As filedwith theSecuritiesandExchange CommissiononJanuary 23,2017
RegistrationNo.333- ______
UNITEDSTATES
SECURITIES ANDEXCHANGECOMMISSION
Washington, D.C.20549
FORMS-1/A
(Pre-Effective Amendment No. 5 )
REGISTRATIONSTATEMENT
UNDERTHE SECURITIESACTOF1933
GLOBAL COSMETICS,INC.
(Exactnameofregistrantas specifiedinitscharter)
| Nevada | 2844 | 30-0891225 | ||
| (StateorotherjurisdictionofIncorporation ororganization) | (PrimaryStandard IndustrialClassification Code Number) | (I.R.S. Employer Identification Number) |
Pavilion96, KensingtonHigh Street
Kensington,London,W8 4SGTel.
No.:+44 203-667-8883
Fax No.:+44207-657-3110
(Address,including zipcode, andtelephonenumber,
includingarea code,ofregistrant’sprincipalexecutiveoffices)
CSCServices OfNevada, Inc.
2215-BRenaissance Drive
Las Vegas, NV89119
(Name andaddressofagentforserviceofprocess)
Copiesofcommunicationsto:
StevenJamesDavis,Esq.
1042 N.ElCamino Real,261
Encinitas, California92024
Tel. No.: (619)788-2383
Approximatedateof commencementofproposedsaletothepublic:Assoon as practicable afterthisRegistrationStatementbecomes effective. Ifanyofthesecuritiesbeing registeredonthisFormaretobeofferedonadelayedorcontinuousbasispursuanttoRule415undertheSecuritiesActof1933, checkthefollowingbox. ☒
IfthisFormisfiledtoregister additionalsecuritiesforanofferingpursuanttoRule462(b)undertheSecuritiesActof1933,please checkthefollowingboxandlisttheSecuritiesActregistrationStatementnumberofthe earliereffective registrationstatementforthesameoffering. ☐
IfthisFormisapost-effective amendmentfiledpursuanttoRule462(c)undertheSecuritiesAct of1933, checkthefollowingbox andlisttheSecuritiesActregistrationstatementnumberofthe earlier effective registrationstatementforthesameoffering. ☐
Ifdeliveryoftheprospectusisexpectedto bemadepursuanttoRule434,please checkthefollowingbox. ☐
Indicateby checkmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,orasmaller reporting company.Seethedefinitionsof“large acceleratedfiler,”“acceleratedfiler”and“smaller reporting company”inRule12b-2ofthe ExchangeAct.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
| (Do not check if a smaller reporting company) |
This registration statement relates to an offering of shares of Common Stock which is subject to a minimum investment amount for a single investor of 20,000 shares ($600). The Company will reject all subscriptions for the purchase of shares of Common Stock which are for an amount less than 20,000 shares ($600).
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CALCULATION OF REGISTRATION FEE
| Title of Each Class Of Securities to be Registered | Amount to be Registered(1) | Proposed Maximum Aggregate Offering Price per Share(2) | Proposed Maximum Aggregate Offering Price | Amount of Registration Fee | ||||||||||||
| Common Stock, $0.001 par value per share | 8,000,000 | $ | 0.03 | $ | 240,000 | $ | 24.17 | |||||||||
| (1) | This registrationstatement coversthesalebyusofuptoanaggregateof8,000,000sharesofour commonstock.PursuanttoRule416undertheSecuritiesActof1933,asamended,this registrationstatement alsocovers any additionalsecuritiesthatmaybeofferedorissuedinconnectionwithanystockdividend,stocksplit, recapitalizationorothersimilartransaction effectedwithoutthe receiptofconsiderationthatresultsinanincreaseinthenumberoftheoutstandingsharesofour commonstock. | |
| (2) | Estimatedsolelyforthepurposeofcalculatingthe registrationfeeinaccordancewithRule457(a)undertheSecuritiesAct. |
THEREGISTRANT HEREBYAMENDSTHISREGISTRATIONSTATEMENT ONSUCH DATEOR DATESAS MAY BE NECESSARYTODELAY ITSEFFECTIVE DATEUNTILTHEREGISTRANTSHALLFILE AFURTHERAMENDMENTWHICHSPECIFICALLYSTATESTHATTHISREGISTRATIONSTATEMENTSHALLTHEREAFTERBECOMEEFFECTIVE INACCORDANCEWITHSECTION8(a)OFTHESECURITIESACTOF1933ORUNTILTHEREGISTRATIONSTATEMENTSHALLBECOME EFFECTIVE ONSUCH DATEASTHECOMMISSION,ACTINGPURSUANTTOSECTION8(a),MAY DETERMINE.
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PROSPECTUSGLOBAL
COSMETICS,INC.
8,000,000
SHARESOF COMMONSTOCK
SUBJECT TO COMPLETION, Dated____________,2016
Thisprospectus relatestoourofferingof8,000,000newsharesofour commonstockatafixed offeringpriceof$0.03 pershare.Thereisnominimumnumberofsharesthatmustbesoldbyusfortheofferingtoproceed,andwewillretaintheproceedsfromthesaleof any oftheofferedshares.Wehavenotmadeany arrangementstoplacefunds raisedinthisofferinginanescrow,trustorsimilar account.Anyinvestorwhopurchasessharesinthisofferingwillhavenoassurancethatotherpurchaserswillinvestinthisoffering.Accordingly,ifwefilefor bankruptcyprotectionor apetition forinsolvencybankruptcyisfiled bycreditorsagainstus,yourfundswillbecomepartofthebankruptcyestate andadministeredaccordingtothebankruptcylaws.
The Company is a shell company (as defined in Rule 12b-2 of the Exchange Act of 1934).
The Company is not a blank check company and does not have any intention to engage in a merger or other business combination.
Theofferingisbeingconductedonaself-underwritten,besteffortsbasis,whichmeansourofficersanddirectorswillattempttoselltheshareswith nocommissionorother remunerationpayabletothemfor anyshares theymaysell.
Thereisnoestablishedpublicmarketfor ourcommon stock,andthe offeringpricehasbeenarbitrarilydetermined. Our commonstockisnotcurrentlylistedorquotedonanyquotationservice.AlthoughweintendtoapplyforquotationontheOTCQBthroughamarketmaker,therecanbenoassurancethatourcommonstockwilleverbequotedonanyquotationserviceorthatanymarketforourstockwilleverdevelop.
Thisofferingwillbeopenuntiltheearlierof: (i)themaximum amountofshareshavebeensold;or(ii)ninemonthsfromthedateof effectivenessofthis registrationstatementofwhichthisprospectusforms apart.Weretaintherighttoextendtheofferingperiodbeyondninemonths.Weretaintherighttoclosetheoffering atanytimeandthereisnominimumoffering requiredforthisofferingto close.
| Offering Price | Underwriting Discounts and Commissions(1) | Proceeds to Company Assuming 100% Subscribed | Proceeds to Company Assuming 75% Subscribed | Proceeds to Company Assuming 50% Subscribed | Proceeds to Company Assuming 25% Subscribed | |||||||||||||||||||
| Per Share | $ | 0.03 | 0 | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | |||||||||||||
| Gross Proceeds | 0 | $ | 240,000 | $ | 180,000 | $ | 120,000 | $ | 60,000 | |||||||||||||||
| Net Proceeds(2) | 0 | $ | 220,000 | $ | 160,000 | $ | 100,000 | $ | 40,000 | |||||||||||||||
| (1) | There arenoarrangementsorplanstouseunderwritersorbroker/dealerstoofferourcommonstock. However,wereservetherighttoutilizetheservicesoflicensedbroker/dealers andcompensatethesebroker/dealerswith acommissionnotto exceed 10%oftheproceeds raised. | |
| (2) | Thenetproceeds estimatesoffering expensesof$20,000. |
Wearean“emerginggrowth company”asdefinedunderthe federalsecuritieslawsand,assuch,mayelecttocomplywith certain reducedpublic company reporting requirements.Thepurchaseofthesecuritiesofferedthrough thisprospectusinvolves ahighdegreeof risk.Seesection entitled“RiskFactors”startingon page 8.
NeithertheSecurities andExchangeCommissionnoranystatesecurities commissionhasapprovedordisapprovedofthesesecuritiesorpasseduponthe adequacyor accuracyofthisprospectus.Anyrepresentationtothe contraryisa criminaloffense.
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TABLEOF CONTENTS
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Thissummaryhighlightsselectedinformation contained elsewhereinthisProspectus.Thissummarydoesnotcontainalltheinformationthat youshould considerbeforeinvestinginthecommonstock of GlobalCosmetics,Inc.(referredtohereinasthe“Company,”“Global,”“we,”“our,”and“us”).Theinformationinthisprospectusisnotcompleteandmaybechanged.Wemaynotsellthesesecuritiesuntiltheregistrationstatementfiledwiththe SecuritiesandExchangeCommissionis effective.The prospectusisnot anoffertosellthesesecurities anditisnotsolicitinganoffertobuythesesecuritiesinanystatewherethe offerorsaleisnotpermitted.YoushouldcarefullyreadtheentireProspectus,including“RiskFactors,”“Management’sDiscussionandAnalysisof Financial Condition andResultsofOperations”andthefinancial statementsbefore makinganinvestmentdecision.
BusinessOverview
Wewereincorporatedunderthelaws oftheStateof NevadaonSeptember17,2015underthename“GlobalCosmetics, Inc.”Our addressisPavilion96,Kensington High Street,Kensington,London,W84SG, UnitedKingdom. Ourcorporate addressislocated at aprivatebusinessmembers clubwhoprovidesecretarialsupport,working areas,dedicatedphonelineandbusiness answeringservice.Theservicesprovided alsoincludemailforwardingphysicalofficespacemay berentedonashort-termbasisforadditionalfees.Weintendtoconductourbusinessoperations,including administrativefunctions,salesandmarketing atthepersonal residencesofourofficers,whomlivecurrentlyinThailand andthe UnitedKingdom;howeverwewill also beworking remotely.Copiesofcertainofour corporatebooksandrecordswill bemaintained andstoredwithourlegalcounselStevenJames Davis,Esq.,whose addressis 1042N. ElCaminoReal, B261,Encinitas,California92024. Ourfixed equipmentwillbelocated at thepersonal residencesofourofficers. Ourphonenumberis+44203-667-8883. Ourfiscalyear endis September30th.
Weareadevelopmentstagecompanyspecializinginthedevelopment,marketinganddistributionofcosmeticsandbeautyproductsforpurchase andconsumptionbyretailers,wholesalersandendconsumers.
Currentlywehave exclusive rightstodistributethe‘4U2’CosmeticsbrandinAustralia, NewZealand,USA,Mexico,Canada andEurope. The licensee has trademark registrations in Australia, New Zealand, USA and Europe and accepted applications in Mexico and Canada. The licensor has also granted the Company a 50% beneficial ownership interest in the trademark registrations. The product line licensed to the Company is an established brand which has produced approximately $2.5 million in revenues for the licensor’s retailers and distributors during the period January 1, 2016 to June 30, 2016, and is expected to produce at least another $2.5 million during the remaining period of 2016.
Asof September30, 2016wehad$6,255in current assets and currentliabilitiesinthe amountof$101,681.Accordingly,wehad aworking capitaldeficitof$95,426asof September30, 2016.Our currentworking capitalisnotsufficienttoenableustoimplementourbusinessplanassetforthinthisprospectus. Ourexpensesinthisoffering areestimated at$10,000, andwewillneed aminimumof$50,000forthenexttwelvemonths.Assuch,ourmonthlyburnrateforthenexttwelvemonthsisestimated at $4,200.Wewillneedtosellaminimumof25%ofthesharesofferedinthisprospectusfornetproceedsof$50,000inordertomeetourfinancialobligations. Ourabilityto remaininbusinesswithlessthan$50,000inthisofferingisquestionable, and we cannot provide any assurances that this offering will result in the sale of any shares. Additionally, although we have funded our historical operations from loans by our Chief Executive Officer, Ben Ridding, there are no agreements, commitments or understandings for Mr. Ridding to provide any additional loans to the Company.Forthese andother reasons,ourindependent auditorshaveraisedsubstantialdoubt aboutourabilityto continue asagoing concern.Accordingly,we require additionalfinancing,includingthe equityfundingsoughtinthisprospectus.
Weareofferingforsaletoinvestorsamaximumof 8,000,000sharesof ourcommonstockatan offering priceof $0.03pershare.Ourbusinessplanis tousetheproceedsofthisofferingto:
| ● | Increaseinventory andstocklevelsinalllicensed areas | |
| ● | Implement anonlinemarketingprogramthroughsocialmediawebsites | |
| ● | Recruit abrandambassadorforonlinemarketing and producttutorials | |
| ● | AttendtradeshowsinEurope andUSAto developbrandawareness andgeneratesales | |
| ● | Developlinkswithwholesalers andexpanddistributionnetwork | |
| ● | Developopportunitieswith highstreetandonline retailers | |
| ● | Developnewand existingproducts and packagingtotargetothermarkets | |
| ● | Promoteproductsthroughmaildeliverytotargetmarkets | |
| ● | Developourwebsitetoincludeproducttutorials, customerloyaltyprograms andcustomer reviewstocreate aninstoreshopping experiencetoincreasesales. | |
| ● | Developourwebsiteto offerit inadditionallanguages | |
| ● | Compensatebeautybloggersfor reviewsofourproducts and onlinepromotions | |
| ● | Acquiresampleproductsforuseinmarketingpromotions | |
| ● | Fundgeneraloverheads andcompliance |
However,ourmanagementhasretaineddiscretiontousetheproceedsoftheofferingforotheruses.Theminimuminvestment amountfor asingleinvestoris$600for20,000shares.Subscriptionsforlessthantheminimuminvestmentwillautomaticallyberejected.Theshares arebeingofferedbyusona“best efforts”basis andthere canbeno assurancethatallor anyofthesharesofferedwillbesubscribed. Iflessthanthemaximumproceeds are availabletous,ourdevelopment andprospects couldbe adversely affected.Thereisnominimumoffering requiredforthisofferingto close.Theproceedsofthisofferingwillbe immediately availabletousforourgeneralbusinesspurposes.Themaximumoffering amountis8,000,000shares($240,000).
As a start-up company with limited operations we are a “shell company” as defined in Rule 12b-2 of the Exchange Act of 1934 (an issuer that has (A) no or nominal operations and (B) either (1) no or nominal assets; (2) assets consisting solely of cash and cash equivalents; or (3) assets consisting of any amount of cash and cash equivalents and nominal other assets). Companies which are a “shell company” are permitted to file a Form 8-K and provide the required disclosure under Item 5.06 at such time as their “shell company” status has ended. Shareholders who are issued unregistered shares of a company which is a “shell company” have additional holding periods and restrictions on the ability to sell their shares under Rule 144 of the Securities Act of 1933, as amended; provided, however, Company shareholders who purchase any of the 8,000,000 registered shares in the offering described in this registration statement will not be subject to the holding periods under Rule 144 of the Securities Act of 1933, as amended. Also, a company which is a “shell company” is prohibited from making certain filings with the Securities and Exchange Commission, such as a Form S-8. Additionally, certain financing sources that would otherwise invest in the Company may not invest in the Company due to the Company being deemed a “shell company”.
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The Offering
| SecuritiesBeing Offered | Upto 8,000,000 sharesofour common stock. | |
| OfferingPrice | The offering price of the common stock is $0.03 per share. There is no public market for our common stock. We cannot give any assurance that the shares offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares in our stock. Upon the effectiveness of the registration statement of which this prospectus is a part, we intend to apply to FINRA for quotation on the OTC OTCQB, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. There is no guarantee, however, that our common stock will ever be quoted on the OTC OTCQB. | |
| Minimum NumberofSharesTo BeSoldinThis Offering | n/a | |
| MaximumNumberofSharesTo BeSoldinThis Offering | 8,000,000 | |
| Securities Issued and to be Issued | 4,444,444 shares of our common stock are issued and outstanding as of the date of this prospectus. Our officer and director, Mr. Benjamin Ridding owns 4,000,000 shares (90%) of the common shares of our Company and therefore has substantial control. Our Chairman and director Mr. Keith McCulloch owns 444,444 shares (10%) of the common shares of our Company. Upon the completion of this offering, Mr. Ridding will own an aggregate of approximately 30% and Mr. McCulloch will own an aggregate of approximately 10% (as a result of the anti-dilution clause within his agreement which will require the Company to issue Mr. McCulloch 1.11111 shares for each 10 shares sold in the offering for a total of 888,888 shares if all 8,000,000 shares are sold) of the issued and outstanding shares of our common stock, if the maximum number of shares is sold. | |
| Number of Shares Outstanding After The Offering If All The Shares Are Sold | 13,333,333 | |
| Use of Proceeds | If we are successful at selling all the shares we are offering, our net proceeds from this offering will be approximately $220,000 . We intend to use these proceeds to execute our business plan. The proceeds from the offering will not be used by the Company to repay the loans made by Ben Ridding to the Company. | |
| Offering Period | This offering will be open until the earlier of: (i) the maximum amount of shares have been sold; or (ii) nine months from the date of effectiveness of this registration statement of which this prospectus forms a part. We retain the right to close the offering at any time and there is no minimum offering required for this offering to close. | |
Minimum Investment: | The Offering is subject to a minimum investment amount for a single investor of 20,000 shares/$600. The Company will reject all subscriptions in an amount less than 20,000 shares/$600. |
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| Statementof Operations | For the year endedSeptember30,2016 (audited) | For the period from September 17, 2015 through September 30, 2015 (audited) | ||||||
| Revenue | $ | — | $ | — | ||||
| Net Loss for Reporting Period | $ | (112,788 | ) | $ | (11,680 | ) | ||
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Inadditiontotheotherinformationinthisprospectus,thefollowingriskfactorsshouldbeconsideredcarefullyinevaluatingourbusinessbeforepurchasing any ofoursharesofcommonstock.Apurchaseofourcommonstockisspeculativeinnatureandinvolves alotofrisks.Nopurchaseofourcommonstockshouldbemadebyanypersonwhoisnotin apositiontolosetheentireamount ofhisorherinvestment.
RisksAssociatedwithOur FinancialCondition
Becauseourauditorhasissuedagoingconcernopinionregardingourcompany,thereisanincreasedriskassociated withaninvestmentinour company.
Wehave earnedno revenuessinceourinception,whichmakesitdifficultto evaluatewhetherwewilloperateprofitably.Totaloperating expenseswere$112,788 and$11,680forthe year ended September 30,2016andfortheperiodfromSeptember17,2015toSeptember30,2015, respectively.Wehaveincurred anetlossof$112,788 and$11,680forthe year ended September30,2016 andfortheperiodfromSeptember17,2015toSeptember30,2015, respectively.Wehavenot attainedsustainedprofitableoperationssinceinception and aredependentuponobtainingfinancingorgenerating revenuefromoperationsto continueoperationsforthenexttwelvemonths.AsofSeptember30, 2016,wehadcash of $6. Ourfutureisdependentuponour abilitytoobtainfinancingoruponfutureprofitableoperations.We reservethe righttoseek additionalfundsthroughprivateplacementsofour commonstock and/orthroughdebtfinancing. Our abilityto raise additionalfinancingisunknown.Wedonothave anyformal commitmentsor arrangementsforthe advancementorloanoffunds.Forthese reasons,our auditorsstatedintheir reportdated January 9,2017 asof andforthe year endedSeptember30,2016thattheyhavesubstantialdoubtwewillbe ableto continue as agoing concern.As a result,thereis anincreased riskthatyou couldlosethe entire amountofyourinvestmentinour company
Becauseweare adevelopmentstage company,wehavelimitedrevenuestosustainouroperations.
Weareadevelopmentstagecompanythatiscurrentlydevelopingourbusiness.Todate,wehavenotgeneratedany revenues. Thesuccessofourbusinessoperationswilldependuponourabilitytoobtainclientsandprovidesqualityservicestothoseclients.Wearenotabletopredictwhetherwewillbeabletodevelopourbusinessandgeneratesignificantrevenues.Ifwearenotabletocompletethesuccessfuldevelopmentof ourbusinessplan,generatesignificantrevenuesandattainsustainableoperations,thenourbusinesswillfail.
Becausewehave alimitedoperatinghistory,itis difficult toevaluateyourinvestmentinourstock.
Evaluationofourbusinesswillbedifficultbecausewehavealimitedoperatinghistory.Todate,revenuesarenotsubstantialenoughtomaintainuswithoutadditionalcapitalinjectionifwedeterminetopursueagrowthstrategybeforesignificantrevenuesaregenerated.Weface anumberofrisksencounteredby early-stage companies,includingourneedtodevelopinfrastructuretosupportgrowth and expansion;ourneedtoobtainlong-termsourcesoffinancing;ourneedto establishourmarketing,sales andsupportorganizations; andourneedtomanage expandingoperations. Ourbusinessstrategymaynotbesuccessful, andwemaynotsuccessfullyaddress these risks. Ifwe areunabletosustainprofitableoperations,investorsmaylosetheir entireinvestmentin us.
Becauseourofferingwill be conductedonabest efforts basis, there can beno assurance thatwe canraise themoneyweneed.
Thesharesarebeingofferedby us on a“bestefforts”basiswithnominimumandwithoutbenefitofa private placement agent. Wecanprovidenoassurancethatthisofferingwillbecompletelysoldout.If lessthan themaximumproceeds areavailable, our businessplans and prospectsforthe currentfiscalyear could be adverselyaffected.
Inordertofundouroperations andpayoffering expensesof$10,000,webelievethatweneedthe$240,000ingrossproceedsfromthisoffering.Webelievethat$60,000ingrossproceedswillbesufficienttopayforthe expensesofthisoffering and conductourproposedbusiness activitiesforthenexttwelvemonthson alimitedbasis.Webelievethefull$240,000would allowustoimplementourbusinessplantothefull extentthatwe envision. Our availablefunds combinedwith revenueswillnotfundour activitiesforthenexttwelvemonths.Asof January 9, 2017our current cashonhandis approximately$6. Our estimatedmonthlyburn rateis approximately$4,200permonth.Basedonour currentburn rate,wewill runoutoffunds immediatelywithout additional capital and assuming revenuesbasedonpastperformanceduringthatperiod. Ifwefailto raisesufficientfundsinthisoffering,investorsmaylosetheir entire cashinvestment.
Giventhatthereisnominimumoffering amount andweneedto raiseatleast$60,000tocontinueoperationsforthenexttwelvemonths,investorsbearthe complete riskoflosingtheir entireinvestmentifwe areunabletoraise enoughproceedsfromthisofferingto continueoperations. Ifwearenot ableto raisetheentire$240,000,wewillhavetolimitoreliminateimportant expenditures,such asthepurchaseof certainmaterials andsuppliesforuseinthemanufacturingofourproducts,leasespace costs,marketing activities andlabor,whichwillhinderour abilitytogeneratesignificant revenues and cause adelayintheimplementationof ourbusinessplan. Moreover,thelessmoneywe are abletoraiseinthisoffering,themorethe riskthatyouwilllose your entireinvestment.
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RisksAssociatedwithOurBusinessModel
Ourbusinessmaynotprove tobe a viablebusinessmodel.
Ourbusinessmodelfordistributing cosmeticproductstowholesalers,retailers andovertheInternetisunproven,andwehave only recentlylaunchedoureffortstodevelopa business centeredon thismodel.Itistooearlytopredictwhetherconsumerswill accept,anduse our productsonaregular basis,insignificantnumbers. Ourproductsmayfail toattract significantnumbersofconsumers. Ifwe areunabletosuccessfullymonetizeourlicensingagreement,wemaynotbe abletogeneratesufficientrevenues.
Becausewemaybeunabletocomplete ourdevelopment of ourbrands,manufacturing andcommercializationofourproducts,we couldfacesignificantlyharmto ourbusiness plans,prospects, resultsofoperationsandfinancialcondition.
Commercializingourproductsdependsonanumberof factors,includingbutnot limitedto:
| ● | completion, refinement andmanagementofoursupply chain; | |
| ● | completion, refinement, andmanagementofourdistribution channels; | |
| ● | demonstrationofefficienciesthatwillmakeourproducts attractivelypriced; | |
| ● | developmentofanadequatesalesforceandsales channelsnecessarytodistributeourproducts andachieveourdesired revenuegoals; and | |
| ● | ourdependencyonthirdpartiesfrom whom wehavelicensedourproducts. |
Wecannotassureinvestorsthatthestrategiesweintendtoemploywillenableustosupportthedevelopmentof ourbrands,manufacturinganddistributionofdesirable cosmeticproducts.Ifweareunabletoimplementthenecessarystepsofourbusinessplan,ourprospects, resultsofoperationsandfinancialconditionwill suffer.
Additionally,wehaveenteredintoalicensingagreementwiththirdpartiesunderwhichthethirdpartiesaregrantingus permissiontodevelop,marketanddistributetheirproducts.Wearethereforedependentonthesethirdpartiestoperformunderthetermsofthelicenseagreementandremaininbusiness.Ifthelicensingagreementisterminated,orthesethirdpartiesdonotperform asrequiredor arenolongerinbusiness,ourprospects, resultsofoperationsandfinancialconditioncould bemateriallyadverselyimpacted.
