As filed with the Securities and Exchange Commission on _________, 2011
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UnderThe Securities Act of l933
DNA BRANDS, INC.
----------------------------------
(Exact name of issuer as specified in its charter)
Colorado 26-0394476
------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
506 N.W. 77th Street
Boca Raton, Florida 33487
---------------------------------------- -----------
(Address of Principal Executive Offices) (Zip Code)
Stock Bonus Plan
---------------------------------
(Full Title of Plan)
Darren Marks
506 N.W. 77th St.
Boca Raton, FL 33487
-------------------------------------
(Name and address of agent for service)
(954) 978-8401
---------------------------------------
(Telephone number, including area code, of agent for
service)
Copies of all communications, including all communications sent to agent for
service to:
William T. Hart,
Esq.Hart & Trinen
l624 Washington
Denver, Colorado 80203
(303) 839-0061
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered (1) per share (2) price fee
-------------------------------------------------------------------------------
Common Stock issuable
pursuant to Stock
Bonus Plan 2,000,000 $0.90 $1,800,000 $209
(1) This Registration Statement also covers such additional number of shares,
presently undeterminable, as may become issuable in the event of stock
dividends, stock splits, recapitalizations or other changes in the
Company's common stock.
(2) Varied, but not less than the fair market value on the date that the
options were or are granted. Pursuant to Rule 457(g), the proposed maximum
offering price per share and proposed maximum aggregate offering price are
based upon closing price of DNA's common stock on June 22, 2011.
DNA BRANDS, INC.
Cross Reference Sheet Required Pursuant to Rule 404
PART I
INFORMATION REQUIRED IN PROSPECTUS
(NOTE: Pursuant to instructions to Form S-8, the Prospectus described below is
not required to be filed with this Registration Statement.)
Item
No. Form S-8 Caption Caption in Prospectus
---- ---------------- ---------------------
1. Plan Information
(a) General Plan Information Stock Option and Bonus Plans
(b) Securities to be Offered Stock Option and Bonus Plans
(c) Employees who may Participate Stock Option and Bonus Plans
in the Plan
(d) Purchase of Securities Pursuant Stock Option and Bonus Plans
to the Plan and Payment for
Securities Offered
(e) Resale Restrictions Resale of Shares by Affiliates
(f) Tax Effects of Plan Stock Option and Bonus Plans
Participation
(g) Investment of Funds Not Applicable.
(h) Withdrawal from the Plan; Other Information Regarding
Assignment of Interest the Plans
(i) Forfeitures and Penalties Other Information Regarding
the Plans
(j) Charges and Deductions and Other Information Regarding
Liens Therefore the Plans
2. Registrant Information and Employee Available Information,
Plan Annual Information Documents Incorporated by
Reference
3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3 - Incorporation of Documents by Reference
The following documents filed with the Commission by DNA Brands, Inc.
("DNA") (Commission File No. 000-53086) are incorporated by reference into this
prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended October 31, 2009.
(2) Report on Form 10-Q for the three months ended January 31, 2010.
(3) Report on Form 10-Q for the three months ended April 30, 2010.
(4) Schedule 14f-1 filed on July 2, 2010.
(5) Report on Form 8-K filed on July 12, 2010.
(6) Report on Form 8-K filed July 15, 2010.
(7) Report on form 10-Q for the three months ended July 31, 2010.
(8) Report on Form 8-K filed September 13, 2010.
(9) Report on Form 8-K/A filed September 16, 2010.
(11) Report on Form 8-K filed on September 16, 2010.
(12) Report on Form 10-Q for the three months ended September 30, 2010.
(13) Report on Form 8-K/A filed October 18, 2010.
(14) Report on Form 8-K filed on November 16, 2010.
(15) Report on Form 8-K/A filed on December 8, 2010.
(16) Registration Statement on Form S-1 filed on December 15, 2010.
(17) Report on Form 8-K/A filed on January 11, 2011.
(18) Report on Form 10-Q/A filed on January 11, 2011.
(19) Annual Report on Form 10-K for the fiscal year ended December 31,
2010.
(20) Report on Form 10-Q filed on May 16, 2011.
