Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Aug. 31, 2014 | Sep. 30, 2014 | |
Document Information [Line Items] | ' | ' |
Entity Registrant Name | 'Maiden Lane Jewelry, Ltd. | ' |
Entity Central Index Key | '0001574097 | ' |
Current Fiscal Year End Date | '--05-31 | ' |
Trading Symbol | 'MDNL | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Aug-14 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2015 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 10,476,854 |
CONDENSED_BALANCE_SHEET
CONDENSED BALANCE SHEET (USD $) | Aug. 31, 2014 | 31-May-14 |
Current Assets: | ' | ' |
Cash and Cash Equivalents | $89,801 | $15,269 |
Accounts Receivable, Net | 2,387,002 | 1,594,010 |
Other Receivables | 418,489 | 0 |
Inventories | 1,825,751 | 2,094,929 |
Prepaid Expenses | 37,216 | 64,092 |
Deferred Taxes | 127,840 | 85,840 |
Total Current Assets | 4,886,099 | 3,854,140 |
Property and Equipment, Net | 14,404 | 10,051 |
Security Deposits | 2,000 | 2,000 |
Total Assets | 4,902,503 | 3,866,191 |
Current Liabilities: | ' | ' |
Accounts Payable | 1,789,200 | 1,895,906 |
Accrued Expenses | 42,962 | 49,474 |
Loans Payable - Factor | 1,458,781 | 826,284 |
Loans Payable - Related Parties | 559,632 | 359,632 |
Common Stock to be Issued | 0 | 32,871 |
Income Taxes Payable | 0 | 0 |
Total Current Liabilities | 3,850,575 | 3,164,167 |
Long-Term Debt: | ' | ' |
Notes Payable, net of debt discount of $183,026 and $0, respectively | 216,974 | 0 |
Convertible Note Payable - Related Party | 74,000 | 74,000 |
Total Liabilities | 4,141,549 | 3,238,167 |
Commitments and Contingencies | ' | ' |
Stockholders' Equity: | ' | ' |
Preferred Stock, $.0001 par value; 10,000,000 shares authorized, none issued and outstanding at August 31, 2014 and May 31, 2014 | 0 | 0 |
Common Stock, $.0001 par value; 50,000,000 shares authorized, 10,476,854 and 10,466,250 shares issued and outstanding at August 31, 2014 and May 31, 2014, respectively | 1,048 | 1,047 |
Additional Paid-In Capital | 1,113,140 | 895,555 |
Accumulated Deficit | -353,234 | -268,578 |
Total Stockholders' Equity | 760,954 | 628,024 |
Total Liabilities and Stockholders' Equity | $4,902,503 | $3,866,191 |
CONDENSED_BALANCE_SHEET_Parent
CONDENSED BALANCE SHEET (Parenthetical) (USD $) | Aug. 31, 2014 | 31-May-14 |
Debt Instrument, Unamortized Discount | $183,026 | $0 |
Preferred Stock, par value | $0.00 | $0.00 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 50,000,000 | 50,000,000 |
Common Stock, shares issued | 10,476,854 | 10,466,250 |
Common Stock, shares outstanding | 10,476,854 | 10,466,250 |
CONDENSED_STATEMENT_OF_OPERATI
CONDENSED STATEMENT OF OPERATIONS (USD $) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Sales - Net | $1,829,784 | $2,290,794 |
Costs and Expenses: | ' | ' |
Cost of Sales | 1,511,876 | 1,623,608 |
Officer's Compensation | 91,370 | 72,555 |
Professional and Consulting Fees | 168,002 | 195,637 |
Selling, General and Administrative Expenses | 153,331 | 212,813 |
Total Costs and Expenses | 1,924,579 | 2,104,613 |
Income (Loss) from Operations | -94,795 | 186,181 |
Other Income (Expense): | ' | ' |
Interest Expense - Related Party | -738 | -740 |
Interest Expense - Notes Payable | -1,153 | 0 |
Interest Expense - Accounts Receivable Financings | -28,281 | 0 |
Amortization of Debt Discount | -1,689 | 0 |
Total Other Income and (Expenses) | -31,861 | -740 |
Income (Loss) before Income Tax Provision (Benefit) | -126,656 | 185,441 |
Income Tax Provision (Benefit) | -42,000 | 59,200 |
Net Income (Loss) | ($84,656) | $126,241 |
Income (Loss) Per Common Share - Basic | ($0.01) | $0.01 |
Basic Weighted Average Shares | 10,469,477 | 10,353,750 |
Income (Loss) Per Common Share - Diluted | ($0.01) | $0.01 |
Diluted Weighted Average Shares | 10,469,477 | 10,390,750 |
CONDENSED_STATEMENT_OF_STOCKHO
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] |
Beginning balance at May. 31, 2014 | $628,024 | $1,047 | $895,555 | ($268,578) |
Beginning balance, Shares at May. 31, 2014 | ' | 10,466,250 | ' | ' |
Issuance of Common Stock for services | 32,871 | 1 | 32,870 | 0 |
Issuance of Common Stock for services (in shares) | 10,604 | 10,604 | ' | ' |
Debt Discount on Notes Payable | 184,715 | 0 | 184,715 | 0 |
Net Loss for the three months ended August 31, 2014 | -84,656 | 0 | 0 | -84,656 |
Ending balance at Aug. 31, 2014 | $760,954 | $1,048 | $1,113,140 | ($353,234) |
Ending balance, Shares at Aug. 31, 2014 | ' | 10,476,854 | ' | ' |
CONDENSED_STATEMENT_OF_CASH_FL
CONDENSED STATEMENT OF CASH FLOWS (USD $) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Cash Flows from Operating Activities: | ' | ' |
Net Income (Loss) | ($84,656) | $126,241 |
Adjustments to Reconcile Net Income (Loss) to Net Cash (Used) in Operating Activities: | ' | ' |
Depreciation | 1,091 | 801 |
Amortization of Note Discount | 1,689 | 0 |
Common Stock Issued for Services | 0 | 0 |
Deferred Taxes | -42,000 | 0 |
Reserve for Doubtful Accounts and Sales Returns and Allowances | 92,708 | 0 |
Changes in Assets and Liabilities: | ' | ' |
(Increase) in Accounts Receivable | -885,700 | -1,275,412 |
(Increase) in Other Receivables | -418,489 | 0 |
Decrease (Increase) in Inventories | 269,178 | -2,029 |
Decrease in Prepaid Expenses | 26,876 | 7,161 |
Increase (Decrease) in Accounts Payable | -106,706 | 493,817 |
Increase (Decrease) in Accrued Expenses | -6,512 | 121,964 |
Increase (Decrease) in Common Stock to be Issued | 0 | 100,000 |
Increase in Income Taxes Payable | 0 | 38,443 |
Net Cash (Used) in Operating Activities | -1,152,521 | -389,014 |
Cash Flows from Investing Activities: | ' | ' |
Capital Expenditures | -5,444 | -1,150 |
Net Cash (Used) In Investing Activities | -5,444 | -1,150 |
Cash Flows from Financing Activities: | ' | ' |
Proceeds from Sale of Common Stock | 0 | 0 |
Payments of Offering Costs | 0 | 0 |
Proceeds of Note Issuance | 400,000 | 0 |
Proceeds of Loans Payable - Related Parties | 306,000 | 354,632 |
Payments of Loans Payable - Related Parties | -106,000 | 0 |
Proceeds from Loans Payable - Factor | 1,674,632 | 0 |
Repayments to Loans Payable - Factor | -1,042,135 | 0 |
Net Cash (Used) In Financing Activities | 1,232,497 | 354,632 |
Increase (Decrease) in Cash and Cash Equivalents | 74,532 | -35,532 |
Cash and Cash Equivalents - Beginning of Period | 15,269 | 39,086 |
Cash and Cash Equivalents - End of Period | 89,801 | 3,554 |
Supplemental Disclosure of Cash Flow Information: | ' | ' |