Becausewerely on thirdpartymanufacturers to makeourproducts,wemaybeunable toeffectivelyhave our products manufacturedanddistributeourproducts,whichwouldadverselyaffectour reputationandmaterially reduceour revenues.
Wedonotownoroperateanymanufacturingfacilities.We intend to primarilyuse arelatedpartymanufacturertomanufactureourproducts,ColorcosCo.Ltd., who has been the exclusive manufacturer of 4U2 products since 2002.Ifwelosetheservicesofourmanufacturer,wemaybeunabletosecuretheservicesofreplacementmanufacturers.Theoccurrenceofanysuchconditionswillhaveamateriallynegativeeffectuponourreputation andourabilitytodistributeourproducts,whichwillcause amaterialreductioninour revenues.
Wewillrelyinpartupondistributionpartnersandwholesalersandretailerstodistributeandsellourproducts,andwemaybeadverselyaffectedifthosepartiesdonotactivelypromoteourproductsorpursuecustomerswho wouldhaveapotentialdemandforourproducts.
Weestimatethatasignificantportion of ourrevenuewillcomefromsalestoendconsumers,retailers,distributorsandresellers.These relationshipshavenotbeenformalizedinagreements,andmaybesubjecttoterminationatanytime.Wecannotcontroltheamount andtimingofresources thatourpartnersdevotetoactivitiesonourbehalf.
Weintendtocontinuetoseekstrategicrelationshipstodistributeandsellourproducts.We,however,maynotbeabletonegotiate acceptable relationships inthefuture andcannotpredictwhether currentorfuture relationshipswillbesuccessful.
Competitorscouldcopy ourbusinessmodelanderodeourbrandrecognition.
We employ abusinessmodelthatcould allow competitorstoduplicateourproducts andservices.Wecannot assureyouthatour competitorswillnotattempttocopyourbusinessmodelandthatthiswillnoterodeourbrandrecognition andimpairourabilitytogeneratesignificant revenues.
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Our operatingresults dependonourabilitytocompetewithour existingcompetitorsandwith newcompetitorsthatmayenter the cosmeticmanufacturing and distributionmarket.
Ourprincipalcompetitorsconsistofcosmeticsmanufacturersanddistributors.Thesebusinessescompetewithusinoneormoreservicecategories.Mostofthesepotential competitorshavegreaterfinancialormarketingresourcesthanwedoandmaybeabletodevotegreaterresourcestosourcing,promotingandsellingtheirservices.Wemay alsofaceincreasedcompetitionduetotheentryofnew competitors.Asaresultofthiscompetition,wemayexperiencelowersalesorgreateroperatingcosts,suchasmarketing costs,whichwouldhave anadverse effectonour resultsofoperationsandfinancialposition.
Ouroperatingresults dependonthepopularity ofourbrandsand productdevelopment.
Weanticipatethatsubstantiallyallofourrevenueswillbegeneratedfromthesaleofproducts.Thedemandforcosmeticproductsisdirectlyrelatedtothepopularityoftheproductsuniqueness,usability, quality andpopularity.Ifthepopularityofourproductsdecreases,salesofourproductsmaybeadverselyaffected.Wecannotassurethattheoveralldollarvolumeofthecosmeticmarketwillgrow,orthatitwillnotdecline,inthefuture.
If weareunabletogaugetrendsand reacttochangingconsumerpreferencesin atimelymanner, oursaleswilldecrease, andourbusinessmayfail.
Webelieveoursuccessdependsinsubstantialpartonourabilitytoofferourproductsthatreflectcurrentneeds, are priced to meet consumer expectations,andanticipate,gauge andreacttochangingconsumerdemandsinatimelymanner.Ourbusinessisvulnerabletochangesinconsumerpreferences.Wewill attempttoreducetherisksofchangingdemandsandproductacceptanceinpartbydevotingaportionofouravailableproductsanddesignstostandardproductsthat arenotsignificantlymodifiedfrom yeartoyear.Nevertheless,ifwemisjudge consumerneedsforourproducts,ourability togeneratesalescouldbeimpairedresultinginthefailureofourbusiness.Therearenoassurancesthat ourfutureproductswillbesuccessful, andinthatregard, anyunsuccessfulproductscouldalsoadverselyaffectourbusiness.
Ifthemarketforcosmeticproductsdoesnotexperiencesignificant growthorif ourproductsdonot achievebroadacceptance,wewill notbeable to achieve revenues.
Wehopetoachievecontinuedrevenuesfromsalesofourproducts.Wecannotaccurately predict,however,futuregrowthratesorthesizeofthemarketforourproductsintheUnitedStatesandEuropeandothermarketsweengagein.Demandforourproductsmaynotoccuras anticipated, ormaydecrease,eithergenerallyorin specificgeographicmarkets, duringparticulartime periods.The expansionofourproducts inthemarketdependsonanumberof factors,suchas:
| ● | the cost,performance andappearanceofourproductsand productsoffered byour competitors; | |
| ● | publicperceptionsregardingourproductsandthe effectivenessandvalueofourproducts; | |
| ● | customersatisfactionwithourproducts;and | |
| ● | marketingeffortsand publicityregardingtheneedsforourproductandthepublicdemandforourproduct. |
Evenif ourproductgainswidemarketacceptance,wemay notadequatelyaddressmarketrequirementsandmay not beabletoexpandmarketacceptance.Ifourproductsdonotachievewidemarketacceptance,wemaynotbeabletoachieveouranticipatedlevelofgrowth,wemaynotachieve revenuesandresultsofoperationswouldsuffer.
In theeventthatwe areunabletosuccessfullycompetein thecosmeticsindustry,wemaynotbeable to achieveprofitableoperations.
Wefacesubstantialcompetitionintheindustry.Duetooursmallsize,itcanbeassumedthatmanyofourcompetitorshavesignificantlygreaterfinancial,technical,marketingandothercompetitiveresources.Accordingly,thesecompetitorsmayhavealreadybegunto establishbrand-recognitionwithconsumers.Wewillattemptto compete againstthese competitorsbydevelopingfeaturesthatexceedthefeaturesofferedbycompetitors.However,wecannotassureyouthatourproductswilloutperformcompetingproductsorthosecompetitorswillnotdevelopnewproductsthatexceedwhatweprovide. In addition,wemay face competitionbasedonprice. Ifourcompetitorslowerthepricesontheirproducts,thenitmaynotbepossibleforustomarketourproductsatpricesthatare economicallyviable. Increasedcompetitioncouldresult in:
| ● | Lowerthanprojectedrevenues; | |
| ● | Price reductionsandlowerprofitmargins; | |
| ● | Theinabilityto developandmaintainourproductswith featuresandusabilitysoughtbypotentialcustomers. |
Anyoneofthese results could adversely affectourbusiness,financial condition andresultsof operations. Inaddition,ourcompetitorsmaydevelop competingproductsthatachievegreatermarketacceptance. Itisalsopossiblethatnew competitorsmayemerge and acquiresignificantmarketshare.Ourinabilitytoachievesalesandrevenueduetocompetitionwillhaveanadverse effectonourbusiness,financial condition andresultsofoperations.
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Ourproductsmaycontain defects,whichcouldadversely affectour reputationandcauseustoincursignificant costs.
Since 2002, consumer complaints for 4U2 have been negligible. All 4U2 products are registered by the Thai FDA under the ASEAN Cosmetics Directive which mirrors the EU Directive and is more stringent than US FDA regulation. However, defectsmaybefoundinourproducts.Anysuchdefectscouldcauseustoincursignificantreturnandexchangecostsanddivertthe attentionofourpersonnelfromproductdevelopment efforts, and causesignificant customer relations andbusiness reputationproblems.Anysuchdefectscouldforceustoundertakeaproductrecallprogram,whichcouldcauseustoincursignificantexpenses andcouldharmourreputationandthatofourproducts.Ifwedeliverproductswithdefects,ourcredibility andthemarketacceptance andsalesofourproductscould beharmed. ..
If wedonoteffectivelyimplementmeasurestosellourproducts,wemaynot achievesustained revenuesandyouwilllose your entireinvestment.
Weintend todistributecosmeticsandhave notmade anysalesto date.We have noexperienceinprovidingdirectsales andservice. Moreover,oursales andmarketing effortsmaynot achieveintended results andthereforemay not generatethe revenuewehopetoachieve.Therecanbe no assurancethatourfocusorourplanswillbesuccessful. Ifwearenot abletosuccessfully addressmarkets forourproducts,wemay notbe abletogrowourbusiness, compete effectivelyor achieveprofitability.
Ifweareunable tosuccessfullymanagegrowth,ouroperationscould beadversely affected.
Ourprogressisexpectedtorequirethefullutilizationofourmanagement,financialandotherresources,whichtodatehasoccurredwithlimitedworkingcapital.Our abilitytomanagegrowtheffectivelywilldependonourabilitytoimproveandexpandoperations,includingourfinancial andmanagementinformationsystems, andto recruit,train andmanagesalespersonnel.There canbeno absolute assurancethatmanagementwillbe abletomanagegrowtheffectively.
Ifwe donotproperlymanagethegrowthofourbusiness,wemayexperiencesignificant strainsonourmanagementand operationsanddisruptionsinourbusiness.Variousrisks arisewhencompaniesandindustriesgrowquickly.Ifourbusinessorindustrygrowstooquickly,ourabilitytomeetcustomerdemandinatimelyandefficientmannercouldbechallenged.Wemay alsoexperiencedevelopmentdelaysasweseektomeetincreaseddemandforourproducts.Ourfailuretoproperlymanagethegrowththatwe,orourindustry,mightexperiencecouldnegativelyimpactourabilitytoexecuteonouroperatingplan and,accordingly,couldhavean adverseimpactonourbusiness,our cash flowandresultsofoperations, and our reputationwithour currentorpotentialcustomers.
Ifweareunable tohireandretainkeypersonnel,wemaynotbeable toimplementourbusiness plan.
Duetothespecifiednatureof ourbusiness,havingcertainkeypersonnelisessentialtothedevelopmentandmarketing oftheproductsweplantosellandthustotheentirebusinessitself.Consequently,thelossofanyofthoseindividualsmayhaveasubstantialeffectonourfuturesuccessorfailure.Wemayhaveto recruitqualifiedpersonnelwith competitive compensationpackages, equityparticipation,andotherbenefitsthatmay affecttheworkingcapitalavailableforouroperations.Managementmayhavetoseektoobtainoutsideindependentprofessionalstoassisttheminassessingthemeritsandrisksofanybusinessproposalsaswellasassistinginthedevelopment andoperationofmany companyprojects.Noassurancecanbegiventhatwewillbeabletoobtainsuchneeded assistanceonterms acceptabletous.Ourfailureto attract additionalqualified employeesorto retaintheservicesofkeypersonnel couldhave amaterialadverse effectonouroperatingresultsandfinancialcondition.
We maybeunableto establish andmaintain allrequireddisclosurecontrols andprocedures andinternalcontrolsoverfinancial reportingandmeet thepublic reporting andthe financialrequirementsforourbusiness.
Ourmanagementhasalegalandfiduciarydutytoestablishandmaintaindisclosurecontrolsandcontrolproceduresincompliancewiththesecuritieslaws,includingtherequirementsmandatedbytheSarbanes-OxleyActof 2002. Thestandardsthatmustbemetformanagementtoassesstheinternalcontroloverfinancialreportingaseffective arenew and complex,and requiresignificantdocumentation,testingandpossibleremediationtomeetthedetailedstandards.Wemayencounterproblemsordelaysincompleting activitiesnecessarytomakeanassessmentofourinternalcontrol overfinancialreporting,anddisclosurecontrolsandprocedures.Ifwecannotassess ourinternalcontrol overfinancial reporting aseffectiveorprovideadequate disclosurecontrolsorimplementsufficient controlprocedures,investorconfidence andsharevaluemaybenegativelyimpacted.
Wewill incurincreasedcostsandourmanagementwillfaceincreased demandsasaresultofoperating asapublic company.
As apublic company,wewillincursignificantlegal, accounting andother expensesthatwedidnotincur asaprivate company.We estimatethatwewillincurnolessthan$40,000in these expensesonanannualbasistoexist as a public company.Those expenseswillbehigherifourbusinessvolume andactivityincreases.Thoseobligations coulddiminishourabilitytofundouroperations andmaypreventusfrommeetingournormalbusinessobligations.
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Inaddition,ouradministrativestaffwillberequiredtoperform additionaltasks.Forexample,inanticipationofbecomingapublic company,wewillneedtoadopt additionalinternalcontrolsanddisclosurecontrolsandproceduresandbearall oftheinternaland externalcostsofpreparingand distributingperiodicpublic reports incompliancewithourobligationsunder applicablesecurities laws.
In addition, changinglaws, regulations andstandards relatingto corporategovernance andpublicdisclosure,includingtheSarbanes-OxleyAct,theDodd-FrankActandrelatedregulationsimplementedbytheSecuritiesandExchangeCommissionare creatinguncertaintyforpublic companies,increasinglegal andfinancial compliance costs andmakingsome activitiesmoretime-consuming.Wearecurrently evaluatingandmonitoringdevelopmentswithrespecttonew andproposedrulesandcannotpredictorestimatetheamountofadditionalcostswemayincurorthetimingofsuch costs.Theselaws, regulationsandstandardsaresubjecttovaryinginterpretations,inmanycasesduetotheirlackofspecificity,and,asaresult,theirapplicationinpracticemay evolveovertime asnewguidanceisprovidedby regulatory andgoverningbodies.This could resultin continuinguncertainty regarding compliancemattersandhighercostsnecessitatedbyongoing revisionstodisclosureandgovernancepractices.Weintendtoinvest resourcestocomplywithevolvinglaws,regulationsandstandards,andthisinvestmentmay resultinincreasedgeneraland administrative expenses and adiversionofmanagement’stime and attentionfrom revenue-generating activitiesto compliance activities.Ifoureffortstocomplywithnewlaws,regulations andstandardsdifferfromtheactivitiesintendedby regulatoryorgoverningbodiesduetoambiguitiesrelatedtopractice,regulatory authoritiesmayinitiatelegalproceedings againstus andourbusinessmaybeharmed.We alsoexpectthat being apublic companyandthesenew rulesandregulationswillmakeitmoreexpensiveforustoobtaindirector andofficerliabilityinsurance, andwemaybe requiredto accept reduced coverageorincursubstantiallyhighercoststoobtain coverage.Thesefactorscouldalsomakeitmoredifficultforustoattractandretainqualifiedmembers ofourboardof directors,particularly toserveonour auditcommittee andcompensation committee, andattractandretainqualifiedexecutiveofficers.
Theincreasedcostsassociatedwithoperatingasapubliccompanymaydecreaseournetincomeorincreaseournetloss,andmay causeustoreducecostsin otherareasof ourbusinessorincreasethepricesof ourproductsorservicestooffsettheeffect ofsuchincreasedcosts.Additionally,iftheserequirementsdivertourmanagement’sattentionfromotherbusinessconcerns,they couldhaveamaterialadverse effectonourbusiness,financialconditionandresultsofoperations.
Because wehavetwopersons as ourofficers anddirectorsthatoccupyall corporatepositions, ourinternal controlsmaybeinadequateandwemayfacenegativeconsequencesrelatedtohavingthemsettheirownsalariesandmakingallofthedecisionsaffecting our company.
Becausewehaveonlytwoofficersanddirectors,BenjaminRiddingandKeithMcCullochmaynotadequatelybeabletoadministerourinternalcontrolsoverdisclosureorfinancialreporting.Acontrolsystem,nomatterhowwellconceivedandoperated,canprovideonlyreasonable,notabsolute,assurancethattheobjectivesofthecontrolsystem aremet.Further,thedesignofacontrolsystemmust reflectthefactthatthereareresourceconstraints,andthebenefitsofcontrolsmust beconsidered relativetotheircosts.Becauseoftheinherentlimitationsin allcontrolsystems,noevaluationof controlscanprovideabsoluteassurancethat all controlissues andinstancesoffraud,if any,withintheCompanyhavebeendetected.Theseinherentlimitationsincludethe realitiesthatjudgmentsindecision-makingcanbefaulty, andthatbreakdownscanoccurbecauseof asimpleerrorormistake.Sincewehaveonlyoneofficer and director,the controlscaneasilycircumvented byourofficersand directorswhichcouldresult inadverse consequencestous.
Inaddition,hewillhaveanoverwhelminginfluenceindeterminingtheoutcomeofall corporatetransactionsorothermatters,includingsettinghisownsalary andperquisites,using corporate assetsandfundstothedesignshefeelsbest,andalsothepowertopreventorcause achangeincontrol.Asaresult,our chief executive officer could establish ahigh salary in thefuturewhichwilldrainour capital andpreventusfromoperating. Youwillnotbe able to control thedecisionshemakes and youmayfind them in conflictwithyourpersonaldesignsfor thisbusiness.
Our officers and directors will allocate some portion of their time to other businesses thereby causing conflicts of interest in his determination as to how much time to devote to our affairs as well as other matters. Benjamin Ridding and Keith McCulloch our current officers and directors, are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and their other commitments. Mr. McCulloch through his company JJH, owns the 4U2 cosmetics brand and this owns minority stakes in 3 of the brands exclusive distributors. Mr. Ridding and Mr. McCulloch are not obligated to devote any specific number of hours to our affairs, but it is estimated that Mr. Ridding will devote approximately 30 - 40 hours per week and Mr McCulloch approximately 15 hours per week on our business. As such, there may be a conflict of interest in the determination as to how much time they devote to their own interests as opposed to our business. Investors should be aware of this in deciding whether to purchase our capital stock.
Because JJH also distributes 4U2 products in other territoriesmayface a conflictofinterestwithregardsto the fulfillment of products by our third party manufacturer.
Asstatedabove,Mr.McCulloch,ourofficer anddirector alsoowns JJHwithwhomwehave anexclusive distributionlicense agreement. JJH distributes 4U2 products outside of the territories in which the Company intends to distribute 4U2 products. All of the 4U2 products are manufactured by Colorcos. Because Colorcos manufactures all of the 4U2 products distributed by JJH and to be distributed by the Company, we could face a conflict ofinterest and Colorcos may supply JJH before it supplies the Company 4U2 products which could result in a loss of sales and revenues by the Company.
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RisksRelated ToLegalUncertainty
OurdirectorsareresidentsoftheUnitedKingdomandThailandandinvestorsmayhavedifficultyenforcinganyjudgmentsagainst themwithinthe United States.
Ourdirectors,Mr.BenjaminRiddingandMr.KeithMcCulloch,areresidentsoftheUnitedKingdomandThailandrespectively,and allorasubstantialportionoftheirassetsarelocatedoutsidetheUnitedStates.Asaresult,itmaybedifficultforinvestorstoenforcewithinthe UnitedStates anyjudgmentsobtained againstourdirectors,includingjudgmentspredicateduponthe civilliabilityprovisionsofthesecurities lawsofthe UnitedStatesor anystatethereof.
Theinability of JJHtoprotectourbrandnameandproprietaryrightsintheUnitedStates andforeign countries couldmateriallyadversely affectourbusiness prospectsandcompetitiveposition.
Oursuccessdependsontheability of JJHtoobtainandmaintainbrandingandotherproprietary-rightprotectionintheUnitedStatedandothercountries.IfJJH isunabletoobtainormaintaintheseprotections,wemaynotbeabletopreventthirdpartiesfromusingourproprietaryrights.
Ifweare thesubjectof futureproductdefectorliabilitysuits,ourbusinesswill likelyfail.
All 4U2 products are registered in Thailand and will be notified to the US FDA. Inthecourseofourplannedoperations,wemaybecomesubjecttolegalactionsbasedonaclaimthatourproductsaredefectiveinworkmanshiporhavecausedpersonalorotherinjuries.Wecurrently donotmaintainliabilityinsuranceandwemaynotbeabletoobtainsuch coverageinthefutureorsuchcoveragemaynotbeadequatetocoverallpotential claims.Moreover,even ifweareabletomaintain sufficientinsurancecoverageinthefuture, anysuccessfulclaimcouldsignificantlyharmourbusiness,financialconditionand resultsofoperations.
Ourcommercialsuccessdependssignificantlyon our abilitytodevelopand commercialize ourproductswithoutinfringingtheintellectual propertyrightsof third parties.
Ourcommercialsuccesswilldepend,inpart,onoperatingourbusinesswithoutinfringingthetrademarksorproprietary rightsofthirdparties.Thirdpartiesthatbelieveweareinfringingontheirrightscouldbringactionsagainstusclaimingdamagesandseekingto enjointhedevelopment,marketinganddistributionofourproducts.Ifwebecomeinvolvedinanylitigation,itcouldconsumeasubstantialportionofourresources,regardlessoftheoutcomeofthelitigation.Ifanyoftheseactionsaresuccessful,wecouldbe requiredtopaydamagesand/ortoobtainalicensetocontinuetodevelopormarketourproducts,inwhich casewemayberequiredtopaysubstantialroyalties.However,anysuchlicensemaynotbeavailableontermsacceptabletousoratall.Ultimately,wecouldbepreventedfrom commercializing aproductorforcedtoceasesomeaspectofourbusinessoperationsasaresultofpatentinfringement claims,whichwouldharmourbusiness.
AsanEmergingGrowthCompanyundertheJobsAct,wearepermittedtorelyonexemptionsfrom certaindisclosures requirements.
Wequalify asan “emerginggrowth company”undertheJOBSAct.Asaresult,wearepermittedto,andintendto,relyonexemptionsfromcertaindisclosure requirements.Forsolong aswe are anemerginggrowth company,wewillnotbe requiredto:
| ● | have anauditor reportonourinternalcontrolsoverfinancialreportingpursuant toSection404(b)oftheSarbanes-OxleyAct; | |
| ● | complywithanyrequirementthatmaybeadoptedbythePublicCompanyAccountingOversightBoardregardingmandatory auditfirm rotationorasupplementtothe auditor’sreportprovidingadditionalinformationabouttheauditandthefinancialstatements(i.e., anauditordiscussionandanalysis); | |
| ● | submitcertainexecutivecompensationmatterstoshareholderadvisoryvotes,suchas“say-on-pay”and“say-on-frequency;” and | |
| ● | disclose certain executive compensation relateditemssuch asthe correlationbetween executive compensation andperformance andcomparisonsoftheChiefExecutive’scompensationtomedian employee compensation. |
Inaddition,Section107oftheJOBSActalsoprovidesthatanemerginggrowthcompanycantakeadvantageoftheextendedtransition periodprovidedinSection 7(a)(2)(B)oftheSecuritiesActforcomplyingwithneworrevisedaccountingstandards.Inotherwords,anemerginggrowthcompany candelaytheadoption ofcertainaccountingstandardsuntilthosestandardswouldotherwise applytoprivatecompanies.Wehaveelectedtotakeadvantageofthebenefitsofthisextendedtransitionperiod.Ourfinancialstatementsmaythereforenotbe comparabletothoseofcompanies thatcomplywithsuch newor revisedaccountingstandards.
Wewillremainan“emerginggrowthcompany”foruptofiveyears,oruntiltheearliestof(i)thelastdayofthefirstfiscalyearinwhichourtotalannualgrossrevenuesexceed$1billion,(ii)thedatethatwebecomea“largeacceleratedfiler”asdefinedinRule
12b-2undertheSecuritiesExchangeActof1934,whichwouldoccurifthemarketvalueofourordinarysharesthatisheldbynon-affiliatesexceeds$700millionasofthelastbusinessdayofourmostrecently completedsecondfiscalquarteror(iii)thedateonwhichwehaveissuedmorethan$1 billionin non-convertibledebtduringtheprecedingthreeyearperiod.
Untilsuchtime,however,wecannotpredictifinvestorswillfindourcommonstocklessattractivebecausewemay relyonthese exemptions. Ifsomeinvestorsfindour commonstocklessattractive asaresult,theremaybealess activetradingmarketforour commonstockand ourstockpricemaybemorevolatile.
As a “shell company” there will be a longer holder period and additional restrictions on an investor’s ability to sell his or her shares under Rule 144 of the Securities Act of 1933, as amended, and certain investors may not want to invest in the Company.
As a start-up company with limited operations we are a “shell company” as defined in Rule 12b-2 of the Exchange Act of 1934 (an issuer that has (A) no or nominal operations and (B) either (1) no or nominal assets; (2) assets consisting solely of cash and cash equivalents; or (3) assets consisting of any amount of cash and cash equivalents and nominal other assets). Companies which are a “shell company” are permitted to file a Form 8-K and provide the required disclosure under Item 5.06 at such time as their “shell company” status has ended. Shareholders who are issued unregistered shares of a company which is a “shell company” have longer holding periods and additional restrictions on being able to sell their shares under Rule 144 of the Securities Act of 1933, as amended; provided, however, Company shareholders who purchase any of the 8,000,000 registered shares in the offering described in this registration statement will not be subject to the holding periods under Rule 144 of the Securities Act of 1933, as amended. Also, a company which is a “shell company” is prohibited from making certain filings with the Securities and Exchange Commission, such as a Form S-8. Additionally, certain financing sources that would otherwise invest in the Company may not invest in the Company due to the Company being a “shell company”, or may deem the shares of such a company to be worth less than a company which is not a “shell company”. This could limit the Company’s ability to attract investors in this offering or in future offerings.
