As filed with the Securities and Exchange
Commission on February 6, 2015
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
True 2 Beauty, Inc.
(Exact name of Registrant as specified in its
charter)
Nevada |
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5961 |
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46-1515670 |
State or other jurisdiction |
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Primary Standard Industrial |
|
(I.R.S. Employer |
Incorporation or organization |
|
Classification Code Number) |
|
Identification Number) |
301 Yamato Road, Suite 1240
Boca Raton, Florida 33431
(800) 630-4190
(Address and Telephone Number of Registrant’s
Principal
Executive Offices and Principal Place of
Business)
Empire Stock Transfer
1859 Whitney Mesa Drive
Henderson, Nevada 89014
702-818-5898
(Name, address,
including zip code, and telephone number, including area code, of agent for service)
Communication Copies to
Frederick M. Lehrer
Attorney and Counselor at Law
285 Uptown Blvd, 402
Altamonte Springs, Florida 32701
flehrer@securitiesattorney1.com
(321) 972-8060
Approximate date of proposed sale to the public:
As soon as practicable and from time to time after the effective date of this Registration Statement.
If any of the securities being registered on
this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering.
If this Form is a post-effective amendment filed pursuant to rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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 |
☒ |
(Do not check if a smaller reporting company) |
CALCULATION OF REGISTRATION FEE
Title of Each
Class of
Securities to be
Registered |
Amount to be
Registered (1) |
Proposed
Maximum
Offering Price
Per Share (2) |
Proposed
Maximum
Aggregate
Offering Price (2) |
Registration
Fee |
Shares of Common Stock, par value $0.001 |
26,000,000 |
$0.02 |
$520,000 |
$60.42 |
|
(1) |
Covers the resale by seven selling security holders of a maximum of 26,000,000 common stock shares reflecting their conversion rights of 26,000,000 shares pursuant to seven convertible promissory notes, 20,000,000 shares of which correspond to the aggregate principal loan amount of $400,000 and 6,000,000 shares that correspond to interest accrued should the notes be carried to maturity. |
|
(2) |
The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(c) under the Securities Act of 1933. |
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 or until the registration statement shall become effective on such date as the Commission, acting pursuant
to such Section 8(a), may determine.
PRELIMINARY PROSPECTUS
True 2 Beauty, Inc.
(A Nevada Corporation)
26,000,000 COMMON STOCK SHARES
The seven selling security holders named in
this prospectus are offering 26,000,000 common shares reflecting their conversion rights of 26,000,000 shares pursuant to seven
convertible promissory notes, 20,000,000 shares of which correspond to the aggregate principal loan amount of $400,000 and 6,000,000
shares that correspond to interest accrued should the notes be carried to maturity. We will not receive any proceeds from the sale
of shares being sold by selling security holders.
The prices at which the selling security holders
may sell their shares will be at a fixed price of $0.02 per share until such time as the shares of our common stock are traded
on the OTCQB operated by OTC Markets Group, Inc. The selling security holders have not engaged any underwriter in connection with
the sale of their shares of Common Stock. Although we intend to apply for quotation of our common stock on the OTCQB through a
market maker, public trading of our common stock may never materialize. If our common stock becomes traded on the OTCQB,
then the sale price to the public will vary according to prevailing market prices or privately negotiated prices by the selling
shareholders.
Our common stock is quoted on the OTC Pinks operated
by OTC Markets Group, Inc. under the symbol “TRTB.” On January 29, 2015, the last reported sale price of our common
stock as reported on the OTC Pinks was $0.797 per share. There is not an active trading market for our stock. Although
we intend to apply for quotation of our common shares on the OTCQB, an active trading of our common shares may never materialize.
We are an “emerging growth company”
as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). See “Description of
Business” and “Risk Factors.”
The purchase of the securities offered through
this prospectus involves a high degree of risk. You should carefully read and consider the section of this prospectus titled “Risk
Factors” on page 6 before buying any common shares.
