UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3 to
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
THE DIAMOND CARTEL, INC.
------------------------
(Exact name of registrant as specified in its charter)
Delaware 6770 80-0914174
------------------------------- ------------------------- -----------------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification Number)
28 Banting Crescent
London, Ontario
Canada N6G 4G2
(519) 619-4370
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Michel Atlidakis, President
28 Banting Crescent
London, Ontario
Canada N6G 4G2
(519) 619-4370
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
William T. Hart
Hart & Hart, LLC
1624 Washington St.
Denver, CO 80203
As soon as practicable after the effective date of this Registration Statement
Approximate date of commencement of proposed sale to the public:
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer", and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer", and "smaller reporting company" in
Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company) Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided by Section 7(a)(2)(B) of the
Securities Act. [X]
CALCULATION OF REGISTRATION FEE
-------------------------------------------------------------------------------
Title of Each Proposed Proposed
Class of Amount Maximum Maximum
Security Being Being Offering Price Aggregate Amount of
Registered Registered per Share (1) Offering Price Registration Fee
-------------------------------------------------------------------------------
Common Stock 3,000,000 $ 0.05 $150,000 $18
(1) Offering price computed in accordance with Rule 457.
Pursuant to Rule 416, this Registration Statement includes such indeterminate
number of additional securities as may be required for issuance as a result of
any stock dividends, stock splits or similar transactions.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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PROSPECTUS
THE DIAMOND CARTEL, INC.
We are offering up to 3,000,000 shares of our common stock to the owners
of one or more business that we may acquire. Until a pubic market develops for
our common stock, the shares we are offering will be valued at $0.05 per share
for the purpose of any acquisition. If and when a public market develops for our
common stock, the shares we are offering, assuming we have not completed an
acquisition by that time, will be valued at a discount to the trading price of
our common stock. The discount will be determined by our board of directors. As
of the date of this prospectus we had not identified any business that we may
attempt to acquire.
As of the date of this prospectus there was no public market for our
common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
These securities are speculative and involve a high degree of risk. For a
description of certain important factors that should be considered by
prospective investors, see "risk factors" beginning on page 6 of this
prospectus.
The date of this prospectus is January __, 2018.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
DESCRIPTIVE INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE
INVESTORS SHOULD CAREFULLY READ THE ENTIRE PROSPECTUS AND SHOULD CONSIDER, AMONG
OTHER FACTORS, THE MATTERS SET FORTH UNDER THE "RISK FACTORS."
Implications of Being an Emerging Growth Company
We qualify as an emerging growth company as that term is used in the JOBS
Act. An emerging growth company may take advantage of specified reduced
reporting and other burdens that are otherwise applicable generally to public
companies. These provisions include:
o a requirement to have only two years of audited financial statements
and only two years of related MD & A;
o reduced disclosure concerning executive compensation arrangements;
o exemption from the auditor attestation requirement in the assessment
of the emerging growth company's internal control over financial
reporting under Section 404 of the Sarbanes-Oxely Act of 2002; and
o No non-binding advisory votes on executive compensation or golden
parachute arrangements.
We have taken advantage of some of these exemptions in this prospectus,
which are also available to us as a smaller reporting company as defined under
Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
In addition, Section 107 of the JOBS act also provides that an emerging
growth company can take advantage of the extended transition period provided in
Section 7(a)(2)(b) of the Securities Act of 1933, as amended (the "Securities
Act") for complying with new or revised accounting standards. We are choosing to
"opt out" of such extended transition period, and as a result, we will comply
with new or revised accounting standards on the relevant dates on which adoption
of such standards is required for non-emerging growth companies. Section 107 of
the JOBS Act provides that our decision to opt out of the extended transition
period for complying with new or revised accounting standards is irrevocable.
We could remain an emerging growth company for up to five years, or until
the earliest of (i) the last day of the first fiscal year in which annual gross
revenue exceeds $1 billion, (ii) the date that we become a "large accelerated
filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the
market value of our common stock that is held by non-affiliates exceeds $700
million as of the last business day of our most recently completed second fiscal
quarter, or (iii) the date on which we have issued more than $1 billion in
non-convertible debt during the preceding three year period.
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General
We are a Blank Check Company formed in Delaware on August 17, 2005, with
plans for effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more
businesses, which we refer to throughout this prospectus as a business
combination. We have not identified any business combination target and we have
not, nor has anyone on our behalf, initiated any substantive discussions,
directly or indirectly, with any business combination target.
The Offering
By means of this prospectus we are offering up to 3,000,000 shares of our
common stock to the owners of one or more business that we may acquire. As of
the date of this prospectus we had not identified any business that we may
attempt to acquire.
The acquisition of the securities offered by this prospectus involves a
high degree of risk. Risk factors include the lack of any relevant operating
history, losses since we were incorporated, the possible need for us to sell
shares of our common stock to raise capital and our auditors, in their report on
our financial statements for the year ended April 30, 2017 and 2016, expressed
substantial doubt as to our ability to continue in business. See the "Risk
Factors" section of this prospectus below for additional Risk Factors.
As of the date of this prospectus, we had 895,750 outstanding shares of
common stock.
Forward-Looking Statements
This prospectus contains or incorporates by reference forward-looking
statements, concerning our financial condition, results of operations and
business. These statements include, among others:
o statements concerning the benefits that we expect will result from the
business activities that we contemplate; and
o statements of our expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical
facts.
You can find many of these statements by looking for words such as
"believes", "expects", "anticipates", "estimates" or similar expressions used in
this prospectus.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties that may cause our actual results to be materially different
from any future results expressed or implied in those statements. Because the
statements are subject to risks and uncertainties, actual results may differ
materially from those expressed or implied. We caution you not to put undue
reliance on these statements, which speak only as of the date of this
prospectus.
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To the extent, the information contained in this prospectus, changes in
any material respect, we will amend this prospectus.
RISK FACTORS
This section discloses all material risks known to us. We do not make, nor
have we authorized any other person to make, any representation about the future
market value of our common stock. In addition to the other information contained
in this registration statement, the following factors should be considered
carefully in evaluating an investment in our securities. If any of the risks
discussed below materialize, our current and intended business could fail and
our common stock could decline in value or become worthless.
We are an emerging growth company with no operating history and no revenues, and
you have no basis on which to evaluate our ability to achieve our business
objective.
We are a development stage company with no operating results, and we will
not commence operations until we complete a business combination. Because we
lack an operating history, you have no basis upon which to evaluate our ability
to achieve our business objective of completing our initial business combination
with one or more target businesses. We have no plans, arrangements or
understandings with any prospective target business concerning a business
combination and may be unable to complete our business combination. If we fail
to complete our business combination, we will never generate any operating
revenues.
Our stockholders may not be afforded an opportunity to vote on any proposed
business combination, which means we may complete a business combination even
though a majority of our stockholders do not support such a combination.
We may not hold a stockholder vote before we complete a business
combination unless the business combination would require stockholder approval
under applicable law or if we decide to hold a stockholder vote for business or
other legal reasons. Accordingly, we may complete a business combination even if
a majority of our shareholders do not approve of the business combination.
Because we are not limited to a particular industry sector or any specific
target businesses with which to pursue our initial business combination, you
will be unable to ascertain the merits or risks of any particular target
business' operations.
We will seek to complete a business combination with an operating company.
Because we have not yet identified or approached any specific target business
with respect to a business combination, there is no basis to evaluate the
possible merits or risks of any particular target business's operations, results
of operations, cash flows, liquidity, financial condition or prospects. To the
extent we complete our business combination, we may be affected by numerous
risks inherent in the business operations with which we combine. For example, if
we combine with a financially unstable business or an entity lacking an
established record of sales or earnings, we may be affected by the risks
inherent in the business and operations of a financially unstable or a
development stage entity. Although management will endeavor to evaluate the
risks inherent in a particular target business, we cannot assure you that we
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will properly ascertain or assess all of the significant risk factors or that we
will have adequate time to complete due diligence. Furthermore, some of these
risks may be outside of our control and leave us with no ability to control or
reduce the chances that those risks will adversely impact a target business. We
also cannot assure you that an investment in our common stock will ultimately
prove to be profitable.