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RisksRelated ToThisOffering
If amarket forour common stockdoes notdevelop,shareholdersmaybeunable toselltheirshares.
Priortothisoffering,therehasbeennopublicmarketforoursecuritiesandtherecanbenoassurancethatan activetradingmarketforthesecurities offeredhereinwill developafterthis offering,or,ifdeveloped,besustained.Weanticipatethat,upon completionofthisoffering,thecommonstockwillbeeligibleforquotationonthe OTCOTCQB.Ifforanyreason,however,oursecuritiesarenot eligibleforinitial orcontinuedquotationontheOTCOTCQBorapublictradingmarket doesnot develop,purchasersofthecommonstockmayhavedifficultysellingtheirsecuritiesshouldtheydesiretodosoandpurchasersofourcommonstockmaylosetheirentireinvestment iftheyareunabletoselloursecurities.
Ourcommonstockpricemaybevolatileandcouldfluctuatewidelyinprice, whichcouldresultinsubstantiallossesforinvestors.
Themarketpriceofourcommonstockislikelytobehighlyvolatileandcouldfluctuatewidelyinpriceinresponsetovariousfactors,manyofwhicharebeyondour control,including:
| ● | innovationsornewproductsandservicesbyusorour competitors; | |
| ● | governmentregulationofourproductsandservices; | |
| ● | the establishmentofpartnershipswithother companies; | |
| ● | intellectualpropertydisputes; | |
| ● | additionsordeparturesof keypersonnel; | |
| ● | salesofour commonstock | |
| ● | our abilitytointegrateoperations,technology,productsandservices; | |
| ● | our abilitytoexecuteourbusinessplan; | |
| ● | operatingresultsbelowexpectations; | |
| ● | lossofanystrategic relationship; | |
| ● | industrydevelopments; | |
| ● | economic and other externalfactors;and | |
| ● | period-to-periodfluctuationsinourfinancial results. |
Youshouldconsider anyoneofthesefactors to bematerial. Ourstockpricemayfluctuatewidelyasa resultofanyofthe above.
Inaddition,thesecuritiesmarketshavefromtimetotimeexperiencedsignificantpriceandvolumefluctuationsthatareunrelatedtotheoperatingperformanceofparticular companies.Thesemarketfluctuationsmayalsomateriallyandadverselyaffectthemarketpriceofour commonstock.
Wemust raiseatleast25%of theofferingtopursueourbusiness planonalimited basis.
Wehavenoalternativeplanofoperationifatleast25%ofthesharesofferedhereinarenotsold.Weplantoremaininbusinessthroughthird-party e-commercesitesorourwebsitesalesforaslongaspossible. Thoseinvestingin ourcommonstockthroughthisofferingaretakingsubstantialriskinthattheymaylosetheirentireinvestmentifwedonotsellatleast25%ofthesharesoffered(See UseofProceeds).
InvestorspurchasingcommonStockpriortoour25%($50,000netafterofferingcostof$10,000)thresholdoftheofferingmaylose their entireinvestment.
Wemayfail andcease operations alltogetherif25%or $60,000ofcommonstockisnot sold.Therefore,investorswho purchasestock at thebeginningofourofferingare atgreater riskoflosingtheir entireinvestment thanthoseinvestingafterthe25% thresholdismade.
Ourmanagement willhavebroaddiscretion overtheuseoftheproceedswereceivein thisofferingandmightnot applytheproceeds inwaysthatincrease thevalueofyourinvestment.
Theofferinghasnoescrow,andinvestorfundsmaybeusedonreceipt.Thereisnoescrowofanyfunds receivedbyusin thisoffering, andanyfundsreceivedmaybeused byusfor anycorporatepurpose as thefundsare received.
Weintendtousethemoney raisedinthisoffering asdetailedin“UseofProceeds”sectionofthisprospectus. However,ourmanagementhasthediscretiontousethemoney asitseesfit, andmaydivergefromusingtheproceedsofthisoffering asexplainedherein. Theuseofproceedsmaynotbeusedtoincreasethevalueofyourinvestment.
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Because FINRAsalespractice requirementsmaylimit astockholder’sabilitytobuyandsellourstock,investorsmaynotbeable tosell theirstockshould theydesire todoso.
Inadditiontothe“pennystock”rulesdescribedbelow,FINRAhasadoptedrulesthatrequirethatinrecommendinganinvestmenttoa customer,abroker-dealermusthavereasonablegroundsforbelievingthattheinvestmentissuitableforthat customer.Priorto recommendingspeculativelowpricedsecuritiestotheirnon-institutional customers,broker-dealersmustmakereasonableeffortstoobtaininformationaboutthecustomer’sfinancialstatus,taxstatus,investmentobjectivesandotherinformation.Underinterpretationsoftheserules,FINRAbelievesthatthereisahighprobabilitythatspeculativelowpricedsecuritieswillnotbesuitableforatleastsomecustomers.TheFINRArequirementsmakeitmoredifficultforbroker-dealerstorecommendthattheircustomersbuyour commonstock,whichmayhavethe effectof reducingtheleveloftrading activityinour commonstock.As a result,fewerbroker-dealersmay bewillingtomakeamarketinourcommonstock,reducingastockholder’sabilitytoresellsharesofourcommonstock.
Becausestatesecuritieslawsmaylimitsecondarytrading,investorsmayberestricted astothestatesinwhich theycansell thesharesoffered bythis prospectus.
Ifyoupurchasesharesofourcommonstocksoldinthisoffering,youmaynotbeabletoresellthesharesinanystateunlessanduntilthesharesofourcommonstockarequalifiedforsecondarytradingundertheapplicablesecuritieslawsofsuchstateorthereis confirmationthatanexemption,suchaslistingincertainrecognizedsecuritiesmanuals,isavailableforsecondarytradinginsuchstate.Therecanbenoassurancethatwewillbesuccessfulinregisteringorqualifyingourcommonstockforsecondarytrading,oridentifyinganavailableexemptionforsecondarytradinginourcommonstockineverystate.Ifwefailtoregisterorqualify,ortoobtainorverify anexemption forthesecondarytradingof,our commonstockinanyparticularstate,thesharesofcommonstockcouldnotbeofferedorsoldto,orpurchasedby,aresidentofthatstate.Intheeventthatasignificantnumberofstatesrefusetopermitsecondarytradinginourcommonstock,themarketforthecommonstockwillbelimitedwhichcoulddrivedownthemarketpriceofour commonstock and reducetheliquidityofthesharesofour commonstock and astockholder’s abilityto resellsharesofour commonstockatallor atcurrentmarketprices,whichcouldincrease astockholder’sriskoflosingsomeor allof his investment.
Becausewedonotexpecttopaydividends fortheforeseeablefuture,investors seekingcash dividends should notpurchaseour common stock.
Wehaveneverdeclaredorpaidanycashdividendsonourcommonstock.Wecurrentlyintendtoretainfutureearnings,ifany,tofinancetheexpansionofourbusiness.Asaresult,wedonotanticipatepayingany cashdividendsintheforeseeablefuture.Ourpaymentofanyfuturedividendswillbeatthediscretionofourboardofdirectorsaftertakingintoaccountvariousfactors,includingbutnotlimitedtoourfinancialcondition,operatingresults,cashneeds,growthplansandthetermsofany creditagreementsthatwemaybeapartytoatthetime.Accordingly,investorsmust relyon salesof their owncommon stockafter priceappreciation,whichmayneveroccur, as theonlywaytorealizetheirinvestment. Investors seekingcashdividends shouldnotpurchaseour commonstock.
Becausewewill besubject tothe“PennyStock”rules, thelevelof trading activityinourstockmaybe reduced.
Broker-dealerpracticesinconnectionwithtransactionsin“pennystocks”areregulatedbypennystockrulesadoptedbytheSecurities andExchangeCommission.Penny stocksgenerallyareequitysecuritieswith apriceoflessthan$5.00(otherthansecuritiesregisteredonsomenationalsecuritiesexchangesorquotedonNasdaq).Thepennystockrulesrequireabroker-dealer,priortoatransactioninapennystocknototherwiseexemptfromtherules,todeliverastandardizedriskdisclosuredocumentthatprovidesinformationaboutpennystocks andthenatureandlevelof risksinthepennystockmarket.Thebroker-dealeralsomustprovidethecustomerwith currentbid andofferquotationsforthepennystock,the compensationofthebroker-dealer anditssalespersoninthetransaction, and,ifthebroker-dealeristhesolemarketmaker,thebroker-dealermustdisclosethisfact andthebroker-dealer’spresumed controloverthemarket,andmonthly accountstatementsshowingthemarketvalueofeachpennystockheldinthecustomer’saccount.Inaddition,broker-dealerswhosellthesesecuritiestopersons otherthan establishedcustomersand“accreditedinvestors”mustmakeaspecialwrittendeterminationthatthepennystockis asuitableinvestmentforthepurchaser and receivethepurchaser’swritten agreementtothetransaction.Consequently,theserequirementsmayhavetheeffectofreducingtheleveloftradingactivity,ifany,inthesecondarymarketfor asecuritysubject tothepennystockrules, andinvestors inour commonstockmayfinditdifficult tosell theirshares.
IfoursharesarequotedontheOTCOTCQB,wewillberequiredtoremaincurrentinourfilingswiththeSECandmeetotherobligations, the failureofwhichcouldriskustoremovalfromthequotationservice.
ThereisnoguaranteethatourcommonstockwilleverbequotedontheOTCOTCQB.However,intheeventthatoursharesarequotedontheOTCOTCQB,wewillbe requiredtoremaincurrentinourfilingswiththeSECand,foreligibilityontheOTCQB,wemustmaintainastockpriceabove$0.01pershareandpay annualdues.Inthe eventthatwebecomedelinquentintheserequirements,wemayberelegatedtoaninferiorquotationserviceorquotationofourcommonstockcouldbeterminated. If oursharesarenot eligibleforquotationonthe OTCOTCQB,investors inour commonstockmayfinditdifficult tosell theirshares.
Becausepurchasersinthisofferingwillexperienceimmediateandsubstantialdilutioninthenettangiblebookvalueoftheir common stock,youmayexperiencedifficultyrecoveringthevalueofyourinvestment.
Purchasersofoursecuritiesinthisofferingwillexperienceimmediate andsubstantialdilutioninthenettangiblebookvalueoftheir commonstockfromtheinitialpublicofferingprice.Dilutioninnettangiblebookvaluepershare representsthe differencebetweenthe amountpersharepaidbypurchasersofsharesofour commonstockinthisoffering andtheproformanettangiblebookvaluepershareofour commonstockimmediatelyfollowingthisoffering.Thedilution experiencedbyinvestorsinthisofferingwill resultin anettangiblebookvaluepersharethatislessthantheofferingpriceof$0.03pershare.Suchdilutionmaydepressthevalueofthe company’s commonstockandmakeitmoredifficultto recoverthevalueofyourinvestmentinatimelymannershould youchosesell yourshares.
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Because Keith McCulloch has anti-dilution rights, investors in this offering will experience dilution of their ownership interest in the Company from the issuance of additional shares to him, and any future investors will also experience such dilution.
Keith McCulloch,whoisadirector andshareholderoftheCompany,hasarighttoreceive additionalshares atno additional costtohimtomaintainhis10%ownershipinterestintheCompany.TheCompanywillissueMr.McCulloch 1.11111sharesof commonstockfor each10sharesof commonstock soldin theoffering, and these shares will be issued for no additional consideration paid by Mr. McCulloch.For example,if theCompanyissues all8,000,000sharesintheoffering,theCompanywillissueMr.McCulloch888,888additionalsharesofcommonstockatnoadditional costtoMr.McCulloch.Theissuanceofthese additionalshareswillresultin furtherdilutionofinvestor’sshares.
Also, if the Company issuances additional shares of Company stock in the future after the offering, the Company will be obligated to issue Mr. McCulloch additional shares to allow him to maintain his 10% ownership interest in the Company, and these shares will be issued to Mr. McCulloch for no additional consideration to be paid by Mr. McCulloch. The issuance of these additional shares would result in further dilution to Company shareholders, including the investors in the offering. Additionally, this obligation by the Company to issue Mr. McCulloch additional shares for no additional consideration may be viewed negatively by future potential investors and result in the inability of the Company to sell additional shares, or cause the Company to sell those shares at a discounted value.
Ifweundertakefuture offeringsof ourcommonstock,purchasersin thisoffering will experiencedilutionoftheir ownershippercentage.
Generally,existingshareholderswillexperiencedilutionoftheirownershippercentageinthecompanyifandwhenadditionalsharesofcommonstockareofferedandsold. Inthefuture,wemayberequiredtoseekadditionalequityfundingintheformofprivateorpublicofferingsof ourcommonstock.Intheeventthatweundertakesubsequentofferings of commonstock,yourownershippercentage,votingpower asa commonshareholder,and earningspershare,ifany,willbeproportionatelydiluted.Thismay,inturn, result inasubstantialdecreaseintheper-sharevalueofyour commonstock.
Becauseyouwillreceivepaperstockcertificates forpurchasingsharesinthisoffering,someinvestorsmayfinditdifficulttoliquidatetheir holdings.
Onceyouhavepurchasedsharesinthisoffering,wewillissueyouapaperstockcertificate.Itmaybedifficultdepositingyourpaperstockcertificatesstockintoyourbrokerageaccount.Manybrokersrestrictordenypapercertificatedeposits.Atthesametime,mostpennystocksarenoteligibleforelectronic(DWACorDRS)depositthroughDTC,soyouwillnotbeabletoelectronicallydeposityourshares.As such,youmayfinditdifficult toliquidateyourshares inour company.
Thefailuretocomplywithgovernmental regulations coulddelayorlimittheintroductionof ourproposedproductsand resultinfailure to achieve revenuesormaintainongoingbusiness.
ThedistributionandmarketingofourintendedproductsaresubjecttoregulationforsafetybygovernmentauthoritiesintheU.S.and abroad.
Anyfailuretocomplywithanyapplicableregulationscoulddelayorthesaleofourproductswhichcouldhaveamaterialadverse effectonourCompany.
Wedependand will dependon third-party contractors forasubstantialportionofouroperationsandmaynotbeable tocontrol their workas effectivelyas ifweperformed these functionsourselves.
We intend to outsourcesubstantialportionsofouroperationstothird-partyserviceproviders.Any contractor thatweretainwillbesubject toFDA andforeign regulatory requirements andsimilar standardsoutsideof the UnitedStatesand Europe andwedonothave controlover compliancewith these regulationsby theseproviders. Consequently, iftheseprovidersdonot adhere toapplicablegoverningpracticesand standards, thedevelopment and commercializationofourproduct candidates couldbedelayedorstopped,which could severelyharmourbusiness andfinancial condition.
Becausewehave reliedonthirdparties and intend to rely on third parties in the future,ourinternal capacitytoperformthesefunctionsislimitedtomanagementoversight. Outsourcingthesefunctionsinvolvestheriskthatthirdpartiesmaynotperformtoourstandards,maynotproduce resultsinatimelymannerormayfailtoperform atall.Althoughwehavenotexperienced anysignificantdifficultieswithourthird-party contractors,itispossiblethatwe could experiencedifficultiesinthefuture. Inaddition,theuseofthird-partyserviceproviders will requireus to discloseourproprietaryinformationtotheseparties,which couldincreasetheriskthatthisinformationwillbemisappropriated.Thereisalimitednumberofthird-partyserviceprovidersthatspecializeorhavetheexpertise requiredtoachieveourbusinessobjectives. Identifying,qualifying andmanagingperformanceofthird-partyserviceproviders canbedifficult,timeconsuming and causedelaysinourdevelopmentprograms.Wecurrentlyhaveasmallnumberofemployees,whichlimitstheinternal resourceswehave availabletoidentify andmonitorthird-partyserviceproviders.Tothe extentweareunabletoidentify, retain andsuccessfullymanagetheperformanceofthird-partyserviceprovidersinthefuture,ourbusinessmaybeadversely affected, andwemaybesubjecttotheimpositionofcivilor criminalpenaltiesiftheir conductofclinicaltrialsviolates applicablelaw.
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Weare exposed toproductandclinical liabilityrisksthat could create asubstantial financialburden shouldwebesued.
Ourbusinessexposesustopotentialproductliability andotherliability risksthatareinherentinthetesting,manufacturingandmarketing of cosmetic products.In addition,theuse,inour clinicaltrials,ofpharmaceutical productsthatweorourcurrent orpotential collaboratorsmaydevelopandthensubsequentlysellmaycauseus to bear aportionofor allproduct liabilityrisks.Whileweintendtocarryaninsurancepolicycoveringliabilityincurredinconnectionwithsuchclaimsshouldthey arise,therecanbeno assurancethatwewillbeabletoobtaininsuranceorthat ourinsurancewill beadequatetocoverallsituations.Moreover,therecanbenoassurancethatsuchinsuranceifobtained,oradditionalinsurance,if required,will beavailableinthefutureor,if available,will be availableoncommerciallyreasonableterms.Asuccessfulproductliabilityclaimorseriesofclaimsbroughtagainstuscouldhaveamaterialadverse effectonourbusiness,prospects,financialconditionandresultsofoperations.
Due to ourlimitedmarketing,salesand distributionexperience,wemaybeunsuccessful inour effortstosellourproposedproducts, enterintorelationshipswiththird partiesordevelopadirectsalesorganization.
Wehavenotestablishedmarketing,salesordistributioncapabilitiesforourproposedproducts.Untilsuchtimeas ourproposedproductsarefurtheralonginthedevelopmentprocess,wewillnotdevoteanymeaningfultimeandresourcestothiseffort.Atthe appropriatetime,wewilldeterminewhetherwewilldevelopourownsalesandmarketing capabilities orenterintoagreementswiththirdpartiestosellourproducts.Wehavelimitedexperienceindeveloping,trainingormanagingasalesforce.Ifwe chooseto establishadirectsalesforce,wemayincursubstantialadditionalexpensesindeveloping,trainingandmanagingsuchanorganization.Wemaybeunabletobuild asalesforceonacost-effectivebasisoratall.Any such directmarketingandsaleseffortsmayprovetobeunsuccessful.Inaddition,wewillcompetewithmanyothercompaniesthatcurrentlyhaveextensivemarketing andsalesoperations. Ourmarketingandsaleseffortsmay beunabletocompeteagainsttheseothercompanies.Wemaybeunabletoestablishasufficientsalesandmarketingorganizationonatimelybasis,ifatall.
Ifwechoosetoenterintoagreementswiththirdpartiestosellourproposedproducts,wemaybeunabletoestablishormaintainthird-partyrelationshipson acommerciallyreasonablebasis,ifatall.Inaddition,thesethirdpartiesmayhavesimilarormore establishedrelationshipswithour competitors.
Wemaybeunabletoengagequalified distributors. Evenifengaged,thesedistributorsmay:
| ● | fail toadequatelymarketourproducts; | |
| ● | fail tosatisfyfinancialor contractualobligations tous; | |
| ● | offer,design,manufactureorpromote competingproducts;or | |
| ● | ceaseoperationswithlittleornonotice. |
Ifwefail to developsales,marketingand distributionchannels,wewouldexperiencedelays inproduct salesandincurincreasedcosts,whichwouldhave amaterialadverse effectonourbusiness,prospects,financialcondition, andresultsofoperation.
Ifweareunabletoprotectourintellectualpropertyeffectively,wemaybeunabletopreventthirdpartiesfromusingour technologies,whichwould impairour competitiveadvantage.
Wewillrelyontrademarkprotectionandothercontractual restrictionstoprotectourproprietarytechnologies,allofwhichprovidelimitedprotectionandmaynotadequatelyprotectourrightsorpermitustogainorkeepany competitiveadvantage.Ifwefailtoprotectourintellectualproperty,wewillbeunabletopreventthirdpartiesfromusingourtechnologiesandtheywillbeabletocompetemoreeffectively againstus.Wecannotguaranteeyouthatwewill besuccessfulindefending challengesmadeinconnectionwithourtrademarksandanyfuturetrademarkapplications.Inadditiontoourtrademarksandanyfuturetrademarkapplications,wewillrelyoncontractualrestrictionstoprotectourproprietarytechnology.Wewillrequireouremployeesandthirdpartiestosign confidentialityagreementsandemployeestoalsosignagreementsassigningtousallintellectualpropertyarisingfromtheirworkforus. Nevertheless,we cannotguaranteethat thesemeasureswillbe effectiveinprotectingourintellectualpropertyrights.
Our financial statements havebeen preparedassumingthat the Companywillcontinueasa goingconcern.
Wehavegeneratedlossestodate andhavelimitedworking capital.Thesefactors raisesubstantialdoubt aboutourabilitytocontinue asagoing concern. Ourfinancialstatementsdonotinclude anyadjustmentsthatmight resultfromthisuncertainty.Thereportofourindependent registeredpublic accountingfirmincluded an explanatoryparagraph expressingsubstantialdoubt aboutour abilityto continue asagoing concernintheir audit reportincludedherein. Ifwecannotgeneratetherequired revenuesandgrossmarginto achieveprofitabilityorobtain additional capitalonacceptableterms,wewillneedtosubstantially reviseourbusinessplanorceaseoperations andaninvestor couldsufferthelossofasignificantportionor allof hisinvestmentinourCompany.
Wehavehadoperatinglosses sinceinception,andwe currently arenotprofitable;andwemayneverachieveprofitability.
ForthefiscalyearendedSeptember30,2016,wehad anaccumulateddeficitof$124,468.Forthe year ended September 30, 2016,wehadanetlossof$112,788. Wehavehadandweexpecttocontinuetohavelossesinthenearterm andhave reliedandwill relyon capitalfundingtosupport ouroperationsinthenearfuture.Todate,such capitalfundinghas beenlimitedinamount. Becausewe are atthe developmentstage of our products,we donot expectthattheywillgenerate revenuessufficienttocoverthe costs ofour operationsinthenearer andmediumterm. We cannotpredictwhether ornotwewill ever become profitable or be ableto continuetofind capital tosupport our development and business plan.
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Wedonotexpecttopaydividendsfortheforeseeablefuture,andwemayneverpaydividendsand,consequently,the onlyopportunityforinvestorstoachieveareturn ontheirinvestmentisifatradingmarketdevelopsandinvestorsare abletosell theirsharesfor aprofitorifourbusiness is soldat aprice that enables investorstorecognize aprofit.
Wecurrentlyintendtoretainanyfutureearningstosupportthedevelopmentandexpansionofourbusinessanddonotanticipatepayingcashdividendsfortheforeseeablefuture.OurpaymentofanyfuturedividendswillbeatthediscretionofourBoardof Directors aftertakinginto accountvariousfactors,includingbutnotlimitedtoourfinancialcondition,operating results, cashneeds,growthplans andthetermsof anycredit agreementsthatwemay be apartyto atthetime. In addition,our abilitytopaydividendsonour commonstockmay belimitedbystatelaw.Accordingly,we cannot assureinvestors any returnontheirinvestment,otherthanin connectionwithasaleoftheirsharesor asaleofourbusiness.Atthepresenttimethereisalimitedtradingmarketforourshares. Therefore,holdersofoursecuritiesmaybeunabletosellthem.We cannot assureinvestorsthat an activetradingmarketwilldeveloporthatanythirdpartywilloffertopurchaseourbusinessonacceptableterms andat apricethatwouldenableourinvestorsto recognize aprofit.
CapitalMarket Risks
Because we willlikelyissue additionalsharesof ourcommonstock,investmentinourcompanycouldbesubjecttosubstantialdilution.
Investors’interestsinourcompanywillbedilutedandinvestorsmaysufferdilutionintheirnetbookvaluepersharewhenweissue additionalshares.Wearecurrentlyauthorizedtoissue150,000,000sharesofourcommonstock.Wemayberequiredtoincreaseour authorizedshares inordertoreceivethe entirepurchasepriceshouldthepurchasepriceofour commonstockdecrease.
In addition,weanticipatethatallor atleastsomeofourfuturefunding,ifany,willbeintheformof equityfinancingfromthesaleofour commonstock. Ifwedosellmorecommonstock,investors’investmentinour companywilllikelybediluted. Dilutionisthedifferencebetweenwhatyoupayforyourstockandthenettangiblebookvaluepershareimmediately aftertheadditionalsharesaresoldbyus. Ifdilutionoccurs, anyinvestmentinour company’s commonstockcouldseriouslydeclinein value.
Wemaybeunable tolistour common stockonNASDAQoronanysecuritiesexchange.