Interest Paid | 26,255 | 0 |
Income Taxes Paid | 0 | 25,850 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ' | ' |
Debt Discount on Notes Payable | 184,715 | 0 |
Issuance of 10,604 shares of Common Stock as consideration for payment of obligation to issue common stock | $32,871 | $0 |
CONDENSED_STATEMENT_OF_CASH_FL1
CONDENSED STATEMENT OF CASH FLOWS (Parenthetical) | 3 Months Ended |
Aug. 31, 2014 | |
Stock Issued During Period, Shares, Issued for Services | 10,604 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||
Summary of Significant Accounting Policies | ' | |||||||
NOTE 1 - Summary of Significant Accounting Policies | ||||||||
Organization and Basis of Presentation | ||||||||
Maiden Lane Jewelry, Ltd., formerly Romantique Ltd., (“the Company”) was incorporated on September 6, 2012 under the laws of the State of New York. The Company is a wholesaler and manufacturer of jewelry including pendants, bracelets and earrings. We began operations on October 1, 2012 by selling fashion rings, pendants, earrings and bracelets to independent retailers. In December 2012, we commenced a line of bridal (engagement) rings, featuring both settings and diamonds. In February 2014 we began focusing on sales of bridal jewelry featuring uniquely cut stones which in May 2014 we branded as an Aspiri cut diamond. | ||||||||
In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. These financial statements are condensed and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These condensed financial statements should be read in conjunction with the Company’s May 31, 2014 audited financial statements and notes included in Form 10-K filed on September 4, 2014. | ||||||||
Results of operations for interim periods are not necessarily indicative of the results of operations for a full year. | ||||||||
Cash and Cash Equivalents | ||||||||
The Company considers all highly-liquid investments purchased with a maturity of three months or less to be cash equivalents. As of August 31, 2014 and 2013, the Company did not have any cash equivalents. | ||||||||
Inventories | ||||||||
Raw materials are stated at the lower of cost or market, with cost determined by specific identification for unique items (such as diamond stones, each with a particular carat weight, color, clarity and cut) and using the first-in, first-out method for generic items or styles (certain semi-mounts and fashion jewelry). Finished goods which we fabricate are stated at the lower of cost or market, with cost determined by specific identification for each component making up the item plus direct labor and other fees (primarily diamond certification). | ||||||||
Property and Equipment | ||||||||
Property and equipment is carried at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the related assets, which is generally five years. | ||||||||
Revenue Recognition | ||||||||
For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” (SAB No. 104), which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB No. 101). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowance, and other adjustments are provided for in the same period the related sales are recorded. Provision for sales returns and allowances that were netted against sales amounted to $93,000 and $43,000 for the three months ended August 31, 2014 and August 31, 2013, respectively. | ||||||||
Concentration of Credit Risks | ||||||||
The Company primarily sells its products to retail jewelers focused on mid-to-high end consumers. Customers typically receive payment terms of ratable monthly payments over 90 to 120 days with exceptions based on credit quality or other terms and conditions. As a result, the Company is exposed to credit risk on its accounts receivable. The Company generally seeks to mitigate such risk by performing credit checks through jeweler trade associations it is a members of, by attending trade shows which selectively invite retailer attendees based on their credit worthiness and by checking references with other jewelers in the industry. | ||||||||
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation (“FDIC”) limit of $250,000 at times during the year. | ||||||||
Sales | ||||||||
The Company’s sales are comprised of primarily three major products: Aspiri Cut Rings, Complete Rings and Fashion Jewelry. The Company may also on occasion sell loose stone inventory. | ||||||||
A breakdown of sales for the three months ended August 31, 2014 and August 31, 2013, respectively: | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
August 31, | August 31, | |||||||
2014 | 2013 | |||||||
(unaudited) | (unaudited) | |||||||
Aspiri Cut Rings | 45 | % | — | |||||
Complete Rings (not Aspiri) | 34 | % | 73 | % | ||||
Fashion Jewelry & Other | 21 | % | 27 | % | ||||
The three months ended August 31, 2014 had returns of Complete Rings that were not Aspiri Cut Rings as some customers substituted such rings for Aspiri Cut Rings. | ||||||||
Advertising Costs | ||||||||
Advertising and show costs are charged to operations when incurred. Advertising costs during the three months ended August 31, 2014 and August 31, 2013 were $49,000 and $29,000, respectively. | ||||||||
Deferred Income Taxes | ||||||||
The Company accounts for deferred income taxes using the asset and liability method, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting and the tax bases of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. | ||||||||
Net Income (Loss) Per Share | ||||||||
Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding. | ||||||||
The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
August 31, | August 31, | |||||||
2014 | 2013 | |||||||
(unaudited) | (unaudited) | |||||||
Numerator: | ||||||||
Net Income (Loss) | $ | -84,656 | $ | 126,241 | ||||
Denominator: | ||||||||
Basic weighted-average shares | 10,469,477 | 10,353,750 | ||||||
Effect of dilutive securities: | ||||||||
Warrants 1 | — | 2 | — | |||||
Convertible Debt 3 | — | 4 | 37,000 | |||||
Diluted weighted-average shares | 10,469,477 | 10,390,750 | ||||||
Per Share Income (Loss): | ||||||||
Basic | $ | -0.01 | $ | 0.01 | ||||
Diluted | $ | -0.01 | $ | 0.01 | ||||
1 | There are 114,000 warrants issued in connection with $400,000 of unsecured notes at an exercise price of $3.50 per warrant into one share of common stock. | |||||||
2 | Warrants for the three months ended August 31, 2014 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. | |||||||
