As filed with the Securities and Exchange Commission on July 9, 2008
Registration No.333-152012
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO.1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Incoming, Inc.
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(Exact name of Registrant as specified in its charter)
Nevada 5130 Pending
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(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation or
Organization)
8300 N. Hayden Road, Suite 207
Scottsdale, Arizona 85258
Phone: (480) 945-3477
Fax: (480) 945-3449
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(Address and Telephone Number of Registrant's Principal Executive Offices)
Yury Nesterov
Chief Executive Officer
8300 N. Hayden Road, Suite 207
Scottsdale, Arizona 85258
Phone: (480) 945-3477
Fax: (480) 945-3449
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(Name, Address and Telephone Number of Agent for Service)
Approximate Date of Commencement of Proposed Sale to 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, 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. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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<page>
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)
<table>
<caption>
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Proposed
Maximum Proposed Maximum
Class of Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered per Share Price Registration Fee (1)
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<s> <c> <c> <c> <c>
Common Stock 25,000,000 $0.010 $250,000 $9.82
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</table>
[1] Estimated solely for purposes of calculating the registration fee under
Rule 457.
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 said Section 8(a),
may determine.
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<page>
PROSPECTUS
Incoming, Inc.
4,000,000 SHARES MINIMUM - 25,000,000 SHARES MAXIMUM
COMMON STOCK
Before this offering, there has been no public market for our common stock. In
the event that we sell at least the minimum number of shares in this offering,
of which there is no assurance, we intend to have our shares of common stock
quoted on the Over the Counter Bulletin Board operated by the Financial Industry
Regulatory Authority. There is no assurance that our shares will ever be quoted
on the Over the Counter Bulletin Board.
We are offering a minimum of 4,000,000 and a maximum of 25,000,000 shares of our
common stock in a direct public offering, without any involvement of
underwriters or broker-dealers. The offering price is $0.010 per share. In the
event that 4,000,000 shares are not sold within 180 days, at our sole
discretion, we may extend the offering for an additional 90 days. In the event
that 4,000,000 shares are not sold within the 180 days, or within the additional
90 days if extended, all money received by us will be promptly returned to you
without interest or deduction of any kind. If at least 4,000,000 shares are sold
within 180 days, or within the additional 90 days, if extended, all money
received by us will be retained by us and there will be no refund. Funds will be
held in a separate account. The foregoing account is not an escrow, trust or
similar account. It is merely a separate account under our control where we will
segregate your funds.
There is no minimum purchase requirement and there are no arrangements to place
the funds in an escrow, trust or similar account.
Our common stock will be sold on our behalf by Yury Nesterov and Elena
Djafarova, our directors. Our directors will not receive any commissions or
proceeds from the offering for selling shares on our behalf.
Investing in our common stock involves risks. See "Risk Factors" starting at
page 8.
<table>
<caption>
Offering Price Expenses Proceeds to Us
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<s> <c> <c> <c>
Per Share - Minimum $ 0.010 $ 0.0023 $ 0.0077
Per Share - Maximum $ 0.010 $ 0.0004 $ 0.0096
Minimum $ 40,000 $ 9,610 $ 30,390
Maximum $ 250,000 $ 9,610 $ 240,390
</table>
The difference between the "Offering Price" and the "Proceeds to Us" is $9,610.
The $9,610 reflects the expenses of the offering. The expenses per share would
be adjusted according to the offering amounts between the minimum and maximum.
The $9,610 will be paid to unaffiliated third parties for expenses connected
with this offering. The $9,610 will be paid from current funds that we have and
the first proceeds of this offering once the minimum subscription has been
completed.
Our common stock is presently not traded on any market or securities exchange.
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.
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<page>
Neither the US Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is July 9, 2008.
Dealer Prospectus Delivery Obligation
Until 180 days after the effective date of this Prospectus, all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
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<page>
Table of Contents Page
----
Summary of Prospectus 6
Our Company 6
The Offering 7
Selected Financial Data 7
Risk Factors 8
Use of Proceeds 16
Determination of Offering Price 17
Dilution of the Price per Share 17
Plan of Distribution; Terms of the Offering 19
Section 15(g) of the Exchange Act 20
Offering Period and Expiration Date 21
Procedures for Subscribing 22
Right to Reject Subscriptions 22
Management's Discussion and Analysis or Plan of Operation 22
Plan of Operation 22
Limited Operating History; Need for Additional Capital 23
Results of Operations 23
Liquidity and Capital Resources 23
Description of our Business and Properties 24
Background 24
Market and Industry Overview 25
Our Business 27
Competition 29
Description of Property 30
Directors, Executive Officers and Control Persons 30
Executive Compensation 30
Security Ownership of Certain Beneficial Owners and Management 31
Certain Relationships and Related Transactions 32
Description of Securities 32
Common Stock 32
Voting Rights 33
Dividend Policy 33
Shares Eligible for Future Sale 33
Interests of Named Experts and Counsel 34
Reports to Security Holders 35
Financial Statements 35
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<page>
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this
prospectus. This summary does not contain all the information that may be
important to you. You should read the more detailed information contained in
this prospectus, including but not limited to, the risk factors beginning on
page 8. References to "we," "us," "our," "Incoming," or the "company" mean
Incoming, Inc.
Forward-Looking Statements
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results may differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in the "Risk Factors" section and elsewhere in this prospectus.
Our Company
We were formed on December 22, 2006. Our plan is to build an apparel and
footwear portfolio of Urban Streetwear and Hip Hop American labels in Urban
Fashion industry for export and distribution in Eastern European and Russian
markets. Our goal is to uniquely position ourselves as a niche dealer and
distributor of American Urban Streetwear and Hip Hop clothing labels in the
Eastern European market. We plan to specialize in distribution and selling of
apparel brands consisting of Urban Streetwear, Hip Hop Clothing, Snowboard and
Skateboarding Apparel and Hipster-inspired all American clothing brands. Our
target market is fashion minded urban consumers in their twenties and early
thirties living in major urban areas of Eastern Europe.
We have no revenues, have incurred losses since our inception on December 22,
2006, and have relied upon the sale of our securities in unregistered private
placement transactions and cash advances from our President, Mr.Yury Nesterov,
to fund our operations. We are a development stage company and we do not expect
to generate revenue for the next twelve months which would be enough to sustain
our operations. Accordingly, for the foreseeable future, we will continue to be
dependent on additional financing in order to maintain our operations and
continue with our corporate activities. Due to the uncertainty of our ability to
meet our financial obligations and to pay our liabilities as they become due, in
their report on our financial statements for the period from inception (December
22, 2006) to November 30, 2007, our independent auditors included additional
comments indicating concerns about our ability to continue as a going concern.
Our financial statements contain additional note disclosures describing the
circumstances that led to this disclosure by our independent auditors. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
This offering and any investment in our common stock involves a high degree of
risk. If we are unable to generate significant revenue, we may be obliged to
cease business operations due to lack of funds. We face many challenges to
continue operations, including our lack of operating history, lack of revenues
to date, and the losses we have incurred to date. Please review the "Risk
Factors" starting on page 8 of this offering.
Our principal executive offices are located at 8300 N.Hayden Road, Suite 207,
Scottsdale, Arizona 85258, and our telephone number at that address is (480)
945-3477.
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<page>
The Offering
Following is a brief summary of this offering:
Securities being offered 4,000,000 shares of common stock minimum
and 25,000,000 shares of common stock
maximum, par value $0.001
Offering price per share $ 0.010
Offering period The shares are being offered for a
period not to exceed 180 days, unless
extended by our Board of Directors for
an additional 90 days.
Net proceeds to us Approximately $30,390 assuming the
minimum number of shares is sold.
Approximately $240,390 assuming the
maximum number of shares is sold.
Use of proceeds We will use the proceeds to pay for
administrative expenses, the
implementation of our business plan, and
general working capital. (i)
Number of shares outstanding
before the offering 4,500,000
Number of shares outstanding 8,500,000 (if minimum number of shares
after the offering if all are sold)
of the shares are sold 29,500,000 (if maximum number of shares
are sold)
(i) If the minimum amount of the shares is sold we will use the proceeds to pay
for our outstanding, as of February 29, 2008, liabilities of $6,018, which
represent the following amounts: travel expenses of $3,168, rent and office
expenses of $1,670 and computer equipment of $1,180. In addition we will pay for
offering expenses. Total offering expenses are $9,610. Of the $9,610, the
amounts to be paid from the proceeds for expenses of the offering are: $3,000
for legal fees; $800 for filing fees; $5,000 for accounting fees and expenses;
$800 for transfer agent fees; and $10 for registration fee. We will use the rest
of the funds (net of offering expenses and outstanding liabilities) for
execution of marketing and advertising plan ($12,000), travel expenses
($10,000), and for general working capital ($2,372).
Selected Financial Data
The following financial information summarizes the more complete historical
financial information at the end of this Prospectus. The summary information
below should be read in conjunction with "Selected Historical Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the audited financial statements and notes thereto included
elsewhere in this prospectus.
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<page>
Income Statement Data
From December 22, 2006
(inception)
to February 29, 2008
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Revenue $ 0
Expenses $ 14,320
Net Profits (Losses) $ (14,320)
Balance Sheet Data
As of
February 29, 2008
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Working Capital (deficit) $ (10,956)
Total Assets $ 6,961
Total Liabilities $ 16,781
As of February 29, 2008, we had a working capital deficit of $10,956 and
accumulated losses of $14,320 since inception. RISK FACTORS Please consider the
following risk factors before deciding to invest in our common stock. This
offering and any investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below and all of the
information contained in this prospectus before deciding whether to purchase our
common stock. If any of the following risks actually occur, our business,
financial condition and results of operations could be harmed. The trading price
of our common stock could decline, and you may lose all or part of your
investment in our common stock.
INDUSTRY RISK FACTORS
=====================
We operate in very competitive markets and may be unable to compete effectively
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in the worldwide "Urban Fashion" retailing industry.
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Competition in the Urban Fashion retailing industry is intense. We face a
variety of competitive challenges from domestic and international apparel
retailers, including a number of competitors that have substantially greater
financial and marketing resources than we do. The principal competitive factors
include product price, quality and assortment of product lines, schedules and
reliability of delivery, and the range and quality of customer services. Due to
limited financing, and fierce competition from multinational wholesalers and
retailers we may not be able to generate revenues and will have to cease
operations. In addition, it is possible that mass-market discount retailers will
increase their investment and enclose Urban Streetwear and Hip Hop clothing in
their retail operations, thereby achieving greater market penetration and
placing additional competitive pressures on our business.
-8-
<page>
The wholesale apparel market is highly competitive with few barriers to entry.
We compete against a diverse group of wholesalers and retailers offering casual
wear and streetwear apparel of European brands such as Scotch& Soda, Broadway
"NYC Fashion", No Excess, 4you, Aigle, as well as products by local fashion
designers and companies; including B.O. Connections, Befree, and Canoe, among
many others.
The level of competition we face from these and other brands varies depending
on the product segment, as many of our competitors do not offer Hip Hop clothing
brands. Our greatest competition is generally in women's apparel, skateboarding
and snowboarding apparel segments. Many of our competitors are larger than us
and have substantially greater resources than us and, as a result, may be able
to adapt more quickly to changing market conditions and exploit new
opportunities and supply their products more quickly and effectively than us.
Many of these brands have better name recognition among consumers and purchase
significantly more merchandise from vendors.
We rely on third parties to manufacture and distribute the products we re-sell.
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We will depend on the Urban Streetwear and Hip Hop clothing brand suppliers to
manufacture and supply the merchandise that we will be re-selling. If these
brand manufacturers are unable to secure sufficient supplies of raw materials,
or maintain adequate manufacturing and shipping capacity, they may be unable to
provide us with timely delivery of products of acceptable quality. In addition,
if the prices charged by these brand manufacturers increase for reasons such as
increases in the price of raw materials, increases in labor costs or currency
fluctuations, our cost of inventory would increase, adversely affecting our
results of operations. We will depend on third parties to transport and deliver
merchandise. Due to the fact that we do not have any independent transportation
or delivery capabilities of our own, if these third parties are unable to
transport or deliver our merchandise for any reason, or if they increase the
price of their services, including as a result of increases in the cost of fuel,
our operations and financial performance may be adversely affected.
We currently do not have long-term agreements with any of our potential brand
manufacturers, and any of these manufacturers may unilaterally terminate their
relationship with us at any time in the future. There is also substantial
competition among wholesalers for quality brand manufacturers. To the extent we
are unable to secure or maintain relationships with quality brand manufacturers,
our business could be harmed.
We may be unable to keep up with constantly changing fashion trends.