Although we identified general criteria and guidelines that we believe are
important in evaluating prospective target businesses, we may enter into our
initial business combination with a target that does not meet such criteria and
guidelines, and as a result, the target business with which we enter into our
initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although we have identified general criteria and guidelines for evaluating
prospective target businesses, it is possible that a target business with which
we enter into a business combination will not have all of these positive
attributes. If we complete a business combination with a target that does not
meet some or all of these guidelines, such combination may not be as successful
as a combination with a business that does meet all of our general criteria and
guidelines. In addition, if stockholder approval of the transaction is required
by law, or we decide to obtain stockholder approval for business or other legal
reasons, it may be more difficult for us to attain stockholder approval of our
initial business combination if the target business does not meet our general
criteria and guidelines.
We may seek investment opportunities with a financially unstable business or an
entity lacking an established record of sales or earnings.
To the extent we complete a business combination with a financially
unstable business or an entity lacking an established record of sales or
earnings, we may be affected by numerous risks inherent in the operations of the
business with which we combine. These risks include volatile revenues or
earnings and difficulties in obtaining and retaining key personnel. Although
management will endeavor to evaluate the risks inherent in a particular target
business, we may not be able to properly ascertain or assess all of the
significant risk factors and we may not have adequate time to complete due
diligence. Furthermore, some of these risks may be outside of our control and
leave us with no ability to control or reduce the chances that those risks will
adversely impact a target business.
We may have a limited ability to assess the management of a prospective target
business and, as a result, we may complete conducting a business combination
with a target business whose management may not have the skills, qualifications
or abilities to manage a public company.
When evaluating the desirability of conducting a business combination with
a prospective target business, our ability to assess the target business'
management may be limited due to a lack of time, resources or information. Our
assessment of the capabilities of the target's management, therefore, may prove
to be incorrect and such management may lack the skills, qualifications or
abilities we suspected. Should the target's management not possess the skills,
qualifications or abilities necessary to manage a public company, the operations
and profitability of the post-combination business may be negatively impacted.
7
Accordingly, any stockholders who choose to remain stockholders following the
business combination could suffer a reduction in the value of their shares. Such
stockholders are unlikely to have a remedy for such reduction in value unless
they are able to successfully claim that the reduction was due to the breach by
our officers or directors of a duty of care or other fiduciary duty owed to
them, or if they are able to successfully bring a private claim under securities
laws that the tender offer materials or proxy statement relating to the business
combination contained an actionable material misstatement or material omission.
The officers and directors of an acquisition candidate may resign upon
completion of a business combination. The loss of a business combination
target's key personnel could negatively impact the operations and profitability
of our post-combination business.
The role of an acquisition candidate's key personnel upon the completion
of a business combination cannot be ascertained at this time. Although we
contemplate that certain members of an acquisition candidate's management team
will remain associated with the acquisition candidate following a business
combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place.
We may attempt to complete a business combination with a private company about
which little information is available, which may result in a business
combination with a company that is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek to complete a business
combination with a privately held company. By definition, very little public
information exists about private companies, and we could be required to make our
decision on whether to pursue a potential initial business combination on the
basis of limited information, which may result in a business combination with a
company that is not as profitable as we suspected, if at all.
We may never be profitable.
Since we recently adopted a new business plan, it is difficult for
potential investors to evaluate our business. We will need to raise additional
capital in order to fund our operations. There can be no assurance that we will
be profitable or that our shares will have any value.
There is substantial doubt about our ability to continue as a going
concern. Our financial statements have been prepared on a going concern basis,
which assumes that we will be able to realize our assets and discharge our
liabilities in the normal course of business for the foreseeable future. We
incurred an accumulated deficit as of October 31, 2017 of $(486,570), and
further losses are anticipated in the development of our business.
Our ability to continue as a going concern is dependent upon our becoming
profitable in the future and/or obtaining the necessary financing to meet our
obligations and repay our liabilities arising from normal business operations
when they come due. There is no guarantee that we will be successful in
achieving these objectives.
Since our officers plan to devote only a portion of their time to our
business, our chances of being profitable will be less than if we had full time
8
management. As of the date of this prospectus we had one officer. This officer
is employed at other companies and his other responsibilities could take
precedence over his duties to us.
Disclosure requirements pertaining to penny stocks may reduce the level of
trading activity in the market for our common stock and investors may find it
difficult to sell their shares.
Trading of our common stock will be subject to Rule 15g-9 of the
Securities and Exchange Commission, which rule imposes certain requirements on
broker/dealers who sell securities subject to the rule to persons other than
established customers and "accredited investors." For transactions covered by
the rule, brokers/dealers must make a special suitability determination for
purchasers of the securities and receive the purchaser's written agreement to
the transaction prior to sale. The Securities and Exchange Commission also has
rules that regulate broker/dealer practices in connection with transactions in
"penny stocks". Penny stocks generally are equity securities with a price of
less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in that security is provided by the
exchange or system). The penny stock rules require a broker/dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Securities and Exchange
Commission that provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker/dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker/dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker/dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation.
There is currently no market for our securities and a market for our securities
may not develop, which would adversely affect the liquidity and price of our
securities.
There is currently no market for our securities. Stockholders therefore
have no access to information about prior market history on which to base their
investment decision. Following this offering, the price of our securities may
vary significantly due to one or more potential business combinations and
general market or economic conditions. Furthermore, an active trading market for
our securities may never develop or, if developed, it may not be sustained. You
may be unable to sell your securities unless a market can be established and
sustained.
We are an "emerging growth company," subject to less stringent reporting and
regulatory requirements of other publicly-held companies, and this status may
have an adverse effect on our ability to attract interest in our common stock.
We are an "emerging growth company" as defined in the Jumpstart Our
Business Startups Act of 2012, or "JOBS Act." As long as we remain an "emerging
growth company," we may take advantage of certain exemptions from various
reporting and regulatory requirements that are applicable to other public
companies that are not an "emerging growth company." We cannot predict if
investors will find our common stock less attractive if we choose to rely on
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these exemptions. If some investors find our common stock less attractive as a
result of any choices to reduce future disclosure, there may be a less active
trading market for our common stock and our stock price may be more volatile.
MARKET FOR OUR COMMON STOCK
There is no current public market for our common stock.
Approximately 256,000 shares of our common stock have satisfied the resale
requirements of Securities and Exchange Commission Rule 144.
Holders of our common stock are entitled to receive dividends as may be
declared by the Board of Directors. Our Board of Directors is not restricted
from paying any dividends but is not obligated to declare a dividend. No cash
dividends have ever been declared and it is not anticipated that cash dividends
will ever be paid. We currently intends to retain any future earnings to finance
future growth. Any future determination to pay dividends will be at the
discretion of our directors and will depend on our financial condition, results
of operations, capital requirements and other factors the board of directors
considers relevant.
Our Certificate of Incorporation authorizes the Board of Directors to
issue up to 1,000,000 shares of preferred stock. The provisions in the Articles
of Incorporation relating to the preferred stock allow directors to issue
preferred stock with multiple votes per share and dividend rights, which would
have priority over any dividends paid with respect to the holders of common
stock. The issuance of preferred stock with these rights may make the removal of
management difficult even if the removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if these
transactions are not favored by management.
As of January 31, 2018, we had approximately 40 shareholders of record and
895,750 outstanding shares of common stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are currently a Blank Check Company incorporated on August 17, 2005 as
a Delaware corporation. We plan to effect a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. We have not identified any business
combination target and we have not, nor has anyone on our behalf, initiated any
substantive discussions directly or indirectly, with respect to identifying any
business combination target. We intend to effectuate a business combination.
The issuance of additional shares of our stock in a business combination:
o may significantly dilute the equity interest of investors in this
offering;
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o may subordinate the rights of holders of common stock if preferred
stock is issued with rights senior to those afforded our common stock;
o could cause a change in control if a substantial number of shares of
our common stock is issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and
could result in the resignation or removal of our present officers and
directors;
o may have the effect of delaying or preventing a change of control of
us by diluting the stock ownership or voting rights or a person
seeking to obtain control of us; and
o may adversely affect prevailing market prices for our common stock.