Neither the SEC nor any state securities
commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation
to the contrary is a criminal offense.
This Prospectus is dated February 6,
2015
TABLE OF CONTENTS
Please read this prospectus carefully. It describes
our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information
necessary to make an informed investment decision.
You should rely only on the information that
we have provided in this prospectus. We have not authorized anyone to provide you with different information and you must not rely
on any unauthorized information or representation. We are not making an offer to sell these securities in any jurisdiction where
an offer or sale is not permitted. This document may only be used where it is legal to sell these securities. You should assume
that the information appearing in this prospectus is accurate only as of the date on the front of this prospectus, regardless of
the time of delivery of this prospectus, or any sale of our common stock. Our business, financial condition and results of operations
may have changed since the date on the front of this prospectus. We urge you to carefully read this prospectus before deciding
whether to invest in any of the common stock being offered.
PROSPECTUS SUMMARY
This summary
highlights selected information appearing elsewhere in this prospectus and is qualified in its entirety by the more detailed
information and financial statements included elsewhere in this prospectus. This summary may not contain all the information
you should consider before investing in our common stock. You should carefully read this prospectus in its entirety before
investing in our common stock, including the sections titled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and
related notes included elsewhere in this prospectus. Unless the context otherwise requires, we use the terms
“we”, “us” and “our” in this prospectus to refer to True 2 Beauty, Inc., a Nevada
incorporated entity, and, where appropriate, our consolidated subsidiary.
Corporate Background:
We
were incorporated as Burrow Mining, Inc. in Nevada on December 11, 2006. Our fiscal year end was October 31. On March 20, 2014
we changed our fiscal year end to March 31.
On
February 14, 2008, we filed a Form SB-2 Registration Statement with the SEC, which was declared effective on January 29, 2009,
at which time we became an SEC Reporting Company. On September 27, 2010, we suspended our duty to file SEC reports by filing a
Form 15. On May 10, 2010, we changed our name to True 2 Beauty, Inc. to focus our business in the health and beauty sector.
In
May 2012, we changed our business plan to operate an online retail/e-commerce auction site, True2Bid.com (“True2Bid”),
through our wholly owned subsidiary, True2Bid, Inc., a Nevada corporation incorporated on July 10, 2012.
We developed and operated True2Bid as a beta test site, but terminated the site in April 2014 because the underlying platform was
not scalable for its needs. We decided to purchase another technology platform that was more robust in its ability to scale and
which would provide comprehensive data to our management to determine the performance of the site. This new platform became operational
on June 23, 2014 under the name BetUGetit.com. Similar to True2Bid, it offered an auction format to win products, however, it was
focused on sports related items, as opposed to general merchandise. BetuGetit.com, which was launched on June 23, 2014, was discontinued
on November 10, 2014 because management determined that the site was too limited in its concept.
In November 2014,
we began development of a new online site, combining an online platform that sells collectibles and memorabilia with authentication
technology provided by a third party. On December 17, 2014, we changed our wholly owned subsidiary name from True2Bid, Inc. to
LegacyXChange, Inc. (“LegacyXChange”) to reflect our new business model, which will operate our future online
site, LegacyXChange.com.
Our common stock has been quoted on the “Pink
Sheets” under the symbol “TRTB” since May 10, 2010.
Business
We are an e-commerce business under development,
planning to operate under the website, LegacyXChange.com, by May 2015. Our platform will be focused on offering sellers and buyers
the ability to trade a wide range of collectibles and memorabilia, primarily consisting of sports
related items, celebrity related items and pop culture items (the “Items’). All of the Items for sale on the
site will be given a unique “Mark” identifier that will provide the basis for tracking ownership and providing verification
the item has been marked with our unique identifier.
Where
You Can Find Us.
Our principal executive office and mailing
address is 301 Yamato Road, Suite 1240, Boca Raton, Florida 33431. Our telephone number is (800) 630-4190.
