F-2
   
Consolidated Statements of Operations
F-3
   
Consolidated Statement of Stockholders’ Equity (Deficit) For The Year Ended December 31, 2005
F-4
   
Consolidated Statements of Cash Flows
F-5
   
Notes to Financial Statements
F-6



ARMANDO C. IBARRA
Certified Public Accountants
A Professional Corporation


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We have audited the accompanying consolidated balance sheets of Alpha Nutra, Inc.
(Formally Sierra- Rockies, Corp.) as of December 31, 2005, and related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amount and disclosures on the financial statements. An audit also includes assessing the accounting principals used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 the company as of December 31, 2005, and the results of its operations and its cash flows for the year then ended, in conformity with US generally accepted accounting principles.


/s/ Armando C. Ibarra
 
Armando C. Ibarra, CPA

Chula Vista, Ca.
July 13, 2006





ALPHA NUTRA, INC.
Consolidated Balance Sheets
 
 
 
 
 
 
 
 
               
               
ASSETS
               
     
As of
    
As of
  
     
December 31,
    
December 31,
  
     
2005
    
2004
  
     
 
    
 
  
               
               
 
CURRENT ASSETS
            
 
Cash
$
                                           -
 
$
                                   263,887
 
 
Accounts receivable
  
                                           -
   
                                   497,911
 
 
Inventory
  
                                           -
   
                                   801,436
 
 
Other receivable
  
                                           -
   
                                    179,261
 
 
Employee advances
  
                                          -
   
                                           615
 
     
 
    
 
  
               
 
Total Current Assets
  
                                           -
   
                                 1,743,110
 
               
 
NET PROPERTY & EQUIPMENT
  
                                           -
    
                                    407,517
 
                
 
OTHER ASSETS
            
 
Deposits
  
                                           -
   
                                     14,752
 
     
 
    
 
  
               
 
Total Other Assets
  
-
   
14,752
 
     
 
    
 
  
               
 
TOTAL ASSETS
$
                                           -
 
$
                              2,165,379
 
     
 
    
 
  
               
               



ALPHA NUTRA, INC.
Consolidated Balance Sheets
 
 
 
 
 
 
 
 
               
               
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
               
     
As of
   
As of
  
     
December 31,
    
December 31,
  
     
2005
    
2004
  
     
 
    
 
  
               
               
 
CURRENT LIABILITIES
            
 
Accounts payable
$
-
 
$
638,242
 
 
Line of credit
  
-
   
35,000
 
 
Sales tax payable
  
-
   
5,830
 
 
Income taxes payable
  
-
   
31,233
 
 
Wages payable
  
-
   
506
 
 
Payroll taxes payable
  
-
   
6,780
 
 
Insurance payable
  
-
   
360
 
 
Note payable
 
-
   
6,000
 
 
Loan payable - current portion
  
-
   
8,671
 
     
 
    
 
  
               
 
Total Current Liabilities
  
-
   
732,622
 
               
 
LONG-TERM LIABILITIES
            
 
Loan payable
 
-
   
128,219
 
     
 
    
 
  
               
 
Total Long-Term Liabilities
  
-
   
128,219
 
               
     
 
    
 
  
               
 
TOTAL LIABILITIES
  
-
   
860,841
 
               
 
STOCKHOLDERS' EQUITY (DEFICIT)
            
 
Common stock ($0.001 par value, 100,000,000 shares authorized
          
 
932,502 and 10,490,796 shares issued and outstanding
           
 
as of December 31, 2005 and 2004, respectively)
  
935
   
10,493
 
 
Additional paid-in capital
  
5,904,085
   
6,978,975
 
 
Retained earnings (deficit)
  
(5,905,020)
    
(5,684,930)
  
     
 
    
 
  
               
 
Total Stockholders' Equity (Deficit)
  
-
   
1,304,538
 
               
     
 
    
 
  
 
TOTAL LIABILITIES
           
 
& STOCKHOLDERS' EQUITY (DEFICIT)
$
-
 
$
2,165,379
 
     
 