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Our success depends, in large part, upon our ability to gauge the evolving
fashion tastes of our consumers and to provide merchandise that satisfies such
fashion tastes in a timely manner. The worldwide Urban Fashion industry
fluctuates according to changing fashion tastes and seasons, and merchandise
usually must be ordered well in advance of the season, frequently before
consumer fashion tastes are evidenced by consumer purchases. In addition, the
cyclical nature of the worldwide clothing and footwear retailing industry also
requires us to secure significant level of inventory, especially prior to peak
selling seasons when all fashion retailers build up their inventory levels. As a
result, if we fail to properly gauge the fashion tastes of consumers, or to
respond in a timely manner, this failure could adversely affect consumer
acceptance of merchandise we re-sell and leave us with inventory deficiency or
inventory surplus. If that occurs, we may be forced to seek additional suppliers
to fill in the inventory deficit or to rely on markdowns or promotional sales to
dispose of excess, slow-moving inventory, which would negatively impact
financial results.
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<page>
The results of our wholesale businesses will be affected by the buying plans of
our customers, which will include smaller independent retailers and boutique
stores. Our customers may not inform us of changes in their buying plans until
it is too late for us to make the necessary adjustments to our product lines and
marketing strategies. While we believe that purchasing decisions in many cases
are made independently by individual stores or store chains, we are exposed to
decisions by the controlling owner of a store, to decrease the quantity of
merchandise purchased from us. In addition, the retail industry periodically
experiences consolidation. We face a risk that our customers may consolidate,
restructure, reorganize or realign in ways that could decrease the number of
stores or the amount of shelf space that carry our merchandise.
The worldwide fashion retailing industry is heavily influenced by general
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economic cycles.
- ---------------
Fashion retailing is a cyclical industry that is heavily dependent upon the
overall level of consumer spending. Purchases of apparel, footwear and related
goods tend to be highly correlated with the cycles of the levels of disposable
income of our consumers. As a result, any substantial deterioration in general
economic conditions could adversely affect our net sales and results of
operations.
Downturns, or the expectation of a downturn, in general economic conditions
could adversely affect consumer spending patterns, our sales and our results of
operations. Because apparel generally is a discretionary purchase, declines in
consumer spending patterns may have a more negative effect on apparel retailers
than other retailers. Therefore, we may not be profitable if there is a decline
in consumer spending patterns.
Our international operations are subject to political and economic risks.
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We expect that most of our sales will be generated outside the United States. We
will be accordingly subject to a number of risks relating to doing business
internationally, any of which could significantly harm our business, including:
o political and economic instability;
o inflation;
o exchange controls and currency exchange rates;
o foreign tax treaties and policies; and
o restrictions on the transfer of funds to and from foreign countries.
Our financial performance on a U.S. dollar denominated basis is also subject to
fluctuations in currency exchange rates. These fluctuations could cause our
results of operations to vary materially. From time to time, we may enter into
agreements seeking to reduce the effects of our exposure to currency
fluctuations, but these agreements may not be effective in reducing our exposure
to currency fluctuations or may not be available at a cost effective price. We
are not currently entered into any of these agreements.
COMPANY RISK FACTORS
====================
There is substantial uncertainty as to whether we will continue operations. If
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we discontinue operations, you could lose your investment.
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Our auditors have discussed their uncertainty regarding our business operations
in their audit report dated January 15, 2008.
-10-
<page>
This means that there is substantial doubt that we can continue as an ongoing
business for the next 12 months. The financial statements do not include
any adjustments that might result from the uncertainty about our
ability to continue in business. As such, we may have to cease operations and
you could lose your entire investment. We lack an operating history and have
losses which we expect to continue into the future. There is no assurance our
future operations will result in profitable revenues. If we cannot generate
sufficient revenues to operate profitably, our business will fail. We were
incorporated on December 22, 2006 and we have not realized any revenues. We have
very little operating history upon which an evaluation of our future success or
failure can be made. Our net loss since inception on December 22, 2006 to
February 29, 2008 is $14,320. Based upon current plans, we expect to incur
operating losses in future periods because we will be incurring expenses and not
generating revenues. We cannot guarantee that we will be successful in
generating revenues in the future. Failure to generate revenues will cause us to
go out of business.
We are mainly dependent upon the funds to be raised in this offering to advance
our business, the proceeds of which may be insufficient to achieve adequate
revenues to remain in business and our business will fail. We have limited
operations. We need the proceeds from this offering to pay for marketing,
professional fees, travel and general and administrative expenditures. We may
need additional funds to complete further development of our business plan to
achieve a sustainable sales level where ongoing operations can be funded out of
revenues. There is no assurance that any additional financing will be available,
or if available, on terms that will be acceptable to us. If we are not able to
obtain needed financing, we may have to cease operations and investors will lose
all of their investment.
We depend on key personnel.
- ---------------------------
Our future success will depend in part on the continued service of key
personnel, particularly Yury Nesterov, our President and Chief Executive
Officer. Our future success will also depend on our ability to attract and
retain key managers, sales people and others. We face intense competition for
these individuals from well established multinational, national and regional
wholesale and retail companies. We may not be able to attract qualified new
employees or retain existing employees, which may have a material adverse effect
on our results of operations and financial condition.
Because our management does not have prior experience in apparel wholesale, our
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business has a higher risk of failure.
- --------------------------------------
Our directors do not have experience in the apparel wholesale industry. As a
result, we may not be able to recognize and take advantage of opportunities
without the aid of qualified marketing, sales and business development
consultants. Our directors' decisions and choices may not be well thought out
and our operations, earnings and ultimate financial success may suffer
irreparable harm as a result.
Because our directors will own 52.3% of our outstanding common stock, if the
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minimum amount of the offering will be sold, they could make and control
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corporate decisions that may be disadvantageous to other minority shareholders.
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-11-
<page>
Our directors, Yury Nesterov and Elena Djafarova, own 100% of the outstanding
shares of our common stock as of the date of this offering. If minimum amount of
the shares will be sold, our directors will own 52.3% of our outstanding common
stock. Accordingly, they will have a significant influence in determining the
outcome of all corporate transactions or other matters, including mergers,
consolidations, and the sale of all or substantially all of our assets. They
will also have the power to prevent or cause a change in control. The interests
of our directors may differ from the interests of the other stockholders and
thus result in corporate decisions that are disadvantageous to other
shareholders.
We do not intend to pay dividends and there will be less ways in which you can
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make a gain on any investment in Incoming, Inc.
- ----------------------------------------------------
We have never paid any cash dividends and currently do not intend to pay any
dividends for the foreseeable future. To the extent that we require additional
funding currently not provided for in our financing plan, our funding sources
may likely prohibit the payment of a dividend. Because we do not intend to
declare dividends, any gain on an investment in Incoming will need to come
through appreciation of the stock's price.
Failure to achieve and maintain effective internal controls in accordance with
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section 404 of the Sarbanes-Oxley Act could have a material adverse effect on
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our business and operating results.
- -----------------------------------
It may be time consuming, difficult and costly for us to develop and implement
the additional internal controls, processes and reporting procedures required by
the Sarbanes-Oxley Act. We may need to hire additional financial reporting,
internal auditing and other finance staff in order to develop and implement
appropriate additional internal controls, processes and reporting procedures.
If we are unable to comply with these requirements of the Sarbanes-Oxley Act, we
may not be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires of publicly traded companies.
If we fail to comply in a timely manner with the requirements of Section 404 of
the Sarbanes-Oxley Act regarding internal control over financial reporting or to
remedy any material weaknesses in our internal controls that we may identify,
such failure could result in material misstatements in our financial statements,
cause investors to lose confidence in our reported financial information and
have a negative effect on the trading price of our common stock.
Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC regulations,
beginning with our annual report on Form 10-K for our fiscal period ending
November 30, 2007, we will be required to prepare assessments regarding internal
controls over financial reporting and beginning with our annual report on Form
10-K for our fiscal period ending November 30, 2008, furnish a report by our
management on our internal control over financial reporting. We have begun the
process of documenting and testing our internal control procedures in order to
satisfy these requirements, which is likely to result in increased general and
administrative expenses and may shift management time and attention from
revenue-generating activities to compliance activities. While our management is
expending significant resources in an effort to complete this important project,
there can be no assurance that we will be able to achieve our objective on a
timely basis. There also can be no assurance that our auditors will be able to
issue an unqualified opinion on management's assessment of the effectiveness of
our internal control over financial reporting. Failure to achieve and maintain
an effective internal control environment or complete our Section 404
certifications could have a material adverse effect on our stock price.
-12-
<page>
In addition, in connection with our on-going assessment of the effectiveness of
our internal control over financial reporting, we may discover "material
weaknesses" in our internal controls as defined in standards established by the
Public Company Accounting Oversight Board, or the PCAOB. A material weakness is
a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the
annual or interim financial statements will not be prevented or detected. The
PCAOB defines "significant deficiency" as a deficiency that results in more than
a remote likelihood that a misstatement of the financial statements that is more
than inconsequential will not be prevented or detected.
In the event that a material weakness is identified, we will employ qualified
personnel and adopt and implement policies and procedures to address any
material weaknesses that we identify. However, the process of designing and
implementing effective internal controls is a continuous effort that requires us
to anticipate and react to changes in our business and the economic and
regulatory environments and to expend significant resources to maintain a system
of internal controls that is adequate to satisfy our reporting obligations as a
public company. We cannot assure you that the measures we will take will
remediate any material weaknesses that we may identify or that we will implement
and maintain adequate controls over our financial process and reporting in the
future. Any failure to complete our assessment of our internal control over
financial reporting, to remediate any material weaknesses that we may identify
or to implement new or improved controls, or difficulties encountered in their
implementation, could harm our operating results, cause us to fail to meet our
reporting obligations or result in material misstatements in our financial
statements. Any such failure could also adversely affect the results of the
periodic management evaluations of our internal controls and, in the case of a
failure to remediate any material weaknesses that we may identify, would
adversely affect the annual auditor attestation reports regarding the
effectiveness of our internal control over financial reporting that are required
under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls could
also cause investors to lose confidence in our reported financial information,
which could have a negative effect on the trading price of our common stock.
RISK FACTORS RELATING TO OUR COMMON STOCK AND THIS OFFERING
===========================================================
There is no public (trading) market for our common stock and there is no
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assurance that the common stock will ever trade on a recognized exchange or
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dealers' network; therefore, our investors may not be able to sell their shares.
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Our common stock is not listed on any exchange or quoted on any similar
quotation service, and there is currently no public market for our common stock.
We have not taken any steps to enable our common stock to be quoted on the OTC
Bulletin Board, and can provide no assurance that our common stock will ever be
quoted on any quotation service or that any market for our common stock will
ever develop. As a result, stockholders may be unable to liquidate their
investments, or may encounter considerable delay in selling shares of our common
stock. Neither we nor our selling stockholders have engaged an underwriter for
this offering, and we cannot assure you that any brokerage firm will act as a
market maker of our securities. A trading market may not develop in the future,
and if one does develop, it may not be sustained. If an active trading market
does develop, the market price of our common stock is likely to be highly
volatile due to, among other things, the nature of our business and because we
are a new public company with a limited operating history. Further, even if a
public market develops, the volume of trading in our common stock will
presumably be limited and likely be dominated by a few individual stockholders.
-13-
<page>
The limited volume, if any, will make the price of our common stock subject to
manipulation by one or more stockholders and will significantly limit the number
of shares that one can purchase or sell in a short period of time. The market
price of our common stock may also fluctuate significantly in response to the
following factors, most of which are beyond our control:
- variations in our quarterly operating results;
- changes in general economic conditions and in the footwear retailing
industry;
- announcements by us or our competitors of significant new contracts,
acquisitions, strategic partnerships or joint ventures, or capital
commitments;
- loss of a major customer, partner or joint venture participant; and
- the addition or loss of key managerial and collaborative personnel.
The equity markets have, on occasion, experienced significant price and volume
fluctuations that have affected the market prices for many companies' securities
and that have often been unrelated to the operating performance of these
companies. Any such fluctuations may adversely affect the market price of our
common stock, regardless of our actual operating performance. As a result,
stockholders may be unable to sell their shares, or may be forced to sell them
at a loss.
- --------------------------------------------------------------------------------
Once publicly trading, the application of the "Penny Stock" rules could
adversely affect the market price of our common shares and increase your
transaction costs to sell those shares. The Securities and Exchange Commission
has adopted Rule 3A51-1, which establishes the definition of a "Penny Stock",
for the purposes relevant to us, as any equity security that has market price of
less than $5.00 per share or within an exercise price of less than $5.00 per
share, subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, Rule 15G-9 require:
- --------------------------------------------------------------------------------
- that a broker or dealer approve a person's account for transactions
in penny stocks; and
- the broker or dealer receive from the investor a written agreement to
the transaction, setting forth the identity and quantity of the penny
stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must:
- obtain financial information and investment experience objectives of
the person; and
- make a reasonable determination that the transactions in penny stocks
are suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prescribed by the SEC relating to the penny stock
market, which, in highlight form:
- sets forth the basis on which the broker or dealer made the suitability
determination; and
- that the broker or dealer received a signed, written agreement from
the investor prior to the transaction.
- Generally, brokers may be less willing to execute transactions in
securities subject to the "penny stock" rules. This may make it more
difficult for investors to dispose of our common stock and cause a
decline in the market value of our stock.
-14-
<page>
Volatility in our common share price may subject us to securities litigation,
- --------------------------------------------------------------------------------
thereby diverting our resources that may have a material effect on our
- --------------------------------------------------------------------------------
profitability and results of operations.