Our Website
Our Internet address will be www.LegacyXChange.com.
No information contained on our website will be part of this prospectus.
Implications of Being an Emerging Growth Company
We qualify as an emerging growth company as
that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens
that are otherwise applicable generally to public companies. These provisions include:
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• |
A requirement to have only two years of audited financial statements and only two years of related MD&A; |
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• |
Exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002; |
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• |
Reduced disclosure about the emerging growth company’s executive compensation arrangements; and |
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• |
No non-binding advisory votes on executive compensation or golden parachute arrangements. |
We have already taken advantage of these reduced
reporting burdens in this prospectus, which are also available to us as a smaller reporting company as defined under Rule 12b-2
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
In addition, Section 107 of the JOBS Act also
provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of
the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards.
We have elected to use the extended transition period provided above and therefore our consolidated financial statements may not
be comparable to companies that comply with public company effective dates.
We could remain an emerging growth company
for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed
$1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act,
which would occur if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business
day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible
debt during the preceding three year period.
For more details regarding this exemption,
see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting
Policies.”
THE OFFERING
Common Stock offered by selling security holders |
|
26,000,000 shares of Common Stock. |
|
|
|
Common Stock outstanding before the offering |
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36,951,165 shares of Common Stock |
|
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Terms of the Offering |
|
The prices at which the selling security holders may sell their shares will be at a fixed price of $0.02 per share until such time as the shares of our common stock are traded on the OTCQB operated by OTC Markets Group, Inc. The selling security holders have not engaged any underwriter in connection with the sale of their shares of Common Stock. Although we intend to apply for quotation of our common stock on the OTCQB through a market maker, public trading of our common stock may never materialize. If our common stock becomes traded on the OTCQB, then the sale price to the public will vary according to prevailing market prices or privately negotiated prices by the selling shareholders. |
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|
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Trading Market |
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We currently trade on the OTC Market Pinks under the symbol “TRTB”. We intend to apply for quotation on the OTC Markets OTCQB. We will require the assistance of a market maker to apply for quotation and there is no guarantee that a market maker will agree to assist us. |
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Use of proceeds |
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We are not selling any shares of the Common Stock covered by this prospectus. As such, we will not receive any of the offering proceeds from the registration of the shares of Common Stock covered by this prospectus. |
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Risk Factors |
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The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See “Risk Factors” beginning on page 6. |
SUMMARY OF FINANCIAL INFORMATION
The following summary financial data should be read in conjunction
with “Management’s Discussion and Analysis,” “Plan of Operation” and the Financial Statements and
Notes thereto, included elsewhere in this prospectus. The consolidated balance sheet data at March 31, 2014 and 2013 and consolidated
statements of operations for the years ended March 31, 2014 and 2013, are derived from our audited consolidated financial statements.
The consolidated balance sheet at September 30, 2014 and consolidated statement of operations for the six months then ended are
derived from our unaudited consolidated financial statements. The data set forth below should be read in conjunction with “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”, our consolidated financial statements and the
related notes included in this prospectus.