All documents filed with the Commission by DNA pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus
and prior to the termination of this offering shall be deemed to be incorporated
by reference into this prospectus and to be a part of this prospectus from the
date of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference shall be deemed to be
modified or superseded for the purposes of this prospectus to the extent that a
statement contained in this prospectus or in any subsequently filed document
which also is or is deemed to be incorporated by reference in this prospectus
modifies or supersedes such statement. Such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.
4
Investors are entitled to rely upon information in this prospectus or
incorporated by reference at the time it is used by DNA to offer and sell
securities, even though that information may be superseded or modified by
information subsequently incorporated by reference into this prospectus.
DNA has filed with the Securities and Exchange Commission a Registration
Statement under the Securities Act of l933, as amended, with respect to the
securities offered by this prospectus. This prospectus does not contain all of
the information set forth in the Registration Statement. For further information
with respect to DNA and such securities, reference is made to the Registration
Statement and to the exhibits filed with the Registration Statement. Statements
contained in this prospectus as to the contents of any contract or other
documents are summaries which are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. The Registration Statement and related exhibits
may also be examined at the Commission's internet site.
Item 4 - Description of Securities
Not required.
Item 5 - Interests of Named Experts and Counsel
Not Applicable.
Item 6 - Indemnification of Directors and Officers
The Articles of Incorporation of DNA provide in substance that DNA shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative by reason of the fact that such
person is or was a director, officer, employee, fiduciary or agent of DNA, or is
or was serving at the request of DNA as a director, officer, employee, fiduciary
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person to
the full extent permitted by the laws of the state of Colorado; and that
expenses incurred in defending any such civil or criminal action, suit or
proceeding may be paid by DNA in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of such director,
officer or employee to repay such amount to DNA unless it shall ultimately be
determined that such person is entitled to be indemnified by DNA as authorized
in the Articles of Incorporation.
Item 7 - Exemption for Registration Claimed
On May 31, 2011 the Company issued 200,000 shares to Darren Marks and
200,000 shares to Mel Leiner pursuant to DNA's Stock Bonus Plan. DNA relied upon
the exemption provided by Section 4(2) of the Securities Act of 1933 in
connection with the issuance of the shares.
5
4 - Instruments Defining Rights of
Security Holders
(a) - Common Stock Incorporated by reference to
Exhibit 3.1 of the Company's
Registration Statement on
Form SB-2, File No. 333-148773.
(b) - Stock Bonus Plan
5 - Opinion Regarding Legality
l5 - Letter Regarding Unaudited Interim
Financial Information None
23 - Consent of Independent Public
Accountants and Attorneys
24 - Power of Attorney Included in the signature page of
this Registration Statement
99 - Re-Offer Prospectus
6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes
and appoints Darren Marks and Mel Leiner, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all other documents in connection therewith, with the Securities and
Exchange Commission granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitutes or substitute may lawfully do or cause to be
done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Boca Raton, Florida, on June 28, 2011.
DNA BRANDS, INC.
By: /s/ Darren Marks
-------------------------------------
Darren Marks, President
Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Darren Marks
------------------------- Principal Executive June 28, 2011
Darren Marks Officer and a Director
/s/ Melvin Leiner
------------------------- Principal Financial and June 28, 2011
Melvin Leiner Accounting Officer
and a Director
7
PLAN PROSPECTUS DNA BRANDS, INC.
506 N.W. 77th St.
Boca Raton, FL 33487
(954) 551-1813
COMMON STOCK
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus relates to shares of the common stock of the Company (the
"Company") issuable pursuant to certain employee incentive plans adopted by the
Company. The employee incentive plans provide for the grant, to selected
employees of the Company and other persons, of either stock bonuses or options
to purchase shares of the Company's Common Stock. The employee incentive plans
benefit the Company by giving selected employees and other persons having a
business relationship with the Company a greater personal interest in the
success of the Company.
Share of common stock reserved under the Company's Incentive Stock Option
Plan are offered to those employees of the Company who hold options (or may in
the future hold options) to purchase such shares granted by the Company pursuant
to the Incentive Stock Option Plan.
Shares of common stock reserved under the Company's Non-Qualified Stock
Option Plan are offered to those persons who hold options (or may in the future
hold options) to purchase such shares granted by the Company pursuant to its
Non-Qualified Stock Option Plan.
Shares of common stock reserved under the Stock Bonus Plan are offered to
those persons granted shares of common stock pursuant to the Company's Stock
Bonus Plan.
This document constitutes part of a Prospectus covering securities that
have been registered under the Securities Act of 1933.
