As filed with the Securities and Exchange Commission on January 18, 2013
Registration No. 333-185278
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ZEWAR JEWELLERY, INC.
(Exact name of registrant as specified in its charter)
Nevada 5961 90-0911609
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
Sunshine Building, Adade Faria Road,
Margao, Goa, India 403601
Telephone: (011) 91992-381-7403
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Mohsin Mulla
President/Treasurer/Secretary
c/o Nizami's Family Shoppee,
Sunshine Building, Adade Faria Road,
Margao, Goa, India 403601
Telephone: (011) 91992-381-7403
National Registered Agents, Inc. of Nevada
1000 East William Street, Suite 204
Carson City, NV 89701
(US)
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of all communications to:
Kristen A. Baracy, Esq.
Carol S. McMahan, Esq.
Synergy Law Group, LLC
730 West Randolph Street, 6th Floor
Chicago, IL 60661
(312) 454-0015
Fax (312) 454-0261
Email: cmcmahan@synergylawgroup.com
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
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, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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. (Check one):
Large Accelerated Filer [ ] Accelerated Filer [ ]
Non-accelerated Filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
===================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to Amount to Be Offering Price Aggregate Offering Registration
Be Registered Registered per Share (1) Price Fee(2)
---------------------------------------------------------------------------------------------------
Common Stock 3,200,000 $0.01 $32,000 $4.36
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Total 3,200,000 $0.01 $32,000 $4.36
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(1) In accordance with Rule 416(a), the registrant is also registering
hereunder an indeterminate number of shares that may be issued and resold
resulting from stock splits, stock dividends or similar transactions
(2) There is no public market for our common stock. The offering price has been
arbitrarily determined by the registrant and bears no relationship to
assets, earnings, or any other valuation criteria. No assurance can be
given that the shares offered hereby will have a market value or that they
may be sold at this, or at any price. We cannot give any assurance that the
shares being offered will be able to be resold at the offered price if and
when an active secondary market might develop, or that a public market for
our securities may be sustained even if developed. The absence of a public
market for our stock will make it difficult to sell your shares. We intend
to apply to the Over-The-Counter Bulletin Board (the "OTCBB") through a
market maker that is a licensed broker dealer, to allow the quotation of
our common stock on the OTCBB upon our becoming a reporting entity under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
offering price of the shares being registered herein is fixed at $0.01 per
share.
(3) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED _______________, 2013
PRELIMINARY PROSPECTUS
ZEWAR JEWELLERY, INC.
3,200,000 SHARES OF COMMON STOCK AT $0.01 PER SHARE
OFFERED BY ZEWAR JEWELLERY, INC.
This prospectus relates to an "all or nothing" offering by Zewar Jewellery, Inc.
("Zewar," "we," "our," the "Company" or the "Registrant") of a total of
3,200,000 shares (the "Shares") of our common stock on a "self-underwritten"
basis at a fixed price of $0.01 per share.
There is no minimum number of Zewar shares that an investor is required to
purchase. This offering of shares by the Company will terminate 180 days from
the date of this prospectus, although we may close the offering on any date
prior if the offering is fully subscribed. In the event that all of the
3,200,000 Zewar shares are not sold within 180 days from the date of this
prospectus, on the 181st day from the effective date all money received by us
will be returned to each subscriber without interest or deduction of any kind.
If all the 3,200,000 Zewar shares offered pursuant to this prospectus are sold
within 180 days from the date of this prospectus, all money received will be
available to us to fund our business and operations, and there will be no
refund.
We intend to open a checking account to be used exclusively for the deposit of
funds received from the sale of shares in this offering. Our management will
have sole control over the withdrawal of funds from this account. We have not
made arrangements to place the funds in an escrow account with a third party
escrow agent due to the costs involved. As a result, investors are subject to
the risk that creditors could attach these funds during the offering process.
See "Use of Proceeds" and "Plan of Distribution."
This is our initial public offering. Prior to this offering there has been no
public market for our common stock and we have not applied for listing or
quotation on any public market. After the effective date of the registration
statement, we intend to apply for quotation of our common stock on the
Over-The-Counter Bulletin Board ("OTCBB"), which is maintained by the Financial
Industry Regulatory Authority, Inc. ("FINRA"). There can be no assurance that
our common stock will qualify for quotation on the OTCBB.
Our sole officer and director will market our common stock and offer and sell
the securities on our behalf. This is a direct "all or nothing" offering that
will not utilize broker-dealers. Our sole officer and director will not receive
any compensation for his role in selling shares in the offering.
Any investment in the shares offered herein involves a high degree of risk. You
should only purchase shares if you can afford a loss of your investment. Our
independent registered public accountant has issued an audit opinion which
includes a statement expressing substantial doubt as to our ability to continue
as a going concern. We are a shell company which results in the imposition of
significant restrictions and limitations discussed herein. There currently is no
market for our securities and a public market may never develop, or, if any
market does develop, it may not be sustained. Our common stock is not traded on
any exchange or on the over-the-counter market. There can be no assurance that
our common stock will ever be quoted on a stock exchange or a quotation service
or that any market for our stock will develop.
THE COMPANY IS CONSIDERED TO BE IN UNSOUND FINANCIAL CONDITION. PERSONS SHOULD
NOT INVEST UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
THE COMPANY IS CONSIDERED AN "EMERGING GROWTH COMPANY" AS DEFINED IN THE
JUMPSTART OUR BUSINESS STARTUPS ACT OF 2012 (THE "JOBS ACT") AND WILL BE SUBJECT
TO REDUCED PUBLIC COMPANY REPORTING REQUIREMENTS. See "Description of Business"
contained herein and "Risk Factors" below.
BEFORE PURCHASING ANY OF THE COMMON STOCK COVERED BY THIS PROSPECTUS, CAREFULLY
READ AND CONSIDER THE RISK FACTORS INCLUDED IN THE SECTION ENTITLED "RISK
FACTORS" BEGINNING ON PAGE 5. THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK,
AND PROSPECTIVE PURCHASERS SHOULD BE PREPARED TO SUSTAIN THE LOSS OF THEIR
ENTIRE INVESTMENT. THERE IS CURRENTLY NO PUBLIC TRADING MARKET FOR THE
SECURITIES.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
You should rely only on the information contained in this prospectus. We have
not authorized any person to provide you with any information about this
offering, Zewar Jewellery, Inc., or the shares offered hereby that is different
from the information included in this prospectus. If anyone provides you with
different information, you should not rely on it.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. The prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
THE DATE OF THIS PROSPECTUS IS _______________, 2013.
TABLE OF CONTENTS
The following table of contents has been designed to help you find information
contained in this prospectus. We encourage you to read the entire prospectus.
Page
----
SUMMARY 3
RISK FACTORS 5
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 16
TAX CONSIDERATIONS 16
USE OF PROCEEDS 16
DETERMINATION OF THE OFFERING PRICE 16
MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 17
DIVIDEND POLICY 17
DILUTION 17
PLAN OF DISTRIBUTION 18
DESCRIPTION OF SECURITIES TO BE REGISTERED 20
SHARES ELIGIBLE FOR FUTURE RESALE 21
INTEREST OF NAMED EXPERTS AND COUNSEL 22
DESCRIPTION OF OUR BUSINESS 22
LEGAL MATTERS 29
MANAGEMENT 30
EXECUTIVE COMPENSATION 32
COMPENSATION OF DIRECTORS 32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 33
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 33
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION 34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION 34
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 37
CORPORATE GOVERNANCE 37
WHERE YOU CAN GET MORE INFORMATION 38
FINANCIAL STATEMENTS F-1
You should rely only on the information contained or incorporated by reference
to this prospectus in deciding whether to purchase our common stock. We have not
authorized anyone to provide you with information different from that contained
in this prospectus. Under no circumstances should the delivery to you of this
prospectus or any sale made pursuant to this prospectus create any implication
that the information contained in this prospectus is correct as of any time
after the date of this prospectus. To the extent that any facts or events
arising after the date of this prospectus, individually or in the aggregate,
represent a fundamental change in the information presented in this prospectus,
this prospectus will be updated to the extent required by law.
This document may only be used where it is legal to sell these securities.
Certain jurisdictions may restrict the distribution of these documents and the
offering of these securities. We require persons receiving these documents to
inform themselves about and to observe any such restrictions. We have not taken
any action that would permit an offering of these securities or the distribution
of these documents in any jurisdiction that requires such action.
Unless otherwise indicated, information contained in this prospectus concerning
our industry, including our market opportunity, is based on information from
independent industry analysts, third-party sources and management estimates.
Management estimates are derived from publicly-available information released by
independent industry analysts and third party sources, as well as data from our
internal research, and are based on assumptions made by us using data and our
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knowledge of such industry and market, which we believe to be reasonable. In
addition, while we believe the market opportunity information included in this
prospectus is generally reliable and is based on reasonable assumptions, such
data involves risks and uncertainties and is subject to change based on various
factors, including those discussed under the heading "Risk Factors."
SUMMARY
This summary provides a brief overview of the key aspects of our offering. It
may not contain all of the information that is important to you. You should read
the entire prospectus carefully, including the more detailed information
regarding our company, the risks of purchasing our common stock discussed under
"Risk Factors," and our financial statements and their accompanying notes.
In this prospectus, "Zewar", the "Company," "we," "us," and "our," refer to
Zewar, unless the context otherwise requires. Unless otherwise indicated, the
term "fiscal year" refers to our fiscal year ending October 31. Unless otherwise
indicated, the term "common stock" refers to shares of the Company's common
stock, par value $0.0001 per share.
THE COMPANY
Zewar Jewellery, Inc. was incorporated in the State of Nevada on September 26,
2012. Our offices are located at the premises of our President, Mohsin Mulla,
who provides such space to us on a rent-free basis at Nizami's Family Shoppee,
Sunshine Building, Adade Faria Road, Margao, Goa, India.
We are a development stage company with plans to enter into the business of the
online retail sale of imitation jewelry. Our product line will consist of middle
and high end silver and bronze imitation jewelry which will be either hand
crafted in the Indian cottage industry or manufactured to specification. Our
president has ample experience in this field. We intend to sell these products
through an internet website (the "Website").
We have initially raised $15,000 from the sale of shares to Mohsin Mulla, our
sole director and officer. We require additional funding in order to pursue our
business objectives and there is no guarantee that we will be successful in this
regard.
We will need to complete our offering in order to cover legal and audit costs
relating to our reporting obligations as a public company estimated at $20,000
(legal fees of $9,000 and audit fees of $11,000), Edgar and XBRL formatting and
conversion expenses estimated at $3,000, to develop a website with catalogue and
purchase inventory at a cost of about $14,000 and pay marketing costs of $5,000,
to cover office and administrative costs of about $3,000 and $2,000 to
incorporate an operating subsidiary in India. We will require the funds from
this offering in order to fully implement Stage II of our business plan as
discussed in the "Plan of Operation" section of this prospectus.
Our business plan anticipates that once we have secured the financing and the
site is operational, our sales will begin in October 2013. Currently, our
President devotes approximately two hours a week to the Company.
Our financial statements from inception (September 26, 2012) through October 31,
2012 report no revenues and a net loss of $1,035 and our assets constitute our
cash balance of $15,000, which was generated from the issuance of shares to our
sole officer and director. As at November 25, 2012, our cash on hand was
approximately $15,000 and $1,035 in liabilities.
Investors should be aware that our independent auditors have issued an audit
opinion which includes a statement expressing substantial doubt as to our
ability to continue as a going concern. This means that our auditors believe
there is substantial doubt that we can continue as an on-going business for the
next 12 months. Our auditor's opinion is based on us having limited operations,
and having limited working capital. Our only source for cash at this time is
investments or loans by others in our Company. However, we do not have any
written agreements in place for any investments or loans from third parties. We
must raise cash to implement our projects and expand our operations.
The Company has no or nominal operations and has assets consisting solely of
cash and cash equivalents and is, therefore, a shell company as defined by Rule
405 under the Securities Act. The Company's status as a shell company imposes
certain restrictions inapplicable to non-shell companies and operates to limit
certain transfer of its securities as discussed in detail herein.
Investors must be aware that we do not have sufficient capital to independently
finance our own plans. We have no plans, arrangements or contingencies in place
in the event that we cease operations, in which case investors would likely lose
their entire investment.
Potential investors should be aware that our President, Mr. Mulla, presently
owns 3,000,000 shares, which would represent 48.39% of the issued and
outstanding common shares of the Company if the offering closes and all our
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offered shares are sold. All of these shares are restricted shares. All
3,000,000 shares were purchased by Mr. Mulla at a price of $0.005 per share
representing a total cost of $15,000.
PENNY STOCK RULES
Our common stock will be considered a "penny stock", and subject to the
requirements of Rule 15g-9, promulgated under the Securities Exchange Act of
1934, as amended. "Penny stock" is generally defined as any equity security not
traded on an exchange or quoted on NASDAQ that has a market price of less than
$5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock.
The required penny stock disclosures include the required delivery, prior to any
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated with it. Such requirements could severely limit the market
liquidity of the securities and the ability of purchasers to sell their
securities in the secondary market. In addition, various state securities laws
impose restrictions on transferring "penny stocks" and as a result, investors in
the common stock may have their ability to sell their shares of the common stock
impaired.
THE OFFERING
We are offering, on a self-underwritten basis, a total of 3,200,000 shares of
the common stock of our Company at a price of $0.01 per share. This is a fixed
price offering. In order to close the Offering all of the offered shares must be
sold. This Offering of shares by our Company will terminate 180 days from the
date of this Prospectus, although we may close the Offering on any date prior if
the Offering is fully subscribed. This is an "all or nothing" offering. In the
event that all 3,200,000 shares of our common stock are not sold within 180 days
from the date of this prospectus, on the 181st day from such date all money
received by us will be promptly returned to each subscriber without interest or
deduction of any kind. If all of the shares of common stock of our Company
offered under this Offering are sold within 180 days from the date of this
Prospectus, all money received will be available to us to fund our business and
operations, and there will be no return of any funds.
The offering price of the common stock has been arbitrarily determined and bears
no relationship to any objective criterion of value. The price does not bear any
relationship to our assets, book value, historical earnings or net worth.
The purchase of the common stock in this offering involves a high degree of
risk. The common stock offered in this Prospectus is for investment purposes
only and currently no market for our common stock exists. Please refer to "RISK
FACTORS" on page 5 and "DILUTION" on page 17 before making an investment in our
stock.
Securities Being Offered 3,200,000 shares of common stock.
Offering Price $0.01 per share
Offering Period The shares are being offered for a period not to
exceed 180 days from the date of this Prospectus,
This is an "all or nothing" offering. In the
event we do not sell all of the shares before the
expiration date of the offering, all funds raised
will be promptly returned to the investors,
without interest or deduction.
No Public Market There is no public market for our common stock.
We cannot give any assurance that the shares
being offered will have a market value, or that
they can be resold at the offered price if and
when an active secondary market might develop, or
that a public market for our securities may be
sustained even if developed. The absence of a
public market for our stock will make it
difficult to sell your shares. If in the future a
market does exist for our securities, it is
likely to be highly illiquid and sporadic.
We intend to apply to the OTCBB, through a market
maker that is a licensed broker dealer, to allow
the trading of our common stock upon our becoming
a reporting company. There can be no guarantee
that our common stock will be accepted for
quotation on the OTCBB.
Number of Common Stock
Issued and Outstanding
Before Offering 3,000,000 shares of our common stock are issued
and outstanding as of the date of this
prospectus.
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Number of Common Stock
to be Issued and
Outstanding After Fully
Subscribed Offering 6,200,000 shares
Net Proceeds to Our Company $32,000
Use of Proceeds We intend to use the proceeds to develop our
business operations.
Risk Factors The securities offered hereby involve a high
degree of risk and should not be purchased by
investors who cannot afford the loss of their
entire investment. See "Risk Factors" beginning
on page 5.
Dividend Policy We have not declared or paid any dividends on our
common stock since our inception, and we do not
anticipate paying any such dividends for the
foreseeable future.
Our sole officer, director, control person and/or his affiliates do not intend
to purchase any shares in this offering.
SUMMARY FINANCIAL INFORMATION
We have not earned any revenues to date and do not anticipate earning revenues
until we have completed our website.
The following tables set forth a summary of the Company's financial information
as provided in its year-end financial statements. You should read this
information together with our audited financial statements and the notes thereto
appearing elsewhere in this prospectus and the information under "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
BALANCE SHEET DATA
October 31, 2012
----------------
Cash $ 15,000
Total Current Assets $ 15,000
Current Liabilities $ 1,035
Total Stockholder's Equity $ 13,965
STATEMENT OF OPERATIONS
From Incorporation
On September 26, 2012 to
October 31, 2012
----------------
Revenue $ --
Net Loss $ (1,035)
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock could decline due to any
of these risks, and you may lose part or all of your investment.
RISKS RELATED TO OUR BUSINESS
WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS TO SUCCEED.
Our independent auditors state in their audit report, which is included with
this prospectus, that since we have no business operations to date and must
secure additional financing to commence our plan of operations, these matters
raise substantial doubt about our ability to continue as a going concern. To
date, we have completed only the preliminary stages of our business plan, which
has consisted of the formation of our company and the identification of our plan
of operation. We cannot assure you that we will be able to generate enough
revenue to achieve profitability. At this time, we cannot predict with assurance
5
the potential success of our business. This increases the risk that we may not
be able to continue as a going concern.
AS A START-UP OR DEVELOPMENT STAGE COMPANY, AN INVESTMENT IN OUR COMPANY IS
CONSIDERED A HIGH RISK INVESTMENT WHEREBY YOU COULD LOSE YOUR ENTIRE INVESTMENT.
We have not commenced operations and, therefore, we are considered a "start-up"
or "development stage" company. There is no meaningful historical data for an
investor to evaluate. The revenue and income potential of our business and the
market for online jewelry sales has not been proven. We will encounter risks and
difficulties commonly faced by early-stage companies in new and rapidly evolving
markets. We intend to make significant investments in our infrastructure and
website. As a result, we will have a net loss from operations and may not be
able to reach or sustain profitability in the future. If we fail to become
profitable, we will be forced to cease operations.