Similarly, if we issue debt securities, it could result in:
o default and foreclosure on our assets if our operating revenues after
an business combination are insufficient to repay our debt
obligations;
o acceleration of our obligations to repay the indebtedness even if we
make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or
reserves without a waiver or renegotiation of that covenant;
o our immediate payment of all principal and accrued interest, if any,
if the debt security is payable on demand;
o our inability to obtain necessary additional financing if the debt
security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding;
o our inability to pay dividends on our common stock;
o using a substantial portion of our cash flow to pay principal and
interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, expenses, capital
expenditures, acquisitions and other general corporate purposes;
o limitations on our flexibility in planning for and reacting to changes
in our business and in the industry in which we operate;
o increased vulnerability to adverse changes in general economic,
industry and competitive conditions and adverse changes in government
regulation; and
o limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements,
execution of our strategy and other purposes and other disadvantages
compared to our competitors who have less debt.
As indicated in the accompanying financial statements, at October 31, 2017
we had no cash and liabilities of $32,576. Further, we expect to continue to
incur significant costs in the pursuit of our acquisition plans. We cannot
assure you that our plans to complete our business combination will be
successful.
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Until we complete an acquisition, we may seek to raise additional funds
through a private offering of debt or equity to fund our operations, including
the costs associated with being a public company. We are not a party to any
arrangement or understanding with any third party with respect to raising any
additional capital.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to
date. Our only activities since inception have been organizational activities
and those necessary to prepare for this offering. Following this offering, we
will not generate any operating revenues until after completion of our business
combination. There has been no significant change in our financial or trading
position and no material adverse change has occurred since the date of our
audited financial statements. After this offering, we expect to incur increased
expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses. We
expect our expenses to increase substantially after the closing of this
offering.
Results of Operations for the year ended April 30, 2017
For the year ended April 30, 2017, we reported a net loss of $23,275, as
compared to $1,434 for the year ended April 30, 2016. The change in net loss
between the years ended April 30, 2017 and 2016 was primarily attributable to
the increase in general and administrative expense for the year ended April 30,
2017 due to an increase in professional fees associated with the Company's
Registration Statement on Form S-1.
Revenue and Operating Expenses
Year Ended
--------------------------------------------------------------------------------
April 30, 2017 April 30, 2016
--------------------------------------------------------------------------------
Revenue $ - $ -
------------------------------------------------------------------------------
Operating Expense 23,275 1,434
------------------------------------------------------------------------------
Net Loss $ (23,275) $ (1,434)
------------------------------------------------------------------------------
Operating Expenses - Operating expenses for the year ended April 30, 2017,
was $23,275 as compared to $1,434 for the year ended April 30, 2016. The
increase is primarily attributable to the increase in professional fees
associated with the Company's Registration Statement on Form S-1.
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Liquidity and Capital Resources
Working Capital
--------------------------------------------------------------------------------
April 30, 2017 April 30, 2016
--------------------------------------------------------------------------------
Current Assets $ - $ -
------------------------------------------------------------------------------
Current Liabilities $ 28,197 $ 4,922
------------------------------------------------------------------------------
Working Capital Deficiency $ (28,197) $ (4,922)
------------------------------------------------------------------------------
Liquidity is a measure of our ability to meet potential cash requirements,
fund our operations and other general business needs. Our liquidity, to a
certain extent, is subject to general economic, financial, competitive and other
factors that are beyond our control.
We have financed our operations to date through the funding by related
party loans. We believe our current available cash may be insufficient to meet
our cash needs for the near future if we do not receive additional funding. It
could be necessary to source liquidity from other financing alternatives should
any such scenario arise. There can be no assurance that financing will be
available in amounts or terms acceptable to us, if at all.
Claims against working capital include accounts payable and accrued
expenses and amounts due to related party. The Company had working capital
deficiency of $28,197 and $4,922, respectively, as of April 30, 2017 and 2016.
Cash Flow Information
Net cash used in operating activities for the year ended April 30, 2017
and 2016 was $13,099 and $-0-, respectively. The increase in cash used in
operating activities was primarily related to the costs associated with filing
our registration statement on Form S-1. We did not have any net cash activity
associated with investing activities for the years ended April 30, 2017 and
2016.
Net cash provided by financing activities for the year ended April 30,
2017 and 2016 was $13,099 and $-0-, respectively. The increase in cash provided
by financing activities was primarily related to the loan proceeds from related
party.
Results of Operations for the six months ended October 31, 2017
For the six months ended October 31, 2017, we reported a net loss of
$4,157, as compared to $15,842 for the six months ended October 31, 2016. The
change in net loss between the six months periods ended October 31, 2017 and
2016 was primarily attributable to the decrease in general and administrative
expense for the six months ended October 31, 2017 due to a decrease in
professional fees associated with the Company's Registration statement on Form
S-1.
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Revenue and Operating Expenses
Six Months Ended
--------------------------------------------------------------------------------
October 31, 2017 October 31, 2016
--------------------------------------------------------------------------------
Revenue $ - $ -
--------------------------------------------------------------------------------
Operating Expense $ 4,157 15,842
--------------------------------------------------------------------------------
Net Loss $ (4,157) $ (15,842)
--------------------------------------------------------------------------------
Operating Expenses - Operating expenses for the six months ended October
31, 2017, was $4,157 as compared to $15,842 for the six months ended October 31,
2016. The decrease is primarily attributable to the decrease in general and
administrative expense associated with the Company's Registration Statement on
Form S-1.
Liquidity and Capital Resources
Working Capital
--------------------------------------------------------------------------------
October 31, 2017 April 30, 2017
--------------------------------------------------------------------------------
Current Assets $ 222 $ -
--------------------------------------------------------------------------------
Current Liabilities $ 32,576 $ 28,197
--------------------------------------------------------------------------------
Working Capital Deficiency $ (32,354) $ (28,197)
--------------------------------------------------------------------------------
Liquidity is a measure of our ability to meet potential cash requirements,
fund our operations and other general business needs. Our liquidity, to a
certain extent, is subject to general economic, financial, competitive and other
factors that are beyond our control.
We have financed our operations to date through the funding by related
party loans. We believe our current available cash may be insufficient to meet
our cash needs for the near future if we do not receive additional funding. It
could be necessary to source liquidity from other financing alternatives should
any such scenario arise. There can be no assurance that financing will be
available in amounts or terms acceptable to us, if at all.
Claims against working capital include accounts payable and accrued
expenses and amounts due to related party. The Company had working capital
deficiency of $32,354 and $28,197 as of October 31, 2017 and April 30, 2017.
Cash Flow Information
Net cash used in operating activities for the six months ended October 31,
2017 and 2016 was $10,395 and $13,119, respectively. The decrease in cash used
in operating activities was primarily related to the decrease in costs
associated with filing our registration statement on Form S-1. We did not have
any net cash activity associated with investing activities for the nine ended
April 30, 2017 and 2016.
14
Net cash provided by financing activities for the six months ended October
31, 2017 and 2016 was $10,395 and $13,119, respectively. The decrease in cash
provided by financing activities was primarily related to a decrease in the loan
proceeds from related party.
Controls and Procedures
We are not currently required to maintain an effective system of internal
controls as defined by Section 404 of the Sarbanes-Oxley Act. We may be required
to comply with the internal control requirements of the Sarbanes-Oxley Act for
the fiscal year ending April 30, 2018. Only in the event that we are deemed to
be a large accelerated filer or an accelerated filer would we be required to
comply with the independent registered public accounting firm attestation
requirement. Further, for as long as we remain an emerging growth company as
defined in the JOBS Act, we intend to take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies
that are not emerging growth companies including, but not limited to, not being
required to comply with the independent registered public accounting firm
attestation requirement.
Related Party Transactions
In September, 2005 we acquired all of the outstanding shares of the
Diamond Cartel Inc. (Canada), an Ontario, Canada corporation, for 187,500 shares
of our common stock. At the time of this acquisition, the assets of Diamond
(Canada) consisted of the concept for the Diamond Cartel's business plan and the
software which was to be used by the Diamond Cartel for its website and internal
operations. Michel Atlidakis is the sole officer and director of the Diamond
Cartel Inc. (Canada). In connection with this acquisition Mr. Atlidakis, our
officer and director, received 154,725 shares of the Diamond Cartel's common
stock.
On June 25, 2007 Mr. Atlidakis purchased 464,175 shares of our Series A
preferred stock. On October 15, 2010 Mr. Atlidakis converted these Series A
preferred shares into 344,175 shares of our common stock.