Consolidated Statement of Operations:
|
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For the Six Months Ended |
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For the Year Ended |
|
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September 30, |
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March 31, |
|
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2014 |
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2013 |
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2014 |
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2013 |
|
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(unaudited) |
|
(unaudited) |
|
|
|
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Revenues |
|
$ |
358 |
|
|
$ |
35,825 |
|
|
$ |
35,240 |
|
|
$ |
79,498 |
|
Gross (loss) |
|
$ |
(1,178 |
) |
|
$ |
2,716 |
|
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$ |
1,072 |
|
|
$ |
(21,709 |
) |
Operating expenses |
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$ |
203,537 |
|
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$ |
199,098 |
|
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$ |
392,085 |
|
|
$ |
801,736 |
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Net loss |
|
$ |
(210,225 |
) |
|
$ |
(196,382 |
) |
|
$ |
(363,929 |
) |
|
$ |
(823,445 |
) |
Net loss per common share - basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.04 |
) |
Weighted average number of common shares outstanding - basic and diluted |
|
|
35,340,520 |
|
|
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28,495,569 |
|
|
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29,745,802 |
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|
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21,466,635 |
|
Balance Sheet Data: |
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September 30,
2014 |
|
March 31,
2014 |
|
|
(unaudited) |
|
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Total Assets |
|
$ |
46,439 |
|
|
$ |
28,206 |
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Total Current Liabilities |
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$ |
131,108 |
|
|
$ |
197,403 |
|
Total Stockholders’ Deficit |
|
$ |
(84,669 |
) |
|
$ |
(169,197 |
) |
Total Liabilities and Stockholders’ Deficit |
|
$ |
46,439 |
|
|
$ |
28,206 |
|
|
|
|
|
|
|
|
|
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
The information contained in this report, including
in the documents incorporated by reference into this report, includes some statements that are not purely historical and that are
“forward-looking statements.” Such forward-looking statements include, but are not limited to, statements regarding
our and their management’s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial
condition, results of operations. In addition, any statements that refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,”
“believes,” “continue,” “could,” “estimates,” “expects,” “intends,”
“may,” “might,” “plans,” “possible,” “potential,” “predicts,”
“projects,” “seeks,” “should,” “would” and similar expressions, or the negatives
of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in
this report are based on current expectations and beliefs concerning future developments and the potential effects on the parties
and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These
that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking
statements, including the following forward-looking statements involve a number of risks, uncertainties (some of which are beyond
the parties’ control) or other assumptions.
RISK FACTORS
The shares of our common stock being issued
in the offering are highly speculative and should be purchased only by persons who can afford to lose the entire amount invested
in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating
to our business and prospects. If any of the following risks occur, our business, financial condition or operating results could
be materially adversely affected. In such case, you may lose all or part of our investment. You should carefully consider the risks
described below and the other information in this prospectus before in investing in our common stock.
RISKS RELATED TO OUR BUSINESS
Our independent registered public accounting
firm has issued a going concern opinion. There is substantial uncertainty that we will continue operations in which case you could
lose your investment.
In their report-dated January 30, 2015,
our independent registered public accounting firm, Salberg & Company, P.A., stated that our consolidated financial statements
for the years ended March 31, 2014 and 2013, were prepared assuming the company will continue as a going concern. This means that
there is substantial doubt that we can continue as an ongoing business. For the years ended March 31, 2014 and 2013, our net loss
was $363,929 and $823,445. Additionally, we had net cash used in operations of $161,801 and $288,456 for the years ended March
31, 2014 and 2013, respectively, and an accumulated deficit and stockholders’ deficit of $8,243,601 and $169,197, respectively,
at March 31, 2014. We will need to generate significant revenue in order to achieve profitability and we may never become profitable.
The going concern explanatory paragraph in the report of the independent registered public accounting firm emphasizes the uncertainty
related to our business as well as the level of risk associated with an investment in our common stock. To implement our plan of
operations we require a minimum funding of $1,380,000 for the next twelve months.
We have a limited operating history and our business prospects
are difficult to evaluate.
We have a limited operating history in our
current business plan. As such, there is little information to evaluate our business and its prospects that you can rely on to
make an investment decision. Our prospects must be considered due to our limited history, our high working capital needs, exposure
to operating losses and the uncertainties and difficulties that are common with companies that are implementing new business models
in the online shopping arena. Some of the principal risks and difficulties we expect to encounter include our ability to:
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· |
Increase product mix and user base of our website; |
|
· |
Further develop our software; |
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· |
Expand the site’s functionality; |
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· |
Develop management tools within the software application to manage data; |
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· |
Raise sufficient capital to finance further development and expansion of our website; and |
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· |
Develop and adapt to competitive pressures by efficiently executing our business plan and developing techniques to compete with our competitors. |
Should we fail to achieve the above goals,
our revenues, results of operations and brand name will be negatively affected, which may result in the loss of your entire investment.