We will incur significant expenses in order to implement our business plan,
including $10,000 to develop website and related costs, as well as an estimated
$12,000 in federal securities law compliance costs for the 12 month period
following the effectiveness of our registration statement. As an investor, you
should be aware of the difficulties, delays and expenses normally encountered by
an enterprise in its development stage, many of which are beyond our control,
including unanticipated developmental expenses, inventory costs, and advertising
and marketing expenses. We cannot assure you that our proposed business plan as
described in this prospectus will materialize or prove successful, or that we
will ever be able to operate profitably. If we cannot operate profitably, you
could lose your entire investment.
BECAUSE WE HAVE NOT YET COMMENCED BUSINESS OPERATIONS, IT MAKES EVALUATING OUR
BUSINESS DIFFICULT.
We were incorporated on September 26, 2012 and to date have been involved
primarily in organizational activities. We have not earned revenues as of the
date of this prospectus and have incurred total losses of $1,035 from our
incorporation to October 31, 2012.
Accordingly, you cannot evaluate our business or our future prospects, due to
our lack of operating history. To date, our business development activities have
consisted solely of organizational activities. Potential investors should be
aware of the difficulties normally encountered by development stage companies
and the high rate of failure of such enterprises. In addition, there is no
guarantee that we will commence business operations. Even if we do commence
operations, at present, we do not know when such operations will commence.
Furthermore, we anticipate that we will incur increased operating expenses
without realizing any revenues. We therefore expect to incur significant losses
into the foreseeable future. We recognize that if we are unable to generate
significant revenues from the development of our website, we will not be able to
earn profits or continue operations.
AS A RESULT OF PLACING YOUR SUBSCRIPTION FUNDS INTO AN OPERATING ACCOUNT (NOT AN
ESCROW ACCOUNT), THE FUNDS ARE SUBJECT TO ATTACHMENT BY CREDITORS OF THE
COMPANY, THEREBY SUBJECTING YOU TO A POTENTIAL LOSS OF THE FUNDS.
Because subscription funds are being placed by the Company in an operating
account during the offering period, rather than an escrow account, creditors of
the Company could attempt to attach, and ultimately could be successful in
obtaining or attaching the funds before the offering closes. In such case,
investors would lose all or part of their investments, regardless of whether or
not the offering closes.
THE RECENTLY ENACTED JOBS ACT WILL ALSO ALLOW THE COMPANY TO POSTPONE THE DATE
BY WHICH IT MUST COMPLY WITH CERTAIN LAWS AND REGULATIONS INTENDED TO PROTECT
INVESTORS AND TO REDUCE THE AMOUNT OF INFORMATION PROVIDED IN REPORTS FILED WITH
THE SEC.
The recently enacted JOBS Act is intended to reduce the regulatory burden on
"emerging growth companies". The Company meets the definition of an "emerging
growth company" and so long as it qualifies as an "emerging growth company," it
will, among other things:
* be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley
Act requiring that its independent registered public accounting firm
provide an attestation report on the effectiveness of its internal
control over financial reporting;
* be exempt from the "say on pay" provisions (requiring a non-binding
shareholder vote to approve compensation of certain executive
officers) and the "say on golden parachute" provisions (requiring a
non-binding shareholder vote to approve golden parachute arrangements
for certain executive officers in connection with mergers and certain
other business combinations) of The Dodd-Frank Wall Street Reform and
Consumer Protection Act (the "Dodd-Frank Act") and certain disclosure
requirements of the Dodd-Frank Act relating to compensation of Chief
Executive Officers;
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* be permitted to omit the detailed compensation discussion and analysis
from proxy statements and reports filed under the Securities Exchange
Act of 1934, as amended and instead provide a reduced level of
disclosure concerning executive compensation; and
* be exempt from any rules that may be adopted by the Public Company
Accounting Oversight Board (the "PCAOB") requiring mandatory audit
firm rotation or a supplement to the auditor's report on the financial
statements.
Although the Company is still evaluating the JOBS Act, it currently intends to
take advantage of all of the reduced regulatory and reporting requirements that
will be available to it so long as it qualifies as an "emerging growth company".
The Company has elected not to opt out of the extension of time to comply with
new or revised financial accounting standards available under Section 102(b)(1)
of the JOBS Act. Among other things, this means that the Company's independent
registered public accounting firm will not be required to provide an attestation
report on the effectiveness of the Company's internal control over financial
reporting so long as it qualifies as an "emerging growth company", which may
increase the risk that weaknesses or deficiencies in the internal control over
financial reporting go undetected. Likewise, so long as it qualifies as an
"emerging growth company", the Company may elect not to provide certain
information, including certain financial information and certain information
regarding compensation of executive officers, which would otherwise have been
required to provide in filings with the SEC, which may make it more difficult
for investors and securities analysts to evaluate the Company. As a result,
investor confidence in the Company and the market price of its common stock may
be adversely affected.
Notwithstanding the above, we are also currently a "smaller reporting company",
meaning that we are not an investment company, an asset-backed issuer, or a
majority-owned subsidiary of a parent company that is not a smaller reporting
company and have a public float of less than $75 million and annual revenues of
less than $50 million during the most recently completed fiscal year. In the
event that we are still considered a "smaller reporting company", at such time
are we cease being an "emerging growth company", the disclosure we will be
required to provide in our SEC filings will increase, but will still be less
than it would be if we were not considered either an "emerging growth company"
or a "smaller reporting company". Specifically, similar to "emerging growth
companies", "smaller reporting companies" are able to provide simplified
executive compensation disclosures in their filings; are exempt from the
provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that
independent registered public accounting firms provide an attestation report on
the effectiveness of internal control over financial reporting; are not required
to conduct say-on-pay and frequency votes until annual meetings occurring on or
after January 21, 2013; and have certain other decreased disclosure obligations
in their SEC filings, including, among other things, only being required to
provide two years of audited financial statements in annual reports. Decreased
disclosures in our SEC filings due to our status as an "emerging growth company"
or "smaller reporting company" may make it harder for investors to analyze the
Company's results of operations and financial prospects.
WE ARE AN "EMERGING GROWTH COMPANY" UNDER THE JOBS ACT OF 2012, AND WE CANNOT BE
CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH
COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.
We are an "emerging growth company," as defined in the Jumpstart Our Business
Startups Act of 2012 ("JOBS Act"), and we may 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 auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved. We cannot predict if investors will
find our common stock less attractive because we may rely on these exemptions.
If some investors find our common stock less attractive as a result, there may
be a less active trading market for our common stock and our stock price may be
more volatile.
In addition, Section 107 of the JOBS Act also provides that an "emerging growth
company" can take advantage of the extended transition period provided in
Section 7(a)(2)(B) of the Securities Act for complying with new or revised
accounting standards. In other words, an "emerging growth company" can delay the
adoption of certain accounting standards until those standards would otherwise
apply to private companies. We are choosing to take advantage of the extended
transition period for complying with new or revised accounting standards. As a
result, our financial statements may not be comparable to those of companies
that comply with public company effective dates.
7
We will remain an "emerging growth company" for up to five years, although we
will lose that status sooner if our revenues exceed $1 billion, if we issue more
than $1 billion in non-convertible debt in a three year period, or if the market
value of our common stock that is held by non-affiliates exceeds $700 million."
WE MUST BUILD A WEBSITE IN ORDER TO BE ABLE TO SELL JEWELRY PRODUCTS TO ONLINE
PURCHASERS.
In order to establish a venue to market our products, we must establish an
Internet website highlighting our inventory and our prices, being offered for
sale.
The construction of our website is in the early stage of development and will
require substantial time and resources to complete. We intend to launch a basic
interim website funded by the proceeds of this Offering, which will feature our
current business plan. We hope to secure sufficient capital to develop our
planned program and a fully functional e-commerce website.
THE JEWELRY ONLINE RETAIL INDUSTRY IS INCREASINGLY COMPETITIVE AS THERE ARE NO
SUBSTANTIAL BARRIERS TO ENTER THE INDUSTRY. WE MAY NOT BE ABLE TO COMPETE
EFFECTIVELY AGAINST DOMINANT COMPANIES. IF WE CANNOT DEVELOP A DESIRABLE JEWELRY
PRODUCT LINE, WE WILL NOT BE ABLE TO COMPETE SUCCESSFULLY, OUR BUSINESS MAY BE
ADVERSELY AFFECTED AND WE MAY NOT BE ABLE TO GENERATE ANY REVENUE.
The number of online retail jewelry organizations in India is increasing, and
the online retail jewelry industry on international level is intensely
competitive. Barriers to entry are minimal; and current and new competitors can
launch new websites.
There are numerous, well-financed competitors who offer larger jewelry product
lines along with other products such as ladies wear. We have not demonstrated
that we can compete successfully against these competitors and we may not be
able to compete in the future. If we are unable to effectively compete, our
results would be negatively affected, we may be unable to implement our plan and
we might ultimately fail. In addition, we cannot prevent unauthorized persons
from copying aspects of our business, including our website design or
functionality, jewelry product line or marketing materials.
OUR ONLINE, OFFLINE AND OTHER MARKETING INITIATIVES MAY NOT BE SUCCESSFUL AND
THIS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION
OR RESULTS OF OPERATIONS.
Our success depends on our ability to attract customers on cost-effective terms.
We intend to develop relationships with online services, search engines, and
other web sites and e-commerce businesses to provide links which would direct
potential customers to our web site. Such services are expensive and may not
result in the cost effective acquisition of customers. We will be relying on the
offline and online marketing initiatives as a source of traffic to our Website
and new customers. If these initiatives are not successful, our business,
financial condition and results of operations will be adversely affected.
OUR FAILURE TO EFFICIENTLY RESPOND TO CHANGING CONSUMER PREFERENCES AND DEMAND
FOR NEW PRODUCTS AND SERVICES COULD SIGNIFICANTLY HARM OUR PRODUCT SALES AND
CUSTOMER RELATIONSHIPS AND OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL
CONDITION COULD BE MATERIALLY AND ADVERSELY AFFECTED.
Our success will depend, in part, on our ability to anticipate and respond to
changing consumer trends and preferences. We may not be able to respond in a
timely or commercially appropriate manner to these changes. Our failure to
accurately predict these trends could negatively impact our inventory levels,
sales and consumer opinion of us as a source for the latest products. The
success of our new product offerings depends upon a number of factors, including
our ability to:
1. accurately anticipate customer needs;
2. competitively price our products;
3. procure and maintain products in sufficient volumes and in a timely
manner; and
4. differentiate our product offerings from those of our competitors.
If we do not introduce new products, make enhancements to existing products or
maintain the appropriate inventory levels to meet customers' demand in a timely
manner, our business, results of operations and financial condition could be
materially and adversely affected.
TEMPORARY POPULARITY OF SOME TYPES AND STYLES OF JEWELRY PIECES MAY RESULT IN
SHORT-TERM INCREASES, FOLLOWED BY DECREASES, IN THE VOLUME OF SAKES, WHICH COULD
CAUSE OUR REVENUES TO FLUCTUATE.
Temporary consumer popularity or "fads" among consumers may lead to short-term
or temporary increases, followed by decreases in the volume and in the average
price of certain types and styles of jewelry which we intend to sell. These
trends may result in significant period-to-period fluctuations in our operating
results and could result in declines in our net revenues and profitability, not
8
only because of a resulting decline in the volume of selling pieces of jewelry,
but also because such trends could lead to increased price competition, which
could require us to reduce the sales prices of certain of our inventory in order
to maintain market share.
INDUSTRY SALES CYCLES CAN BE UNPREDICTABLE.
Sales cycles for customers who purchase jewelry are generally unpredictable due
primarily to the discretionary nature of the purchase of jewelry. Customers will
typically purchase jewelry when discretionary income is abundant. Sales of
jewelry are typically seasonal, with heightened sales occurring during holiday
periods and bridal seasons. When economic conditions preclude consumers from
purchasing jewelry or during a season of low sales, such downturns in sales will
affect our financial projections and could adversely affect results of
operations.
MANUFACTURE OF JEWELRY IS SUBJECT TO DISRUPTION.
As with all manufacturing operations, the creation of jewelry will subject us to
certain operating risks, including:
* plant shutdown due to a breakdown or failure of equipment or
processes, violation of permit requirements (whether through
operations or change in law), catastrophic events such as fires,
explosions, floods or other similar occurrences affecting us, the
manufacturers which produce our jewelry and/or third parties upon
which our business may depend and
* disputes with labor unions in which certain personnel involved in the
operation of such facilities are members and disputes under various
collective bargaining agreements applicable to those plants.
The occurrence of one or more of these events could significantly reduce
revenues expected to be produced and/or significantly increase the expenses of
production, thereby adversely affecting our business, results of operations and
financial condition.
WE DEPEND ON OUR ABILITY TO LOCATE AND DEVELOP NEW SOURCES OF JEWELRY IN A
TIMELY AND CONSISTENT MANNER, AND FAILURE TO DO SO WOULD ADVERSELY AFFECT OUR
OPERATIONS AND FINANCIAL PERFORMANCE.
Our success in the industry will require additional and continuing development
to become and remain competitive. Our future success will depend, in part, on
our ability to continue to find and retain additional artists, artisans,
manufacturers and suppliers to provide jewelry for retail sale. We expect to
make substantial investments in activities to develop suppliers and
manufacturers. This development activity will require investment in order to
establish our market position. We may experience unforeseen problems in our
development endeavors. We may not achieve widespread market acceptance of our
jewelry products. We may not meet some of these requirements or may not meet
them on a timely basis. We may modify plans for the creation and sale of jewelry
which may substantially increase our expenses. These factors could materially
affect our ability to forecast operations and negatively affect our stock price,
results of operations, cash flow and financial condition.
CUSTOMERS MAY BE UNWILLING TO USE THE INTERNET TO PURCHASE GOODS.
Our long-term future depends heavily upon the general public's willingness to
use the Internet as a means to purchase goods. Although e-commerce remains a
relatively new concept, large numbers of customers are using the Internet to
purchase goods. The demand for and acceptance of products sold over the Internet
are highly uncertain, and most e-commerce businesses have a short track record.
Concerns about the security and privacy of transactions over the Internet could
inhibit the growth of the Internet and e-commerce. If consumers are unwilling to
use the Internet to conduct business, our business may not develop profitably.
THE SECURITY RISKS OR PERCEPTION OF RISKS OF E-COMMERCE MAY DISCOURAGE CUSTOMERS
FROM PURCHASING GOODS FROM US.
In order for the e-commerce market to develop successfully, we and other market
participants must be able to transmit confidential information securely over
public networks. Third parties may have the technology or know-how to breach the
security of customer transaction data. Any breach could cause customers to lose
confidence in the security of our Website and choose not to purchase from us.
We will rely on encryption and authentication technology licensed from third
parties to provide the security and authentication necessary to effect secure
transmission of confidential information such as customer credit card numbers.
We cannot assure you that advances in computer capabilities, new discoveries in
the field of cryptography or other events or developments will not result in a
compromise or breach of the algorithms that we will use to protect customer
transaction data. If any such compromise of our security were to occur, it could
harm our reputation, business, prospects, financial condition and results of
operations. A party who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our operations.
We may be required to expend significant capital and other resources to protect
against such security breaches or to alleviate problems caused by such breaches.
We cannot assure you that our security measures will prevent security breaches
9
or that failure to prevent such security breaches will not harm our business,
prospects, financial condition and results of operations.
FAILURE OF THIRD-PARTY SYSTEMS OR THIRD-PARTY SERVICE AND SOFTWARE PROVIDERS
UPON WHICH WE RELY COULD ADVERSELY AFFECT OUR BUSINESS.
We will rely on certain third-party computer systems or third-party service and
software providers, including data centers, technology platforms, back-office
systems, Internet service providers and communications facilities. Any
interruption in these third-party services, or deterioration in their
performance or quality, could adversely affect our business. If our arrangement
with any third party is terminated, we may not be able to find alternative
systems or service providers on a timely basis or on commercially reasonable
terms. This could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
We host our platform and serve all of our customers from our network servers,
which will be located at various data center facilities. Problems faced by our
data center locations or with the telecommunications network providers with whom
we may contract could adversely affect the experience of our customers. If our
data centers are unable to keep up with our growing needs for capacity or close
without adequate notice, this could have an adverse effect on our business. Any
changes in third-party service levels at our data centers or any errors,
defects, disruptions, or other performance problems with our services could harm
our reputation and adversely affect the performance of our platform.
Interruptions in our services might reduce our sales revenues, subject us to
potential liability and thereby adversely affect our business, financial
condition, results of operations and cash flows.
WE MAY BE LIABLE IF THIRD PARTIES MISAPPROPRIATE OUR CUSTOMERS' PERSONAL
INFORMATION.
If third parties are able to penetrate our network security or otherwise
misappropriate our customers' personal information or credit card information,
or if we give third parties improper access to our customers' personal
information or credit card information, we could be subject to liability. This
liability could include claims for unauthorized purchases with credit card
information, impersonation or other similar fraud claims. This liability could
also include claims for other misuses of personal information, including
unauthorized marketing purposes. These claims could result in litigation.
Liability for misappropriation of this information could adversely affect our
business. In addition, the Federal Trade Commission and state agencies have been
investigating various Internet companies regarding their use of personal
information. We could incur additional expenses if new regulations regarding the
use of personal information are introduced or if government agencies investigate
our privacy practices.
SYSTEM AND ONLINE SECURITY FAILURES COULD HARM OUR BUSINESS AND OPERATING
RESULTS.
Our services will depend on the efficient and uninterrupted operation of our
computer and communications hardware systems. Our systems and operations will be
vulnerable to damage or interruption from a number of sources, including fire,
flood, power loss, telecommunications failure, break-ins, earthquakes and
similar events. Our Internet host provider does not guarantee that our Internet
access will be uninterrupted, error-free or secure. Our servers are also
vulnerable to computer viruses, physical, electrical or electronic break-ins and
similar disruptions. Any substantial interruptions could result in the loss of
data and could completely impair our ability to generate revenues from our
service. We do not presently have a full disaster recovery plan in effect to
cover the loss of all facilities and equipment. We have business interruption
insurance; however, we cannot be certain that our coverage will be sufficient to
compensate us for losses that may occur as a result of business interruptions.