3 | Convertible debt is convertible into 37,000 shares of common stock. | |||||||
4 | Convertible debt for the three months ended August 31, 2014 is not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. | |||||||
Accounting Estimates | ||||||||
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Management uses its best judgment in valuing these estimates, and may, as warranted, solicit external professional advice and other assumptions believed to be reasonable. | ||||||||
Fair Value Measurements | ||||||||
The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, or which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: | ||||||||
Level 1: Quoted prices in active markets for identical assets or liabilities. | ||||||||
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities. | ||||||||
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. | ||||||||
The Company's financial instruments include cash and cash equivalents, accounts receivable, accounts payable and loans and notes payable. These items are determined to be a Level 1 fair value measurement. | ||||||||
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and loans payable approximates fair value because of the short maturity of these instruments. The recorded value of long-term debt approximates its fair value as the terms and rates approximate market rates. | ||||||||
Recent Accounting Pronouncements | ||||||||
Management does not believe there would have been a material effect on the accompanying financial statements had any recently issued, but not yet effective, accounting standards been adopted in the current period. | ||||||||
Inventories
Inventories | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventories | ' | |||||||
NOTE 2 - Inventories | ||||||||
Inventories consist of the following: | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Raw Materials | $ | 823,169 | $ | 257,598 | ||||
Finished Goods | 1,002,582 | 1,837,331 | ||||||
Total Inventory | $ | 1,825,751 | $ | 2,094,929 | ||||
Inventories are pledged as security for the Company’s Accounts Receivable Financing Agreement (see Note 8). | ||||||||
Property_and_Equipment
Property and Equipment | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||
Property and Equipment | ' | |||||||
NOTE 3 - Property and Equipment | ||||||||
Property and equipment consists of the following: | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Office Equipment | $ | 14,715 | $ | 9,271 | ||||
Computers | 4,808 | 4,808 | ||||||
19,523 | 14,079 | |||||||
Less: Accumulated Depreciation | 5,119 | 4,028 | ||||||
$ | 14,404 | $ | 10,051 | |||||
Depreciation expense was approximately $1,100 and $800 for the three months ended August 31, 2014 and August 31, 2014, respectively. | ||||||||
Other_Receivables
Other Receivables | 3 Months Ended |
Aug. 31, 2014 | |
Receivables [Abstract] | ' |
Other Receivables | ' |
NOTE 4 - Other Receivables | |
Other receivables represent the cost of certain diamonds returned to our diamond vendor for credit. The receivable represents the excess of the cost of diamonds returned over amounts owned to the vendor. | |
Convertible_Note_Payable_Relat
Convertible Note Payable - Related Party | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Convertible Note Payable - Related Party | ' | |||||||
NOTE 5 - Convertible Note Payable – Related Party | ||||||||
Convertible note payable to the Company’s president is summarized as follows: | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Note Payable, bearing interest at 4% per annum, and due December 31, 2015. The note is Convertible into shares of the Company’s Common stock at a conversion rate of $2 per share, subject to adjustment upon the occurrence of certain events including stock dividends, stock split or combinations and reclassifications. | $ | 74,000 | $ | 74,000 | ||||
Loans_Payable_Related_Parties
Loans Payable - Related Parties | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Loans Payable - Related Parties | ' | |||||||
NOTE 6 - Loans Payable – Related Parties | ||||||||
Loans payable to related parties is summarized as follows: | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Loans payable to the Company’s President and CEO. The loans are payable on demand and non-interest bearing, and are subordinated to the factor. | $ | 559,632 | $ | 359,632 | ||||
A portion of this loan in the amount of $210,000 is subordinated to the factor. | ||||||||
Unsecured_Notes_Payable
Unsecured Notes Payable | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Unsecured Notes Payable | ' | |||||||
NOTE 7 - Unsecured Notes Payable | ||||||||
On August 18, 2014 and August 25, 2014 the Company issued $250,000 and $150,000, respectively, of unsecured, subordinated notes bearing 11% interest with 285 detachable and freely transferable warrants per $1,000 face value Note. The notes are due on the second anniversary of their issue date with warrants exercisable within ten years from their issue date at an exercise price of $3.50. The notes issued on August 25, 2014 are to an entity controlled by the brother of the Company’s president. | ||||||||
Pursuant to ASC 470-20, the Company recorded the value of the warrants using the Black-Scholes method, which was determined to be approximately $343,000. A portion of the debt proceeds was allocated to the warrants as debt discount using the relative fair value method, which approximated $185,000. As the warrants contain fixed settlement provisions and the exercise price cannot be adjusted, the Company recorded the fair value of the warrants as additional paid in capital with a corresponding debt discount which will be amortized over the two-year term of the notes using the interest method. For the three months ended August 31, 2014, the Company recognized approximately $1,700 in amortization expense relating to these warrants. | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Notes Payable, Par | $ | 400,000 | $ | — | ||||
Initial Debt Discount | -184,715 | — | ||||||
Accumulated Amortization | 1,689 | — | ||||||
Notes Payable, Net | $ | 216,974 | $ | — | ||||
The fair value of the warrants on the issuance date was calculated using the Black Scholes method with the following weighted average assumptions: | ||||||||
Dividend yield | 0 | % | ||||||
Volatility | 311.07 | % | ||||||
Risk-free interest rate | 2.39 | % | ||||||
Expected life (months) | 120 | |||||||
Grant date price per share | $ | 3.01 | ||||||