The date of this Prospectus is June __, 2011.
The Company's Incentive Stock Option Plan, Non-Qualified Stock Option Plan
and Stock Bonus Plan are sometimes collectively referred to in this Prospectus
as "the Plans". The terms and conditions of any stock bonus and the terms and
conditions of any options, including the price of the shares of Common Stock
issuable on the exercise of options, are governed by the provisions of the
respective Plans and the stock bonus or stock option agreements between the
Company and the Plan participants.
Offers or resales of shares of Common Stock acquired under the Plan by
"affiliates" of the Company are subject to certain restrictions under the
Securities Act of l933. See "RESALE OF SHARES BY AFFILIATES".
No person has been authorized to give any information, or to make any
representations, other than those contained in this Prospectus, in connection
with the shares offered by this Prospectus, and if given or made, such
information or representations must not be relied upon. This Prospectus does not
constitute an offering in any state or jurisdiction to any person to whom it is
unlawful to make such offer in such state or jurisdiction.
The Company's Common Stock is traded on the OTC Bulletin Board under the
symbol "DNAX".
With respect to the Company's Plans, the shares to which this prospectus
relates will be sold from time to time by the Company when and if options
granted pursuant to the Plans are exercised. In the case of shares issued by the
Company pursuant to the Stock Bonus Plan, the shares will be deemed to be sold
when the shares have been granted by the Company
2
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION.................................................4
DOCUMENTS INCORPORATED BY REFERENCE...................................4
GENERAL INFORMATION...................................................4
INCENTIVE STOCK OPTION PLAN...........................................4
NON-QUALIFIED STOCK OPTION PLAN.......................................8
STOCK BONUS PLAN......................................................10
OTHER INFORMATION REGARDING THE PLANS.................................10
ADMINISTRATION OF THE PLANS...........................................11
RESALE OF SHARES BY AFFILIATES........................................12
AMENDMENT, SUSPENSION OR TERMINATION OF THE PLANS.....................12
DESCRIPTION OF COMMON STOCK...........................................12
EXHIBITS:
Amended 2011 Stock Bonus Plan referred to in this Prospectus.
3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of l934 and in accordance therewith files reports, proxy
statements, and other information with the Securities and Exchange Commission.
Such reports, proxy statements, and other information concerning the Company can
be inspected at the Commission's office at 100 F Street, N.E., Washington, D.C.
20549. Copies of such material can be obtained from the Public Reference Section
of the Commission, Washington, D.C. 20549 at prescribed rates. Certain
information concerning the Company is also available at the Internet Web Site
maintained by the Securities and Exchange Commission at www.sec.gov.
All documents incorporated by reference, as well as other information
concerning the Plans, other than exhibits to such reports and documents, are
available, free of charge to holders of shares or options granted pursuant to
the Plans, upon written or oral request directed to the Company at 506 N.W. 77th
Street, Boca Raton, Florida 33487, telephone: (954) 551-1813.
This Prospectus does not contain all information set forth in the
Registration Statement, of which this Prospectus is a part, which the Company
has filed with the Commission under the Securities Act of l933 and to which
reference is hereby made. Each statement contained in this Prospectus is
qualified in its entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated by reference in this Registration
Statement:
(1) Annual Report on Form 10-K for the fiscal year ended October 31, 2009.
(2) Report on Form 10-Q for the three months ended January 31, 2010.
(3) Report on Form 10-Q for the three months ended April 30, 2010.
(4) Schedule 14f-1 filed on July 2, 2010.
(5) Report on Form 8-K filed on July 12, 2010.
(6) Report on Form 8-K filed July 15, 2010.
(7) Report on form 10-Q for the three months ended July 31, 2010.
(8) Report on Form 8-K filed September 13, 2010.
(9) Report on Form 8-K/A filed September 16, 2010.
(11) Report on Form 8-K filed on September 16, 2010.
(12) Report on Form 10-Q for the three months ended September 30, 2010.
(13) Report on Form 8-K/A filed October 18, 2010.
(14) Report on Form 8-K filed on November 16, 2010.
(15) Report on Form 8-K/A filed on December 8, 2010.
4
(16) Registration Statement on Form S-1 filed on December 15, 2010.
(17) Report on Form 8-K/A filed on January 11, 2011.