WE ARE DEPENDENT UPON THE FUNDS TO BE RAISED IN THIS OFFERING TO START OUR
BUSINESS, THE PROCEEDS OF WHICH MAY BE INSUFFICIENT TO ACHIEVE REVENUES.
We need the proceeds from this offering to start our operations. If $32,000 is
raised, this amount will enable us, after paying the expenses of this offering,
to develop our website and advertise online our jewelry products. It will also
enable us to initiate the development of our marketing plans and initiate the
development of marketing and support material such as brochures, flyers and
"fact sheets." We need the funds to be obtained in this Offering to complete
further development of our business plan to achieve a sustainable sales level
where ongoing operations can be funded out of revenues.
BECAUSE WE OPERATE IN A FOREIGN COUNTRY, OUR BUSINESS IS SUBJECT TO CURRENCY
FLUCTUATIONS AND RISKS WHICH COULD IMPACT OUR REVENUES AND RESULTS OF
OPERATIONS. ALSO, SINCE WE HOLD OUR CASH RESERVES IN US DOLLARS, WE MAY
EXPERIENCE WEAKENED PURCHASING POWER IN INDIAN RUPEES TERMS AND MAY NOT BE ABLE
TO AFFORD TO CONDUCT OUR PLANNED PROGRAM.
Although we hold our cash reserves in US dollars, we intend to operate our
business in Indian rupees through a wholly-owned Indian subsidiary. Almost all
of our operations and expenses will be denominated in the Indian currency. Due
to foreign exchange rate fluctuations, the value of our reserves and the cash
flow that our subsidiary will receive will result in both translation gains and
losses in terms of Indian rupees.
10
We anticipate that we will raise all necessary funds for current and future
operations through the sale of our equity, which will be denominated in United
States dollars. If there occurs a significant decline in the US Dollar versus
the Indian rupee, our Indian rupees purchasing power in US dollars would
significantly decline. As well, if there was a significant decline in the Indian
rupee relative to the US dollar, the amount of revenue and net profit that we
may generate from our future subsidiary's operations would be reduced in terms
of US dollars, our financial statement reporting currency. We have not entered
into derivative instruments to offset the impact of foreign exchange
fluctuations.
IF WE BECOME MORE INVOLVED IN INTERNATIONAL BUSINESS TRANSACTIONS, WE WILL BE
EXPOSED TO LOCAL BUSINESS RISKS IN DIFFERENT COUNTRIES, WHICH COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION OR RESULTS OF OPERATIONS.
We may expand our international sales efforts to consumers located in different
countries. Any such international operations would be subject to risks inherent
in doing business in other countries, including, but not necessarily limited to:
* new and different legal and regulatory requirements in local
jurisdictions;
* potentially adverse tax consequences, including imposition or increase
of taxes on transactions or withholding and other taxes on remittances
and other payments by subsidiaries;
* risk of nationalization of private enterprises by foreign governments;
* legal restrictions on doing business in or with certain nations,
certain parties and/or certain products; and
* local economic, political and social conditions, including the
possibility of hyperinflationary conditions and political instability.
We may not be successful in developing and implementing policies and strategies
to address the foregoing factors in a timely and effective manner in the
locations where we will do business. Consequently, the occurrence of one or more
of the foregoing factors could have a material adverse effect on our
international operations and upon our financial condition and results of
operations.
Our operations in developing markets could expose us to political, economic and
regulatory risks that are greater than those we may face in established markets.
Further, our international operations may require us to comply with additional
United States and international regulations.
WE ARE VULNERABLE TO THE CURRENT ECONOMIC CRISIS THAT MAY NEGATIVELY AFFECT OUR
PROFITABILITY
The recent global recession has placed severe constraints on the ability of all
companies, particularly smaller ones, to raise capital, operate effectively and
profitably and to plan for the future. Currently, it is not clear whether the
economy will recover appreciably in the near future. As a small, start-up
company we are especially vulnerable to these conditions. If current economic
conditions do not improve, or if they worsen, our business plan will likely be
negatively affected and will suffer.
DECLINES IN GENERAL ECONOMIC CONDITIONS COULD RESULT IN DECREASED DEMAND FOR OUR
PRODUCTS WHICH COULD ADVERSELY AFFECT OUR OPERATING RESULTS.
The availability of discretionary or disposable income and the confidence of
consumers about future economic conditions are important factors that can affect
the willingness and ability of consumers to purchase, and the prices that they
are willing to pay for, pieces of fashion jewelry. As a result, economic
uncertainties, downturns and recessions can and do adversely affect our
operating results by (i) reducing the purchases of fashion jewelry; and (ii)
increasing the production costs associated with creation of jewelry products.
WE INTEND TO COMMENCE OPERATIONS IN THE AREA OF ONLINE SALES OF RETAIL JEWELRY.
OUR BUSINESS WILL NOT BE DIVERSIFIED, WHICH COULD RESULT IN SIGNIFICANT
FLUCTUATIONS IN OUR OPERATING RESULTS. A DOWNTURN IN OUR INDUSTRY SECTOR MAY
REDUCE OUR STOCK PRICE, EVEN IF OUR BUSINESS IS SUCCESSFUL.
We intend to commence operations in the area of online sales of retail jewelry,
and, accordingly, are dependent upon trends in that sector. Downturns in our
industry could adversely affect our business. A downturn in our sector may
reduce our stock price, even if our business is successful. The popularity of
collecting jewelry can vary due to a number of factors, most of which are
outside of our control, including fashion trends, general consumer confidence
and their impact on disposable income and other general economic conditions.
IF OUR SOLE OFFICER RESIGNS, WE WILL BE LEFT WITHOUT MANAGEMENT AND OUR BUSINESS
OPERATIONS WOULD CEASE.
We depend on the services of our President, Mohsin Mulla, and our success will
depend on the decisions made by him. The loss of the services of our President
could have an adverse effect on our business, financial condition and results of
operations. There is no assurance that our President will not leave us or
compete against us in the future, as we presently have no employment agreement
with him. In such circumstance, we may have to recruit qualified personnel with
11
competitive compensation packages, equity participation and other benefits that
may affect the working capital available for our operations. Our failure to
attract additional qualified employees or to retain the services of Mr. Mulla
could have a material adverse effect on our operating results and financial
condition. Even if we are able to find additional personnel, it is uncertain
whether we could find someone who could successfully operate our business. We
could fail without appropriate replacements.
ALTHOUGH OUR PRESIDENT IS NOT CURRENTLY RECEIVING COMPENSATION FOR HIS SERVICES,
HE ANTICIPATES RECEIVING MANAGEMENT FEES ONCE WE ARE ABLE TO AFFORD TO PAY THEM
FROM OPERATIONS, WHICH WILL ADVERSELY IMPACT ANY POTENTIAL NET PROFIT THAT WE
MAY GENERATE.
We are not currently compensating our President for providing management
services to us. We intend to pay management fees to him as compensation if the
cash flow that we generate from operations significantly exceeds our total
expenses. We currently anticipate that such management fees would not exceed
$3,000 per month. However, Mr. Mulla, as our sole officer and director, has the
power to set his own compensation as he sees fit. Management fees that he
receives will have an adverse effect on our net profit, if any.
OUR MANAGEMENT HAS NO PRIOR EXPERIENCE IN THE MARKETING OF PRODUCTS AND SERVICES
VIA THE INTERNET AND THEREFORE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE THE
DEVELOPMENT OR GROWTH OF OUR COMPANY IN THIS FIELD.
Our management has no experience in marketing an online jewelry business.
Although Mr. Mulla has extensive experience in retail sales of jewelry, this
experience may not be totally useful in developing and marketing products that
are appealing to the internet browser. Our inexperience may cause us to make
serious mistakes in the development or implementation of our business plan. Our
management may be unable to develop or grow a business in this field due to its
inexperience.
BECAUSE OUR SOLE OFFICER AND DIRECTOR HAS NO FORMAL TRAINING IN FINANCIAL
ACCOUNTING AND MANAGEMENT, IN THE FUTURE OUR DISCLOSURE AND ACCOUNTING CONTROLS
MAY NOT BE EFFECTIVE TO COMPLY WITH APPLICABLE LAWS AND REGULATIONS, WHICH COULD
RESULT IN FINES, PENALTIES AND ASSESSMENTS AGAINST US.
We have only one officer and director. He has no formal training in financial
accounting and management; however, he has been preparing the financial
statements that have been audited and reviewed by our auditors and included in
this prospectus. Furthermore, he is responsible for our managerial and
organizational structure, which will include preparation of disclosure and
accounting controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002
(the "SOX Act"). Accordingly, he may be incapable of creating and implementing
the disclosure and accounting controls which are required under the SOX Act,
which could result in fines, penalties and assessments against us and which
ultimately could cause you to lose your entire investment.
THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR SOLE OFFICER AND DIRECTOR COULD
ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S.
SECURITIES LAWS.
Mohsin Mulla, our sole officer and director, has had no responsibility for
managing a public company in the United States, which could impair our ability
to comply with legal and regulatory requirements such as those imposed by the
Sarbanes-Oxley Act of 2002. Such responsibility includes complying with federal
securities laws and making required disclosures on a timely basis. In addition,
Mr. Mulla may not be able to implement programs and policies in an effective and
timely manner or in a manner which adequately responds to such increased legal,
regulatory compliance and reporting requirements, including establishing and
maintaining internal controls over financial reporting. Any such deficiencies,
weaknesses or lack of compliance could have a materially adverse effect on our
ability to comply with the reporting requirements of the Exchange Act, which is
necessary to maintain our public company status. If we were to fail to fulfill
those obligations, our ability to continue as a U.S. public company would be in
jeopardy, in which event you could lose your entire investment in our company.
OUR SOLE OFFICER AND DIRECTOR WILL ALLOCATE ONLY A PORTION OF HIS TIME TO OUR
BUSINESS, WHICH COULD HAVE A NEGATIVE IMPACT ON OUR SUCCESS.
Currently, our sole officer and director allocates only a portion of his time to
the operation of our business. If our business develops faster than anticipated,
or if his other commitments require him to devote substantially more time than
is currently planned, there is no guarantee that he will be able to devote the
time necessary to assure our successful operations. The limited ability of our
officer/director to devote time and effort to our operations may have a negative
effect on us and our ability to implement our plan of operations currently and
in the future. This could negatively impact our business development.
IF OUR ESTIMATES RELATED TO EXPENDITURES ARE ERRONEOUS OR INACCURATE, OUR
BUSINESS WILL FAIL AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.
Our success is dependent in part upon the accuracy of our management's estimates
of expenditures for legal and accounting services, including those we expect to
incur as a publicly reporting company, software development, website development
12
and advertising and administrative expenses, which management estimates to
aggregate a minimum of approximately $47,000 over the next 12 months. If such
estimates are erroneous or inaccurate, or we encounter unforeseen expenses and
delays, we may not be able to carry out our business plan, which could result in
the failure of our business and a loss of your entire investment.
WE ARE SUBJECT TO THE MANY RISKS OF DOING BUSINESS INTERNATIONALLY INCLUDING BUT
NOT LIMITED TO THE DIFFICULTY OF ENFORCING LIABILITIES IN A FOREIGN
JURISDICTION.
Our sole officer and director resides outside of the United States and all of
our substantial assets will be located outside of the United States in an
operating subsidiary that we intend to incorporate following this offering. We
are a Nevada corporation and, as such, are subject to the jurisdiction of the
State of Nevada and the United States courts for purposes of any lawsuit, action
or proceeding by investors herein. However, even if judgment is obtained against
us, it is possible that most of our liquid assets will be held in the name of
our subsidiary and will be difficult or impossible to realize without obtaining
judgment in India as well. Therefore, the cost of enforcing liabilities against
us will be high.
Our sole officer and director resides in India. Any action brought against his
in the United States, even if successful, either through default or on the
merits of the claim, that results in a financial award against him, may be
required to be enforced and/or collected in India, unless Mr. Mulla owned assets
located in the United States. Further, shareholder efforts to bring an action in
India against its citizens for any alleged breach of a duty in a foreign
jurisdiction may be difficult, as prosecution of a claim in a foreign
jurisdiction, and in particular a foreign nation, may be effectively, if not
financially, unfeasible.
RISKS RELATING TO OUR COMMON STOCK
BECAUSE OUR SOLE OFFICER AND DIRECTOR, WHO IS ALSO OUR SOLE PROMOTER, WILL OWN
MORE THAN 48% OF THE OUTSTANDING SHARES AFTER THIS OFFERING, HE WILL RETAIN
ALMOST MAJORITY CONTROL OF US AND BE ABLE TO ELECT DIRECTORS WHICH COULD
DECREASE THE PRICE AND MARKETABILITY OF THE SHARES.
Even if we sell all 3,200,000 shares of common stock in this offering, Mr. Mulla
will still own 3,000,000 shares and will continue to control/influence us. As a
result, Mr. Mulla will have significant influence to:
* elect or defeat the election of our directors;
* amend or prevent amendment of our articles of incorporation or bylaws;
* effect or prevent a merger, sale of assets or other corporate
transaction; and
* effect the outcome of any other matter submitted to the stockholders
for vote.
Moreover, because of the significant ownership position held by our insider, new
investors may not be able to effect a change in the Company's business or
management, and therefore, shareholders would be subject to decisions made by
management and the major shareholder.
In addition, sales of significant amounts of shares held by Mr. Mulla, or the
prospect of these sales, could adversely affect the market price of our common
stock. Management's stock ownership may discourage a potential acquirer from
making a tender offer or otherwise attempting to obtain control of us, which in
turn could reduce our stock price or prevent our stockholders from realizing a
premium over our stock price.
WE ARE SELLING THIS OFFERING WITHOUT AN UNDERWRITER AND MAY BE UNABLE TO SELL
ALL OF THE SHARES, IN WHICH CASE, WE MAY HAVE TO SEEK ALTERNATIVE FINANCING TO
IMPLEMENT OUR BUSINESS PLANS AND YOU WOULD RECEIVE A RETURN OF YOUR ENTIRE
INVESTMENT.
This offering is self-underwritten; that is, we are not going to engage the
services of an underwriter to sell the shares. We intend to sell them through
our sole officer and director, who will receive no commission. He will offer the
shares to friends, relatives, acquaintances and business associates; however,
there is no guarantee that he will be able to sell any of the shares. This is an
"all or nothing" offering. In the event we do not sell all of the shares before
the expiration date of the offering, all funds raised will be promptly returned
to the investors, without interest or deduction.
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION OF THE PRICE YOU PAY FOR YOUR
SHARES.
Our existing stockholder acquired his shares at a cost of $0.005 per share, a
cost per share that is substantially less than the amount you will pay for the
shares you purchase in this offering. Accordingly, any investment you make in
these shares will result in the immediate and substantial dilution of the net
tangible book value of those shares from the $0.01 you pay for them. Upon
completion of the offering, the net tangible book value of your shares will be
$0.00354 per share, $0.00646 less than what you paid for them.
13
BECAUSE THE PROCEEDS OF OUR OFFERING WILL BE HELD IN A STANDARD BANK ACCOUNT
RATHER THAN AN ESCROW ACCOUNT, UNTIL THE OFFERING CLOSES, IT IS POSSIBLE THAT
CREDITORS OF THE COMPANY COULD ATTACH THESE FUNDS AND WE MAY NOT BE ABLE TO
RETURN YOUR FUNDS IF THE OFFERING IS NOT COMPLETED.
We intend to open a checking account to be used exclusively for the deposit of
funds we receive from the sale of shares in the offering. Our management will
have sole control over the withdrawal of funds from this account. We have not
made arrangements to place the funds in an escrow account with a third party
escrow agent due to the costs involved. As a result, investors are subject to
the risk that creditors could attach these funds during the offering process.
THERE IS CURRENTLY NO PUBLIC MARKET FOR OUR SECURITIES, AND THERE CAN BE NO
ASSURANCE THAT ANY PUBLIC MARKET WILL DEVELOP OR THAT OUR COMMON STOCK WILL BE
QUOTED FOR TRADING.
There is no public market for our securities and there can be no assurance that
an active trading market for the securities offered herein will develop after
this offering, or, if developed, be sustained. After the effective date of the
registration statement of which this prospectus is a part, we intend to identify
a market maker to file an application with the Financial Industry Regulatory
Authority ("FINRA") to have our common stock quoted on the Over-the-Counter
Bulletin Board. We will have to satisfy certain criteria in order for our
application to be accepted. We do not currently have a market maker that is
willing to participate in this application process, and even if we identify a
market maker, we cannot assure you that we will meet the requisite criteria or
that our application will be accepted. Our common stock may never be quoted on
the Over-the-Counter Bulletin Board, or, even if quoted, a public market may not
materialize.
If our securities are not eligible for initial quotation, or if quoted, are not
eligible for continued quotation on the Over-the-Counter Bulletin Board or a
public trading market does not develop, purchasers of the shares of common stock
may have difficulty selling or be unable to sell their securities should they
desire to do so, rendering their shares effectively worthless and resulting in a
complete loss of their investment.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HIS ABILITY TO SELL
OUR STOCK.
The shares offered by this prospectus constitute penny stock under the Exchange
Act. The shares will remain penny stock for the foreseeable future. "Penny
stock" rules impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited
investors, that is, generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with a spouse. For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our shares of
common stock. The market price of our shares would likely suffer as a result.
FINRA SALES PRACTICE REQUIREMENTS MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND
SELL OUR STOCK.
FINRA has adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for believing that the
investment is suitable for that customer. Prior to recommending speculative low
priced securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative
low-priced securities will not be suitable for certain customers. FINRA
requirements will likely make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which may have the effect of reducing
the level of trading activity in our common stock. As a result, fewer
broker-dealers may be willing to make a market in our common stock, reducing a
stockholder's ability to resell shares of our common stock.
IF QUOTED, THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE, WHICH MAY
SUBSTANTIALLY INCREASE THE RISK THAT YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT
OR ABOVE THE PRICE THAT YOU MAY PAY FOR THE SHARES.