We expect to incur losses in the
future.
Based upon our current plans, we expect
to incur operating losses in future periods due to $480,000 of expenses during our 12-month plan of operations. Our revenue levels
and financing to fund our plan of operations are uncertain. Should we fail to generate sufficient revenues and/or obtain financing
to sustain our operations, you will lose your entire investment.
Our operating results may fluctuate
and/or be negatively affected due to various factors
Our operating results are likely to fluctuate
and/or be negatively affected due to:
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· |
The level of acceptance of the online shopping community of our website and buying and selling collectibles and memorabilia; |
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Fluctuations in the demand for our services and products; |
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Amount and timing of operating costs and capital expenditures relating to expansion of our operations; |
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Competition from large online shopping platforms such as eBay and Amazon as well as new and existing online shopping companies; |
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Competition from new forms of authentication processes that may require less capital and human resources; |
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Our ability to enhance the attractiveness and functionality of our website and improve and increase our products and services mix; |
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Changing customer preferences; and |
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General economic conditions. |
Any one or a combination of the above factors
could negatively affect our operations, revenues and operating results.
If we do not attract users who purchase
or sell products on our site on a cost effective basis, our results of operations will be negatively affected.
To succeed, we must develop a user base and
continue to attract and retain a large number of users, as sellers and buyers on a cost-effective basis. We will rely on a variety
of methods to attract new users, including search engine optimization, advertising banners, advertising by key search words, affiliate
marketing and email that direct potential users to our website. If we are unable to effectively use our future marketing initiatives
or the cost of such initiatives were to significantly increase or our platform does not satisfy our existing users, we may be unable
to attract new customers or retain existing customers on a cost-effective basis and our revenues and results of operations will
be negatively affected.
If our expenditure estimates are erroneous,
our business may fail and you will lose your entire investment.
Our success is dependent upon the accuracy
of our management’s estimates of expenditures to complete the development, launch, and customer acquisition necessary to
sustain the business. If such estimates are erroneous or inaccurate we may be unable to successfully carry out our business plan,
which may result in the failure of our business and loss of your entire investment.
Our business model may be insufficient to
ensure our success in our intended market.
Our survival is currently dependent upon the
success of our efforts to gain market acceptance of our online website model, which is limited to collectibles and memorabilia
in sports, entertainment, and pop culture and represents a small segment in the overall collectible and memorabilia markets. Should
our target market not be responsive to our products and services, we may not have alternate services or products that we can offer
to ensure our survival.
The markets that we will serve are subject
to changing customer requirements, and new product/services introductions. If we are unable to enhance our existing services, it
could adversely impact our ability to attract and retain customers. As a result, competitors could erode our market position through
advancements. Broad acceptance of our services by customers will be critical to our future success, as will our ability to perform
services on a timely basis that meet changing customer needs. We may experience difficulties that could delay or prevent enhancement
of our website and successful marketing of our products and services.
We have engaged in several
businesses, all of which have been unsuccessful.
As
indicated on page 1 of this prospectus, we have engaged in several businesses, including the health and beauty sector, male and
female enhancement products, a female hair product, an online retail/e-commerce auction site and another online retail/e-commerce
site selling sports related items. Should we be unsuccessful with our new business model, you will lose your entire investment.
Our online shopping site that only sells
items that have been marked for authentication and or tracking purposes for collectibles and memorabilia is a new online website
experience and has inherent marketing risks.
Our online site that concentrates on sports,
entertainment, and pop culture related items and authentication services is a new service introduction to the online retail marketing
market and has not achieved market acceptance. There is no assurance that we will successfully promote this new online concept,
establish sufficient user activity, or overcome intense competitive pressures from major online competitors, such as eBay or Amazon.