Althoughwemay applytolistourcommonstockonNASDAQortheNYSEMKTinthefuture,wecannotassureyouthatwewillbe abletomeettheinitiallistingstandards,includingtheminimumpersharepriceandminimum capitalizationrequirements,orthatwewillbeabletomaintainalistingofourcommonstockoneitherofthoseoranyothertradingvenue.If ourcommonstock beginstrading,untilsuchtimeaswewouldqualifyforlistingonNASDAQ,theNYSEMKToranothertradingvenue,ourcommonstockwouldtradeonOTCMarketsorOTCBulletin Boardoranotherover-the-counterquotationsystemwhereaninvestormayfinditmoredifficulttodisposeofsharesorobtainaccuratequotationsastothemarketvalueofourcommonstock.In addition,rules promulgatedbytheSECimposevariouspracticerequirementsonbroker-dealerswhosellsecuritiesthatfailtomeetcertaincriteriasetforthinthoserulestopersons otherthan establishedcustomersandaccreditedinvestors.Consequently,ifourcommonstockbeginstrading,theserulesmay deterbroker-dealersfrom recommendingorsellingourcommonstock,whichmayfurtheraffecttheliquidityofour commonstock. Itwouldalsomakeitmoredifficultforus toraise additionalcapital.
Futuresalesofourequitysecuritiescouldputdownwardsellingpressureonoursecurities,andadverselyaffectthestockprice.
Thereisariskthatthisdownwardpressuremaymakeitimpossibleforaninvestortosellhisorhersecuritiesatanyreasonableprice,ifatall.Futuresalesofsubstantial amountsofourequitysecuritiesinthepublicmarket,ortheperceptionthatsuchsalescouldoccur, could putdownwardsellingpressureonoursecurities, andadverselyaffect themarketpriceofour commonstock.
Wedonotintendtopaydividendsonanyinvestmentinthesharesofstockofourcompanyandanygainonaninvestmentinour companywill needtocome throughan increaseinourstock’s price,whichmayneverhappen.
Wehaveneverpaidanycashdividendsandcurrentlydonotintendtopay anydividendsfortheforeseeablefuture.Totheextentthatwerequireadditionalfunding currentlynotprovidedforinourfinancingplan,ourfundingsourcesmayprohibitthepaymentofadividend.Becausewedonotintendtodeclaredividends,anygainonaninvestmentinourcompanywillneedtocomethroughanincreaseinthestock’sprice.Thismayneverhappenandinvestorsmaylose alloftheirinvestment inour company.
FINRAsales practice requirementsmay alsolimit astockholder’sabilitytobuy and sellourstock.
Inadditiontothe“pennystock” rulesdescribed above,theFinancial IndustryRegulatoryAuthority (known as“FINRA”)hasadopted rulesthatrequirethatinrecommending aninvestmenttoacustomer, abroker-dealermusthavereasonablegroundsforbelievingthattheinvestmentissuitableforthat customer.Priorto recommendingspeculativelowpricedsecuritiestotheirnon-institutional customers,broker-dealersmustmake reasonable effortstoobtaininformation aboutthe customer’sfinancialstatus,taxstatus,investmentobjectives andotherinformation. Underinterpretationsofthese rules,FINRAbelievesthatthereisahighprobabilitythatspeculativelowpricedsecuritieswillnotbesuitablefor atleastsome customers.FINRA requirementsmakeitmoredifficultforbroker-dealersto recommendthattheir customersbuy ourcommonshares,whichmaylimit yourabilitytobuy andsellourstockandhave anadverse effectonthemarketforourshares.
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CorporateandOther Risks
Limitationsondirectorandofficerliability andindemnificationof ourCompany’sofficersanddirectorsbyusmaydiscouragestockholdersfrombringingsuitagainstanofficerordirector.
OurCompany’scertificateofincorporationandbylawsprovide,withcertainexceptionsaspermittedbygoverningstatelaw,thatadirectororofficershallnotbepersonallyliabletousorourstockholdersforbreachoffiduciaryduty asadirector,exceptforactsoromissionswhichinvolveintentionalmisconduct,fraudorknowingviolation oflaw,orunlawful payments ofdividends.Theseprovisionsmaydiscouragestockholdersfrombringingsuitagainstadirectorforbreachoffiduciaryduty andmay reducethelikelihood ofderivativelitigationbroughtbystockholdersonourbehalfagainstadirector.
Weareresponsible for theindemnificationofourofficersand directors.
Shouldourofficersand/ordirectorsrequireustocontributetotheirdefense,wemayberequiredtospendsignificantamountsofour capital. Ourcertificateofincorporationandbylawsalsoprovidefortheindemnificationofourdirectors,officers,employees,and agents,undercertaincircumstances,againstattorney’sfeesandotherexpensesincurredbythemin anylitigationtowhichtheybecome aparty arisingfromtheir associationwithor activitiesonbehalfofourCompany.Thisindemnificationpolicy could resultinsubstantialexpenditures,whichwemaybeunabletorecoup.Iftheseexpendituresaresignificant,orinvolveissueswhichresultinsignificant liabilityforourkeypersonnel,wemaybeunabletocontinueoperatingasagoingconcern.
Wearedependentforour successonafewkeyindividuals.
Oursuccessdependsontheskills, experience andperformanceofkeymembersof ourmanagementteam. Each ofthoseindividualsmayvoluntarilyterminatehisrelationshipwiththeCompany atanytime.Werewetoloseoneormoreofthesekeyindividuals,wewouldbeforcedtoexpendsignificanttimeandmoneyinthepursuitofareplacement,whichwould resultinboth adelayintheimplementationofourbusinessplanandthediversionoflimitedworking capital.Wedonotmaintain akeymaninsurancepolicyon anyofour executiveofficers.
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SPECIALNOTEREGARDINGFORWARD-LOOKINGSTATEMENTS
Thisprospectuscontainsforward-lookingstatements.Allstatements otherthanstatements ofhistoricalfactscontainedinthisprospectus,includingstatements regardingourstrategy,future operations,futurefinancialposition,futurerevenue, projectedcosts,prospects,plans,objectivesofmanagementandexpectedmarketgrowthareforward-lookingstatements.Thesestatementsinvolveknownandunknownrisks,uncertaintiesandotherimportantfactorsthatmay causeouractualresults,performanceorachievementstobemateriallydifferentfromanyfuture results,performanceor achievementsexpressed orimplied bytheforward-lookingstatements.
Thewords“anticipate,”“believe,”“could,”“estimate,”“expect,”“intend,”“may,”“plan,”“potential,”“predict,”“project,”“should,”“target,”“will,”“would”andsimilarexpressionsareintendedtoidentifyforward-lookingstatements,althoughnotallforward-lookingstatementscontaintheseidentifyingwords.Theseforward-lookingstatementsinclude,amongotherthings,statements about:
| ● | our abilityto obtainadditionalfinancing; | |
| ● | the accuracyofour estimatesregardingexpenses,future revenuesandcapitalrequirements; | |
| ● | thesuccessandtimingofourpreclinical studiesandclinical trials; | |
| ● | our abilityto obtainandmaintainregulatoryapprovaloftheproductcandidateswemaydevelop, andthelabelingunder anyapprovalwemayobtain; | |
| ● | regulatorydevelopments inthe UnitedStatesand other countries; | |
| ● | theperformanceofthird-partymanufacturers; | |
| ● | ourplans to developandcommercializeourproductcandidates; | |
| ● | our abilityto obtainandmaintainintellectualpropertyprotection forourproductcandidates; | |
| ● | thesuccessfuldevelopmentofoursalesandmarketingcapabilities; | |
| ● | thepotentialmarketsforourproductcandidatesand our abilitytoservethosemarkets; | |
| ● | the rate and degreeofmarketacceptanceofanyfutureproducts; | |
| ● | thesuccessofcompetingdrugs thatareorbecome available;and | |
| ● | thelossof keyscientificormanagementpersonnel. |
Theforward-lookingstatementsinthisProspectusarebaseduponourmanagement’sbeliefs,assumptionsandexpectationsofourfutureoperationsandeconomicperformance,takingintoaccounttheinformationcurrently availabletothem. Thesestatementsarenotstatementsofhistoricalfact.Forward-lookingstatementsinvolve risksanduncertainties,someofwhicharenotcurrentlyknowntousthatmaycauseouractualresults,performanceorfinancialconditiontobemateriallydifferentfromtheexpectationsoffutureresults,performanceorfinancial conditionweexpressorimplyin anyforward-lookingstatements.Theseforward-lookingstatements arebasedonourcurrentplans andexpectations andaresubject toanumberof uncertaintiesandrisks thatcouldsignificantly affectcurrentplansandexpectationsand ourfuturefinancialconditionandresults.
Weundertakenoobligationtopublicly updateorreviseany forward-looking statements,whetheras aresultofnewinformation,future eventsorotherwise.Inlightoftheserisks,uncertaintiesandassumptions,theforward-lookingeventsdiscussedinthisProspectusmightnotoccur.Wequalify any andallofourforward-lookingstatementsentirelybythesecautionaryfactors.Asaconsequence, currentplans,anticipatedactionsandfuturefinancialconditionsandresultsmay differfromthoseexpressedinanyforward-lookingstatementsmadeby oronourbehalf.Youarecautionednottounduly relyonsuchforward-lookingstatementswhenevaluatingtheinformationpresentedherein.
Thenetproceedstousfromthesaleofupto8,000,000sharesofcommonstockofferedatapublicofferingpriceof$0.03persharewillvarydependinguponthetotalnumberofsharessold.Thefollowingtablesummarizes,inorderofprioritytheanticipated applicationoftheproceedswewill receivefromthisofferingifthemaximumnumberofsharesis sold:
| Amount Assuming Maximum Offering | Percent of Maximum | |||||||
| GROSSOFFERING | $ | 240,000 | 100 | % | ||||
| Commission1 | $ | — | 0 | % | ||||
| Offering Expenses | $ | 20,000 | 8 | % | ||||
| Net Proceeds | $ | 220,000 | 92 | % | ||||
| USE OF NET PROCEEDS | ||||||||
| Advertising and marketing2 | $ | 105,000 | 48 | % | ||||
| Facility, Inventory and Equipment3 | $ | 90,000 | 41 | % | ||||
| Legal and accounting4 | $ | 25,000 | 11 | % | ||||
| TOTAL APPLICATION OF NET PROCEEDS | $ | 220,000 | 100.0 | % | ||||
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1Commissions:Shareswillbeofferedandsoldbyuswithoutspecialcompensationorotherremunerationforsuchefforts.Wedonotplantoenterintoagreementswithfindersorsecuritiesbroker-dealerswherebythefindersorbroker-dealerswouldbeinvolvedinthesaleoftheSharestotheinvestors.Shareswillbesolddirectlybyus,andnofeeorcommissionwillbepaid.However,wereservethe righttoutilizetheservicesoflicensedbroker/dealersand compensatethesebroker/dealerswithacommissionnotto exceed10%oftheproceedsraised.
2Advertising andmarketing: Weintendtouseapproximately$105,000ofthenetproceedsof thisoffering todevelopoure-commercewebsite,expensesrelatedtomarketing andadvertising,promotional brochures, bloggers,camera,radioandprint advertising,andsimilar expenses.
3Facility, MaterialsandEquipment:Weintendtouseapproximately$100,000ofthenetproceedsofthisofferingtoleasewarehousespace, purchaseinventories andequipmentforusein the distributionofour products (including the purchase ofan integratedinventory control system).
4Legalandaccounting:Aportionoftheproceedswillbeusedto paylegal, accounting, andrelatedcompliance costs.
Intheeventthatlessthanthemaximumnumberofsharesissoldweanticipateapplicationoftheproceedswewillreceivefromthisoffering,inorderofpriority,willbe asfollows:
| Amount Assuming 75% of Offering | Percent | Amount Assuming 50% of Offering | Percent | Amount Assuming 25% of Offering | Percent | |||||||||||||||||||
| GROSS OFFERING | $ | 180,000 | 100 | % | $ | 120,000 | 100 | % | $ | 60,000 | 100 | % | ||||||||||||
| Commission | $ | — | 0 | % | $ | — | 0 | % | $ | — | 0 | % | ||||||||||||
| Offering Expenses | $ | 20,000 | 11 | % | $ | 20,000 | 16 | % | $ | 20,000 | 33 | % | ||||||||||||
| Net Proceeds | $ | 160,000 | 89 | % | $ | 100,000 | 83 | % | $ | 40,000 | 66 | % | ||||||||||||
| USE OF NET PROCEEDS | ||||||||||||||||||||||||
| Advertising and marketing | $ | 75,000 | 47 | % | $ | 40,000 | 40 | % | $ | 7,500 | 19 | % | ||||||||||||
| Facility, Inventory and | ||||||||||||||||||||||||
| Equipment | $ | 60,000 | 37 | % | $ | 35,000 | 35 | % | $ | 7,500 | 19 | % | ||||||||||||
| Legal and accounting | $ | 25,000 | 16 | % | $ | 25,000 | 25 | % | $ | 25,000 | 62 | % | ||||||||||||
| TOTAL APPLICATION | ||||||||||||||||||||||||
| OF NET PROCEEDS | $ | 170,000 | 100.0 | % | $ | 100,000 | 100.0 | % | $ | 40,000 | 100.0 | % | ||||||||||||
Determinationof OfferingPrice
The$0.03pershareofferingpriceofourcommonstockwasarbitrarily chosenbymanagement.Thereisnorelationshipbetweenthisprice and our assets, earnings,book valueor anyotherobjective criteriaof value.
Purchasersofoursecuritiesinthisofferingwillexperienceimmediate andsubstantialdilutioninthenettangiblebookvalueoftheir commonstock fromthepublicofferingprice.
Dilution representsthedifferencebetweentheofferingpriceandthenettangiblebookvaluepershareimmediately aftercompletionofthisoffering.
Additionally, Keith McCulloch,whoisadirector andshareholderoftheCompany,hasarighttoreceive 1.11111sharesof commonstockfor each10sharesof commonstock soldin theoffering.Forexample,if theCompanyissues all8,000,000sharesintheoffering,theCompanywill issue Mr. McCulloch888,888additionalsharesofcommonstockatnoadditional cost toMr. McCulloch to preserve his 10% ownership interest after the offering.
Nettangiblebookvalueisthe amountthatresultsfromsubtractingtotalliabilities andintangible assetsfromtotal assets.Dilution arisesmainly asaresultofour arbitrarydeterminationoftheofferingpriceofthesharesbeingoffered. Dilutionofthevalueofthesharesyoupurchaseisalso a resultofthelowerbook valueofthesharesheld byour existingstockholders.
AsofSeptember 30, 2016,thenettangiblebookvalueofourshareswasnegative$95,426or approximately$0pershare.Historicalnettangiblebookvaluepershareofcommonstockisequaltoourtotaltangible assetslesstotalliabilities,dividedbythenumberofsharesofcommonstockoutstanding asof September 30,2016.
Upon completionofthisoffering,butwithouttakinginto accountany changeinthenettangiblebookvalue aftercompletionofthisofferingotherthanthatresultingfromthesaleof8,000,000sharesandreceiptoftotalproceedsof$240,000minustheestimatedoffering expensesof $20 ,000 resultinginnetproceedsof $220 ,000 ,thenettangiblebookvalueofthe13,333,333sharestobeoutstandingwillbe$134,574,orapproximately$0.0093perShare.This alsorepresentstheincreaseinnettangiblebookvaluepershare attributabletocashpaymentsfrompurchasersofthesharesofferedasthenetbookvalueofoursharesasofSeptember 30, 2016wasapproximately$0 pershare.
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Accordingly,thenettangiblebookvalueofthesharesheldbyour existingstockholders (4,444,444shares)willbe increased by$0.0114persharewithout any additionalinvestmentontheirpart. This increaseis calculatedby addingthenettangiblebookvalue aftertheofferingpershareof$0.0101 to the existing book value per share of ( $0.0215 ) as of September 30, 2016.Thepurchasersofsharesin thisofferingwillthereforeincurimmediatedilution (areductionin thenettangiblebookvaluepershare)fromtheofferingpriceof$0.03pershare.Thedilutionwillbe$0.0207pershare,whichiscalculatedbydeductingthenettangiblebook value aftertheofferingpershareof$0.0093fromtheofferingpriceof$0.03.
Thefollowingtableillustratesthepersharedilutiontothenewinvestors anddoesnotgive anyeffecttothe resultsofanyoperationssubsequenttoSeptember 30, 2016.Thefollowingtableshowsthepersharedilution assumingthat25%,50%, 75% and100%, respectively,oftheprimary OfferingbytheCompanyis sold.
| 25 | % | 50 | % | 75 | % | 100 | % | |||||||||
| Price Paid per Share by Existing Shareholders | $ | 0.005 | $ | 0.005 | $ | 0.005 | $ | 0.005 | ||||||||
| Public Offering Price per Share | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | ||||||||
| Net Tangible Book Value Prior to this Offering | $ | (95,426 | ) | $ | (95,426 | ) | $ | (95,426 | ) | $ | (95,426 | ) | ||||
| Net Tangible Book Value After this Offering | $ | ( 40,426 | ) | $ | 14,574 | $ | 69,574 | $ | 124,574 | |||||||
| Increase in Net Tangible Book Value per Share Attributable to cash payments from purchasers of the shares offered | | $ | 0.0061 | | | $ | 0.0016 | | | $ | 0.0063 | | | $ | 0.0093 | |
| Immediate Dilution per Share to New Investors | $ | 0.03561 | $ | 0.0284 | $ | 0.0237 | $ | 0.0207 |
Thefollowingtablesetsforth asof September 30, 2016,thenumberofsharesofcommonstockpurchasedfromus andthetotal considerationpaidby our existingstockholders andbynewinvestorsinthisofferingifnewinvestorspurchasethemaximumoffering, assuming apurchasepriceinthisofferingof$0.03pershareofcommonstock.
| Number | Percent | Amount | ||||||||||
| Existing Stockholders | 4,444,444 | 33.3 | % | $ | 20,000 | |||||||
| New Investors | 8,000,000 | 60.0 | % | $ | 240,000 | |||||||
| Additional Shares to Keith McCulloch | 888,888 | 6.7 | % | $ | 0 | |||||||
| Total | 13,333,332 | 100 | % | $ | 260,000 | |||||||
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PlanOf Distribution,TermsOfThe Offering
ThereIsNoCurrentMarket for OurSharesof Common Stock
Thereiscurrentlynomarketforourshares.Wecannotgiveyouany assurancethatthesharesyoupurchasewilleverhaveamarketorthatifamarketfor ourshares ever develops,thatyouwillbeabletosellyourshares. Inaddition, evenifapublicmarketforoursharesdevelops,thereisnoassurancethatasecondarypublicmarketwillbesustained.
Thesharesyoupurchasearenottradedorlistedonany exchange.Aftertheeffectivedateoftheregistrationstatementofwhichthisprospectusformsapart,weintendtohaveamarketmakerfileanapplicationwiththeFinancialIndustryRegulatoryAuthoritytohaveourcommonstockquotedontheOTCOTCQB.Wecurrentlyhavenomarketmakerwhoiswillingtolistquotationsforourstock.Further,evenassumingwedolocatesuchamarketmaker,itcouldtakeseveralmonthsbeforethemarketmaker’slistingapplicationforourshares isapproved.
TheOTCQBismaintainedbyOTCMarketGroup,Inc. ThesecuritiestradedontheOTCQBarenotlistedortradedonthefloorof anorganizednationalorregionalstock exchange.Instead,thesesecuritiestransactionsareconductedthrough atelephoneandcomputernetworkconnectingdealersinstocks.Over-the-counterstocksaretraditionallysmallercompaniesthatdonotmeetthefinancialandotherlistingrequirementsofa regionalornational stockexchange.
EvenifoursharesarequotedontheOTCOTCQB,apurchaserofoursharesmaynotbeabletoreselltheshares.Broker-dealersmaybediscouragedfromeffectingtransactionsinoursharesbecausetheywillbeconsideredpennystocksandwillbesubjecttothepennystockrules.Rules15g-1through15g-9promulgatedundertheSecuritiesExchangeActof1934,asamended,imposesalespractice anddisclosurerequirementsonFINRAbrokers-dealerswhomakeamarketina“pennystock.”Apennystockgenerallyincludesanynon-NASDAQ equitysecuritythathasamarketpriceoflessthan$5.00pershare.Underthepennystockregulations,abroker-dealersellingpennystocktoanyoneotherthananestablished customeror“accreditedinvestor”(generally,anindividualwithnetworthin excessof $1,000,000oranannualincomeexceeding $200,000,or$300,000togetherwithhis orherspouse)mustmakeaspecialsuitabilitydeterminationforthepurchaserandmustreceivethepurchaser’swrittenconsenttothetransaction priortosale,unlessthebroker-dealerorthetransactionsisotherwiseexempt. In addition,thepennystock regulations requirethebroker-dealertodeliver,priortoanytransactioninvolving apennystock,adisclosureschedulepreparedbytheCommission relatingtothepennystockmarket,unlessthe broker-dealer orthetransaction isotherwise exempt. Abroker-dealerisalsorequiredto disclose commissionspayabletothebroker-dealerandtheregisteredrepresentativeandcurrent quotationsforthesecurities.Finally,a broker-dealeris requiredtosendmonthlystatementsdisclosingrecentpriceinformationwithrespecttothepennystockheldinacustomer’saccountandinformationwithrespect tothelimitedmarket inpennystocks.
Theadditionalsalespracticeanddisclosurerequirementsimposeduponbrokers-dealersmay discouragebroker-dealersfromeffectingtransactionsinourshares,whichcouldseverelylimitthemarketliquidityofthesharesandimpedethesaleofoursharesinthesecondarymarket, assumingonedevelops.
The Offeringwill beSold byOur OfficersandDirectors
Weareofferinguptoatotalof 8,000,000sharesofcommonstock. Theoffering priceis $0.03pershare.Theofferingwill beforninemonthsunlessclosedsoonerby asaleofallofthesharesoffered.In oursolediscretion,wehavetherighttoterminatetheofferingat anytime,evenbeforewehavesoldthe8,000,000shares.Therearenospecificeventswhichmighttriggerourdecisiontoterminatetheoffering.
The Company’s officers and directors intend to sell the shares to pre-existing contacts which they have. The Company’s officers and directors do not intend to purchase any shares in the offering. Thesharesarebeingofferedbyusona“best efforts”basisandthere canbenoassurancethatallor anyofthesharesofferedwillbesubscribed. Iflessthanthemaximumproceeds areavailabletous,ourdevelopment andprospects couldbeadversely affected.Thereisnominimumoffering requiredforthisofferingtoclose.Allfunds receivedasaresultofthisofferingwillbeimmediately availabletousforourgeneralbusinesspurposes.
Wecannotassureyouthatalloranyofthesharesofferedunderthisprospectuswillbesold.Noonehascommittedtopurchaseanyofthesharesoffered.Therefore,wemaysellonlyanominalamountofshares,inwhichcaseourabilitytoexecuteourbusinessplanmightbenegativelyimpacted.We reservetherighttowithdrawor cancelthisoffering andto acceptorreject anysubscriptioninwholeorinpart,for anyreasonorforno reason.Subscriptionswillbe acceptedor rejectedpromptly.Allmoniesfrom rejectedsubscriptionswillbereturnedimmediatelybyustothesubscriber,withoutinterestor deductions.Certificatesforsharespurchasedwillbeissuedand distributed byourtransfer agentpromptly after asubscriptionisacceptedand“goodfunds”are receivedinour account.
Ifitturnsoutthatwehavenotraisedenoughmoneytoeffectuateourbusinessplan,wewilltry toraiseadditionalfundsfromasecondpublicoffering, a privateplacementorloans.At thepresenttime,wehavenotmade anyplanstoraise additionalmoney andthereisno assurancethatwewouldbeabletoraise additionalmoneyinthefuture. Ifweneedadditionalmoney andarenotsuccessful,wewillhavetosuspendor ceaseoperations.
Wewillsellthesharesinthisofferingthroughourofficers anddirectors.Theofficers anddirectors engagedinthesaleofthesecuritieswillreceivenocommissionfromthesaleofthesharesnorwilltheyregisterasbroker-dealerspursuanttoSection15oftheSecurities ExchangeActof1934in relianceuponRule3(a)4-1.Rule3(a)4-1setsforththose conditionsunderwhich aperson associatedwithanissuermayparticipateintheofferingoftheissuer’ssecurities andnotbedeemedtobe abroker-dealer. Ourofficers and directorssatisfythe requirementsofRule3(a)4-1inthat:
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| 1. | Theyarenotsubjecttoastatutory disqualification,asthattermisdefinedinSection3(a)(39)oftheAct,atthetimeofhisorherparticipation;and | |
| 2. | Theyarenotcompensatedinconnectionwiththeirparticipationbythepaymentofcommissionsorotherremunerationbased eitherdirectlyorindirectlyontransactions insecurities;and | |
| 3. | Theyarenot, at thetimeoftheirparticipation, anassociated personofabroker-dealer;and | |
| 4. | TheymeettheconditionsofParagraph(a)(4)(ii)ofRule3(a)4-1oftheExchangeAct,inthatthey(A)primarilyperform,or areintendedprimarilytoperform attheendoftheoffering,substantialdutiesfororonbehalfoftheissuerotherwisethanin connectionwithtransactionsinsecurities;and(B)arenotbrokersordealers,oranassociatedpersonof abrokerordealer,withintheprecedingtwelve(12)months;and(C)donotparticipateinsellingandofferingofsecuritiesforanyissuermorethanonce everytwelve (12)monthsotherthaninrelianceonParagraphs(a)(4)(i)or (a)(4)(iii). |
Aslongaswesatisfyalloftheseconditions,wearecomfortablethatwewillbeabletosatisfytherequirementsofRule3(a)4-1ofthe
ExchangeAct.