Even if our shares are quoted for trading on the Over-the-Counter Bulletin Board
following this offering and a public market develops for our common stock, the
market price of our common stock may be volatile. It may fluctuate significantly
in response to the following factors:
* variations in quarterly operating results;
* our announcements of significant commissions and achievement of
milestones;
14
* our relationships with other companies or capital commitments;
* additions or departures of key personnel;
* sales of common stock or termination of stock transfer restrictions;
* changes in financial estimates by securities analysts, if any; and
* fluctuations in stock market price and volume.
Your inability to sell your shares during a decline in the price of our stock
may increase losses that you may suffer as a result of your investment.
BECAUSE WE DO NOT INTEND TO PAY ANY DIVIDENDS ON OUR COMMON STOCK, HOLDERS OF
OUR COMMON STOCK MUST RELY ON STOCK APPRECIATION FOR ANY RETURN ON THEIR
INVESTMENT.
We have not declared or paid any dividends on our common stock since our
inception, and we do not anticipate paying any such dividends for the
foreseeable future. Accordingly, holders of our common stock will have to rely
on capital appreciation, if any, to earn a return on their investment in our
common stock.
ADDITIONAL ISSUANCES OF OUR SECURITIES MAY RESULT IN IMMEDIATE DILUTION TO
EXISTING SHAREHOLDERS.
We must raise additional capital in order for our business plan to succeed. Our
most likely source of additional capital will be through the sale of additional
shares of common stock. We are authorized to issue up to 100,000,000 shares of
common stock, of which 3,000,000 shares of common stock are currently issued and
outstanding. Our Board of Directors has the authority to cause us to issue
additional shares of common, and to determine the rights, preferences and
privilege of such shares, without consent of any of our stockholders. We may
issue shares in connection with financing arrangements or otherwise. Any such
issuances will result in immediate dilution to our existing shareholders'
interests, which will negatively affect the value of your shares.
WE MAY BE EXPOSED TO POTENTIAL RISKS RESULTING FROM REQUIREMENTS UNDER SECTION
404 OF THE SARBANES-OXLEY ACT OF 2002 TO THE EXTENT APPLICABLE TO THE COMPANY.
Pursuant to Section 404 of the SOX Act, we will be required to include in our
annual report our assessment of the effectiveness of our internal control over
financial reporting once this registration statement becomes effective and we
commence filing financial reports with the Securities & Exchange Commission. We
expect to incur additional expenses and diversion of management's time as a
result of performing the system and process evaluation, testing and remediation
required in order to comply with the management certification and auditor
attestation requirements.
We currently do not have a sufficient number of employees to segregate
responsibilities and are presently unable to afford increasing our staff or
engaging outside consultants or professionals to overcome our lack of employees.
During the course of our testing, we may identify other deficiencies that we may
not be able to remediate in time to meet the deadline imposed by the SOX Act for
compliance with the requirements of Section 404. In addition, if we fail to
achieve and maintain the adequacy of our internal controls, as such standards
are modified, supplemented or amended from time to time, we may not be able to
ensure that we can conclude on an ongoing basis that we have effective internal
controls over financial reporting in accordance with Section 404 of the SOX Act.
Moreover, effective internal controls, particularly those related to revenue
recognition, are necessary for us to produce reliable financial reports and are
important to help prevent financial fraud. If we cannot provide reliable
financial reports or prevent fraud, our business and operating results could be
harmed, investors could lose confidence in our reported financial information,
and the trading price of our common stock, if a market ever develops, could drop
significantly.
IF OUR COMMON STOCK IS NOT APPROVED FOR QUOTATION ON THE OVER-THE-COUNTER
BULLETIN BOARD OR OTCQB MARKET, OUR COMMON STOCK MAY NOT BE PUBLICLY-TRADED,
WHICH COULD MAKE IT DIFFICULT TO SELL SHARES OF OUR COMMON STOCK AND/OR CAUSE
THE VALUE OF OUR COMMON STOCK TO DECLINE IN VALUE.
In order to have our common stock quoted on the Over-The-Counter Bulletin Board
("OTCBB") or OTCQB market, which is our current plan, we will need to first have
our Registration Statement, of which this prospectus is a part, declared
effective by the SEC; then engage a market maker, who will file a Form 15c2-11
with FINRA; and clear FINRA comments to obtain a trading symbol. Assuming the
SEC declares the Registration Statement effective and assuming we clear FINRA
comments, we anticipate receiving a trading symbol and having our shares of
common stock quoted on the OTCBB in approximately one (1) to two (2) months
after the effectiveness of our Registration Statement. In the event our
Registration Statement is not declared effective by the SEC or our Form 15c2-11
is not approved by FINRA for the OTCBB, we plan to file a 15c2-11 to quote our
shares of common stock on the OTC Pink Sheets. If we are not cleared to have our
securities quoted on the OTCBB, OTCQB and/or in the event we fail to obtain
effectiveness of our Registration Statement, and are not cleared for trading on
the OTC Pink Sheets, there will be no public market for our common stock and it
could be difficult for our then shareholders to sell shares of common stock
which they own. As a result, the value of our common stock will likely be less
than it would be otherwise due to the difficulty shareholders will have in
selling their shares. If we are unable to obtain clearance to quote our
15
securities on the OTCBB, OTCQB and/or the Pink Sheets, it will be difficult for
us to raise capital and we could be forced to curtail or abandon our business
operations, and as a result, the value of our common stock could become
worthless.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements and information relating to
our business that are based on our beliefs as well as assumptions made by us or
based upon information currently available to us. These statements reflect our
current views and assumptions with respect to future events and are subject to
risks and uncertainties. Forward-looking statements are often identified by
words like: "believe," "expect," "estimate," "anticipate," "intend," "project"
and similar expressions or words which, by their nature, refer to future events.
In some cases, you can also identify forward-looking statements by terminology
such as "may," "will," "should," "plans," "predicts," "potential" or "continue"
or the negative of these terms or other comparable terminology. These statements
are only predictions and involve known and unknown risks, uncertainties and
other factors, including the risks in the section entitled Risk Factors
beginning on page 5, that may cause our or our industry's actual results, levels
of activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. In addition, you are directed to
factors discussed in the "Management's Discussion and Analysis of Financial
Condition and Results of Operation" section beginning on page 34, and the
section entitled "Description of Our Business" beginning on page 22, as well as
other factors discussed elsewhere in this prospectus. Such other factors
include, among others: general economic and business conditions; industry
capacity; industry trends; competition; changes in business strategy or
development plans; project performance; availability, terms, and deployment of
capital; and availability of qualified personnel.
These forward-looking statements speak only as of the date of this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, or achievements. Except as required by applicable law, including the
securities laws of the United States, we expressly disclaim any obligation or
undertaking to disseminate any update or revisions of any of the forward-looking
statements to reflect any change in our expectations with regard thereto or to
conform these statements to actual results.
TAX CONSIDERATIONS
We are not providing any tax advice as to the acquisition, holding or
disposition of the securities offered herein. In making an investment decision,
investors are strongly encouraged to consult their own tax advisor to determine
the U.S. federal, state and any applicable foreign tax consequences relating to
their investment in our securities.
USE OF PROCEEDS
If all the shares are sold, the total proceeds from this offering will be
$32,000. We expect to disburse the proceeds from this offering in the priority
set forth below, within the first 12 months after successful completion of this
offering:
Total Offering proceeds to us $32,000
Cash on hand 15,000
-------
TOTAL $47,000
-------
Legal Counsel Fees for Public Company Reporting Requirements $ 9,000
Accounting and audit fees 11,000
Edgar and XBRL formatting and conversion expenses 3,000
Website development and related expenses 10,000
Inventory of imitation jewelry 4,000
Brochures, Marketing and Promotion 5,000
Incorporate Indian subsidiary 2,000
Office and Administrative 3,000
-------
TOTAL $47,000
=======
DETERMINATION OF OFFERING PRICE
There is no established market for our stock. The offering price of the shares
has been determined arbitrarily by us. The price does not bear any relationship
to our assets, book value, earnings, or other established criteria for valuing a
privately held company. In determining the number of shares to be offered and
16
the offering price, we took into consideration our capital structure and the
amount of money we would need to implement our business plans. Accordingly, the
offering price should not be considered an indication of the actual value of our
securities.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Upon the effectiveness of the registration statement of which this prospectus
forms a part, we intend to seek a market maker to file an application with the
FINRA to have our stock quoted on the OTC Bulletin Board. However, we cannot
assure you that our shares will be quoted on the OTC Bulletin Board or, if
quoted, that a public market will materialize.
The Securities and Exchange Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00, other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
quotation system. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the Securities and Exchange Commission, that:
a. contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
b. contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation of such duties or other requirements of the
securities laws;
c. contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance of
the spread between the bid and ask price;
d. contains a toll-free telephone number for inquiries on disciplinary
actions;
e. defines significant terms in the disclosure document or in the conduct
of trading in penny stocks; and
f. contains such other information and is in such form, including
language, type, size and format, as the Securities and Exchange
Commission shall require by rule or regulation.
The broker or dealer also must provide, prior to effecting any transaction in a
penny stock, the customer with:
(a) bid and offer quotations for the penny stock;
(b) the compensation of the broker-dealer and its salesperson in the
transaction;
(c) the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
(d) a monthly account statement showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a suitably written statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock. Therefore, if our common stock
becomes subject to the penny stock rules, stockholders may have difficulty
selling those securities.
HOLDERS
As of the date of this Prospectus, we have one holder of record of our common
stock.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any securities authorized for issuance under any equity
compensation plans.
DIVIDEND POLICY
We have not paid any dividends since our incorporation and do not anticipate
the payment of dividends in the foreseeable future. At present, our policy is to
retain earnings, if any, to develop and market our product. The payment of
dividends in the future will depend upon, among other factors, our earnings,
capital requirements, and operating financial conditions.
DILUTION
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this offering. Net
tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
result of our arbitrary determination of the offering price of the shares being
17
offered. Dilution of the value of the shares you purchase is also a result of
the lower book value of the shares held by our existing stockholders.
In this offering, the level of dilution is increased as a result of the
relatively low book value of Zewar`s presently issued and outstanding stock.
This is due to the shares of common stock issued to the Company's founder
totaling 3,000,000 shares at $0.005 per share for $15,000 cash versus the
current offering price of $0.01 per share.
The Company's net tangible book value on October 31, 2012 was $13,965, or
approximately $0.00466 per share, based upon 3,000,000 shares outstanding. Upon
completion of this offering, but without taking into account any change in the
net tangible book value after completion of this offering other than that
resulting from the sale of the shares and receipt of the total proceeds of
$32,000 less expense for issuance and distribution of the securities being
registered ($24,004), the net tangible book value of the 6,200,000 shares to be
outstanding will be $21,961, or approximately $0.00354 per share. Accordingly,
the net tangible book value of the shares held by our existing stockholder,
holding 3,000,000 shares, will be increased by $0.00146 per share without any
additional investment on his part. The purchasers of our common stock in this
offering will incur immediate dilution (a reduction in the net tangible book
value per share from the offering price of $0.01 per share) of $0.00646 per
share. As a result, after completion of the offering, the net tangible book
value of the shares held by purchasers in this offering would be $0.00354 per
share, reflecting an immediate reduction from the $0.01 price per share they
paid for their shares.
After completion of the offering, the sole existing shareholder will own 48.4%
of the total number of shares then outstanding, for which he will have made a
cash investment of $15,000, or $0.005 per share. Upon completion of the
offering, the purchasers of the shares offered hereby will own 51.6% of the
total number of shares then outstanding, for which they will have made a cash
investment of $32,000, or $0.01 per share.
The following table illustrates the dilution to the purchasers of the common
stock in this offering. The table below includes an analysis of the dilution
that will occur if all shares are sold:
Dilution Table
100% of
Shares Sold
-----------
Offering Price Per Share $ 0.01
Net Tangible Book Value Per Share Before the Offering $0.00466
Net Tangible Book Value Per Share After the Offering $0.00354
Net Increase to Original Shareholder $0.00146
Decrease in Investment to New Shareholders $0.00646
Dilution to New Shareholders 64.6%
The following table summarizes the number and percentage of shares purchased the
amount and percentage of consideration paid and the average price per share paid
by our existing stockholder and by new investors in this offering:
Price per Total Number of Percentage of Consideration
Share Shares Held Ownership Paid
----- ----------- --------- ----
Existing Stockholder $0.005 3,000,000 48.4% $15,000
Investors in This Offering $0.010 3,200,000 51.6% $32,000
PLAN OF DISTRIBUTION
We are registering 3,200,000 shares of our common stock for offer and sale at
$0.01 per share.
There is currently no active trading market for our common stock, and such a
market may not develop or be sustained. We currently plan to have our common
stock listed on the OTCBB subject to the effectiveness of this Registration
Statement. In addition, a market maker will be required to file a Form 211 with
FINRA before the market maker will be able to make a market in our shares of
common stock. At the date hereof, we are not aware that any market maker has any
such intention.
We may not sell the shares registered herein until the registration statement
filed with the Securities and Exchange Commission is effective. Further, we will
not offer the shares through a broker-dealer or anyone affiliated with a
broker-dealer. Upon effectiveness, all of the shares being registered herein may
become tradable. The stock may be traded or listed only to the extent that there
is interest by broker-dealers in acting as a market maker in our stock. Despite
our best efforts, we may not be able to convince any broker/dealers to act as
18
market-makers and make quotations on the OTCBB. We may consider pursuing a
quotation on the OTCBB after this registration becomes effective and we have
completed our offering.
The price per share will remain at $0.01 even if we obtain a listing on any
exchange or are quoted on the OTCBB, the offering price of $0.01 will not change
for the duration of the offering.
We will receive all of the proceeds from such sales of securities and are
bearing all expenses in connection with the registration of our shares.
This is a self-underwritten offering. There are no plans or arrangements to
enter into any contracts or agreements to sell the Shares with a broker or
dealer. Mr. Mulla, our sole officer and director, will sell the shares and
intends to offer them to friends, family members and business acquaintances with
no commission or other remuneration payable to his for any Shares he sells. In
offering the securities on our behalf, he will rely on the safe harbor from
broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange
Act of 1934.
Mr. Mulla will not register as a broker-dealer pursuant to Section 15 of the
Securities Exchange Act of 1934, in reliance upon Rule 3a4-1, which sets forth
those conditions under which a person associated with an issuer may participate
in the offering of the issuer's securities and not be deemed to be a
broker-dealer. Our sole officer and director satisfies the requirements of Rule
3a4-1, because he:
(a) is not subject to a statutory disqualification, as that term is
defined in Section 3(a)(39)of the Act, at the time of his
participation; and
(b) will not be compensated in connection with his participation by the
payment of commissions or other remuneration based either directly or
indirectly on transactions in securities; and
(c) is not, nor will he be at the time of his participation in the
offering, an associated person of a broker-dealer; and
(d) meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the
Exchange Act, in that he (A) primarily performs, or is intended
primarily to perform at the end of the offering, substantial duties
for or on behalf of our company, other than in connection with
transactions in securities; and (B) is not a broker or dealer, or been
associated person of a broker or dealer, within the preceding twelve
months; and (C) has not participated in selling and offering
securities for any Issuer more than once every twelve months other
than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Only after our registration statement is declared effective by the SEC, we
intend to advertise, through tombstones, and hold investment meetings in state
of Karnataka and Goa, India. We will not utilize the internet to advertise our
offering. Mr. Mulla will also distribute the prospectus to potential investors
at the meetings, to business associates and to his friends and relatives who are
interested in us and a possible investment in the offering. No Shares purchased
in this offering will be subject to any kind of lock-up agreement.
Our officer, director, control person and his affiliates do not intend to
purchase any Shares in this offering.
We may sell our Shares in India only.
SECTION 15(g) OF THE EXCHANGE ACT
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rules
15g-1 through 15g-6 and Rule 15g-9 promulgated thereunder, impose additional
sales practice requirements on broker/dealers who sell our securities to persons
other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouses). While Section 15(g) and Rules 15g-1 through 15g-6 apply to
brokers-dealers, they do not apply to us.
Rule 15g-1 exempts a number of specific transactions from the scope of the penny
stock rules. Rule 15g-2 declares unlawful broker/dealer transactions in penny
stocks unless the broker/dealer has first provided to the customer a
standardized disclosure document.
Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny
stock transaction unless the broker/dealer first discloses and subsequently
confirms to the customer current quotation prices or similar market information
concerning the penny stock in question.
Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for
a customer unless the broker/dealer first discloses to the customer the amount
of compensation or other remuneration received as a result of the penny stock
transaction.
Rule 15g-5 requires that a broker/dealer executing a penny stock transaction,
other than one exempt under Rule 15g-1, disclose to its customer, at the time of
or prior to the transaction, information about the sales persons compensation.
19
Rule 15g-6 requires broker/dealers selling penny stocks to provide their
customers with monthly account statements.
Rule 15g-9 requires broker/dealers to approve the transaction for the customer's
account; obtain a written agreement from the customer setting forth the identity
and quantity of the stock being purchased; obtain from the customer information
regarding his investment experience; make a determination that the investment is
suitable for the investor; deliver to the customer a written statement for the
basis for the suitability determination; notify the customer of his rights and
remedies in cases of fraud in penny stock transactions; and, the FINRA's toll
free telephone number and the central number of the North American Securities
Administrators Association, for information on the disciplinary history of
broker/dealers and their associated persons.
The application of the penny stock rules may affect your ability to resell your
Shares.
TERMS OF THE OFFERING
The Shares will be sold at the fixed price of $0.01 per share until the
completion of this offering. There is no minimum subscription amount required
per investor, and subscriptions, once received, are irrevocable by subscribers.
This offering will commence on the date of this prospectus is effective and
continue for a period not to exceed 180 days (the "Expiration Date").
DEPOSIT OF OFFERING PROCEEDS
This is an "all or none" offering and, as such, we will not be able to spend any
of the proceeds unless and until all shares are sold and all proceeds are
received. We intend to hold all monies collected for subscriptions in a bank
account until the total amount of $32,000 has been received. At that time, the
funds will be used in the implementation of our business plans. In the event the
offering is not sold out prior to the Expiration Date, all monies will be
returned to investors, without interest or deduction.