(18) Report on Form 10-Q/A filed on January 11, 2011.
(19) Annual Report on Form 10-K for the fiscal year ended December 31,
2010.
(20) Report on Form 10-Q filed on May 16, 2011.
All reports and documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior
to the filing of a post-effective amendment to this Registration Statement of
which this Prospectus is a part which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this Prospectus and to be a
part thereof from the date of filing of such reports or documents.
The Company does not intend to update this Prospectus in the future unless
and until there is a material change in the information contained herein.
5
GENERAL INFORMATION
The Company has an Incentive Stock Option Plan, a Non-Qualified Stock
Option Plan and a Stock Bonus Plan. In some cases the plans described above are
collectively referred to as the "Plans". The terms and conditions of any stock
bonus and the terms and conditions of any options, including the price of the
shares of Common Stock issuable on the exercise of options, are governed by the
provisions of the respective Plans and the stock bonus or stock option
agreements between the Company and the Plan participants.
A summary of the Company's Plans follows.
Incentive Stock Option Plan. The Company has an Incentive Stock Option Plan
which authorizes the issuance of its common stock to persons that exercise
options granted pursuant to the plan. Only Company employees may be granted
options pursuant to the Incentive Stock Option Plan.
Non-Qualified Stock Option Plan. The Company's Non-Qualified Stock Option
Plan authorizes the issuance of shares of the Company's Common Stock to persons
that exercise options granted pursuant to the Plan. The Company's employees,
directors, officers, consultants and advisors are eligible to be granted options
pursuant to the Plan, provided however that bona fide services must be rendered
by such consultants or advisors and such services must not be in connection with
the offer or sale of securities in a capital-raising transaction. The option
exercise price is determined by the Board of Directors.
Stock Bonus Plan. The Company has a Stock Bonus Plan which allows for the
issuance of shares of Common Stock. Such shares may consist, in whole or in
part, of authorized but unissued shares, or treasury shares. Under the Stock
Bonus Plan, the Company's employees, directors, officers, consultants and
advisors are eligible to receive a grant of the Company's shares, provided
however that bona fide services must be rendered by consultants or advisors and
such services must not be in connection with the offer or sale of securities in
a capital-raising transaction.
Summary.
The following sets forth certain information as of June 20, 2011 concerning
the stock options and stock bonuses granted by the Company pursuant to the
Plans. Each option represents the right to purchase one share of the Company's
common stock.
Total Remaining
Shares Shares Options/
Reserved Options Options Issued As Shares
Name of Plan Under Plans Granted Exercised Stock Bonus Under Plans
------------ ----------- ------- --------- ----------- -----------
Incentive Stock 500,000 -- -- N/A 500,000
Option Plan
Non-Qualified Stock 1,000,000 -- -- N/A 100,000
Option Plan
Stock Bonus Plan 2,000,000 N/A N/A 1,231,133 768,867
6
As of June 20, 2011 the Company had not granted any options pursuant to the
Incentive Stock Option Plan or the Non-Qualified Stock Option Plan.
INCENTIVE STOCK OPTION PLAN
Securities to be Offered and Persons Who May Participate in the Plan
All employees of the Company are eligible to be granted options pursuant to
the Plan as may be determined by the Company's Board of Directors which
administers the Plan.
Options granted pursuant to the Plan terminate at such time as may be
specified when the option is granted.
The total fair market value of the shares of Common Stock (determined at
the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.
In the discretion of the Board of Directors, options granted pursuant to
the Plan may include installment exercise terms for any option such that the
option becomes fully exercisable in a series of cumulating portions. The Board
of Directors may also accelerate the date upon which any option (or any part of
any option) is first exercisable. However, no option, or any portion thereof may
be exercisable until one year following the date of grant. In no event shall an
option granted to an employee then owning more than l0% of the Common Stock of
the Company be exercisable by its terms after the expiration of five years from
the date of grant, nor shall any other option granted pursuant to the Plan be
exercisable by its terms after the expiration of ten years from the date of
grant.