Asourofficersanddirectorwillsellthesharesbeingofferedpursuanttothisoffering,RegulationMprohibitstheCompany anditsofficersanddirectorsfrom certaintypesoftradingactivitiesduringthetimeofdistributionofoursecurities.Specifically,Regulation Mprohibitsourofficersanddirectorsfrombiddingfororpurchasingany commonstockorattemptingtoinduceanyotherpersontopurchase anycommonstock,until thedistributionofoursecuritiespursuant tothisofferinghasended.
OfferingPeriodand ExpirationDate
Thisofferingwillcommenceontheeffectivedateofthisprospectus,asdeterminedbytheSecuritiesandExchangeCommission,and continueforaperiodofninemonthsunlessclosedsooner byasale ofallof thesharesoffered.Inoursole discretion,wehavetherighttoterminatetheofferingatanytime,evenbeforewehavesoldthe8,000,000shares.Therearenospecificeventswhichmighttriggerourdecisiontoterminatetheoffering.
ProceduresforSubscribing
Ifyoudecidetosubscribeforanysharesinthisoffering,youmustdeliveracheckorcertifiedfundsforacceptanceorrejection.Theminimuminvestmentamountforasingleinvestoris$600for20,000shares.Subscriptionsforlessthantheminimuminvestmentwill automaticallybe rejected.Allchecksforsubscriptionsmustbemadepayableto“Global Cosmetics, Inc.”
Right toRejectSubscriptions
Wemaintaintherighttoacceptorrejectsubscriptionsinwholeorinpart,foranyreasonorfornoreason.Allmoniesfrom rejectedsubscriptionswillbereturnedimmediatelybyustothesubscriber,withoutinterestordeductions.Subscriptionsforsecuritieswillbe accepted or rejectedwithin48hoursofourhavingreceivedthem.
DescriptionofSecurities
Our authorized capitalstockconsistsof150,000,000sharesofcommonstock,withaparvalueof$0.001pershare.Asof September 30, 2016,therewere4,444,444sharesofour commonstockissuedandoutstanding. Ourshares arecurrentlyheldbytwo (2)stockholdersofrecord.Wehavenot issuedanysharesofpreferredstock.
Common Stock
Our commonstockisentitledtoonevotepershareonallmatterssubmittedtoavoteofthestockholders,includingtheelectionofdirectors. Exceptasotherwise requiredbylaworprovidedinany resolution adoptedbyourboardofdirectorswithrespecttoanyseriesof preferredstock,theholdersof our commonstockwillpossess allvotingpower.Generally, allmatterstobevotedonbystockholdersmustbe approvedby amajority (or,inthe caseof electionofdirectors,byaplurality)ofthevotes entitledtobe castby allsharesofour commonstockthat arepresentinpersonor representedbyproxy,subjectto anyvoting rightsgrantedtoholdersof anypreferredstock. Holdersofour commonstockrepresentingfiftypercent (50%)ofour capital stockissued,outstanding andentitledtovote, representedinpersonorbyproxy, arenecessaryto constitute aquorum atanymeetingofourstockholders. Avotebytheholdersofamajorityofouroutstandingsharesisrequiredtoeffectuate certainfundamental corporate changessuchasliquidation,mergeror an amendmenttoourArticlesof Incorporation. OurArticlesof Incorporationdonotprovidefor cumulativevotinginthe electionofdirectors.
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Subjecttoany preferentialrightsofany outstandingseriesofpreferredstockcreatedby ourboardofdirectorsfromtimetotime,theholdersofsharesofourcommonstockwillbeentitledtosuchcashdividendsasmay bedeclaredfromtimetotimeby ourboardofdirectorsfromfundsavailabletherefore.
Subjecttoanypreferentialrightsofanyoutstandingseriesof preferredstockcreatedfromtimetotimebyourboardof directors,uponliquidation, dissolutionorwindingup,theholdersof sharesofourcommon stockwillbeentitledtoreceive prorataall assetsavailablefordistributiontosuch holders.
Intheeventofanymergerorconsolidationwithorintoanothercompanyinconnectionwithwhichsharesofourcommonstockare convertedintoorexchangeableforsharesofstock,othersecuritiesorproperty(includingcash),allholdersofourcommonstockwillbeentitledtoreceivethesamekindandamountofsharesofstock andothersecuritiesandproperty (includingcash).Holdersofour commonstockhavenopre-emptiverights,noconversionrightsandtherearenoredemptionprovisionsapplicabletoourcommonstock.
Preferred Stock
Ourboardofdirectorsmaybecomeauthorizedtoauthorizepreferredsharesofstockandtodividetheauthorizedsharesof ourpreferredstockintooneormoreseries,eachofwhichmustbesodesignatedastodistinguishthesharesofeachseriesofpreferredstockfromthesharesofallotherseriesandclasses.Ourboardofdirectorsisauthorized,withinanylimitationsprescribedbylaw andour articlesofincorporation,tofix anddeterminethedesignations, rights,qualifications,preferences,limitations andtermsofthesharesofanyseriesofpreferredstockincluding,butnot limitedto,thefollowing:
| 1. | Thenumberofsharesconstitutingthatseriesandthedistinctivedesignationofthatseries,whichmaybebydistinguishingnumber,letterortitle; | |
| 2. | Thedividendrateonthesharesofthatseries,whetherdividendswillbecumulative,andifso,fromwhichdate(s),andthe relative rightsofpriority,ifany,ofpaymentofdividendsonsharesofthat series; | |
| 3. | Whetherthatserieswillhavevotingrights,inadditiontothevotingrightsprovidedbylaw,and,ifso,thetermsofsuchvotingrights; | |
| 4. | Whetherthatserieswillhaveconversionprivileges,and,ifso,thetermsandconditionsofsuchconversion,includingprovision for adjustmentofthe conversion rateinsucheventsas theBoard ofDirectorsdetermines; | |
| 5. | Whetherornottheshares ofthatserieswill beredeemable,and,ifso,thetermsandconditions ofsuch redemption,includingthedateordateuponorafterwhichthey areredeemable,andtheamountpersharepayableincaseofredemption,which amountmayvaryunderdifferentconditionsandatdifferentredemptiondates; | |
| 6. | Whetherthatserieswillhaveasinkingfundfortheredemption orpurchaseofshares ofthatseries,and,ifso,thetermsand amountofsuchsinking fund; | |
| 7. | Therightsofthesharesofthatseriesintheeventofvoluntaryorinvoluntaryliquidation,dissolutionorwindingupofthe corporation, andthe relative rightsofpriority,ifany,ofpaymentofsharesofthat series; | |
| 8. | Anyother relative rights,preferencesandlimitationsofthat series |
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Anti-Dilution Rights
Keith McCulloch, who is a director and shareholder of the Company, has a right to receive 1.11111 shares of common stock for each 10 shares of common stock sold in the offering, and these shares will be issued for no additional consideration paid by Mr. McCulloch. For example, if the Company issues all 8,000,000 shares in the offering, the Company will issue Mr. McCulloch 888,888 additional shares of common stock at no additional cost to Mr. McCulloch.
Wehaveneverdeclaredorpaidanycashdividendsonourcommonstock.Wecurrentlyintendtoretainfutureearnings,ifany,tofinancethe expansionofourbusiness.Asa result,wedonotanticipatepayinganycashdividends intheforeseeablefuture.
Share PurchaseWarrants
Wehavenot issuedand donothaveoutstandinganywarrants to purchasesharesofour commonstock.
Options
Wehavenot issuedand donothaveoutstandinganyoptions to purchasesharesofour commonstock.
ConvertibleSecurities
Wehavenotissuedanddonothaveoutstandinganysecuritiesconvertibleintosharesofourcommonstockoranyrightsconvertibleor exchangeableintosharesofour commonstock.
NevadaAnti-TakeoverLaws
NevadaRevisedStatutessections 78.378to78.379providestateregulationovertheacquisitionof acontrollinginterestin certain Nevadacorporationsunlessthearticlesofincorporationorbylawsofthecorporationprovidethattheprovisionsofthesesectionsdonotapply.Ourarticles ofincorporation andbylaws donotstatethattheseprovisionsdonotapply.Thestatutecreates anumber of restrictionsontheabilityofapersonorentitytoacquirecontrolofaNevadacompanybysettingdowncertainrulesofconductandvotingrestrictionsinanyacquisitionattempt,amongotherthings.ThestatuteislimitedtocorporationsthatareorganizedinthestateofNevadaandthathave200ormorestockholders,atleast100ofwhom arestockholdersofrecordandresidentsoftheStateof Nevada;anddoesbusinessintheStateofNevadadirectlyorthrough anaffiliatedcorporation.Becauseoftheseconditions,thestatute currentlydoesnotapplyto our company.
Interestsof Named ExpertsandCounsel
Noexpertorcounselnamedinthisprospectusashavingpreparedorcertifiedanypartofthisprospectusorhavinggivenan opinionuponthevalidityofthesecuritiesbeingregisteredoruponotherlegalmattersinconnectionwiththeregistrationoroffering ofthe commonstockwasemployedonacontingencybasis,orhad,oristoreceive,inconnectionwiththeoffering,asubstantialinterest,directorindirect,intheregistrant oranyofits parents orsubsidiaries.Norwasanysuchperson connectedwiththeregistrant oranyofitsparentsorsubsidiariesasapromoter,managingorprincipalunderwriter,votingtrustee,director,officer,or employee.
Harrison Law,P.A.ourindependent legalcounsel,hasprovidedanopiniononthevalidityofour commonstock.
Anton&ChiaCertifiedPublicAccountants,haveauditedourfinancialstatementsincludedinthisprospectusandregistrationstatementtotheextentandfortheperiodssetforthintheirauditreport.Anton&ChiaCertifiedPublicAccountantshavepresentedtheirreportwithrespecttoourauditedfinancialstatements.ThereportofAnton &ChiaCertifiedPublicAccountantsisincludedin relianceupontheir authority asexperts inaccountingandauditing.
CompanyOverview
WewereincorporatedasGlobalCosmetics,Inc.onSeptember17,2015intheStateof Nevadaforthepurposeofmarketing,supply and distributionofcosmeticsproducts tocustomers.
We intend tospecializeindeveloping,marketing anddistributing cosmetics andbeautyproductsforpurchase andconsumptionby retailers,wholesalers andend consumers.
The Company has entered into a licensing agreement with Colorcos Company Limited (“Colorcos”), Bel-Air Cosmetics Corp. (“Bel-Air Cosmetics”), and J J Holand Limited (“JJH”). The licensing agreement provides that (i) JJH has granted the Company the exclusive user and exclusive importation and distribution rights for the FOR YOU TOO/4U2 trademark and designs of JJH in the territories of North America, Europe and Australasia; (ii) the Company has granted to Colorcos the exclusive supply rights for the cosmetics and personal care products bearing the JJH Trademarks (and subject to the ability of Colorcos to fulfill the supply requirements); and (iii) JJH and Bel-Air Cosmetics shall develop new products and make such products available to the Company for evaluation. The license agreement provides that the parties shall negotiate and agree upon pricing for the products.
JJH is owned by Keith McCulloch, who is a Company officer, director and shareholder, and Bel-Air Cosmetics is wholly-owned by JJH. Mr. McCulloch is the President and a director of Bel-Air Cosmetics. JJH is the owner of all intellectual property related to the 4U2 cosmetic product line. JJH has an exclusive development agreement with Bel-Air Cosmetics Corp for new product development, product formulations and product designs. Under this agreement, Bel-Air Cosmetics requires the following legend to be printed on all 4U2 products: “Manufactured under license from Bel-Air Cosmetics USA”. This legend will also be place on all products distributed by the Company which are licensed from Colorcos.
The Company is dependent upon JJH and Bel-Air Cosmetics to develop any new products to be distributed by the Company, and is dependent upon Colorcos to supply the cosmetic products to be distributed by the Company (subject to Colorcos’ ability to meet the Company’s supply requirements). The Company does not intend to distribute any cosmetic products other than the 4U2 branded products which are the subject to the license agreement. Under the terms of the license agreement, the Company is prohibited from distributing or handling any products that could be considered directly competitive with 4U2 products.
The product line licensed to the Company is an established brand which has produced approximately $2.5 million in revenues for Bel-Air Cosmetic’s retailers and distributors during the period January 1, 2016 to June 30, 3016, and is expected to produce at least another $2.5 million during the remaining period of 2016.
Products We Intend To Distribute
Weintendtodistribute andsellthe4U2Cosmeticsproduct line, which consists of facial cosmetics marketed at the teen-to-twenty-something segment of the market.Thismarketusescosmetics toeither standout andrebelorbe subtle anddiscreet inthewaythey choose towearmakeupproducts.The company tagline“speakforyourself’ isastatementofempowermentgiving thewomen the choice tobewhoever theywant tobe.The4U2Cosmeticsproduct range reflects this andhas awide rangeof colors available tosuit all skin types andtones.
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Theproductline currently consistsof 4U2 brandedLipaholic(creamymoisturizinglipstick),MySecret(mattlonglastinglipstick),Eyeshadow &Blush(eyeshadow,mattblusher,shimmerblush andsparklingblush),Glow,ShadeandHighlight(foruseincontouring),ThisandThat(canbeusedasblusher,shadow andhighlighting), DYF9glossy eyeliner,matt eyeliner,mascara,STYX (eyelinerpencil), DFY9 EyeShadowBase,DFY9eyebrowpowder,highdefinitioneyebrowliner,eyebrowmascara,Celebrity(foundationpowder,BBcream,liquidfoundation,makeup base,BBpowder andfacialmildmakeupremover).
TheLipaholic rangeis4U2’sleadingproduct andis acolorful,young,fun,high energyproduct.ThenameLipaholicgivestheimpressiontheproductis a must have.MySecretlipstickisaimedforamoremature consumer.TheDFY9rangeof products areeye and eyebrow liners.This areaofthemarketisconsciousofusingproductsthatmayleadtooutbreaksinskin conditionssuchasacne. The end use and purpose of our product range is to deliver beauty to the end consumer.
WeintendtouseLipaholicasthemainproductto initiallydrawpeopletothewebsite.Bystockingalargerangeofproductsweintendtoincreasesalesbyhavingpromotions andofferingfreepostageonaminimumpurchaseamount.TheproductsareallmanufacturedbyColorcos CoLtd., exclusivelyinBangkok,Thailandunder Thai FDA, GMP and ISO accreditation, using only cosmetic grade products from Thai FDA accredited suppliers and using modern equipment from South Korea. The 4U2 product range is constantly changing to meet the needs of its core consumers. In 2016 4U2 will launch over 50 new product variants.
Market Analysis
Our Chairman and Director Keith McCulloch is the creator of the of 4U2 cosmetics product line. He has successfully marketed, developed and retailed the 4U2 brand in multiple countries, mainly in SE Asia.
We considerbothcosmeticsbrands andmanufacturerstobeourcompetition. Ourproducts areofahighqualitybutarecompetitivelypriced.Weoffer customerssignificantsaving comparedtolargemainstreambrands.Beingsmallerthanourlargecompetitorsmeanswe areabletoreactquicklytotrends,fashions andotherinfluencesinproductdesign andmarketing.4U2Cosmetics areconstantlydevelopingtheirproductlinewithnewproductsbeinglaunched frequently.Ourmostpopularlipstick retailsfor$5USDwhere similarproducts arepricedanywherefrom$10to$35.
4U2Cosmeticsincorporatethedynamic, celebrity,WestCoast,SouthernCalifornia,USAlifestylewiththeuseofboldcolors,funmarketingmaterials,qualityproductsandcompetitivepricing.Whetheruserswanttoplayitsafeorstandoutthe4U2Cosmeticsrangeenablesthe enduserto bewhoevertheywant to be and to speak for themselves.
The cosmeticsmarketcanbesplitinto 4segments. Ourproducts areaimed atthesegmentofthemarketwhereperceptionsofbeauty arestillbeingformed. Ideasofbeauty arechanging andanindividual'sownidentityisbeingdiscoveredby experimentingwithdifferentbeautyproducts andideas. Ideasareinfluencedbymessagesfrompeers,media, celebrities andmusicicons.
We currentlyoutsourcetheproductionofour cosmetics to ourmanufacturer,Colorcos Co.Ltd.,whichisGMPandISO certified,locatedinThailand.Wehave awrittenagreementwithColorcos Co.Ltdtomanufactureourproducts as described in section 2 of the License Agreement. Our arrangementwithourmanufacturertoacquireinventoryisasfollows:
| 1. | Colorcoshave anexclusivesupplyrightsforour currentproducts,subject tothe abilityofColorcos tofulfill thesupply requirementsoftheCompany. | |
| 2. | ColorcosmustprovidetheCompanywithwrittenandapproved purchaseordersat the agreed pricesatregularintervals to ensurethat inventoriesofproducts initswarehouse andat stores are adequate (minimumofthreemonthsofanticipatedsales)tomeetanticipated demandandtoavoidanyout-of-stocksituations. | |
| 3. | Products shallbeshippedasagreedwiththeCompany. | |
| 4. | TitletotheProducts shallpass totheCompanyex-Colorcosfactory. | |
| 5. | Tomanufacture andshipCompanyordersforProductsexpeditiouslyandtoagreedspecificationsand qualitystandards. | |
| 6. | Tomaintainorderfulfillment informationandexportdocumentationasreasonablyrequiredwiththeCompanyatall times. | |
| 7. | ToextendtotheCompanyconcessionaryfreegoodsor other pricing andpromotionalarrangementsfor at least thefirstyearofthisAgreementandtomaintainpricesandinitialconcessionaryarrangementsforoneyear,subject tothe exchange ratefluctuations. | |
| 8. | Tomaintainstrictcostcontrol toensurethatProductsarepricedcompetitivelyandto provideProductsata costwhichisnohigherthanthe costprovidedtoanyotherColorcoscustomer. | |
| 9. | TosendallnewlineProducts totheCompanyfor evaluationandtesting freeofcharge. |
Itis ourpresentintentiontodevelopourrelationshipwithColorcosCo.Ltd.,andusethemformanufacturing,packaging andshippingourproducts tocustomers.
Marketing
Werecognizethecriticalimportanceofmarketing.Wewillrequireaproperlydesignedandexecutedmarketingplantoensuremarketpenetrationand business success.
Our marketing plan is intended to include the use of beauty bloggers in reviewing and promotion of products. The Company entered into a service agreement with a third party contractor to create content and copy for the website and to assist the Company with social media, bloggers and press releases. This is where we believe our customers will go to find advice, reviews and recommendations on which products to purchase. Through our own social media avenues on platforms such as Facebook, Instagram, YouTube and Twitter, we expect to be able to communicate with influencers and increase our website traffic and online sales. In Thailand, 4U2 has over 100,000 likes on Facebook and this universe is growing. The Company entered into an agreement with a third party contractor to develop and launch our website. We plan to make our website accessible in English, Spanish and other European languages as our distribution network expands.
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Wewouldliketocreatesponsoredadvertisementstoreachourpotential customers across allsocialmediaavenues.Thisshouldallowus totarget specificgeographicalareasandmeasureour returnoninvestment throughsalesand postclicks.
AsourCompanygrows,weplantoattendtradeshowsinEurope,USAandAustraliatohelpusreach potentialdistributors,recruitbrandinfluencers, ambassadors,increasesalesandgeneratebrandawareness.
Therearealsoanumberofpublicationsthatwewouldliketoadvertisein,suchpublicationsarecommonplaceintheUK,Europeandthe UnitedStatesandwouldthereforebe amorestrategic andcosteffectivemarketingapproach.
Asourcompanygrows,weplantoobtain aretailspaceinwhich customers canseeandpurchaseourproducts.Webelievethiswillgiveusanotherpointofsale andincreased credibility asadistributor andretailer.Weaimtolaunch aneco-friendlymarketing campaignthatwillallowustotellourstory andshowcasetheproductsinour ranges.TosuccessfullypenetratetheUSmarketmanagementfeelsabrand ambassadorsuchasamusician, establishedbeautybloggeroraneasily recognizablepersonthatwould affiliate his or her selfwith thebrandwouldgive credibility andincrease sales inthe US.
Sales Strategy
Weaimtodevelopsales initiallythroughoure-commercewebsite,retailersandwholesalersofcosmeticproducts.Thestrategyisanticipatedtobeginwithgeneratingdemandinthe UnitedKingdombeforebranchingouttoEuropeandtheUnitedStates.Asthereachofoursalesgrows,morefundingwillbedirectedtomarketingandsales strategy.
Underthedirectionoftheexecutivemanagement,wemaytargetlargerevents,organizationsorbusinessestohighlightthebeneficialfeaturesourproductscould bringtothese companies.
Therearealsoanumberofbusiness-to-businesswebsitesthatwewouldliketoadvertiseourproducts.Interestintheseareasmaygive riseto ordersandsalesas thepeopleinterestedtendtorelatetomediumtolargesized businesses.
OurWebsite
Ourplanistoposition GlobalCosmetics,Inc.asaleadingglobal developer,marketer,distributorandretailerof cosmeticandbeautyproductsforpurchaseandconsumptionby retailers,wholesalersandendconsumers.Currently,wehavelimitedaccesstoaworldmarket duetothelackoffundingthatsuch adrivewouldrequire.Wehavedesigned andresearchedastrategyforthisbuthavelimitedfunds tointroduceit.Withthegrowththatwe areplanningwehopetofocusmoreonthis.
The Company entered into an agreement with a third party contractor to develop and launch our website. We plan to make our website accessible in English, Spanish and other European languages as our distribution network expands.We are confident that development of our site will result in increased sales and profits. Our vision is to create our own Company website that will become an integral part of our marketing, inventory control, sales and daily operations.
Competition
The cosmetic and beautyindustryisanextremelylarge,fragmentedandhighlycompetitiveglobalmarket.Thelargestcompetitorsincludeinternational,nationalandregionalmanufacturerswiththeirownretailoutlets,specialtyretailers,massmerchantsandinternet-basedretailers. Duetothebreadthofourmerchandise,it isdifficult toidentifycompanies thatcompetewith us ineveryproductcategory.Wegenerallycompetewithindividual,oftenowner-operatedcosmeticspecialists ineachofthemarkets thatweoperate aswellasbroadlymerchandised departmentstoresandcertainspecialtystores. InparticularwehaveidentifiedNYX cosmetics(www.nyxcosmetics.com) and WetnWild(www.wetnwildbeauty.com)to bethemaincompetitorsforthe4U2 brand.Wemayfacenewcompetitorsandincreasedcompetition fromexistingcompetitorsaswe expandintonew marketsandincreaseourpresenceinexistingmarkets.
Webelievethatourcompetitiveadvantageiscurrentlyintwoparts:first,ourcosteffectiveness(priceofonelipstick$5)ispricedvery competitivelyagainstourcompetitors ($10approximatelyfor alipstickofcomparablequality)withan industry average grossprofit margin oneachunit;andsecond,ourabilitytochangeourproductrangequicklytokeepontrendinthemarketplacewithcurrentfashions.Afurther competitive advantagethatwehopeto developisourbrandname ande-commercewebsite.
Regulationand Legislation
The Company is not required to obtain government approval from any of the governments in which it intends to distribute the products. All products will be manufactured to ISO (International Standard Organization) standards which are intended to conforms to all requirements for distribution of cosmetics in North America, Australia, New Zealand and Europe. In the United States, cosmetic products and ingredients are not subject to premarket approval by the Food and Drug Administration, with the exception of color additives. However, products must be safe for consumers under labeled or customary conditions of use, and they must be properly labeled. Color additives must be approved for the intended use and in certain cases must be from batches certified by the FDA. The manufacturer of our products will be responsible for ensuring that their products are in compliance with United States law.
We are subject to the general rules and regulations governing the operation of a business such as labor and employment laws, laws governing advertising and promotions, privacy laws, product and other safety regulations, consumer protection regulations, environmental requirements and other laws that regulate retailers and govern the promotion and sale of merchandise and the operation of retail facilities. We believe that we are in compliance with applicable laws in all material respects.
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Employees
Wepresently employBenjaminRidding, asourPresident,CEO,Secretary,Treasurer andDirector, andKeith McCulloch, asourChairman, Director. Mr.Riddingpresentlydedicates approximately 40hours perweek onour businesswhile Mr.McCulloch also dedicates approximately 15hours perweek on our business.
Related partydisclosure
OnNovember20,2015,theCompanyenteredintoanAgreement(the‘LicensingAgreement”)withColorcosCompanyLimited (“Colorcos”),Bel-AirCosmeticsCorp.(“Bel-AirCosmetics”),andJJHolandLimited(“JJH”).TheLicensingAgreementprovidesthat(i)JJHhasgrantedtheCompanytheexclusiveuserandexclusiveimportationanddistributionrightsfortheFORYOU TOO/4U2trademark anddesignsofJJHintheterritoriesof NorthAmerica, Europe andAustralasia; (ii)theCompanyhasgrantedtoColorcostheexclusivesupplyrightsforthecosmeticsandpersonalcareproductsbearingtheJJHTrademarks(andsubjecttotheabilityofColorcostofulfillthesupply requirements);and(iii)JJHandBel-Airshalldevelopnewproductsandmakesuch productsavailabletotheCompanyforevaluation.TheLicenseAgreementprovidesthatthepartiesshallnegotiateand agreeupon pricingfortheproducts.