    
 
  
               

 



ALPHA NUTRA, INC.
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
               
               
     
Year Ended
    
Year Ended
  
     
December 31,
   
December 31,
 
     
2005
    
2004
  
     
 
    
 
  
               
 
REVENUES
            
 
Sales
$
2,525,242
 
$
3,603,329
 
 
Sales discounts & credits
  
-
   
(111,075)
  
 
Returns and allowances
  
-
   
(43,696)
  
     
 
    
 
  
 
Total Revenues
  
                     2,525,242
   
  3,448,558
 
               
 
COST OF REVENUES
  
(1,442,868)
    
(1,684,291)
  
     
 
    
 
  
               
 
GROSS PROFIT
  
1,082,374
   
1,764,267
 
               
 
OPERATING COSTS
            
 
Depreciation expense
  
-
   
5,471
 
 
Bad debts
  
-
   
35,000
 
 
Administrative expenses
  
1,296,501
   
1,817,982
 
     
 
    
 
  
               
 
Total Operating Costs
  
1,296,501
   
1,858,453
 
               
     
 
    
 
  
               
 
OPERATING INCOME (LOSS)
  
(214,127)
    
(94,186)
  
               
 
OTHER INCOME & (EXPENSES)
            
               
 
Interest expense
  
(5,963)
    
(2,012)
  
 
Other expense
  
-
   
(5,636)
  
     
 
    
 
  
               
 
Total Other Income & (Expenses)
  
(5,963)
    
(7,648)
  
     
 
    
 
  
               
 
NET INCOME (LOSS)
$
(220,090)
  
$
(101,834)
  
     
 
    
 
  
               
 
BASIC EARNINGS (LOSS) PER SHARE
$
(0.04)
  
$
(0.06)
  
     
 
    
 
  
               
 
WEIGHTED AVERAGE NUMBER OF
            
 
COMMON SHARES OUTSTANDING
  
5,611,516
   
1,572,992
 
     
 
    
 
  
               




ALPHA NUTRA, INC.
Consolidated Statement of Stockholders' Equity (Deficit)
For the Year Ended December 31, 2005
             
 
 
 
Additional
 
 
 
 
Common
Common
Paid-in
Retained
Total
 
 
Shares
Stock
Capital
Earnings
  
 
 
 
 
 
 
 
 
Balance, December 31, 2003
22,889
24
5,601,262
(5,583,096)
18,190
 
 
 
 
 
 
 
 
             
Recapitalization (note 1)
66,667
67
30,836
 
30,903
 
             
Stock issued for services rendered on
           
March 11, 2004 @ $0.50 per share
1,689
2
37,998
 
38,000
 
             
Stock issued for services rendered on
           
August 11, 2004 @ $0.001 per share
996
1
   
1
 
             
Stock issued for relief of debt on
           
November 10, 2004
8,598,556
8,599
1,308,879
 
1,317,478
 
             
Stock issued for services rendered on
           
November 10, 2004 @ $0.001 per share
1,800,000
1,800
   
1,800
 
             
Net loss for the year ended
            
December 31, 2004
      
(101,834)
(101,834)
  
 
 
 
 
 
 
  
Balance, December 31, 2004
10,490,796
10,493
6,978,975
(5,684,930)
1,304,538
 
 
 
 
 
 
 
 
             
Stock issued in employee bonus
            
January 18, 2005
407,039
407
406,632
 
407,039
 
             
Recapitalization (note 1)
(10,465,333)
(10,465)
(1,981,022)
  
(1,991,487)
  
             
Stock issued for services rendered on
           
December 5, 2005 @ $0.001 per share
500,000
500
499,500
 
500,000
 
             
Net loss for the year ended
            
December 31, 2005
      
(220,090)
(220,090)
  
 
 
 
 
 
 
  
Balance, December 31, 2005
932,502
$935
$ 5,904,085
$(5,905,020)
$ -
 
 
 