As of January 31, 2018 we owed Mr. Atlidakis $28,416 for expenses incurred
on our behalf. The amount we owe Mr. Atlidakis is non-interest bearing,
unsecured, and due on demand.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of the date of this prospectus, we did not have any off-balance sheet
arrangements and did not have any commitments or contractual obligations.
Critical Accounting Policies and New Accounting Pronouncements
See Note 3 to the audited financial statements included as part of this
prospectus, for a description of the Company's critical accounting policies and
the potential impact of the adoption of any new accounting pronouncements.
CHANGES IN CERTIFYING ACCOUNTANT
On December 17, 2017 we dismissed MaloneBailey, LLP as our independent
registered accounting firm. None of the reports of MaloneBailey on our financial
15
statements contained an adverse opinion or disclaimer of opinion, or were
qualified or modified as to uncertainty, audit scope or accounting principles,
except for a going concern paragraph in MaloneBailey's reports on our financial
statements as of and for the years ended April 30, 2016 and 2015.
During our two most recent fiscal years and the interim period preceding
the date of termination, there were no disagreements with MaloneBailey on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreement(s), if not resolved to
MaloneBailey's satisfaction, would have caused them to refer to the subject
matter of the disagreement(s) in connection with their reports.
On December 17, 2017, we engaged Paritz & Company, P.A. as our independent
registered public accounting firm. During the two most recent years, and the
subsequent interim period through the date of engagement, neither we, nor anyone
engaged on our behalf, consulted with Paritz & Company regarding either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
our financial statements.
The change in our independent accountants was approved by our Directors.
PROPOSED BUSINESS
Introduction
We are currently a Blank Check Company incorporated on August 17, 2005 as
a Delaware Corporation. We plan to acquire a privately held company using shares
of our common stock. We have not identified any business combination target and
we have not, nor has anyone on our behalf, initiated any substantive
discussions, directly or indirectly, with respect to identifying any business
combination target.
Business Strategy
We intend to pursue an acquisition opportunity in any business industry or
sector. However, we believe the following general criteria and guidelines are
important in evaluating prospective target businesses, but we may decide to
enter into a business combination with a target business that does not meet
these criteria and guidelines.
o High-Growth Markets. We will seek out opportunities in faster-growing
segments of developed markets and emerging international markets. Our
management has extensive experience operating media businesses and
leading transactions in international markets.
o Business with Revenue and Earnings Growth Potential. We will seek to
acquire one or more businesses that have multiple, diverse potential
drivers of revenue and earnings growth, including but not limited to a
combination of development, production, digital and distribution
capabilities and balance sheet management. We will focus on assets
that currently are undervalued or sub-optimally managed, including
those undergoing debt or operational restructuring, where our
management is well-positioned to unlock their value.
16
o Companies with Potential for Strong Free Cash Flow Generation. We will
seek to acquire one or more businesses that have the potential to
generate strong and stable free cash flow.
We anticipate structuring our business combination so that the
post-transaction company in which our public stockholders own shares will own or
acquire 100% of the equity interests or assets of the target business or
businesses. We may, however, structure our business combination such that the
post-transaction company owns or acquires less than 100% of such interests or
assets of the target business in order to meet certain objectives of the target
management team or shareholders or for other reasons, but we will only complete
such business combination if the post-transaction company owns or acquires 50%
or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to
register as an investment company under the Investment Company Act of 1940, as
amended, or the Investment Company Act. Even if the post-transaction company
owns or acquires 50% or more of the voting securities of the target, our
stockholders prior to the business combination may collectively own a minority
interest in the post-transaction company, depending on valuations ascribed to
the target and us in the business combination transaction. For example, we could
pursue a transaction in which we issue a substantial number of new shares in
exchange for all of the outstanding capital stock of a target. In this case, we
would acquire a 100% controlling interest in the target. However, as a result of
the issuance of a substantial number of new shares, our stockholders immediately
prior to our business combination could own less than a majority of our
outstanding shares subsequent to our business combination.
We plan to acquire another entity solely with shares of our common stock.
In this offering, we are not raising any capital and none of our shareholders
are selling their shares. At some point in time, after the effective date of our
registration statement, of which this prospectus is a part, we will identify a
business we want to acquire and will begin to negotiate the terms of the
potential acquisition. Once the terms have been agreed upon, we will sign an
agreement with the shareholders of the target entity reflecting the terms of the
acquisition.
Once we enter into an agreement to acquire the target entity, we will file
an 8-K report under Item 1.01 of Form 8-K, which will contain all the
information required by Rule 144(i)(2), as well as the number of shares we
propose to issue in connection with the acquisition and the method we used to
determine the value of the target entity. We will also file a post-effective
amendment to our registration statement disclosing the same information in the
8-K report, plus any other information required by the instructions to Form S-1
and Regulation S-X.
The agreement with the shareholders of the target entity will provide,
among other things, that our offer to exchange shares of our common stock for
shares of the target entity is subject to:
o The shareholder's receipt of the post-effective amendment;
o The shareholders of the target entity owning a certain percentage of
the outstanding shares of the target entity affirming the exchange of
their shares for the shares of our common stock. The percentage
required for affirmation will be negotiated between us and the target
entity.
17
The agreement with the shareholders of the target entity will be with each
shareholder. No merger will be involved and it is not expected the target entity
will not call a meeting of its shareholders to approve the terms of the
agreement.
The acquisition of the target entity will be approved by our board of
directors. We will not call a meeting of our shareholders to approve the
acquisition of the target entity. Our shareholders will not be entitled to
dissenters' rights in connection with the acquisition of the target entity.
Once we complete the acquisition of the target entity, we will file an 8-K
report under Item 2.01 of Form 8-K.
We will not issue any shares of our common stock until the shareholders of
the target entity, owning the minimum number of shares required by our agreement
with the target entity, have accepted our offer with respect to the exchange of
their shares for shares of our common stock.
We will determine the value of any business we acquire based upon:
o the value of the assets less the liabilities of the business;
o the anticipated earnings of the business, or
o a combination of the foregoing.
Status as a public company
We believe our structure will make us an attractive business combination
partner to target businesses. As a public company, we offer a target business an
alternative to the traditional initial public offering through a merger or other
business combination. In this situation, the owners of the target business would
exchange their shares of stock in the target business for shares of our stock or
for a combination of shares of our stock and cash, allowing us to tailor the
consideration to the specific needs of the sellers. Although there are various
costs and obligations associated with being a public company, we believe target
businesses will find this method a more certain and cost effective method to
becoming a public company than the typical initial public offering. In a typical
initial public offering, there are additional expenses incurred in marketing,
road show and public reporting efforts that may not be present to the same
extent in connection with a business combination with us.
Furthermore, once a proposed business combination is completed, the target
business will have effectively become public, whereas an initial public offering
is always subject to the underwriters' ability to complete the offering, as well
as general market conditions, which could prevent the offering from occurring.
Once public, we believe the target business would then have greater access to
capital and an additional means of providing management incentives consistent
with stockholders' interests. It can offer further benefits by augmenting a
company's profile among potential new customers and vendors and aid in
attracting talented employees.
18
We may seek to complete our initial business combination with a company or
business that may be financially unstable or in its early stages of development
or growth, which would subject us to the numerous risks inherent in such
companies and businesses.
We have not identified any business combination target and we have not,
nor has anyone on our behalf, initiated any substantive discussions with respect
to identifying any business combination target. From the date of this
prospectus, there have been no communications or discussions between any of our
officers or directors and any of their potential contacts or relationships
regarding a potential business combination. Additionally, we have not engaged or
retained any agent or other representative to identify or locate any suitable
acquisition candidate, to conduct any research or take any measures, directly or
indirectly, to locate or contact a target business. Accordingly, there is no
current basis for investors in this offering to evaluate the possible merits or
risks of the target business with which we may ultimately complete our business
combination. Although our management will assess the risks inherent in a
particular target business with which we may combine, we cannot assure you that
this assessment will result in our identifying all risks that a target business
may encounter. Furthermore, some of those risks may be outside of our control,
meaning that we can do nothing to control or reduce the chances that those risks
will adversely impact a target business.
We may seek to raise additional funds through a private offering of debt
or equity securities in connection with the completion of a business
combination. There are no prohibitions on our ability to raise funds privately
or through loans in connection with our business combination. At this time, we
are not a party to any arrangement or understanding with any third party with
respect to raising any additional funds through the sale of securities or
otherwise.