The License Agreement also provides that after the commencement of the first renewal period of the License Agreement, the Company will be granted a 50% beneficial ownership of the 4U2 trademarks that are registered in the territory, with JJH owning the other 50%. The trademark registrations will remain in JJH’s ownership on the various registers and JJH will remain responsible for the management and continued existence of the various trademarks. In the event that the trademarks are sold, each party will be entitled to 50% of the net purchase proceeds from the sale.
ThetermoftheLicenseAgreementisfiveyears,with automatic renewalforadditionalperiodsoffiveyears,unlessonepartyprovides 6monthspriorwrittennoticetotheotherpartyoftermination.TheLicenseAgreementmay alsobeterminatedduetothematerialbreachbytheotherparty, andmay beterminatedby Bel-Air,Colorcos andJJHinthe eventtheCompanydoesnotpurchase aminimum amountofproductsduringtheterm asfollows: US$50,000duringthefirst12months; US$150,000duringthesecond12months; and$250,000duringthethird12months.TheLicenseAgreement alsocontains certain representations,warranties,indemnityobligations andrightsoftermination.
TheforegoingisonlyabriefdescriptionofthematerialtermsoftheLicenseAgreement,anddoesnotpurporttobeacomplete descriptionof therightsand obligationsoftheparties thereunder, andsuchdescriptionisqualifiedinitsentiretybyreferencetotheLicenseAgreementwhichisfiledasanexhibit tothis FormS-1.
JJHisownedbyKeith McCulloch,whoisalso anofficer,director (Chairman) andshareholderoftheCompany.TheCompanyissued444,444sharesofCompany commonstocktoMr.McCullochunderthetermsoftheLicenseAgreement.TheLicenseAgreement alsoprovidesthatMr.McCullochhasarighttoreceive 1.11111 shares of common stock for each 10 shares of common stock sold atno additional costtohimtomaintainhis10%ownershipinterestintheCompany. JJH owns 100% of Bel-Air Cosmetics.
Descriptionof Property
Wedonotownanyrealproperty.Wemaintainour corporateoffice atPavilion96, Kensington HighStreet
Kensington,London,W8 4SG.
LegalProceedings
Wearenotcurrentlyapartytoanylegalproceedings.Wearenotawareofanypendinglegalproceedingtowhichanyofourofficers,directors,or anybeneficialholdersof5%ormoreofourvotingsecuritiesare adversetousorhave amaterial interestadversetous.
Market for Common Equity andRelated StockholderMatters
NoPublicMarket for Common Stock
Thereispresentlynopublicmarketforourcommonstock.Weanticipatemakinganapplicationfortradingofourcommonstockontheoverthecounterbulletinboardupontheeffectiveness oftheregistrationstatement ofwhichthis prospectusformsapart. Wecanprovidenoassurancethatourshareswillbetraded onthebulletinboard,oriftraded,that apublicmarketwillmaterialize.
TheSecurities ExchangeCommissionhasadopted rulesthatregulatebroker-dealerpracticesin connectionwithtransactionsinpennystocks.Pennystocks aregenerally equitysecuritieswithapriceoflessthan$5.00,otherthansecurities registeredoncertainnationalsecurities exchangesorquotedonthe NASDAQsystem,providedthat currentprice andvolumeinformationwith respecttotransactionsinsuchsecuritiesisprovidedbythe exchangeorsystem.Thepennystock rulesrequire abroker-dealer,priortoatransactioninapennystock,todeliver astandardized riskdisclosuredocumentpreparedbytheCommission,that: (a)contains adescriptionofthenature andlevelofriskinthemarketforpennystocksinbothpublicofferings andsecondarytrading;(b) contains adescriptionofthebroker’sordealer’sdutiestothe customer andoftherights andremedies availabletothe customerwith respecttoaviolationtosuchdutiesorother requirementsofSecurities’laws; (c)contains abrief, clear,narrativedescriptionof adealermarket,includingbidandaskpricesforpennystocks andthesignificanceofthespreadbetweenthebidandaskprice;(d) contains atoll-freetelephonenumberforinquiriesondisciplinary actions;(e)definessignificanttermsinthedisclosuredocumentorintheconductoftradinginpennystocks; and;(f) containssuchotherinformation andisinsuchform,includinglanguage,type,sizeandformat, astheCommissionshall requirebyruleor regulation.
Thebroker-dealer alsomustprovide,priortoeffecting anytransactionina pennystock,thecustomerwith; (a) bidand offerquotationsforthepennystock;(b)thecompensationofthebroker-dealer anditssalespersoninthetransaction;(c)thenumberofsharestowhichsuchbidandaskpricesapply,orother comparableinformation relatingtothedepth andliquidityofthemarketforsuchstock; and(d) amonthly account statementsshowingthemarketvalueofeachpennystock heldinthe customer’s account.
29
Inaddition,thepennystockrulesrequirethatpriortoatransactioninapennystocknototherwiseexemptfromthoserules;thebroker-dealermustmakeaspecialwrittendeterminationthatthepennystockisasuitableinvestmentforthepurchaserandreceivethepurchaser’swrittenacknowledgmentofthereceiptofarisk disclosurestatement,awritten agreementtotransactionsinvolvingpennystocks, andasignedand datedcopyofawrittensuitabilitystatement.
Thesedisclosurerequirementsmayhavetheeffectofreducingthetradingactivityinthesecondarymarketforourstockifitbecomessubjecttothesepennystockrules.Therefore,becauseourcommonstockissubjecttothepennystockrules,stockholdersmayhavedifficultysellingthosesecurities.
Holdersof Our Common Stock
Currently,wehaveone (2)holderofrecord ofour commonstock.
Rule144Shares
None of our common stock is currently available for resale to the public under Rule 144. In general, Rule 144 as currently in effect permits our common stock that has been acquired by a person who is an affiliate of ours, or has been an affiliate of ours within the past three months, to be sold into the market in an amount that does not exceed, during any three-month period, the greater of:
| (1) | one percent of the total number of shares of our common stock outstanding; or | |
| (2) | the average weekly reported trading volume of our common stock for the four calendar weeks prior to the sale. |
Such sales are also subject to specific manner of sale provisions, a six-month holding period requirement, notice requirements and the availability of current public information about us.
Rule 144 also provides that a person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has for at least six months beneficially owned shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock subject only to the availability of current public information regarding us. A person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned for at least one year shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock under Rule 144 without regard to the current public information requirements of Rule 144.
StockOptionGrants
To date,wehavenotgrantedanystockoptions.
Dividends
There arenorestrictionsinour articlesofincorporationorbylawsthatpreventusfromdeclaringdividends.TheNevadaRevisedStatutes,however,do prohibitusfromdeclaringdividendswhere aftergiving effect tothedistributionofthedividend:
| (1) | wewouldnotbe ableto payourdebtsas theybecomedueintheusualcourseofbusiness,or; | |
| (2) | ourtotalassetswouldbelessthanthesumofourtotalliabilitiesplustheamountthatwouldbeneededtosatisfytherightsofshareholderswhohavepreferentialrights superiortothose receivingthedistribution. |
Wehavenotdeclaredanydividends andwedonotplanto declare anydividendsintheforeseeablefuture.
30
IndextoFinancial Statements:
Financial Statements:
31
REPORT OFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM
TotheBoardofDirectorsandStockholdersof
GlobalCosmetics, Inc.
We have audited the accompanying balance sheets of Global Cosmetics, Inc. (the "Company”) as of September 30, 2016 and 2015, and the related statement of operations, changes in stockholders’ deficit and cash flows for the year ended September 30, 2016 and of the period from September 17, 2015 (inception) to September 30, 2015. 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.
Weconducted ourauditsinaccordancewithstandards ofthePublicCompanyAccountingOversightBoard(UnitedStates).Those standardsrequirethatweplanandperformthe auditto obtainreasonable assuranceaboutwhetherthefinancialstatementsare free ofmaterial misstatement.TheCompanywasnotrequired tohave, norwereweengagedto perform,anauditofitsinternal controloverfinancialreporting. Ourauditsincludedconsiderationofinternalcontrol overfinancialreporting as abasisfordesigningauditproceduresthat are appropriateinthecircumstances, butnotforthepurposeofexpressingan opinionontheeffectivenessofthe Company's internal controloverfinancialreporting. Accordingly,we expressnosuch opinion. Anaudit includesexamining,on atest basis,evidencesupporting theamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesused andsignificantestimatesmadebymanagement,aswell asevaluating theoverall financialstatementpresentation. Webelievethatourauditsprovideareasonablebasisfor ouropinion.
Inouropinion,thefinancialstatementsreferredtoabovepresentfairly, inallmaterialrespects,thefinancialpositionoftheCompanyasofSeptember30, 2016 and 2015,andtheresultsofitsoperations,changesinstockholders’ deficitanditscashflowsfor the year ended September 30, 2016 and of theperiod fromSeptember17,2015(inception) toSeptember30,2015,inconformitywithaccountingprinciples generally acceptedinthe UnitedStatesofAmerica.
Theaccompanyingfinancial statementshavebeenpreparedassumingthattheCompanywill continueasagoingconcern.Asdiscussed inNote5tothe financialstatements,theseconditionsraisesubstantialdoubtaboutitsabilitytocontinueasagoingconcern.Management'splansinregardtothesemattersarealso describedinNote5.The financialstatementsdonotincludeanyadjustmentsrelatingtothe recoverabilityandclassificationofassetcarrying amounts orthe amountandclassificationof liabilitiesthatmightresultshould theCompanybe unable tocontinueas agoing concern.
/s/Anton &Chia, LLP
NewportBeach, California
January 23, 2017
F-1
Global Cosmetics, Inc.
| September 30, | September 30, | |||||||
| ASSETS | 2016 | 2015 | ||||||
| Current Assets | ||||||||
| Cash | $ | 6 | $ | — | ||||
| Inventory | 6,249 | — | ||||||
| Total Current Assets | 6,255 | — | ||||||
| TOTAL ASSETS | $ | 6,255 | $ | — | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | 15,584 | — | ||||||
| Advances from related party | 86,097 | 11,539 | ||||||
| Total Current Liabilities | 101,681 | 11,539 | ||||||
| Stockholders’ Deficit | ||||||||
| Common stock, $0.001 par value, 150,000,000 shares authorized; 4,444,444 and 4,000,000 shares issued and outstanding as of September 30, 2016 and September 30, 2015, respectively | 4,444 | 4,000 | ||||||
| Additional paid-in capital | 16,000 | 16,000 | ||||||
| Accumulated deficit | (124,468 | ) | (11,680 | ) | ||||
| Accumulated other comprehensive income | 8,598 | 141 | ||||||
| Stock Subscription Receivable | — | (20,000 | ) | |||||
| Total Stockholders’ Deficit | (95,426 | ) | (11,539 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 6,255 | $ | — | ||||
The accompanying notes are an integral part of these financial statements.
F-2
Global Cosmetics, Inc.
Consolidated Statements of Comprehensive Loss
| Year Ended September 30, | From inception September 17, 2015 to September 30, | |||||||
| 2016 | 2015 | |||||||
| Revenues | $ | — | $ | — | ||||
| Cost of Revenue | — | — | ||||||
| Gross Profit | — | — | ||||||
| Operating Expenses | ||||||||
| General and administrative expenses | 83,677 | 10,019 | ||||||
| Professional Fees | 29,111 | 1,661 | ||||||
| Total Operating Expenses | 112,788 | 11,680 | ||||||
| Loss before Provision for Income Taxes | (112,788 | ) | (11,680 | ) | ||||
| Provision for Income Taxes | — | — | ||||||
| Net Loss | $ | (112,788 | ) | $ | (11,680 | ) | ||
| Other Comprehensive Income/(Loss) | ||||||||
| Foreign currency translation adjustment | 8,457 | 141 | ||||||
| Total Comprehensive Loss | (104,331 | ) | (11,539 | ) | ||||
| Net Loss per Share: Basic and Diluted | $ | (0.03 | ) | $ | — | |||
| Weighted Average Number of Shares Outstanding: Basic and Diluted | 4,383,733 | 4,000,000 | ||||||
The accompanying notes are an integral part of these financial statements.
F-3
Global Cosmetics, Inc.
Consolidated Statement of Cash Flows
| Year Ended September 30, | From inception September 17, 2015 to September 30, | |||||||
| 2016 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (112,788 | ) | $ | (11,680 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | — | — | ||||||
| Changes in: | ||||||||
| Accounts payable | 15,584 | — | ||||||
| Inventories | (6,255 | ) | ||||||
| Net cash used in operating activities | (103,459 | ) | (11,680 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Advances from (repayment to) Director | 74,558 | 11,539 | ||||||
| Proceeds from sale of common stock | 20,000 | — | ||||||
| Net cash provided by financing activities | 94,558 | 11,539 | ||||||
| Effect of exchange rate changes on cash | 8,907 | 141 | ||||||
| Changes in cash during the period | 6 | 0 | ||||||
| Cash at beginning of period | — | — | ||||||
| Cash at end of period | $ | 6 | 0 | |||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for taxes | $ | — | $ | — | ||||
| Cash paid for interest | $ | — | $ | — | ||||
The accompanying notes are an integral part of these financial statements.
F-4
Global Cosmetics, Inc.
Consolidated Statement of Stockholders’ Deficit
| Common Stock | Additional Paid-in | Stock Subscription | Accumulated | Accumulated Other | ||||||||||||||||||||||||
| Shares | Amount | Capital | Received | Deficit | Comprehensive Income | Total | ||||||||||||||||||||||
| Balance, September 17, 2015 | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
| Common stock issued for cash | 4,000,000 | $ | 4,000 | $ | 16,000 | $ | (20,000 | ) | $ | — | $ | — | $ | — | ||||||||||||||
| — | ||||||||||||||||||||||||||||
| Net loss | — | — | — | — | (11,680 | ) | (11,680 | ) | ||||||||||||||||||||
| Other comprehensive income/(loss) | — | — | — | — | — | 141 | 141 | |||||||||||||||||||||
| Balance, September 30, 2015 | 4,000,000 | 4,000 | 16,000 | (20,000 | ) | (11,680 | ) | 141 | (11,539 | ) | ||||||||||||||||||
| Common stock issued for Licenses | 444,444 | $ | 444 | $ | — | $ | — | $ | — | $ | 444 | |||||||||||||||||
| — | ||||||||||||||||||||||||||||
| Common stock issued for cash | 20,000 | 20,000 | ||||||||||||||||||||||||||
| Net loss | — | — | — | — | (112,788 | ) | (112,788 | ) | ||||||||||||||||||||
| Other comprehensive income/(loss) | — | — | — | — | 8,457 | 8,457 | ||||||||||||||||||||||
| Balance, September 30, 2016 | 4,444,444 | 4,444 | 16,000 | — | (124,468 | ) | 8,598 | (95,426 | ) | |||||||||||||||||||
The accompanying notes are an integral part of these financial statements
F-5
GlobalCosmetics, Inc.
Notes totheConsolidatedFinancial Statements
NOTE1–ORGANIZATION, DESCRIPTION OFBUSINESSAND PRINCIPLESOF CONSOLIDATION
GlobalCosmetics,Inc.wasincorporatedonSeptember17,2015intheStateofNevadaforthepurposeofdeveloping,marketinganddistributingcosmeticsand beautyproductsforpurchase andconsumptionbyretailers,wholesalersandendconsumers.
NOTE2-SUMMARY OFSIGNIFICANTACCOUNTINGPOLICIES
Thecompanywasincorporated,forthepurposeofdeveloping,marketinganddistributingcosmeticsandbeautyproductsforpurchase andconsumptionbyretailers,wholesalersandendconsumers.
The consolidated financial statements include the financial statements of Global Cosmetics, Inc., and its wholly-owned subsidiary Global Cosmetics Ltd. All significant inter-company balances and transactions have been eliminated upon consolidation.
TheCompanyhaselectedSeptember30as itsfiscalyear end.
Basisofpresentation
TheCompanyreportsrevenue andexpensesusingthe accrualmethod ofaccounting forfinancialandtaxreportingpurposes.
Earnings(Loss) PerShare
Basicnetincome(loss)pershareamountsarecomputedbasedontheweightedaveragenumberof shares actuallyoutstanding.Dilutednetincome(loss)pershareamountsare computedusingtheweightedaveragenumberofcommonsharesandcommonequivalentsharesoutstandingasifshareshadbeenissuedonthe exerciseofany commonshare rightsunlessthe exercisebecomesantidilutive andthenonlythebasicpershare amountsareshowninthe report.
EstimatesandAssumptions
Managementusesestimatesandassumptionsinpreparingfinancialstatementsinaccordancewithgenerally acceptedaccountingprinciples. Thoseestimatesandassumptionsaffectthe reportedamountsoftheassetsandliabilities,thedisclosureof contingentassets andliabilities,andthereportedrevenuesandexpenses.Actualresultscouldvaryfromtheestimatesthatwereassumedinpreparingthesefinancial statements.
CashandCash Equivalents
TheCompany considers allhighlyliquidinvestmentswithanoriginalmaturityofthreemonthsorlessto be cash equivalents. As of September 30, 2016 and 2015, the Company had $6 and $nil, respectively, of cash and no cash equivalents.
Revenue Recognition
WerecognizerevenueforsalesinaccordancewithASC605-10whenpersuasiveevidenceofanarrangementexists,deliveryhasoccurred orserviceshavebeenrendered,pricesarefixed ordeterminable, and collectabilityisreasonablyassured.
Revenueis recognizedforsalestransactedwhen thecustomerreceives andpaysforthemerchandiseatthe register.Forsaleswhereweshipthemerchandisetothecustomerrevenueisrecognized atthetimethecustomerreceivesthe product.Amounts relatedtoshipping andhandlingthatarebilledtocustomersarerecordedinnetsales,andtherelatedcostsarerecordedin cost ofgoodssoldintheConsolidatedStatementofOperations.Revenuesarepresentednetofestimatedreturnsandanytaxescollectedfrom customersand remittedtogovernmental authorities.
ClassificationofExpenses
Costof goods soldand occupancyexpenses includethefollowing:
| ● | the costofmerchandise; | |
| ● | inventoryshortage andvaluationadjustments; | |
| ● | freightcharges; | |
| ● | shippingandhandlingcosts; | |
| ● | costsassociatedwithoursourcingoperations,includingpayrollandrelated benefits; | |
| ● | productioncosts; | |
| ● | insurance costsrelatedtomerchandise;and | |
| ● | rent,occupancy,depreciation, andamortizationrelatedto ourstoreoperations,distributioncenters, andcertaincorporatefunctions |
F-6
Inventory
As of September 30, 2016 and 2015, the balance of inventory totaled $6,249 and $nil, respectively. We do have a commitment to buy $437,552 of inventory over the next 3 years under the terms of our licensing agreement.
We recognize our inventory at the lower of cost and net realizable value, we recognize determine costs on a first-in first-out basis.
IncomeTaxes
TheCompanyaccountsforitsincometaxesinaccordancewithASCNo.740,“IncomeTaxes”.UnderStatement740,aliabilitymethodisusedwhereby deferredtaxassetsandliabilities aredeterminedbasedontemporarydifferencesbetweenbasisusedforfinancialreportingandincometaxreportingpurposes. Incometaxesareprovidedbasedontax ratesin effectatthetimesuchtemporarydifferencesareexpectedtoreverse.Avaluationallowanceisprovidedforcertain deferredtax assetsifitismorelikelythannot,that theCompanywillnotrealizethetaxassets throughfutureoperations.
Foreign CurrencyTranslation
The functional currency of the Company is Great British Pounds (GBP). Assets and liabilities of our operations are translated into United States dollar equivalents using the exchange rates in effect at the balance sheet date. Revenues and expenses are translated using the average exchange rates during each period. Adjustments resulting from the process of translating foreign functional currency financial statements into U.S. dollars are included in accumulated other comprehensive income in common shareholders’ equity. Foreign currency transaction gains and losses are included in other comprehensive income/(loss) and totaled $8,457 and $141 for the year to September 30, 2016 and for the period from September 17, 2015 (inception) to September 30, 2015, respectively.
Recent AccountingPronouncements
TheCompanydoesnotexpectthattheadoptionofotherrecentaccountingpronouncementswillhaveamaterialimpacton itsfinancialstatements.
F-7
NOTE 3- PROVISION FORINCOMETAXES
For the year ended September 30, 2016, the Company has incurred net losses and, therefore, has no tax liability. The net deferred tax assets generated by the loss carry-forwards has been fully reserved. The cumulative net operating loss carry-forward is approximately $115,870, and will expire beginning in the year 2035.
TheprovisionforFederalincometaxconsistsofthefollowing as at fortheyearsendedSeptember30,2016 and September 30, 2015, respectively:
| September 20, 2016 | September 30, 2015 | |||||||
| Federal income tax benefit attributable to: | ||||||||
| Current operations | $ | 115,870 | $ | 11,539 | ||||
| Change in valuation allowance | (115,870 | ) | (11,539 | ) | ||||
| Income tax provision | $ | — | $ | — | ||||
The cumulativetaxeffect atthe expected rateof34%ofsignificantitemscomprisingournetdeferredtaxamountisasfollows atSeptember30,2016 September 30, 2015, respectively:
| September 30, 2016 | September 30, 2015 | |||||||
| Deferred tax asset attributable to: | ||||||||
| Net operating loss carryover | $ | 39,396 | $ | 3,923 | ||||
| Valuation allowance | (39,396 | ) | (3,923 | ) | ||||
| Net deferred tax asset | $ | — | $ | — | ||||
Duetothe changeinownershipprovisionsoftheTaxReformActof1986,thenetoperatingloss carryforwardsforFederalincometaxreportingpurposes aresubjecttoannuallimitations.
NOTE 4- COMMITMENTS AND CONTINGENCIES
TheCompanyisnotpresentlyinvolvedinanylitigation.
TheCompanyneitherownsnorleasesanyrealorpersonalproperty.
NOTE 5-GOING CONCERN
As set forth on the Company’s balance sheet, its assets total $6,255. This amount does not provide adequate working capital for the Company to successfully operate its business and to service its debt. Expenses incurred to the date of this prospectus are being recorded on the Company’s books as they occur. This raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital. Management believes that the Company will be able to operate for the coming year from equity funding via proceeds raised from the offering set forth in this prospectus. However, there can be no assurances that management’s plans to complete this offing will be successful, and there is no agreement, commitment or understanding by Mr. Ridding or any other person to provide any funding or additional loans to the Company. However, we have an understanding with Mr. Ridding that he will provide, assuming his personal circumstance allow him) additional loans up to $50,000 to allow us to operate for the coming year, among other finance activities, by obtaining additional loans from Mr. Ridding.
NOTE 6-SIGNIFICANTTRANSACTIONSWITH RELATED PARTIES
As of September 30, 2016, the balance of the amounts due to the director was $86,097. The amounts loaned from the director were unsecured, non-interest bearing, and had no specific terms of repayment. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
OnSeptember17,2015,theCompany’sfounder,PresidentandCEO,BenjaminRidding,acquired4,000,000commonshares,atapriceof$0.005 pershare for cash.
On September 17, 2015, the Company’s founder, President and CEO, Benjamin Ridding, entered into an consulting agreement with the company in which he would provide consulting services to the Company for compensation of $5,000 (five thousand) USD per month.
OnNovember20,2015,theCompanyenteredintoanAgreement(the‘LicensingAgreement”)withColorcosCompanyLimited (“Colorcos”),Bel-AirCosmeticsCorp.(“Bel-AirCosmetics”),andJJHolandLimited(“JJH”).TheLicensingAgreementprovidesthat(i)JJHhasgrantedtheCompanytheexclusiveuserandexclusiveimportationanddistributionrightsfortheFORYOU TOO/4U2trademark anddesignsofJJHintheterritoriesof NorthAmerica, Europe andAustralasia; (ii)theCompanyhasgrantedtoColorcostheexclusivesupplyrightsforthecosmeticsandpersonalcareproductsbearingtheJJHTrademarks(andsubjecttotheabilityofColorcostofulfillthesupply requirements);and(iii)JJHandBel-Airshalldevelopnewproductsandmakesuch productsavailabletotheCompanyforevaluation.TheLicenseAgreementprovidesthatthepartiesshallnegotiateand agreeupon pricingfortheproducts.
The License Agreement also provides that after the commencement of the first renewal period of the License Agreement, the Company will be granted a 50% beneficial ownership of the 4U2 trademarks that are registered in the territory, with JJH owning the other 50%. The trademark registrations will remain in JJH’s ownership on the various registers and JJH will remain responsible for the management and continued existence of the various trademarks. In the event that the trademarks are sold, each party will be entitled to 50% of the net purchase proceeds from the sale.
