UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1 TO
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BLUE SPA INCORPORATED
(Exact name of registrant as specified in its charter)
| Nevada | 2844 | 00-0000000 | ||
| (State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (IRS Employer Identification Number) |
26/F Building A, Times Plaza
2 Zongfu Road
Chengdu 610016
China
Telephone: 86-28-66847826
Facsimile: 86 28 66067199
(Address, including zip code, and telephone number,
including area code, of Registrant’s principal executive offices)
Agent for Service:
Law Yau Yau
Blue Spa Incorporated
26/F Building A, Times Plaza
2 Zongfu Road
Chengdu 610016
China
Telephone: 011-86-28-668-47826
Facsimile: 011-86 28 660-67199
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
| If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: | [X] | |
| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | [ ] | |
| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | [X] | |
| If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | [ ] | |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company in Rule 12b-2 of the Exchange Act. |
| Larger accelerated filer | [ ] | Accelerated filer | [ ] |
| Non-accelerated filer | [ ] (Do not check if a smaller reporting company) | Smaller reporting company | [X] |
EXPLANATORY NOTE
This post-effective amendment #1 amends a registration statement on Form S-1/A (No. 333-169331) originally relating to an aggregate 3,000,000 shares of class common stock with no par value per share as listed below. That registration statement was declared effective by the Securities and Exchange Commission on January 10, 2012. The purpose of this post-effective amendment #1 is to update the Form S-1/A #3 filed on December 15, 2011 and the information set forth in the prospectus in that registration statement.
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities To Be Registered | Amount to be registered | Proposed Maximum Offering Price per share[1] | Proposed Maximum | Amount of Registration Fee | ||||||||||||
| Shares of common stock ($0.0001 par value), to be registered by selling shareholders | 3,000,000 shares | $ | 0.10 | $ | 300,000 | $ | 21.39 | |||||||||
| Total | - | - | $ | 300,000 | $ | 21.39 | ||||||||||
[1]Estimated in accordance with Rule 457(c) solely for the purpose of calculating the registration fee based on a bona fide estimate of the maximum offering price.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. The selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to Completion
Dated *, 2013
Prospectus
BLUE SPA INCORPORATED
3,000,000 shares of common stock
The selling shareholders of Blue Spa Incorporated (“Blue Spa”) named in this prospectus are offering to sell up to 3 million shares of Blue Spa’s common stock held by them. The selling shareholders will be deemed underwriters and will be required to sell Blue Spa’s shares at a fixed price of $0.10 per share for the duration of the offering. The selling stockholders will offer their shares for sale for a period not to exceed 180 days following the effective date of this registration statement.
Blue Spa will not receive any proceeds from the sale of the shares of common stock being offered by the selling shareholders. However, Blue Spa will pay for the expenses of this offering and the selling stockholders’ offering, except for any selling shareholder’s legal or accounting costs or commissions.
Blue Spa is a startup company that intends to be engaged in the development, production, wholesale distribution, and retail sales of quality natural skin and body care products, fitness apparel, and related accessories. Blue Spa is also a “shell” company as defined by the SEC as a result of only having nominal operations and nominal assets. Blue Spa has adopted for its business operations a multi-channel concept, and intends to develop its business operations into a wholesale distribution network with a retail strategy, e-commerce, and a consumer catalogue. As of the effective date of this prospectus Blue Spa has not conducted any business operations nor generated any revenues.
Blue Spa is a “shell” company as defined by the Securities and Exchange Commission as a result of only having nominal operations and nominal assets.
Blue Spa’s shares of common stock are not quoted on any national securities exchange or any quotation system, like the Over-the-Counter Bulletin Board (OTCBB).
This investment involves a high degree of risk. See “Risk Factors” beginning on page 6 for a discussion of certain risk factors and uncertainties you should carefully consider before making a decision to purchase any shares of Blue Spa’s common stock.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
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Table of Contents
You should rely only on the information contained in this prospectus. Blue Spa has not authorized anyone to provide you with information different from that contained in this prospectus. The selling shareholders are offering to sell shares of Blue Spa’s common stock and seeking offers to buy shares of Blue Spa’s common stock only in jurisdictions where such offers and sales are permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Blue Spa’s business, financial condition, results of operations and prospects may have changed since that date.
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The following summary is a shortened version of more detailed information, exhibits and financial statements appearing elsewhere in this prospectus. Prospective investors are urged to read this prospectus in its entirety.
Blue Spa is a startup company that intends to be engaged in the development, production, wholesale distribution, and retail sales of quality natural skin and body care products, fitness apparel, and related accessories. Blue Spa is also a “shell” company as defined by the SEC as a result of only having nominal operations and nominal assets. Blue Spa’s objective is to develop a multi-channel concept that will combine a wholesale distribution network with a retail strategy. To date, Blue Spa has not conducted any business operations nor generated any revenues.
Blue Spa plans to distribute and sell quality natural skin and body care products, fitness apparel, and related accessories. Blue Spa intends to (1) identifyand brand quality natural skin and body care products for wholesale distribution and retail sales and (2) develop a Blue Spa line of yoga and fitness apparel.
To date Blue Spa has raised $17,000 via offerings completed between September 2009 and January 2010. The following table summarizes the date of offering, the price per share paid, the number of shares sold, and the amount raised for these two offerings.
| Closing Date of Offering | Price Per Share Paid | Number of Shares Sold | Amount Raised | |||||||||
| September 14, 2009 | $ | 0.0005 | 4,000,000 | $ | 2,000 | |||||||
| January 29, 2010 | $ | 0.005 | 3,000,000 | $ | 15,000 | |||||||
Blue Spa has no revenues, has achieved losses since inception, has no operations, has been issued a going concern opinion by its auditor and relies upon the sale of its shares of common stock to fund its operations.
Name, Address, and Telephone Number of Registrant
Blue Spa Incorporated
26/F Building A, Times Plaza
2 Zongfu Road
Chengdu 610016, China
Tel: 86-28-66847826
The Offering
The following is a brief summary of this offering.
| Securities being offered by selling shareholders: | 3,000,000 shares of common stock (These shares are being registered by Blue Spa for resale on behalf of existing shareholders.) | |
| Offering price: | $0.10 | |
| Offering period: | The shares are being offered for a period not to exceed 180 days following the effective date of this registration statement. | |
| Net proceeds to Blue Spa: | Nil, as Blue Spa will not be receiving any proceeds from the sale of shares by the selling shareholders. | |
| Use of proceeds: | Not applicable. | |
| Number of shares outstanding before the offering: | 7,000,000 | |
| Number of shares outstanding after the offering: | 7,000,000 |
Summary Financial Information
The tables and information below are derived from Blue Spa’s unaudited interim financial statements for the nine month periods-ended February 28, 2013 and February 28, 2012. Blue Spa had a working capital deficit of $60,748 as at February 28, 2013.
| Financial Summary | February 28, 2013 (unaudited) $ | May 31, 2012 (audited) $ | ||||||
| Cash | 0 | 2,285 | ||||||
| Total Assets | 0 | 2,285 | ||||||
| Total Liabilities | 60,748 | 52,337 | ||||||
| Total Stockholder’s Deficit | (60,748 | ) | (50,052 | ) | ||||
| Statement of Operations | For the Nine Months Ended February 28, 2013 $ | For the Nine Months Ended February 28, 2012 $ | Accumulated From September 4, 2009 (Date of Inception) to February 28, 2013 $ | |||||||||
| Revenue | - | - | ||||||||||
| Net Loss For the Period | 7,153 | 3,290 | 77,748 | |||||||||
| Net Loss per Share | (0.001 | ) | (0.000 | ) | ||||||||
The book value of Blue Spa’s outstanding common stock was $(0.000) per share as at February 28, 2013
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An investment in the common stock of Blue Spa involves a number of very significant risks. You should carefully consider the following known material risks and uncertainties in addition to other information in this prospectus in evaluating Blue Spa and its business before purchasing shares of Blue Spa’s common stock. Blue Spa’s business, operating results and financial condition could be seriously harmed due to any of the following known material risks. You could lose all or part of your investment due to any of these risks.
Risks associated with Blue Spa’s business:
| 1. | Because Blue Spa has only recently commenced business operations, Blue Spa faces a high risk of business failure and this could result in a total loss of your investment. |
Blue Spa has recently begun the initial phases of its plan of operations, and thus has no way to evaluate the likelihood whether Blue Spa will be able to operate its business successfully. Blue Spa was incorporated on September 4, 2009 and to date has been involved primarily in organizational activities, obtaining financing and market research. Blue Spa has not earned any revenues and Blue Spa has never achieved profitability as of the date of this prospectus. Potential investors should be aware of the difficulties normally encountered by new wholesale and retail companies and the high rate of failure of such enterprises. The likelihood of success must be considered in the light of problems, expenses, difficulties, complications and delays encountered in connection with the start-up of a wholesale / retail business that Blue Spa plans to undertake. These potential problems include, but are not limited to, unanticipated problems relating to start-up and additional costs and expenses that may exceed current estimates. Blue Spa has no history upon which to base any assumption as to the likelihood that its business will prove successful, and Blue Spa can provide no assurance to investors that Blue Spa will generate any operating revenues or ever achieve profitable operations. If Blue Spa is unsuccessful in addressing these risks its business will likely fail and you will lose your entire investment in this offering.
| 2. | Because Blue Spa has only recently commenced business operations, Blue Spa expects to incur operating losses for the foreseeable future. |
Blue Spa has never earned any revenue and Blue Spa has never been profitable. Prior to completing its first three phases of its plan of operations, which are the development of its website, (2) the identification and development of its products, and (3) the development of its wholesale distribution network, Blue Spa may incur increased operating expenses without realizing any revenues from its business operation. This could cause Blue Spa to fail and you will lose your entire investment in this offering.
| 3. | Blue Spa does not have sufficient funds to complete each phase of its proposed plan of operation and as a result may have to suspend operations. |
Each of the phases of Blue Spa’s plan of operation is limited and restricted by the amount of working capital that Blue Spa has and is able to raise from financings and generate from business operations. Blue Spa currently does not have sufficient funds to complete each phase of its proposed plan of operation and management expects that Blue Spa will not satisfy its cash requirements for the next 12 months. As a result, Blue Spa may have to suspend or cease its operations on one or more phases of its proposed plan of operation. As of February 28, 2013, Blue Spa had $nil in cash.
Until Blue Spa is able to generate any consistent and significant revenue it will be required to raise the required funds by way of equity or debt financing. Blue Spa intends to finance its plan of operation with private loans and equity financing initially and then with revenues generated from its business operations. If Blue Spa cannot raise the funds necessary to proceed it may have to suspend operations until it has sufficient capital.
| 4. | Blue Spa’s auditors have expressed substantial doubt about Blue Spa’s ability to continue as a going concern. |
The accompanying financial statements have been prepared assuming that Blue Spa will continue as a going concern. As discussed in Note 3 to the financial statements, Blue Spa was recently incorporated on September 4, 2009, and does not have a history of earnings, and as a result, Blue Spa’s auditor has expressed substantial doubt about the ability of Blue Spa to continue as a going concern. Continued operations are dependent on Blue Spa’s ability to complete equity or debt financings or generate profitable operations. Such financings may not be available or may not be available on reasonable terms. Blue Spa’s financial statements do not include any adjustments that may result from the outcome of this uncertainty.
| 5. | Because Blue Spa holds a significant portion of its cash reserves in United States dollars, Blue Spa may experience weakened purchasing power in Chinese yen terms. |
Blue Spa holds a significant portion of its cash reserves in United States dollars. Due to foreign exchange rate fluctuations, the value of these United States dollar reserves can result in both translation gains or losses in Chinese Yuan terms. If there was to be a significant decline in the United States dollar versus the Chinese Yen, Blue Spa’s US dollar purchasing power in Chinese Yen would also significantly decline. Blue Spa has not entered into derivative instruments to offset the impact of foreign exchange fluctuations.
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| 6. | As Blue Spa will outsource the manufacturing of its products, and Blue Spa will be dependent upon those manufacturers to manufacture Blue Spa’s products in a timely and cost-efficient manner while maintaining a minimum level of quality. |
Because Blue Spa will rely on independent manufacturers to produce most of its products, Blue Spa’s sales and profitability may be adversely affected if those independent manufacturers fail to meet pricing, product quality and timeliness requirements or if Blue Spa is unable to obtain some components used in its products from limited supply sources. To date, Blue Spa has not entered into any agreements with any independent manufactures or third-party suppliers.
Blue Spa is looking for opportunities to provide essential business services in a more cost-effective manner. In some cases, this will require the outsourcing of functions or parts of functions that can be performed more effectively by external service providers. These include certain manufacturing and distribution functions. While management will conduct the appropriate due diligence before entering into any agreement with any outsourcing entities, the failure of one or more entities to provide the expected services, provide them on a timely basis, or to provide them at the prices management expects or requires may have a material adverse effect on Blue Spa’s results of operations or financial condition.
| 7. | Third party distributors will deliver Blue Spa’s products, and the loss of these distributors or a disruption or interruption in the distribution system may adversely affect Blue Spa’s business. |
Blue Spa will rely on distribution facilities and distribution centers operated by third-party vendors for substantially all of its product distribution. The loss of multiple or key distributors or a significant disruption or interruption in the supply chain could have a material adverse effect on the sale of Blue Spa’s products. Furthermore, increases in the costs of products may adversely affect Blue Spa’s profit margins if Blue Spa is unable to pass along any higher costs in the form of price increases or otherwise achieve cost efficiencies in marketing and sale of its products. If Blue Spa encounters problems with its distribution system, the Blue Spa’s ability to meet customer expectations, manage inventory, complete sales, and achieve objectives for operating efficiencies could be harmed.To date, Blue Spa has not entered into any agreements with any third-party distributors.
| 8. | Blue Spa’s success will depend, in part, on the quality and safety of the products it develops, sells and delivers to its customers. |
Blue Spa’s success depends, in part, on the quality and safety of the products. If the products are found to be defective or unsafe, or if they otherwise fail to meet Blue Spa’s customers’ standards, Blue Spa’s relationship with its customers could suffer, Blue Spa could lose market share, and Blue Spa could become subject to liability claims, any of which could result in a material adverse effect on Blue Spa’s business, results of operations, and financial condition.
Additionally, if defects in the manufacture of Blue Spa’s products are not discovered until after such products are purchased by the customers, Blue Spa’s customers could lose confidence in the technical attributes of the products and, as a result, Blue Spa’s operations could suffer and its business may be harmed.
| 9. | Blue Spa will rely on third-party suppliers to provide raw material for Blue Spa’s products, and Blue Spa will have limited control over the suppliers and may not be able to obtain quality products on a timely basis or in sufficient quantity. |
Blue Spa will not manufacture its products or the raw materials for manufacturing those products. Instead, Blue Spa will rely on third-party suppliers to provide the required raw materials. Many of the specialty fabrics used in Blue Spa’s fitness apparel will be a technically advanced textile product developed and manufactured by third parties and may be available, in the short-term, from only one or a very limited number of sources.To date, Blue Spa has not entered into any agreements with any third-party suppliers.
If Blue Spa experiences significant increased demand, or need to replace an existing supplier, there can be no assurance that additional supplies of raw materials or fabrics will be available when required on terms that are acceptable to Blue Spa, or at all, or that any supplier would allocate sufficient capacity to Blue Spa in order to meet Blue Spa’s requirements or fill its orders in a timely manner. Even if Blue Spa is able to expand existing or find new supplier or fabric sources, Blue Spa may encounter delays in production and added costs as a result of the time it takes to train the new suppliers in Blue Spa’s methods, products and quality control standards. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from Blue Spa’s markets or from other participants in the supply chain. Any delays, interruption or increased costs in the supply of raw materials or fabric for the products could have an adverse effect on Blue Spa’s ability to meet customer demand for the products and may result in lower net revenue and income from operations both in the short and long-term.
In addition, there can be no assurance that the suppliers will continue to provide fabrics and raw materials that comply with Blue Spa’s technical specifications and quality standards. In the future, Blue Spa may receive, shipments of products that fail to comply with the technical specifications or that fail to conform to the quality control standards. If Blue Spa is unable to obtain replacement products in a timely manner, Blue Spa risks the loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs.