Warrants issued | 114,000 | |||||||
Aggregate grant date fair value | $ | 343,140 | ||||||
Financing_Agreement
Financing Agreement | 3 Months Ended | ||||
Aug. 31, 2014 | |||||
Payables and Accruals [Abstract] | ' | ||||
Financing Agreement | ' | ||||
NOTE 8 - Financing Agreement | |||||
On September 30, 2013 the Company entered into an Account Receivable Financing Agreement with Rosenthal & Rosenthal, Inc. (“Rosenthal”) pursuant to which Rosenthal shall provide the Company with a line of credit up to $1,000,000. On May 23, 2014, this Accounts Receivable Financing Agreement was amended to increase the line of credit up to a maximum of $1,500,000. Loans made under the Accounts Receivable Financing Agreement bear interest at prime rate plus 3.5% (for an effective average rate of 7.5% for the three months ended August 31, 2014) and are subject to certain financial covenants. As security for these loans, Rosenthal has placed liens on the Company’s accounts receivable, inventories, and all other assets. In addition, the loans have been personally guaranteed by Yitzchok Gurary, and his parents, Mordechai Gurary and Leah Gurary. In addition, the Company has granted Rosenthal a Landlord Subordination agreement. | |||||
The Accounts Receivable Financing Agreement calls for the subordination of certain of the Company’s debt as follows: | |||||
Accounts Payable – Classique Creations, LLC | $ | 500,000 | |||
Demand Loans Payable – Yitzchok Gurary | $ | 210,000 | |||
In connection with the Accounts Receivable Finance Agreement, the Company has borrowed approximately $1.5 million net as of August 31, 2014. Total draws and repayments for the three months ended August 31, 2014 totaled approximately $1.7 million and $1.0 million, respectively. The Accounts Receivable Financing Agreement expires September 30, 2015. | |||||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Aug. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
NOTE 9 - Commitments and Contingencies | |
None. | |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Aug. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
NOTE 10 - Related Party Transactions | |
On October 1, 2012 the Company entered into a one-year consulting agreement with Isaac Gurary, under which he was to provide certain business and corporate marketing services to the Company for an annual consulting fee of 3% of certain net sales during the term of the agreement. As of August 31, 2014 the amount owed to Mr. Gurary was approximately $130,000. As of May 31, 2014, the Company had recorded accrued compensation to Mr. Gurary in the amount of approximately $104,000. These amounts are included in accounts payable and accrued expenses respectively at August 31, 2014 and May 31, 2014, respectively. Mr. Gurary serves as the Company’s President and is a significant stockholder of the Company. | |
During the three months ended August 31, 2014 and August 31, 2013, the Company purchased approximately 43% and 58%, respectively, of its merchandise from Classique Creations LLC (“Classique”), a company that is owned by the mother of the Company’s President. | |
Included in accounts payable at August 31, 2014 and May 31, 2014 are amounts owed to Classique totaling approximately $1.4 million and $1.5 million, respectively. Payment terms to Classique are one to twelve months and the manner of settlement is cash payment. Pursuant to the Accounts Receivable Financing Agreement (See Note 8), accounts payable to Classique totaling $500,000 are subordinated to the finance company. | |
The Company rents office space from a Company affiliated with the Company’s president on a month to month basis. The agreement calls for rent at $2,060 per month. Rent expense was approximately $6,000 for three months ended August 31, 2014, and $8,000 for three months ended August 31, 2013. | |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended |
Aug. 31, 2014 | |
Equity [Abstract] | ' |
Stockholdersb Equity | ' |
NOTE 11 - Stockholders’ Equity | |
On August 4, 2014 the Company issued 10,604 shares of common stock at a price per share of $3.10 for marketing services rendered during the year ended May 31, 2014. These shares have not been registered. | |
In connection with the issuance of $400,000 principal notes payable, the Company issued 114,000 common stock purchase warrants. Such warrants have an exercise price of $3.50 per share and expire August 2024. As of August 31, 2014, all common stock purchase warrants remained outstanding and exercisable with a weighted average exercise price of $3.50 per share and a remaining contractual life of 10 years. | |
Major_Suppliers_and_Customers
Major Suppliers and Customers | 3 Months Ended |
Aug. 31, 2014 | |
Major Suppliers [Abstract] | ' |
Major Suppliers | ' |
NOTE 12 - Major Suppliers and Customers | |
During the three months ended August 31, 2014 and August 31, 2013, the Company purchased approximately $538,000 (approximately 43%) and $902,000 (approximately 58%), respectively, of its merchandise from one manufacturer that is a related party (see Note 7). | |
In addition, the Company purchased merchandise from one vendor which amounted to approximately 57% of total purchases during the three months ended August 31, 2014. | |
Our three largest customers frequently vary from period to period. For the three months ended August 31, 2014, our three largest customers accounted for approximately 34% of our total revenues. For the three months ended August 31, 2013, our three largest customers accounted for approximately 16% of our total revenues. | |
Income_Taxes
Income Taxes | 3 Months Ended |
Aug. 31, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
NOTE 13 - Income Taxes | |
Our effective tax rates were approximately -33% and 32% for the three months ended August 31, 2014 and 2013, respectively. | |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Aug. 31, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
NOTE 14 - Subsequent Events | |
On September 15, 2014 the Company issued $30,000 of unsecured, subordinated notes bearing 11% interest with 285 detachable and freely transferable warrants per $1,000 face value Note. The notes are due on the second anniversary of their issue date with warrants exercisable within ten years from their issue date at an exercise price of $3.50. | |