Purchase of Securities Pursuant to the Plan
The purchase price per share of common stock purchasable under an option is
determined by the Board of Directors but cannot be less than the fair market
value of the Common Stock on the date of the grant of the option (or 110% of the
fair market value in the case of a person owning more than 10% of the Company's
outstanding shares). An option may be exercised, in whole or in part, at any
time, or in part, from time to time, during the option period, by giving written
notice of exercise to the Board of Directors at the Company's offices specifying
the number of shares to be purchased, such notice to be accompanied by payment
in full of the purchase price either by a payment of cash, bank draft or money
order payable to the Company. At the discretion of the Board of Directors
payment of the purchase price for shares of Common Stock underlying options may
be paid through the delivery of shares of the Company's Common Stock having an
aggregate fair market value equal to the option price, provided such shares have
been owned by the option holder for at least one year prior to such exercise. A
combination of cash and shares of Common Stock may also be permitted at the
discretion of the Board of Directors. No shares shall be issued until full
payment has been made. An optionee shall have the rights of a stockholder only
with respect to shares of stock for which certificates have been issued. Under
no circumstances may an option be exercised after the expiration of the option.
7
Tax Aspects of Incentive Stock Options Granted Under the Plan
Options granted under the Plan will be incentive stock options within the
meaning of Section 422 of the Internal Revenue Code (the "Code") and will be
subject to the provisions of the Code. Generally, if Common Stock of the Company
is issued to an employee pursuant to an option granted as described below, and
if no disqualifying disposition of such shares is made by such employee within
one year after the transfer of such shares to him or within two years after the
date of grant: (a) no income will be realized by the employee at the time of the
grant of the option; (b) no income will be realized by the employee at the date
of exercise; (c) when the employee sells such shares, any amount realized in
excess of the option price will be taxed as a long-term capital gain and any
loss sustained will be a long-term capital loss; and (d) no deduction will be
allowed to the Company for federal income tax purposes. Generally, if any
disqualifying disposition of such shares is made by an employee within one year
after the transfer of such shares to him, or within two years after the date of
grant, the difference between the amount paid for the shares upon exercise of
the option and the fair market value of the shares on the date the option was
exercised will be taxed as ordinary income in the year the disqualifying
disposition occurs and the Company will be allowed a deduction for such amount.
However, if such disqualifying disposition is a sale or exchange for which a
loss would have been recognized (if sustained), the amount taxed to the employee
as ordinary income (and deductible by the Company) will be limited to the excess
of the amount realized upon such sale or exchange over the amount paid for the
shares where such excess is less than the amount referred to in the preceding
sentence. This limitation does not apply to a disposition of the type as to
which losses (if sustained) are not recognized as deductible losses for income
tax purposes, e.g., a gift, a sale to certain related persons or a so-called
"wash" sale (a sale within 30 days before or after the acquisition of the
Company's shares or the receipt of an option or the entering into a contract to
buy the Company's shares). If the shares are sold in a disqualifying disposition
during such one-year period and the amount realized is in excess of the fair
market value of the shares at the time of exercise, such excess will be taxed as
a long-term or short-term capital gain depending upon the holding period.
An employee who exercises an incentive stock option may be subject to the
alternative minimum tax since the difference between the option price and the
fair market value of the stock on the date of exercise is an item of tax
preference. However, no item of preference
NON-QUALIFIED STOCK OPTION PLAN
Securities to be Offered and Persons Who May Participate in the Plan
The Company's employees, directors and officers, and consultants or
advisors to the Company are eligible to be granted options pursuant to the
Non-Qualified Stock Option Plan as may be determined by the Company's Board of
Directors that administers the Plan, provided however that bona fide services
must be rendered by such consultants or advisors and such services must not be
in connection with the offer or sale of securities in a capital-raising
transaction.
Options granted pursuant to the Plan not previously exercised will
terminate at such other time as may be specified when the option is granted.
8
In the discretion of the Board of Directors options granted pursuant to the
Plan may include installment exercise terms for any option such that the option
becomes fully exercisable in a series of cumulating portions. The Board of
Directors may also accelerate the date upon which any option (or any part of any
option) is first exercisable. In no event shall an option be exercisable by its
terms after the expiration of ten years from the date of grant.