We expect the market for our common shares to be characterized by significant
price volatility when compared to seasoned issuers, and we expect that our share
price will continue to be more volatile than a seasoned issuer for the
indefinite future. In the past, plaintiffs have often initiated securities class
action litigation against a company following periods of volatility in the
market price of its securities. We may in the future be the target of similar
litigation. Securities litigation could result in substantial costs and
liabilities and could divert management's attention and resources.
You could be diluted from our future issuance of capital stock and derivative
- --------------------------------------------------------------------------------
securities.
- -----------
As of February 29, 2008, we had 4,500,000 shares of common stock outstanding and
no shares of preferred stock outstanding. We are authorized to issue up to
75,000,000 shares of common stock and no shares of preferred stock. To the
extent of such authorization, our Board of Directors will have the ability,
without seeking stockholder approval, to issue additional shares of common stock
or preferred stock in the future for such consideration as the Board of
Directors may consider sufficient. The issuance of additional common stock or
preferred stock in the future may reduce your proportionate ownership and voting
power.
We will incur increased costs as a result of being a public company, which could
- --------------------------------------------------------------------------------
affect our profitability and operating results.
- -----------------------------------------------
The Sarbanes-Oxley Act of 2002 and the new rules subsequently implemented by the
Securities and Exchange Commissions, the Nasdaq National Market and the Public
Company Accounting Oversight Board have imposed various new requirements on
public companies, including requiring changes in corporate governance practices.
We expect these rules and regulations to increase our legal and financial
compliance costs and to make some activities more time-consuming and costly.
These costs could affect profitability and our results of operations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements which involve assumptions
and describe our future plans, strategies, and expectations, are generally
identifiable by use of the words "may," "will," "should," "expect,"
"anticipate," "estimate," "believe," "intend," or "project" or the negative of
these words or other variations on these words or comparable terminology. These
statements are expressed in good faith and based upon a reasonable basis when
made, but there can be no assurance that these expectations will be achieved or
accomplished.
Such forward-looking statements include statements regarding, among other
things, (a) the potential markets for our products, our potential profitability,
and cash flows (b) our growth strategies, (c) anticipated trends in the footwear
retailing industry, (d) our future financing plans and (e) our anticipated needs
for working capital. This information may involve known and unknown risks,
uncertainties, and other factors that may cause our actual results, performance,
or achievements to be materially different from the future results, performance,
or achievements expressed or implied by any forward-looking statements. These
statements may be found under "Management's Plan of Operation" and "Description
of Our Business and Properties," as well as in this prospectus generally. Actual
events or results may differ materially from those discussed in forward-looking
statements as a result of various factors, including,
-15-
<page>
without limitation, the risks outlined under "Risk Factors" and matters
described in this prospectus generally. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this filing will in fact occur. In addition to the information
expressly required to be included in this filing, we will provide such further
material information, if any, as may be necessary to make the required
statements, in light of the circumstances under which they are made, not
misleading.
Although forward-looking statements in this report reflect the good faith
judgment of our management, forward-looking statements are inherently subject to
known and unknown risks, business, economic and other risks and uncertainties
that may cause actual results to be materially different from those discussed in
these forward-looking statements. Readers are urged not to place undue reliance
on these forward-looking statements, which speak only as of the date of this
report. We assume no obligation to update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this
report, other than as may be required by applicable law or regulation. Readers
are urged to carefully review and consider the various disclosures made by us in
our reports filed with the Securities and Exchange Commission which attempt to
advise interested parties of the risks and factors that may affect our business,
financial condition, results of operation and cash flows. If one or more of
these risks or uncertainties materialize, or if the underlying assumptions prove
incorrect, our actual results may vary materially from those expected or
projected. We will have little likelihood of long-term success unless we are
able to continue to raise capital from the sale of our securities until, if
ever, we generate positive cash flow from operations.
Use of Proceeds
- ----------------
Our offering is being made on a self underwritten basis - with a minimum of
$40,000 in gross proceeds. The table below sets forth the use of proceeds if
$40,000 (i.e. gross proceeds of the minimum offering) or $250,000 (i.e. gross
proceeds of the maximum offering) of our common stock is sold.
<table>
<caption>
$40,000 $250,000
----------------- -------------------
<s> <c> <c>
Gross proceeds $ 40,000 $ 250,000
Offering expenses 9,610 9,610
------------------ --------------------
Net proceeds $ 30,390 $ 240,390
================== ====================
The net proceeds will be used as follows:
Outstanding liabilities $ 6,018 $ 16,781
Marketing 2,000 40,000
Travel expenses 5,000 30,000
Inventory 12,000 100,000
Logistics - 35,000
General and administrative 5,372 18,609
=================== ====================
TOTAL $ 30,390 $ 240,390
=================== ====================
</table>
Total offering expenses are approximately $9,610. Of the $9,610, the amounts to
be paid from the proceeds for expenses of the offering are: $3,000 for legal
fees; $800 for filing fees; $5,000 for accounting fees and expenses; $800 for
transfer agent fees; and $9.82 for registration fee.
-16-
<page>
If the minimum amount of the shares is sold we will use the proceeds to pay for
our outstanding, as of February 29, 2008, liabilities of $6,018, which represent
the following amounts: travel expenses of $3,168, rent and office expenses of
$1,670 and computer equipment of $1,180.If the maximum amount of the shares is
sold we will pay all of our outstanding liabilities as of February 29, 2008,
representing current accounts payable of $6,018, the amounts owed to our
director for expenses incurred on behalf of the company in the amount of $530,
and $10,233 loan. The loan is payable on demand, unsecured, bears interest at
6.75% per annum and consists of $10,000 of principal, and $233 of accrued
interest payable.
Our President has provided funds for general working capital to the date of this
prospectus. We may rely on loans from our directors and officers, Yury Nesterov
and Elena Djafarova to continue our operations; however, there are no assurances
that our directors will provide us with any additional funds. Currently, we do
not have any arrangements for additional financing. If we are not able to obtain
needed financing, we may have to cease operations.
"General and Administrative Costs" include costs related to operating our
office. These costs include rent, telephone service, mail, stationery,
accounting, acquisition of office equipment and supplies, costs of paying an
administrative assistant, expenses of filing reports with the Securities and
Exchange Commission, travel, and general working capital.
Determination of Offering Price
- -------------------------------
The price of the shares we are offering was arbitrarily determined in order for
us to raise up to a total of $250,000 in this offering. The offering price bears
no relationship whatsoever to our assets, earnings, book value or other criteria
of value. Among the factors considered were:
o our lack of operating history
o the proceeds to be raised by the offering
o the amount of capital to be contributed by purchasers in this offering
in proportion to the amount of stock to be retained by our existing
shareholder, and
o our cash requirements
Dilution of the Price per Share
- -------------------------------
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.
As of February 29, 2008, the net tangible book value of our shares of common
stock was a deficit of $(14,320) or approximately $(0.0032) per share based upon
4,500,000 shares outstanding. If 100% of the shares are sold:
Upon completion of this offering, in the event all of the shares are sold, the
net tangible book value of the 29,500,000 shares to be outstanding will be
$235,680, or approximately $0.008 per share. The amount of dilution to the
shareholders acquiring shares in this offering will be $0.002 per share. The net
tangible book value of the shares held by our existing shareholder will be
increased by $0.0112 per
-17-
<page>
share without any additional investment on their part. The shareholders
acquiring shares in this offering will incur an immediate dilution from $0.010
per share to $0.008 per share.
After completion of this offering, if 25,000,000 shares are sold, the
shareholders acquiring shares in this offering will own approximately 84.75% of
the total number of shares then outstanding shares for which the shareholders
acquiring shares will have made cash investment of $250,000, or $0.010 per
share. Our existing shareholders will own approximately 15.25% of the total
number of shares then outstanding, for which they have made contributions of
cash of $4,500, or $0.001 per share.
If the minimum number of the shares is sold:
- --------------------------------------------
Upon completion of this offering, in the event 16% or the minimum amount of the
shares are sold, the net tangible book value of the 8,500,000 shares to be
outstanding will be $25,680 or approximately $ 0.003 per share. The amount of
dilution to the shareholders acquiring shares in this offering will be $ 0.007
per share. The net tangible book value of the shares held by our existing
stockholders will be increased by $0.0062 per share without any additional
investment on their part. The shareholders acquiring shares in this offering
will incur an immediate dilution from $0.010 per share to $ 0.003 per share.
After completion of this offering, if 4,000,000 shares are sold, the
shareholders acquiring shares in this offering will own approximately 47.06% of
the total number of shares then outstanding shares for which the shareholders
acquiring shares will have made cash investment of $40,000, or $0.010 per share.
Our existing stockholders will own approximately 52.94% of the total number of
shares then outstanding, for which they have made contributions of cash,
totaling $4,500, or $0.001 per share.
The following table compares the differences of investment in our shares to the
shareholders acquiring shares in this offering with investment in our shares of
our existing stockholders.
Existing stockholders if all of the shares are sold:
<table>
<caption>
<s> <c>
Price per share $ 0.001
Net tangible book value per share before offering $ (0.0032)
Net tangible book value per share after offering $ 0.008
Increase to present stockholders in net tangible book value per share after offering $ 0.0112
Capital contributions $ 4,500
Number of shares outstanding before the offering 4,500,000
Number of shares after offering held by existing stockholders 4,500,000
Percentage of ownership after offering 15.25%
Purchasers of shares in this offering if all shares sold:
Price per share $ 0.010
Dilution per share $ 0.002
Capital contributions $ 250,000
Number of shares after offering held by public investors 25,000,000
Percentage of ownership after offering 84.75%
</table>
-18-
<page>
<table>
<caption>
Existing stockholders if the minimum number of shares sold:
<s> <c>
Price per share $ 0.001
Net tangible book value per share before offering $ (0.0032)
Net tangible book value per share after offering $ 0.003
Increase to present stockholders in net tangible book value per share after offering $ 0.0062
Capital contributions $ 4,500
Number of shares outstanding before the offering 4,500,000
Number of shares after offering held by existing stockholders 4,500,000
Percentage of ownership after offering 52.94%
Purchasers of shares in this offering if the minimum number of shares sold:
Price per share $ 0.010
Dilution per share $ 0.007
Capital contributions $ 40,000
Number of shares after offering held by public investors 4,000,000
Percentage of ownership after offering 47.06%
</table>
Plan of Distribution; Terms of the Offering
- ---------------------------------------------
We are offering a minimum of 4,000,000 and up to a maximum of
25,000,000 shares of common stock on a direct public offering basis, without any
involvement of underwriters or broker-dealers. The offering price is $0.010 per
share. Funds from this offering will be placed in a separate bank account. This
account is not an escrow, trust or similar account. We will hold the funds in
the account until we receive a minimum of $40,000, at which time we will
appropriate the funds for the purposes we have described above. Any funds
received by us thereafter will be immediately available for our use. If we do
not receive the minimum amount of $40,000 within 180 days of the effective date
of our Prospectus, or within an additional 90 days if we so choose, all funds
will be promptly returned to the shareholders acquiring shares in this offering
without a deduction of any kind. During the 180 day period and possible
additional 90 day period, no funds will be returned to the shareholders
acquiring shares in this offering. The shareholders acquiring shares in this
offering will only receive a refund of the subscription if we do not raise a
minimum of $40,000 within the 180 day period referred to above, which could be
expanded by an additional 90 days at our discretion for a total of 270 days.
There are no finders involved in our distribution. Officers, directors,
affiliates or anyone involved in marketing our shares will not be allowed to
purchase shares in the offering. You will not have the right to withdraw your
funds during the offering. You will only have the right to have your funds
returned if we do not raise the minimum amount of the offering or if there is a
material change in the terms of the offering. The following are material changes
that would entitle you to a refund of your money:
- - an extension of the offering period beyond 270 days;
- - a change in the offering price;
- - a change in the minimum sales requirement;
- - a change to allow sales to affiliates in order to meet the minimum
sales requirement;
- - a change in the amount of proceeds necessary to release the funds
held in the separate bank account
-19-
<page>
If any of the above material changes occur, a new offering may be made by means
of a post-effective amendment.
We will sell the shares in this offering through our directors Mr. Yury Nesterov
and Ms. Elena Djafarova. They will receive no commission from the sale of any
shares. They will not register as a broker-dealer under Section 15 of the
Exchange Act in reliance upon Rule 3a4-1. Rule 3a4-1 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. The
conditions are that:
1. The person is not statutorily disqualified, as that term is defined in
Section 3(a)(39) of the Act, at the time of his participation; and,
2. The person is not compensated in connection with her participation by
the payment of commissions or other remuneration based either directly or
indirectly on transactions in securities;
3. The person is not at the time of their participation, an associated person of
a broker-dealer; and,
4. The person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of the
Securities Exchange Act 1934, as amended (the "Exchange Act"), in that she (A)
primarily performs, or is intended primarily to perform at the end of the
offering, substantial duties for or on behalf of the issuer otherwise than in
connection with transactions in securities; and (B) is not a broker or dealer,
or an associated person of a broker or dealer, within the preceding twelve (12)
months; and (C) does not participate in selling and offering of securities for
any issuer more than once every twelve (12) months other than in reliance on
Paragraphs (a)(4)(i) or (a)(4)(iii).