On October 6, 2014, the Accounts Receivable Financing Agreement with Rosenthal was amended to increase the line of credit up to a maximum of $2,000,000 with all other terms remaining the same. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||
Organization and Basis of Presentation | ' | |||||||
Organization and Basis of Presentation | ||||||||
Maiden Lane Jewelry, Ltd., formerly Romantique Ltd., (“the Company”) was incorporated on September 6, 2012 under the laws of the State of New York. The Company is a wholesaler and manufacturer of jewelry including pendants, bracelets and earrings. We began operations on October 1, 2012 by selling fashion rings, pendants, earrings and bracelets to independent retailers. In December 2012, we commenced a line of bridal (engagement) rings, featuring both settings and diamonds. In February 2014 we began focusing on sales of bridal jewelry featuring uniquely cut stones which in May 2014 we branded as an Aspiri cut diamond. | ||||||||
In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. These financial statements are condensed and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These condensed financial statements should be read in conjunction with the Company’s May 31, 2014 audited financial statements and notes included in Form 10-K filed on September 4, 2014. | ||||||||
Results of operations for interim periods are not necessarily indicative of the results of operations for a full year. | ||||||||
Cash and Cash Equivalents | ' | |||||||
Cash and Cash Equivalents | ||||||||
The Company considers all highly-liquid investments purchased with a maturity of three months or less to be cash equivalents. As of August 31, 2014 and 2013, the Company did not have any cash equivalents. | ||||||||
Inventories | ' | |||||||
Inventories | ||||||||
Raw materials are stated at the lower of cost or market, with cost determined by specific identification for unique items (such as diamond stones, each with a particular carat weight, color, clarity and cut) and using the first-in, first-out method for generic items or styles (certain semi-mounts and fashion jewelry). Finished goods which we fabricate are stated at the lower of cost or market, with cost determined by specific identification for each component making up the item plus direct labor and other fees (primarily diamond certification). | ||||||||
Property and Equipment | ' | |||||||
Property and Equipment | ||||||||
Property and equipment is carried at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the related assets, which is generally five years. | ||||||||
Revenue Recognition | ' | |||||||
Revenue Recognition | ||||||||
For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” (SAB No. 104), which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB No. 101). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowance, and other adjustments are provided for in the same period the related sales are recorded. Provision for sales returns and allowances that were netted against sales amounted to $93,000 and $43,000 for the three months ended August 31, 2014 and August 31, 2013, respectively. | ||||||||
Concentration Risk Credit Risk | ' | |||||||
Concentration of Credit Risks | ||||||||
The Company primarily sells its products to retail jewelers focused on mid-to-high end consumers. Customers typically receive payment terms of ratable monthly payments over 90 to 120 days with exceptions based on credit quality or other terms and conditions. As a result, the Company is exposed to credit risk on its accounts receivable. The Company generally seeks to mitigate such risk by performing credit checks through jeweler trade associations it is a members of, by attending trade shows which selectively invite retailer attendees based on their credit worthiness and by checking references with other jewelers in the industry. | ||||||||
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation (“FDIC”) limit of $250,000 at times during the year. | ||||||||
Sales | ' | |||||||
Sales | ||||||||
The Company’s sales are comprised of primarily three major products: Aspiri Cut Rings, Complete Rings and Fashion Jewelry. The Company may also on occasion sell loose stone inventory. | ||||||||
A breakdown of sales for the three months ended August 31, 2014 and August 31, 2013, respectively: | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
August 31, | August 31, | |||||||
2014 | 2013 | |||||||
(unaudited) | (unaudited) | |||||||
Aspiri Cut Rings | 45 | % | — | |||||
Complete Rings (not Aspiri) | 34 | % | 73 | % | ||||
Fashion Jewelry & Other | 21 | % | 27 | % | ||||
The three months ended August 31, 2014 had returns of Complete Rings that were not Aspiri Cut Rings as some customers substituted such rings for Aspiri Cut Rings. | ||||||||
Advertising Costs | ' | |||||||
Advertising Costs | ||||||||
Advertising and show costs are charged to operations when incurred. Advertising costs during the three months ended August 31, 2014 and August 31, 2013 were $49,000 and $29,000, respectively. | ||||||||
Deferred Income Taxes | ' | |||||||
Deferred Income Taxes | ||||||||
The Company accounts for deferred income taxes using the asset and liability method, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting and the tax bases of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. | ||||||||
Net Income (Loss) Per Share | ' | |||||||
Net Income (Loss) Per Share | ||||||||
Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding. | ||||||||
The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
August 31, | August 31, | |||||||
2014 | 2013 | |||||||
(unaudited) | (unaudited) | |||||||
Numerator: | ||||||||
Net Income (Loss) | $ | -84,656 | $ | 126,241 | ||||
Denominator: | ||||||||
Basic weighted-average shares | 10,469,477 | 10,353,750 | ||||||
Effect of dilutive securities: | ||||||||
Warrants 1 | — | 2 | — | |||||
Convertible Debt 3 | — | 4 | 37,000 | |||||
Diluted weighted-average shares | 10,469,477 | 10,390,750 | ||||||
Per Share Income (Loss): | ||||||||
Basic | $ | -0.01 | $ | 0.01 | ||||
Diluted | $ | -0.01 | $ | 0.01 | ||||
1 | There are 114,000 warrants issued in connection with $400,000 of unsecured notes at an exercise price of $3.50 per warrant into one share of common stock. | |||||||
2 | Warrants for the three months ended August 31, 2014 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. | |||||||
3 | Convertible debt is convertible into 37,000 shares of common stock. | |||||||
4 | Convertible debt for the three months ended August 31, 2014 is not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. | |||||||