Sources of target businesses
We anticipate that target business candidates will be brought to our
attention from various unaffiliated sources, including investment bankers,
private investment funds. Target businesses may be brought to our attention by
such unaffiliated sources as a result of being solicited by us through calls or
mailings. These sources may also introduce us to target businesses in which they
think we may be interested on an unsolicited basis, since many of these sources
will have read this prospectus and know what types of businesses we are
targeting. Our officers and directors, as well as their affiliates, may also
bring to our attention target business candidates that they become aware of
through their business contacts as a result of formal or informal inquiries.
While we do not presently anticipate engaging the services of professional firms
or other individuals that specialize in business acquisitions on any formal
basis, we may engage these firms or other individuals in the future, in which
event we may pay a finder's fee, consulting fee or other compensation to be
determined in an arm's length negotiation based on the terms of the transaction.
We will engage a finder only to the extent our management determines that the
use of a finder may bring opportunities to us that may not otherwise be
available to us or if finders approach us on an unsolicited basis with a
potential transaction that our management determines is in our best interest to
pursue. Payment of finder's fees is customarily tied to completion of a
transaction, in which case any such fee will be paid out of the funds held in
the trust account. In no event, however, will our sponsor or any of our existing
officers or directors, or any entity with which they are affiliated, be paid any
finder's fee, consulting fee or other compensation prior to, or for any services
they render in order to effectuate, the completion of our business combination
19
(regardless of the type of transaction that it is). None of our sponsor,
executive officers or directors, or any of their respective affiliates, will be
allowed to receive any compensation, finder's fees or consulting fees from a
prospective business combination target in connection with a contemplated
acquisition of such target by us. Although some of our officers and directors
may enter into employment or consulting agreements with the post-transaction
company following our business combination, the presence or absence of any such
arrangements will not be used as a criterion in our selection process of an
acquisition candidate.
We are not prohibited from pursuing a business combination with a business
combination target that is affiliated with our officers or directors, or making
the acquisition through a joint venture or other form of shared ownership with
our officers or directors. In the event we seek to complete our business
combination with a business combination target that is affiliated with our
executive officers or directors, we, or a committee of independent directors,
would obtain an opinion from an independent investment banking firm which is a
member of FINRA, that such an business combination is fair to our company from a
financial point of view. We are not required to obtain such an opinion in any
other context.
In evaluating a prospective target business, we expect to conduct an
extensive due diligence review which will encompass, among other things,
meetings with incumbent management and employees, document reviews, interviews
of customers and suppliers, inspection of facilities, as well as a review of
financial and other information which will be made available to us.
Michel Atlidakis, our sole officer and director, does not have any
experience with transactions involving blank check companies.
The time required to select and evaluate a target business and to structure
and complete our business combination, and the costs associated with this
process, are not currently ascertainable with any degree of certainty. Any costs
incurred with respect to the identification and evaluation of a prospective
target business with which our business combination is not ultimately completed
will result in our incurring losses and will reduce the funds we can use to
complete another business combination. We will not pay any finders or consulting
fees to members of our management team, or any of their respective affiliates,
for services rendered to or in connection with our business combination.
Limited ability to evaluate the target's management team
Although we intend to closely scrutinize the management of a prospective
target business when evaluating the desirability of effecting our business
combination with that business, our assessment of the target business'
management may not prove to be correct. In addition, the future management may
not have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of members of our management team, if any,
in the target business cannot presently be stated with any certainty. While it
20
is possible that one or more of our directors will remain associated in some
capacity with us following our business combination, it is unlikely that any of
them will devote their full efforts to our affairs subsequent to our business
combination. Moreover, we cannot assure you that members of our management team
will have significant experience or knowledge relating to the operations of the
particular target business.
We cannot assure you that any of our key personnel will remain in senior
management or advisory positions with the combined company. The determination as
to whether any of our key personnel will remain with the combined company will
be made at the time of our business combination.
Following a business combination, we may seek to recruit additional
managers to supplement the incumbent management of the target business. We
cannot assure you that we will have the ability to recruit additional managers,
or that additional managers will have the requisite skills, knowledge or
experience necessary to enhance the incumbent management.
Competition
In identifying, evaluating and selecting a target business for our business
combination, we may encounter intense competition from other entities having a
business objective similar to ours, including other blank check companies,
private equity groups and leveraged buyout funds, and operating businesses
seeking strategic acquisitions. Many of these entities are well established and
have extensive experience identifying and effecting business combinations
directly or through affiliates. Moreover, many of these competitors possess
greater financial, technical, human and other resources than us. Our ability to
acquire larger target businesses will be limited by our available financial
resources. This inherent limitation gives others an advantage in pursuing the
acquisition of a target business.
Periodic Reporting and Financial Information
Following the date of this prospectus, we will have reporting obligations,
including the requirement that we file annual, quarterly and current reports
with the SEC. In accordance with the requirements of the Exchange Act, our
annual reports will contain financial statements audited and reported on by our
independent registered public accountants.
We will provide stockholders with audited financial statements of the
prospective target business as part of the proxy solicitation materials sent to
stockholders to assist them in assessing the target business. In all likelihood,
these financial statements will need to be prepared in accordance with GAAP. We
cannot assure you that any particular target business identified by us as a
potential acquisition candidate will have financial statements prepared in
accordance with GAAP or that the potential target business will be able to
prepare its financial statements in accordance with GAAP. To the extent that
this requirement cannot be met, we may not be able to acquire the proposed
target business. While this may limit the pool of potential acquisition
candidates, we do not believe that this limitation will be material.
21
We may be required to evaluate our internal control procedures for the
fiscal year ending April 30, 2018 as required by the Sarbanes-Oxley Act. Only in
the event we are deemed to be a large accelerated filer or an accelerated filer
will we be required to have our internal control procedures audited. A target
company may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development of the internal
controls of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such acquisition.
MANAGEMENT
Name Age Position
Michel Atlidakis 52 Chief Executive, Financial and Accounting
Officer and a Director
The following is a brief summary of the background of our officer and
director including his principal occupation during the five preceding years.
Directors serve until their successors are elected and qualified or until they
are removed.
Mr. Atlidakis has been our officer and director since August 2005. Mr.
Atlidakis has also been a director of Go Beyond Promotions, Inc. since 2014, a
director of Revive Kitchen, Inc. between December 2013 and January 2015 and a
director of Tasty Twists, Inc. between December 2013 and January 2015. Between
January 2009 and December 2013 Mr. Atlidakis was an independent consultant
providing services in the areas of business planning, financing, marketing, and
workforce development. Mr. Atlidakis is our promoter, as that term is defined by
the Securities and Exchange Commission.
We believe that Mr. Atlidakis is qualified to serve as a director due to
his experience with development stage companies.
Our director is not independent as that term is defined in section 803 of
the listing standards of the NYSE MKT. Our director does not qualify as a
financial expert as that term is defined by the Securities and Exchange
Commission. We do not believe a financial expert is necessary since we did not
have any revenues for the year ended April 30, 2017, or the six months ended
October 31, 2017.
We have not adopted a Code of Ethics applicable to our principal
executive, financial, and accounting officers and persons performing similar
functions. We do not believe a Code of Ethics is needed at this time since we
have only one officer.
We do not have a compensation committee. Our director serves as our audit
committee.
Directors are elected to hold office until the next annual meeting of
shareholders and until their successors have been elected and qualified.
Executive officers are elected by the directors and hold office until their
resignation or removal by directors.
22
Executive Compensation
The following table sets forth in summary form the compensation paid to
our officer during the two years ended April 30, 2017.
Stock Option All Other
Name and Salary Bonus Awards Awards Compensation
Principal Position Period (1) (2) (3) (4) (5) Total
------------------ ------ ------ ----- ------ ----- ------------ -------
Michel Atlidakis 2017 -- -- -- -- -- --
Chief Executive, 2016 -- -- -- -- -- --
Financial and
Accounting Officer
We do not have any consulting or employment agreements with any of our
officers or directors. None of the proceeds from this offering will be used to
pay our officers for compensation which is accrued but unpaid as of the date of
this prospectus. As of the date of this prospectus, we have no immediate plans
to pay compensation for past services.