Our directors and officers are not statutorily disqualified, are not being
compensated, and are not associated with a broker-dealer. They are and will
continue to be our officers and directors at the end of the offering and have
not been during the last twelve months and are currently not broker-dealers or
associated with a broker-dealer. They have not during the last twelve months and
will not in the next twelve months offer or sell securities for another
corporation.
Only after our Prospectus is declared effective by the Securities and Exchange
Commission (the "Commission"), we intend to distribute this Prospectus to
potential investors at meetings and to our friends, business associates and
relatives who are interested in us and a possible investment in the offering. We
will not utilize the Internet to advertise our offering.
Section 15(g) of the Exchange Act
- ----------------------------------
Our shares are covered by Section 15(g) of the Exchange Act, and Rules 15g-1
through 15g-6 promulgated thereunder. They 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 $160,000 or $300,000 jointly with their
spouses).
Rule 15g-1 exempts a number of specific transactions from the scope of the penny
stock rules.
-20-
<page>
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.
Rule 15g-6 requires broker-dealers selling penny stocks to provide their
customers with monthly account statements.
Rule 15g-9 requires broker-dealers to approved 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 NASD's toll free telephone number and the central number of the North
American 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.
Regulation M
- ------------
Our officers and directors, who will sell the shares, are aware that they are
required to comply with the provisions of Regulation M, promulgated under the
Securities and Exchange Act of 1934, as amended. With certain exceptions,
Regulation M precludes officers and/or directors, sales agents, any
broker-dealers or other person who participate in the distribution of shares in
this offering from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete.
Offering Period and Expiration Date
- -----------------------------------
This offering will start on the date of this prospectus and continue for a
period of up to 180 days, and an additional 90 days, if so elected by our Board
of Directors.
-21-
<page>
Procedures for Subscribing
If you decide to subscribe for any shares in this offering, you must:
1. execute and deliver a subscription agreement; and
2. deliver a check or certified funds to us for acceptance or rejection.
All checks for subscriptions must be made payable to Incoming, Inc.
Right to Reject Subscriptions
We have 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 after
we receive them.
Management's Discussion and Analysis or Plan of Operation
=========================================================
We are a start-up stage corporation with limited operations and no revenues from
our business operations. 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. We do not anticipate that we
will generate significant revenues until we have established our wholesale
operations and developed distribution channels with sales sufficient enough to
generate a healthy profit margin. Accordingly, we must raise cash from sources
other than operations.
To meet our need for cash we are attempting to raise money from this offering.
If we raise the minimum amount through this offering, we will be able to
continue operations and remain in business for twelve months. If we are unable
to generate revenues after the twelve months for any reason, or if we are unable
to make a reasonable profit after twelve months, we may have to cease
operations. At the present time, we have not made any arrangements to raise
additional cash, other than through this offering.
If we need additional cash and cannot raise it we will either have to suspend
operations until we do raise the cash, or cease operations entirely. If we raise
the minimum amount of money from this offering, it will last for twelve months
but with limited funds available to build and grow our business. If we raise the
maximum amount, we believe we can achieve profitable operations, however, we
cannot guarantee that proceeds from this offering will be sufficient enough for
us to continue as going concern. If we raise less than the maximum amount and we
need more money we will have to revert to obtaining additional money through a
second public offering, a private placement of securities, or loans. Other than
as described in this paragraph, we have no other financing plans.
Plan of Operation
- -----------------
Our plan of operation is based on two major goals:
- - short term goals for one year (12 months) and
- - long term goals up to five years
-22-
<page>
Our short term goal is to build a portfolio of Urban Streetwear and Hip Hop
American apparel labels for distribution in the Russian Market. We intend to
enter into distribution agreements with local buyers for department stores, as
well as with distributors for independent stores, store chains and boutiques.
Our long term goal is to expand our distribution and sales territories into
other Eastern European countries and to add other categories of apparel to our
portfolio, such as American brands of snowboarding apparel, skateboarding
apparel and hipster-inspired clothing brands.
Limited Operating History; Need for Additional Capital
- ------------------------------------------------------
There is limited historical financial information about us upon which to base an
evaluation of our performance. We are in a start-up stage operations and have
generated no revenues. We cannot guarantee 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, such as increases in inventory, shipping, and marketing costs,
increases in administration expenditures associated with daily operations,
increases in accounting and audit fees, increases in legal fees related to
filings and regulatory compliance and increases in travel expenditures.
To become profitable and competitive, we have to successfully promote and
increase sales of our Urban Streetwear and Hip Hop closing lines. We anticipate
relying on equity sales of our common stock in order to continue to fund our
business operations. Issuances of additional shares will result in dilution to
our existing stockholders. There is no assurance that we will achieve any of
additional sales of our equity securities or arrange for debt or other financing
for to fund our planned business activities. We may also rely on loans from our
directors; however, there are no assurances that our directors will provide us
with any additional funds.
Currently, we do not have any arrangements for additional financing. We have no
assurance 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.
Results of Operations
- ---------------------
From Inception on December 22, 2006 to February 29, 2008
During the period from our inception to February 29, 2008, we hired consultants
in the areas of bookkeeping and accounting. We also retained an attorney in
relation to this Registration Statement, and an auditor to audit our financial
statements. Our loss since inception is $14,320 of which $5,500 for accounting
and audit fees; $233 for interest expense; $3,000 for management fees; $3,701
for general and administrative expenses; $530 for organization costs; and $1,356
for rent.
Since inception, we have sold 4,500,000 shares of common stock to our directors
for $4,500.
Liquidity and Capital Resources
- --------------------------------
As of February 29, 2008, our total assets consisted of cash of $5,825 (November
30, 2007 - $12,840)
-23-
<page>
and computer equipment with book value of $1,136 (November 30, 2007 - $1,180)
and our total liabilities were $16,781 (November 30, 2007 - $16,417) for a total
working capital deficit of $10,956 (November 30, 2007 - $(3,937)). During the
period ended November 30, 2007, the President of the Company provided a $10,000
loan to the Company in accordance with loan agreement. The loan payable is
unsecured, bears interest at 6.75% per annum, and consists of $10,000 of
principal and $33 of accrued interest payable. As at February 29, 2008, Yury
Nesterov, our President, is owed $10,763 (November 30, 2007 - $10,595) for cash
advances and expenditures incurred on behalf of the company. This amount
consists of the $10,000 loan principal (November 30, 2007 - $10,000), $233 of
accrued interest (November 30, 2007 - $65) and $530 (November 30, 2007 - $530)
for expenses incurred on behalf of the Company.
We expect to incur substantial losses over the next two years.
As of February 29, 2008, we had cash of $5,825, and we believe that we need
approximately an additional $40,000 to meet our working capital requirements
over the next 12 months. Our intention is to obtain this money through this
offering.
DESCRIPTION OF OUR BUSINESS AND PROPERTIES
You should rely only on the information contained in this prospectus or any
supplement hereto. We have not authorized anyone to provide you with different
information. If anyone provides you with different information you should not
rely on it. We are not making an offer to sell the shares in any jurisdiction
where the offer is not permitted. You should not assume that the information
contained in this prospectus is accurate as of any date other than the date on
the front cover of this prospectus regardless of the date of delivery of this
prospectus or any supplement hereto, or the sale of the shares. Our business,
financial condition, results of operations and prospects may have changed since
that date.
We obtained statistical data and certain other industry forecasts used
throughout this prospectus from market research, publicly available information
and industry publications. Industry publications generally state that they
obtain their information from sources that they believe to be reliable, but they
do not guarantee the accuracy and completeness of the information. Similarly,
while we believe that the statistical and industry data and forecasts and market
research used herein are reliable, we have not independently verified such data.
We have not sought the consent of the sources to refer to their reports or
articles in this prospectus.
Background
- ----------
We were formed on December 22, 2006. Our plan is to build an apparel and
footwear portfolio of Urban Streetwear and Hip Hop American labels in Urban
Fashion industry for export and distribution in Eastern European and Russian
markets. Our goal is to uniquely position ourselves as a niche dealer and
distributor of American Urban Streetwear and Hip Hop clothing labels in the
Eastern European market. We plan to specialize in selling and distribution of
apparel brands consisting of:
1) Urban Streetwear
2) Hip Hop clothing
3) Snowboard and skateboarding apparel
4) Hipster-inspired all American clothing brands.
-24-
<page>
We have entered into an agreement with OOO Propaganda (the "Propaganda", or
Distributor), a distributor located in Russian Federation where Propaganda was
granted the non-exclusive and non-assignable right to re-sell products supplied
by Incoming, Inc.
Our target market is fashion minded urban consumers, in their twenties and early
thirties, living in major urban areas of such fashion driven cities as Moscow,
Saint Petersburg, Yekaterinburg, etc.
Market and Industry Overview
- ----------------------------
Industry
- --------
Hip-hop fashion is a distinctive style of dress originating with the
African-American and Latino youth in major cities in the United States. Each
city contributed various elements to its overall style seen worldwide today. Hip
hop fashion complements the expressions and attitudes of hip hop culture in
general. Hip hop fashion has changed significantly during its history, and today
it is a prominent part of popular fashion as a whole across the world and for
all ethnicities. Hip-hop's foundation, built on sampling, storytelling, cultural
references, and competitive attitude, encouraged an entire generation to express
themselves.
In the 1990s and beyond, many hip hop artists and executives started their own
fashion labels and clothing lines. Notable examples include Wu-Tang Clan
(Wu-Wear), Russell Simmons (Phat Farm), Kimora Lee Simmons (Baby Phat), Diddy
(Sean John), Apple Bottom Jeans (Nelly), Damon Dash and Jay-Z (Rocawear), 50
Cent (G-Unit Clothing), Eminem (Shady Limited), 2Pac (Makaveli) and OutKast
(OutKast Clothing). Other prominent hip hop fashion companies have included
brands such as Karl Kani and FUBU, Ecko, Dickies, Girbaud, Enyce, Famous Stars
and Straps, Bape, LRG, Timberland Boots, and Akademiks.
Today, Hip hop clothing is produced by popular and successful designers. Hip hop
fashion is worn by a significant percentage of young people around the world,
with a significant number of retailers that are dedicated to the sale of hip hop
inspired fashions.
Due to the recent trend in hip hop fashion to revert back to the "old school",
the clothing is becoming similar to early 80's form of dressing. It has geared
toward a more hipster-inspired style of dressing (so-called "prep-hop"), which
may include items such as polo shirts, sport coats, woven button shirts, large
ornamental belt buckles, cufflinks, skull and skeleton decorations, elaborately
decorated zip-up hoodies, trucker hats, tighter-fitting "vintage style" t-shirts
with shorter arm sleeves, Lumberjack button ups or plaid designed shirts, Snow
Inspired Fashions and tighter denim jeans. Shorter length t-shirts have become
involved in recent trends, in order to expose decorated belts and belt buckles
and biker chains. Although the "baggy" style of dress remains relevant, some hip
hoppers forego that particular style, opting for colorful fitted prep-hop and
hipster-inspired clothing as exemplified by the growing influence of rappers
such as Kanye West, Common, will.i.am, and Andre 3000, as well as the
tighter-fitting skater influenced styles in the case of Pharrell. 80's trends
have reemerged, such as Members Only jackets, huge oversized chains and large
eyeglasses.
The streetwear style is very close to hip-hop culture, urban, skaters and even
surf, meaning it sports a lot of wide influences. Traditionally, denim is a
large part of streetwear culture because it is easy to maintain (it won't stain
and is a strong material) and so are caps.
-25-
<page>
Another integral part of what streetwear is and what it means is that it is a
very popular fashion genre, but even as it grows in stature, it still remains
something underground. One factor that has helped this is the fact that many of
the well known streetwear brands have not given in to a buyout by the giants of
the clothing industry; this would undoubtedly bring those brands to the
mainstream. Shops that sell streetwear also show close alliance to the
independent brands by not selling well known brands, and sticking to their
independent brands.
Through the years streetwear has developed and has been molded by its past and
through pioneers like Shawn Stussy, the influence of the hip hop culture and the
input of Japanese designers. However, through this sculpting and change,
streetwear has managed to keep to its roots.
The core of streetwear has always been, and likely will always be, the graphic
tee. It is through this medium that one can truly see what sets street fashion
apart from the generic looking tees of the mainstream. This is evident in the
originality and creativity found in the graphics. Rather than simply branding
the shirt, streetwear companies have blessed their products with clever phrases
and /or images that bestow emotional appeal upon the shirt, distinctly absent
from the larger brands.
A second characteristic, which was truer today than ten years ago due to the
advent of the internet, is a degree of exclusivity. True streetwear is the
domain of specialty boutiques and not found in the mall. Traditionally
streetwear has been reserved for those with their ear to the ground and by the
time a once exclusive label reached the mainstream, those in the know had long
since moved onto the next one. It is this concept of exclusivity which
essentially disqualifies brands with street origins that are readily available
in malls and places like Athletes World.