Accounting Estimates | ' | |||||||
Accounting Estimates | ||||||||
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Management uses its best judgment in valuing these estimates, and may, as warranted, solicit external professional advice and other assumptions believed to be reasonable. | ||||||||
Fair Value Measurements | ' | |||||||
Fair Value Measurements | ||||||||
The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, or which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: | ||||||||
Level 1: Quoted prices in active markets for identical assets or liabilities. | ||||||||
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities. | ||||||||
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. | ||||||||
The Company's financial instruments include cash and cash equivalents, accounts receivable, accounts payable and loans and notes payable. These items are determined to be a Level 1 fair value measurement. | ||||||||
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and loans payable approximates fair value because of the short maturity of these instruments. The recorded value of long-term debt approximates its fair value as the terms and rates approximate market rates. | ||||||||
Recent Accounting Pronouncements | ' | |||||||
Recent Accounting Pronouncements | ||||||||
Management does not believe there would have been a material effect on the accompanying financial statements had any recently issued, but not yet effective, accounting standards been adopted in the current period. | ||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||
Reconciliation of Revenue from Segments to Consolidated | ' | |||||||
A breakdown of sales for the three months ended August 31, 2014 and August 31, 2013, respectively: | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
August 31, | August 31, | |||||||
2014 | 2013 | |||||||
(unaudited) | (unaudited) | |||||||
Aspiri Cut Rings | 45 | % | — | |||||
Complete Rings (not Aspiri) | 34 | % | 73 | % | ||||
Fashion Jewelry & Other | 21 | % | 27 | % | ||||
Schedule of reconciliation of the shares used in calculating the per share amounts | ' | |||||||
The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
August 31, | August 31, | |||||||
2014 | 2013 | |||||||
(unaudited) | (unaudited) | |||||||
Numerator: | ||||||||
Net Income (Loss) | $ | -84,656 | $ | 126,241 | ||||
Denominator: | ||||||||
Basic weighted-average shares | 10,469,477 | 10,353,750 | ||||||
Effect of dilutive securities: | ||||||||
Warrants 1 | — | 2 | — | |||||
Convertible Debt 3 | — | 4 | 37,000 | |||||
Diluted weighted-average shares | 10,469,477 | 10,390,750 | ||||||
Per Share Income (Loss): | ||||||||
Basic | $ | -0.01 | $ | 0.01 | ||||
Diluted | $ | -0.01 | $ | 0.01 | ||||
1 | There are 114,000 warrants issued in connection with $400,000 of unsecured notes at an exercise price of $3.50 per warrant into one share of common stock. | |||||||
2 | Warrants for the three months ended August 31, 2014 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. | |||||||
3 | Convertible debt is convertible into 37,000 shares of common stock. | |||||||
4 | Convertible debt for the three months ended August 31, 2014 is not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. | |||||||
Inventories_Tables
Inventories (Tables) | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Schedule of Inventories | ' | |||||||
Inventories consist of the following: | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Raw Materials | $ | 823,169 | $ | 257,598 | ||||
Finished Goods | 1,002,582 | 1,837,331 | ||||||
Total Inventory | $ | 1,825,751 | $ | 2,094,929 | ||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ' | |||||||
Schedule of property and equipment | ' | |||||||
Property and equipment consists of the following: | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Office Equipment | $ | 14,715 | $ | 9,271 | ||||
Computers | 4,808 | 4,808 | ||||||
19,523 | 14,079 | |||||||
Less: Accumulated Depreciation | 5,119 | 4,028 | ||||||
$ | 14,404 | $ | 10,051 | |||||
Convertible_Note_Payable_Relat1
Convertible Note Payable - Related Party (Tables) | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Debt Disclosure [Abstract] | ' | |||||||
Schedule of Convertible note payable | ' | |||||||
Convertible note payable to the Company’s president is summarized as follows: | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Note Payable, bearing interest at 4% per annum, and due December 31, 2015. The note is Convertible into shares of the Company’s Common stock at a conversion rate of $2 per share, subject to adjustment upon the occurrence of certain events including stock dividends, stock split or combinations and reclassifications. | $ | 74,000 | $ | 74,000 | ||||
Loans_Payable_Related_Parties_
Loans Payable - Related Parties (Tables) | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Loans Payable [Abstract] | ' | |||||||
Schedule of Loans Payable Related Party | ' | |||||||
Loans payable to related parties is summarized as follows: | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Loans payable to the Company’s President and CEO. The loans are payable on demand and non-interest bearing, and are subordinated to the factor. | $ | 559,632 | $ | 359,632 | ||||
Unsecured_Notes_Payable_Tables
Unsecured Notes Payable (Tables) | 3 Months Ended | |||||||
Aug. 31, 2014 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Schedule of Notes Payable | ' | |||||||
For the three months ended August 31, 2014, the Company recognized approximately $1,700 in amortization expense relating to these warrants. | ||||||||
August 31, 2014 | May 31, 2014 | |||||||
(unaudited) | ||||||||
Notes Payable, Par | $ | 400,000 | $ | — | ||||
Initial Debt Discount | -184,715 | — | ||||||
Accumulated Amortization | 1,689 | — | ||||||
Notes Payable, Net | $ | 216,974 | $ | — | ||||
Schedule of Fair Value of the Warrants on the Issuance Date | ' | |||||||
The fair value of the warrants on the issuance date was calculated using the Black Scholes method with the following weighted average assumptions: | ||||||||
Dividend yield | 0 | % | ||||||
Volatility | 311.07 | % | ||||||
Risk-free interest rate | 2.39 | % | ||||||
Expected life (months) | 120 | |||||||
Grant date price per share | $ | 3.01 | ||||||
Warrants issued | 114,000 | |||||||
Aggregate grant date fair value | $ | 343,140 | ||||||
Financing_Agreement_Tables