PROCEDURES AND REQUIREMENTS FOR SUBSCRIPTION
If you decide to subscribe for any shares in this offering, you will be required
to execute a Subscription Agreement and tender it, together with a check, bank
draft or certified funds to us. Subscriptions, once received by the company, are
irrevocable by subscribers.
RIGHT TO REJECT SUBSCRIPTIONS
We maintain the right to accept or reject subscriptions in whole or in part, for
any reason or for no reason. All monies from rejected subscriptions will be
returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours of our
having received them.
DESCRIPTION OF SECURITIES TO BE REGISTERED
CAPITAL STOCK
Our authorized capital stock consists of 125,000,000 shares, of which
100,000,000 shares are common stock and 25,000,000 shares are preferred stock,
each with a par value of $0.0001 per share. As of the date hereof, there are
3,000,000 shares of common stock issued and outstanding, and there are no issued
and outstanding shares of preferred stock.
COMMON STOCK
Holders of our common stock have no preemptive rights to purchase additional
shares of common stock or other subscription rights. The common stock carries no
conversion rights and is not subject to redemption or to any sinking fund
provisions. All shares of common stock are entitled to share equally in
dividends from sources legally available therefor, when, as and if declared by
the Board of Directors, and upon our liquidation or dissolution, whether
voluntary or involuntary, to share equally in our assets that are available for
distribution to stockholders.
The Board of Directors is authorized to issue additional shares of common stock
not to exceed the amount authorized by our Articles of Incorporation, on such
terms and conditions and for such consideration as the Board may deem
appropriate without further stockholder action.
OPTIONS, WARRANTS AND RIGHTS
There are no outstanding options, warrants, or similar rights to purchase any of
our securities.
DIVIDEND POLICY
We have not paid any cash dividends to shareholders. The declaration of any
future cash dividends is at the discretion of our board of directors and depends
upon our earnings, if any, our capital requirements and financial position,
20
general economic conditions, and other pertinent conditions. It is our present
intention not to pay any cash dividends in the foreseeable future, but rather to
reinvest earnings, if any, in our business operations.
PENNY STOCK REGULATION
The SEC has adopted regulations which generally define "penny stock" to be any
equity security that has a market price (as defined) of less than $5.00 per
share or an exercise price of less than $5.00 per share. Such securities are
subject to rules that impose additional sales practice requirements on
broker-dealers who sell them. For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchaser of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prepared by the SEC relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative, current quotations for
the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, among other requirements, monthly statements must be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks. As the Shares immediately
following this Offering will likely be subject to such penny stock rules,
purchasers in this Offering will in all likelihood find it more difficult to
sell their Shares in the secondary market.
SHARES ELIGIBLE FOR FUTURE RESALE
GENERAL
There is no public market for our common stock. We cannot predict the effect, if
any, that market sales of shares of our common stock or the availability of
shares of our common stock for sale will have on the market price of our common
stock. Sales of substantial amounts of our common stock in the public market
could adversely affect the market prices of our common stock and could impair
our future ability to raise capital through the sale of our equity securities.
Upon completion of this offering, based on our outstanding shares as of the date
of this Prospectus, we will have outstanding an aggregate of 6,200,000 shares of
our common stock. Of these shares, upon effectiveness of the registration
statement of which this prospectus forms a part, the 3,200,000 shares covered
hereby will be freely transferable without restriction or further registration
under the Securities Act since they will not be held by affiliates of the
Company.
The remaining 3,000,000 restricted shares of common stock to be outstanding are
owned by our sole officer and director, known as our "affiliate," and may not be
resold in the public market except in compliance with the registration
requirements of the Securities Act or under an exemption under Rule 144 under
the Securities Act, if available, or otherwise.
RULE 144
The 3,000,000 shares held by our sole director and officer is subject to the
sale limitations imposed by Rule 144 and rules applying to shell companies. The
eventual availability for sale of substantial amounts of common stock under Rule
144 could adversely affect prevailing market prices for our securities.
Our issued shares of common stock are not currently available for resale to the
public in accordance with the volume and trading limitations of Rule 144 of the
Act because we are a shell company. Our shareholders cannot rely on Rule 144 for
the resale of our common stock until the following have occurred:
1. we have ceased to be a shell company;
2. we are subject to the reporting requirements of the Exchange Act;
3. we have filed all Exchange Act reports required for the past 12
months; and
4. a minimum of one year has elapsed since we filed current Form 10
information on Form 8-K changing our status from a shell company to a
non-shell company.
When Rule 144 is available, our affiliate stockholder shall be entitled to sell
within any three month period a number of shares that does not exceed the
greater of:
1. 1% of the number of shares of the company's common stock then
outstanding; or
2. the average weekly trading volume of the company's common stock during
the four calendar weeks preceding the filing of a notice on Form 144
with respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
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INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents or subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
The financial statements included herewith have been audited by LBB & Associates
LLP, registered independent certified public accountants, to the extent and for
the periods set forth in their report appearing elsewhere in this document and
in the registration statement filed with the Securities and Exchange Commission,
and are included in reliance upon such report given upon the authority of said
firm as experts in auditing and accounting.
Synergy Law Group, LLC has provided an opinion on the validity of our common
stock.
DESCRIPTION OF OUR BUSINESS
OVERVIEW
We were incorporated on September 26, 2012 in the State of Nevada. We have never
been involved in any reclassification, merger, consolidation or purchase or sale
of a significant amount of assets nor have we ever declared bankruptcy, been in
receivership, or been involved in any legal action or proceedings.
Our independent auditor has issued an audit opinion which includes a statement
expressing substantial doubt as to our ability to continue as a going concern.
BUSINESS OF ISSUER
We are a development stage company with no revenue to date and limited
operations and assets to date.
IN GENERAL
We are a development stage company with plans to operate an India-based online
retail jewelry store specializing in costume fashion jewelry products with an
emphasis on a diverse collection of rings, earrings, necklaces and bracelets.
Costume jewelry, also may be known as fashion jewelry is defined as jewelry made
from any non-precious metals resulting in it being inexpensive to produce and
more affordable to consumers.
We will seek to provide our clientele with a wide collection of jewelry that
includes items for special occasions ranging from celebrations to everyday wear.
We will seek to provide a one-stop shop through our convenient website. This
website will provide our customers the ease of shopping online and ability to
performing online purchases. Our target audience is 20-30 year old Indian women
with web-enabled computers or mobile devices.
To date our operations have been limited to organizational activities, and we
will not start operations until our website is completed.
Our president and CEO has significant experience in jewelry and clothing fashion
We plan to purchase either directly from a manufacturer based in the State of
Gujarat, India or have it hand-crafted from the vast Indian cottage industry.
INDUSTRY OVERVIEW
The overall jewelry industry is expected to increase 2.4% and total an estimated
$8.9 billion during 2012. The fashion jewelry industry is attributed to a large
portion of this growth due to its affordability.
We expect sales of both genuine and costume jewelry to increase as consumers
regain confidence in the economy. As consumers begin to discover and appreciate
the greater options for costume jewelry, value sales are projected to increase.
One report cited that during the period April - June 2012-13, India's fashion
jewelry and accessories exports stood at $62.47 million as against $54.35
million during the corresponding period in the prior fiscal period.
Growth in the costume jewelry industry is attributable to the following factors:
1. Decline in personal disposable income of consumers leaving the primary
concern basic needs such a food and shelter and less to spend on items
outside of that such as fashion accessories.
2. With the cost of gold and silver rising significantly in recent years,
customers want to find the least expensive and trendiest pieces of
jewelry. Fashion jewelry offers a stylish alternative to fine genuine
jewelry
3. Latest fashions are constantly changing resulting in fine jewelry
becoming too costly for consumers to maintain and costume jewelry as
more affordable option to remain trendy and up to date.
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PRINCIPAL PRODUCTS
We plan to offer an array of custom designs, styles, and collections of rings,
earrings, necklaces, and bracelets for all occasions. We plan to research and
select approximately 100 products and fashion styles to include on the website
which will cater to the young and affluent market which we will be targeting.
These items will be appropriate to accessorize for all events including the
following:
* Fanciest occasions: celebrations such as engagements, weddings,
graduations, birthday parties, special outings, parties
* Professional work wear: presentations, board meetings, client
meetings, conferences, suitable work wear, work events, work parties
* Every day wear: accessorize for summer, fall and winter for all every
day wear, casual outings with friends, family
We will refine our initial product offering to respond to changing consumer
purchasing habits and needs. Our website will be designed to give us the
flexibility to showcase new items and collections.
PRINCIPAL SUPPLIERS
We will either outsource our jewelry design project to jewelry designers with
3-D jewelry design capabilities or seek to purchase jewelry from manufacturers.
There are skilled artisans in the Indian cottage industry who will use prototype
designs which we select. These skilled artisans and labors are third-party
vendors that do not set minimum orders nor require us to enter into any material
agreements. We will outsource our manufacturing jobs to these third-party
vendors. The time frame to commence this phase of operation will be following
the completion of our website.
Our Company's president is the primary owner of two branches of clothing and
accessories stores based in Goa, India. He will be the wholesale supplier on
consignment and will cater to the needs of our clients based on our
specifications of products. We will be the primary decision maker in all product
selection. We will also cater to orders for customer design jewelry sets which
we have made through the network of our president.
TECHNOLOGY
We intend to implement a broad array of commercially available, licensed
technologies that facilitate Website management, complex database search
functionality, customer interaction and personalization and transaction
processing.
To address the critical issues of privacy and security on the Internet, we plan
to incorporate, for transmission of credit card and personal information between
customers and our Web server, industry standard Secure Sockets Layer (SSL)
security technology. SSL is the standard security technology for creating an
encrypted link between a web server and a browser. This link ensures that all
data passed between our web server and the browser on a customer's computing
device remains private and secure. This system is used by countless websites
worldwide to allow secure internet transactions for customers.
Our systems will provide our customers with real time product availability
information and updated customer information to enhance our customer care.
We will have an integrated direct connection for processing credit cards to
ensure that a valid credit card number and authorization have been received at
the same time a customer submits an order on our website.
Our information systems will provide our customer care representatives with
records of all prior contact with a customer, including the customer's address,
phone number, e-mail address, fax number, order history, payment history, and
notes.
WEBSITE DESIGN AND FEATURES
Online shoppers will be able to search our website for products which will be
categorized into 4 major groups: earrings, rings, necklaces and bracelets. These
will then be further divided within each category based on style ranging from
every day wear to fancy. By further breaking down product line and style,
customers will have the ease of browsing our website. This will enhance their
ability to easily navigate through our wide product selection.
Many other websites force customers to search through pages and pages of
uncategorized items which result in customers getting lost or confused within
the product line when searching for a particular item. Our goal is to categorize
as much as possible so that customers can find the product that they are looking
for in the most expedient manner. Our website design will be simplified and
provide an easily navigational page. Once shoppers select items, these will be
added to their shopping cart and allow them to move on to place an order. The
checkout process will be simplified and streamlined, reducing its complication
and encouraging shoppers to continue with the process.
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WEBSITE CONTENT
Our website will contain pictures and detailed descriptions of each item. There
will also be an option to zoom in to observe the quality of the product through
each picture listed. This will add value to each item and ensure that it matches
the needs of the occasion that our customers are purchasing the item for.
Many shopping carts are tricky to navigate and lose customers who often leave
without buying, because the sign-up registration process asks for more personal
information than that which is necessary to complete the transaction. Our
website design will be engineered for speed and ease. Once shoppers place an
order, the checkout process will be streamlined and simplified down to one page,
thus reducing the chances of shopping cart abandonment.
The Website will contain an automatic shipment feature, for customers who wish
to purchase products on a regular, recurring, basis by leaving their credit card
details on file within our secure server platform.
Success in today's online retailing world includes addressing the needs of
mobile device users. We will engineer our Website to ensure compatibility with
mobile devices, including smart phones and tablets like the iPad and BlackBerry
Playbook.
PRICE AND POSITIONING
We will have a wide range of products from simple to fancy styles ranging from
250 rupees (US $5.00) to 2,000 rupees (US $40), plus postage and handling which
we estimate would be approximately 100 rupees (US $2.00) per item for delivery
in India. Our products will be competitively priced based on the market rates in
India. We will not be positioning ourselves as a discount retailer and believe
that we will create brand recognition through our latest fashion collections
based on each of the four seasons (spring, summer, winter, fall). The ease of
navigation through our website, cutting edge website design, latest and
trendiest offerings, informative descriptions will assist us in the positioning
of our product line and help to ensure success of the line.
COMPETITION
There is a large variety of competitors including large and popular online
shopping providers such as Amazon that are using the internet to expand their
channels for distribution, traditional well known retailers and established mail
order and online retailers of fashion costume jewelry and accessories.
Competitors with a presence in the Indian market are increasing in number.
With the growth of the costume jewelry industry, we expect the continued
entrance of additional competitors in the future particularly considering the
vast size of the Indian market.
Our current or potential competitors include the following:
* Large online merchants such as Amazon, Indian Jewellery.com, Mukshis,
Joyalukka, Indian Fashion Expo. These offer a large variety of items
with online purchases and delivery options.
* Large International Department Stores: Forever 21, Aldo Accessories,
Mango. These are popular and well known among the target market.
* Specialized Indian wedding retailers which specifically cater to the
bridal market offering a wide variety of Indian jewelry for wedding
ceremonies.
* Local Street Vendors in highly populated areas: these provide highly
discounted rate items and offer options to bargain and negotiate
prices directly with the vendor.
ONLINE MARKETING
In order for any online retailer to be successful, they must develop and
increase traffic to their websites. We will use a broad array of marketing
strategies including social media, email blasts and print advertising to inform
our market about our products.
As part of our online marketing strategy, we will make our products and brand
available by having searchable terms available to internet consumers by using
targeted keywords in order to achieve priority placement on the top search
engines and search engine networks such as Google and Bing. We will optimize
each page of our website to allow for search engines and networks to pick up the
website. Search engine optimization strategy is most effective by researching
the most frequently searched terms that potential customers would use when
searching for fashion jewelry products on the Internet. We will incorporate
keywords in our product descriptions on each page of our website.
Additionally, after the Company is operational and has adequate financial
resources, we will join the LinkShare Network which is an affiliate program for
merchant clients and affiliate websites, This network develops and builds a long
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term branded affiliate program to promote online sales and establish an overall
Internet presence. This will enable us to establish link arrangements with other
websites as well as portals and search engines.
SOCIAL MEDIA TOOLS
We believe social media tools are critically important to building brand and
community. As social media platforms (e.g. Facebook) mature past their college
roots, consumers and businesses have embraced them and these platforms have
become vital tools to connect consumers and promote product purchases. Our
social media strategy includes videos, talk-backs with fashion leaders,
contests, coupons, special offers and give-aways, among others. We intend to
select and place advertising on those social media platforms that are effective
in reaching our target audience. Costs for videos and contests are included in
our initial budget. No cash outlay is required for coupons and special offers.
INTELLECTUAL PROPERTY AND AGREEMENTS
Presently, we have no intellectual property, patents or trademarks. We have no
royalty agreement or any labor contracts.
OPERATION PLAN
In our plan of operation, we plan to develop a website where we will catalogue
our jewelry line and create a method of payment for the jewelry items and
delivery charges. We seek to provide a convenient shopping experience. We will
require additional funding in order to pursue our business objectives and there
is no guarantee that we will be successful in this regard.
Our business plan anticipates that our sales will begin in October 2013. We
intend to operate the business through a wholly-owned subsidiary company that we
will incorporate in India following the effectiveness of this registration
statement. As a holding company of a foreign enterprise rather than a United
States incorporated company that conducts business in India, we will be
dependent on our operating subsidiary for any cash flow.
Our office is located at the premises of our President, Mohsin Mulla, who
currently provides such space to us on a rent-free basis at C/o Nizami's Family
Shoppe, Sunshine Building, Adade Faria Road, Margao, Goa, India. Mr. Mulla has
been owner and manager of two readymade garments shops, namely Nizami Family
Shoppe (family wear and imitation jewelry) and Nizami Creations (ladies Indian
saris and jewelry). Both shops are in Margao, Goa. Mr. Mulla purchases garments
and jewelry directly from manufactures in the State of Gujarat, India.
Currently, our President devotes approximately two hours a week to the Company.
He has indicated that he is willing to spend more time with the business as it
grows and his services are needed. We anticipate that he will eventually be
required to spend about 20 hours a week on matters relating to our business.
We will require the funds from this offering in order to initiate our business
plan. We have been issued a "substantial doubt" going concern opinion from our
auditors and our major asset is our cash balance of $15,000 at October 31, 2012,
which was generated from the issuance of shares to our sole officer and
director. If we do not obtain funds from this Offering, we may not be able to
continue. We estimate that our cash on hand will allow us to continue as a going
concern only through July 31, 2013.
We have not conducted any formal market research into the likelihood of success
of our operations or the acceptance of our products or services by the public.
We are relying on the experience of our President, Mr. Mohsin Mulla, for
developing a business plan.
SATISFACTION OF OUR CASH OBLIGATIONS FOR THE NEXT 12 MONTHS. We have
accomplished the goal of developing our business plan; however, we are in the
early stages of setting up an operational company capable of realizing revenues.
We are conducting this Offering to obtain the basic minimum amount of funds
necessary for the Company to advance from a development stage company to an
operational company with the potential to realize revenues. If we are
unsuccessful in generating cash proceeds from Offering, we will be forced to
curtail expenditures. Our sole officer and director, Mr. Mulla, has agreed to
continue his part time work without pay, until such time as there are sufficient
funds from operations or from an additional securities offering in the future.
We have not allocated any pay for Mr. Mulla out of the funds being raised in
this Offering. If we receive no additional funds, including the funds from this
Offering, we could continue in business until July 2013 on an "as needed" basis.
EXPECTED PURCHASE OR SALE OF PLANT OR SIGNIFICANT EQUIPMENT. The purchase of any
plant or significant equipment is not required by us at this time or in the next
12 months.