Our board of directors may increase the compensation paid to our officers
depending upon a variety of factors, including the results of our future
operations.
The following table shows the amount which we expect to pay to our
executive officer during the twelve months ending February 28, 2019 and the
amount of time this officer expects to devote to our business.
Percentage of Time
Projected to be Devoted
Name Compensation to Our Operations
---- ------------ ------------------
Michel Atlidakis -- 10%
Stock Options. We have not granted any stock options as of the date of this
prospectus.
In the future, we may grant stock options to our officers, directors, employees
or consultants.
Long-Term Incentive Plans. We do not provide our officers or employees with
pension, stock appreciation rights, long-term incentive or other plans and have
no intention of implementing any of these plans for the foreseeable future.
Employee Pension, Profit Sharing or other Retirement Plans. We do not have a
defined benefit, pension plan, profit sharing or other retirement plan, although
we may adopt one or more of such plans in the future.
Compensation of Directors. Our directors do not receive any compensation
pursuant to any standard arrangement for their services as directors. Although
our bylaws permit us to pay our directors for attending meetings, we do not
compensate our directors for attending meetings.
23
PRINCIPAL SHAREHOLDERS
The following table shows the ownership, as of the date of this prospectus,
of those persons owning beneficially 5% or more of the Company's common stock
and the number and percentage of outstanding shares owned by each of the
Company's directors and officers and by all officers and directors as a group.
Each owner has sole voting and investment power over their shares of common
stock.
Name Shares Owned % of Outstanding Shares
---- ------------ -----------------------
Michel Atlidakis 556,625 62%
All officers and directors 556,625 62%
as a group (1 person)
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 200,000,000 shares of common stock. Holders of
common stock are each entitled to cast one vote for each share held of record on
all matters presented to shareholders. Cumulative voting is not allowed; hence,
the holders of a majority of our outstanding shares of common stock can elect
all directors.
Holders of common stock are entitled to receive such dividends as may be
declared by the Board out of funds legally available and, in the event of
liquidation, to share pro rata in any distribution of our assets after payment
of liabilities. Our directors are not obligated to declare a dividend. It is not
anticipated that dividends will be paid in the foreseeable future.
Holders of common stock do not have pre-emptive rights to subscribe to any
additional shares which may be issued in the future. There are no conversion,
redemption, sinking fund or similar provisions regarding the common stock. All
outstanding shares of common stock are fully paid and non-assessable.
Preferred Stock
We are authorized to issue 1,000,000 shares of preferred stock. Shares of
preferred stock may be issued from time to time in one or more series as may be
determined by the Board of Directors. The voting powers and preferences, the
relative rights of each such series and the qualifications, limitations and
restrictions of each series will be established by the Board of Directors. Our
directors may issue preferred stock with multiple votes per share and dividend
rights which would have priority over any dividends paid with respect to the
holders of our common stock. The issuance of preferred stock with these rights
may make the removal of management difficult even if the removal would be
considered beneficial to shareholders generally, and will have the effect of
limiting shareholder participation in transactions such as mergers or tender
offers if these transactions are not favored by management. As of the date of
this prospectus we had not issued any shares of preferred stock.
24
LEGAL PROCEEDINGS
We are not involved in any legal proceedings and we do not know of any
legal proceedings which are threatened or contemplated.
INDEMNIFICATION
Our Bylaws authorize indemnification of a director, officer, employee or
agent of us against expenses incurred by him in connection with any action,
suit, or proceeding to which he is named a party by reason of his having acted
or served in such capacity, except for liabilities arising from his own
misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent who was found liable for misconduct or
negligence in the performance of his duty may obtain such indemnification if, in
view of all the circumstances in the case, a court of competent jurisdiction
determines such person is fairly and reasonably entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers, or persons controlling us pursuant
to the foregoing provisions, we have been informed that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the securities we are offering by this
prospectus. This prospectus does not contain all of the information included in
the registration statement. For further information about us and our securities,
you should refer to the registration statement and the exhibits and schedules
filed with the registration statement. Whenever we make reference in this
prospectus to any of our contracts, agreements or other documents, the
references are materially complete but may not include a description of all
aspects of such contracts, agreements or other documents, and you should refer
to the exhibits attached to the registration statement for copies of the actual
contract, agreement or other document.
25
The Diamond Cartel Inc.
April 30, 2017 and 2016
Index
Reports of Independent Registered Public Accounting Firm..............F-1, F-2
Balance Sheets.............................................................F-3
Statements of Operations...................................................F-4
Statements of Shareholders' Deficit........................................F-5
Statements of Cash Flows...................................................F-6
Notes to the Financial Statements..........................................F-7
26
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Paritz & Company, P.A. 15 Warren Street, Suite 25
Hackensack, New Jersey 07601
(201)342-7753
Fax: (201) 342-7598
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
The Diamond Cartel, Inc.
London, Ontario, Canada
We have audited the accompanying balance sheet of The Diamond Cartel, Inc. as of
April 30, 2017, and the related statements of operations, stockholders' deficit,
and cash flows for the year then ended. The Company's management is responsible
for these financial statements. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Diamond Cartel, Inc. as of
April 30, 2017, and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has not generated revenues since inception,
has a working capital deficiency of $28,197, and has an accumulated deficit of
$482,413. These factors, among others, raise substantial doubt as to the
Company's ability to continue as a going concern. Management's plans regarding
these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/Paritz & Company, P.A.
Hackensack, NJ
January 31, 2018
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
The Diamond Cartel, Inc.
Wilmington, Delaware
We have audited the accompanying balance sheet of The Diamond Cartel, Inc.,
(the "Company") as of April 30, 2016 and the related statements of operations,
shareholders' deficit, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States of America). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Diamond Cartel, Inc. as
of April 30, 2016, and the results of its operations, and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has recurring losses and has not generated
revenues from its planned principal operations. These factors raise substantial
doubt as to the Company's ability to continue as a going concern. Management's
plans regarding these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ MALONEBAILEY, LLP
www.malonebailey.com
Houston, Texas
February 2, 2017
F-2
The Diamond Cartel Inc.
Balance Sheets
April 30, April 30,
2017 2016
ASSETS
Total Assets $ - $ -
-------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Account payable and accrued liabilities $10,176 -
Due to related party 18,021 4,922
--------------------------------------------------------------------------------
28,197 4,922
--------------------------------------------------------------------------------
Stockholders' Deficit
Preferred Stock, 946,000 shares authorized,
$0.001 par value; no shares issued
and outstanding at April 30, 2016 and 2017 -- --
Preferred stock - Series A, 54,000 shares
authorized, $0.001 par value, 0.48 shares
issued and outstanding at April 30, 2016 and 2017 -- --
Common stock, 200,000,000 shares authorized,
$0.0001 par value; 895,750 shares issued
issued and outstanding at April 30, 2016 and 2017 90 90
Additional paid-in capital 454,126 454,126
Accumulated deficit (482,413) (459,138)
--------------------------------------------------------------------------------
Total Stockholders' Deficit $ (28,197) (4,922)
--------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit $ -- --
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
F-3
The Diamond Cartel Inc.
Statements of Operations
Year Ended Year Ended
April 30, 2017 April 30, 2016
-------------- ---------------
Revenue $ -- $ --
Expenses
General and administrative 23,275 1,434
--------------------------------------------------------------------------------
Net Loss before provision for income tax (23,275) (1,434)
--------------------------------------------------------------------------------
Provision for income tax -- --
Net loss $(23,275) $ (1,434)
========= =========
Net Loss Per Common Share - Basic and
Diluted $ (0.03) $ (0.00)
--------------------------------------------------------------------------------
Weighted Average Number of Common
Shares Outstanding 895,750 895,750
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
F-4
The Diamond Cartel Inc.
Statement of Stockholders' Deficit
Preferred
Stock Preferred Common Common Additional
Stock Stock Stock Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit Total
--------------------------------------------------------------------------------------------------------
Balance - April 30, 2015 0.48 - 895,750 $ 90 $454,126 $(457,704) $(3,488)
Net loss for the year - - - - - (1,434) (1,434)
------------------------------------------------------------------------------------------------------
Balance - April 30, 2016 0.48 - 895,750 90 454,126 (459,138) (4,922)
Net loss for the year - - - - - (23,275) (23,275)
------------------------------------------------------------------------------------------------------
Balance - April 30, 2017 0.48 - 895,750 $ 90 $454,126 $(482,413) $(28,197)
------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
F-5
The Diamond Cartel Inc.