Financing Agreement (Tables) | 3 Months Ended | ||||
Aug. 31, 2014 | |||||
Payables and Accruals [Abstract] | ' | ||||
Schedule of Accounts Payable and Accrued Liabilities | ' | ||||
The Accounts Receivable Financing Agreement calls for the subordination of certain of the Company’s debt as follows: | |||||
Accounts Payable – Classique Creations, LLC | $ | 500,000 | |||
Demand Loans Payable – Yitzchok Gurary | $ | 210,000 | |||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Aspiri Cut Rings [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration Risk, Percentage | 45.00% | 0.00% |
Complete Rings [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration Risk, Percentage | 34.00% | 73.00% |
Fashion Jewelry and Other [Member] | ' | ' |
Accounting Policies [Line Items] | ' | ' |
Concentration Risk, Percentage | 21.00% | 27.00% |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 1) (USD $) | 3 Months Ended | |||
Aug. 31, 2014 | Aug. 31, 2013 | |||
Numerator: | ' | ' | ||
Net Income (Loss) | ($84,656) | $126,241 | ||
Denominator: | ' | ' | ||
Basic weighted-average shares | 10,469,477 | 10,353,750 | ||
Effect of dilutive securities: | ' | ' | ||
Warrants | 0 | [1],[2] | 0 | [1] |
Convertible Debt | 0 | [3],[4] | 37,000 | [3] |
Diluted weighted-average shares | 10,469,477 | 10,390,750 | ||
Per Share Income (Loss): | ' | ' | ||
Basic | ($0.01) | $0.01 | ||
Diluted | ($0.01) | $0.01 | ||
[1] | There are 114,000 warrants issued in connection with $400,000 of unsecured notes at an exercise price of $3.50 per warrant into one share of common stock. | |||
[2] | Warrants for the three months ended August 31, 2014 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. | |||
[3] | Convertible debt is convertible into 37,000 shares of common stock. | |||
[4] | Convertible debt for the three months ended August 31, 2014 is not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Accounting Policies [Line Items] | ' | ' |
Property, Plant and Equipment, Useful Life | '5 years | ' |
Sales Returns and Allowances, Goods | $93,000 | $43,000 |
Advertising Expense | 49,000 | 29,000 |
Debt Conversion, Converted Instrument, Shares Issued | 37,000 | ' |
Federal Deposit Insurance Corporation Premium Expense | 250,000 | ' |
Debt Conversion, Converted Instrument, Warrants or Options Issued | 114,000 | ' |
Debt Conversion, Original Debt, Amount | $400,000 | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $3.50 | ' |
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right | 1 | ' |
Inventories_Details
Inventories (Details) (USD $) | Aug. 31, 2014 | 31-May-14 |
Inventory [Line Items] | ' | ' |
Raw Materials | $823,169 | $257,598 |
Finished Goods | 1,002,582 | 1,837,331 |
Total Inventory | $1,825,751 | $2,094,929 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Aug. 31, 2014 | 31-May-14 |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | $19,523 | $14,079 |
Less: Accumulated Depreciation | 5,119 | 4,028 |
Property Plant And Equipment, Net | 14,404 | 10,051 |
Office Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | 14,715 | 9,271 |
Computer Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | $4,808 | $4,808 |
Property_and_Equipment_Details1
Property and Equipment (Details Textual) (USD $) | 3 Months Ended | |
Aug. 31, 2014 | 31-May-14 | |
Property, Plant and Equipment [Line Items] | ' | ' |
Depreciation | $1,100 | $800 |
Convertible_Note_Payable_Relat2
Convertible Note Payable - Related Party (Details) (USD $) | Aug. 31, 2014 | 31-May-14 |
Short-term Debt [Line Items] | ' | ' |
Note Payable, bearing interest at 4% per annum, and due December 31, 2015. The note is Convertible into shares of the Companybs Common stock at a conversion rate of $2 per share, subject to adjustment upon the occurrence of certain events including stock dividends, stock split or combinations and reclassifications. | $74,000 | $74,000 |
Convertible_Note_Payable_Relat3
Convertible Note Payable - Related Party (Details Textual) (Convertible Notes Payable [Member], USD $) | 3 Months Ended |
Aug. 31, 2014 | |
Convertible Notes Payable [Member] | ' |
Short-term Debt [Line Items] | ' |
Debt Instrument, Interest Rate, Effective Percentage | 4.00% |
Debt Instrument, Maturity Date | 31-Dec-15 |
Debt Instrument, Convertible, Conversion Price | $2 |
Loans_Payable_Related_Parties_1
Loans Payable - Related Parties (Details) (USD $) | Aug. 31, 2014 | 31-May-14 |
Related Party Transaction [Line Items] | ' | ' |
Loans payable to the Companybs President and CEO. The loans are payable on demand and non-interest bearing, and are subordinated to the factor. | $559,632 | $359,632 |
President [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Loans payable to the Companybs President and CEO. The loans are payable on demand and non-interest bearing, and are subordinated to the factor. | $559,632 | $359,632 |
Loans_Payable_Related_Parties_2
Loans Payable - Related Parties (Details Textual) (USD $) | Aug. 31, 2014 |
Related Party Transaction [Line Items] | ' |
Notes Payable, Related Parties | $210,000 |
Unsecured_Notes_Payable_Detail
Unsecured Notes Payable (Details) (USD $) | Aug. 31, 2014 | 31-May-14 |
Unsecured Notes Payable [Line Items] | ' | ' |
Notes Payable, Net | $216,974 | $0 |
Notes Payable [Member] | ' | ' |
Unsecured Notes Payable [Line Items] | ' | ' |
Notes Payable, Par | 400,000 | 0 |
Initial Debt Discount | -184,715 | 0 |
Accumulated Amortization | 1,689 | 0 |
Notes Payable, Net | $216,974 | $0 |
Unsecured_Notes_Payable_Detail1
Unsecured Notes Payable (Details 1) (USD $) | 3 Months Ended |
Aug. 31, 2014 | |
Unsecured Notes Payable [Line Items] | ' |
Warrants issued | 114,000 |
Aggregate grant date fair value | $343,000 |
Warrant [Member] | ' |
Unsecured Notes Payable [Line Items] | ' |
Dividend yield | 0.00% |
Volatility | 311.07% |
Risk-free interest rate | 2.39% |
Expected life (months) | '120 months |
Grant date price per share | $3.01 |
Warrants issued | 114,000 |
Aggregate grant date fair value | $343,140 |
Unsecured_Notes_Payable_Detail2
Unsecured Notes Payable (Details Textual) (USD $) | Aug. 31, 2014 | 31-May-14 | Aug. 31, 2014 | Aug. 31, 2014 | Aug. 25, 2014 | Aug. 18, 2014 |
Warrant [Member] | Unsecured Debt [Member] | Unsecured Debt [Member] | Unsecured Debt [Member] | |||
Unsecured Notes Payable [Line Items] | ' | ' | ' | ' | ' | ' |
Convertible Subordinated Debt | ' | ' | ' | ' | $150,000 | $250,000 |