MILESTONES:
We are a development stage company with minimal amounts of equity capital
initially available ($15,000). We have, therefore, set our goals in three
stages: (1) goals based upon the availability of our initial funding of $15,000;
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(2) goals based upon our proceeds from this Offering in the amount of $32,000;
and (3) goals at such time as we are generating revenue as an operational
company.
Stage I: Development of our business operations based upon our founders'
investment of $15,000.
* To set up our corporate structure (file for incorporation) set up
corporate governance. Accomplished through the incorporation in Nevada
in September of 2012 for approximate cost of $1,000;
* To retain counsel and an auditor to assist in preparation of documents
providing for the raising of $32,000 to complete Stage II of our Plan
of Operations by way of an initial filing with the SEC for a cost of
$6,000.
* To register a domain name, www.zewar.in. This has been accomplished
for a cost of approximately $10.
* To have our registration statement deemed effective by the SEC so that
we may complete the Offering. We anticipate that this completion will
cost us an additional $17,000 part of which will be o funded from the
proceeds of the Offering.
Stage II: Development of our business operations.
After completion of the Offering, we intend to complete the following:
a. Meet all reporting requirement of a public company which is budgeted
at $12,000 per annum (primarily for audit and review of our annual and
quarterly financial statements);
b. We plan to request bids for our website development from at least
three developers who are based in the state of Goa, India. We have
approached one such developer for an initial pricing and timing. We
have been advised that the theme design, payment module (CC Avenue
module), website development and social media module integration would
cost approximately $5,000 and would take approximately three months.
The search engine optimization would take approximately six months to
develop and would cost approximately $1,000. The domain plus the
server would cost approximately $400 per year. Custom Facebook page
and Twitter page with advertisement banner will cost approximately
$500. We also plan to develop the search engine optimization module.
The total cost for all these is estimated at $7,000.
c. While our website is being developed, we will select fashion styles
for our inventory. We estimate that this will be completed within
three months so that these are shown in our website while the website
is being developed. Initially, we will have a limited product line
available and our inventory cost is estimated to be $4,000.
d. As part of our marketing plan is to produce three 10-second videos
showing our product and the video will be shown on our website.
e. We estimate that Zewar will be operational in nine months after
completion of the initial offering to be at estimated total cost of
$23,000.
Stage III: Generation of revenue as an operational business. Without rent and
management fees payable to our President, we will need to generate a profit
(revenue less cost of inventory) of $20,000 ($12,000 for operation as a public
company, $3,000 for website maintenance and $3,000 for general operating
expense) to continue as an operating company.
Until an infusion of capital from this Offering, we will not be able to complete
Stage II of our Plan of Operation. We currently have insufficient capital to
commence any significant website development. Our Plan of Operation is premised
upon having funds available from this Offering. We believe that the funds
received in the Offering will assist us in generating revenues. We have suffered
startup losses which raises substantial concern regarding our ability to
continue as a going concern. We believe that the proceeds of this Offering will
enable us to maintain our operations and working capital requirements for at
least the next 12 months, without taking into account any internally generated
funds from operations, if any.
There is still no assurance that, even with the funds from this Offering, we
will be able to maintain operations at a level sufficient for an investor to
obtain a return on an investment in our common stock. Further, we may continue
to be unprofitable.
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EXISTING GOVERNMENT REGULATIONS
There are no government regulations relating to online retail sales.
As the Internet is becoming a popular mode of buying, it is possible that a
number of laws and regulations may be adopted by the Indian Government with
respect to the Internet. Laws may cover issues such as privacy, freedom of
expression, contents, advertising, information security and others.
In addition, because our products will be available for the Internet in multiple
states and foreign countries, other jurisdictions may claim that we are required
to qualify to do business in that state or country. Our failure to qualify in a
jurisdiction where we are required to do so can subject us to taxes and/or
penalties. The application of laws or regulations from jurisdictions whose laws
do not currently apply to us could have a material adverse effect on our results
of operations and our financial condition.
In the US, the Federal Trade Commission ("FTC") has also initiated action on
more than one occasion against online services regarding the way information is
collected from users. We do not contemplate providing personal information
regarding our customers. However, the adoption of additional consumer protection
laws could create uncertainty in Internet usage and reduce the demand for our
products.
JOBS ACT
In April 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted
into law. The JOBS Act provides, among other things:
* Exemptions for "emerging growth companies" from certain financial
disclosure and governance requirements for up to five years and
provides a new form of financing to small companies;
* Amendments to certain provisions of the federal securities laws to
simplify the sale of securities and increase the threshold number of
record holders required to trigger the reporting requirements of the
Securities Exchange Act of 1934, as amended;
* Relaxation of the general solicitation and general advertising
prohibition for Rule 506 offerings;
* Adoption of a new exemption for public offerings of securities in
amounts not exceeding $50 million; and
* Exemption from registration by a non-reporting company of offers and
sales of securities of up to $1,000,000 that comply with rules to be
adopted by the SEC pursuant to Section 4(6) of the Securities Act and
exemption of such sales from state law registration, documentation or
offering requirements.
In general, under the JOBS Act a company is an "emerging growth company" if its
initial public offering ("IPO") of common equity securities was effected after
December 8, 2011 and the company had less than $1 billion of total annual gross
revenues during its last completed fiscal year. A company will no longer qualify
as an "emerging growth company" after the earliest of
(i) the completion of the fiscal year in which the company has total
annual gross revenues of $1 billion or more,
(ii) the completion of the fiscal year of the fifth anniversary of the
company's IPO;
(iii)the company's issuance of more than $1 billion in nonconvertible debt
in the prior three-year period, or
(iv) the company becoming a "larger accelerated filer" as defined under the
Securities Exchange Act of 1934, as amended.
The JOBS Act provides additional new guidelines and exemptions for non-reporting
companies and for non-public offerings. Those exemptions that impact the Company
are discussed below.
FINANCIAL DISCLOSURE. The financial disclosure in a registration statement filed
by an "emerging growth company" pursuant to the Securities Act of 1933, as
amended, will differ from registration statements filed by other companies as
follows:
(i) audited financial statements required for only two fiscal years
(provided that "smaller reporting companies" such as the Company are
only required to provide two years of financial statements);
(ii) selected financial data required for only the fiscal years that were
audited (provided that "smaller reporting companies" such as the
Company are not required to provide selected financial data as
required by Item 301 of Regulation S-K); and
(iii)executive compensation only needs to be presented in the limited
format now required for "smaller reporting companies".
27
However, the requirements for financial disclosure provided by Regulation S-K
promulgated by the Rules and Regulations of the SEC already provide certain of
these exemptions for smaller reporting companies. The Company is a smaller
reporting company. Currently a smaller reporting company is not required to file
as part of its registration statement selected financial data and only needs to
include audited financial statements for its two most current fiscal years with
no required tabular disclosure of contractual obligations.
The JOBS Act also exempts the Company's independent registered public accounting
firm from having to comply with any rules adopted by the Public Company
Accounting Oversight Board ("PCAOB") after the date of the JOBS Act's enactment,
except as otherwise required by SEC rule.
The JOBS Act further exempts an "emerging growth company" from any requirement
adopted by the PCAOB for mandatory rotation of the Company's accounting firm or
for a supplemental auditor report about the audit.
INTERNAL CONTROL ATTESTATION. The JOBS Act also provides an exemption from the
requirement of the Company's independent registered public accounting firm to
file a report on the Company's internal control over financial reporting,
although management of the Company is still required to file its report on the
adequacy of the Company's internal control over financial reporting.
Section 102(a) of the JOBS Act exempts "emerging growth companies" from the
requirements in ss.14A(e) of the Securities Exchange Act of 1934 for companies
with a class of securities registered under the Securities Exchange Act of 1934,
as amended, to hold shareholder votes for executive compensation and golden
parachutes.
OTHER ITEMS OF THE JOBS ACT. The JOBS Act also provides that an "emerging growth
company" can communicate with potential investors that are qualified
institutional buyers or institutions that are accredited to determine interest
in a contemplated offering either prior to or after the date of filing the
respective registration statement. The JOBS Act also permits research reports by
a broker or dealer about an "emerging growth company" regardless of whether such
report provides sufficient information for an investment decision. In addition
the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules
or regulations regarding brokers, dealers and potential investors,
communications with management and distribution of research reports on the
"emerging growth company's" IPOs.
Section 106 of the JOBS Act permits "emerging growth companies" to submit
registration statements under the Securities Act of 1933, as amended, on a
confidential basis provided that the registration statement and all amendments
thereto are publicly filed at least 21 days before the issuer conducts any road
show. This is intended to allow "emerging growth companies" to explore the IPO
option without disclosing to the market the fact that it is seeking to go public
or disclosing the information contained in its registration statement until the
company is ready to conduct a roadshow.
ELECTION TO OPT OUT OF TRANSITION PERIOD: Section 102(b)(1) of the JOBS Act
exempts "emerging growth companies" from being required to comply with new or
revised financial accounting standards until private companies (that is, those
that have not had a Securities Act of 1933, as amended, registration statement
declared effective or do not have a class of securities registered under the
Securities Exchange Act of 1934, as amended) are required to comply with the new
or revised financial accounting standard.
Pursuant to Section 107 of the JOBS Act, an emerging growth company may choose
to forgo such exemption and instead comply with the requirements that apply to
an issuer that is not an emerging growth company. We have elected under this
section of the JOBS Act to maintain our status as an emerging growth company and
take advantage of the JOBS Act provisions relating to complying with new or
revised accounting standards under Section 102(b)(1) of the JOBS Act.
SUBSIDIARIES
Since we are proposing to do business in India, we intend to operate our
business in India through an Indian incorporated subsidiary to be established
following the effectiveness of our Registration Statement.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS AND
LABOR CONTRACTS
We have no patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have not spent any funds on research and development activities to date.
28
COMPLIANCE WITH ENVIRONMENTAL LAWS
Our operations will not be subject to any environmental laws.
FACILITIES
We do not own or rent facilities of any kind. We plan to conduct our operations
from the office of our President who provides this space to us free of charge.
We expect to continue to be able to use the office of our President without
charge until the business is profitable and operations warrant renting a larger
space in a commercial building.
EMPLOYEES
We have commenced only limited operations related to the organization of the
Company, and therefore currently have no employees. Our sole officer and
director spends approximately two hours a week on our business without
compensation. Upon commencement of our operation, our President will devote 20
hours per week to the Company's business. When business operations warrant, we
may retain one part-time person for packing and delivery to post office or
courier offices at a salary of approximately $80 per month which will be
financed from revenue generated from operations..
REPORTS TO STOCKHOLDERS
We are not currently a reporting company, but upon effectiveness of the
registration statement, of which this prospectus forms a part, we will be
required to file reports with the SEC pursuant to the Securities Exchange Act of
1934, as amended. These reports include annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K. You may obtain copies of
these reports from the SEC's Public Reference Room at 100 F Street, NE.,
Washington, DC 20549, on official business days during the hours of 10 a.m. to 3
p.m. or on the SEC's website, at www.sec.gov. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
DESCRIPTION OF PROPERTY
We do not currently own any property. We are currently operating out of the
premises of our President, on a rent-free basis during our development stage. We
consider our current principal office space arrangement adequate at this time.
SHELL COMPANY STATUS
Rule 405 of the Securities Act defines the term "shell company" as a registrant,
other than an asset-backed issuer, that has:
(1) No or nominal operations; and
(2) Either:
(i) No or nominal assets;
(ii) Assets consisting solely of cash and cash equivalents; or
(iii)Assets consisting of any amount of cash and cash equivalents and
nominal other assets.
For purposes of this definition, the determination of a registrant's assets
(including cash and cash equivalents) is based solely on the amount of assets
that would be reflected on the registrant's balance sheet prepared in accordance
with generally accepted accounting principles on the date of that determination.
The Company has no or nominal operations and has assets consisting solely of
cash and cash equivalents and is, therefore, a shell company as defined under
Rule 405.
The Company's shell company status results in the following consequences:
* The Company is ineligible to file a registration of securities using
Form S-8; and
* Rule 144 is unavailable for transfers of our securities until we have
ceased to be a shell company, are subject to the reporting
requirements of the Exchange Act; we have filed Exchange Reports for
12 months and a minimum of one year has elapsed since the filing of
Form 10 information on Form 8-K changing our status from a shell
company to a non-shell company.
LEGAL MATTERS
We know of no existing or pending legal proceedings against us, nor are we
involved as a plaintiff in any proceeding or pending litigation. There are no
proceedings in which any of our director, officer or any of their respective
29
affiliates, or any beneficial stockholder, is an adverse party or has a material
interest adverse to our interest. Our address for service of process in Nevada
is 1000 East William Street, Suite 204, Carson City, Nevada 89701.
MANAGEMENT
Our sole executive officer and director and his age as of the date of this
prospectus is as follows:
Name Age Position
---- --- --------
Mohsin Mulla 29 President, Secretary/Treasurer and sole member of the
Board of Directors
The person named above has held his offices/positions since the inception of our
company and is expected to hold his offices/positions until the next annual
meeting of our stockholders.
BIOGRAPHICAL INFORMATION
Set forth below is a brief description of the background and business experience
of our sole executive officer and director:
Mohsin Mulla has been our President, Secretary, Treasurer and a member of the
Board of Directors since our inception on September 26, 2012. From 2005 to 2008,
Mr. Mulla worked as a manager of a readymade garment shop in Mapusa, Goa, India.
From 2009 to present, Mr. Mulla has been owner and manager of two readymade
garments shops, namely Nizami Family Shoppe (family wear and imitation jewelry)
and Nizami Creations (ladies Indian saris and jewelry). Both shops are in
Margao, Goa. Mr. Mulla purchases garments and jewelry directly from
manufacturers in the State of Gujarat, India.
Mr. Mulla reads and speaks English, Hindi and Konkani fluently. Management
believes that Mr. Mulla's understanding of the English language, and his
familiarity with Indian culture, will enable his to deal with a myriad of issues
involving customer service.
Mr. Mulla's currently spends up to two hours a week on the operations of our
company and he has indicated that he is willing to spend more time with the
business as it grows and his services are needed. We anticipate that he will
eventually be required to spend about 20 hours a week on matters relating to our
business, but Mr. Mulla will retain services of staff for handling and shipping.
The specific experience, qualifications, attributes, and skills that led to the
conclusion that Mr. Mulla serve as our director were: his business experience in
the retail industry gained while managing a garment shop and thereafter opening
his own garment store which he expanded to two locations; his ability to receuit
staff and consultants with appropriate skills; his negotiation skills which will
be utilized in the future for leasing premises and purchasing jewelry; his
computer technology skills and his ability to read and speak English, Hindi, and
Konkani fluently.
Mr. Mulla is not an officer or director of any reporting company that files
annual, quarterly, or periodic reports with the United States Securities and
Exchange Commission.
During the past ten years, M. Mulla has not been the subject of the following
events:
1. Any bankruptcy petition filed by or against any business of which Mr.
Mulla was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that time.
2. Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding.
3. An order, judgment, or decree, not subsequently reversed, suspended or
vacated, or any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting Mr.
Mulla's involvement in any type of business, securities or banking
activities.
4. Found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Future Trading
Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or
vacated.
BOARD COMPOSITION
Our Bylaws provide that the Board of Directors shall consist of not less than
one nor more than nine members, and that our shareholders shall determine the
number of directors from time to time. Each director serves for a term that
expires until the next annual meeting of shareholders and until his successor
shall have been elected and qualified, or until his earlier resignation, removal
from office, or death.
30
COMMITTEES OF THE BOARD OF DIRECTORS
We do not presently have a separately constituted audit committee, compensation
committee, nominating committee, executive committee or any other committees of
our Board of Directors, and we do not have an audit committee "financial
expert." As such, our entire Board of Directors acts as our audit committee and
handles matters related to compensation and nominations of directors.
POTENTIAL CONFLICTS OF INTEREST
Since we do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our sole director, who is also our sole executive officer. Thus,
there is an inherent conflict of interest.
DIRECTOR INDEPENDENCE
As of the date of this Prospectus which is part of the Registration Statement
filed on Form S-1, we have no independent directors.
The Company has developed the following categorical standards for determining
the materiality of relationships that the Directors may have with the Company. A
Director shall not be deemed to have a material relationship with the Company
that impairs the Director's independence as a result of any of the following
relationships:
- the Director is an officer or other person holding a salaried position
of an entity (other than a principal, equity partner or member of such
entity) that provides professional services to the Company and the
amount of all payments from the Company to such entity during the most
recently completed fiscal year was less than two percent of such
entity's consolidated gross revenues;
- the Director is the beneficial owner of less than five percent of the
outstanding equity interests of an entity that does business with the
Company;
- the Director is an executive officer of a civic, charitable or
cultural institution that received less than the greater of $1 million
or two percent of its consolidated gross revenues, as such term is
construed by the New York Stock Exchange for purposes of Section
303A.02(b)(v) of the Corporate Governance Standards, from the Company
or any of its subsidiaries for each of the last three fiscal years;
- the Director is an officer of an entity that is indebted to the
Company, or to which the Company is indebted, and the total amount of
either the Company's or the business entity's indebtedness is less
than three percent of the total consolidated assets of such entity as
of the end of the previous fiscal year; and
- the Director obtained products or services from the Company on terms
generally available to customers of the Company for such products or
services. The Board retains the sole right to interpret and apply the
foregoing standards in determining the materiality of any
relationship.
The Board shall undertake an annual review of the independence of all
non-management Directors. To enable the Board to evaluate each non-management
Director, in advance of the meeting at which the review occurs, each
non-management Director shall provide the Board with full information regarding
the Director's business and other relationships with the Company, its affiliates
and senior management.
Directors must inform the Board whenever there are any material changes in their
circumstances or relationships that could affect their independence, including
all business relationships between a Director and the Company, its affiliates,
or members of senior management, whether or not such business relationships
would be deemed not to be material under any of the categorical standards set
forth above. Following the receipt of such information, the Board shall
re-evaluate the Director's independence.