ThetermoftheLicenseAgreementisfiveyears,with automatic renewalforadditionalperiodsoffiveyears,unlessonepartyprovides 6monthspriorwrittennoticetotheotherpartyoftermination.TheLicenseAgreementmay alsobeterminatedduetothematerialbreachbytheotherparty, andmay beterminatedby Bel-Air,Colorcos andJJHinthe eventtheCompanydoesnotpurchased aminimum amountofproductsduringtheterm asfollows: US$50,000duringthefirst12months; US$150,000duringthesecond12months; and$250,000duringthethird12months.TheLicenseAgreement alsocontains certain representations,warranties,indemnityobligations andrightsoftermination.
TheforegoingisonlyabriefdescriptionofthematerialtermsoftheLicenseAgreement,anddoesnotpurporttobeacomplete descriptionof therightsand obligationsoftheparties thereunder, andsuchdescriptionisqualifiedinitsentiretybyreferencetotheLicenseAgreementwhichisfiledasanexhibit tothis FormS-1.
JJHisownedbyKeith McCulloch,whoisalso adirector (ChairmanoftheBoard)oftheCompany.TheCompanyissued444,444sharesofCompany commonstockto Mr.McCullochundertheterms oftheLicenseAgreement.TheLicenseAgreement alsoprovidesthatMr.McCullochhasarighttoreceive additionalsharesatnoadditional costtohimtomaintainhis10%ownershipinterestintheCompany. JJH owns 100% of Bel-Air Cosmetics.
NOTE 7–CAPITALSTOCK
The Company was incorporated on September 17, 2015 in Nevada with authorized capital of 150,000,000 shares of $0.001 par value common stock and 10,000,000 shares of $0.001 par value preferred stock.
On September 17, 2015, the Company issued 4,000,000 shares of common stock to our founder for cash proceeds of $20,000.
On November 20, 2015, the Company issued 444,444 shares of common stock under the terms of the Licensing Agreement.
There were 4,444,444 shares of common stock issued and outstanding at September 30, 2016. There were no shares of preferred stock issued and outstanding at September 30, 2016.
NOTE 8–SUBSEQUENTEVENTS
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to September 30, 2016 through January 9, 2017 (the date which the financial statements were issued), and has determined that it does not have any material subsequent events to disclose in these financial statements.
F-8
Management DiscussionandAnalysisof FinancialConditionandResultsof Operations
Forward-LookingStatements
Management’sstatementscontainedinthisportionoftheprospectusarenothistoricalfactsandareforward-lookingstatements.Factorswhichcouldhaveamaterial adverseeffectontheoperationsandfutureprospectsoftheCompanyonaconsolidatedbasisinclude,butarenotlimitedto,thosemattersdiscussedunderthesection entitled“RiskFactors,”above.Such risksanduncertaintiesshould be consideredinevaluating forward-lookingstatementsandundue relianceshouldnotbeplaced onsuchstatements.
Our Planfor the Next12Months
Thefollowingisalistofbusinessgoalsandmilestoneswewishtoaccomplishwithinthenext twelvemonths.
| ● | Securenecessaryfunds | |
| ● | Engageinadvertisingandmarketing | |
| ● | Increaseinventorylevelsandallocatefundingtoexpand ourdistribution network | |
| ● | Hireskilledemployees tocompleteourteam | |
| ● | Payforlegalandaccountingcosts |
Ourfirstmajormilestoneswillbesecuringfundsanduppingthescaleofourinventory.Thisisourprimaryfocus.Inthreeyears,wehopetohave established ourbrandandcompanyinEurope, North America andAustralia
Advertising andMarketing
Asdemand anddirectonlinesalesincreaseweexpecttobenefitfromdevelopingoure-commercewebsitetohandlemultipleproductlinesandintegratethisfunctionintotheinventory controlsystemwhichwealsointendon acquiring.Wealsointendtoincorporateface recognition codingtoourwebsiteto create aninstore experiencethroughthewebsite.Consumerswillbe abletovisualizedifferent cosmeticproductsontheirfaceasthecoding allowsuserstochange colortones etc.Wethisthistechnologywillgiveusauniquesellingpointinthemarket.Thiswillinvolvetechnicalprogramming,increasedservercapacity andbandwidth. Management expectsthiswillcost$30,000andwouldbeimplementedimmediately aftertheCompany raises sufficientfunds.
We intend to increase our online marketing and web presence when funding is received. We intend to instruct a specialist search engine optimization and marketing expert to help penetrate new market opportunities in North America, Europe and Australia. We estimate initially this will cost $20,000. Ultimately we aim to develop online global campaigns using Google Adwords, Facebook, cosmetic and beauty bloggers which allow you to target potential customers by topic, location and language. Google Adwords for example allows you to choose where your ad appears, on which specific websites and in which geographical areas (states, towns, or even neighborhoods), allowing for targeted marketing. Words which we will use for the search will include ‘cosmetic’, ‘lipstick’, ‘teens’ and other similar concepts that are popular in different countries/languages. In order for beauty bloggers to review our products prices vary from $500 up to $50,000 dependent on the number of followers the respective blogger has. We intend to engage bloggers whose fees range between $500 to $5,000 for a review. We estimate this will initially cost $10,000. The more expensive bloggers have the largest number of followers, but it is hard to identify what percentage of followers fall within our target market. The bloggers with fewer followers tend to have a more loyal following who will be more likely to purchase products on a recommendation. With this strategy we are also able to reach our target market and monitor response and reactions to marketing campaigns and adjust accordingly. Included in our online marketing and web presence budget we intend to increase our own social media following by retaining a specialist social media marketing company. We intend to use Heybridge Creative who have experience in the launch and development of cosmetic brands and existing contacts within the industry. Heybridge will focus on strategies to increase our social media following and website traffic through competitions, product giveaways and consistently updating fresh interactive content. With regards to the international markets we hope to establish our brand in, we have had our website reviewed by a marketing strategist who has begun to develop some basic advertising campaigns in the North America and Europe. The size and length of this campaign will depend on funding received. We intend to begin the campaign in April/May 2017 with the aim of increasing sales. A modest 3 month campaign would cost in the region of $10,000.
Ineachofourlicensedterritoriesweintendtoattendtradeshows.Thecostofacustomdesigneddisplayunitandproductstorageis$2,800 USDassourcedthrough current Thailand based suppliersfor a3mx2mstand.Thecostof attendingtradeshowsvariesbetween$4,000and$7,000 USDpershow andrequiresstaffingwith 3sales representatives andmakeup artistsata costof$150 aday.We anticipatethatwewillrequire$35,000toattendtradeshowsinthe UnitedKingdom, NorthAmerica, Europe andAustraliaduring a 12monthperiod.
Thetradeshowswillgeneratesales,brandawarenessandcollectcustomerinformationthroughcompetitionsandsurveys.
Wethereforeintendtobudgetatotalof $105,000foradvertisingandmarketingifwesell100%of ouroffering.Theshortfallinfundstocompletetheaboveobjectionsisexpectedtobemetbyourrevenues.Intheeventweareabletoraiselessthan100%ofouroffering,wewillhavetoscalebackon advertising andmarketingintheorderofpreferenceoutlinedabove.Thus,forinstance,ifwe areonlyraise50%to100% ofouroffering,wewill developoure-commercewebsitefollowedbysearchengine optimizationwith lessmoneyinvolvedinourmarketing,tradeshow attendance campaign. Inthe eventwe areonly ableto raiselessthan50%,wewillhavetoconsiderouroptionswithavailable revenues.Weplantoimplement these campaignsonceourwebsitehasbeendeveloped.
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Facility, MaterialsandEquipment
Shouldwesecuresufficientfunding,weintendtoincreaseourinventorylevels andexpandourdistributionnetwork.Throughtheuseofdistribution andfulfillment companyShipwirewearecurrently abletoholdinventoriesinNorthAmerica, EuropeandAustralia.Thecosttohold100SKU’s (stockkeepingunit)is approximately$300permonthineachwarehouselocation.Thecostoffulfillmentis$4.75per order.Shouldweraisesufficientfunding,weintendtoincreaseourinventorylevels andsecureourownwarehousefacilitywith anintegratedstockmanagementsystem.Webelieve asuitablewarehousewould costinthe regionof$20,000per annum, anintegratedinventorymonitoringsystem$20,000,theexpansionofourdistributionnetwork$10,000and$50,000ofinventorywouldsatisfyourfirst yearinventoryordercommitmentunder ourlicensing agreement.Theacquisitionof inventoryisourimmediatepriority alongwithsecuringfunding.Weintendtoachievethisinthenext3to6months.
Intheeventweareabletoraiselessthan100% ofouroffering,wewillhavetoscalebackthepurchaseoftheaboveitemsinthe orderofpreferenceoutlinedabove.Thus,forinstance,ifweareonly raise50%to100%of ouroffering,wewillpurchaseourfirstyears commitmentofinventoryperthetermsofourlicensingagreementandlooktoexpandourdistributionnetworkthroughsecuring retailersandretailerstostockour products.In theeventweare onlyabletoraiselessthan50%,wewillfocusonacquiring50%ofourfirstyearscommitmentofinventoryperthetermsofourlicensingagreementwithinthenext3to6months.
Wewouldlikeachieveourownwarehousingunitinthenext12months, butthecurrentspacewehavealongwithourShipwirefacilitydoesnotmaketheleasingofthisourimmediatepriority.
OfferingExpenses, LegalandAccounting
Inordertofundouroperations andpayoffering expensesof$10,000,webelievethatweneedthe$220,000inproceedsfromthisoffering. Uponthe effectivenessofour registrationstatementofwhichthisprospectusforms as part,wewillberequiredto compensationlegalandaccountingprofessional aswemeet our reportingobligationswiththeSecurities andExchangeCommission.Webelievethiswillcostus approximately$25,000forthenext twelvemonths.
AsofSeptember 30, 2016,wehad$6,255in currentassetsandcurrentliabilitiesinthe amountof$101,681.Accordingly,wehadworking capitaldeficit of$95,426as of September 30, 2016. Our currentworking capitalalongwithour revenuesisnotsufficientto enableustoimplementourbusinessplanassetforthinthisprospectus. Ourexpensesinthisoffering areestimated at $10,000,andwewillneedaminimumof$50,000forthenexttwelvemonths.Assuch,ourmonthlyburnrateforthenexttwelvemonthsisestimated at $4,200.Wewillneedtosell aminimumof25%ofthesharesofferinginthisprospectusfornetproceedsof$50,000inordertomeetourfinancialobligations. Our abilitytoremaininbusinesswithless than$50,000inthisofferingisquestionable.
Basedon our current burn rate,wewill runoutoffundsimminentlywithout additional capitalandassuming revenues basedonpastperformanceduringthatperiod. Ifwefailtoraisesufficientfunds inthisoffering,investorsmaylosetheir entire cashinvestment.
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Resultsof Operationsforthe year endedSeptember 30, 2016.
Revenues
Wehadno revenuesforthe year ended September 30, 2016.
We expectrevenuestoincreaseduringtheyearendedSeptember30,2016 asaresultofincreasedsalesresultingfromimprovedmarketing and brand awareness. Ifwe are abletoraisemoney,wehopetogenerate revenues toformour e-commercesite.
Costof Goods Sold
Wehadno costof goodssoldforthe year ended September 30, 2016.
GrossProfit
Grossprofitforthe year ended September 30, 2016was$Nil.
OperatingExpenses
Operating expenseswere$112,788 for the year ended September 30, 2016.Ouroperating expensesfor the year ended September 30, 2016consistedof general andadministrative expensesof$83,677and professionalfeesof$29,111.
Weanticipateouroperatingexpenseswillincreaseasweundertakeourplanofoperations.Theincreasewill beattributabletothemeasures describedabovetoimplementourbusiness plan andthe professionalfees associatedwithour becomingareportingcompanyundertheSecuritiesExchangeActof1934.
NetLoss
Net lossforthe year ended September 30, 2016was$112,788.
Liquidity andCapitalResources
As of September 30, 2016, we had total current assets of $6,255, consisting of inventories. We had current liabilities of $101,681 as of September 30, 2016. Accordingly, we had a working capital deficit of $95,426 as of September 30, 2016.
Operating activitiesused$103,459in cashforthe year endedSeptember 30, 2016.FinancingActivitiesfor the year endedSeptember 30, 2016 generated$94,558incash fromdirector advances and proceedsfrom the saleofour common stock.
Asoutlined above,weexpecttospend approximately$220,000towardtheinitialimplementationofourbusinessplan overthe courseof ournextfullfiscalyear.As atSeptember 30, 2016,wehad$6in cash.Thesuccessofourbusinessplanthereforedependson raisingfundsthroughthecurrentoffering. Ifthemaximumofferingissold,weshouldhavesufficient cashto carryoutourbusinessplanuntil June30,2017. Ifsubstantiallylessthanthemaximumofferingissold,however,our abilityto executeonourimmediatebusinessplanwillbeimpaired. Our abilitytooperatebeyond June 30,2017,is contingentuponusobtaining additionalfinancing and/orupon realizingsalesrevenuesufficienttofundourongoing expenses. Untilweareabletosustainourongoingoperationsthroughsalesrevenue,weintendtofundoperationsthroughdebtand/or equityfinancing arrangements,whichmaybeinsufficienttofundour capitalexpenditures,working capital,orother cashrequirements.Wedonothaveanyformal commitmentsorarrangementsforthesalesofstockorthe advancementorloanoffunds atthistime.Therecanbeno assurancethatsuch additionalfinancingwillbe availabletousonacceptableterms,or atall.
Off Balance Sheet Arrangements
As of September 30, 2016, there were no off balance sheet arrangements.
Resultsof OperationsfortheperiodfromSeptember17,2015toSeptember30,2015.
Revenues
WehadnorevenuesfortheperiodfromSeptember17,2015toSeptember30,2015.
We expectrevenuestoincreasefortheyearendedSeptember30,2016 asaresultofincreasedsalesresultingfromimprovedmarketing,increasedproduction andhigherqualityproduction. Ifweareabletoraisemoney,wehopetogenerate revenuestoformourowne-commercesite.
Costof Goods Sold
Wehadnocostof goods soldfortheperiodfromSeptember17,2015toSeptember30,2015.
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GrossProfit
OurgrossprofitfortheperiodfromSeptember17,2015toSeptember30,2015was$Nil.
OperatingExpenses
Operatingexpenseswere$11,680fortheperiodfromSeptember17,2015toSeptember30,2015.OuroperatingexpensesfortheperiodfromSeptember17,2015toSeptember30,2015consistedofgeneralandadministrativeexpensesof$10,019andprofessionalfeesof$1,661.
Weanticipateouroperatingexpenseswillincreaseasweundertakeourplanofoperations.Theincreasewill beattributabletothemeasures describedabovetoimplementourbusiness plan andthe professionalfees associatedwithour becomingareportingcompanyundertheSecuritiesExchangeActof1934.
NetLoss
Net lossfortheperiodfromSeptember17,2015toSeptember30,2015was$11,680
Liquidity andCapitalResources
AsofSeptember30,2015,wehadtotalcurrentassets of$Nil.Wehadcurrentliabilities of$11,539as ofSeptember30,2015.Accordingly,wehadaworkingcapitaldeficitof$11,539asofSeptember30,2015.
Operatingactivitiesused$11,680incashfortheperiodfromSeptember17,2015toSeptember30,2015.FinancingActivitiesfortheperiodfromSeptember17,2015toSeptember30,2015generated $11,539incash fromdirector advances.
Asoutlined above,weexpecttospend approximately$220,000towardtheinitialimplementationofourbusinessplan overthe courseofournextfullfiscalyear.September30,2015,wehadnoin cash.Thesuccessofourbusinessplanthereforedependsonraisingfundsthroughthecurrentoffering. Ifthemaximumofferingissold,weshouldhavesufficient cashto carryoutourbusinessplanuntilSeptember30,2016. Ifsubstantiallylessthanthemaximumofferingissold,however,our abilitytoexecuteonourimmediatebusinessplanwillbeimpaired. OurabilitytooperatebeyondSeptember30,2016,iscontingentuponusobtaining additionalfinancing and/oruponrealizingsalesrevenuesufficienttofundourongoing expenses. Untilweareabletosustainourongoingoperationsthroughsales revenue,weintendtofundoperationsthroughdebtand/or equityfinancing arrangements,whichmaybeinsufficienttofundourcapital expenditures,working capital,orother cashrequirements.Wedonothaveanyformal commitmentsorarrangementsforthesalesofstockorthe advancementorloanoffunds atthistime.Therecanbeno assurancethatsuch additionalfinancingwill beavailabletousonacceptableterms,or atall.
GoingConcern
Our assets atSeptember30, 2015total$Nil.This amountdoesnotprovide adequateworking capitalforustosuccessfullyoperateourbusiness andtoserviceourdebt. Expensesincurredtothedateofthisprospectus arebeing recordedourbooks astheyoccur.This raisessubstantialdoubt aboutour abilityto continue as agoing concern. Our continuation as agoing concernisdependentuponobtaining additionalworking capital. Managementbelievesthatwewillbe abletooperateforthe comingyearfrom theproceeds raisedfromtheofferingsetforthinthisprospectus. However,there canbeno assurancesthatthis offering will be successful or thatmanagement’splanswillbesuccessful.
OffBalanceSheet Arrangements
AsofSeptember30,2015,therewereno offbalancesheetarrangements.
EmergingGrowthCompanies
Becausewegeneratedlessthan$1billionintotalannualgrossrevenuesduringourmostrecently completedfiscalyear,wequalify as an“emerging growthcompany”undertheJumpstartOurBusiness Startups(“JOBS”)Act.
Wewill loseour emerging growthcompanystatusonthe earliestoccurrenceofanyofthefollowingevents:
| 1. | onthelastday ofanyfiscalyearinwhichweearnatleast$1billionintotal annualgross revenues,which amountisadjustedforinflation everyfiveyears; | |
| 2. | onthelastdayofthefiscalyearoftheissuerfollowingthefifth anniversaryofthedateofourfirstsaleofcommon equitysecuritiespursuanttoaneffective registrationstatement; | |
| 3. | onthedateonwhichwehave,duringtheprevious3-yearperiod,issuedmorethan$1 billionin non-convertibledebt;or | |
| 4. | thedateonwhichsuchissuerisdeemedtobe a`large acceleratedfiler’, asdefinedinsection240.12b-2oftitle17,Codeof Federal Regulations,or anysuccessorthereto.” |
A“large acceleratedfiler”isanissuerthat, at the endofitsfiscalyear,meetsthefollowing conditions:
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| 1. | ithasanaggregateworldwidemarketvalueofthevoting andnon-voting common equityheldbyitsnon-affiliatesof$700millionormore asofthelastbusinessdayoftheissuer’smost recentlycompletedsecondfiscalquarter; | |
| 2. | Ithasbeensubjecttothe requirementsofsection13(a)or15(d)oftheActfor aperiodofat least twelve calendarmonths; and | |
| 3. | Ithasfiledat leastone annual reportpursuanttosection13(a)or15(d)oftheAct. |
Asanemerging growthcompany, exemptionsfromthefollowingprovisionsare availabletous:
| 1. | Section404(b)oftheSarbanes-OxleyActof2002,which requires auditor attestationofinternal controls; | |
| 2. | Section14A(a)and(b)oftheSecurities ExchangeActof1934,which require companiestoholdshareholder advisoryvotesonexecutive compensation andgoldenparachute compensation; | |
| 3. | Section14(i)ofthe ExchangeAct (whichhasnotyetbeenimplemented),which requires companiestodisclosethe relationshipbetween executive compensation actuallypaidandthefinancialperformanceofthe company; | |
| 4. | Section953(b)(1)ofthe Dodd-FrankAct(whichhasnotyetbeenimplemented),which requires companiestodisclosethe ratiobetweentheannualtotal compensationoftheCEOandthemedianofthe annualtotal compensationof allemployeesofthe companies; and | |
| 5. | The requirementtoprovide certainother executive compensationdisclosureunderItem402ofRegulationS-K.Instead, an emerginggrowth companymustonly complywiththemorelimitedprovisionsofItem402applicabletosmaller reporting companies, regardlessoftheissuer’ssize. |
PursuanttoSection107oftheJOBSAct,anemerginggrowthcompanymay choosetoforgosuchexemptionandinsteadcomplywiththerequirementsthatapplyto anissuerthatisnotanemerginggrowthcompany.Wehaveelectedtomaintainourstatusasan emerging growthcompanyandtake advantageoftheJOBSActprovisions.
Changes InandDisagreementswithAccountants
Wehavehadnochanges inordisagreementswithour accountants.
Directorsand Executive Officers
Our executiveofficers and directors andtheir respective agesasof September 30, 2016are asfollows:
| Name | Age | Position(s)andOffice(s) Held | ||
| KeithMcCulloch | 69 | ChairmanoftheBoard ofDirector | ||
| BenjaminRidding | 34 | Chief Executive Officer,ChiefFinancial Officer,Secretary,Treasurer andDirector |
Setforthbelowisabriefdescriptionofthebackgroundand businessexperienceofeachofour currentexecutiveofficersand directors.
KeithMcCulloch–Chairmanof theBoardof Directors
KeithMcCulloch hasbeenChairmanoftheBoard ofDirectorsofourCompanysinceincorporationonSeptember17,2015.
Mr.McCullochhasbeenaDirector and ownerofJJHolandLimitedsince1997.JJ HolandLimitedprovidedconsultingservicestothetobaccoindustry between1997and2005.JJHolandLimitedhasbeen registering cosmetic Trade Marks anddeveloping,manufacturing,retailingcosmeticandbeautyproductsfrom2002untilpresent. Mr.McCullochheldthepositionofSeniorVicePresidentofMattel,Inc.(1995-1996) andnumerous seniorpositionsatRJReynoldsTobaccoInternational between1975and1995 in Europe, Asia, Japan, USA, Middle East and Africa.Mr.McCullochholdsaBA Honsin GeographyfromDurhamUniversity, England. He is a retired fellow of the Institute of Chartered Accountants in England and Wales.
Asidefromthatprovided above,Mr.McCullochdoesnothold andhasnotheldoverthepastfiveyearsanyotherdirectorshipsinany companywithaclassofsecurities registeredpursuanttoSection12oftheExchangeActorsubjecttothe requirementsofSection15(d)ofthe ExchangeActor anycompany registeredasaninvestment companyundertheInvestmentCompanyActof1940.WebelievethatMr.McCulloch’s experience andbackgroundinthe retailindustryprovideherthequalifications, attributes andskillsnecessarytoserveontheBoard.
BenjaminRidding- President, ChiefExecutive Officer, Chief FinancialOfficer,Secretary,TreasurerandaDirector
Benjamin Ridding has been President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and a Director of our Company since incorporation on September 17, 2015.
Mr. Ridding, has extensive experience in the leadership, direction and management of a diverse range of successful international business ventures. From January 2014 to April 2015, he was President & CEO of Quorum Corp. Quorum Corp. was established to create and operate a micro jobs website, Quintup.comTM, that would serve as an online marketplace for the purchase and sale of personal services amongst individuals and businesses operating in Eastern Africa, Kenya, Tanzania, and Uganda. Since January 2012, Mr. Ridding has been the Managing Director at Headland Adventures, a leisure services company that offers a diverse range of activities for tourists around the world. From March 2008 until March 2012, Mr. Ridding has also been the Managing Director of SiT. SiT was an adventure travel business, which under the direction of Mr. Ridding handled a client list encompassing diverse corporate clients such as Barclays, Sun Capital Partners, Coca Cola, Walt Disney and BP. The operations covered the US, Europe, Asia and Australasia during the time Mr. Ridding was with SiT. Recently, Mr. Ridding has begun to focus on beauty and cosmetic products.
Mr. McCulloch is related to Mr. Ridding by virtue of being Mr. Ridding’s uncle.
Mr. Ridding presently dedicates approximately 40 hours per week on our business while Mr. McCulloch also dedicates approximately 15 hours per week on our business. Mr. McCulloch also spends his time working with J J Holand and Bel-Air Cosmetics.
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Asidefromthatprovidedabove,Mr.Riddingdoesnotholdandhasnotheldoverthepastfiveyearsanyotherdirectorshipsinany companywithaclassofsecurities registeredpursuanttoSection12oftheExchangeActorsubjecttotherequirementsofSection
15(d)oftheExchangeActoranycompanyregisteredasaninvestmentcompanyundertheInvestmentCompanyActof1940.WebelievethatMr.Ridding’smanagementexperienceprovidehimthequalifications,attributesandskillsnecessarytoserveontheBoard.
Directors
Ourbylawsauthorizenoless thanone (1)directorormorethanthirteen(13)directors.We currentlyhavetwo directors.
Termof Office
OurDirectorsareappointedforaone-yeartermtoholdofficeuntilthenextannualgeneralmeetingofourshareholdersoruntil removedfromofficeinaccordancewithourbylaws. Ourofficersare appointed byourboard ofdirectorsandhold officeuntilremovedbytheboard.
SignificantEmployees
Wehavenosignificantemployeesotherthanourofficersand directors.