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Risks associated with Blue Spa’s industry:
| 10. | Any new laws or regulations relating to Blue Spa’s business or any new interpretations of existing laws could have a negative impact on Blue Spa’s business operations. |
Currently, other than business and operations licenses applicable to most commercial ventures, Blue Spa is not required to obtain any governmental approval for its business operations. However, there can be no assurance that current or new laws or regulations will not, in the future, impose additional fees and taxes on Blue Spa and its business operations.
Blue Spa’s business is subject to numerous laws, regulations and policies. Changes in the laws, regulations and policies, including the interpretation or enforcement thereof, that affect, or will affect, Blue Spa’s business, including changes in accounting standards, tax laws and regulations, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action we may take as a result could have a negative impact on the financial results of Blue Spa’s business operations.
| 11. | Failure to successfully compete in the skin care product or fitness apparel industry with established companies may result in Blue Spa’s inability to continue with its business operations. |
There are several established skin care and apparel companies that provide similar products. Management expects competition in this market to increase significantly as new companies enter the market and current competitors expand their products and services. Blue Spa’s competitors may develop or offer products that are better than Blue Spa’s or that achieve greater market acceptance. It is also possible that new competitors may emerge and acquire significant market share. Competitive pressures created by any one of these companies, or by Blue Spa’s competitors collectively, could have a negative impact on Blue Spa’s business, results of operations and financial condition and as a result, Blue Spa may not be able to continue with its business operations.
In addition, if Blue Spa is unable to develop and introduce new or enhanced products quickly enough to respond to market or user requirements or to comply with emerging industry standards, or if these products do not achieve market acceptance, Blue Spa may not be able to compete effectively.
| 12. | Blue Spa may be subject to legal proceedings involving its intellectual property that could result in substantial costs and which could materially harm Blue Spa’s business operations. |
From time to time, Blue Spa may be subject to legal proceedings and claims in the ordinary course of its business, including claims of alleged infringement of the trademarks and other intellectual property rights of third parties by Blue Spa. These types of claims could result in increased costs of doing business through legal expenses, adverse judgments or settlements or require Blue Spa to change its business practices in expensive ways. Additional litigation may be necessary in the future to enforce Blue Spa’s intellectual property rights, to protect its trade secrets or to determine the validity and scope of the proprietary rights of others. Any litigation, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could materially harm Blue Spa’s business.
Risks associated with Blue Spa:
| 13. | Blue Spa’s sole officer and director resides outside of the United States, and as a result it may be difficult for a shareholder to enforce their rights against him or enforce United States court judgments against him in China. |
Blue Spa’s sole director and officer, Law Yau Yau, resides in China and substantially all of Blue Spa’s assets are located in China. As a result, it may be difficult for United States investors to enforce their legal rights, to effect service of process upon Law Yau Yau or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of Blue Spa’s directors and officers under federal securities laws. Further, it is unclear if extradition treaties now in effect between the United States and China would permit effective enforcement of criminal penalties of the federal securities laws.
| 14. | Blue Spa’s management lacks any formal training or experience in operating a wholesale or retail business, and as a result management may make mistakes, which could have a negative impact on Blue Spa’s business operations. |
Blue Spa’s management is inexperienced in operating a wholesale and retail business. Blue Spa’s sole officer and director, Law Yau Yau, has no direct training or experience in these areas and, as a result, may not be fully aware of all of the specific requirements related to working within this industry. Management’s decisions and choices may not take into account standard managerial approaches wholesale or retail companies commonly use. Consequently, Blue Spa’s operations, earnings, and ultimate financial success could suffer irreparable harm due to management’s lack of experience in this industry. As a result, Blue Spa may have to suspend or cease operations and Blue Spa’s business operations may be negatively impacted.
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| 15. | If Blue Spa is unable to attract or retain key personnel necessary for the implementation of its business operations, Blue Spa’s plan of operation may be negatively impacted. |
Blue Spa’s future success depends largely upon the continued service of its sole director and officer and other key personnel. Blue Spa’s success also depends on its ability to continue to attract, retain and motivate qualified personnel. Key personnel represent a significant asset, and the competition for these personnel is intense in the wholesale and retail industry. Blue Spa may have particular difficulty attracting and retaining key personnel in initial phases of its plan of operation. Blue Spa does not maintain key person life insurance on any of its personnel. The loss of one or more of its key employees or its inability to attract, retain and motivate qualified personnel could negatively impact Blue Spa’s ability to complete its plan of operation.
| 16. | If Blue Spa’s management is not able to commit sufficient time to the growth and development of Blue Spa and its operations, Blue Spa’s business operation may fail. |
Currently Mr. Yau Yau is able to devote approximately 10 hours per week to Blue Spa’s business operations. If Mr. Yau Yau or other key personnel are not able to commit a sufficient amount of time to the growth and development of the business operations of Blue Spa then, as a result, Blue Spa’s operations will be negatively impacted and may fail.
| 17. | Blue Spa’s principal shareholder owns a significant percentage of Blue Spa’s shares of common stock and will be able to exercise significant influence over Blue Spa’s affairs. |
Blue Spa’s current director and sole officer, Law Yau Yau, beneficially own 57.1% of its shares of common stock. As a result, Mr. Yau is able to influence or control matters requiring approval by Blue Spa’s shareholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. Mr. Yau may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of Blue Spa, could deprive Blue Spa’s shareholders of an opportunity to receive a premium for their shares of common stock as part of a sale of Blue Spa and might ultimately affect the market price of Blue Spa’s common stock.
| 18. | Blue Spa is a “shell company” and as a result shareholders owning restricted shares will not be able to sell any of those shares until the shares are registered or Blue Spa ceases to be a “shell company”. |
Since Blue Spa is classified as a “shell company” then Rule 144 will not be available to the shareholders of Blue Spa and they will not be able to sell their shares until Blue Spa is no longer classified as a “shell company” or the shares are registered. Shareholders will only be able to rely on Rule 144 and to sell their shares (a) once the shares are registered or (b) one year after Blue Spa ceases to be a “shell company” and files the required information. As a result of the “shell company” trading restrictions and Blue Spa’s “shell company” status, none of Blue Spa’s shares of common stock can be sold pursuant to Rule 144.See “Rule 144 Shares” onpage ♦ for more information.
| 18. | Blue Spa is an “emerging growth company”, and cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make its shares of common stock less attractive to investors. |
Blue Spa is and will remain an “emerging growth company” until the earliest to occur of (a) the last day of the fiscal year during which its total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (b) the last day of the fiscal year following the fifth anniversary of its initial public offering, (c) the date on which Blue Spa has, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (d) the date on which Blue Spa is deemed a “large accelerated filer” (with at least $700 million in public float) under the Securities and Exchange Act of 1934 (the “Exchange Act”). For so long as Blue Spa remains an “emerging growth company” as defined in the JOBS Act, it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” as described in further detail below. Blue Spa cannot predict if investors will find its shares of common stock less attractive because Blue Spa will rely on some or all of these exemptions. If some investors find Blue Spa’s shares of common stock less attractive as a result, there may be a less active trading market for its shares of common stock and its stock price may be more volatile. If Blue Spa avails itself of certain exemptions from various reporting requirements, its reduced disclosure may make it more difficult for investors and securities analysts to evaluate Blue Spa and may result in less investor confidence.
The recently enacted JOBS Act is intended to reduce the regulatory burden on “emerging growth companies”. Blue Spa meets the definition of an “emerging growth company” and so long as it qualifies as an “emerging growth company,” it will, among other things.
| ● | be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting; |
| ● | be exempt from the “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of The Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and certain disclosure requirements of the Dodd-Frank Act relating to compensation of Chief Executive Officers; |
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| ● | be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure concerning executive compensation; and |
| ● | be exempt from any rules that may be adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements. |
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, Blue Spa is choosing to “opt out” of such extended transition period, and as a result, Blue Spa will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that its decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Notwithstanding the above, Blue Spa is also currently a “smaller reporting company”, meaning that it is not an investment company, an asset-backed issuer, nor a majority-owned subsidiary of a parent company that is not a smaller reporting company, and has a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. Some of the reduced disclosure and other requirements available to Blue Spa as a result of the JOBS Act may continue to be available to Blue Spa after it is no longer considered an “emerging growth company”. Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in its SEC filings due to its status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze Blue Spa’s results of operations and financial prospects.
| 19. | Blue Spa does not expect to pay dividends in the foreseeable future. |
Blue Spa has never paid cash dividends on its shares of common stock and has no plans to do so in the foreseeable future. Blue Spa intends to retain earnings, if any, to develop and expand its business.
| 20. | There is no liquidity and no established public market for Blue Spa’s common stock and it may prove impossible to sell your shares. |
There is presently no public market in Blue Spa’s shares. While Blue Spa intends to contact an authorized OTC Bulletin Board market maker for sponsorship of its common stock, Blue Spa cannot guarantee that such sponsorship will be approved nor that Blue Spa’s common stock will be listed and quoted for sale. Even if Blue Spa’s shares are quoted for sale, buyers may be insufficient in numbers to allow for a robust market, and it may prove impossible to sell your shares.
| 21. | If the selling shareholders sell a large number of shares all at once or in blocks, the value of Blue Spa’s shares would most likely decline. |
The selling shareholders are offering 3 million shares of Blue Spa’s common stock through this prospectus. They must sell these shares at a fixed price of $0.10 for the duration of this offering. Blue Spa’s common stock is presently not traded on any market or securities exchange, but should a market develop, shares sold at a price below the current market price at which the common stock is trading will cause that market price to decline. Moreover, the offer or sale of large numbers of shares at any price may cause the market price to fall. The outstanding shares of common stock covered by this prospectus represent approximately 43% of the shares of common stock currently outstanding.
| 22. | Blue Spa’s common stock is subject to the “penny stock” rules of the SEC and the trading market in Blue Spa’s securities is limited, which makes transactions in Blue Spa’s stock cumbersome and may reduce the value of an investment in Blue Spa’s stock. |
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to Blue Spa, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
| ● | that a broker or dealer approve a person’s account for transactions in penny stocks; and | |
| ● | the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |
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In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
| ● | obtain financial information and investment experience objectives of the person; and | |
| ● | make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form:
| ● | sets forth the basis on which the broker or dealer made the suitability determination; and | |
| ● | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of Blue Spa’s common stock and cause a decline in the market value of Blue Spa’s common stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Blue Spa will not receive any proceeds from the sale of the shares of common stock being offered for sale by the selling shareholders through this Prospectus.
Determination of Offering Price
The offering price has been determined by Blue Spa’s board of directors. The board of directors selected the $0.10 offering price for the sale of the shares by the selling shareholders. Currently there is no market for Blue Spa’s common stock and Blue Spa wanted to give its shareholders the ability to sell their shares for a price equal or greater to the price they paid for their shares.
The offering price for the shares offered by the selling shareholders does not bear any relationship to Blue Spa’s assets, book value, earnings, or other established criteria for valuing a privately held company. Accordingly, the offering price should not be considered an indication of the actual value of the Blue Spa’s common stock nor should the offering price be regarded as an indicator of the future market price of Blue Spa’s common stock.
The shares of common stock to be sold by the selling shareholders are shares of Blue Spa’s common stock that are currently issued and outstanding. Accordingly, there will be no dilution to Blue Spa’s shareholders.
The selling shareholders named in this prospectus are offering all of their 3,000,000 shares of the common stock offered through this prospectus. These shares were acquired from Blue Spa in the following private placement:
| 1. | 3,000,000 shares of Blue Spa common stock that the selling shareholders acquired from Blue Spa in a minimum-maximum offering that was exempt from registration under Regulation S of the Securities Act of 1933 and was completed on January 29, 2010. |
For the duration of this offering the selling shareholders will be offering their shares at the fixed offering price of $0.10 per share.
The following table provides as of the date of this prospectus information regarding the beneficial ownership of Blue Spa’s common stock held by each of the selling shareholders, including:
| 1. | the number of shares owned by each before the offering; | |
| 2. | the total number of shares that are to be offered for each; | |
| 3. | the total number of shares that will be owned by each upon completion of the offering; and |
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| 4. | the percentage owned by each upon completion of the offering. |
| Name of Selling Shareholder | Shares Owned Before the Offering | Total Number of Shares to be Offered for the Security Holder’s Account | Total Shares Owned After the Offering is Complete | Percentage of Shares Owned After the Offering is Complete | ||||||||||||
| Peng Zong Chou | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Tang Hua Lin | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Nong Hai Mei | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Zhong Wei Wei | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Yan Zhao Zhi | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Shi Zhan Fu | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Ma Qiang Bin | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Yu Meng Ting | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Luo Shuang Xi | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Liang Guo Qiang | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Liang Fu Cheng | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Chen Yu Jin | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Peng Shi Cai | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Su Mei Xian | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Zhong Jiao | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Liu Cai Xia | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Liu Kai | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Li Shuang | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Liao Xiao Yan | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Yuan Wu Qua | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Liu Ding Wu | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Liu Jain Duo | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Dai Tao | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Wei Jin Ling | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Li Liang Bing | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Wei Hong Hua | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Pan Zhao Xing | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Nong Jun Hua | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Yang Chang Zhong | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Pan Jin Hang | 100,000 | 100,000 | Nil | Nil | ||||||||||||
| Total | 3,000,000 | 3,000,000 | 0 | 0 | % | |||||||||||
All of the selling shareholders are natural persons. Since the incorporation of Blue Spa, none of the selling shareholders has had any material relationship with Blue Spa.
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This is a secondary offering made on behalf of the selling shareholders. In general Blue Spa will have one type of securities that will be available for distribution:
| 1. | Non-affiliate shares owned by selling shareholders. |
Non-Affiliate Shares Owned by Selling Shareholders
The selling shareholders who currently own 3,000,000 shares of common stock in the capital of Blue Spa may sell some or all of their common stock in one or more transactions, including block transactions.
The selling shareholders will sell the shares at $0.10 per share for the duration of this offering.
The selling shareholders must comply with the requirements of the Securities Act and the Securities Exchange Act in the offer and sale of the common stock. In particular, during the offering the selling shareholders will be deemed to be engaged in a distribution of the common stock, and therefore be considered underwriters. As a result, the selling shareholders must comply with applicable law and may, among other things:
| ● | Not engage in any stabilization activities in connection with Blue Spa’s common stock; | |
| ● | Furnish each broker or dealer through which common stock may be offered, such copies of this prospectus, as amended from time to time, as may be required by such broker or dealer; and | |
| ● | Not bid for or purchase any of Blue Spa’s securities or attempt to induce any person to purchase any of Blue Spa’s securities other than as permitted under the Securities Exchange Act. |
The selling shareholders may also sell their shares directly to market makers acting as principals or brokers or dealers, who may act as agent or acquire the common stock as a principal. Any broker or dealer participating in such transactions as agent may receive a commission from the selling shareholders, or, if they act as agent for the purchaser of such common stock, from such purchaser. The selling shareholders will likely pay the usual and customary brokerage fees for such services. Brokers or dealers may agree with the selling shareholders to sell a specified number of shares at a stipulated price per share and, to the extent such broker or dealer is unable to do so acting as agent for the selling shareholders, to purchase, as principal, any unsold shares at the price required to fulfill the respective broker’s or dealer’s commitment to the selling shareholders.
Brokers or dealers who acquire shares as principals may thereafter resell such shares from time to time in transactions in a market or on an exchange, in negotiated transactions or otherwise, at market prices prevailing at the time of sale or at negotiated prices, and in connection with such re-sales may pay or receive commissions to or from the purchasers of such shares. These transactions may involve cross and block transactions that may involve sales to and through other brokers or dealers. If applicable, the selling shareholders may distribute shares to one or more of their partners who are unaffiliated with Blue Spa. Such partners may, in turn, distribute such shares as described above. Blue Spa can provide no assurance that all or any of the common stock offered will be sold by the selling shareholders.
Blue Spa is bearing all costs relating to the registration of the common stock owned by the selling shareholders. The selling shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock.
The Securities Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Blue Spa’s stock qualifies as a penny stock and as a result will be subject to these penny stock rules. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Commission, which:
| ● | contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; | |
| ● | contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties; | |
| ● | contains a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the bid and ask price; | |
| ● | contains a toll-free telephone number for inquiries on disciplinary actions; |
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| ● | defines significant terms in the disclosure document or in the conduct of trading penny stocks; and | |
| ● | contains such other information and is in such form (including language, type, size, and format) as the Commission shall require by rule or regulation; |
The broker-dealer also must provide, prior to proceeding with any transaction in a penny stock, the customer:
| 1. | with bid and offer quotations for the penny stock; | |
| 2. | details of the compensation of the broker-dealer and its salesperson in the transaction; | |
| 3. | the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and | |
| 4. | monthly account statements showing the market value of each penny stock held in the customer’s account. |
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for Blue Spa’s stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities.