Statements of Cash Flows
Year Ended Year Ended
April 30, 2017 April 30, 2016
-------------- ---------------
Operating Activities
Net loss $(23,275) $(1,434)
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 10,176 --
Due to related party 1,434
--------- -------
Net Cash Used in Operating Activities (13,099) --
--------- -------
Financing Activities:
Proceeds of loan from related party 13,099 --
--------- -------
Net Cash Provided by Financing Activities 13,099 --
--------- -------
Change in Cash -- --
Cash - Beginning of year -- --
--------- -------
Cash - End of year $ -- --
--------- -------
Supplemental Disclosures:
Interest paid -- --
Income taxes paid -- --
--------- -------
The accompanying notes are an integral part of these financial statements
F-6
The Diamond Cartel Inc.
Notes to the Financial Statements
April 30, 2017
1. Nature of Operations
The Diamond Cartel Inc. (the "Company") was incorporated in the State of
Delaware on August 17, 2005. The Company is a newly organized Blank Check
Company which plans to effect a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business with one or
more businesses. The Company has not identified any business combination
target and the Company has not, nor has anyone on its behalf, initiated any
substantive discussions, directly or indirectly, with any business
combination target.
2. Going Concern
These financial statements have been prepared on a going concern basis, which
contemplates the Company will continue to realize its assets and discharge
its liabilities in the normal course of business. The Company has never
generated revenue since inception. At April 30, 2017, the Company has a
working capital deficiency of $28,197 and has accumulated deficit of
$482,413. These factors, among others, raise substantial doubt regarding the
Company's ability to continue as a going concern. These financial statements
do not include any adjustments to the recoverability and classification of
recorded asset amounts and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern. The
continuation of the Company as a going concern is dependent upon the
continued financial support from its stockholders and the ability of the
Company to obtain necessary equity financing to continue operations. The
Company intends to fund its activities through debt and equity financing
arrangements. There is no assurance that the Company will obtain the
necessary financing to complete its objectives.
3. Summary of Significant Accounting Policies
a) Basis of Accounting
The Company's financial statements are prepared in accordance with
accounting principles generally accepted in the United States. The
Company has an April 30 year-end.
b) Use of Estimates
The preparation of financial statements in accordance with United
States generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses in the reporting period. The
Company regularly evaluates estimates and assumptions related to
deferred income tax asset valuations. The Company bases its estimates
and assumptions on current facts, historical experience and various
other factors that it believes to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other
sources. The actual results experienced by the Company may differ
F-7
materially and adversely from the Company's estimates. To the extent
there are material differences between the estimates and the actual
results, future results of operations will be affected.
c) Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid instruments with maturity of three months or less at the
time of issuance to be cash equivalents.
d) Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with
ASC 260, Earnings per Share which requires presentation of both basic
and diluted earnings per share (EPS) on the face of the income
statement. Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average
number of shares outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding
during the period including convertible debt, stock options, and
warrants, using the treasury stock method, and convertible securities,
using the if-converted method. In computing diluted EPS, the average
stock price for the period is used in determining the number of shares
assumed to be purchased from the exercise of stock options or
warrants. Diluted EPS excludes all dilutive potential shares if their
effect is anti-dilutive.
e) Financial Instruments
The Company's financial instruments consist of amounts due to related
party. Pursuant to ASC 820, Fair Value Measurements and Disclosures
and ASC 825, Financial Instruments, the Company believes that the
recorded values of all financial instruments approximate their current
fair values because of their nature and respective maturity dates or
durations.
f) Related Parties
The Company follows ASC 850, Related Party Disclosures, for the
identification of related parties and disclosure of related party
transactions. See Note 4.
g) Comprehensive Loss
ASC 220, Comprehensive Income establishes standards for the reporting
and display of comprehensive loss and its components in the financial
statements. As at April 30, 2017 and 2016, the Company has no items
that represent comprehensive loss and, therefore, has not included a
schedule of comprehensive loss in the financial statements.
F-8
h) Income Taxes
Potential benefits of income tax losses are not recognized in the
accounts until realization is more likely than not. The Company has
adopted ASC 740, Income Taxes as of its inception. Pursuant to ASC
740, the Company is required to compute tax asset benefits for net
operating losses carried forward. The potential benefits of net
operating losses have not been recognized in these financial
statements because the Company cannot be assured it is more likely
than not it will utilize the net operating losses carried forward in
future years. i) Fair value
Accounting standards regarding fair value of financial instruments
define fair value, establish a three-level hierarchy which prioritizes
and defines the types of inputs used to measure fair value, and
establish disclosure requirements for assets and liabilities presented
at fair value on the balance sheets. Fair value is the amount that
would be received from the sale of an asset or paid for the transfer
of a liability in an orderly transaction between market participants.
A liability is quantified at the price it would take to transfer the
liability to a new obligor, not at the amount that would be paid to
settle the liability with the creditor.
The three-level hierarchy is as follows:
o Level 1 inputs consist of unadjusted quoted prices for identical
instruments in active markets.
o Level 2 inputs consist of quoted prices for similar instruments.
o Level 3 valuations are derived from inputs which are significant and
unobservable and have the lowest priority.
Financial assets and liabilities are classified in their entirety based on
the lowest level of input that is significant to the fair value
measurement. The carrying amounts reported in the balance sheet for
amounts due to related party approximate their fair market value based on
the short-term maturity of these instruments.
j) Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are
in effect and that may impact its financial statements and does not
believe that there are any other new accounting pronouncements that
have been issued that might have a material impact on its financial
position or results of operations.
4. Related Party Transactions and Balances
As of April 30, 2017 and 2016, the Company was indebted to the President of
the Company for $18,021 and $4,922, respectively, for expenses incurred on
behalf of the Company. The amount is non-interest bearing, unsecured, and due
on demand.
F-9
5. Income Taxes
The reconciliation of income tax benefit at the U.S. statutory rate of 35%
for the period from inception to April 30, 2017 and 2016 to the company's
effective tax rate is as follows:
2017 2016
---- ----
Tax benefit at U.S. statutory rate $ 8,146 $ 502
Change in valuation allowance (8,146) (502)
The tax effects of temporary differences that give rise to significant
portions of the net deferred tax assets at April 30, 2017 and 2016 are as
follows:
2017 2016
---- ----
Net operating loss: $ 168,845 $ 160,699
Valuation allowance (168,845) (160,699)
--------- ---------
0 0
Change in valuation allowance:
Balance, April 30, 2016 $ (160,699) (160,197)
Increase in valuation allowance (8,146) (502)
---------- --------
Balance, April 30, 2017 $(168,845) $(160,699)
=========== =========
The Company has approximately $482,413 of net operating losses ("NOL")
carried forward to offset taxable income, if any, in future years which
expire in fiscal 2025. In assessing the realization of deferred tax assets,
management considers whether it is more likely than not that some portion or
all of the deferred tax assets will be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies in making this
assessment. Based on the assessment, management has established a full
valuation allowance against all of the deferred tax asset relating to NOLs
for every period because it is more likely than not that all of the deferred
tax asset will not be realized.
6. Subsequent Events
Management has evaluated subsequent events through January 31, 2018, the date
that these financial statements were available to be issued. There have been
no events that would require adjustment to or disclosure in the financial
statements.
F-10
The Diamond Cartel Inc.
October 31, 2017
Index
Balance Sheets............................................................F-12
Statements of Operations..................................................F-13
Statements of Cash Flows..................................................F-14
Notes to the Financial Statements.........................................F-15
F-11
The Diamond Cartel Inc.
Unaudited Balance Sheets
October 31, April 30,
2017 2017
ASSETS
Current Assets
Prepaid expenses $ 222 $ -
--------------------------------------------------------------------------------
Total Assets 222 -
--------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Account payable and accrued liabilities $ 4,160 $10,176
Due to related party 28,416 18,021
--------------------------------------------------------------------------------
32,576 28,197
--------------------------------------------------------------------------------
Stockholders' Deficit
Preferred Stock, 946,000 shares authorized,
$0.001 par value; no shares issued and
outstanding at October 31, 2017 and April 30, 2017 - -
Preferred stock - Series A, 54,000 shares authorized,
$0.001 par value, 0.48 shares issued and outstanding
at October 31, 2017 and April 30, 2017 - -
Common stock, 200,000,000 shares authorized,
$0.0001 par value; 895,750 shares issued and
outstanding at October 31, 2017 and April 30, 2017 90 90
Additional paid-in capital 454,126 454,126
Accumulated deficit (486,570) (482,413)
--------------------------------------------------------------------------------
Total Stockholders' Deficit $ (32,354) $ (28,197)
--------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit $ 222 $ -
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
F-12
The Diamond Cartel Inc.