InvolvementinCertain LegalProceedings
Tothebestof ourknowledge,duringthepasttenyears,noneofthefollowingoccurredwith respecttoourpresent orformerdirector, executiveofficer,oremployee: (1)anybankruptcypetitionfiledbyoragainstanybusiness ofwhichsuchpersonwasageneral partnerorexecutiveofficereitheratthetimeofthebankruptcy orwithintwoyearspriortothattime;(2)any convictioninacriminalproceeding orbeingsubjecttoapendingcriminalproceeding(excludingtrafficviolationsandotherminoroffenses);(3)beingsubjecttoanyorder,judgmentordecree,not subsequentlyreversed,suspended orvacated,ofanycourtofcompetentjurisdiction,permanentlyortemporarilyenjoining,barring,suspendingorotherwiselimitinghisorherinvolvementinanytypeofbusiness,securitiesorbankingactivities;and(4)beingfoundby acourtofcompetentjurisdiction(inacivilaction),theSECortheCommoditiesFuturesTradingCommissiontohaveviolatedafederal orstatesecuritiesorcommoditieslaw,andthe judgmenthasnot been reversed,suspended orvacated.
CompensationDiscussionandAnalysis
Wepresentlydonothaveemploymentagreementswithany ofournamedexecutiveofficersandwehavenotestablishedasystemof executive compensationor anyfixed policies regardingcompensationofexecutiveofficers.
OurPresidentholdssubstantialownershipinourcompany andismotivatedby astrongentrepreneurialinterestindeveloping ouroperationsandpotentialrevenuebasetothebestofhisability.Asourbusinessandoperationsexpandandmature,weexpecttodevelopaformal systemofcompensationdesignedtoattract, retainandmotivatetalentedexecutives.
SummaryCompensation Table
Thetablebelowsummarizes allcompensation awardedto,earnedby,orpaidtoeachnamedexecutiveofficerforourlasttwo completedfiscalyearsfor all services renderedtous.
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| SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||||||||||||
| Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||
| Keith McCulloch, Chairman and director | 2016 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||
| 2015 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
| Benjamin Ridding, CEO, CFO, Secretary, Treasurer and director | 2016 | 60,000 | 0 | 0 | 0 | 0 | 0 | 0 | 60,000 | |||||||||||||||||||||||
| 2015 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Narrative Disclosure totheSummaryCompensation Table
Our CEO, Benjamin Ridding charges a consulting fee to the company of $5,000 per month.Weanticipate providingmoresignificant compensation atsometimeinthefuture. Ourdecisiontocompensate officers dependsonthe availability ofour cashresourceswith respecttotheneedfor cashtofurther business purposes.
SecuritiesAuthorizedforIssuance UnderEquityCompensationPlans
Todate,wehavenotadoptedastockoptionplanorotherequity compensationplanandhavenotissuedanystock,options,orothersecuritiesascompensation.
OutstandingEquityAwardsAt FiscalYear-end Table
Thetablebelowsummarizesallunexercisedoptions,stockthathasnotvested,andequityincentiveplanawardsforeachnamed executiveofficeroutstandingasofthe end ofourlastcompletedfiscalyear.
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | ||||||||||||||||||||||||||||||||||||
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Shares of Stock That Have Not Vested (#) | Market Value of Shares or Shares of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Shares or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Shares or Other Rights That Have Not Vested (#) | |||||||||||||||||||||||||||
| Keith McCulloch | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
| Benjamin Ridding | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
SecurityOwnershipof CertainBeneficialOwnersandManagement
Thefollowingtablesetsforth, asof September 30,2016,thebeneficialownershipofour commonstockby eachexecutiveofficer anddirector,byeachperson knownby ustobeneficiallyownmorethan5%ofour commonstock andbytheexecutiveofficers anddirectors asagroup. Exceptasotherwiseindicated, allshares areowneddirectly andthepercentageshownisbasedon4,444,444sharesof commonstockissuedand outstandingon September 30, 2016.
| Title of class | Name and address of beneficial owner | Amount of beneficial ownership | Percent of class | ||||||||
| Common | Keith McCulloch 169/20 Royal Gems Golf Resort, Salaya – Banglpasi, Putthamonton, Nakon Rathom 73170, Thailand | 444,444 | 10 | % | |||||||
| Common | Benjamin Ridding 51 Pinfold Street, Suite 354, Birmingham, B2 4AY | 4,000,000 | 90 | % | |||||||
| Common | Total all executive officers and directors | 4,444,444 | 100 | % | |||||||
| Common | Other 5% Shareholders | ||||||||||
| None | |||||||||||
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Asusedinthistable,“beneficialownership”meansthesole orsharedpowertovote, ortodirectthevotingof,asecurity, orthesole orsharedinvestmentpowerwithrespecttoasecurity(i.e.,thepowertodisposeof,ortodirectthedisposition of,asecurity).Inaddition,forpurposesofthistable,apersonisdeemed,asofanydate,tohave“beneficialownership”ofanysecuritythatsuchpersonhasthe right toacquirewithin60 daysaftersuchdate.
Thepersonsnamedabovehavefullvoting andinvestment powerwith respecttothesharesindicated.Undertherules oftheSecurities andExchangeCommission,aperson(orgroupofpersons)isdeemedtobea“beneficialowner”ofasecurityifheorshe,directlyorindirectly,has orsharesthepowertovoteortodirectthevotingofsuchsecurity,orthe powertodispose ofortodirectthe dispositionofsuchsecurity.Accordingly,morethanonepersonmaybedeemedtobeabeneficialownerofthesamesecurity.A personisalsodeemedtobeabeneficialownerofanysecurity,whichthatpersonhastherighttoacquirewithin 60days,suchasoptionsorwarrantsto purchaseour commonstock.
Disclosureof CommissionPositionofIndemnificationforSecuritiesActLiabilities
Inaccordancewiththeprovisionsinourarticlesofincorporation,wewillindemnifyanofficer,director,orformerofficerordirector,tothefullextentpermittedbylaw.
InsofarasindemnificationforliabilitiesarisingundertheSecuritiesAct of1933(the “Act”)maybepermittedtoourdirectors,officers andcontrolling personspursuanttotheforegoingprovisions,orotherwise,wehavebeen advisedthatintheopinionoftheSecurities andExchangeCommissionsuchindemnificationisagainstpublicpolicyasexpressedintheActandis,therefore,unenforceable.Intheeventthataclaimforindemnificationagainstsuchliabilities(otherthanthepaymentbyusofexpensesincurredorpaidbyadirector,officerorcontrollingpersonofusinthesuccessfuldefenseofany action,suitorproceeding)isassertedbysuchdirector,officeror controlling personinconnectionwiththesecuritiesbeing registered,wewill,unlessintheopinionofourcounselthematterhasbeensettledbycontrollingprecedent,submitto acourtofappropriatejurisdictionthequestionwhethersuchindemnificationbyitisagainstpublicpolicy asexpressedintheSecuritiesActandwillbegoverned bythefinaladjudicationofsuchissue.
CertainRelationshipsandRelated Transactions
Except assetforthbeloworinthesectiontitled“ExecutiveCompensation,”noneofourdirectorsorexecutiveofficers,noranyproposednomineeforelection asadirector,noranypersonwhobeneficiallyowns,directlyorindirectly,sharescarryingmorethan5%ofthevoting rights attachedtoallofouroutstandingshares,noranymembersoftheimmediatefamily (includingspouse,parents, children,siblings, andin-laws)ofanyoftheforegoingpersonshasanymaterialinterest,directorindirect,inanytransactionsinceourincorporationorinanypresentlyproposedtransactionwhich,ineither case,hasorwillmaterially affectus.
AsofSeptember 30,2016,thebalanceofthe amountsdueto ourfounder,President,CEO,CFO,Treasurer andSecretary, BenjaminRiddingwas$86,097.The amountsloaned to the Company by Mr.Riddingwereunsecured,non-interest bearing, andhadnospecificterms ofrepayment.
OnSeptember17,2015,theCompanyissuedBenjaminRidding,ourfounder,President,CEO,CFO,Treasurer andSecretary4,000,000 commonshares, atapriceof$0.005pershare.
OnNovember20,2015, theCompanyissuedKeithMcCulloch,orChairmanoftheBoardofDirectors,444,444sharesofcommonstockasconsideration underthetermsoftheLicenseAgreement.
AvailableInformation
WehavefiledaregistrationstatementonformS-1undertheSecuritiesActof1933withtheSecurities andExchangeCommissionwithrespecttothesharesof our commonstock offeredthroughthisprospectus.Thisprospectusisfiled asapartofthat registrationstatement,butdoesnot contain alloftheinformation containedinthe registrationstatement andexhibits.Statementsmadeinthe registrationstatement aresummariesofthematerialtermsofthe referencedcontracts, agreementsordocumentsofthe company.We referyoutoourregistrationstatement andeach exhibit attachedtoitforamoredetaileddescriptionofmattersinvolvingthecompany, andthestatementswehavemadeinthisprospectus arequalifiedintheir entiretyby referencetothese additionalmaterials. Youmayinspecttheregistrationstatement, exhibits andschedulesfiledwiththeSecurities andExchangeCommission attheCommission’sprincipalofficeinWashington, D.C.Copiesofalloranypartoftheregistrationstatementmay beobtainedfromthePublicReferenceSectionoftheSecurities and ExchangeCommission,100 FStreet, NE,Washington, DC20549.PleaseCalltheCommission at (202)942-8088forfurtherinformationontheoperationofthepublic referencerooms.TheSecurities andExchangeCommission alsomaintains aWebSiteathttp://www.sec.govthatcontains reports,proxyStatements andinformation regarding registrantsthatfiles electronicallywiththeCommission. Our registrationstatement andthe referencedexhibits canalso befoundonthissite.
Ifwearenotrequiredtoprovide anannualreporttooursecurityholders,weintendtostillvoluntarilydosowhenotherwisedue,andwillattachauditedfinancialstatementswithsuchreport.
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Dealer ProspectusDeliveryObligation
Until _____________,alldealersthateffecttransactionsinthesesecuritieswhetherornotparticipatinginthisofferingmaybe requiredtodeliveraprospectus. Thisisin additiontothedealers’obligationtodeliveraprospectuswhen acting asunderwritersandwithrespect totheirunsoldallotmentsorsubscriptions.
PartII
InformationNot Required Inthe Prospectus
Item13. OtherExpensesOfIssuance AndDistribution
The estimatedcostsofthisofferingare asfollows:
| Securities and Exchange Commission registration fee | $ | 24.17 | ||
| Federal Taxes | — | |||
| State Taxes and Fees | — | |||
| Listing Fees | — | |||
| Printing and Engraving Fees | — | |||
| Transfer Agent Fees | 1,000 | |||
| Accounting fees and expenses | 14,000 | |||
| Legal fees and expenses | 15,000 | |||
| Total | 30,024.17 |
Allamountsare estimates,otherthantheCommission’sregistration fee.
Item14.Indemnificationof DirectorsandOfficers
Ourofficersand directorsareindemnifiedasprovided bythe NevadaRevisedStatutesand ourbylaws.
UnderthegoverningNevadastatutes,directorimmunityfrom liabilitytoacompanyoritsshareholdersformonetaryliabilitiesapplies automaticallyunlessitisspecificallylimitedby acompany’sarticlesofincorporation.Ourarticlesofincorporationdonotcontainanylimitinglanguage regardingdirectorimmunityfromliability. Exceptedfromthis immunity are:
| 1. | awillfulfailuretodealfairlywiththecompanyoritsshareholdersinconnectionwithamatterinwhichthedirectorhasamaterial conflictofinterest; | |
| 2. | aviolationofcriminallaw(unlessthedirectorhadreasonable causetobelievethathisorher conductwaslawfulorno reasonable causetobelievethathisorher conductwasunlawful); | |
| 3. | atransactionfrom whichthedirectorderived animproperpersonalprofit; and | |
| 4. | willfulmisconduct. |
Ourbylawsprovidethatwewillindemnifyourdirectorsandofficerstothefullestextentnotprohibitedby Nevadalaw;provided,however,thatwemaymodifytheextentofsuchindemnificationbyindividualcontractswithourdirectorsandofficers;and,provided,further,thatweshallnotberequiredtoindemnify anydirectororofficerinconnectionwithanyproceeding(orpartthereof)initiatedbysuchperson unless:
| 1. | suchindemnificationisexpressly requiredto bemadebylaw; | |
| 2. | theproceedingwasauthorizedbyourBoard ofDirectors; | |
| 3. | suchindemnificationisprovidedbyus,inoursolediscretion,pursuanttothepowersvestedusunder Nevadalaw;or; | |
| 4. | suchindemnificationisrequiredto bemadepursuanttothebylaws. |
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Ourbylawsprovidethatwewilladvancetoany personwhowasorisaparty oristhreatenedtobemadeapartytoanythreatened,pendingorcompletedaction,suitorproceeding,whethercivil,criminal,administrativeorinvestigative,byreason ofthefactthatheisorwasadirectororofficer,ofthecompany,orisorwasservingattherequestofthecompany asadirectororexecutiveofficerof anothercompany,partnership,jointventure,trustorotherenterprise,priortothefinaldispositionoftheproceeding,promptlyfollowingrequesttherefore,allexpensesincurredby anydirectororofficerinconnectionwithsuch proceedinguponreceiptofanundertakingbyoronbehalfofsuchpersonto repaysaid amountsifitshouldbedeterminedultimatelythatsuchpersonisnotentitledto beindemnifiedunderourbylawsorotherwise.
Ourbylawsprovidethatnoadvanceshallbemadebyustoanofficerofthecompany,exceptbyreasonofthefactthatsuchofficerisorwasadirectorofthecompanyinwhicheventthisparagraphshallnotapply,in any action,suitorproceeding,whethercivil, criminal, administrativeorinvestigative,if adeterminationis reasonablyandpromptlymade: (a)bytheboardofdirectorsbyamajorityvoteofaquorumconsistingofdirectorswhowerenotpartiestotheproceeding,or(b)ifsuchquorumisnotobtainable,or, evenifobtainable, aquorumofdisinteresteddirectorssodirects,byindependentlegal counselin awrittenopinion,thatthefactsknowntothedecision-makingparty atthetimesuchdeterminationismadedemonstrate clearly and convincinglythatsuchperson actedinbadfaithorinamannerthat suchpersondidnotbelieveto beinornotopposedtothebest interestsofthe company.
Item15. RecentSalesof Unregistered Securities
OnSeptember17,2015,theCompanyissuedBenjaminRidding,ourfounder,President,CEO,CFO,Treasurer andSecretary,4,000,000sharesofcommonstock, atapriceof$0.005pershare.
OnNovember20,2015, theCompanyissuedKeithMcCulloch,orChairmanoftheBoardofDirectors,444,444sharesofcommonstockasconsideration underthetermsoftheLicenseAgreement.
TheseshareswereissuedpursuanttoSection4(a)(2)oftheSecuritiesActof1933and arerestrictedsharesasdefinedintheSecuritiesAct.Wedidnotengagein anygeneralsolicitationor advertising.
Item16.Exhibits
| Exhibit Number | Description | |
| 3.1 | ArticlesofIncorporation(1) | |
| 3.2 | By-laws(1) | |
| 5.1 | Opinion Regarding Legality and Consent of Counsel by Harrison Law, P.A.(3) | |
| 10.1 | SubscriptionAgreementdatedSeptember17,2015 betweentheCompany and BenjaminRidding(1) | |
| 10.2 | AgreementdatedNovember20,2015 amongtheCompany,ColorcosCompanyLimited,Bel-AirCosmeticsCorp., andJJHolandLimited.(1) | |
| 10.3 | Letter Agreement with J J Holand Limited dated November 20, 2015 regarding 50% ownership of trademarks(1) | |
| 10.4 | FormofSubscriptionAgreement(1) | |
| 10.5 | Agreement dated August 3, 2015 with Heybridge Creative(2) | |
| 10.6 | General Service Agreement dated May 4, 2015 with Sarah Moody(2) | |
| 10.7 | Trademark Registration issued by The European Union, Office For Harmonization in the Internal Market, Trademarks and Designs (English Translation is contained in paragraphsEN-3. EN-35 and EN-44 on page 4/10)(3) | |
| 10.8 | Trademark Registration issued by The New Zealand Intellectual Property Office(3) | |
| 10.9 | Trademark Registration issued by the Australian Government, IP Australia(3) | |
| 10.10 | Trademark Registration issued by United States of America, United States Patent and Trademark Office(3) | |
| 10.11 | Trademark Registration issued by Mexico, Mexican Institute of Industrial Property(4) | |
| 10.11.1 | English Translation of Trademark Registration issued by Mexico, Mexican Institute of Industrial Property(4) | |
| 10.12 | Colorcos Invoice dated June 8, 2016(3) | |
| 23.1 | Consent of Independent Registered Public Accounting Firm | |
| 23.2 | Consent of Experts and Counsel: Counsel’s Consent, by Harrison Law, P.A., is included in Exhibit 5.1.(3) |
(1) Incorporated by reference to the Registrant’s Form S-1 filed with the SEC on May 2, 2016.
(2) Incorporated by reference to the Registrant’s Form S-1/A filed with the SEC on July 29, 2016.
(3) Incorporated by reference to the Registrant’s Form S-1/A filed with the SEC on October 11, 2016.
(4) Incorporated by reference to the Registrant’s Form S-1/A filed with the SEC on November 4, 2016.
Item17. Undertakings
Theundersignedregistrantherebyundertakes:
| 1. | Tofile,during anyperiodinwhichoffersorsales arebeingmade, apost-effective amendmenttothis registrationstatement: |
| a. | Toinclude anyprospectus requiredbySection10(a)(3)oftheSecuritiesActof1933; | |
| b. | Toreflectintheprospectus anyfactsorevents arisingaftertheeffectivedateofthe registrationstatement (orthemost recentpost-effective amendmentthereof)which,individuallyorintheaggregate, represent afundamental changeintheinformationsetforthinthe registrationstatement. Notwithstandingtheforegoing, anyincreaseordecreaseinvolumeofsecuritiesoffered(ifthetotaldollarvalueofsecuritiesofferedwouldnotexceedthatwhichwas registered) and anydeviationfromtheloworhigh endofthe estimatedmaximumoffering rangemaybe reflectedintheformofprospectusfiledwiththeCommissionpursuanttoRule424(b)if,inthe aggregate,the changesinvolume andprice representnomorethan20% changeinthemaximum aggregateofferingpricesetforthinthe“CalculationofRegistrationFee”tableinthe effective registrationstatement. | |
| c. | Toinclude anymaterialinformationwith respecttotheplanofdistributionnotpreviouslydisclosedinthe registrationstatementor anymaterial changetosuchinformationinthe registrationstatement; |
| 2. | That,forthepurposeofdetermining anyliabilityundertheSecuritiesActof1933,eachsuchpost-effective amendmentshallbedeemedtobe anewregistrationstatement relatingtothesecuritiesofferedtherein, andtheofferingofsuchsecurities atthat timeshallbedeemedto betheinitialbonafideofferingthereof. | |
| 3. | Toremovefromregistrationbymeansofapost-effective amendment anyofthesecuritiesbeing registeredwhich remainunsold at theterminationoftheoffering. | |
| 4. | That,forthepurposeofdeterminingliabilityundertheSecuritiesActof1933to anypurchaser: |
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| a. | Each prospectusfiledby the registrantshallbedeemedtobepart ofthe registrationstatement as ofthedatethefiledprospectuswasdeemedpartof andincludedinthe registrationstatement; and | |
| b. | Eachprospectus requiredtobefiledaspartofaregistrationstatementinrelianceonRule430Brelatingtoanofferingforthepurposeof providingtheinformation requiredby section10(a)oftheSecuritiesActof1933shallbedeemedtobepart of andincludedinthe registrationstatement as ofthe earlier of the datesuchformofprospectusisfirstusedaftereffectivenessorthedateofthefirst contractofsaleofsecuritiesintheofferingdescribedintheprospectus.AsprovidedinRule430B,forliabilitypurposesoftheissuerandanypersonthatisatthatdateanunderwriter,suchdateshallbedeemedtobeanew effectivedateofthe registrationstatement relatingtothesecuritiesinthe registrationstatementtowhichthat prospectus relates, andtheofferingofsuchsecurities atthattimeshallbedeemedtobetheinitialbonafideofferingthereof.Provided,however,thatnostatementmadein a registrationstatementorprospectusthatis part oftheregistrationstatementormadein adocumentincorporatedordeemedincorporatedby referenceintothe registrationstatementorprospectusthatispartofthe registrationstatementwill,asto apurchaserwithatimeofcontractofsalepriortosuch effectivedate,supersedeormodify anystatementthatwasmadeinthe registrationstatementorprospectusthatwaspartofthe registrationstatementormadeinanysuchdocumentimmediatelypriortosuch effectivedate;or | |
| c. | EachprospectusfiledpursuanttoRule424(b)as part of aregistrationstatement relatingtoanoffering,otherthan registrationstatements relyingonRule430Borotherthanprospectusesfiledin relianceonRule430A,shallbedeemedtobepart of andincludedinthe registrationstatement as ofthedateitisfirstusedaftereffectiveness.Provided,however,thatnostatementmadeinaregistrationstatementorprospectusthatis part oftheregistrationstatementormadein adocumentincorporatedor deemedincorporatedbyreferenceintotheregistrationstatementorprospectusthatispartofthe registrationstatementwill,astoapurchaserwith atimeof contractofsalepriortosuchfirstuse,supersedeormodify anystatementthatwasmadeinthe registrationstatementorprospectusthatwaspartofthe registrationstatementormadeinanysuchdocumentimmediatelypriortosuchdateoffirstuse. |
| 5. | That,forthepurposeofdeterminingliabilityofthe registrantundertheSecuritiesActof1933to anypurchaserintheinitialdistributionofthesecurities:Theundersigned registrantundertakesthatinaprimaryofferingofsecuritiesoftheundersigned registrantpursuanttothis registrationstatement, regardlessoftheunderwritingmethodusedtosellthesecuritiestothepurchaser,ifthesecurities areofferedorsoldtosuchpurchaserbymeansofanyofthefollowing communications,theundersigned registrantwillbe asellertothepurchaser andwillbe consideredto offerorsellsuchsecuritiestosuchpurchaser: |
| a. | Anypreliminaryprospectusorprospectusoftheundersigned registrant relatingtotheoffering requiredtobefiledpursuanttoRule424; | |
| b. | Anyfreewritingprospectus relatingtotheofferingpreparedbyoronbehalfoftheundersigned registrantorusedor referredto bytheundersigned registrant; | |
| c. | Theportionofanyotherfreewritingprospectus relatingtotheoffering containingmaterialinformation abouttheundersigned registrantorits securitiesprovidedbyoronbehalfoftheundersigned registrant; and | |
| d. | Anyother communicationthat isanofferintheofferingmadebytheundersigned registranttothepurchaser. |
| 6. | Inthe eventtheregistrant requests accelerationofeffectivedateorfilingofregistrationstatementbecoming effectiveuponfilingthenthe registrantundertakestoadviseyouasfollows: |
| a. | Ifanyprovisionorarrangement existswherebytheregistrantmayindemnify adirector,officerorcontrollingpersonofthe registrant againstliabilities arising undertheSecuritiesAct,or | |
| b. | Thereisnounderwriter. | |
| c. | Thebenefitsofsuchindemnification arenotwaivedbysuchpersons: |
Insofar asindemnificationforliabilities arisingundertheSecuritiesAct of1933maybepermittedtodirectors,officers andcontrollingpersonsofthe registrantpursuanttotheforegoingprovisions,orotherwise,theregistranthasbeen advisedthatintheopinionoftheSecurities and ExchangeCommissionsuchindemnificationis againstpublicpolicyas expressedintheAct andis,therefore,unenforceable. Inthe eventthataclaimforindemnification againstsuchliabilities (otherthanthepaymentbythe registrantof expensesincurredorpaidbyadirector,officeror controllingpersonofthe registrantinthesuccessfuldefenseofany action,suitorproceeding)isassertedbysuchdirector,officerorcontrollingpersoninconnectionwiththesecuritiesbeing registered,theregistrantwill,unlessintheopinionofits counselthematterhasbeensettledby controllingprecedent,submitto acourtofappropriatejurisdictionthe questionwhethersuch indemnificationbyitis againstpublicpolicyasexpressedintheActandwillbegovernedbythefinal adjudicationofsuchissue.
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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, thereunto duly authorized, in the City of London, United Kingdom, on January 23, 2017.
GLOBALCOSMETICS, INC.
| By: | /s/Keith McCulloch |
| KeithMcCulloch ChairmanandDirector | |
| By: | /s/BenjaminRidding |
| Benjamin Ridding President,Chief Executive Officer,ChiefFinancial Officer,PrincipalFinancial Officer,PrincipalAccounting Officer,Secretary,Treasurer andDirector |
PursuanttotherequirementsoftheSecuritiesActof1933,thisregistrationstatementhasbeensignedbythefollowingpersonsinthe capacitiesand onthedates indicated.
| By: | /s/Keith McCulloch |
| KeithMcCulloch ChairmanandDirector | |
| January 23,2017 | |
| By: | /s/BenjaminRidding |
| Benjamin Ridding President,Chief Executive Officer,ChiefFinancial Officer,PrincipalFinancial Officer,PrincipalAccounting Officer,Secretary,Treasurer andDirector | |
| January 23,2017 | |
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