Regulation M
During such time as Blue Spa or the selling shareholders may be engaged in a distribution of any of the shares Blue Spa is registering by this registration statement, Blue Spa or the selling shareholders are required to comply with Regulation M. In general, Regulation M precludes any selling shareholder, any affiliated purchasers, and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a “distribution” as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a “distribution participant” as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution.
Regulation M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. Blue Spa has informed the selling shareholders that the anti-manipulation provisions of Regulation M may apply to the sales of their shares offered by this prospectus, and Blue Spa has also advised the selling shareholders of the requirements for delivery of this prospectus in connection with any sales of the common stock offered by this prospectus.
Description of Securities to be Registered
General
Blue Spa’s authorized capital stock consists of 500,000,000 shares of common stock at a par value of $0.0001 per share.
Common Stock
As at the date of this prospectus, 7,000,000 common shares are issued and outstanding and owned by 31 shareholders of record. All of the common shares have been validly issued, are fully paid and non-assessable.
Holders of Blue Spa’s common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders of one-third of shares of common stock issued and outstanding, represented in person or by proxy, are necessary to constitute a quorum at any meeting of Blue Spa’s stockholders. A vote by the holders of a majority of Blue Spa’s outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to Blue Spa’s
Articles of Incorporation.
Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of Blue Spa’s common stock have no preemptive rights, no conversion rights and there are no redemption provisions applicable to Blue Spa’s common stock.
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Dividend Policy
Blue Spa has never declared or paid any cash dividends on its common stock. Blue Spa currently intends to retain future earnings, if any, to finance the expansion of its business. As a result, Blue Spa does not anticipate paying any cash dividends in the foreseeable future.
Share Purchase Warrants
As of the date of this prospectus, there are no outstanding warrants to purchase Blue Spa’s securities. Blue Spa may, however, issue warrants to purchase its securities in the future.
Options
As of the date of this prospectus, there are no options to purchase Blue Spa’s securities. Blue Spa may, however, in the future grant such options and/or establish an incentive stock option plan for its directors, employees and consultants.
Convertible Securities
As of the date of this prospectus, Blue Spa has not issued and does not have outstanding any securities convertible into shares of Blue Spa’s common stock or any rights convertible or exchangeable into shares of Blue Spa’s common stock. Blue Spa may, however, issue such convertible or exchangeable securities in the future.
Nevada Anti-Takeover Laws
The provisions of the Nevada Revised Statutes (NRS) sections 78.378 to 78.3793 apply to any acquisition of a controlling interest in an certain type of Nevada corporation known as an “Issuing Corporation”, unless the articles of incorporation or bylaws of the corporation in effect on the 10th day following the acquisition of a controlling interest by an acquiring person provide that the provisions of those sections do not apply to the corporation, or to an acquisition of a controlling interest specifically by types of existing or future stockholders, whether or not identified.
The provisions of NRS 78.378 to NRS 78.3793 do not restrict the directors of an “Issuing Corporation” from taking action to protect the interests of the corporation and its stockholders, including, but not limited to, adopting or signing plans, arrangements or instruments that deny rights, privileges, power or authority to a holders of a specified number of shares or percentage of share ownership or voting power.
An “Issuing Corporation” is a corporation organized in the State of Nevada and which has 200 or more stockholders of record, with at least 100 of who have addresses in the State of Nevada appearing on the stock ledger of the corporation and does business in the state of Nevada directly. As Blue Spa currently has less than 200 stockholders and no shareholders in the State of Nevada the statute does not currently apply to Blue Spa.
If Blue Spa does become an “Issuing Corporation” in the future, and the statute does apply to Blue Spa, its sole director Mr. Law Yau Yau on his own will have the ability to adopt any of the above mentioned protection techniques whether or not he owns a majority of Blue Spa’s outstanding common stock, provided he does so by the specified 10th day after any acquisition of a controlling interest.
Interests of Named Experts and Counsel
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest exceeding $50,000, directly or indirectly, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
Richard C. Fox of Fox Law Offices, P.A., 561 NE Zebrina Senda, Jensen Beach, Florida, 34957 has provided the legal opinion regarding the legality of the shares being registered.
The financial statements included in this prospectus have been audited by Dominic K.F. Chan & Co. of Hong Kong to the extent and for the periods set forth in their report appearing elsewhere herein, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
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Blue Spa is a Nevada company and was incorporated on September 4, 2009. Blue Spa is a startup company that intends to be engaged in the development, production, wholesale distribution, and retail sales of quality natural skin and body care products, fitness apparel, and related accessories. Blue Spa is also a “shell” company as defined by the SEC as a result of only having nominal operations and nominal assets. Blue Spa has adopted for its business operations a multi-channel concept,and intends to develop its business operations intoa wholesale distribution network with a retail strategy, e-commerce, and a consumer catalogue. As of the effective date of this prospectus Blue Spa has not conducted any business operations nor generated any revenues.
Since September 2009, Blue Spa has had its executive head office at 26/F Building A, Times Plaza, 2 Zongfu Road, Chengdu 610016, China. The telephone number at this office is 86-28-66847826.Blue Spa is renting the administrative office on a month to month basis for $115 per month.
Blue Spa’s plan of operations is to distribute and sell quality natural skin and body care products, fitness apparel, and related accessories for women. Blue Spa intends to (1) identifyand brand quality natural skin and body care products for wholesale distribution and retail sales and (2) develop a Blue Spa line of yoga and fitness apparel, as a natural extension of the skin and body care brand.Blue Spa will begin as a wholesale company with a retail component and, over the course of 10 years, evolve to a retail company with a wholesale component. Blue Spa will also combine e-commerce and a consumer catalogue into its operations. See “Plan of Operation” and “Management’s Discussion and Analysis of Financial Condition” below for more information.
Blue Spa has an authorized capital of 500,000,000 common shares with a par value of $0.0001 per share with 7 million common shares currentlyissued and outstanding.
Blue Spa has not been involved in any bankruptcy, receivership or similar proceedings. There have been no material reclassifications, mergers, consolidations or purchases or sales of a significant amount of assets not in the ordinary course of Blue Spa’s business.
Plan of Operation
Blue Spa’s plan of operation for the remainder of its fiscal year is to:
| 1. | develop and populate its website; | |
| 2. | identify, develop, and purchase products and inventory; | |
| 3. | develop and launch Blue Spa’s wholesale distribution network; | |
| 4. | develop and market the Blue Spa brand; and | |
| 5. | develop and launch Blue Spa’s brick and mortar retail presence. |
Phase 1 - Develop and populate Website (six months)
In Phase 1, Blue Spa plans to (1) upgrade and update its website so that it is more visually appealing and technologically sound, (2) update its product line and visuals on the Website, and (3) implement a downloadable high resolution picture format for viewing its products.
Unlike current e-commerce models, management does not intend to use the Internet to establish Blue Spa’s products or its brand, or bring them to market. The e-commerce consumer is typically brand and convenience conscience. The early ventures have shown that the costs associated with establishing a brand via this medium are prohibitive and significant. Instead, Blue Spa will develop its initial Internet capabilities as a combination business-to-business tool and e-catalogue. The Website will be simple and direct with minimal cost. Also, the e-commerce platform will provide Blue Spa with a valuable wholesale tool as it will provide distributors with an access code that will allow them to place orders and utilize Blue Spa’s product knowledge database as a training tool for their employees.
Blue Spa has budgeted $10,000 for this phase and expects it to take six months to complete, with completion expected within the next six months of Blue Spa’s plan of operation.
Phase 2 –Identify, develop, and purchase products and inventory (six months)
In Phase 2, Blue Spa plans to identify and develop its Water Range skin care products. Also, Blue Spa will identify and purchase fitness apparel and related accessories that fits in with its Blue Spa’s brand. Phase 2 will overlap with Phase 1 and will be worked on simultaneously with Phase 1.
Blue Spa has budgeted $25,000 for this phase and expects it to take six months to complete, with completion expected within the next six months of Blue Spa’s plan of operation.
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Phase 3 – Launch Blue Spa wholesale (12 months)
In Phase 3, Blue Spa plans to (1) to identify and secure partnerships with well-respected distributors, (2) identify and contract with key wholesale showrooms in which to display Blue Spa’s products, (3) further enhance and develop the brand image of Blue Spa, and (4) identify and retain key biotechnology specialists and management to assist in the continued development of its products and the administration of its business operations.
By identifying and securing partnerships with distributors and showrooms to represent Blue Spa and its products, management intends to gain key show positions in Hong Kong, Tokyo, San Francisco, and New York gift shows. Terms and conditions of any contract will include a commission on all sales at a rate higher than the industry standard to provide motivation for the representatives to promote Blue Spa’s products.
Blue Spa has budgeted $100,000 for this phase and expects it to take 12 months to complete, with completion expected within the next 12 months of Blue Spa’s plan of operation. Also in this phase, Blue Spa will continue to (a) maintain and populate the Website with new products and (b) continue to develop and purchase products and inventory to brand.
Phase 4 – Develop and market Blue Spa brand of products (24 months)
In Phase 4, Blue Spa plans to (1) develop a brand for its products, (2) develop a packaging and labeling system that promotes Blue Spa’s brand, (3) create a series of brochures and ad material to use at point of sale and trade shows, (4) implement its marketing strategy on its target market, (5) identify and retain key management to assist in the continued development of its products.
Blue Spa has budgeted $200,000 for this phase and expects it to take 24 months to complete, with completion expected within the next 24 months of Blue Spa’s plan of operation.
Phase 5 – Launch Blue Spa retail (60 months)
In Phase 5, Blue Spa plans to (1) launch its retail business model, (2) hire and train sales staff, (3) increase the brand awareness of Blue Spa’s business model and its products, (4) identify and retain key management for retail operations, and (5) identify and appoint industry advisors.
The face of retailing is changing, which has created a new business model. This new model will greatly reduce the need for a traditional brick and mortar retailer to open thousands of doors in order to reach the market; but at the same time it will not completely eliminate the need for a brick and mortar presence in the market. Under this new business model, Blue Spa will develop its brand awareness by utilizing a brick and mortar retail presence, which, in turn, will eliminate the need for heavy ad spending that has been associated with e-commerce.
Blue Spa has budgeted $500,000 for this phase and expects it to take 60 months to complete, with completion expected within the next 60 months of Blue Spa’s plan of operation.
Accounting and Audit Plan
Blue Spa has retained a bookkeeper to assist in the keeping and organization of Blue Spa’s financial records. Blue Spa’s bookkeeper is expected to charge Blue Spa approximately $2,700 to maintain Blue Spa’s financial records for the next 12 months. Blue Spa’s independent auditor is expected to charge approximately $1,000 to review each of Blue Spa’s quarterly financial statements and approximately $7,500 to audit Blue Spa’s annual financial statements. In the next 12 months, Blue Spa anticipates spending approximately $12,000 to pay for its accounting and audit requirements.
SEC Filing Plan
Blue Spa intends to become a reporting company after its registration statement is declared effective. This means that Blue Spa will file documents with the US Securities and Exchange Commission on a quarterly basis. Blue Spa expects to incur filing costs of approximately $4,000 per quarter to support its quarterly and annual filings. In the next 12 months, Blue Spa anticipates spending approximately $16,000 for legal costs to pay for three quarterly filings, one annual filing, and a 424B4 final prospectus filing, in order to complete registration of Blue Spa’s common stock.
Products
To date, Blue Spa has no skin care products, fitness apparel, or related accessories manufactured or in productions, and Blue Spa has not begun research or development on any product.
Blue Spa plans to manufacture and distribute quality personal care products, fitness apparel and related accessories. This is to be accomplished through a combination of wholesale distribution and company-owned retail outlets.
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Skin Care
Blue Spa’s range of skin care products will address various skin care needs and will include moisturizers, creams, lotions, cleansers, and sun screens products. A number of the products will be developed for use on particular areas of the body, such as the face or the hands or around the eyes.
Blue Spa’s skin care products will offer therapeutic benefits to the user based upon the principles of Thalasso therapy in Blue Spa’s water line and Botanical treatments in its earth line. Blue Spa’s color cosmetics will be mineral based and provide the user with mesthetic benefits while nourishing the skin.
The initial launch for skin care products will be known as Blue Spa’s “Water Range”. The products in the Water Range will be developed in Blue Spa’s labs to be located in the Brittany region of France. Blue Spa’s first goal is to identify and reach an agreement with a lab and a manufacturer located in this region. The Brehat archipelago lies off the coast of Brittany and is unique for its wide range of sea algae and seaweed and unique ecosystem.