 
 
 
 
 
             




ALPHA NUTRA, INC.
Consolidated Statements of Cash Flows
 
             
   
Year Ended
    
Year Ended
  
   
December 31,
   
December 31,
 
   
2005
    
2004
  
   
 
    
 
  
             
CASH FLOWS FROM OPERATING ACTIVITIES
            
             
Net income (loss)
$
(220,090)
  
$
(101,834)
  
Adjustments to reconcile net loss to net cash
           
used in operating activities:
            
Depreciation expense
  
-
   
5,471
 
Common stock issued for relief of debt
  
-
   
1,317,478
 
Common stock issued for services
  
907,039
   
39,803
 
Common stock issued in recapitalization
  
-
   
30,903
 
Assets exchange agreement
  
(1,991,487)
    
-
 
Bad debts
  
-
   
35,000
 
Changes in operating assets and liabilities:
            
(Increase) decrease in accounts receivable
  
497,911
   
(497,911)
  
(Increase) decrease in inventory
  
801,436
   
(801,436)
  
(Increase) decrease in income tax benefit
  
179,261
   
(179,261)
  
(Increase) decrease in employee advances
  
615
   
(615)
  
(Increase) decrease deposits
  
14,752
   
(14,752)
  
Increase (decrease) in accounts payable
  
(638,242)
    
544,568
 
Increase (decrease) in sales tax payable
  
(5,830)
    
5,830
 
Increase (decrease) in income taxes payable
  
(31,233)
    
31,233
 
Increase (decrease) in payroll taxes payable
  
(6,780)
    
6,780
 
Increase (decrease) in other wages payable
  
(506)
    
506
 
Increase (decrease) in insurance payable
  
(360)
    
360
 
   
 
    
 
  
             
Net Cash Provided by (Used in) Operating Activities
  
(493,514)
    
422,121
 
             
CASH FLOWS FROM INVESTING ACTIVITIES
            
             
Net sale (purchase) of fixed assets
  
407,517
   
(412,988)
  
   
 
    
 
  
             
Net Cash Provided by (Used in) Investing Activities
  
407,517
   
(412,988)
  
             
CASH FLOWS FROM FINANCING ACTIVITIES
            
             
Payments on loan payable
  
(136,890)
    
136,890
 
Payments on note payable
  
(6,000)
    
6,000
 
Payments to line of credit
  
(35,000)
    
-
 
   
 
    
 
  
             
Net Cash Provided by (Used in) Financing Activities
  
(177,890)
    
142,890
 
             
   
 
    
 
  
             
Net Increase (Decrease) in Cash
  
(263,887)
    
152,023
 
             
Cash at Beginning of Year
  
263,887
   
111,864
 
   
 
    
 
  
             
Cash at End of Year
$
-
 
$
263,887
 
   
 
    
 
  
             
Supplemental Cash Flow Disclosures:
            
             
Cash paid during year for interest
$
5,963
 
$
2,012
 
   
 
    
 
  
Cash paid during year for taxes
$
-
 
$
-
 
   
 
    
 
  
 
            
Non-Cash Activities
            
             
Common stock issued for services
$
907,039
 
$
39,803
 
   
 
    
 
  
             
Common stock cancelled in asset exchange agreement
$
1,991,487
 
$
-
 
   
 
    
 
  
             


ALPHA NUTRA, INC.
Notes to Consolidated Financial Statements
As of December 31, 2005

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

General

Alpha Nutra, Inc. was incorporated under the laws of the State of California on March 14, 1988. The Company's offices are located at 2038 Corte Del Nogal, Suite 110, Carlsbad, California 92008. The Company was originally known as TJB Enterprises, Inc. It changed its name to Gallery Rodeo International in 1991, Sierra-Rockies Corporation in 1996, Alpha Nutraceuticals in 2004 and Alpha Nutra, Inc. on January 27, 2005.