Finally, streetwear companies dare to tread where no others will and are
continually pushing the boundaries of what some folk would consider "decency."
This is evident even in the graphics and sayings that express political
opinions, social commentary and elements of a more risque nature. Essentially,
streetwear companies aim to stay true to themselves by not compromising their
values out of fear of upsetting the general public. It is this radical attitude
that separates streetwear from the generic fashion designed for the masses.
Examples of established men and women Hip-Hop clothing brands are LRG, Coogi,
Baby Phat, Apple Bottoms, Luxurie by LRG, Pastry Shoes, and Sean John, Rocawear,
Akademiks, G Unit, New Era, Champion Sports, Phat Farm, Vokal, Unk, Drunknmunky,
Ecko, Majestic, Triple Five Soul, King Apparel, Zoo York , Elko Unlimited, Lugz
and Mecca USA to name a few.
Newer urban streetwear and hip hop brands are Crown Holder, Dereon, Sneak Tip,
The Originators, Junkfood Clothing, Nostic, and Black label, Crooks & Castles,
Hundreds, 10 Deep, Know1edge, N4E1 - Not For Everyone, Franco Shade and 3Sixteen
among others.
Market
- ------
In the past eight years Russia has become a consumer power. The economy is
growing at an annual rate of 6.9% since 2003, with Russian and other Eastern
European elites already overtaking Western Europeans in terms of conspicuous
consumption, the consumer potential - and with it the scope of Western brands-
is boundless once wealth trickles down to the bulk of consumers.
-26-
<page>
Russia has experienced a strong growth of retail trade that goes in hand with
its rising consumer income and expenditure. In 2007, Russia was ranked one of
the world's largest retail markets. Russian consumers have a higher purchasing
power since the majority of the population owns a house without the burden of
mortgage repayments, having inherited their housing from the state following the
collapse of communism. Per capita spending on clothing and footwear has grown by
almost 30% since 2000.
The style of clothes worn in Russia is similar to the rest of Europe, with young
people following fashion trends. Celebrities, particularly those on TV, always
signal the latest fashion trends. The population at large buys clothes and
footwear in specialized shops, paying attention to latest world fashion trends.
The luxury segment of the Russian clothing and footwear market is highly
developed, making it one of the most dynamic luxury markets in the world. The
majority of the global luxury brands which have already established a strong
presence in Russia are now launching their own distribution networks. For the
last five years, luxury brands like Louis Vuitton, Salvatore Ferragamo and
Burberry are expanding in Russia.
The steady growth in personal incomes, as well as ongoing real ruble
appreciation, is forecasted to increase the size of the retail market. Market
research reveals that the Russian market of apparel consumption grows annually
by 25%. The market capacity in the average price sector made 12-13 billion US
dollars, of which 40% fell on Moscow, and 17% on St. Petersburg. The sales of
premium-class garments reached 2.5-3 billion US dollars, while the sales of de
luxe attire were estimated at 1.5 billion US dollars.
The business profitability in the Russian apparel market remains attractive. The
share of the foreign presence in the local market annually grows by 4-4.5% in
capital cities, and has good prospects in the regions. Now, Russian regions are
just starting to develop in response to the growing incomes of the local
population. Hence, the Russian market holds a potential to upsurge its consumer
activity.
The medium priced segment of Russian clothing and footwear market is evolving
constantly as this segment is addressing apparel needs of majority of youth
(students and young professionals). With the increasing influence of Western
culture including Hollywood movies and American music on younger Russians there
is a growing influence of hip hop and rap music on youth culture in Eastern
Europe as well as growing popularity of snowboarding and skateboarding
activities.
Just a few years ago, the eastern edge of Europe was terra incognita on
hip-hop's world map. Today, European rappers also "feature" each other on songs
and even provide cross-border assists when necessary. Music isn't the only thing
that hip-hop imported from the U.S., its country of origin. Along came in hip
hop inspired fashion with gold chains and baggy pants, hoodies and tracksuits.
Our Business
============
Plan of Operations
- ------------------
Short term goal (twelve-month period)
The two key elements of our short term plan are to create our initial portfolio
of Urban Street wear and Hip Hop American apparel labels we want to sell to the
foreign market and do a test market of these products. Our plan of operation for
the next twelve months will be focused on three major areas:
-27-
<page>
1) Operations
2) Marketing
3) Financing
Operations
- ----------
We plan to create our portfolio of apparel labels by sourcing them through
industry trade shows, directly contacting North American label manufacturers,
searching through apparel industry publications, ads and referrals. We are
planning to create two separate segments of our portfolio:
-Hip Hop apparel including footwear and accessories with focus on
providing customers with a selection of high-end, contemporary apparel
and accessories, at a medium to higher price points that are generally
a better fit for department stores, chain stores and boutiques. This
segment represent an apparel that appear to be more mainstream and will
be targeting younger men and women in the eighteen to thirty five years
old age category.
-Urban Streetwear including footwear and accessories that will cater to
consumers in major urban areas who are shopping less in department
stores and more in other channels, such as specialty shops, boutiques
and mid-tier locations where uniqueness and value is perceived to be
higher. This is a niche urban casual apparel segment that holds a
higher degree of exclusivity, perceived to be edgier and appeal to a
younger audience.
We plan to achieve this by doing the following:
1) We will buy samples and small quantities of chosen products from brand
manufacturers throughout the United States and ship them to our
Distributor for testing on the local market. The Distributor will
utilize their existing contacts to introduce the products to local
buyers.
2) Our company will create a list of perspective brands based on feedback
we will receive from our Distributor.
3) We will obtain all the necessary information about prospective brands
we wish to include in our portfolio from the manufacturers for the
purpose of developing a sale support system.
4) Upon receiving a purchase order from Distributor, Incoming will place a
trial order with chosen label manufacturers or their distributors and
fulfill it by shipping purchased goods to the Distributor's warehouse
in Moscow.
5) We will evaluate the consumer response to the introduced new
merchandise by working closely with the Distributor and deciding on
whether to keep or adjust our product lines. Then we will develop a
more detailed plan of operations including types of products and next
order volumes.
Marketing
- ---------
We plan to develop a strategic marketing plan by working together with
our distributor, Propaganda, for generating brand awareness in geographical
areas where we plan to introduce our products first. We will focus our marketing
and sales efforts on the youth lifestyle markets and action, sports, snow sports
and specifically, persons ranging in age from 17 to 35. Individuals born between
approximately 1978 and 1994, more commonly referred to as Generation Y,
represent the core of our target demographic. Generation Y is a powerful
demographic supported by solid growth and spending power. The marketing plan
will cover the following:
-28-
<page>
1) Active promotional program including in-store demonstrations, printing
promotional materials, educating buyers and other potential distributors
on the brands we carry.
2) Public and media relations program in key areas.
3) Sponsoring events, Hip-Hop concerts, competitions in skateboarding and
urban art by supplying our products to increase customer awareness of
brands that we represent.
Financing
- ---------
We intent to raise a minimum of $40,000 and up to a maximum of $250,000 of gross
proceeds from this offering. Management believes that even if we raise a minimum
amount that will net $30,390 after offering expenses, we will have sufficient
cash flow to meet our capital requirements for at least the next twelve months.
Management expects to keep operating costs to a minimum until cash is available
through financing or operating activities. If we are unable to generate profits
or unable to obtain additional funds for our working capital needs, we may need
to cease or curtail operations.
Long term goal (five-year period)
- ---------------------------------
There are three key elements of our long term plan:
1) Expand our portfolio by diversifying our offerings with innovative new
American brands and labels.
2) Introduce new merchandise categories including footwear, accessories
and jewelry.
3) Expand selling territories, increase number of distributors, and
uncover new distribution channels.
Competition
- -----------
The Company's business is subject to significant competition. The fashion
industry is highly competitive and Eastern European market is dominated by large
multinational Western brands including Gucci, Louis Vuitton, Ferragamo and
Burberry among others. Multinational competitors have already established their
brand name recognition in the Russian market.
In our particular apparel segment, we compete against a diverse group of
wholesalers and retailers offering casual wear and streetwear apparel of
European brands, such as Scotch&Soda, Broadway "NYC Fashion", No Excess, 4you,
Aigle, as well as products by local fashion designers and companies. There are
also a number of local national competitors offering casual streetwear apparel
including B.O. Connections, Befree, and Canoe among many others. Moreover,
competition for shelf space in department and independent stores is intense and
poses great difficulty for smaller companies and distributors.
In addition, several big local Russian retailers such as TsUM, Petrovsky
Passage, and GUM among others already offer some of the Hip Hop American
clothing labels such as Sean John, Baby Phat, and Rocawear. These retailers may
be able to purchase merchandise that we cannot purchase because of their name
recognition and relationships with suppliers, or they may be able to purchase
branded merchandise with better pricing concessions than us. Our local and
regional competitors have extensive knowledge of the consumer base and may be
able to garner more loyalty from customers than us. If the targeted consumer
base is satisfied with the selection, quality and price of our competitors'
products, buyer may decide not to purchase our merchandise.
-29-
<page>
Incoming will try to offer distinctive labels and brands, which address
specific consumer tastes. We will target specific group of consumers who are
looking for unique, edgy and exclusive brands that are not offered by other
competitors.
Description of Property
- -----------------------
We do not hold ownership or leasehold interest in any property.
Directors, Executive Officers and Control Persons
Our executive officers and directors and their respective ages as of the date of
this prospectus are as follows:
- --------------------------------------------------------------------------------
Name Age Position
- --------------------------------------------------------------------------------
Yury Nesterov 52 President, Chief Executive
Officer, Director
Elena Djafarova 32 Secretary, Treasurer, Chief
Financial Officer, Director
The directors will serve as directors until our next annual shareholder meeting
or until a successor is elected who accepts the position. Directors are elected
for one-year terms. Officers hold their positions at the will of the Board of
Directors, absent any employment agreement. There are no arrangements,
agreements or understandings between non-management shareholders and management
under which non-management shareholders may directly or indirectly participate
in or influence the management of Incoming's affairs.
Yury Nesterov, President
Since December 22, 2006, Mr.Nesterov has been our President, Chief Executive
Officer, and a director of the Company. In the past he worked as a manager at a
shoe manufacturing company in Toronto. In the past five years Mr.Nesterov held
various contract positions with private companies in North America and Russia.
Mr.Nesterov is not an officer or director of any other reporting company. Mr.
Nesterov intends to devote approximately 25% of his business time to our
affairs.
Elena Djafarova, Director
Elena Djafarova holds a position as a merchandiser at Avangard-Moda clothing
store in Moscow, Russia. In the past Ms. Djafarova owned and operated clothing
boutique store in Kishinev, Moldova. She intends to devote approximately 20% of
her business time to our affairs.
EXECUTIVE COMPENSATION
There are no formal written employment arrangements in place. We do not have any
agreements or understandings that would change the terms of compensation during
-30-
<page>
the course of the year. The table below shows what we have paid to our
directors since our inception of December 22, 2006 through February 29, 2008.
SUMMARY COMPENSATION TABLE
<table>
<caption>
- --------------------------------------------------------------------------------------------------------------
| Long Term Compensation |
Annual Compensation ------------------------------
---------------------- | Awards |Payouts|
Other ------------------------------
Annual
Compen- |Restricted| Securities| | All Other
Name and Year sation |Stock | Underlying| LTIP | Compen-
Principal Ended Salary Bonus |Awards | Options/ |Payouts| sation
Position ($) ($) ($) | ($) | SARs (#) | ($) | ($)
- --------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Y. Nesterov, 12-22-06 -0- -0- $2,000 (1) -0- -0- -0- -0-
President, (inception)to
Chief 11-30-07
Executive
Officer
Director 12-01-07 to -0- -0- $1,000(1) -0- -0- -0- -0-
02-29-08
E.Djafarova 12-22-06 -0- -0- -0- -0- -0- -0- -0-
Secretary, (inception) to
Treasurer, 11-30-07
Chief
Financial 12-01-07 to -0- -0- -0- -0- -0- -0- -0-
Officer, 02-29-08
- --------------------------------------------------------------------------------------------------------------
</table>
(1) The company's president provides management services to the
company as per unwritten arrangement with the company. During the
period ended November 30, 2007, the company paid $2,000 for
management services. During the three months ended February 29,
2008, the company paid $1,000 for management services.
Stock Option Grants
We do not have any stock options outstanding. No stock options or stock
appreciation rights under any stock incentive plans were granted to our sole
director and officer since our inception. Security Ownership of Certain
Beneficial Owners and Management The following table sets forth the ownership,
as of June 26, 2008 of our common stock by each of our directors, and by all
executive officers and directors as a group, and by each person known to us who
is the beneficial owner of more than 5% of any class of our securities. As of
June 26, 2008 there were 4,500,000 common shares issued and outstanding. To the
best of our knowledge, all persons named have sole voting and investment power
with respect to the shares, except as otherwise noted.