Blue Spa’s methodology in choosing the Water Range for its initial launch is based on two primary issues:
| 1. | The benefits of Thalasso therapy treatment. | |
| 2. | Blue Spa’s name and logo will make coincide with the launch of these natural products made from raw materials from the sea. |
| The Water Range |
| A. | Biocatalyst Tonic | |
| Purpose: to finish cleansing and leave the skin clean; to relieve, smooth and soften the skin; to reactivate the physiologic epidermis’ functions; to prepare the skin for make up; and to hydrate the entire upper layer of epidermis. | ||
| Key ingredients: Corallina officinalis contains trace elements of marine minerals and in excess of 300 enzymes. They promote elasticity of the dermis’ structural fibers (keratogenesis). This ingredient prepares the skin for cosmetics. Critmum maritimum extract adds purifying and regenerating properties. Rose water contributes a relaxing effect. | ||
| Skin type: All. | ||
| Use: Spray on nightly after make up removal and before applying night creams or during the day to relieve stress and brighten the complexion. | ||
| B. | Eye makeup remover | |
| Purpose: to remove eye make up; to sooth and relieve sensitive skin in eye area; and to fortify eyelashes. | ||
| Key ingredients: Rhodophycea extract promotes remineralization and hydration of skin while fortifying eyelashes. Rose water to tone sensitive skin while soothing and relieving eye shadows. | ||
| Skin type: All. | ||
| Use: Soak on cotton ball lightly and gently apply on eyelids to remove make up. | ||
| C. | Cleansing cream | |
| Purpose: to soothe skin during make up removal; to gently remove impurities from the skin without damaging the epidermis hydrolipidic film. | ||
| Key Ingredients: Crithmum maritimum extract is rich in essential oils with regenerating and anti-inflammatory properties. Shea butter to nourish the skin and add suppleness. Palm oil and Groundnut oil act as cleansing agents and soothe the skin. | ||
| Skin types: Sensitive, delicate and mature skins; gentle enough to be suitable for use as a baby cream. | ||
| Use: Apply on face and neck nightly to remove make up. Finish with Biocatalyst Tonic. | ||
| D. | Multi protection day cream | |
| Purpose: to act like a second skin; to penetrate deep into epidermis to insure protection, promote elasticity and improve suppleness; and to clarify skin while soothing and hydrating. | ||
| Key ingredients: Ulva lactuca extract, a fragile green algae that can resist wave pressure up to 20 tons per cubic centimeter because of an elastic fiber network similar to elastin. This extract provides hydrating and protective properties that protect against the harsh elements of the environment. Shea butter nourishes skin and acts against dehydration. | ||
| Skin types: Dry and Normal. | ||
| Use: Gently massage a few drops onto clean and toned skin each morning. |
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| E. | Regenerating facial scrub (micro marbles) | |
| Purpose: to clean off dead skin cells to promote regeneration of healthy new cells; to lighten complexion and impart radiance to the skin; and to soften and purify the epidermis. | ||
| Key ingredients: Spherical micro-marbles exfoliate without causing irritation. Crithmun maritimum extract purifies epidermis and boosts cell regeneration. | ||
| Skin types: All. | ||
| Use: Every other week for dry and sensitive skins, weekly for oily and normal skin types. Apply gently on clean skin, rinse with water and apply Biocatalyst Tonic. | ||
| F. | Hydrating Cream Mask | |
| Purpose: to soften skin; to provide equilibrium for cutaneous functions; to regenerate, while providing firmness; and to maintain hydration of the epidermis. | ||
| Key ingredients: Ulva lactuca extract is efficient in fighting skin slackening. Codium tomentosum extract provides long-lasting deep hydration of the upper epidermal layer. Enriched vitamin A, for skin regeneration. | ||
| Skin types: Suitable for all skin types but most beneficial for sensitive skin. | ||
| Use: Apply on face, around eye contour area and on the neck after a gentle exfoliation. Allow to settle for three to five minutes, then wipe off excess with a soft tissue. | ||
| G. | Purifying Cream Mask | |
| Purpose: to smooth skin; to regenerate, enlighten and firm the skin; to deep clean the skin, while purifying and balancing the sebaceous functions; and to maintain hydration of the upper layers of the epidermis. | ||
| Key ingredients: Laminaria digitata extract. This brown algae has anti-lipasic and sebostatic activities to fight against inflammation and regulate sebaceous secretions. Critmum maritimum extract rich in essential oils that purify the epidermis and boost cellular regeneration. Vitamin A palmitate, to reinforce suppleness. | ||
| Skin types: Oily and combination skins. | ||
| Use: Apply on face (except eye area) and neck after a peeling or when skin is tired. Allow to settle for five to seven minutes, then gently remove excess. | ||
| H. | Peel-Off facemask | |
| Purpose: to form a polymeric mask that cleans the skin and lightens the complexion. | ||
| Key ingredients: Diatomaceous micro algae, Corallina officinalis and Laminaria sp. combine to increase cell metabolism. | ||
| Skin types: All. | ||
| Use: Apply to face weekly. Leave on the face approximately ten minutes then peel off starting from the neck. | ||
| I. | Royal sea cream (remineralizing face, body and hair algae mask) | |
| Purpose: to tone, relax, remineralize and detoxify the face, body and hair; to be used as a hair mask to nourish the bulb, sooth the scalp and strengthens the hair shaft; and to be applied on the body as a remineralizing source. | ||
| Key ingredients: Rhodophycea and Pheophycea provide minerals necessary to improve metabolism and elasticity of skin fibers. In addition they aid in the elimination of skin toxins. Red seaweed adds hydrating properties to the upper epidermal layer that are essential to skin suppleness. | ||
| Skin types: All. | ||
| Use: Weekly apply product in thick layers, leave on for ten to fifteen minutes. Finish with a shower or a shampoo. | ||
| J. | Body lotion (intensive hydration) | |
| Purpose: to fight dryness, restore and maintain hydrolipidic film, nourish, regenerate, prevent aging and improve elasticity; to protect your skin from the environment; and to leave the skin firm and smooth. | ||
| Key ingredients: A powerful marine osmoregulator extracted from green seaweed and Chondrus crispus extract maintain an in-depth long-term hydration rate of the epidermis. Carraghenans work on the skins surface with the skins natural proteins to create a protective film. Vegetable oil from Karite butter increases cell regeneration and insures suppleness. | ||
| Skin types: All. | ||
| Use: Apply daily on dried skin all over the body with a soft circular motion. |
| Page 19 |
| K. | Super firming gel (algae firming gel) | |
| Purpose: to firm and tone the skin, combined with a lipolytic action to support the acceleration of the elimination of fat cells. | ||
| Key ingredients: Laminaria Digitata extract provides the lipolytic properties. Pelvetia Canaliculata improves blood circulation. | ||
| Skin types: All. | ||
| Use: Gently massage the gel into belly, hips, and buttocks. For legs and thighs apply with an upward motion. | ||
| L. | Tensing and regenerating cream | |
| Purpose: to smooth and tense the epidermis; to prevent dehydration of dry skin areas; to reinforce cutaneous elasticity; and to create a lifting effect. | ||
| Key ingredients: Algae oil from Laminaria digitata is rich in vitamin A to protect from free radicals and aid in fiber regeneration, vitamin E which promotes hydration, vitamin C to speed up the healing process and vitamin F (from the Omega 6 family) to promote suppleness and nourish the skin. | ||
| Skin types: All. | ||
| Use: In morning and evening apply a small amount of the active serum on arms, tummy, legs, bust and/or buttocks. Slightly massage until fully absorbed into the skin. | ||
| M. | Sparkling sea pebbles | |
| Purpose: Relaxes and soothes the skin. Re-mineralizes the skin by providing trace elements and minerals required for the body’s natural balance. Delicately perfumes the skin. | ||
| Key ingredients: Atomized sea water extracted from the Gulf Stream is combined with Patchouli (anti-inflammatory), lemon zest and mint (invigorating) and essential oils for aromatheraputic benefit. | ||
| Skin type: Hypoallergenic for all skin types. | ||
| Use: After stepping into the bath place the pebble in the small of the back to benefit from the Jacuzzi effect. It can also be used for a very relaxing foot bath. | ||
| N. | Soothing after-sun gel | |
| Purpose: to calm the epidermis after sun exposure; to stop the heat sensation; and to rehydrate the epidermis. | ||
| Key ingredients: Enteromorpha compressa extract and green algae create a soothing and hydrating action. This combination of ingredients has a peptide action that has been proven excellent in fighting problems caused by over-exposure to the sun (tightening, stinging, itching and heat sensation). It also reduces the intensity and duration of sunburn. Codium tomentosum extract is a powerful marine osmoregulator that helps in maintaining the epidermis hydration rate at the optimal level. | ||
| Skin types: All. | ||
| Use: Apply generously on face and body. Within two hours of applying after-sun gel apply the hydrating milk to preserve and enhance the skins beauty. | ||
| O. | Sun care hydrating milk (SPF 8) | |
| Purpose: to protect the skin from the sun’s harmful rays; to ensure a uniform tan; to soften and smooth skin and to preserve the epidermis hydration. | ||
| Key ingredients: A mix of three algae extracts to obtain protection against UVA and UVB rays while still allowing the skin to tan. A vegetable oil cocktail, rich in vitamins A and E to reinforce the skins hydration capacity and nutrients to ensure the skins suppleness. Glycerin provides a natural dampener to soften and smooth the skin. | ||
| Skin types: All. | ||
| Use: Apply in an even layer all over the body. Renew application frequently during extended periods of sun exposure. | ||
| P. | Anti-aging protective sun cream (SPF 12) | |
| Purpose: to ensure a safe and rapid suntan; to preserve epidermal hydration; and to fight against premature aging of the skin caused by the sun. | ||
| Key ingredients: Chritmum Maritimum and Phaeodactylum Tricornotum phylo plankton combine to create a natural synergy rich in the essential fatty acids EPA/DHA. This ensures cellular regeneration and the formation of ceramids that are essential to the balance of the hydrolipidic film. Oil of Karite butter ensures the skin will maintain a supple texture and appearance. Palm oil (nourishing and softening), liquorice extract (anti-inflammatory) and a insaponifiable of Soya and Avocado extract aide in maintaining the skins fiber and give the cream its total care capacity. | ||
| Skin types: All. | ||
| Use: During or before sun exposure. Apply frequently during extended periods of exposure to the sun. |
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Fitness Apparel and Related Accessories
Blue Spa plans on developing an authentic line of fitness apparel and accessories for women, men, and female youth. The assortment of apparel will include fitness pants, shorts, tops and jackets, is designed for healthy lifestyle activities such as yoga, running and general fitness. The fitness-related accessories will include, among others, gym bags, yoga mats, and water bottles.
Blue Spa’s initial apparel launch will include eight styles. Three of the styles will be offered in three colors with the remaining four offered in black. Sizing will be S-M-L in all items. Blue Spa’s initial apparel will include the following styles:
| 1. | long sleeve poly pique V-neck for medium to high activity workout; | |
| 2. | long sleeve poly pique mock for medium to high activity workout; | |
| 3. | hip length lycra jacket for warm-up and cool down; | |
| 4. | special loose fit designed lycra pant for yoga; | |
| 5. | lycra tight for heavy aerobic activity; | |
| 6. | lycra short for heavy aerobic exercise; | |
| 7. | lycra long sleeve crew top for warm up and cool down; | |
| 8. | rib-cotton crew shirt for warm-up and cool down. |
Markets
Because Blue Spa plans to be a combined wholesale (to the end user through a reseller) and retail (direct to end user) strategy its target customer must be broken into two distinct groups: (1) the reseller and (2) the end user.
Blue Spa’s target customers (vs. end user) for wholesale distribution will be resellers who recognize the needs of the targeted consumer and who identifies with that consumer. The wholesale strategy will target select spas, department stores and specialty stores that are recognized trend leaders (i.e. Fred Segal, Bergdorf Goodman, Barney’s and Fellisimo). This product positioning will further establish the brand image of Blue Spa. Blue Spa will reach its targeted reseller market through four distinct reseller channels.
1.Spas and Health Clubs:
Most high-quality day spas and health clubs (and many upscale spas at resort properties) use generic products. Blue Spa’s goal will be to develop affiliations with select spas in urban areas and vacation destinations to establish is wholesale business and market its brand of products.
2.Lifestyle Retailers:
Blue Spa’s target retailer will be lifestyle-based rather than the typical soaps and potions or natural product retailers. These retailers exist in almost every city, such as Wilkes Bashford in San Francisco, Mario’s in Seattle, Harold’s in several south central cities, Fred Segal in Los Angeles, Bergdorf Goodman in New York and Colette in Paris. These retailers have developed a loyal and sophisticated customer base.
3.Cosmetic Specialty Retailers:
Sephora is the major force in this category.
4.Boutique Department Stores:
This category is composed of what was once called “Carriage Trade” retailers. Blue Spa will limit its wholesale target customers within this segment to Saks, Niemans and Barneys.
Blue Spa’s targeted end users are between the ages of 24 and 65 and are predominantly female. They are urban professionals with at least some college-level education. This targeted end user has an active lifestyle and is concerned about social and environmental issues. Mind and body wellness are important to them. They belong to a health club; take yoga, Pilates or tai chi lessons. The effects of aging and the maintenance of a youthful appearance are a part of their life.
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Distribution Methods
Distribution of Blue Spa’s skin care products and fitness apparel and related accessories will be managed from a facility in Hong Kong during the first three phases of Blue Spa’s plan of operations. After that, Blue Spa plans to manage distribution through a strategic alliance capable of handling both wholesale distribution and retail fulfillment. Blue Spa is in the process of identifying a distribution facility in Hong Kong for the purpose of its wholesale distribution needs during the initial three phases of its plan of operations.
Additionally, Blue Spa will develop its market position by combining a wholesale distribution strategy with a retail strategy that includes a day spa or affiliations with spas. Blue Spa will provide retail appropriate packaging and develop bulk sizes for distribution within the spa trade.
For Blue Spa’s fitness apparel and accessory lines, Blue Span also plans on developing strategic alliances with select yoga and fitness facilities for the distribution and sale of its fitness apparel and related accessories at those facilities.
Status of Products
Blue Spa is the registered owner ofwww.bluespashop.comand is currently developing a website for this domain name. Blue Spa acquired the domain namewww.bluespashop.comon July 28, 2010.
None of Blue Spa’s skin care products or its fitness apparel is in production nor has Blue Spa commenced any research and development of such products or fitness apparel.
Blue Spa’s first goal is to identify and reach an agreement with a lab and a manufacturer located in the Brittany region of France, where the Brehat archipelago lies off the coast of Brittany and is unique for its wide range of sea algae and seaweed, which Blue Spa intends to utilize in its Water Range products. Blue Spa wants to retain experienced marine biotechnology specialists and utilize their skill and expertise in developing and producing its Water Range of skin care products from the sea.
In identifying a lab, Blue Spa will look for one with state of the art research and development resources and an innovative research and development department with a strong technical background. For a manufacturer, Blue will look for one that can provide Blue Spa with access to gradable production flow. Also, the manufacturer will (1) need to be able to produce both small and large volumes of skin care product, (2) have an experienced quality control department, and (3) have a strong history of complying with government rules and regulations.
Blue Spa also wants to locate a facility in the Shanghai, China. This region is a producer of some of the essential oils and herbal compounds to be used in Blue Spa’s skin care products. The facility would give Blue Spa access to the latest developments in skin care and essential oils. Also, Blue Spa is looking for a manufacturing facility that contains a small lab that specializes in reverse engineering and can also handle a small-run production. This facility would be used to develop and test Blue Spa’s products.
For its fitness apparel, Blue Spa is looking for a manufacturer and a facility in the United States that can produce high quality fitness apparel from technical fabrics and has complete pattern-making and sewing facilities for cut and sew products as well as knit goods. The availability of such technical knowledge and production capability would provide Blue Spa with significant flexibility in developing its fitness apparel and managing inventory demands. During the early phases of development of Blue Spa, the facility will also have to handle fulfillment of apparel orders.
For its related accessories, Blue Spa is looking to enter into a contract with a manufacturer of quality sports-related accessories including: bags, hats, totes and socks for the wholesale market with office and distribution facilities preferably located in southern California.
Competitive Conditions
Blue Spa will occupy a unique market position. No other brand offers a specialty line that includes skin care, cosmetics, fitness apparel and accessories. However, within each category significant brands do exist with quality and price varying widely within each category. Blue Spa’s competitive advantage will be the positioning as a quality brand.
In the skin care and cosmetics category the competition can be divided into three groups:
(1) Commercial - i.e. MAC, Origins, Philosophy, Erno Laslo and Shesheido;
(2) Clinical - i.e. Kiehl’s, Clinique, Clarins and Dr. Hauscha; and
(3) Spa - private label brands associated with spas.
The commercial brands are primarily sold through department stores. They vary widely in quality from Origins to Shesheido. They also vary widely in price. The major advantage of these competitors is their financial strength and their department store relationships.
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The clinical brands are perceived to be “authentic”. Their image is based upon the perception of treatment qualities verses purely cosmetic benefits. These brands are sold through their own retail outlets, specialty stores, department stores and/or health food stores. Kiehl’s is perceived as one of the most authentic of the clinical brand.
The spa brands are sold almost exclusively at the spas they are associated with. This close affiliation provides a validation for the products but limits their ability to achieve wide market distribution. Bliss and Aveda are notable exceptions. These two brands have achieved wide market distribution and brand recognition.
Competition in the fitness apparel industry is principally on the basis of brand image and recognition as well as product quality, innovation, style, distribution and price. Management believes that Blue Spa will successfully compete on the basis of its unique brand image, its focus on women, and its technical product innovation.
Nike recently announced the formation of a women’s division as a separate business unit. While this offers the possibility of a major competitor in the women’s fitness category, it also highlights the opportunity. Puma is the only brand that has developed a line of fitness apparel focused specifically at this consumer. They have positioned this line to sell through women’s specialty stores rather than traditional sport retailers. Early sales have been exceptional, further highlighting the potential within this category.
The market for fitness apparel is highly competitive. It includes increasing competition from established companies who are expanding their production and marketing of performance products, as well as from frequent new entrants to the market. Blue Spa will be in direct competition with wholesalers and direct sellers of athletic apparel, such as Nike, Inc., adidas AG, which includes the adidas and Reebok brands, and Under Armour, Inc. We also compete with retailers specifically focused on women’s fitness apparel including lululemon athletica inc, Lucy Activewear Inc., The Gap, Inc. (including the Athleta collection), and bebe stores, inc. (including the BEBE SPORT collection).
Raw Materials
The principal raw materials to be used in the manufacture of Blue Spa’s skin care products are essential oils, herbal compounds, marine minerals, and algae. For its fitness apparel, Blue Spa will use technical and natural fabrics.
Principal Suppliers
Blue Spa currently has no principal suppliers. Blue Spa needs to establish a supply chain for its products and the raw materials for the products. Also, Blue Spa will need to identify supply sourcing within the regions of manufacture to allow for improved supply chain efficiencies.
Dependence on Customers
Currently, Blue Spa has no customers and is therefore not dependent on one or a few major customers at this time.
Trademark and Licenses
Blue Spa currently has no patents or trademarks; and Blue Spa is not party to any license, franchise, concession, or royalty agreements or any labor contracts.
Government Approvals and Regulations
Currently, Blue Spa is in compliance with all business and operations licenses that are typically applicable to most commercial ventures. However, there can be no assurance that existing or new laws or regulations that may be adopted in various jurisdictions in the future, will not impose additional fees and taxes on Blue Spa and its business operations. Management is not aware of any such revisions to existing laws and regulations nor new laws or regulations that could have a negative impact on Blue Spa’s business and add additional costs to Blue Spa’s business operations.
Also, Blue Spa and its products will be subject to regulation by the Food and Drug Administration and the Federal Trade Commission in the United States, as well as by various other Federal, state, local and international regulatory authorities and the regulatory authorities in the countries in which its products are manufactured or sold. Such regulations principally relate to the ingredients, labeling, packaging and marketing of the products. Management believes that Blue Spa will be able to comply with such regulations, as well as with applicable Federal, state, local and international and other countries’ rules and regulations governing the discharge of materials hazardous to the environment. There are no significant capital expenditures for environmental control matters either planned in the current year or expected in the near future.