Purchase of Securities Pursuant to the Plan
The purchase price per share of common stock purchasable under an option is
determined by the Company's Board of Directors. An option may be exercised, in
whole or in part, at any time, or in part, from time to time, during the option
period, by giving written notice of exercise to the Board of Directors at the
Company specifying the number of shares to be purchased, such notice to be
accompanied by payment in full of the purchase price either by a payment of
cash, bank draft or money order payable to the Company At the discretion of the
Board of Directors payment of the purchase price for shares of Common Stock
underlying options may be paid through the delivery of shares of the Company's
Common Stock having an aggregate fair market value equal to the option price,
provided such shares have been owned by the option holder for at least one year
prior to such exercise. A combination of cash and shares of Common Stock may
also be used at the discretion of the Board of Directors. No shares shall be
issued until full payment has been made. An optionee shall have the rights of a
stockholder only with respect to shares of stock for which certificates have
been issued. Under no circumstances may an option be exercised after the
expiration of the option.
Tax Aspects of Options Granted Under the Plan
The difference between the option price and the market value of the shares
on the date the option is exercised is taxable as ordinary income to an Optionee
at the time of exercise and to the extent such difference does not constitute
unreasonable compensation is deductible by the Company at that time. Gain or
loss on any subsequent sale of shares received through the exercise of an option
will be treated as capital gain or loss.
Since the amount of income realized by an Optionee on the exercise of an
option under the Plans represents compensation for services provided to the
Company, the Company may be required to withhold income taxes from the
Optionee's income even though the compensation is not paid in cash. To withhold
the appropriate tax on the transfer of the shares, the Company will (i) reduce
the number of shares issued or distributed to reflect the necessary withholding,
(ii) withhold the appropriate tax from other compensation due to the Optionee,
or (iii) condition the transfer of any shares to the Optionee on the payment to
the Company of an amount equal to the taxes required to be withheld.
STOCK BONUS PLAN
Securities to be Offered and Persons Who May Participate in the Plan
Under the Stock Bonus Plan, the Company's employees, directors and
officers, and consultants or advisors to the Company will be eligible to receive
a grant of the Company's shares, provided however that bona fide services must
be rendered by such consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
9
transaction. The aggregate number of shares which may be granted may not exceed
the amount available in the Bonus Share Reserve. The grant of the Company's
shares rests entirely with the Company's Board of Directors administering the
Plan. It is also left to the Board of Directors to decide the type of vesting
and transfer restrictions which will be placed on the shares.
Tax Aspects of Shares Granted Pursuant to the Plan
Any shares of stock transferred to any person pursuant to the Stock Bonus
Plan will be subject to the provisions of Section 83 of the Internal Revenue
Code. Consequently, if (and so long as) the shares received remain substantially
nonvested, the recipient of the shares will not have to include the value of
these shares in gross income. The shares will remain substantially nonvested so
long as they are subject to a substantial risk of forfeiture and are
nontransferable. A substantial risk of forfeiture exists if a person's rights in
the shares are conditioned upon the future performance of substantial services.
Nontransferability will exist if a person is restricted from selling, assigning
or pledging these shares, and, if transfer is permitted, a transferee is
required to take the shares subject to the substantial risk of forfeiture.
However, in the year such shares become either transferable or not subject to a
substantial risk of forfeiture, the recipient of the shares will be required to
include in gross income for that taxable year the excess of the share's fair
market value at the time they became vested over the amount (if any) paid for
such shares. This amount will be taxable as ordinary compensation income.
There is available an election through which a person can choose to
recognize as ordinary income in the year of transfer the excess of the share's
fair market value at the time of transfer over the amount (if any) the person
paid for such shares. By making this election any future appreciation
(depreciation) in value will be treated as appreciation (depreciation)
attributable to a capital asset rather than as compensation income. An election
to be valid must be made within thirty (30) days of the date on which the shares
are issued by the Company
The Company does not recognize income when granting or transferring shares
to the recipient of the shares pursuant to the Plans. Furthermore, Section 83
permits the Company to take an ordinary business deduction equal to the amount
includable by the recipient of the shares in the year the recipient recognizes
the value of the shares as income.
OTHER INFORMATION REGARDING THE PLANS
All shares to be issued pursuant to the Plans will, prior to the time of
issuance, constitute authorized but unissued shares or treasury shares.
The terms and conditions upon which a person will be permitted to assign or
hypothecate options or shares received pursuant to any of the Plans will be
determined by the Company's Board of Directors that administers the Plans. In
general, however, options are non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies any vesting
requirements imposed by the Board of Directors when the shares were issued.
10
Any shares issued pursuant to the Stock Bonus Plan and any options granted
pursuant to the stock option Plans will be forfeited if the "vesting" schedule
established by the Board of Directors at the time of the grant is not met. For
this purpose, vesting means the period during which the employee must remain an
employee of the Company or the period of time a non-employee must provide
services to the Company.