On January 2, 2003 the Company filed a Voluntary Petition for a Chapter 11 proceeding in the United States Bankruptcy Court, Southern District of California. The Company had previously filed similar petitions in 1998 and 2001 but was unable to gain approval for a plan of reorganization in those filings. However on November 6, 2003 the Court approved the Plan of
Reorganization proposed by the Company. The Plan included the following provisions:

The non-control person shareholders of the Company who held shares prior to the reorganization would receive one new unit for every 100 old shares that they previously held. Each unit consists of one common share, one "A" warrant to purchase one common share at an exercise price $2.50, and one "B" warrant to purchase one common share at an exercise price of $10.00. The "A" warrant will expire if unexercised on December 31, 2004, and the "B" warrant will expire if unexercised on December 31, 2005. The total number of units issued to these former shareholders was 117,029 units.

The creditors of the Company would receive 570,001 units in exchange for all of their claims against the Company.

Additional units were to be granted to former management (76,000 units), to the bankruptcy attorney (50,000 units), and to administrative lenders (300,000 units). An additional 56,802 "A" warrants and 56,802 "B" warrants were to be issued to former control persons.

The Company was ordered to acquire the business of Let's Talk Health, Inc. (LTH) by issuing 3,000,000 shares of common stock to the shareholders of LTH. This transaction was completed on January 1, 2004 and, as provided in the Plan, Louis Paulsen, the president of LTH, and other members of the management team of LTH, took over the management of the Company.

On June 30, 2005, the Company entered into a Stock and Asset Exchange Agreement with GMGH International, LLC and Golden Tones International, LLC whereby the Company exchanged 100% of the Avidia Nutrition interests and Let’s Talk Health, Inc. shares of common stock held by the Company for 100% of the Alpha Nutra, Inc. shares of common stock held by GMGH, Golden Tones and each of the respective owners of GMGH and Golden Tones. The 10,465,333 shares of common stock the Company received from GMGH, Golden Tones and the owners were retired by the Company. Following the exchange, GMGH and Golden Tones owned 100% of Avidia Nutrition and Let’s Talk Health, Inc. The Company retained ownership of the AlphaNutra.com business.

Nature of Operations
 
As of July 1, 2005, following the sale of Lets Talk Health, Inc. and Avidia Nutrition, the Company has no ongoing business operations.
 
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
a. Accounting Method
 
The Company's policy is to use the accrual method of accounting to prepare and present financial statements, which conform to generally accepted accounting principles (GAAP). The Company has elected a December 31, year-end.

b.  
Basis of Consolidation
 
The consolidated financial statements of Alpha Nutra, Inc. for the year ended 2004 include those accounts of Let’s Talk Health, Inc., and Avidia Nutrition. All significant intercompany transactions have been eliminated. On June 30, 2005, the Company in an assets exchange agreement relinquished ownership in all its subsidiaries. As of December 31, 2005 the financial statements reflect the financial position of solely Alpha Nutra, Inc.

c. Cash Equivalents

The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.

d. Property and Equipment
 
Property, equipment and leasehold improvements are stated at costs less accumulated depreciation or amortization. Maintenance and repairs, as well as renewals for minor amounts are charged to expenses. Renewals and betterments of substantial amount are capitalized, and any replaced or disposed units are written off.

e.Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In accordance with FASB 16 all adjustments are normal and recurring.

f. Concentration of Credit Risk

The Company maintains credit with various financial institutions. Management performs periodic evaluations of the relative credit standing of the financial institutions. The Company has not sustained any material credit losses for the instruments. The carrying values reflected in the balance sheet at December 31, 2004 reasonable approximate the fair values of cash, accounts payable, and credit obligations. In making such assessment, the Company, has utilized discounted cash flow analysis, estimated, and quoted market prices as appropriate in accordance with paragraph 9 of SFAS 107.

g. Basic Earnings per Share 
 
In February 1997, the FASB issued SFAS No. 128, “Earnings Per Share”, which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. SFAS No. 128 supersedes the provisions of APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of SFAS No. 128 effective July 20, 1998 (inception).
 