Unaudited Statements of Operations
Six Months Six Months
Ended Ended
October 31, October 31,
2017 2016
Revenue $ -- $ --
Expenses
General and administrative 4,157 15,842
--------------------------------------------------------------------------------
Net Loss before provision for income tax (4,157) (15,824)
--------------------------------------------------------------------------------
Provision for income tax -- --
Net Loss $ (4,157) $(15,824)
========= ========
Net Loss Per Common Share - Basic
and Diluted $ (0.00) $ (0.00)
--------------------------------------------------------------------------------
Weighted Average Number of Common Shares
Outstanding 895,750 895,750
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
F-13
The Diamond Cartel Inc.
Unaudited Statements of Cash Flows
Six Months Six Months
Ended Ended
October 31, October 31,
2017 2016
Operating Activities
Net loss $ (4,157) $ (15,842)
Changes in operating assets and liabilities:
Prepaid expense (222) (1,119)
Accounts payable and accrued liabilities (6,016) 3,842
--------------------------------------------------------------------------------
Net Cash Used in Operating Activities (10,395) (13,119)
--------------------------------------------------------------------------------
Financing Activities:
Proceeds of loan from related party 10,395 13,119
--------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 10,395 13,119
--------------------------------------------------------------------------------
Change in Cash - -
Cash - Beginning of period - -
--------------------------------------------------------------------------------
Cash - End of period $ - $ -
--------------------------------------------------------------------------------
Supplemental Disclosures:
Interest paid $ - $ -
Income taxes paid $ - $ -
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
F-14
The Diamond Cartel Inc.
Unaudited Notes to the Financial Statements
October 31, 2017
1. Nature of Operations
The Diamond Cartel Inc. (the "Company") was incorporated in the State of
Delaware on August 17, 2005. The Company is a newly organized Blank Check
Company which plans to effect a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business with one or
more businesses. The Company has not identified any business combination
target and the Company has not, nor has anyone on its behalf, initiated any
substantive discussions, directly or indirectly, with any business
combination target.
2. Going Concern
These financial statements have been prepared on a going concern basis, which
contemplates the Company will continue to realize its assets and discharge
its liabilities in the normal course of business. The Company has never
generated revenue since inception.. At October 31, 2017, the Company has a
working capital deficiency of $32,354 and has accumulated deficit of
$486,570. These factors, among others, raise substantial doubt regarding the
Company's ability to continue as a going concern. The continuation of the
Company as a going concern is dependent upon the continued financial support
from its stockholders and the ability of the Company to obtain necessary
equity financing to continue operations. These financial statements do not
include any adjustments to the recoverability and classification of recorded
asset amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company
intends to fund its activities through debt and equity financing
arrangements. There is no assurance that the Company will obtain the
necessary financing to complete its objectives.
3. Summary of Significant Accounting Policies
a) Basis of presentation
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America for interim financial statements and with Article 8
of Regulation S-X of the United States Securities and Exchange
Commission ("SEC"). Accordingly, they do not contain all information
and footnotes required by accounting principles generally accepted in
the United States of America for annual financial statements. In the
opinion of the Company's management, the accompanying unaudited
financial statements contain all the adjustments necessary (consisting
only of normal recurring accruals) to present the financial position
of the Company at October 31, 2017 and the results of operations and
cash flows for the periods presented. The results of operations for
the six months ended October 31, 2017 are not necessarily indicative
of the operating results for the full fiscal year or any future
period. These unaudited financial statements should be read in
conjunction with the financial statements and related notes thereto
included elsewhere in this filing for the years ended April 30, 2017
and 2016.
The Company's financial statements are prepared in accordance with
accounting principles generally accepted in the United States. The
Company has an April 30 year-end.
F-15
b) Use of Estimates
The preparation of financial statements in accordance with United
States generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses in the reporting period. The
Company regularly evaluates estimates and assumptions related to
deferred income tax asset valuations. The Company bases its estimates
and assumptions on current facts, historical experience and various
other factors that it believes to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other
sources. The actual results experienced by the Company may differ
materially and adversely from the Company's estimates. To the extent
there are material differences between the estimates and the actual
results, future results of operations will be affected.
4. Related Party Transactions and Balances
As at October 31, 2017 and April 30, 2017, the Company was indebted to the
President of the Company for $28,416 and $18,021, respectively, for expenses
incurred on behalf of the Company. The amount is non-interest bearing,
unsecured, and due on demand.
5. Subsequent Events
Management has evaluated subsequent events through January 31, 2018, the date
that these financial statements were available to be issued. There have been
no events that would require adjustment to or disclosure in the financial
statements.
F-16
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY ................................................ 4
RISK FACTORS ...................................................... 6
MARKET FOR OUR COMMON STOCK ....................................... 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................ 11
BUSINESS........................................................... 13
MANAGEMENT ........................................................ 18
PRINCIPAL SHAREHOLDERS............................................. 20
DESCRIPTION OF SECURITIES.......................................... 23
LEGAL PROCEEDINGS.................................................. 23
INDEMNIFICATION ................................................... 23
AVAILABLE INFORMATION.............................................. 24
FINANCIAL STATEMENTS............................................... 25
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this prospectus, and
if given or made, such information or representations must not be relied upon as
having been authorized by the Company. This prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, any of the securities
offered in any jurisdiction to any person to whom it is unlawful to make an
offer by means of this prospectus.
Until ______________, ____, all dealers effecting transactions in the
registered securities, whether or not participating in this distribution, may be
required to deliver a prospectus. This is in addition to the obligation of
dealers to deliver a prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by us in
connection with the issuance and distribution of the securities being
registered.
SEC Filing Fee $ 6
Blue Sky Fees and Expenses 1,000
Legal Fees and Expenses 35,000
Accounting Fees and Expenses 15,000
Miscellaneous 3,994
-------
TOTAL $55,000
=======
All expenses other than the SEC filing fee are estimated.
Item 14. Indemnification of Directors and Officers.
Our bylaws provide that we may indemnify any and all of our officers,
directors, employees or agents or former officers, directors, employees or
agents, against expenses actually and necessarily incurred by them, in
connection with the defense of any legal proceeding or threatened legal
proceeding, except as to matters in which such persons shall be determined to
not have acted in good faith and in our best interest.
Item 15. Recent Sales of Unregistered Securities.
None.
Item 16. Exhibits and Financial Statement Schedules.
Exhibit No. Description
3.1 Certificate of Incorporation, as amended (1)
3.2 By-laws (1)
4.1 Designation of Series A Preferred Stock (1)
5 Form of Opinion of Hart & Hart (1)
23.1 Consent of Attorneys (1)
23.2 Consents of Accountants
(1) Filed with Amendment No. 1 to Registration Statement.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section l0 (a)(3) of the
Securities Act:
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities that remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act of l933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(4) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3)
shall be deemed to be part of the registration statement as of the date
the filed prospectus was deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to Rule
424(b)(2), (b)(5), or (b)(7) as part of a registration statement in
reliance on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by section 10(a) of the Securities Act of 1933 shall be deemed to
be part of and included in the registration statement as of the earlier of
the date such form of prospectus is first used after effectiveness or the
date of the first contract of sale of securities in the offering described
in the prospectus. As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such date shall
be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. Provided, however,
that no statement made in a registration statement or prospectus that is
part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus
filed pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to
the offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made
by the undersigned registrant to the purchaser.
(6) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in London, Ontario,
Canada, on the 31st day of January, 2018.
THE DIAMOND CARTEL, INC.
By: /s/ Michel Atlidakis
--------------------------
Michel Atlidakis
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Name Position Date
---- -------- ----
/s/ Michel Atlidakis Principal Executive, January 31, 2018
------------------------ Financial and Accounting
Michel Atlidakis Officer and a Director