-31-
<page>
<table>
<caption>
- --------------------------------------------------------------------------------------------------------------------
Title of Class Name of Amount and Percent of Percent of Percent of
Beneficial Owner Nature of Class Before Class After Class After
Beneficial Offering Offering with Offering with
Ownership Minimum Number of Maximum Number of
Shares Sold Shares Sold
(1) (%) (%) (%)
- --------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Common Yury Nesterov 3,000,000 66.67 35.29 10.17
President, CEO, and
Director
- --------------------------------------------------------------------------------------------------------------------
Common Elena Djafarova 1,500,000 33.33 17.65 5.08
Secretary, Treasurer
CFO, and Director
- --------------------------------------------------------------------------------------------------------------------
All Officers and 4,500,000 100 52.94 15.25
Directors as a Group
that consists of two
persons
- --------------------------------------------------------------------------------------------------------------------
</table>
(1) - Includes shares that could be obtained by the named individuals
within the next 60 days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The President of the Company provides management services to the Company. During
the period ended February 29, 2008 management services of $1,000 (November 30,
2007 - $2,000) were charged to operations.
During the period ended November 30, 2007, the President of the Company provided
a $10,000 loan to the Company. The loan payable is payable on demand, unsecured,
bears interest at 6.75% per annum and consists of $10,000 of principal, and $233
of accrued interest payable.
As at February 29, 2008 the Company owed $530 (November 30, 2007, - $530) to the
President of the Company for expenses incurred on behalf of the Company. We have
not entered into any transactions with our officers, directors, persons
nominated for these positions, beneficial owners of 5% or more of our common
stock, or family members of these persons wherein the amount involved in the
transaction or a series of similar transactions exceeded $60,000.
DESCRIPTION OF SECURITIES
Common Stock
The authorized capital stock of Incoming, Inc. consists of 75,000,000 common
shares, $0.001 par value. Holders of the 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
-32-
<page>
share equally in dividends from sources legally available, therefore, when, as
and if declared by the Board of Directors, and upon liquidation or dissolution
of Incoming, Inc., whether voluntary or involuntary, to share equally in the
assets of Incoming 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 Incoming's Articles of Incorporation, on
such terms and conditions and for such consideration as the Board may deem
appropriate without further stockholder action.
Voting Rights
Each holder of common stock is entitled to one vote per share on all matters on
which such stockholders are entitled to vote. Since the shares of common stock
do not have cumulative voting rights, the holders of more than fifty percent of
the shares voting for the election of directors can elect all the directors if
they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the Board of Directors.
Dividend Policy
Holders of Incoming's common stock are entitled to dividends if declared by the
Board of Directors out of funds legally available; therefore, Incoming does not
anticipate the declaration or payment of any dividends in the foreseeable
future. We intend to retain earnings, if any, to finance the development and
expansion of its business. Future dividend policy will be subject to the
discretion of the Board of Directors and will be contingent upon future
earnings, if any, Incoming's financial condition, capital requirements, general
business conditions and other factors. Therefore, there can be no assurance that
any dividends of any kind will ever be paid. Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
Options
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
Convertible Securities
We have not issued and do not have outstanding any securities convertible into
shares of our common stock or any rights convertible or exchangeable into shares
of our common stock.
Shares Eligible for Future Sale
The 25,000,000 shares of common stock registered in this offering will be
freely tradable without restrictions under the Securities Act. No shares held
by our "affiliates" (officers, directors or 10% shareholders) are being
registered hereunder. Our 4,500,000 issued and outstanding shares have been held
since November,2007,and are subject to the sale limitations imposed by Rule 144.
Under Rule 144, since our directors are an affiliate as defined in that rule,
the shares can be publicly sold,
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<page>
subject to volume restrictions and restrictions on the manner of sale,
commencing one year after their acquisition. The eventual availability for sale
of substantial amounts of common stock under Rule 144 could adversely affect
prevailing market prices for our securities.
Anti-takeover provisions
There are no Nevada anti-takeover provisions that may have the affect of
delaying or preventing a change in control.
Legal Proceedings
No officer, director, or persons nominated for these positions, and no
promoter or significant employee of our corporation has been involved in legal
proceedings that would be material to an evaluation of our management. We are
not aware of any pending or threatened legal proceedings which involve
Incoming,Inc.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes and our Bylaws. We have been advised that in the opinion of the
Securities and Exchange Commission indemnification for liabilities arising under
the Securities Act 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 is asserted by one of our directors, officers, or
controlling persons in connection with the securities being registered, we will,
unless in the opinion of our legal counsel the matter has been settled by
controlling precedent, submit the question of whether such indemnification is
against public policy to court of appropriate jurisdiction. We will then be
governed by the court's decision.
Interest of Named Experts and Counsel
Our financial statements included in this prospectus and the registration
statement have been audited by Ronald R. Chadwick P.C., Certified Public
Accountant, 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 SEC, and are included in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
The validity of the securities offered hereby will be passed upon for us by of
the law firm Harrison Law P.A.
Additional Information
We have filed with the Commission a registration statement on Form S-1 under the
1933 Act with respect to the securities offered by this prospectus. This
prospectus, which forms a part of the
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<page>
registration statement, does not contain all the information set forth in the
registration statement, as permitted by the rules and regulations of the
Commission. For further information with respect to us and the securities
offered by this prospectus, reference is made to the registration statement.
Statements contained in this prospectus as to the contents of any contract or
other document that we have filed as an exhibit to the registration statement
are qualified in their entirety by reference to the to the exhibits for a
complete statement of their terms and conditions. The registration statement and
other information may be read and copied at the Commission's Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the
Commission.
Reports to Security Holders
Upon effectiveness of this Prospectus, we will be subject to the reporting and
other requirements of the Exchange Act and we intend to furnish our shareholders
annual reports containing financial statements audited by our independent
auditors and to make available quarterly reports containing unaudited financial
statements for each of the first three quarters of each year.
FINANCIAL STATEMENTS
Index Page
- ----- ----
Audited Financial Statements for the period ended November 30, 2007:
Report of Independent Registered Certified Public Accounting Firm F-2
Balance Sheets F-3
Statement of Operations F-4
Statement of Cash Flows F-5
Statement of Stockholders' Equity F-6
Notes to the Financial Statements F-7
Unaudited Financial Statements for the three-month period ended February 29,
2008:
Balance Sheets F-13
Statement of Operations F-14
Statement of Cash Flows F-15
Statement of Stockholders' Equity F-17
Notes to the Financial Statements F-18
-35-
<page>
INCOMING, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
November 30, 2007
BALANCE SHEET
STATEMENT OF OPERATIONS
STATEMENT OF CASH FLOWS
STATEMENT OF STOCKHOLDERS' EQUITY
NOTES TO FINANCIAL STATEMENTS
F-1
<page>
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Incoming, Inc.
Scottsdale, Arizona
I have audited the accompanying balance sheet of Incoming, Inc. (a development
stage company) as of November 30, 2007 and the related statements of operations,
stockholders' equity and cash flows for the period from December 22, 2006
(inception) through November 30, 2007. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Incoming, Inc. as of November 30,
2007 and the related statements of operations, stockholders' equity and cash
flows for the period from December 22, 2006 (inception) through November 30,
2007 in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements the Company has suffered recurring losses from operations
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Aurora, Colorado
Ronald R. Chadwick, P.C.
January 15, 2008
RONALD R. CHADWICK, P.C.
F-2
<page>
INCOMING, INC.
(A Development Stage Company)
BALANCE SHEET
November 30, 2007
2007
----
ASSETS
Current assets
Cash $ 12,480
---------
Total current assets 12,480
Property and equipment, net 1,180
---------
Total assets $ 13,660
=========
LIABILITIES & STOCKHOLDERS'EQUITY
---------------------------------
Current liabilities
Accounts payable and accrued liabilities $ 5,822
Due to related parties 530
Notes payable related parties 10,065
---------
Total current liabilities 16,417
Capital stock $0.001 par value;
75,000,000 shares authorized;
4,500,000 shares issued and outstanding 4,500
Deficit accumulated during the development stage ( 7,257)
--------
Total Stockholders' Equity ( 2,757)
Total Liabilities and Stockholders' Equity $ 13,660
========
The accompanying notes are an integral part of these financial statements
F-3
<page>
INCOMING, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
December 22, 2006 (Inception) Through November 30, 2007
Revenue $ -
---------
Expenses:
Accounting and audit fees $ 3,500
General and Administrative 740
Management 2,000
Organization costs 530
Rent 422
---------
7,192
---------
Loss from operations ( 7,192)
Other income (expense)
Interest expense ( 65)
---------
Income (loss) before provision for income tax ( 7,257)
Provision for income tax
-
---------
Net income (loss) $ ( 7,257)
=========
Net income (loss) per share $ ( 0.02)
=========
Weighted average number of common shares outstanding 446,064
=========
The accompanying notes are an integral part of these financial statements
F-4
<page>
INCOMING, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
December 22, 2006 (Inception) Through November 30, 2007
Cash Flows From Operating Activities:
Net income (loss) $ ( 7,257)
Adjustment to reconcile net income to net cash
provided by (used for) operating activities:
Accounts payable and accrued liabilities 5,822
Accounts payable related parties 530
---------
Net cash provided by (used for) operating
activities ( 905)
Cash Flows From Investing Activities
Purchase of fixed assets ( 1,180)
---------
Net cash provided by (used for) investing activities ( 1,180)
Cash Flows From Financing Activities:
Loan payable - related party 10,065
Proceeds from issuance of common stock 4,500
--------
Net cash provided by (used for) financing 14,565
activities
--------
Net Increase (Decrease) In Cash 12,480
Cash At The Beginning Of The Period -
--------
Cash At The End Of The Period $ 12,480
========
Schedule Of Non-Cash Investing And Financing
Activities
None
Supplemental Disclosure
Cash paid for:
Interest $ -
=========
Income Taxes $ -
=========
The accompanying notes are an integral part of these financial statements
F-5
<page>
INCOMING, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
December 22, 2006 (Inception) Through November 30, 2007
<table>
<caption>
Deficit
Accumulated
Common Shares During the
------------- Development
Number Par Value Stage Total
------ --------- ----- -----
<s> <c> <c> <c> <c>
Balances, December 22, 2006 - $ - $ - $ -
Issued for cash:
Common stock November, 2007 - at $0.001 4,500,000 4,500 - 4,500
Net gain (loss) for the period ended November 30, 2007 - - ( 7,257) ( 7,257)
--------- --------- ----------- ------------
Balances, November 30, 2007 4,500,000 $ 4,500 $ ( 7,257) $ ( 2,757)
========= ========= =========== ============
</table>
The accompanying notes are an integral part of these financial statements
F-6
<page>
INCOMING, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2007
(Stated in US Dollars)
Note 1 Nature and Continuance of Operations
------------------------------------
The Company was incorporated in the State of Nevada, United States
of America on December 22, 2006, and its fiscal year end is
November 30. The Company is engaged in distribution of American
Urban Streetwear and Hip Hop clothing labels in the Eastern
European market.
These financial statements have been prepared on a going concern
basis. The Company has a working capital deficiency of $3,937, and
has accumulated deficit of $7,257 since inception. Its ability to
continue as a going concern is dependent upon the ability of the
Company to generate profitable operations in the future and/or to
obtain the necessary financing to meet its obligations and repay
its liabilities arising from normal business operations when they
come due. The outcome of these matters cannot be predicted with
any certainty at this time. These factors raise substantial doubt
that the company will be able to continue as a going concern.
Management plans to continue to provide for its capital needs by
the issuance of common stock and related party advances. These
financial statements do not include any adjustments to the amounts
and classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States of America. Because a precise determination of many
assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful
judgement. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
Development Stage Company
-------------------------
The Company complies with Financial Accounting Standard Board
Statement ("FAS") No. 7 and The Securities and Exchange Commission
Act Guide 7 for its characterization of the Company as development
stage.
Revenue Recognition
-------------------
Sales are recognized when revenue is realized or realizable and
has been earned. The Company's policy is to recognize revenue when
risk of loss and title to the product
F-7
<page>
Incoming, Inc.
(A Development Stage Company)
Notes to the Financial Statements
November 30, 2007 - Page 2
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Revenue Recognition - (cont'd)
-------------------
transfers to the customer. Net sales is comprised of gross
revenues less expected returns, trade discounts and customer
allowances, which include costs associated with off-invoice
mark-downs and other price reductions, as well as trade promotions
and coupons. These incentive costs are recognized at the later of
the date on which the Company recognizes the related revenue or
the date on which the Company offers the incentive.
Impairment of Long-lived Assets
-------------------------------
Capital assets are reviewed for impairment in accordance with FAS
No. 144, "Accounting for the Impairment or Disposal of Long-lived
Assets", which was adopted effective January 1, 2002. Under FAS
No. 144, these assets are tested for recoverability whenever
events or changes in circumstances indicate that their carrying
amounts may not be recoverable. An impairment charge is recognized
for the amount, if any, which the carrying value of the asset
exceeds the fair value.
Research and Development
------------------------
Research and development expenditures are expensed as incurred.
Foreign Currency Translation
----------------------------
The financial statements are presented in United States dollars.