Basic net loss per share amounts is computed by dividing the net income by the weighted average number of common shares outstanding.
 
h. Income Taxes
 
The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 
NEW ACCOUNTING PRONOUNCEMENTS:
 
In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS 151, Inventory Costs - an amendment of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that “… under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges…” This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This Statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this Statement will have any immediate material impact on the Company.
 
In December 2004, the FASB issued SFAS No. 152, “Accounting for Real Estate Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67” (“SFAS 152) The amendments made by Statement 152 This Statement amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. This Statement is effective for financial statements for fiscal years beginning after June 15, 2005, with earlier application encouraged. The Company does not anticipate that the implementation of this standard will have a material impact on its financial position, results of operations or cash flows.
 
On December 16, 2004, the Financial Accounting Standards Board (“FASB”) published Statement of Financial Accounting Standards No. 123 (Revised 2004), Shared-Based Payment (“SFAS 123R). SFAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans. The provisions of SFAS 123R are effective as of the first interim period that begins after June 15, 2005. Accordingly, the Company will implement the revised standard in the third quarter of fiscal year 2005. Currently, the Company accounts for its share-based payment transactions under the provisions of APB 25, which does not necessarily require the recognition of compensation cost in the financial statements. The Company does not anticipate that the implementation of this standard will have a material impact on its financial position, results of operations or cash flows.
 
On December 16, 2004, FASB issued Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary transactions (“SFAS 153”). This statement amends APB Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception of exchanges of nonmonetary assets that do not have commercial substance. Under SFAS 153, if a nonmonetary exchange of similar productive assets meets a commercial-substance criterion and fair value is determinable, the transaction must be accounted for at fair value resulting in recognition of any gain or loss. SFAS 153 is effective for nonmonetary transactions in fiscal periods that begin after June 15, 2005. The Company does not anticipate that the implementation of this standard will have a material impact on its financial position, results of operations or cash flows.
 
NOTE 3. INVENTORY
 
Inventory at December 31, 2005 and 2004 is summarized as follows:
 
     
 
December 31,
2005
 
  
 
December 31,
2004
 
               
Vitamins & nutritional supplements
  
 
 $
0
 
$
610,874
Raw Materials
      
0
    
190,562
       
 Total inventory
  
 
$
0
 
$
801,436   
 
 
Inventory is stated at the lower of cost (first-in, first-out) or market. Inventory costs include any material, labor and manufacturing overhead incurred by the Company in the production of inventory. Inventory is primarily vitamins and nutritional supplements purchased from outside manufacturers then shipped to the retailer for sale.
 
 
NOTE 4. PROPERTY & EQUIPMENT
 
Property and equipment is stated at cost. Additions, renovations, and improvements are capitalized. Maintenance and repairs, which do not extend asset lives, are expensed as incurred. Depreciation is provided on a straight-line basis over the estimated useful lives ranging from 27.5 years for commercial rental properties, 5 years for tenant improvements, and 5 - 7 years on furniture and equipment.
 

 
December 31,
  
December 31,
 
2005
  
2004
       
Equipment
$ 0
  
$ 120,495
Furniture
0
  
30,272
Leasehold Improvements
0
  
301,106
 
$ 0
  
$ 451,873
Less Accumulated Depreciation
0
  
(44,356)
Net Property and Equipment
$ 0
  
$ 407,517

Depreciation expense for the years ended December 31, 2005 and 2004 was $-0- and $5,471, respectively.

NOTE 5. BASIC & DILUTED EARNINGS (LOSS) PER COMMON SHARE
 
Basic earnings (loss) per common share has been calculated based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per common share has been calculated based on the weighted average number of shares of common and preferred stock outstanding during the period.
 