As an “emerging growth company” Blue Spa will be governed by the Jumpstart Our Business Startups Act (the “JOBS Act”).
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Jumpstart Our Business Startups Act
In April 2012, the JOBS Act was enacted into law. The JOBS Act provides, among other things:
| ● | exemptions for “emerging growth companies” from certain financial disclosure and governance requirements for up to five years and provides a new form of financing; | |
| ● | amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Exchange Act; | |
| ● | relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings; | |
| ● | adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and | |
| ● | exemption from registration by a non-reporting company of offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and exemption of such sales from state law registration, documentation or offering requirements. |
In general, under the JOBS Act a company is an “emerging growth company” if its initial public offering (“IPO”) of common equity securities was effected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an “emerging growth company” after the earliest of:
| (a) | the completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more, | |
| (b) | the completion of the fiscal year of the fifth anniversary of the company’s IPO, | |
| (c) | the company’s issuance of more than $1 billion in nonconvertible debt in the prior three-year period, or | |
| (d) | the company becoming a “larger accelerated filer” as defined under the Exchange Act, |
The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact Blue Spa are discussed below.
Financial Disclosure. The financial disclosure in a registration statement filed by an “emerging growth company” pursuant to the Securities Act will differ from registration statements filed by other companies as follows:
| (1) | audited financial statements required for only two fiscal years (provided that “smaller reporting companies” such as Blue Spa are regardless only required to provide two years of financial statements); | |
| (2) | selected financial data required for only the fiscal years that were audited (provided that “smaller reporting companies” such as Blue Spa are not required to provide selected financial data as required by Item 301 of Regulation S-K); and | |
| (3) | executive compensation only needs to be presented in the limited format now required for “smaller reporting companies”. |
However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. Blue Spa is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs to include audited financial statements for its two most current fiscal years with no required tabular disclosure of contractual obligations.
The JOBS Act also exempts Blue Spa’s independent registered public accounting firm from having to comply with any rules adopted by the Public Company Accounting Oversight Board (“PCAOB”) after the date of the JOBS Act’s enactment, except as otherwise required by SEC rule.
The JOBS Act further exempts an “emerging growth company” from any requirement adopted by the PCAOB for mandatory rotation of the Company’s accounting firm or for a supplemental auditor report about the audit.
Internal Control Attestation. The JOBS Act also provides an exemption from the requirement of Blue Spa’s independent registered public accounting firm to file a report on Blue Spa’s internal control over financial reporting, although management is still required to file its report on the adequacy of Blue Spa’s internal control over financial reporting.
Section 102(a) of the JOBS Act exempts “emerging growth companies” from the requirements in §14A(e) of the Exchange Act for companies with a class of securities registered under the Exchange Act to hold shareholder votes for executive compensation and golden parachutes.
Other Items of the JOBS Act. The JOBS Act also provides that an “emerging growth company” can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The JOBS Act also permits research reports by a broker or dealer about an “emerging growth company” regardless of whether such report provides sufficient information for an investment decision. In addition the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of a research reports on the “emerging growth company’s” IPO.
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Section 106 of the JOBS Act permits “emerging growth companies” to submit registration statements under the Securities Act on a confidential basis provided that the registration statement and all amendments thereto are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow “emerging growth companies” to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the “emerging growth company” is ready to conduct a roadshow.
Election to Opt Out of Transition Period. Section 102(b)(1) of the JOBS Act exempts “emerging growth companies” from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standard.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. Blue Spa has elected to opt out of the transition period.
Research and Development Costs
Since September 4, 2009, Blue Spa has not spent any funds on either company-sponsored research and development activities or customer-sponsored research activities relating to the development of new products, services or techniques or the improvement of existing products, services, or techniques.
Employees
Blue Spa currently does not have any employees. In each phase of its plan of operations, Blue Spa intends to retain the services of key management to assist in the various aspects of its business operations, such as product development, retail operations, finance, and administration. In the first years of development of Blue Spa’s business operations these people will all fill multiple rolls. Also, in Phase 5 of Blue Spa’s plan of operation management intends to identify and appoint industry advisors to provide management with a valuable sounding board for strategic and creative decisions and to assist in increasing the brand awareness of Blue Spa’s business model and its products.
Blue Spa’s sole asset consists of its domain namewww.bluespashop.com.
Blue Spa’s executive offices are located at 26/F Building A, Times Plaza, 2 Zongfu Road, Chengdu 610016, China. Blue Spa is renting the offices on a month to month basis for $115 per month. Management believes that Blue Spa’s current facilities are suitable and adequate to meet its current needs, and that suitable additional or substitute space will be available as needed to accommodate expansion of Blue Spa’s business operations.
Blue Spa has no legal proceedings that have been or are currently being undertaken for or against Blue Spa nor are any contemplated.
This prospectus and any exhibits will be contained in a Form S-1 registration statement that will be filed with the Securities and Exchange Commission (“SEC”). As a reporting company Blue Spa files quarterly, annual, beneficial ownership and other reports with the SEC. You may read and copy any materials Blue Spa files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C., 20549. You may obtain information from the Public Reference Room by calling the SEC at 1-800-SEC-0330. Since Blue Spa is an electronic filer, the easiest way to access its reports is through the SEC’s Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
This prospectus constitutes a part of a Post Effective Amendment on Form S-1/A to update a registration statement on Form S-1 filed by Blue Spa with the SEC under the Securities Act. As permitted by the rules and regulations of the SEC, this Prospectus omits certain information that is contained in the registration statement. Blue Spa refers you to the registration statement and related exhibits for further information with respect to Blue Spa and the securities offered. Statements contained in the prospectus concerning the content of any documents filed as an exhibit to the registration statement (or otherwise filed with the SEC) are not necessarily complete. In each instance you may refer to the copy of the filed document. Each statement is qualified in its entirety by such reference.
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Market for Common Equity and Related Stockholder Matters
Market Information
There is presently no public market for Blue Spa’s common stock. Blue Spa anticipates applying for trading of its common stock on the Over the Counter Bulletin Board (OTCBB) upon the effectiveness of the registration statement of which this prospectus forms a part. However, Blue Spa can provide no assurance that its shares will be traded on the OTCBB or, if traded, that a public market will materialize.
Blue Spa has no common stock that is subject to outstanding warrants to purchase or securities that are convertible to Blue Spa common stock.
As of May 31, 2013 Blue Spa had 7 million common shares outstanding of which 3 million common shares are owned by non-affiliate shareholders and 4 million common shares are owned by Blue Spa’s sole Director and Officer who is an affiliate.
Subject to the Rule 144 volume limitations and the “shell company” trading restrictions described in the paragraph below, there are a total of 3,000,000 shares of Blue Spa’s common stock that can be sold pursuant to Rule 144 as follows:
| ● | 3 million common shares of Blue Spa’s common stock owned by 30 non-affiliates since January 29, 2010. |
Rule 144 Shares
Subject to Blue Spa’s status as a “shell company” as defined by the SEC and discussed below, under Rule 144 a shareholder, including an affiliate of Blue Spa, may sell shares of common stock after at least six months have elapsed since such shares were acquired from Blue Spa or an affiliate of Blue Spa. Rule 144 further restricts the number of shares of common stock which may be sold within any 90 day period to the greater of one percent of the then outstanding shares of common stock or the average weekly trading volume in the common stock during the four calendar weeks preceding the date on which notice of such sale was filed under Rule 144. Certain other requirements of Rule 144 concerning availability of public information, manner of sale and notice of sale must also be satisfied. In addition, a shareholder who is not an affiliate of Blue Spa, and who has not been an affiliate of Blue Spa for 90 days prior to the sale, and who has beneficially owned shares acquired from Blue Spa or an affiliate of Blue Spa for more than one year may resell the shares of common stock without compliance with the foregoing requirements under Rule 144.
Blue Spa is classified as a “shell company” for having (1) no or nominal operations and (2) no or nominal assets. As a result, Rule 144 is not available to the shareholders of Blue Spa and they are not able to sell their shares under Rule 144 until Blue Spa is no longer classified as a “shell company” or the shares are registered. Shareholders would only be able to rely on Rule 144 and to sell their shares (a) once the shares are registered or (b) one year after Blue Spa files the required information once it ceases to be a “shell company”.
Subject to the Rule 144 volume limitations and the “shell company” trading restrictions described in the paragraph above, there are currently no shares of Blue Spa’s common stock that can be sold pursuant to Rule 144.
Holders of Blue Spa’s Common Stock
As of May 31, 2013 Blue Spa had 31 holders of its common stock.
Equity Compensation Plans
Blue Spa has no equity compensation program including no stock option plan and none are planned for the foreseeable future.
Registration Rights
Blue Spa has not granted registration rights to the selling shareholders or to any other person.
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Dividends
There are no restrictions in Blue Spa’s articles of incorporation or bylaws that restrict Blue Spa from declaring dividends. The Nevada Revised Statutes, however, do prohibit Blue Spa from declaring dividends where, after giving effect to the distribution of the dividend:
| 1. | Blue Spa would not be able to pay its debts as they become due in the usual course of business; or |
| 2. | Blue Spa’s total assets would be less than the sum of its total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. |
Blue Spa has not declared any dividends. Blue Spa does not plan to declare any dividends in the foreseeable future.
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Financial Statements
For The Year Ended May 31, 2012
(Stated in US Dollars)
| F-1 |
BLUE SPA INCORPORATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31, 2012
INDEX TO FINANCIAL STATEMENTS
| F-2 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
BLUE SPA INCORPORATED
We have audited the accompanying balance sheet of Blue SPA Incorporated (the “Company”) a development stage company as of May 31, 2012 and 2011, and the related statements of operations, stockholders’ deficit and other comprehensive loss, and cash flows for the year then ended May 31, 2012, 2011 and for the period from September 4, 2009 (inception) through May 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those 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 amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by 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 present fairly, in all material respects, the financial position of the Company as of May 31, 2012 and 2011, and the results of its operations and its cash flows for the year then ended May 31, 2012 and 2011, and for the period from September 4, 2009 (inception) through May 31, 2012, in conformity with United States generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company is in the development stage and has limited operations. Its ability to continue as a going concern is dependent upon its ability to obtain additional financing and/or achieve a sustainable profitable level of operations. These conditions raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Dominic K.F. Chan & Co
Certified Public Accountants
Hong Kong, December 12, 2012
| F-3 |
(A Development Stage Company)
BALANCE SHEET
| Note | May 31, 2012 | May 31, 2011 | ||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 2,285 | $ | 5,430 | ||||||
| TOTAL ASSETS | $ | 2,285 | $ | 5,430 | ||||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||
| LIABILITIES | ||||||||||
| Current Liabilities: | ||||||||||
| Accrued Liabilities | 4 | $ | 18,482 | $ | 15,625 | |||||
| Notes Payable | 6 | 32,000 | 12,000 | |||||||
| Interest Payable | 1,855 | 211 | ||||||||
| TOTAL LIABILITIES | 52,337 | 27,863 | ||||||||
| Going Concern | 2 | |||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||||
| Common Stock | 5 | |||||||||
| Par Value:$0.0001 | ||||||||||
| Authorized 500,000,000 shares | ||||||||||
| Outstanding and issued 7,000,000 | 700 | 700 | ||||||||
| Additional Paid in Capital | 16,300 | 16,300 | ||||||||
| Deficit Accumulated during the development stage | (67,052 | ) | (39,406 | ) | ||||||
| TOTAL STOCKHOLDERS’ DEFICIT | (50,052 | ) | (22,406 | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 2,285 | $ | 5,430 | ||||||
See accompanying notes to financial statements
| F-4 |
(A Development Stage Company)
STATEMENT OF OPERATIONS
| For the period | For the period | |||||||||||||||||
| For the year | For the year | September 4, 2009 | September 4, 2009 | |||||||||||||||
| ended | ended | (inception) to | (inception) to | |||||||||||||||
| Note | May 31, 2012 | May 31, 2011 | May 31, 2011 | May 31, 2012 | ||||||||||||||
| Administrative and other operating expenses | $ | (26,002 | ) | $ | (21,289 | ) | $ | (36,279 | ) | $ | (62,281 | ) | ||||||
| Formation cost | - | - | (2,916 | ) | (2,916 | ) | ||||||||||||
| Operating loss before interest expenses | (26,002 | ) | (21,289 | ) | (39,195 | ) | (65,197 | ) | ||||||||||
| Interest expenses | (1,644 | ) | (211 | ) | (211 | ) | (1,855 | ) | ||||||||||
| Operating loss before income taxes | 7 | (27,646 | ) | (21,500 | ) | (39,406 | ) | (67,052 | ) | |||||||||
| Income Taxes | - | - | - | - | ||||||||||||||
| Net loss and comprehensive loss | $ | (27,646 | ) | $ | (21,500 | ) | $ | (39,406 | ) | $ | (67,052 | ) | ||||||
| Loss per share of common stock | ||||||||||||||||||
| -Basic and diluted | $ | (0.004 | ) | $ | (0.003 | ) | $ | (0.006 | ) | (0.010 | ) | |||||||
| Weighted average shares of common stock | ||||||||||||||||||
| -Basic and diluted | 7,000,000 | 7,000,000 | 6,246,057 | 6,522,000 | ||||||||||||||
See accompanying notes to financial statements
| F-5 |
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS’ DEFICIT
AND COMPREHENSIVE LOSS
| Deficit | ||||||||||||||||||||
| accumulated | ||||||||||||||||||||
| Common stock | Additional Paid-in | during the development | ||||||||||||||||||
| Share(s) | Amount | Capital | stage | Total | ||||||||||||||||
| Balance, September 4, 2009 (Inception) | - | - | - | - | - | |||||||||||||||
| Issuance of common stock | 7,000,000 | 700 | 16,300 | - | $ | 17,000 | ||||||||||||||
| Net loss and comprehensive loss | - | - | - | (17,906 | ) | (17,906 | ) | |||||||||||||
| Balance, May 31, 2010 | 7,000,000 | $ | 700 | $ | 16,300 | $ | (17,906 | ) | $ | (906 | ) | |||||||||
| Net loss and comprehensive loss | - | - | - | (21,500 | ) | (21,500 | ) | |||||||||||||
| Balance, May 31, 2011 | 7,000,000 | $ | 700 | $ | 16,300 | $ | (39,406 | ) | $ | (22,406 | ) | |||||||||
| Net loss and comprehensive loss | - | - | - | (27,646 | ) | (27,646 | ) | |||||||||||||
| Balance, May 31, 2012 | 7,000,000 | $ | 700 | $ | 16,300 | $ | (67,052 | ) | $ | (50,052 | ) | |||||||||
See accompanying notes to financial statements
| F-6 |
(A Development Stage Company)
STATEMENT OF CASH FLOWS
| For the period | ||||||||||||
| For the year | For the year | September 4, 2009 | ||||||||||
| ended | ended | (inception) to | ||||||||||
| May 31, 2012 | May 31, 2011 | May 31, 2012 | ||||||||||
| Cash Flows from operating activities: | ||||||||||||
| Net loss | $ | (27,646 | ) | $ | (21,500 | ) | $ | (67,052 | ) | |||
| Changes in current assets and liabilities | ||||||||||||
| Accrued expenses | 2,857 | 2,159 | 18,482 | |||||||||
| Interest payable | 1,644 | 211 | 1,855 | |||||||||
| Net cash used in operating activities | $ | (23,145 | ) | $ | (19,130 | ) | $ | (46,715 | ) | |||
| Cash Flows from financing activities: | ||||||||||||
| Proceeds from issuance of common stock | - | - | 17,000 | |||||||||
| Notes payable | 20,000 | 12,000 | 32,000 | |||||||||
| Net cash generated from financing activities | $ | 20,000 | $ | 12,000 | $ | 49,000 | ||||||
| Net increase in cash and cash equivalents | (3,145 | ) | (7,130 | ) | 2,285 | |||||||
| Cash and cash equivalents at beginning of period | 5,430 | 12,560 | - | |||||||||
| Cash and cash equivalents at end of period | $ | 2,285 | $ | 5,430 | $ | 2,285 | ||||||
| Supplementary disclosures of cash flow information: | ||||||||||||
| Interest paid | - | - | - | |||||||||
| Income taxes paid | - | - | - | |||||||||
See accompanying notes to financial statements
| F-7 |
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2012
| 1. | Organization and Nature of Operations |
Blue Spa Incorporated (“the Company”) was incorporated in the State of Nevada, USA on September 4, 2009. The Company is in its early developmental stage since its formation and has not realized any revenues from its planned operations. The Company is engaged in the development of an internet based retailer of a multi-channel concept combining a wholesale distribution with a retail strategy. It plans to distribute quality personal care products, fitness apparel and related accessories.