SIGNIFICANT EMPLOYEES
We have no employees.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No director, person nominated to become a director, executive officer, promoter
or control person of our company has, during the last ten years: (i) been
convicted in or is currently subject to a pending a criminal proceeding
(excluding traffic violations and other minor offenses); (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to any federal or state securities or banking or commodities
laws including, without limitation, in any way limiting involvement in any
business activity, or finding any violation with respect to such law, nor (iii)
any bankruptcy petition been filed by or against the business of which such
person was an executive officer or a general partner, whether at the time of the
bankruptcy or for the two years prior thereto.
31
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
We have not implemented a formal policy or procedure by which our stockholders
can communicate directly with our Board of Directors. Nevertheless, every effort
will be made to ensure that the views of stockholders are heard by the Board of
Directors, and that appropriate responses are provided to stockholders in a
timely manner. During the upcoming year, our Board will monitor whether it would
be appropriate to adopt such a process.
EXECUTIVE COMPENSATION
Since our incorporation on September 26, 2012, we have not compensated and have
no arrangements to compensate our sole officer and director Mr. Mulla for his
services to us as an officer or director. However, we anticipate that Mr. Mulla
will receive compensation from the Company once cash flow that we generate from
operations significantly exceeds our total expenses. We expect that once we are
in full operations, the compensation that we will pay to Mr. Mulla will not
exceed $3,000 (approximately 150,000 rupees) per month.
We have not granted any stock options to Mr. Mulla; there are no stock option,
retirement, pension, or profit sharing plans for the benefit of Mr. Mulla; and,
we have not entered into any employment or consulting agreements with Mr. Mulla.
However, as sole officer and director of the company Mr. Mulla has the power to
set his own compensation.
The following table sets forth the compensation paid by us for the period from
inception until the fiscal year ending October 31, 2012, and subsequent thereto,
for our sole officer and director. This information includes the dollar value of
base salaries, bonus awards and number of stock options granted, and certain
other compensation, if any. The compensation discussed addresses all
compensation awarded to, earned by, or paid to our named executive officers.
Change in
Pension
Value and
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- --------
Mohsin Mulla 2012 Nil Nil Nil Nil Nil Nil Nil Nil
President, Secretary,
Treasurer and Director
OUTSTANDING EQUITY AWARDS AT 2012 FISCAL YEAR-END
We do not currently have a stock option plan nor any long-term incentive plans
that provide compensation intended to serve as an incentive for performance. No
individual grants of stock options or other equity incentive awards have been
made to our sole executive officer and director since our inception;
accordingly, none were outstanding at October 31, 2012.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS
There are currently no employments or other contracts or arrangements with our
executive officer. There are no compensation plans or arrangements, including
payments to be made by us, with respect to our sole officer or director that
would result from the resignation, retirement or any other termination of such
person from us. There are no arrangements for our sole director or officer that
would result from a change-in-control.
LONG-TERM INCENTIVE PLAN AWARDS
We do not have any long-term incentive plans that provide compensation intended
to serve as incentive for performance.
COMPENSATION OF DIRECTORS
The sole member of our board of directors is not compensated for his services as
a director. The board has not implemented a plan to award options to any
directors. There are no contractual arrangements with any member of the board of
directors. We have no director's service contracts.
32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the transactions discussed below, none of the following parties has,
since the date of incorporation, had any material interest, direct or indirect,
in any transaction with us or in any presently proposed transaction that has or
will materially affect us:
- The Officers and Directors;
- Any Person proposed as a nominee for election as a director;
- Any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to the outstanding
shares of common stock;
- Any relative or spouse of any of the foregoing persons who have the
same house as such person.
On September 26, 2012, we issued an aggregate of 3,000,000 shares of our common
stock to our sole officer and director, Mohsin Mulla, for a purchase price of
$0.005 per share or for aggregate consideration of $15,000. The shares were
issued pursuant to an exemption from registration under the Securities Act of
1933 provided by Regulation S promulgated thereunder.
Mr. Mulla currently manages his own private readymade garment business. Our
business plan contemplates that we will eventually enter into a management
agreement with Mr. Mulla whereby he will provide management services to us in
consideration of a monthly fee. However, we do not anticipate entering into such
an agreement with Mr. Mulla until our cash flow from operations justifies such
an agreement. We expect that the compensation that we will pay to Mr. Mulla will
not exceed $3,000 per month.
We have not entered into any other transaction, nor are there any proposed
transactions, in which our sole director and executive officer, or any
significant stockholder, or any member of the immediate family of any of the
foregoing, had or is to have a direct or indirect material interest.
Our sole officer and director may be considered a promoter of the Company due to
his participation in and management of the business since our incorporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On September 26, 2012, we issued an aggregate of 3,000,000 shares of our common
stock to our sole officer and director for aggregate consideration of $15,000.
The following table sets forth information regarding the beneficial ownership of
our common stock by our sole officer and director as of the date of this
Prospectus. There is no other person or group of affiliated persons, known by us
to beneficially own more than 5% of our common stock.
We have determined beneficial ownership in accordance with the rules of the
Securities and Exchange Commission. These rules generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or
investment power with respect to those securities. The person is also deemed to
be a beneficial owner of any security of which that person has a right to
acquire beneficial ownership within 60 days. Unless otherwise indicated, the
person identified in this table has sole voting and investment power with
respect to all shares shown as beneficially owned by her, subject to applicable
community property laws, and the address for each person listed in the table is
c/o Zewar Jewellery, Inc., c/o Nizami's Family Shoppee, Sunshine Building, Adade
Faria Road, Margao, Goa, India.
The percentage ownership information shown in the table below is calculated
based on 3,000,000 shares of our common stock issued and outstanding as of the
date of this Prospectus. We do not have any outstanding options, warrants or
other securities exercisable for or convertible into shares of our common stock.
Percentage of
No. of No. of Percentage of Ownership After
Name and Address Common Stock Common Stock Ownership Fully Subscribed
of Beneficial Owner Before Offering After Offering Before Offering Offering
------------------- --------------- -------------- --------------- --------
Mohsin Mulla 3,000,000 3,000,000 100% 48.4%
c/o Nizami's Family Shoppee, Sunshine
Building, Adade Faria Road,
Margao, Goa, India
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission initial reports of
33
ownership and reports of changes of ownership of our common stock. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
We do not have any issued and outstanding securities that are convertible into
common stock. Other than the shares covered by the registration statement of
which this prospectus is a part, we have not registered any shares for sale
under the Securities Act.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The Nevada General Corporation Law requires us to indemnify officers and
directors for any expenses incurred by any officer or director in connection
with any actions or proceedings, whether civil, criminal, administrative, or
investigative, brought against such officer or director because of his or his
status as an officer or director, to the extent that the director or officer has
been successful on the merits or otherwise in defense of the action or
proceeding. The Nevada General Corporation Law permits a corporation to
indemnify an officer or director, even in the absence of an agreement to do so,
for expenses incurred in connection with any action or proceeding if such
officer or director acted in good faith and in a manner in which he or he
reasonably believed to be in or not opposed to the best interests of the
corporation and such indemnification is authorized by the stockholders, by a
quorum of disinterested directors, by independent legal counsel in a written
opinion authorized by a majority vote of a quorum of directors consisting of
disinterested directors, or by independent legal counsel in a written opinion if
a quorum of disinterested directors cannot be obtained.
The Nevada General Corporation Law prohibits indemnification of a director or
officer if a final adjudication establishes that the officer's or director's
acts or omissions involved intentional misconduct, fraud, or a knowing violation
of the law and were material to the cause of action. Despite the foregoing
limitations on indemnification, the Nevada General Corporation Law may permit an
officer or director to apply to the court for approval of indemnification even
if the officer or director is adjudged to have committed intentional misconduct,
fraud, or a knowing violation of the law.
The Nevada General Corporation Law also provides that indemnification of
directors is not permitted for the unlawful payment of distributions, except for
those directors registering their dissent to the payment of the distribution.
According to Article 11 of our Bylaws, we are authorized to indemnify our
directors to the fullest extent authorized under Nevada law subject to certain
specified limitations.
Insofar as indemnification for liabilities arising under the Securities Act may
be provided to directors, officers or persons controlling us pursuant to the
foregoing provisions, we have been informed that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations
should be read in conjunction with the financial statements and related notes
that appear elsewhere in this prospectus. This discussion contains
forward-looking statements and information relating to our business that reflect
our current views and assumptions with respect to future events and are subject
to risks and uncertainties, including the risks in the section entitled Risk
Factors beginning on page 5, that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
These forward-looking statements speak only as of the date of this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, or achievements. Except as required by applicable law, including the
securities laws of the United States, we expressly disclaim any obligation or
undertaking to disseminate any update or revisions of any of the forward-looking
statements to reflect any change in our expectations with regard thereto or to
conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with accounting principles generally accepted in the
United States.
34
OVERVIEW
We are a development stage company and have not commenced operations or
generated or realized any revenues.
Because we have not generated any revenues and no revenues are anticipated until
we implement our business plan, our auditors have issued a going concern
opinion. This means that our auditors believe there is substantial doubt that we
can continue as an on-going business for the next twelve months unless we obtain
additional capital.
We believe that we will be able to raise enough money through this offering to
begin operations but we cannot assure you that we will stay in business after
our operations have commenced. If we are unable to successfully develop a
website, negotiate supply of fine imitation jewelry, develop and execute a
marketing strategy, or if we are unable to attract enough customers to purchase
our products, we may quickly use up the proceeds from this offering and will
need to find alternative sources, such as a second public offering, a private
placement of securities, or loans from our officer or others in order for us to
maintain our operations. At the present time, we have not made any arrangements
to raise additional cash, other than through this offering.
RESULTS OF OPERATIONS
FROM INCEPTION ON SEPTEMBER 26, 2012 TO OCTOBER 31, 2012
We have not generated any revenues since our inception on September 26, 2012.
During the period from inception to October 31, 2012, our operating expenses
were comprised of professional fees of $1,035. We currently anticipate that our
legal and accounting fees will increase over the next 12 months as a result of
becoming a reporting company with the SEC. We have prepared an internal business
plan. We have not started our proposed business operations and do not expect to
do so until approximately 180 days after we have completed this offering.
Since inception, we have sold 3,000,000 shares of common stock to our sole
officer and director for $15,000.
ACTIVITIES TO DATE
Our activities to date have involved organizing the Company and developing a
business plan.
PLAN OF OPERATION
We are a development stage company with limited operations and assets. We are in
the process of establishing an online retail jewelry business.
While we have not yet developed our jewelry product line, our President has
conducted a limited amount of informal research regarding the popular jewelry
sales in his retail establishments. We intend to continue to identify specific
product lines.
The first stage of our business plan is to develop our website, and begin
development of our product line, followed by development of the marketing plan.
To develop our website, we will begin to design an information page which will
utilize artwork and a logo and include our mission statement, a brief biography
of our President, our product line, price list, contact information and ordering
instructions. This information page will serve as an "e-brochure." We plan to
distribute the e-brochure electronically via the internet in accordance with all
laws governing online solicitation known as spam mail. We plan to obtain the
email addresses from various alliances such as various email address providers.
We will contract web space from a local Internet service provider. We intend to
establish an office in our President's premises to maintain the website and
database. This will include physical office space, computer equipment,
telephones and other assets as required to maintain the operations.
We expect the development of our website to take approximately 2 to 4 months.
The initial cost is expected to be $10,000. We intend to register and list our
web address with widely used search engines and directories. When registering,
we plan to include keyword-sensitive content referred to as metatags, or words
that describe the content of the site, as well as titles, to attempt to ensure
that our domain name is listed prominently in search results in most search
returns.
Our complete budget for the next stage of our business plan is as follows:
35
Net proceeds to us $32,000
Cash on hand 15,000
-------
TOTAL $47,000
-------
Legal Counsel fees for Public Company Reporting Requirements $ 9,000
Auditor Fees for Public Company Reporting Requirements 11,000
Edgar and XBRL formatting and conversion expenses 3,000
Website development and related expenses 10,000
Inventory of imitation jewelry 4,000
Brochures, Marketing and Promotion 5,000
Incorporate Indian subsidiary 2,000
Office and Administrative 3,000
-------
TOTAL $47,000
=======
We do not expect to realize any revenues and do not expect to commence
operations until approximately winter 2013.
The legal counsel and auditor fees are based on our estimates for preparing
necessary filings with the Securities & Exchange Commission upon us becoming a
reporting issuer. This will include the filing of our annual report with audited
financial statements, quarterly reports with unaudited interim financial
statements and any necessary current reports. The Office and Administrative
costs are comprises of equipment purchases (primarily a computer and printer).
As of the date of this registration statement, our current cash balance is
$15,000 with liabilities of $1,035.
During the first stages of our growth, Mr. Mulla will provide all the labor
required without compensation. Since we intend to operate with very limited
administrative support, Mr. Mulla will continue to be responsible for at least
the first year of operations.
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
LIQUIDITY AND CAPITAL RESOURCES
As of the date of this prospectus, we have yet to generate any revenues from our
business operations.
On September 17, 2012, we sold 3,000,000 shares of our common stock to our
president, Mohsin Mulla, for $15,000 in cash. As of the date of this Offering,
Mr. Mulla is our sole stockholder.
The following table provides selected financial data about our company for the
period from the date of incorporation through October 31, 2012. For detailed
financial information, see the financial statements included in this prospectus.
Balance Sheet Data October 31, 2012
------------------ ----------------
Cash $15,000
Total assets $15,000
Total liabilities $ 1,035
Shareholders' equity $13,965
We have no written or verbal commitments from stockholders, directors or
officers to provide the Company with any form of cash advances, loans or other
sources of liquidity to meet our needs.
We anticipate needing a minimum of $32,000 to implement Stage II of our business
plan, as described above. Currently, available cash is not sufficient to allow
us to commence full execution of our business plan.
As of the date of this prospectus, the current funds available to us will be
sufficient to continue maintaining a reporting status and limited operations for
approximately six months (July 2013).
Our independent auditor has expressed substantial doubt about our ability to
continue as a going concern and believes that our ability is dependent on our
ability to implement our business plan, raise capital and generate revenues. See
Note 2 of our financial statements.
36
Even though we intend to begin generating revenues, we can make no assurances
and therefore we may incur operating losses in the next twelve months. The
absence of any operating history makes predictions of future operating results
difficult to ascertain. Our prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in their early
stage of development, particularly companies in new and rapidly evolving
markets. Such risks for us include, but are not limited to, an evolving business
model and management of growth. To address these risks, we must, among other
things, obtain investors for this Offering, implement and successfully execute
our business and marketing strategy, continually research new information on the
jewelry and accessories markets and trends, as well as attract, retain and
motivate qualified personnel. There can be no assurance that we will be
successful in addressing such risks, and the failure to do so can have a
material adverse effect on our business prospects, financial condition and
results of operations.
LIMITED OPERATING HISTORY AND NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us upon which to base an
evaluation of our performance. We are in the development stage of our operations
and have not generated any revenues. We cannot assure you that we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources and possible cost overruns due to price and cost increases in services
and products.
We cannot assure you that future financing will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be unable to
continue, develop or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
GOING CONCERN CONSIDERATION
The report of our independent registered accounting firm raises concern about
our ability to continue as a going concern based on the absence of an
established source of revenue, recurring losses from operations, and our need
for additional financing in order to fund our operations in 2013. Please see
footnote 2 to our financial statements for additional information.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have not had any changes in or disagreements with our accountants on
accounting and financial disclosure. LBB & Associates Ltd., LLP of Houston,
Texas has served as our accounting firm since our inception.
CORPORATE GOVERNANCE
We are not subject to the corporate governance rules of any securities exchange
or securities association, because our securities are not traded on any
exchange. We have no audit, nominating or compensation committees. As a small
business, we do not have the resources to engage additional individuals to
perform these functions. Our sole director performs these functions. When
seeking nominees to serve as director, our sole director will evaluate the
candidacy of an individual based on his or his educational attainments, his or
his relevant experience and professional stature. Our sole director also
performs the function of the audit committee by overseeing the quality and
integrity of the financial reporting practices of the Company.
CODE OF ETHICS
The Company has adopted a Code of Ethics applicable to its Directors and
officers (including its principal executive officer and principal financial
officer). The Company's Code of Ethics is filed as an exhibit to this
registration statement on Form S-1.
ORGANIZATION WITHIN LAST FIVE YEARS
We were organized under the laws of the State of Nevada on September 26, 2012 to
operate an on-line retail sale of imitation jewelry. Our product line will
consist of middle and high end jewelry.. At that time we appointed Mohsin Mulla
as sole director, President, Secretary and Treasurer. In connection with our
organization, we have issued 3,000,000 shares of common stock to Mr.
Mulla for cash proceeds of $15,000.
37
WHERE YOU CAN GET MORE INFORMATION
We have filed with the SEC a Registration Statement on Form S-1 (including
exhibits) under the Securities Act with respect to the shares to be sold in this
Offering. This Prospectus, which forms part of the Registration Statement, does
not contain all the information set forth in the Registration Statement as some
portions have been omitted in accordance with the rules and regulations of the
SEC. For further information with respect to our Company and the Shares offered
in this Prospectus, reference is made to the Registration Statement, including
the exhibits filed thereto, and the financial statements and notes filed as a
part thereof. With respect to each such document filed with the SEC as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved. We are not currently subject
to the informational requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"). As a result of the offering of the Shares of our common stock,
we will become subject to the informational requirements of the Exchange Act,
and, in accordance therewith, we will file quarterly and annual reports and
other information with the SEC and send a copy of our annual report together
with audited consolidated financial statements to each of our shareholders. The
Registration Statement, such reports and other information may be inspected and
copied at the Public Reference Room of the SEC located at 100 F Street, N. E.,
Washington, D. C. 20549. Copies of such materials, including copies of all or
any portion of the Registration Statement, may be obtained from the Public
Reference Room of the SEC at prescribed rates. You may call the SEC at
1-800-SEC-0330 to obtain information on the operation of the Public Reference
Room. Such materials may also be accessed electronically by means of the SEC's
home page on the internet (http://www.sec.gov).