 
December 31,
December 31,
 
2005
2004
     
Net loss from operations
$ (220,090)
$ (101,834)
     
Basic loss per share
$ (0.04)
$ (0.06)
     
Weighed average number of common shares outstanding
5,611,516
1,572,992

The Company was required to compute primary loss per share amounts for 2004 and 2003 pursuant to SFAS 128. SFAS 128 also requires the computation and presentation of diluted earnings per share. However, since the Company and its subsidiaries had losses applicable to common stock, the assumed effects of the conversion of any preferred shares or stock options were anti-dilutive and, accordingly, dilutive per share amounts have not been presented in the accompanying consolidated statements of operations.

NOTE 6. INCOME TAXES
 
Income taxes are provided in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryfowards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Provision for income taxes for the year ended December 31, 2004 consists solely of the minimum California franchise tax due for the Company.

 
At December 31, 2005 the Company has significant operating and capital losses carryfoward. The tax benefits resulting for the purposes have been estimated as follows:

 
 
December 31, 2005
   
Net losses as of 12/31/05
5,905,020
   
Gross income tax benefit
2,007,707
Valuation allowance
(2,007,707)
Net income tax benefit
$ -0-

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. The net operating loss expires twenty years from the date the loss was incurred. In accordance with SFAS 109 paragraph 18 the Company has reduced its deferred tax benefit asset by a valuation allowance due to negative evidence that has caused the Company to feel it is more likely than not that some portion or all of the deferred tax asset will not be realized. No portion of the valuation allowance will be allocated to reduce goodwill or other noncurrent intangible asset of an acquired entity. There are no temporary differences or carryforward tax effects that would significantly affect the Company’s deferred tax asset.

NOTE 7. ACQUISITIONS

On January 1, 2004, the Alpha Nutra, Inc. and Let’s Talk Health, Inc. entered into an asset purchase agreement. This agreement was entered into as part of a Plan of Reorganization proposed by the Buyer to the United States Bankruptcy Court. In consideration of the transfer to Buyer (Alpha Nutra) of the Assets and the Intellectual Property, Buyer agrees to deliver to the Company or its designees 3,000,000 shares of the Buyer’s Common Stock. Subsequent to the purchase agreement the Company will retain control.
 
On May 1, 2004, the Company entered into an agreement were Alpha Nutra, Inc. would purchase the assets subject to liabilities of Avidia Nutrition, Inc. The acquisition was recorded as a purchase in accordance with Accounting Principles Board Opinions No. 16 (APB No. 16). Avidia Nutrition is in the business of manufacturing and selling of vitamins and nutritional supplements.

On June 30, 2005, the Company entered into an assets purchase agreement were Alpha would relinquish ownership in Let’s Talk Health, Inc. and Avidia Nutrition, Inc. in exchange for 10,465,333 of the Company’s common stock.
 
As of July 1, 2006, the operating results of the Company were solely of Alpha Nutra, Inc.

NOTE 8. STOCKHOLDERS’ EQUITY

The stockholders’ equity section of the Company contains the following classes of capital stock as of December 31, 2005:

·  
Common stock, $ 0.001 par value; 100,000,000 shares authorized; 932,502 shares issued and outstanding.
EX-31.1 2 ex311.htm EXHIBIT 31.1 Exhibit 31.1
Exhibit 31.1
 
CERTIFICATION OF ANNUAL REPORT
 
I, Mark L. Baum, certify that:
 
 
1. I have reviewed this Form 10-KSB of Alpha Nutra, Inc. (the “Company”);
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

September 20, 2006
/s/ Mark L. Baum     
By: Mark L. Baum
Its: President & Chief Financial Officer

EX-32.1 3 ex321.htm EXHIBIT 32.1 Exhibit 32.1
Exhibit 32.1
 
CERTIFICATION OF ANNUAL REPORT
 
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Alpha Nutra, Inc.(the “Company”), certifies that:
 
    1. The Annual Report on Form 10-KSB of the Company for the year ended December 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
 
    2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 

September 20, 2006


By:
/s/  Mark L. Baum
 Mark L. Baum
 President and Chief Executive Officer
   

This certification is made solely for the purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.
 


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