The Company has chosen a fiscal year end May 31.
| 2. | Going Concern |
These financial statements have been prepared in conformity with generally accepted accounting principles in the United States, which contemplate continuation of the Company as a going concern. However, the Company has limited operations and has sustained operating losses resulting in a deficit. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon the continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements, and the success of its future operations.
The Company has accumulated a deficit of $ 67,052 since inception September 4, 2009, has yet to achieve profitable operations and further losses are anticipated in the development of its business. The Company’s ability to continue as a going concern is in substantial doubt and is dependent upon obtaining additional financing and/or achieving a sustainable profitable level of operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company believes that the cash on hand will be able to meet its on-going costs in the next 12 months. The Company may seek additional equity as necessary and it expects to raise funds through private or public equity investment in order to support existing operations and expand the range of its business. There is no assurance that such additional funds will be available for the Company on acceptable terms, if at all.
| 3. | Summary of principal accounting policies |
A summary of the significant accounting policies applied in the presentation of the accompanying financial statements follows:
Basis of presentation
The Company has not earned any revenue from limited principal operations. Accordingly, the Company’s activities have been accounted for as those of a “Development Stage Entity” as set forth in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915. Among the disclosures required by FASB ASC 915 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of earnings, retained earnings and stockholders’ equity and cash flows disclose activity since the date of the Company’s inception.
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America.
| F-8 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2012
| 3. | Summary of principal accounting policies (Continued) |
Use of 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 revenue and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.
Foreign currency translations
The Company is located and operating outside of the United States of America. The functional currency of the Company is the U.S. Dollar. At the transaction date, each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are re-measured by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations.
Cash and cash equivalents
The Company considers all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less to be cash equivalents.
Development Stage Company
The Company is a developmental stage company, and follows the guideline of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codifications (“ASC”) Topic 915 Development State Entities. All losses accumulated since inception has been considered as part of the Company’s development stage activities.
Comprehensive income
The Company has adopted ASU 220 “Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners.
For the year ended May 31, 2012, there are no reconciling items between the net loss presented in the statements of operations and comprehensive loss as defined by ASU 220.
| F-9 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2012
| 3. | Summary of principal accounting policies (Continued) |
Loss per share
The Company reports basic loss per share in accordance with ASC Topic 260 Earnings Per Share (“EPS”). Basic loss per share is based on the weighted average number of common shares outstanding and diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net loss (numerator) applicable to common stockholders by the weighted average number of common shares outstanding (denominator) for the period. All EPS presented in the financial statements are basic EPS as defined by ASU 260, “Earnings Per Share”. There are no diluted net income/ (loss) per share on the potential exercise of the equity-based financial instruments, hence a state of anti-dilution has occurred. All per share and per share information are adjusted retroactively to reflect stock splits and changes in par value.
Income Taxes
The Company follows the guideline under ASC Topic 740 Income Taxes. “Accounting for Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Since the Company is in the developmental stage and has losses, no deferred tax asset or income taxes have been recorded in the financial statements.
Website Development Costs
The Company recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost” that codified the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”) NO. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Relating to website development costs the Company follows the guidance pursuant to the Emerging Issues Task Force (EITF) NO. 00-2, “Accounting for Website Development Costs”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage.
Costs associated with the website consist primarily of website development costs paid to third party. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. Internal costs related to the development of website content will be charged to operations as incurred. Web-site development costs related to the customers are charged to cost of sales.
| F-10 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2012
| 3. | Summary of principal accounting policies (Continued) |
Research and Development Costs
Research and development costs are expensed as incurred.
Fair value of financial instruments
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.
The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and short term note - related party, approximate their carrying values since they are short term in nature and they are receivable or payable on demand.
Management is of the opinion that the Company is exposed to significant interest or credit risks arising from the bank-held assets. The Company is operating outside the United States of America and may have significant exposure to foreign currency risk due to the fluctuation of the currency in which the Company operates and the U.S. dollar.
The Company accounts for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
| ● | Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. As of May 31, 2012, the Company did not have any level 1 inputs. | |
| ● | Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and forward and spot prices for currencies and commodities. Our Level 2 instruments consists options issued for services. As of May 31, 2012, the Company did not have any level 2 inputs. | |
| ● | Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. As of May 31, 2012, the Company did not have any level 3 inputs. |
The carrying values of cash, accounts payable and loan payable approximate fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
| F-11 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2012
| 3. | Summary of principal accounting policies (Continued) |
Concentration of credit risk
The Company places its cash and cash equivalents with a high credit quality financial institution. The Company maintains United States Dollars at a bank in the Switzerland that are not insured. The Company minimizes its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institution.
Recently issued accounting pronouncements
The FASB has issued Accounting Standards Update (ASU) No. 2011-04,Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU represents the converged guidance of the FASB and the IASB (the Boards) on fair value measurement. The collective efforts of the Boards and their staffs, reflected in ASU 2011-04, have resulted in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term “fair value.” The Boards have concluded the common requirements will result in greater comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. ASU No. 2011-04 is effective during interim and annual periods beginning after December 15, 2011. The adoption did not have a material impact on the Company’s financial position, results of operations and cash.
The FASB has issued Accounting Standards Update (ASU) No. 2011-05,Comprehensive Income(Topic 220): Presentation of Comprehensive Income. This ASU amends the FASB Accounting Standards CodificationTM (Codification) to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments to the Codification in the ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and the adoption did not have a material impact on the Company’s financial position, results of operations and cash.
The FASB has issued Accounting Standards Update (ASU) No. 2011-08,Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The amendments in this Update are intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption did not have a material impact on the Company’s financial position, results of operations and cash.
| F-12 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2012
| 3. | Summary of principal accounting policies (Continued) |
Recently issued accounting pronouncements (continued)
The FASB has issued Accounting Standards Update (ASU) No. 2011-11 Balance Sheet (Topic 210)Disclosures about Offsetting Assets and Liabilities.The amendments in this Update will enhance disclosures required by U.S. GAAP by requiring improved information about financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either Section 210-20-45 or Section 815-10-45. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented.
The FASB has issued Accounting Standards Update (ASU) No. 2011-12 Comprehensive Income (Topic 220).Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.Under the amendments in Update 2011-05, entities are required to present reclassification adjustments and the effect of those reclassification adjustments on the face of the financial statements where net income is presented, by component of net income, and on the face of the financial statements where other comprehensive income is presented, by component of other comprehensive income. In addition, the amendments in Update 2011-05 require that reclassification adjustments be presented in interim financial periods. The amendments in this Update supersede changes to those paragraphs in Update 2011-05 that pertain to how, when, and where reclassification adjustments are presented. The amendments in this Update are effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2011.The adoption did not have a material impact on the Company’s financial position, results of operations and cash.
| 4. | Accrued expenses |
Accrued expenses as of May 31 are summarized as follows:
| May 31, 2012 | May 31, 2011 | |||||||
| Accrued audit fee | $ | 10,000 | $ | 10,000 | ||||
| Accrued accounting fee | 1,575 | 2,150 | ||||||
| Accrued legal fee | 5,048 | - | ||||||
| Accrued formation fee | - | 2,916 | ||||||
| Accrued office expenses | 1,859 | 559 | ||||||
| Total | $ | 18,482 | $ | 15,625 | ||||
| F-13 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2012
| 5. | Common stock |
During the year ended May 31, 2012, no shares of common stock were sold. There were a total of 7,000,000 common stocks issued and outstanding as of May 31, 2012. There were no warrants or stock options outstanding as of May 31, 2012.
| 6. | Notes payable |
During the year ended May 31, 2012, the Company entered into loan agreements of an aggregate total of $20,000 serve as working capital. The promissory notes are unsecured, bear interest at 8% per annum and are due on demand.
| Date | Principal | Interest | Total | |||||||||
| October 6, 2010 | $ | 3,000 | $ | 397 | $ | 3,397 | ||||||
| February 22, 2011 | 1,500 | 152 | 1,652 | |||||||||
| May 17, 2011 | 7,500 | 625 | 8,125 | |||||||||
| September 16, 2011 | 5,000 | 283 | 5,283 | |||||||||
| November 4, 2011 | 5,000 | 229 | 5,229 | |||||||||
| March 15, 2012 | 10,000 | 169 | 10,169 | |||||||||
| Total | $ | 32,000 | $ | 1,855 | $ | 33,855 | ||||||
| F-14 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 2012
| 7. | Income tax |
The principal reconciling items from income tax computed at the statutory rates and at the effective income tax rates are as follows:
| 2012 | 2011 | |||||||
| US$ | US$ | |||||||
| Computed tax using respective companies’ statutory tax rates 34% (2011: 34%) | (9,400 | ) | (7,310 | ) | ||||
| Non-deductible expenses | 9,400 | 7,310 | ||||||
| Total provision for income tax at effective tax rate | - | - | ||||||
The components of deferred tax assets are as follows:
| 2012 | 2011 | |||||||
| US$ | US$ | |||||||
| Temporary differences | 9,400 | 7,310 | ||||||
| Less: Valuation allowances | (9,400 | ) | (7,310 | ) | ||||
| Net deferred tax assets | - | - | ||||||
| As of the fiscal year ended May 31, 2012 and 2011, the Company had net operating loss carry forward. The expenses for the year ended May 31, 2012 and 2011 will not be deducted for tax purposes and will represent a deferred tax asset. The Company will provide a valuation allowance in full amount of the deferred tax asset since there is no assurance of future taxable income. |
| F-15 |
Interim Financial Statements
For The Period September 4, 2009 (inception)
To The Period Ended February 28, 2013
(Stated in US Dollars)
| F2-1 |
BLUE SPA INCORPORATED
INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2013
INDEX TO FINANCIAL STATEMENTS
| F2-2 |
(A Development Stage Company)
UNAUDITED INTERIM BALANCE SHEETS
| February 28, 2013 | May 31, 2012 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | - | $ | 2,285 | ||||
| TOTAL ASSETS | $ | - | $ | 2,285 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accrued Liabilities - Note 5 | $ | 11,930 | $ | 18,482 | ||||
| Notes Payable - Note 7 | 45,000 | 32,000 | ||||||
| Interest Payable | 3,818 | 1,855 | ||||||
| TOTAL LIABILITIES | 60,748 | 52,337 | ||||||
| Going Concern - Note 3 | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common Stock - Note 6 Par Value:$0.0001 Authorized 500,000,000 shares Outstanding but not issued 7,000,000 | 700 | 700 | ||||||
| Additional Paid in Capital | 16,300 | 16,300 | ||||||
| Deficit Accumulated during the development stage | (77,748 | ) | (67,052 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (60,748 | ) | (50,052 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | - | $ | 2,285 | ||||
See accompanying notes to unaudited interim financial statements
| F2-3 |
(A Development Stage Company)
UNAUDITED INTERIM STATEMENTS OF OPERATIONS
| For the Period | ||||||||||||||||||||
| For the three | For the three | For the nine | For the nine | September 4, 2009 | ||||||||||||||||
| months ended | months ended | months ended | months ended | (inception) to | ||||||||||||||||
| February 28, 2013 | February 29, 2012 | February 28, 2013 | February 29, 2012 | February 28, 2013 | ||||||||||||||||
| Administrative and other operating expenses | $ | 6,474 | $ | 2,851 | $ | 8,733 | $ | 8,355 | $ | 71,014 | ||||||||||
| Formation cost | - | - | - | - | 2,916 | |||||||||||||||
| Operating loss before interest expenses | (6,474 | ) | (2,851 | ) | (8,733 | ) | (8,355 | ) | (73,930 | ) | ||||||||||
| Interest expenses | (679 | ) | (439 | ) | (1,963 | ) | (1,031 | ) | (3,818 | ) | ||||||||||
| Operating loss before income taxes | (7,153 | ) | (3,290 | ) | (10,696 | ) | (9,386 | ) | (77,748 | ) | ||||||||||
| Income Taxes | - | - | - | - | - | |||||||||||||||
| Net loss and comprehensive loss | $ | (7,153 | ) | $ | (3,290 | ) | $ | (10,696 | ) | $ | (9,386 | ) | $ | (77,748 | ) | |||||
| Loss per share of common stock | ||||||||||||||||||||
| -Basic and diluted | $ | (0.001 | ) | $ | (0.000 | ) | (0.002 | ) | $ | (0.001 | ) | |||||||||
| Weighted average shares of common stock | ||||||||||||||||||||
| -Basic and diluted | 7,000,000 | 7,000,000 | 7,000,000 | 7,000,000 | ||||||||||||||||
See accompanying notes to unaudited interim financial statements
| F2-4 |
(A Development Stage Company)
UNAUDITED INTERIM STATEMENTS OF STOCKHOLDERS’ DEFICIT
AND COMPREHENSIVE INCOME
| Deficit | ||||||||||||||||||||
| accumulated | ||||||||||||||||||||
| Additional | during the | |||||||||||||||||||
| Common | Paid-in | development | ||||||||||||||||||
| Shares | Amount | Capital | stage | Total | ||||||||||||||||
| Balance, September 4, 2009 (Inception) | - | - | - | - | - | |||||||||||||||
| Issuance of common stock | 7,000,000 | 700 | 16,300 | - | $ | 17,000 | ||||||||||||||
| Net loss and comprehensive loss | - | - | - | (17,906 | ) | (17,906 | ) | |||||||||||||
| Balance, May 31, 2010 | 7,000,000 | $ | 700 | $ | 16,300 | $ | (17,906 | ) | $ | (906 | ) | |||||||||
| Net loss and comprehensive loss | - | - | - | (21,500 | ) | (21,500 | ) | |||||||||||||
| Balance, May 31, 2011 | 7,000,000 | $ | 700 | $ | 16,300 | $ | (39,406 | ) | $ | (22,406 | ) | |||||||||
| Net loss and comprehensive loss | - | - | - | (27,646 | ) | (27,646 | ) | |||||||||||||
| Balance, May 31, 2012 | 7,000,000 | $ | 700 | $ | 16,300 | $ | (67,052 | ) | $ | (50,052 | ) | |||||||||
| Net loss and comprehensive loss | (10,696 | ) | (10,696 | ) | ||||||||||||||||
| Balance, February 28, 2013 | 7,000,000 | $ | 700 | $ | 16,300 | $ | (77,748 | ) | $ | (60,748 | ) | |||||||||
See accompanying notes to unaudited interim financial statements
| F2-5 |
(A Development Stage Company)
UNAUDITED INTERIM STATEMENTS OF CASH FLOWS
| For the period | ||||||||||||
| For the nine | For the nine | September 4, 2009 | ||||||||||
| months ended | months ended | (inception) to | ||||||||||
| February 28, 2013 | February 29, 2012 | February 28, 2013 | ||||||||||
| Cash Flows from operating activities: | ||||||||||||
| Net loss | $ | (10,696 | ) | $ | (9,386 | ) | $ | (77,748 | ) | |||
| Changes in current assets and liabilities | ||||||||||||
| Accrued expenses | (6,552 | ) | (7,000 | ) | 11,930 | |||||||
| Interest payable | 1,963 | 1,031 | 3,818 | |||||||||
| Net cash used in operating activities | $ | (15,285 | ) | $ | (15,355 | ) | $ | (62,000 | ) | |||
| Cash Flows from financing activities: | ||||||||||||
| Proceeds from issuance of common stock | - | - | 17,000 | |||||||||
| Notes payable | 13,000 | 10,000 | 45,000 | |||||||||
| Net Cash generated from financing activities | $ | 13,000 | $ | 10,000 | $ | 62,000 | ||||||
| Net increase in cash and cash equivalents | (2,285 | ) | (5,355 | ) | - | |||||||
| Cash and cash equivalents at beginning of period | 2,285 | 5,430 | - | |||||||||
| Cash and cash equivalents at end of period | $ | - | $ | 75 | $ | - | ||||||
See accompanying notes to unaudited interim financial statements
| F2-6 |
(A Development Stage Company)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
February 28, 2013
| 1. | Organization and Nature of Operations |
Blue Spa Incorporated (“the Company”) was incorporated in the State of Nevada, USA on September 4, 2009. The Company is in its early developmental stage since its formation and has not realized any revenues from its planned operations. The Company is engaged in the development of an internet based retailer of a multi-channel concept combining a wholesale distribution with a retail strategy. It plans to distribute quality personal care products, fitness apparel and related accessories.