In accordance with Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation", since the functional currency
of the Company is U.S. dollars, the foreign currency monetary
assets and liabilities are re-measured using the foreign exchange
rate that prevailed at the balance sheet date.Revenue and expenses
are translated at weighted average rates of exchange during the
year and stockholders' equity accounts and furniture and
equipment are translated by using historical exchange rates. Any
re-measurement gain or loss incurred is reported in the income
statement.
Net Loss per Share
------------------
Basic loss per share includes no dilution and is computed by
dividing loss available to common stockholders by the weighted
average number of common shares outstanding for the period.
Dilutive losses per share reflects the potential dilution of
securities that could share in the losses of the Company. Because
the Company does not have any potentially dilutive securities, the
accompanying presentation is only of basic loss per share.
F-8
<page>
Incoming, Inc.
(A Development Stage Company)
Notes to the Financial Statements
November 30, 2007 - Page 3
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Stock-based Compensation
------------------------
The Company has not adopted a stock option plan and has not
granted any stock options. Accordingly no stock-based compensation
has been recorded to date.
Income Taxes
------------
The Company uses the asset and liability method of accounting for
income taxes in accordance with FAS No. 109 "Accounting for Income
Taxes". Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
temporary differences between the financial statements carrying
amounts of existing assets and liabilities and loss carryforwards
and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
Fair Value of Financial Instruments
-----------------------------------
The carrying value of the Company's financial instruments
consisting of cash, accounts payable and accrued liabilities,
agreement payable and due to related party approximate their
carrying value due to the short-term maturity of such instruments.
Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments.
Recent Accounting Pronouncements
--------------------------------
In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measures". This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted
accounting principles (GAAP), expands disclosures about fair value
measurements, and applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 does
not require any new fair value measurements. However, the FASB
anticipates that for some entities, the application of SFAS No.
157 will change current practice. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after
November 15, 2007, which for the Company would be the fiscal year
beginning February 1, 2008. The Company is currently evaluating
the impact of SFAS No. 157 but does not expect that it will have a
material impact on its financial statements.
In September 2006, the FASB issued SFAS No. 158, "Employers'
Accounting for Defined Benefit Pension and Other Postretirement
Plans." This Statement requires an employer to recognize the over
funded or under funded status of a defined benefit post retirement
plan (other than a multiemployer plan) as an asset or liability in
its statement of financial position, and to recognize changes in
that funded status in the year in which the changes occur through
comprehensive income. SFAS No. 158 is effective for fiscal years
ending
F-9
<page>
Incoming, Inc.
(A Development Stage Company)
Notes to the Financial Statements
November 30, 2007 - Page 4
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Recent Accounting Pronouncements - (cont'd)
---------------------------------
after December 15, 2006 which for the Company would be February 1,
2007. The Company does not expect that the implementation of SFAS
No. 158 will have any material impact on its financial position
and results of operations.
In September 2006, the SEC issued Staff Accounting Bulletin
("SAB") No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year
Financial Statements." SAB No. 108 addresses how the effects of
prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements.
SAB No. 108 requires companies to quantify misstatements using a
balance sheet and income statement approach and to evaluate
whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative
factors. SAB No. 108 is effective for periods ending after
November 15, 2006 which for the Company would be February 1, 2007.
The Company is currently evaluating the impact of adopting SAB No.
108 but does not expect that it will have a material effect on its
financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities". This
Statement permits entities to choose to measure many financial
assets and financial liabilities at fair value. Unrealized gains
and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007. The Company is
currently assessing the impact of SFAS No. 159 on its financial
position and results of operations.
Note 3 Capital Stock
-------------
The total number of common shares authorized that may be issued by
the Company is 75,000,000 shares with a par value of one tenth of
one cent ($0.001) per share and no other class of shares is
authorized.
During the period from December 22, 2006 (inception) to November
30, 2007, the Company issued 4,500,000 shares of common stock to
its directors for total proceeds of $4,500.
To November 30, 2007, the Company has not granted any stock
options and has not recorded any stock-based compensation.
F-10
<page>
Incoming, Inc.
(A Development Stage Company)
Notes to the Financial Statements
November 30, 2007 - Page 5
Note 4 Related Party Transactions
--------------------------
a) The President of the Company provides management services to
the Company. During the period ended November 30, 2007
management services of $2,000 were charged to operations.
b) During the period ended November 30, 2007, the President of
the Company provided a $10,000 loan to the Company. The loan
payable is payable on demand, unsecured, bears interest at
6.75% per annum and consists of $10,000 of principal, and $65
of accrued interest payable.
c) As at November 30, 2007, the Company owed $530 to the
President of the Company for expenses incurred on behalf of
the Company.
Note 5 Income Taxes
------------
The significant components of the Company's deferred tax assets
are as follows:
2007
Deferred Tax Assets ----
Non-capital loss carryforward $ 1,089
Less: valuation allowance for deferred tax asset ( 1,089)
---------
$ -
========
There were no temporary differences between the Company's tax and
financial bases that result in deferred tax assets, except for the
Company's net operating loss carryforwards amounting to
approximately $7,257 at November 30, 2007 which may be available
to reduce future year's taxable income.
These carryforwards will expire, if not utilized, commencing in
2027. Management believes that the realization of the benefits
from these deferred tax assets appears uncertain due to the
Company's limited operating history and continuing losses.
Accordingly a full, deferred tax asset valuation allowance has
been provided and no deferred tax asset benefit has been recorded.
F-11
<page>
INCOMING, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
February 29, 2008
(Unaudited)
BALANCE SHEET
STATEMENT OF OPERATIONS
STATEMENT OF CASH FLOWS
STATEMENT OF STOCKHOLDERS' EQUITY
NOTES TO FINANCIAL STATEMENTS
F-12
<page>
INCOMING, INC.
(A Development Stage Company)
BALANCE SHEETS
<table>
<caption>
February 29, November 30,
2008 2007
---- ----
(Unaudited) (Audited)
<s> <c> <c>
ASSETS
------
Current assets
Cash $ 5,825 $ 12,480
------------- --------------
Total current assets 5,825 12,480
Property and equipment, net 1,136 1,180
------------- --------------
Total assets $ 6,961 $ 13,660
============= ==============
LIABILITIES & STOCKHOLDERS'EQUITY
---------------------------------
Current liabilities
Accounts payable and accrued liabilities $ 6,018 $ 5,822
Due to related parties 530 530
Notes payable related parties 10,233 10,065
------------- --------------
Total current liabilities 16,781 16,417
------------- --------------
Capital stock $0.001 par value;
75,000,000 shares authorized;
4,500,000 shares issued and outstanding 4,500 4,500
Deficit accumulated during the development stage ( 14,320) ( 7,257)
------------- -------------
Total Stockholders' Equity ( 9,820) ( 2,757)
------------- -------------
Total Liabilities and Stockholders' Equity $ 6,961 $ 13,660
============= =============
</table>
The accompanying notes are an integral part of these financial statements
F-13
<page>
INCOMING, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
<table>
<caption>
Three Months December 22, 2006 December 22, 2006
Ended (Inception) Through (Inception) Through
February 29, 2008 February 28, 2007 February 29, 2008
<s> <c> <c> <c>
Revenue $ - $ - $ -
------------ --------------- -------------
Expenses:
Accounting and audit fees $ 2,000 $ - $ 5,500
General and Administrative 2,961 - 3,701
Management 1,000 - 3,000
Organization costs - 530 530
Rent 934 - 1,356
------------ --------------- -------------
6,895 530 14,087
------------ --------------- -------------
Loss from operations ( 6,895) ( 530) ( 14,087)
Other income (expense)
Interest expense ( 168) - ( 233)
------------ --------------- -------------
Income (loss) before provision for income tax ( 7,063) ( 530) ( 14,320)
Provision for income tax
- - -
------------ --------------- -------------
Net income (loss) $( 7,063) $( 530) $( 14,320)
============ =============== =============
Net income (loss) per share $( 0.01) $( 0.00)
============ ===============
Weighted average number of common shares outstanding 4,500,000 -
============ ===============
</table>
The accompanying notes are an integral part of these financial statements
F-14
<page>
INCOMING, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
<table>
<caption>
Three Months December 22, 2006 December 22, 2006
Ended (Inception) Through (Inception) Through
February 29, 2008 February 28, 2007 February 29, 2008
<s> <c> <c> <c>
Cash Flows From Operating Activities:
Net income (loss) $ ( 7,063) $ ( 530) $( 14,320)
Adjustment to reconcile net income to net cash
provided by (used for) operating activities:
Amortization 44 - 44
Accounts payable and accrued liabilities 196 - 6,018
Accounts payable related parties - 530 530
------------ -------------- -----------
Net cash provided by (used for) operating
activities ( 6,823) - ( 7,728)
------------ -------------- -----------
Cash Flows From Investing Activities
Purchase of fixed assets - - ( 1,180)
------------ -------------- -----------
Net cash provided by (used for) investing activities - - ( 1,180)
------------ -------------- -----------
Cash Flows From Financing Activities:
Loan payable - related party 168 - 10,233
Proceeds from issuance of common stock - - 4,500
------------ -------------- -----------
Net cash provided by (used for) financing 168 - 14,733
activities
------------ -------------- -----------
Cont'd
</table>
The accompanying notes are an integral part of these financial statements
F-15
<page>
INCOMING, INC.
(A Development Stage Company) Cont'd
STATEMENT OF CASH FLOWS
(Unaudited)
<table>
<caption>
Three Months December 22, 2006 December 22, 2006
Ended (Inception) Through (Inception) Through
February 29, 2008 February 28, 2007 February 29, 2008
<s> <c> <c> <c>
Net Increase (Decrease) In Cash 6,655 - 5,825
Cash At The Beginning Of The Period 12,480 - -
------------ ------------- -----------
Cash At The End Of The Period $ 5,825 $ - $ 5,825
============ ============= ===========
Schedule Of Non-Cash Investing And Financing
Activities
None
Supplemental Disclosure
Cash paid for:
Interest $ - $ - $ -
============ ============= ===========
Income Taxes $ - $ - $ -
============ ============= ===========
</table>
The accompanying notes are an integral part of these financial statements
F-16
<page>
INCOMING, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
December 22, 2006 (Inception) Through February 29, 2008
(Unaudited)
<table>
<caption>
Deficit
Accumulated
Common Shares During the
------------- Development
Number Par Value Stage Total
------ --------- ----- -----
<s> <c> <c> <c> <c>
Balances, December 22, 2006 - $ - $ - $ -
Issued for cash:
Common stock November, 2007 - at $0.001 4,500,000 4,500 - 4,500
Net gain (loss) for the period ended November 30, 2007 - - ( 7,257) ( 7,257)
--------- --------- ----------- ------------
Balances, November 30, 2007 4,500,000 4,500 ( 7,257) ( 2,757)
Net gain (loss) for the period ended February 29, 2008 - - ( 7,063) ( 7,063)
--------- --------- ----------- ------------
Balances, February 29, 2008 4,500,000 $ 4,500 $ ( 14,320) $ ( 9,820)
========= ========= =========== ============
</table>
The accompanying notes are an integral part of these financial statements
F-17
<page>
INCOMING, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
February 29, 2008
(Unaudited)
Note 1 Nature and Continuance of Operations
------------------------------------
Organization
------------
The Company was incorporated in the State of Nevada, United States
of America on December 22, 2006, and its fiscal year end is
November 30. The Company is engaged in distribution of American
Urban Streetwear and Hip Hop clothing labels in the Eastern
European market.
Going Concern
-------------
These financial statements have been prepared on a going concern
basis. The Company has a working capital deficiency of $10,956,
and has accumulated deficit of $14,320 since inception. Its
ability to continue as a going concern is dependent upon the
ability of the Company to generate profitable operations in the
future and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business
operations when they come due. The outcome of these matters cannot
be predicted with any certainty at this time. These factors raise
substantial doubt that the company will be able to continue as a
going concern. The Company to date has funded its initial
operations through the issuance of 4,500,000 shares of capital
stock for the net proceeds of $4,500 and loans from director in
the amount of $10,000. Management plans to continue to provide for
its capital needs by the issuance of common stock and related
party advances. These financial statements do not include any
adjustments to the amounts and classification of assets and
liabilities that may be necessary should the Company be unable to
continue as a going concern.
Unaudited Interim Financial Statements
--------------------------------------
The accompanying unaudited interim financial statements have been
prepared in accordance with United States generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-QSB of Regulation S-B. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have
been condensed or omitted pursuant to such rules and regulations.
However, except as disclosed herein, there have been no material
changes in the information disclosed in the notes to the financial
statements for the year ended November 30, 2007 included in the
Company's S-1 filed with the Securities and Exchange Commission.
The interim unaudited financial statements should be read in
conjunction with those financial statements included in the Form
S-1. In the opinion of Management, all adjustments considered
necessary for a fair presentation, consisting solely of normal
recurring adjustments, have been made. Operating results for the
three months ended February 29, 2008 are not necessarily
indicative of the results that may be expected for the year ending
November 30, 2008.
F-18
<page>
Incoming, Inc.