Each Option shall be exercisable from time to time during a period (or
periods) determined by the Company's Board of Directors and ending upon the
expiration or termination of the Option; provided, however, the Board of
Directors may, limit the number of shares purchaseable in any period or periods
of time during which the Option is exercisable.
Employment by the Company does not include a right to receive bonus shares
or options pursuant to the Plans. Only the Board of Directors has the authority
to determine which persons shall be issued bonus shares or granted options and,
subject to the limitations described elsewhere in this Prospectus and in the
Plans, the number of shares of Common Stock issuable as bonus shares or upon the
exercise of any options.
The Plans are not qualified under Section 401(a) of the Internal Revenue
Code, nor are they subject to any provisions of the Employee Retirement Income
Security Act of 1974.
The description of the federal income tax consequences as set forth in this
Prospectus is intended merely as an aid for such persons eligible to participate
in the Plans, and the Company assumes no responsibility in connection with the
income tax liability of any person receiving shares or options pursuant to the
Plans. Persons receiving shares or options pursuant to the Plans are urged to
obtain competent professional advice regarding the applicability of federal,
state and local tax laws.
As of the date of this Prospectus, and except with respect to shares or
options which have not yet vested, no terms of any Plan or any contract in
connection therewith creates in any person a lien on any of the securities
issuable by the Company pursuant to the Plans.
ADMINISTRATION OF THE PLANS
The Plans are administered by a Company's Board of Directors. The Company's
Directors serve for a one-year tenure and until their successors are elected.
The Company's Directors are elected each year at the annual shareholder's
meeting. A Director may be removed at any time by the vote of a majority of the
Company's shareholders represented in person or by proxy at any special meeting
called for the purpose of removing one or more directors. Any vacancies which
may occur on the Board of Directors will be filled by the majority vote of the
remaining directors. The Board of Directors is vested with the authority to
interpret the provisions of the Plans and supervise the administration of the
Plans. In addition, the Board of Directors is empowered to select eligible
employees of the Company to whom shares or options are to be granted, to
determine the number of shares subject to each grant of a stock bonus or an
option and to determine when, and upon what conditions, shares or options
granted under the Plans will vest or otherwise be subject to forfeiture and
cancellation.
11
RESALE OF SHARES BY AFFILIATES
Shares of common stock acquired pursuant to the Plans may be resold freely,
except that any person deemed to be an "affiliate" of the Company, within the
meaning of the Securities Act of l933 (the "Act") and the rules and regulations
promulgated thereunder, may not sell shares acquired by virtue of the Plans
unless such shares are sold by means of a special Prospectus, are otherwise
registered by the Company under the Securities Act for resale by such person or
an exemption from registration under the Act is available. Rule l44, promulgated
under the Act, which contains limitations on the manner of sale and the amount
of shares that may be sold, provides an exemption from registration under the
Act. An employee who is not an officer or director of the Company generally
would not be deemed an "affiliate" of the Company.
In addition, the acquisition of shares or options by officers and directors
may be considered a "purchase" and the sale thereof will generally be considered
a "sale" for purposes of Section l6(b) of the Securities Exchange Act of l934.
AMENDMENT, SUSPENSION OR TERMINATION OF PLANS
The Board of Directors of the Company may at any time, and from time to
time, amend, terminate, or suspend one or more of the Plans in any manner they
deem appropriate, provided that such amendment, termination or suspension shall
not adversely affect rights or obligations with respect to shares or options
previously granted.
DESCRIPTION OF COMMON STOCK
The common stock issued as a stock bonus and the common stock issuable upon
the exercise of any options granted pursuant to the Plans entitles holders to
receive such dividends, if any, as the Board of Directors declares from time to
time; to cast one vote per share on all matters to be voted upon by
stockholders; and to share ratably in all assets remaining after the payment of
liabilities in the event of liquidation, dissolution or winding up of the
Company. The shares carry no preemptive rights. All shares offered under the
Plans will, upon issuance by the Company (and against receipt of the purchase
price in the case of options), be fully paid and non-assessable.
12
FORM S-8
DNA BRANDS, INC.
506 N.W. 77th St.
Boca Raton, FL 33487
EXHIBITS