The Company has chosen a fiscal year end May 31.
| 2. | Going Concern |
These financial statements have been prepared in conformity with generally accepted accounting principles in the United States, which contemplate continuation of the Company as a going concern. However, the Company has limited operations and has sustained operating losses resulting in a deficit. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon the continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements, and the success of its future operations.
The Company has accumulated a deficit of $77,748 since inception September 4, 2009, has yet to achieve profitable operations and further losses are anticipated in the development of its business. The Company’s ability to continue as a going concern is in substantial doubt and is dependent upon obtaining additional financing and/or achieving a sustainable profitable level of operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company believes that the cash on hand will be able to meet its on-going costs in the next 12 months. The Company may seek additional equity as necessary and it expects to raise funds through private or public equity investment in order to support existing operations and expand the range of its business. There is no assurance that such additional funds will be available for the Company on acceptable terms, if at all.
| 3. | Summary of principal accounting policies |
A summary of the significant accounting policies applied in the presentation of the accompanying financial statements follows:
Basis of presentation
The Company has not earned any revenue from limited principal operations. Accordingly, the Company’s activities have been accounted for as those of a “Development Stage Entity” as set forth in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915. Among the disclosures required by FASB ASC 915 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of earnings, retained earnings and stockholders’ equity and cash flows disclose activity since the date of the Company’s inception.
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America.
| F2-7 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
February 28, 2013
| 3. | Summary of principal accounting policies (Continued) |
Use of 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 revenue and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.
Foreign currency translations
The Company is located and operating outside of the United States of America. The functional currency of the Company is the U.S. Dollar. At the transaction date, each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are re-measured by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations.
Cash and cash equivalents
The Company considers all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less to be cash equivalents.
Development Stage Company
The Company is a developmental stage company, and follows the guideline of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codifications (“ASC”) Topic 915 Development State Entities. All losses accumulated since inception has been considered as part of the Company’s development stage activities.
Comprehensive income
The Company has adopted ASU 220 “Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners.
For the nine months ended February 28, 2013 there are no reconciling items between the net loss presented in the statements of operations and comprehensive loss as defined by ASU 220.
| F2-8 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
February 28, 2013
| 3. | Summary of principal accounting policies (Continued) |
Loss per share
The Company reports basic loss per share in accordance with ASC Topic 260 Earnings Per Share (“EPS”). Basic loss per share is based on the weighted average number of common shares outstanding and diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net loss (numerator) applicable to common stockholders by the weighted average number of common shares outstanding (denominator) for the period. All EPS presented in the financial statements are basic EPS as defined by ASU 260, “Earnings Per Share”. There are no diluted net income/ (loss) per share on the potential exercise of the equity-based financial instruments, hence a state of anti-dilution has occurred. All per share and per share information are adjusted retroactively to reflect stock splits and changes in par value.
Income Taxes
The Company follows the guideline under ASC Topic 740 Income Taxes. “Accounting for Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Since the Company is in the developmental stage and has losses, no deferred tax asset or income taxes have been recorded in the financial statements.
Website Development Costs
The Company recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost” that codified the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”) NO. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Relating to website development costs the Company follows the guidance pursuant to the Emerging Issues Task Force (EITF) NO. 00-2, “Accounting for Website Development Costs”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage.
Costs associated with the website consist primarily of website development costs paid to third party. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. Internal costs related to the development of website content will be charged to operations as incurred. Web-site development costs related to the customers are charged to cost of sales.
| F2-9 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
February 28, 2013
| 3. | Summary of principal accounting policies (Continued) |
Research and Development Costs
Research and development costs are expensed as incurred.
Fair value of financial instruments
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.
The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and short term note - related party, approximate their carrying values since they are short term in nature and they are receivable or payable on demand.
Management is of the opinion that the Company is exposed to significant interest or credit risks arising from the bank-held assets. The Company is operating outside the United States of America and may have significant exposure to foreign currency risk due to the fluctuation of the currency in which the Company operates and the U.S. dollar.
The Company accounts for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
| ● | Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. As of February 28, 2013, the Company did not have any level 1 inputs. |
| ● | Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and forward and spot prices for currencies and commodities. Our Level 2 instruments consists options issued for services. As of February 28, 2013, the Company did not have any level 2 inputs. |
| ● | Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. As of February 28, 2013, the company did not have any level 3 inputs. |
The carrying values of cash, accounts payable and loan payable approximate fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
| F2-10 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
February 28, 2013
| 4. | Summary of principal accounting policies (Continued) |
Concentration of credit risk
The Company places its cash and cash equivalents with a high credit quality financial institution. The Company maintains United States Dollars at a bank in the Slovenia that are not insured. The Company minimizes its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institution.
Recently issued accounting pronouncements
The Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently issued would, if adopted, have a material effect on the accompanying financial statements.
| 5. | Accrued expenses |
Accrued expenses as of February 28, 2013 are summarized as follows:
| February 28, 2013 | May 31, 2012 | |||||||
| Accrued audit fee | $ | 3,000 | $ | 10,000 | ||||
| Accrued accounting fee | 1,725 | 1,575 | ||||||
| Accrued legal fee | 1,328 | 5,048 | ||||||
| Accrued office expenses | 5,877 | 1,859 | ||||||
| Total | $ | 11,930 | $ | 18,482 | ||||
| 6. | Common stock |
During the nine months ended February 28, 2013, no shares of common stock were sold. There were a total of 7,000,000 common stocks issued and outstanding as of February 28, 2013. There were no warrants or stock options outstanding as of February 28, 2013.
| F2-11 |
BLUE SPA INCORPORATED
(A Development Stage Company)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
February 28, 2013
| 7. | Notes payable |
The promissory notes are unsecured, bear interest at 8% per annum and are due on demand.
| Date | Principal | Interest | Total | |||||||||
| October 6, 2010 | $ | 3,000 | $ | 577 | $ | 3,577 | ||||||
| February 22, 2011 | 1,500 | 242 | 1,742 | |||||||||
| May 17, 2011 | 7,500 | 1,073 | 8,573 | |||||||||
| September 16, 2011 | 5,000 | 582 | 5,582 | |||||||||
| November 4, 2011 | 5,000 | 528 | 5,528 | |||||||||
| March 15, 2012 | 10,000 | 767 | 10,767 | |||||||||
| December 14,2012 | 13,000 | 48 | 13,048 | |||||||||
| Total | $ | 45,000 | $ | 3,818 | $ | 48,818 | ||||||
| 8. | Income tax |
As of the nine months period ended February 28, 2013 and February 29, 2012, the Company had a net operating loss carry forward. The expenses for the period ended February 28, 2013 and February 29, 2012 will not be deducted for tax purposes and will represent a deferred tax asset. The Company will provide a valuation allowance in full amount of the deferred tax asset since there is no assurance of future taxable income.
| 9. | Subsequent Events |
Subsequent to the period ended February 28, 2013, the Company entered into a promissory note for $14,000.
| F2-12 |
Management’s Discussion and Analysis of Financial Condition
General
This discussion should be read in conjunction with the May 31, 2012 audited financial statements, the notes, and the tables included elsewhere in this registration statement. Management’s discussion and analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future performance. However, future performance involves risks and uncertainties that may cause actual results to differ materially from those expressed in the forward-looking statements. See “Forward-looking Statements” below for more details.
Blue Spa is a startup company that intends to be engaged in the development, production, wholesale distribution, and retail sales of quality natural skin and body care products, fitness apparel, and related accessories. Blue Spa is also a “shell” company as defined by the SEC as a result of only having nominal operations and nominal assets. Blue Spa is focused on developing a multi-channel concept, and intends to develop its business operations into a wholesale distribution network with a retail strategy, e-commerce, and a consumer catalogue.
Blue Spa has not commenced significant operations nor generated any revenues and is considered a Development Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.7Accounting and Reporting by Development Stage Enterprises, and follows the guideline of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codifications (“ASC”) Topic 915 Development State Entities
Liquidity, Capital Resources and Financial Position
Year Ended May 31, 2012
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. At May 31, 2012, Blue Spa had a cash balance of $2,285 and negative cash flows from operations of $23,145 compared to the fiscal period ended May 31, 2011 when Blue Spa had a cash balance of $5,430 and negative cash flows from operations of $19,130.
From its inception, on September 4, 2009 to May 31, 2012 Blue Spa raised a total of $17,000 from private offerings of its shares of common stock, which has been used to fund Blue Spa’s operations to date. Since December 1, 2011 Blue Spa has not raised any additional funds by way of equity financing. Since inception Blue Spa has raised a total of $45,000 from debt financing, which has been used to fund Blue Spa’s continued operations.
The notes to Blue Spa’s audited financial statements as of May 31, 2012, disclose its uncertain ability to continue as a going concern. Blue Spa has not and does not expect to generate any revenues to cover its expenses while it is in the development stage and as a result Blue Spa has accumulated a deficit of $67,052 since inception. As of May 31, 2012, Blue Spa had $52,337 in current liabilities compared to $27,836 for the same time period for the prior fiscal period. When its current liabilities are offset against its current assets of $2,285 Blue Spa is left with a negative working capital of $50,052. While Blue Spa has successfully generated sufficient working capital through the sale of common stock to the date of this filing and management believes that Blue Spa can continue to do so for the next year, there are no assurances that Blue Spa will succeed in generating sufficient working capital through the sale of common stock to meet its ongoing cash needs.
Net Cash Flows From Operating Activities.Net cash flows from operating activities during the year ended May 31, 2012 was a net loss of $27,646, which was primarily due to an increase of accrued expenses, compared to a net loss of $21,500 in the prior fiscal period.
Net Cash Flows From Investing Activities.Blue Spa did not have any net cash flows from investing activities during the years ended May 31, 2012 and May 31, 2011.
Net Cash Flows From Financing Activities. During the year ended May 31, 2012 Blue Spa raised $20,000 from notes payable and interest payable, compared to the prior fiscal period when Blue Spa raised $12,211 in common stock subscriptions.
Nine Month Period Ended February 28, 2013
At February 28, 2013, Blue Spa had a cash balance of $0 and negative cash flows from operations of $15,285 for the nine month period ended February 28, 2013, compared to a cash balance of $75 and negative cash flows from operations of $15,355 for the nine month period ended February 29, 2012.
| Page 28 |
The notes to Blue Spa’s unaudited financial statements as of February 28, 2013, disclose its uncertain ability to continue as a going concern. Blue Spa has not and does not expect to generate any revenues to cover its expenses while it is in the development stage and as a result Blue Spa has accumulated a deficit of $77,748 since inception. As of February 28, 2013, Blue Spa had $60,748 in current liabilities compared to $52,337 for the same time period for the prior fiscal period. When its current liabilities are offset against its current assets of $0 Blue Spa is left with a negative working capital of $60,748.
While Blue Spa has successfully generated sufficient working capital through the sale of common stock to the date of this filing and management believes that Blue Spa can continue to do so for the next year, there are no assurances that Blue Spa will succeed in generating sufficient working capital through the sale of common stock to meet its ongoing cash needs.
Net Cash Flows From Operating Activities.Net cash flows from operating activities during the nine month period ended February 28, 2013 was a net loss of $15,285, which was primarily due to accrued expenses of $6,552, compared to a net loss of $15,355 for the same time period for the prior fiscal period, which was also primarily due to accrued expenses.
Net Cash Flows From Investing Activities.Blue Spa did not have any net cash flow from investing activities during the nine month period ended February 28, 2013 compared to $nil for the same time period for the prior fiscal period.
Net Cash Flows From Financing Activities. Blue Spa has $13,000 in net cash flow from financing activities during the nine month period ended February 28, 2013, compared to 10,000 for the same time period for the prior fiscal period.
Results of Operations
Year Ended May 31, 2012
Net Loss. During the year ended May 31, 2012, Blue Spa had a net loss of $27,646 or $0.004 per share. The loss was primarily due to administrative and other operating expenses, compared to the prior fiscal period ended May 31, 2011, when Blue Spa had a net loss of $21,500 or $0.003 per share, which was primarily due to administrative and other operating expenses and cost of formation.
Revenue. Blue Spa had no operating revenues since its inception on September 4, 2009, through to May 31, 2012. Blue Spa’s activities have been financed from the proceeds of share subscriptions and notes payable.
Operating Expenses. Blue Spa’s operating expenses since its inception on September 4, 2009, through to May 31, 2012 were $67,052. The operating expenses were primarily due to $62,281 in administrative and other operating expenses, $2,916 in formation costs, and $1,855 in interest expenses.
Nine Month Period Ended February 28, 2013
Net Loss. During the nine month period ended February 28, 2013, Blue Spa had a net loss of $7,153 or $0.001 per share. The loss was primarily due to administrative and other operating expenses, compared to the same time period for the prior fiscal period, when Blue Spa had a net loss of $3,290 or $0.000 per share, which was primarily due to administrative and other operating expenses.
Revenue. Blue Spa had no operating revenues since its inception on September 4, 2009, through to February 28, 2013. Blue Spa’s activities have been financed from the proceeds of share subscriptions.
Operating Expenses. Blue Spa’s operating expenses since its inception on September 4, 2009, through to February 28, 2013 were $77,748. The operating expenses were primarily due to $71,014 in administrative and other operating expenses, $2,916 in formation costs, and $3,818 in interest expenses.
Inflation
Management does not believe that inflation will have a material impact on Blue Spa’s future operations.
Off-balance sheet arrangements
Blue Spa has no off-balance sheet arrangements including arrangements that would affect its liquidity, capital resources, market risk support and credit risk support or other benefits. Blue Spa does not have any non-consolidated, special-purpose entities.
Contingencies and Commitments
Blue Spa had no contingencies or long term commitments at February 28, 2013.
| Page 29 |
Critical Accounting Policies and Estimates
An appreciation of Blue Spa’s critical accounting policies is necessary to understand its financial results. These policies may require that Blue Spa to make difficult and subjective judgments regarding uncertainties; as a result, the estimates may significantly impact its financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. Blue Spa has applied its critical accounting policies and estimation methods consistently.
Website Development Costs
Blue Spa recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost” that codified the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”) NO. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Relating to website development costs Blue Spa follows the guidance pursuant to the Emerging Issues Task Force (EITF) NO. 00-2, “Accounting for Website Development Costs”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage.
Costs associated with the website consist primarily of website development costs paid to third party. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. Internal costs related to the development of website content will be charged to operations as incurred. Web-site development costs related to the customers are charged to cost of sales.
Fair Value of Financial Instruments
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and short term note - related party, approximate their carrying values since they are short term in nature and they are receivable or payable on demand. Management is of the opinion that Blue Spa is exposed to significant interest or credit risks arising from the bank-held assets. Blue Spa is operating outside the United States of America and may have significant exposure to foreign currency risk due to the fluctuation of the currency in which Blue Spa operates and the U.S. dollar. Blue Spa accounts for certain assets and liabilities at fair value.
Concentration of Credit Risk
Blue Spa places its cash and cash equivalents with a high credit quality financial institution. Blue Spa maintains United States Dollars at a bank in the Switzerland that are not insured. Blue Spa minimizes its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institution.
Foreign Currency Translation
Blue Spa is located and operating outside of the United States of America. The functional currency of Blue Spa is the U.S. Dollar. At the transaction date, each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are re-measured by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations.
Research and Development Costs
Research and development costs will be expensed as incurred.