38
ZEWAR JEWELLERY, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
OCTOBER 31, 2012
F-1
LBB & ASSOCIATES LTD., LLP
10260 Westheimer Road, Suite 310
Houston, TX 77042
Phone: (713) 800-4343 Fax: (713) 456-2408
Report of Independent Registered Public Accounting Firm
To the Board of Directors of
Zewar Jewellery, Inc. (A Development Stage Company)
Margao, Goa, India
We have audited the accompanying balance sheet of Zewar Jewellery, Inc. (the
"Company") as of October 31, 2012, and the related statements of operations,
stockholder's equity, and cash flows for the period from September 26, 2012
(inception) through October 31, 2012. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 Zewar Jewellery, Inc. as of
October 31, 2012, and the results of its operations and its cash flows for the
period from September 26, 2012 (inception) through October 31, 2012 in
conformity with accounting principles generally accepted in the United States of
America.
As discussed in Note 2 to the financial statements, the Company's absence of
significant revenues, losses from operations, and its need for additional
financing in order to fund its projected loss in 2013 raise substantial doubt
about its ability to continue as a going concern. The 2012 financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ LBB & Associates Ltd., LLP
----------------------------------------
LBB & Associates Ltd., LLP
Houston, Texas
November 28, 2012
F-2
ZEWAR JEWELLERY, INC.
(A Development Stage Company)
BALANCE SHEET
--------------------------------------------------------------------------------
October 31,
2012
--------
ASSETS
Current assets
Cash $ 15,000
--------
Total current assets 15,000
--------
Total assets $ 15,000
========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Current liabilities
Accounts payables and accrued liabilities $ 1,035
--------
Total current liabilities 1,035
--------
Total liabilities 1,035
--------
STOCKHOLDER'S EQUITY
Preferred stock: $0.0001 par value, 25,000,000 authorized,
0 issued and outstanding --
Common stock: $0.0001 par value, 100,000,000 authorized,
3,000,000 issued and outstanding 300
Additional paid-in capital 14,700
Deficit accumulated during the development stage (1,035)
--------
Total stockholder's equity 13,965
--------
Total liabilities and stockholder's equity $ 15,000
========
(The accompanying notes are an integral part of these financial statements)
F-3
ZEWAR JEWELLERY, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Period From
September 26, 2012
(inception) to
October 31,
2012
--------
Expenses:
Professional fees $ 1,035
--------
Total operating expenses 1,035
--------
Net loss $ (1,035)
========
Net loss per share - basic and diluted $ (0.03)
========
Weighted average shares outstanding -
basic and diluted 40,984
========
(The accompanying notes are an integral part of these financial statements)
F-4
ZEWAR JEWELLERY, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY
For the period September 26, 2012 (Inception) to October 31, 2012
--------------------------------------------------------------------------------
Deficit
Accumulated
Common Stock Additional During the
--------------------- Paid-in Development
Number Par Value Capital Stage Total
------ --------- ------- ----- -----
Balance, September 26, 2012 (inception) -- $ -- $ -- $ -- $ --
Common stock issued for cash 3,000,000 300 14,700 -- 15,000
Net loss -- -- -- (1,035) (1,035)
--------- ------ -------- -------- --------
Balance, October 31, 2012 3,000,000 $ 300 $ 14,700 $ (1,035) $ 13,965
========= ====== ======== ======== ========
(The accompanying notes are an integral part of these financial statements)
F-5
ZEWAR JEWELLERY, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------
For the Period From
September 26, 2012
(inception) to
October 31,
2012
--------
Cash flows from operating activities
Net loss $ (1,035)
Adjustment to reconcile net loss to net cash
used in operating activities
Change in operating assets and liabilities
Accounts payables and accrued liabilities 1,035
--------
Net cash flows used in operating activities --
--------
Cash flows from financing activities
Proceeds from issuance of common stock 15,000
--------
Net cash flows provided by financing activities 15,000
--------
Change in cash 15,000
Cash - beginning of period --
--------
Cash - end of period $ 15,000
========
Supplemental cash flow disclosures
Cash paid For:
Interest $ --
========
Income tax $ --
========
(The accompanying notes are an integral part of these financial statements)
F-6
ZEWAR JEWELLERY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2012
--------------------------------------------------------------------------------
1. NATURE AND CONTINUANCE OF OPERATIONS
Zewar Jewellery, Inc. (the "Company") was incorporated in the state of Nevada on
September 26, 2012 ("Inception") and is in the development stage. The Company
intends to operate as an on-line imitation jewellery retailer. The Company's
corporate headquarters are located in Margao, India and its fiscal year-end is
October 31.
In accordance with Accounting Standards Codification ("ASC") 915, the Company is
considered to be in the development stage. Its activities to date have been
limited to capital formation, organization and development of its business plan.
The Company has not commenced operations.
2. GOING CONCERN
These financial statements have been prepared on a going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future. The
Company has incurred a loss since inception resulting in an accumulated deficit
of $1,035 as at October 31, 2012 and further losses are anticipated in the
development of its business raising substantial doubt about the Company's
ability to continue as a going concern. In addition to operational expenses, as
the Company executes its business plan, it is incurring expenses related to
complying with its public reporting requirements. The Company will need to raise
capital in the next twelve months in order to remain in business. The ability to
continue as a going concern is dependent upon the Company generating profitable
operations in the future and/or obtaining the necessary financing to meet its
obligations and repay its liabilities arising from normal business operations
when they come due. Management intends to finance operating costs over the next
twelve months with existing cash on hand and proceeds from its public offering.
The Company has no written or verbal commitments from stockholders, directors or
officers to provide the Company with any form of cash advances, loans or other
sources of liquidity to meet its working capital needs. The accompanying
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classifications of liabilities that may result from the possible inability
of the Company to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America and are
presented in US dollars. The Company has elected a October 31, year end. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the periods presented have been reflected herein.
DEVELOPMENT STAGE COMPANY
The Company complies with Financial Accounting Standards Board (FASB) Accounting
Standard Codification (ASC) Statement No. 915 and Securities and Exchange
Commission Industry Guide 7 for its characterization of the Company as a
development stage
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material
assumptions or estimates other than the assumption that the Company is a going
concern.
F-7
ZEWAR JEWELLERY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2012
--------------------------------------------------------------------------------
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
three months or less when purchased to be cash equivalents. The Company
maintains cash and cash equivalent balances at one financial institution that is
insured by the FDIC.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount reported in the balance sheet for cash and cash equivalents,
accounts payable, and accrued expenses approximate fair value because of the
immediate or short-term maturity of these financial instruments. Unless
otherwise noted, it is management's opinion the Company is not exposed to
significant interest, currency or credit risks arising from these financial
instruments. The Company does not utilize derivative instruments.
FOREIGN CURRENCY TRANSLATION
The Company's functional and reporting currency is the United States dollar.
Monetary assets and liabilities denominated in foreign currencies are translated
using the exchange rate prevailing at the balance sheet date. Non-monetary
assets and liabilities denominated in foreign currencies are translated at rates
of exchange in effect at the date of the transaction. Average monthly rates are
used to translate expenses. Revenue and expenses are translated at average rates
of exchange during the year. Gains and losses arising on translation or
settlement of foreign currency denominated transactions or balances are included
in the determination of net income (loss). The Company has not, to the date of
these financial statements, entered into derivative instruments to offset the
impact of foreign currency fluctuations.
REVENUE
The Company's revenues will be derived principally by the sale of its website
products, and recorded in accordance with ASC 605 REVENUE RECOGNITION. The
Company has generated no revenues to date. The Company recognizes revenue when
it is realized or realizable and earned less estimated future doubtful accounts.
The Company considers revenue realized or realizable and earned when it has
persuasive evidence of an arrangement that the services have been rendered to
the customer, the sales price is fixed or determinable, and collectability is
reasonably assured.
BASIC AND DILUTED LOSS PER SHARE
Basic loss per share is computed by dividing net loss available to common
shareholders by the weighted average number of outstanding common shares during
the period. Diluted loss per share gives effect to all dilutive potential common
shares outstanding during the period including stock options and warrants using
the treasury method. Dilutive loss per share excludes all potential common
shares if their effect is anti-dilutive.
STOCK-BASED COMPENSATION
The Company records stock-based compensation using the fair value method of
valuing stock options and other equity-based compensation issued. The Company
has not granted any stock options since its inception. Accordingly, no
stock-based compensation has been recorded.
INCOME TAXES
Deferred tax assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or settled as
prescribed in FASB ASC 740, INCOME TAXES. As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are adjusted through the provision
for income taxes. A valuation allowance is established to reduce deferred tax
assets if it is more likely than not that a deferred tax asset will not be
realized.
F-8
ZEWAR JEWELLERY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2012
--------------------------------------------------------------------------------
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company applies the authoritative guidance in accounting for uncertainty in
income taxes recognized in the financial statements. This guidance prescribes a
two-step process to determine the amount of tax benefit to be recognized. First,
the tax position must be evaluated to determine the likelihood that it will be
sustained upon external examination. If the tax position is deemed
"more-likely-than-not" to be sustained, the tax position is then assessed to
determine the amount of benefit to recognize in the financial statements. The
amount of the benefit that may be recognized is the largest amount that has a
greater than 50% likelihood of being realized upon ultimate settlement.
At October 31, 2012 a full deferred tax asset valuation allowance has been
provided and no deferred tax asset benefit has been recorded.
INTELLECTUAL PROPERTIES
The Company has adopted the provisions of ASC 350-50, Website Development Costs.
Costs incurred in the planning stage of a website are expensed as research and
development while costs incurred in the development stage are capitalized and
amortized over the life of the asset, estimated to be five years. Expenses
subsequent to the launch will be expensed as research and development expenses.
The Company will expense upgrades and revisions to its website as incurred. The
Company has incurred no costs for research and development. Once the Company's
website is fully operational, this asset will be amortized over a sixty month
period.
RECENTLY ADOPTED AND RECENTLY ENACTED ACCOUNTING PRONOUNCEMENTS
Recent accounting pronouncements issued by the FASB (including its EITF), the
AICPA, and the SEC did not or are not believed by management to have a material
impact on the Company's present or future financial statements.
4. CAPITAL STOCK
The total number of common shares authorized that may be issued by the Company
is 100,000,000 shares with a par value of $0.0001 per share.
The total number of preferred shares authorized that may be issued by the
Company is 25,000,000 shares with a par value of $0.0001 per share. The
preferred stock may be issued in one or more series, from time to time, with
each series to have such designation, relative rights, preference or
limitations, as adopted by the Company's Board of Directors.
During the period ended October 31, 2012, the Company issued 3,000,000 shares of
common stock for total cash proceeds of $15,000 to the Company's sole director
and officer.
At October 31, 2012, there were no outstanding stock options or warrants.
5. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. Mr. Mohsin
Mulla, sole officer and director of the Company, is currently providing the
Company with use of office space and services free of charge. The Company's sole
officer and director is involved in other business activities and may in the
future, become involved in other business opportunities as they become
available. Thus he may face a conflict in selecting between the Company and his
other business interests. The Company has not formulated a policy for the
resolution of such conflicts.
Mr. Mulla, sole officer and director of the Company, will not be paid for any
underwriting services that he performs on behalf of the Company with respect to
the Company's upcoming S-1 offering.
F-9
ZEWAR JEWELLERY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2012
--------------------------------------------------------------------------------
6. INCOME TAXES
As of October 31, 2012, the Company had net operating loss carry forwards of
approximately $1,035 that may be available to reduce future years' taxable
income through 2032. Future tax benefits which may arise as a result of these
losses have not been recognized in these financial statements, as their
realization is determined not likely to occur and accordingly, the Company has
recorded a valuation allowance for the deferred tax asset relating to these tax
loss carry-forwards.
The components of the deferred tax asset, the statutory tax rate, the effective
tax rate and the elected amount of the valuation allowance are indicated below:
For the
Period Ended
October 31,
2012
--------
Operating loss $ 1,035
Statutory tax rate 34%
Refundable federal income tax attributable to current operations 352
Change in valuation allowance (352)
--------
Net refundable amount $ --
========
The cumulative tax effect at the expected rate of 34% of significant items
comprising the net deferred tax amount is:
October 31,
2012
--------
Deferred tax asset attributed to:
Net operating loss $ 352
Less, valuation allowance (352)
--------
Net deferred tax assets $ --
========
The Company has provided a valuation allowance against its deferred tax assets
given that it is in the exploration stage and there is substantial uncertainty
as to the Company's ability to realize future tax benefits through utilization
of operating loss carry forwards.
7. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through November 28, 2012, the date
these financial statements were available for issuance. Subsequent to the fiscal
period ended October 31, 2012, the Company did not have any material
recognizable subsequent events.
F-10
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO GIVE YOU DIFFERENT INFORMATION. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR AN OFFER TO BUY THE SECURITIES REFERRED TO IN
THIS PROSPECTUS IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
THE INFORMATION CONTAINED IN THIS ARE CORRECT ONLY AS OF THE DATE SHOWN ON THE
COVER PAGE OF THESE DOCUMENTS, REGARDLESS OF THE TIME OF THE DELIVERY OF THESE
DOCUMENTS OR ANY SALE OF THE SECURITIES REFERRED TO IN THIS PROSPECTUS.
ZEWAR JEWELLERY, INC.
3,200,000 SHARES OF COMMON STOCK
PROSPECTUS
___________________, 2013
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the issuance and
distribution of the securities being registered hereby, including those expenses
that we have incurred to date. All such expenses will be borne by the
registrant.
Securities and Exchange Commission registration fee $ 4
Legal and accounting expenses $20,000
Transfer Agent Fees $ 1,000
Edgar formatting and XBRL conversion $ 3,000
-------
Total $24,004
=======
All amounts other than the Commission's registration fee are estimates. All
expenses will be borne by the registrant.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and the Bylaws.
Under the Nevada Revised Statutes, director immunity from liability to a company
or its stockholders for monetary liabilities applies automatically unless it is
specifically limited by a company's Articles of Incorporation. Our Articles of
Incorporation do not specifically limit the directors' immunity. Excepted from
that immunity are: (a) a willful failure to deal fairly with us or our
stockholders in connection with a matter in which the director has a material
conflict of interest; (b) a violation of criminal law, unless the director had
reasonable cause to believe that his or his conduct was lawful or no reasonable
cause to believe that his or his conduct was unlawful; (c) a transaction from
which the director derived an improper personal profit; and (d) willful
misconduct.
Our Bylaws provide that we will indemnify our directors to the fullest extent
not prohibited by Nevada law; provided, however, that we may modify the extent
of such indemnification by individual contracts with our directors and officers;
and, provided, further, that we shall not be required to indemnify any director
or officer in connection with any proceeding, or part thereof, initiated by such
person unless such indemnification: (a) is expressly required to be made by law,
(b) the proceeding was authorized by the board of directors, (c) is provided by
us, in our sole discretion, pursuant to the powers vested us under Nevada law,
or (d) is required to be made pursuant to our Bylaws.
Our Bylaws provide that we will advance to any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or he is or was our director or officer, or is or was
serving at the request of us as a director or executive officer of another
company, partnership, joint venture, trust or other enterprise, prior to the
final disposition of the proceeding, promptly following request therefore, all
expenses incurred by any director or officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under our Bylaws or otherwise.
Our Bylaws provide that no advance shall be made by us to our officers except by
reason of the fact that such officer is or was our director in which event this
paragraph shall not apply, in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is reasonably and
promptly made: (a) by the Board by a majority vote of a quorum consisting of
directors who were not parties to the proceeding, or (b) if such quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, that the facts known
to the decision-making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of securities
without registration since inception. No such sales involved the use of an
underwriter; no advertising or public solicitation was involved; the securities
bear a restrictive legend; and no commissions were paid in connection with the
sale of any securities.
II-1
We have sold securities within the past three years without registering the
securities under the Securities Act of 1933 on one occasion:
On September 26, 2012, the Company issued a total of 3,000,000 shares of common
stock to Mr. Mohsin Mulla for cash at $0.005 per share for a total of $15,000.
This sale was completed pursuant to an exemption from registration under the
Securities Act provided by Regulation S promulgated thereunder.
REGULATION S COMPLIANCE
For the above offering, we relied upon the following facts to make the
Regulation S exemption available:
Each offer or sale was made in an offshore transaction;
Neither we, a distributor, any respective affiliates, nor any person on behalf
of any of the foregoing, made any directed selling efforts in the United States;
Offering restrictions were, and are, implemented;
No offer or sale was made to a U.S. person or for the account or benefit of a
U.S. person;
Each purchaser of the securities certifies that it was not a U.S. person and was
not acquiring the securities for the account or benefit of any U.S. person;
Each purchaser of the securities agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and agreed not
to engage in hedging transactions with regard to such securities unless in
compliance with the Act;
The securities contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are required, either by contract or a provision in its bylaws, articles,
charter or comparable document, to refuse to register any transfer of the
securities not made in accordance with the provisions of Regulation S pursuant
to registration under the Act, or pursuant to an available exemption from
registration; provided, however, that if any law of any Canadian province
prevents us from refusing to register securities transfers, other reasonable
procedures, such as a legend described in paragraph (b)(3)(iii)(B)(3) of
Regulation S have been implemented to prevent any transfer of the securities not
made in accordance with the provisions of Regulation S.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation *
3.2 Bylaws *
4.1 Specimen common stock certificate *
5.1 Legal opinion of Synergy Law Group, LLC
14.1 Code of Ethics *
23.1 Consent of Synergy Law Group, LLC (see Exhibit 5.1)
23.2 Consent of LBB & Associates Ltd., LLP, Certified Public
Accountant, for use of their report
99.1 Subscription Agreement *
----------
* Included as an exhibit to the Company's Registration Statement on Form S-1
filed with the Commission on December 5, 2012.
ITEM 17. UNDERTAKINGS
The undersigned registrant 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 10(a)(3) of the Securities Act
of 1933.
II-2
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, 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 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 to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
4. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by 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, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
5. 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 the 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.
6. 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Margao, State of Goa,
India on January 18, 2013.
ZEWAR JEWELLERY, INC.
By: /s/ Mohsin Mulla
--------------------------------------------
Mohsin Mulla
President, Treasurer, Secretary and Director
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Name Title Date
---- ----- ----
/s/ Mohsin Mulla Principal Executive Officer, January 18, 2013
--------------------------- Principal Financial Officer,
Mohsin Mulla Principal Accounting Officer,
President, Secretary, Treasurer
and Director
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