(A Development Stage Company)
Notes to the Financial Statements
February 29, 2008
(Unaudited) - Page 2
Note 2 Summary of Significant Accounting Policies
------------------------------------------
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States of America. Because a precise determination of many
assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful
judgement. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
Development Stage Company
-------------------------
The Company complies with Financial Accounting Standard Board
Statement ("FAS") No. 7 and The Securities and Exchange Commission
Act Guide 7 for its characterization of the Company as development
stage.
Revenue Recognition
-------------------
Sales are recognized when revenue is realized or realizable and
has been earned. The Company's policy is to recognize revenue when
risk of loss and title to the product transfers to the customer.
Net sales is comprised of gross revenues less expected returns,
trade discounts and customer allowances, which include costs
associated with off-invoice mark-downs and other price reductions,
as well as trade promotions and coupons. These incentive costs are
recognized at the later of the date on which the Company
recognizes the related revenue or the date on which the Company
offers the incentive.
Impairment of Long-lived Assets
-------------------------------
Capital assets are reviewed for impairment in accordance with FAS
No. 144, "Accounting for the Impairment or Disposal of Long-lived
Assets", which was adopted effective January 1, 2002. Under FAS
No. 144, these assets are tested for recoverability whenever
events or changes in circumstances indicate that their carrying
amounts may not be recoverable. An impairment charge is recognized
for the amount, if any, which the carrying value of the asset
exceeds the fair value.
Research and Development
------------------------
Research and development expenditures are expensed as incurred.
Foreign Currency Translation
----------------------------
The financial statements are presented in United States dollars.
In accordance with Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation", since the functional currency
of the Company is U.S. dollars, the foreign currency monetary
assets and liabilities are re-measured using the foreign exchange
rate that prevailed at the balance sheet date.Revenue and expenses
F-19
<page>
Incoming, Inc.
(A Development Stage Company)
Notes to the Financial Statements
February 29, 2008
(Unaudited) - Page 3
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Foreign Currency Translation - (cont'd)
----------------------------
are translated at weighted average rates of exchange during the
year and stockholders' equity accounts and furniture and
equipment are translated by using historical exchange rates. Any
re-measurement gain or loss incurred is reported in the income
statement.
Net Loss per Share
------------------
Basic loss per share includes no dilution and is computed by
dividing loss available to common stockholders by the weighted
average number of common shares outstanding for the period.
Dilutive losses per share reflects the potential dilution of
securities that could share in the losses of the Company. Because
the Company does not have any potentially dilutive securities, the
accompanying presentation is only of basic loss per share.
Stock-based Compensation
------------------------
The Company has not adopted a stock option plan and has not
granted any stock options. Accordingly no stock-based compensation
has been recorded to date.
Income Taxes
------------
The Company uses the asset and liability method of accounting for
income taxes in accordance with FAS No. 109 "Accounting for Income
Taxes". Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
temporary differences between the financial statements carrying
amounts of existing assets and liabilities and loss carryforwards
and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
Fair Value of Financial Instruments
-----------------------------------
The carrying value of the Company's financial instruments
consisting of cash, accounts payable and accrued liabilities,
agreement payable and due to related party approximate their
carrying value due to the short-term maturity of such instruments.
Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments.
Recent Accounting Pronouncements
--------------------------------
In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measures". This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted
accounting principles (GAAP), expands disclosures about fair value
measurements, and applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 does
not require any new fair value measurements. However, the FASB
anticipates that for some entities, the application of SFAS No.
157 will change current practice. SFAS No. 157 is effective for
financial
F-20
<page>
Incoming, Inc.
(A Development Stage Company)
Notes to the Financial Statements
February 29, 2008
(Unaudited) - Page 4
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Recent Accounting Pronouncements - (cont'd)
---------------------------------
statements issued for fiscal years beginning after November 15,
2007, which for the Company would be the fiscal year beginning
February 1, 2008. The Company is currently evaluating the impact
of SFAS No. 157 but does not expect that it will have a material
impact on its financial statements.
In September 2006, the FASB issued SFAS No. 158, "Employers'
Accounting for Defined Benefit Pension and Other Postretirement
Plans." This Statement requires an employer to recognize the over
funded or under funded status of a defined benefit post retirement
plan (other than a multiemployer plan) as an asset or liability in
its statement of financial position, and to recognize changes in
that funded status in the year in which the changes occur through
comprehensive income. SFAS No. 158 is effective for fiscal years
ending after December 15, 2006 which for the Company would be
February 1, 2007. The Company does not expect that the
implementation of SFAS No. 158 will have any material impact on
its financial position and results of operations.
In September 2006, the SEC issued Staff Accounting Bulletin
("SAB") No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year
Financial Statements." SAB No. 108 addresses how the effects of
prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements.
SAB No. 108 requires companies to quantify misstatements using a
balance sheet and income statement approach and to evaluate
whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative
factors. SAB No. 108 is effective for periods ending after
November 15, 2006 which for the Company would be February 1, 2007.
The Company is currently evaluating the impact of adopting SAB No.
108 but does not expect that it will have a material effect on its
financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities". This
Statement permits entities to choose to measure many financial
assets and financial liabilities at fair value. Unrealized gains
and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007. The Company is
currently assessing the impact of SFAS No. 159 on its financial
position and results of operations.
In December 2007, the FASB issued two new statements: (a.) SFAS
No. 141(revised 2007), Business Combinations, and (b.) No. 160,
Noncontrolling Interests in Consolidated Financial Statements.
These statements are effective for fiscal years beginning after
December 15, 2008 and the application of these standards will
improve, simplify and converge internationally the accounting for
business combinations and the reporting of noncontrolling
interests in consolidated financial statements. The Company is in
the process of evaluating the impact, if any, on SFAS 141 (R) and
SFAS 160 and does not anticipate that the adoption of these
standards will have any impact on its consolidated financial
statements.
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Incoming, Inc.
(A Development Stage Company)
Notes to the Financial Statements
February 29, 2008
(Unaudited) - Page 5
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Recent Accounting Pronouncements - (cont'd)
---------------------------------
(a.) SFAS No. 141 (R) requires an acquiring entity in a business
combination to: (i) recognize all (and only) the assets acquired
and the liabilities assumed in the transaction, (ii) establish an
acquisition-date fair value as the measurement objective for all
assets acquired and the liabilities assumed, and (iii) disclose to
investors and other users all of the information they will need to
evaluate and understand the nature of, and the financial effect
of, the business combination, and, (iv) recognize and measure the
goodwill acquired in the business combination or a gain from a
bargain purchase.
(b.) SFAS No. 160 will improve the relevance, comparability and
transparency of financial information provided to investors by
requiring all entities to: (i) report noncontrolling (minority)
interests in subsidiaries in the same manner, as equity but
separate from the parent's equity, in consolidated financial
statements, (ii) net income attributable to the parent and to the
non-controlling interest must be clearly identified and presented
on the face of the consolidated statement of income, and (iii) any
changes in the parent's ownership interest while the parent
retains the controlling financial interest in its subsidiary be
accounted for consistently.
Note 3 Capital Stock
-------------
The total number of common shares authorized that may be issued by
the Company is 75,000,000 shares with a par value of one tenth of
one cent ($0.001) per share and no other class of shares is
authorized.
During the period from December 22, 2006 (inception) to November
30, 2007, the Company issued 4,500,000 shares of common stock to
its directors for total proceeds of $4,500.
To February 29, 2008, the Company has not granted any stock
options and has not recorded any stock-based compensation.
Note 4 Related Party Transactions
--------------------------
a) The President of the Company provides management services to
the Company. During the period ended February 29, 2008
management services of $1,000 (November 30, 2007 - $2,000)
were charged to operations.
b) During the period ended November 30, 2007, the President of
the Company provided a $10,000 loan to the Company. The loan
payable is payable on demand, unsecured, bears interest at
6.75% per annum and consists of $10,000 of principal, and $233
of accrued interest payable.
c) As at February 29, 2008 the Company owed $530 (November 30,
2007, - $530) to the President of the Company for expenses
incurred on behalf of the Company.
F-22
<page>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses to be paid in connection
with the common stock being registered, all of which will be paid by Incoming,
Inc. (on behalf of itself and the selling stockholders) in connection with this
offering. All amounts are estimates except for the registration fee.
Securities and Exchange Commission registration fee $ 9.82
Transfer Agent Fees 800
Accounting fees and expenses 5,000
Legal fees and expenses 3,000
Edgar filing fees 800
-----------
Total: $ 9,609.82
===========
IDEMNIFICATION OF DIRECTORS AND OFFICERS
Under our Articles of Incorporation and Bylaws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his/her position, if he/she acted in good faith
and in a manner he/she reasonably believed to be in our best interest. We may
advance expenses incurred in defending a proceeding. To the extent that the
officer or director is successful on the merits in a proceeding as to which
he/she is to be indemnified, we must indemnify him/her against all expenses
incurred, including attorney's fees. With respect to a derivative action,
indemnity may be made only for expenses actually and reasonably incurred in
defending the proceeding, and if the officer or director is judged liable, only
by a court order. The indemnification is intended to be to the fullest extent
permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of
1933, which may be permitted to directors or officers under Nevada law, we are
informed that, in the opinion of the Securities and Exchange Commission,
indemnification is against public policy, as expressed in the Act and is,
therefore, unenforceable.
RECENT SALES OF UNREGISTERED SECURITIES
We completed an offering of 4,500,000 shares of our common stock at a price of
$0.001 per share to our directors Yury Nesterov (3,000,000) and Elena Djafarova
(1,500,000), on November 27, 2007. The total amount received from this offering
was $4,500. We completed this offering pursuant to Regulation S of the
Securities Act.
The offer and sale of all Shares of our common stock listed above were affected
in reliance on the exemptions for sales of securities not involving a public
offering, as set forth in Regulation S promulgated under the Securities Act. The
Investor acknowledged the following: Subscriber is not a United States Person,
nor is the Subscriber acquiring the Shares directly or indirectly for the
account or benefit of a United States Person. None of the funds used by the
Subscriber to purchase the Units have been obtained from United States Persons.
For purposes of this Agreement, "United States Person" within the meaning of
U.S. tax laws, means a citizen or resident of the United States, any former U.S.
citizen subject to Section 877 of the Internal Revenue Code, any corporation, or
partnership organized or existing under the laws of the United States of America
or any state, jurisdiction, territory or possession thereof and any estate or
trust the income of which is subject to U.S. federal income tax irrespective of
its source, and within the meaning of U.S. securities laws, as defined in Rule
902(o) of Regulation S, means:
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<page>
(i) any natural person resident in the United States; (ii) any partnership or
corporation organized or incorporated under the laws of the United States; (iii)
any estate of which any executor or administrator is a U.S. person; (iv) any
trust of which any trustee is a U.S. person; (v) any agency or branch of a
foreign entity located in the United States; (vi) any non-discretionary account
or similar account (other than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. person; (vii) any discretionary
account or similar account (other than an estate or trust) held by a dealer or
other fiduciary organized, incorporated, or (if an individual) resident in the
United States; and (viii) any partnership or corporation if organized under the
laws of any foreign jurisdiction, and formed by a U.S. person principally for
the purpose of investing in securities not registered under the Securities Act,
unless it is organized or incorporated, and owned, by accredited investors (as
defined in Rule 501(a)) who are not natural persons, estates or trusts.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore
have been omitted.
EXHIBITS
The exhibits listed under here below are filed as part of this Form S-1:
3.1 Articles of Incorporation*
3.2 Bylaws*
5.1 Legal Opinion of Harrison Law, P.A. with consent to use*
10.1 Distribution and Marketing Agreement*
23.1 Consent of Ronald R.Chadwick P.C., Certified Public Accountant*
* - filed as an exhibit to our registration statement on Form S-1 filed on
June 30, 2008
UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a post-
effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(b) reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth in this
registration statement; and notwithstanding the forgoing, 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 the 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
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<page>
(c) include any additional or changed material information on the plan of
distribution.
2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of the
securities being registered hereby which remain unsold at the termination of the
offering.
4. That, for determining our liability under the Securities Act to any purchaser
in the initial distribution of the securities, we undertake that in a primary
offering of our securities 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, we 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 that we file relating to the
offering required to be filed pursuant to Rule 424 (Section 230.424 of this
chapter);
(ii) any free writing prospectus relating to the offering prepared by or
on our behalf or used or referred to by us;
(iii) the portion of any other free writing prospectus relating to the
offering containing material information about us or our securities provided by
or on behalf of us; and
(iv) any other communication that is an offer in the offering made by us
to the purchaser.
Each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no statement made
in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such date of first use.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
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<page>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and authorized this registration
statement to be signed on our behalf by the undersigned, on July 9, 2008.
INCOMING, INC.
Date: July 9, 2008 By: /s/ Yury Nesterov
-----------------------
Name: Yury Nesterov
Title: President,Chief Executive Officer and Director
(Principal Executive Officer)
Date: July 9, 2008 By: /s/ Elena Djafarova
-------------------------
Name: Elena Djafarova
Title: Chief Financial Officer, Secretary and Director
(Principal Accounting and Financial Officer)
II - 4