Forward-looking Statements
This registration statement contains forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties. Statements that are not historical facts, including statements about management’s beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by, or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend,” or similar expressions. These statements include, among others, statements regarding Blue Spa’s current expectations, estimates and projections about future events and financial trends affecting the financial condition and operations of its business. Forward-looking statements are only predictions and not guarantees of performance and speak only as of the date they are made. Blue Spa undertakes no obligation to update any forward-looking statement in light of new information or future events.
| Page 30 |
Although management believes that the expectations, estimates and projections reflected in the forward-looking statements are based on reasonable assumptions when they are made, Blue Spa can give no assurance that these expectations, estimates and projections can be achieved. Management believes the forward-looking statements in this registration statement are reasonable; however, you should not place undue reliance on any forward-looking statement, as they are based on current expectations. Future events and actual results may differ materially from those discussed in the forward-looking statements. Factors that could cause actual results to differ materially from Blue Spa’s expectations include, but are not limited to:
| ● | the number of products and the quality of those products that Blue Spa is able to successfully produce and market, | |
| ● | changes in federal or state laws and regulations to which Blue Spa is subject, including tax, environmental, and employment laws and regulations, | |
| ● | conditions of the capital markets that Blue Spa utilizes to access capital, | |
| ● | the ability to raise capital in a cost-effective way, | |
| ● | the effect of changes in accounting policies, if any, | |
| ● | the ability of Blue Spa to manage its growth, | |
| ● | the ability to control costs, | |
| ● | Blue Spa’s ability to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, | |
| ● | Blue Spa’s ability to obtain governmental and regulatory approval of various expansion or other projects, | |
| ● | changes in general economic conditions in the United States and in the rest of the world and changes in the industries in which Blue Spa conducts its business, and | |
| ● | the costs and effects of legal and administrative claims and proceedings against Blue Spa, |
For a more detailed discussion of these and other risks that may impact Blue Spa’s business, see “Risk Factors” beginning on page 7.
Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure
Since inception on September 4, 2009, there were no disagreements with Blue Spa’s principal accountants on any matter of accounting principle or practices, financial statement disclosure or auditing scope or procedure. In addition, there were no reportable events as described in Item 304 of Regulation S-K that occurred within Blue Spa’s two most recent fiscal years and the subsequent interim periods.
Directors, Executive Officers, Promoters and Control Persons
The sole Director and Officer currently serving Blue Spa is as follows:
| Name | Age | Positions Held and Tenure | ||
| Law Yau Yau | 29 | President, CEO, Treasurer, CFO, Corporate Secretary, |
The sole Director named above will serve until the next annual meeting of the stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated.
Biographical information
Law Yau Yau
Mr. Yau Yau has acted as Blue Spa’s sole Director and Officer since its inception on September 4, 2009. Since January 2005 Mr. Yau Yau has also been a Quality Control Manager for Shenzhen Linfeng Electronics Co Ltd, in the Shenzhen, Province of China.
Conflicts of Interest
Though Mr. Yau Yau does not work with any other wholesale or retail companies other than Blue Spa, he may in the future. Blue Spa does not have any written procedures in place to address conflicts of interest that may arise between its business and the future business activities of Mr. Yau Yau.
| Page 31 |
Audit Committee Financial Expert
Blue Spa does not have a financial expert serving on an audit committee. Blue Spa does not have a separately-designated standing audit committee because it is a start-up development company and has no revenue. Rather, Blue Spa’s board of directors perform the required functions of an audit committee. Blue Spa’s board of directors is responsible for: (1) selection and oversight of Blue Spa’s independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by Blue Spa’s employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.
Significant Employees and Consultants
Blue Spa has no significant employees other than Mr. Yau Yau who is Blue Spa’s sole director and officer. Mr. Yau Yau has devoted and will continue to devote approximately 10 hours per week or 20% of his working time to Blue Spa’s business.
Family Relationships
There are no family relationships among the directors, executive officers or persons nominated or chosen by Blue Spa to become directors or executive officers.
Involvement in Certain Legal Proceedings
During the past ten years, no of the director, officer, or promoter of Blue Spa has been:
| ● | a general partner or executive officer of any business against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time; | |
| ● | convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
| ● | subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; | |
| ● | subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity, or to be associated with persons engaged in any such activity; | |
| ● | found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated; | |
| ● | found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; | |
| ● | the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: |
| ● | any Federal or State securities or commodities law or regulation; or | |
| ● | any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or | |
| ● | any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| ● | the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
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Compensation Discussion and Analysis
Blue Spa does not have any compensation policies currently in place nor a compensation committee.
Since the end of Blue Spa’s last fiscal year end, no actions have been taken regarding executive compensation.
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to Blue Spa’s Officer for all services rendered in all capacities to Blue Spa for the fiscal periods indicated.
Name and principal | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan | Non-qualified Deferred Compensation Earnings | All other compensation | Total | ||||||||||||||||||
| position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||
| Law Yau Yau | 2012 | nil | nil | nil | nil | nil | nil | nil | nil | |||||||||||||||||
| CEO & CFO | 2011 | nil | nil | nil | nil | nil | nil | nil | nil | |||||||||||||||||
| Sep 2009 – present | 2010 | nil | nil | nil | nil | nil | nil | nil | nil |
Blue Spa’s director has not received any monetary compensation as a director since Blue Spa’s inception to the date of this prospectus. Blue Spa currently does not pay any compensation to its director serving on its board of directors.
Stock Option Grants
Blue Spa has not granted any stock options to the executive officer since its inception on September 4, 2009.
Employment Agreements
Currently, Blue Spa does not have an employment agreement with Law Yau Yau. However, Blue Spa reimburses Mr. Yau Yau for all reasonable expenses incurred by Mr. Yau Yau while acting as the sole director and officer of Blue Spa.
There are no other agreements between Blue Spa and any named executive officer, and there are no employment agreements or other compensating plans or arrangements with regard to any named executive officer that provide for specific compensation in the event of resignation, retirement, other termination of employment or from a change of control of Blue Spa or from a change in a named executive officer’s responsibilities following a change in control.
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Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this prospectus, the number of shares of common stock owned of record and beneficially by executive officers, directors, and persons who hold 5% or more of the outstanding common stock of Blue Spa.
| Title of Class | Name and Address of Beneficial Owner | Number of Shares Owned Beneficially | Percent of Class Owned Prior To This Offering(1) | |||||||
| common shares | Law Yau Yau 14 Hau, Zhan Nan Lo Wu Chang Chu Wu Han Ze, China | 4,000,000 | 57.1 | % | ||||||
| common shares | All executive officers and directors as a group | 4,000,000 | 57.1 | % | ||||||
The percent of class is based on 7,000,000 shares of common stock outstanding as of May 31, 2013.
Each person listed above has full voting and investment power with respect to the common shares indicated. Under the rules of the SEC, a person (or a group of persons) is deemed to be a “beneficial owner” of a security if he or she, directly or indirectly, has or shares power to vote or to direct the voting of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase Blue Spa’s common shares.
Changes in Control
Blue Spa is not aware of any arrangement that may result in a change in control of the Company.
Transactions with Related Persons, Promoters and
Certain Control Persons
| (a) | Transactions with Related Persons |
During Blue Spa’s last three fiscal years, no director, executive officer, security holder, nor any immediate family of such director, executive officer, nor security holder owning 5% or more has had any direct or indirect material interest in any transaction or currently proposed transaction, which Blue Spa was or is to be a participant, that exceeded the lesser of (1) $120,000 or (2) one percent of the average of Blue Spa’s total assets at year-end for the last two completed fiscal years
| (b) | Review, approval or ratification of transactions with related persons |
Currently Blue Spa does not have any policies and procedures for the review, approval, or ratification of transactions with related persons.
| (c) | Promoters and certain control persons |
Since inception of Blue Spa on September 4, 2009, Law Yau Yau has been the only promoter of Blue Spa’s business, but Mr. Yau Yau has not received anything of value from Blue Spa nor is any person entitled to receive anything of value from Blue Spa for services provided as a promoter of the business of Blue Spa.
| (d) | Director independence |
Blue Spa’s board of directors currently solely consists of Law Yau Yau. Pursuant to Item 407(a) of Regulation S-K of the Securities Act, Blue Spa’s board of directors has adopted the definition of “independent director” as set forth in Rule 4200(a)(15) of the NASDAQ Manual. In summary, an “independent director” means a person other than an executive officer or employee of Blue Spa or any other individual having a relationship which, in the opinion of Blue Spa’s board of directors, would interfere with the exercise of independent judgement in carrying out the responsibilities of a director, and includes any director who accepted any compensation from Blue Spa in excess of $200,000 during any period of 12 consecutive months with the three past fiscal years. Also, the ownership of Blue Spa’s stock will not preclude a director from being independent.
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In applying this definition, Blue Spa’s board of directors has determined that Mr. Yau Yau does not qualify as an “independent director” pursuant to the same Rule.
As of the date of the prospectus, Blue Spa did not maintain a separately designated compensation or nominating committee. Blue Spa has also adopted this definition for the independence of the members of its audit committee. Law Yau Yau is the sole member of Blue Spa’s audit committee as a result of being the sole director. Blue Spa’s board of directors has determined that Mr. Yau Yau is not “independent” for purposes of Rule 4200(a)(15) of the NASDAQ Manual, applicable to audit, compensation and nominating committee members, and is not “independent” for purposes of Section 10A(m)(3) of the Securities Exchange Act.
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling Blue Spa pursuant to provisions of the State of Nevada, Blue Spa has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
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Dealer Prospectus Delivery Obligation
Until [12 months from the effective date of this prospectus], all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
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Part II - Information Not Required In Prospectus
Other Expenses of Issuance and Distribution
The estimated costs of this offering are as follows:
| SEC Registration Fee | $ | 100 | ||
| Legal Fees and Expenses | 5,000 | |||
| Accounting Fees and Expenses | 600 | |||
| Auditor Fees and Expenses | 10,000 | |||
| Electronic Filing Fees | 2,000 | |||
| Printing Costs | 500 | |||
| Courier Costs | 500 | |||
| Transfer Agent Fees | 3,000 | |||
| Total | $ | 21,700 |
All amounts are estimates. Blue Spa is paying all expenses listed above. None of the above expenses of issuance and distribution will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale.
Indemnification of Directors and Officers
As permitted by Nevada law, Blue Spa’s Articles of Incorporation provide that it will indemnify Blue Spa’s directors and officers against expenses and liabilities they incur to defend, settle or satisfy any civil or criminal action brought against them on account of their being or having been directors or officers of Blue Spa, unless, in any such action, they are adjudged to have acted with gross negligence or willful misconduct.
Exclusion of Liabilities
Pursuant to the laws of the State of Nevada, Blue Spa’s Articles of Incorporation exclude personal liability for its directors for monetary damages based upon any violation of their fiduciary duties as directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, acts in violation of Section 7-106-401 of the Nevada Business Corporation Act, or any transaction from which a director receives an improper personal benefit. This exclusion of liability does not limit any right, which a director may have to be indemnified, and does not affect any director’s liability under federal or applicable state securities laws.
Disclosure of Commission position on Indemnification for Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling Blue Spa pursuant to provisions of the State of Nevada, Blue Spa has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
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Recent Sales of Unregistered Securities
As of September 4, 2009 Blue Spa has sold 7 million shares of unregistered securities. All of these 7 million shares were acquired from Blue Spa in private placements that were exempt from registration under Regulation S of the Securities Act of 1933 and were sold to non-US residents.
The shares include the following:
| 1. | On September 14, 2009, Blue Spa issued 4,000,000 shares of common stock at a price of $0.0005 per share for cash proceeds of $2,000 to its President; and |
| 2. | On January 29, 2010, Blue Spa issued 3,000,000 shares of common stock to 30 non-affiliate International resident at a price of $0.005 per share for cash proceeds of $15,000. |
With respect the above offerings to International residents, Blue Spa completed the offerings of the common stock pursuant to Rule 903 of Regulation S of the Securities Act on the basis that the sale of the common stock was completed in an “offshore transaction”, as defined in Rule 902(h) of Regulation S. Blue Spa did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the shares. Each investor represented to Blue Spa that the investor was not a U.S. person, as defined in Regulation S, and was not acquiring the shares for the account or benefit of a U.S. person. The subscription agreement executed between Blue Spa and the investor included statements that the securities had not been registered pursuant to the Securities Act and that the securities may not be offered or sold in the United States unless the securities are registered under the Securities Act or pursuant to an exemption from the Securities Act. The investor agreed by execution of the subscription agreement for the common stock: (i) to resell the securities purchased only in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an exemption from registration under the Securities Act; (ii) that Blue Spa is required to refuse to register any sale of the securities purchased unless the transfer is in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act or pursuant to an exemption from registration under the Securities Act; and (iii) not to engage in hedging transactions with regards to the securities purchased unless in compliance with the Securities Act. When issued all securities will be endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Securities Act and cannot be resold without registration under the Securities Act or an applicable exemption from the registration requirements of the Securities Act.
Each investor was given adequate access to sufficient information about Blue Spa to make an informed investment decision. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to any of the investors.
Exhibits
| Exhibit Number | Description | |
| 3.1 | Articles of Incorporation of Blue Spa Incorporated, filed as an Exhibit to Blue Spa Incorporated’s Form S-1/A Amendment #1 (Registration Statement) filed on December 17, 2010 and incorporated herein by reference. | |
| 3.2 | By-Laws of Blue Spa Incorporated, filed as an Exhibit to Blue Spa Incorporated’s Form S-1 (Registration Statement) filed on September 13, 2010 and incorporated herein by reference. | |
| 3.3 | Certificate of Amendment of Blue Spa Incorporated, filed as an Exhibit to Blue Spa Incorporated’s Form S-1/A Amendment #1 (Registration Statement) filed on December 17, 2010 and incorporated herein by reference. | |
| 5.1 | Opinion of Richard C. Fox, regarding the legality of the securities being registered, filed as an Exhibit to Blue Spa Incorporated’s Form S-1/A Amendment #2 (Registration Statement) filed on November 23, 2011 and incorporated herein by reference. | |
| 14 | Code of Ethics, filed as an Exhibit to Blue Spa Incorporated’s Form S-1 (Registration Statement) filed on September 13, 2010 and incorporated herein by reference. | |
| 23.1 | Consent of Independent Auditor. | |
| 23.2 | Consent of Richard C. Fox, filed as an Exhibit to Blue Spa Incorporated’s Form S-1/A Amendment #2 (Registration Statement) filed on November 23, 2011 and incorporated herein by reference. | |
| 101* | Financial statements from the annual report on Form 10-K of Blue Spa Incorporated for the fiscal year ended May 31, 2012, formatted in XBRL: (i) the Audited Balance Sheet, (ii) the Audited Statement of Operations; (iii) the Audited Statement of Stockholders’ Deficit and Comprehensive Income, and (iv) the Audited Statement of Cash Flows and Financial statements from the quarterly report on Form 10-Q of Blue Spa Incorporated for the quarter ended February 28, 2013, formatted in XBRL: (i) the Unaudited Interim Balance Sheet, (ii) the Unaudited Interim Statement of Operations; (iii) the Unaudited Interim Statement of Stockholders’ Deficit and Comprehensive Income, and (iv) the Unaudited Interim Statements of Cash Flows. |
| * | In accordance with Rule 402 of Regulation S-T, the XBRL (“eXtensible Business Reporting Language”) related information is furnished and not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
Undertakings
The undersigned registrant hereby undertakes:
| 1. | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: |
| a) | include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | |
| b) | reflect in Blue Spa’s prospectus any facts or events arising after the effective date of this registration statement, or most recent post-effective amendment, which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease if the securities offered (if the total dollar value of securities offered would not exceed that which was registered) any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. | |
| c) | include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement. |
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| 2. | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
| 3. | To remove from registration by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of the offering. | |
| 4. | That each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 340A, will be deemed to be part of and included in this registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of this registration statement or made in a document incorporated or deemed incorporated by reference into this registration statement or prospectus that is a part of this registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in this registration statement or prospectus that was part of this registration statement or made in any such document immediately prior to such date of first use. |
Insofar as indemnification for liabilities arising under that Securities Act may be permitted to Blue Spa’s directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other than the payment by Blue Spa of expenses incurred or paid by one of its directors, officers or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of Blue Spa’s directors, officers or controlling persons in connection with the securities being registered, Blue Spa will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against the public policy as expressed in the Securities Act, and a will be governed by the final adjudication of such issue.
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Signatures
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto, duly authorized in the City of Chengdu, China on June 03, 2013.
Blue Spa Incorporated
| By: | /s/ Law Yau Yau |
Law Yau Yau
Director, Chief Executive Officer, President, and Principal Executive Officer
Pursuant to the requirements of Securities Act of 1933, this registration statement was signed by the following persons in the capacities and the dates stated:
| /s/ Law Yau Yau | |
| Law Yau Yau | |
| Director, Chief Executive Officer, President, and Principal Executive Officer | |
June 03, 2013
| /s/ Law Yau Yau | |
| Law Yau Yau |
Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer
June 03, 2013
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