Debt Instrument, Interest Rate, Stated Percentage | ' | ' | ' | 11.00% | ' | ' |
Debt Instrument, Convertible, Number of Equity Instruments | ' | ' | ' | 285 | ' | ' |
Debt Instrument, Face Amount | ' | ' | ' | 1,000 | ' | ' |
Debt Instrument, Maturity Date, Description | ' | ' | ' | 'The notes are due on the second anniversary of their issue date | ' | ' |
Warrants Exercisable Period | ' | ' | 'ten years | ' | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $3.50 | ' | $3.50 | ' | ' | ' |
Warrants and Rights Outstanding | 343,000 | ' | 343,140 | ' | ' | ' |
Debt Instrument, Unamortized Discount | 183,026 | 0 | 185,000 | ' | ' | ' |
Amortization Period | ' | ' | '2 years | ' | ' | ' |
Amortization of Financing Costs | ' | ' | $1,700 | ' | ' | ' |
Financing_Agreement_Details
Financing Agreement (Details) (Accounts Receivable Financing Agreement [Member], USD $) | Aug. 31, 2014 |
Accounts Receivable Financing Agreement [Member] | ' |
Subordinated Borrowing [Line Items] | ' |
Accounts Payable - Classique Creations, LLC | $500,000 |
Demand Loans Payable - Yitzchok Gurary | $210,000 |
Financing_Agreement_Details_Te
Financing Agreement (Details Textual) (USD $) | 3 Months Ended | 3 Months Ended | |||
Aug. 31, 2014 | Aug. 31, 2013 | 23-May-14 | Aug. 31, 2014 | Sep. 30, 2013 | |
Accounts Receivable Financing Agreement [Member] | Accounts Receivable Financing Agreement [Member] | ||||
Subordinated Borrowing [Line Items] | ' | ' | ' | ' | ' |
Line Of Credit | ' | ' | ' | $1,500,000 | $1,000,000 |
Line of Credit Facility, Maximum Borrowing Capacity | ' | ' | 1,500,000 | ' | ' |
Debt Instrument, Maturity Date | ' | ' | ' | 30-Sep-15 | ' |
Proceeds from Loans Payable - Factor | 1,674,632 | 0 | ' | ' | ' |
Repayments of Notes Payable | $1,042,135 | $0 | ' | ' | ' |
Debt Instrument, Basis Spread on Variable Rate | 3.50% | ' | ' | ' | ' |
Debt Instrument, Interest Rate During Period | 7.50% | ' | ' | ' | ' |
Related_Party_Transactions_Det
Related Party Transactions (Details Textual) (USD $) | 3 Months Ended | 3 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Aug. 31, 2014 | Aug. 31, 2013 | 31-May-14 | Aug. 31, 2014 | Aug. 31, 2013 | 31-May-14 | Aug. 31, 2014 | 31-May-13 | 31-May-14 | |
Classique Creations LLC [Member] | Classique Creations LLC [Member] | Classique Creations LLC [Member] | Issac Gurary [Member] | Issac Gurary [Member] | Issac Gurary [Member] | ||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consulting Agreement Period | ' | ' | ' | ' | ' | ' | ' | '1 year | ' |
Percentage of Sales Revenue | ' | ' | ' | ' | ' | ' | ' | ' | 3.00% |
Accrued Professional Fees, Current | ' | ' | ' | ' | ' | ' | ' | ' | $104,000 |
Accounts Payable, Related Parties, Current | ' | ' | ' | 1,400,000 | ' | 1,500,000 | ' | ' | ' |
Related Party Cash Payment Term Minimum | 'one month | ' | ' | ' | ' | ' | ' | ' | ' |
Operating Leases, Rent Expense | 2,060 | ' | ' | ' | ' | ' | ' | ' | ' |
Rent expense | 6,000 | 8,000 | ' | ' | ' | ' | ' | ' | ' |
Due to Related Parties, Current | 559,632 | ' | 359,632 | 500,000 | ' | ' | ' | ' | ' |
Professional Fees | $168,002 | $195,637 | ' | ' | ' | ' | $130,000 | ' | ' |
Related Party Cash Payment Term Maximum | 'twelve months | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage Of Merchandise Purchased From Related Party | ' | ' | ' | 43.00% | 58.00% | ' | ' | ' | ' |
Stockholders_Equity_Details_Te
Stockholders' Equity (Details Textual) (USD $) | 3 Months Ended | 3 Months Ended | |||
Aug. 31, 2014 | Aug. 31, 2014 | 31-May-14 | Aug. 31, 2014 | Aug. 31, 2014 | |
Notes Payable [Member] | Notes Payable [Member] | Common Stock [Member] | Warrant [Member] | ||
Class of Stock [Line Items] | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, Issued for Services | 10,604 | ' | ' | 10,604 | ' |
Shares Issued, Price Per Share | ' | ' | ' | $3.10 | ' |
Long-term Debt, Gross | ' | $400,000 | $0 | ' | ' |
Debt Conversion, Converted Instrument, Warrants or Options Issued | 114,000 | ' | ' | ' | 114,000 |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $3.50 | ' | ' | ' | $3.50 |
Weighted Average Remaining Contractual Term | ' | ' | ' | ' | '10 years |
Warrants Exercisable Period | ' | ' | ' | ' | 'ten years |
Major_Suppliers_and_Customers_
Major Suppliers and Customers (Details Textual) (USD $) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Sales Revenue, Net [Member] | Three Largest Customers [Member] | ' | ' |
Major Suppliers [Line Items] | ' | ' |
Concentration Risk, Percentage | 34.00% | 16.00% |
Classique Creations LLC [Member] | ' | ' |
Major Suppliers [Line Items] | ' | ' |
Percentage Of Merchandise Purchased From Related Party | 43.00% | 58.00% |
Payments to Suppliers | 538,000 | 902,000 |
Vendor [Member] | ' | ' |
Major Suppliers [Line Items] | ' | ' |
Percentage Of Merchandise Purchased From Related Party | 57.00% | ' |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Income Tax Disclosure [Line Items] | ' | ' |
Effective Income Tax Rate Reconciliation, Percent | -33.00% | 32.00% |
Subsequent_Events_Details_Text
Subsequent Events (Details Textual) (USD $) | Aug. 31, 2014 | 23-May-14 | Aug. 31, 2014 | Aug. 25, 2014 | Aug. 18, 2014 | Aug. 31, 2014 | Oct. 06, 2014 | Sep. 30, 2014 | Sep. 15, 2014 | Sep. 15, 2014 | Sep. 30, 2014 |
Unsecured Debt [Member] | Unsecured Debt [Member] | Unsecured Debt [Member] | Warrant [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |||
Unsecured Debt [Member] | Unsecured Debt [Member] | Warrant [Member] | Warrant [Member] | ||||||||
Unsecured Debt [Member] | |||||||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Interest Rate, Stated Percentage | ' | ' | 11.00% | ' | ' | ' | ' | ' | 11.00% | ' | ' |
Debt Instrument, Convertible, Number of Equity Instruments | ' | ' | 285 | ' | ' | ' | ' | ' | ' | ' | 285 |
Debt Instrument, Face Amount | ' | ' | $1,000 | ' | ' | ' | ' | ' | $1,000 | ' | ' |
Debt Instrument, Maturity Date, Description | ' | ' | 'The notes are due on the second anniversary of their issue date | ' | ' | ' | ' | 'The notes are due on the second anniversary of their issue date | ' | ' | ' |
Warrants Exercisable Period | ' | ' | ' | ' | ' | 'ten years | ' | ' | ' | ' | 'ten years |
Convertible Subordinated Debt | ' | ' | ' | 150,000 | 250,000 | ' | ' | ' | 30,000 | ' | ' |
Line of Credit Facility, Maximum Borrowing Capacity | ' | $1,500,000 | ' | ' | ' | ' | $2,000,000 | ' | ' | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $3.50 | ' | ' | ' | ' | $3.50 | ' | ' | ' | $3.50 | ' |