Our prospects must be considered in light of the problems, delays, expenses and difficulties encountered by a new online site for
selling and buying of collectibles, a business model with limited operations, including problems relating to further development
of our software, marketing and obtaining financing for our operational plan. Any one or a combination of these factors could negatively
affect our results of operations and have a material adverse effect on our business.
We will have limited items for auction or
purchase on our website, most of which will be sports, entertainment and pop culture related.
Upon our website going live, we will have a
limited number of items for auction for sale on our website. If we fail to develop a robust diversified product mix, our revenues
and results of operations will be negatively impacted.
There may be other companies that create
technology similar or better than the third party authentication technology we currently use for marking products.
Other companies may develop authentication
technologies that are more efficient in application and less costly to administer and manage. This may result in more intense competition,
which could have an effect on our revenue and competitiveness and cause our proposed business operations to fail.
If our third party authentication technology
provider terminates its business or it is sold or such provider terminates our relationship with it, our results of operations
will be negatively impacted.
If our third party provider of the technology
that we use for creating our “Marks”, advises us on how to apply these marks, and offer services to verify these marks,
goes out of business, discontinues providing these types of services, be sold, or we terminate our business relationship with such
third party provider for unforeseen reasons, which would have an immediate and adverse impact on our business operations and may
cause our business to fail.
Because our CEO has limited experience managing an SEC Reporting Company that is publicly traded this could adversely impact our ability to comply with the reporting requirements of US securities laws.
Our Chief Executive Officer has limited
experience managing an SEC Reporting Company that is publicly traded, which could impair our ability to comply with legal and
regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Such responsibilities include complying with
federal securities laws and making required disclosures on a timely basis. Any such reporting deficiencies, weaknesses or
lack of compliance could have a materially adverse effect on our ability to comply with Exchange Act reporting requirements.
If we were to fail to fulfill those obligations, our ability to continue as a public company would be in jeopardy and you
could lose your entire investment.
If we are unable to attract new users and
retain existing users on a cost-effective basis, our business and results of operations will be adversely affected.
To succeed we must develop a user base and
continue to attract and retain a large number of users on a cost-effective basis. We will rely on a variety of methods to attract
new members, such as search engines, advertising banners, affiliate marketing and email that directs potential users to our website.
If we are unable to effectively use our future marketing initiatives or the cost of such initiatives were to significantly increase
or such initiatives or our efforts to satisfy our existing users are unsuccessful, we may be unable to attract new users or retain
existing users on a cost-effective basis and our revenues and results of operations will be negatively affected.
We will require additional capital to conduct
our operations and support business growth, which may have adverse consequences to our shareholders and which may be unavailable
or not be available on acceptable terms to us.
We anticipate that the minimum additional capital
necessary to fund our 12 month plan of operations will be approximately $1,380,000, including $480,000 for operating expenses to
be used for software and website development, general administrative expenses, business development, marketing costs and public
reporting company costs and includes $900,000 that we plan on spending for items in our Plan of Operations as outlined below. Our
planned expenses are contingent upon generating adequate revenues and obtaining financing. At an operating burn rate of $40,000
per month for total expenses of $480,000 with available cash of only $120,000, we presently have the ability to conduct our operations
for only 3 months.
We will need to engage in equity or debt financings
to secure additional funds for those business purposes, which may have any one or all of the following consequences:
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· |
If we raise additional funds through issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution; |
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· |
Any new securities, such as preferred shares, that we issue could have rights, preferences and privileges superior to those of holders of our common stock; and |
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· |
Any debt financing could include restrictive covenants relating to our financial and operational matters, or related to any intellectual property rights, which may make it more difficult to procure additional capital. |
We may be unable to obtain additional financing
on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when
we require it, our ability to continue to support our business growth and to respond to business challenges will be negatively
affected. Furthermore, if the amount of capital we are able to raise from financing activities, together with our revenues from
operations, is insufficient to satisfy our capital needs, we may have to reduce or even cease our operations. In either
event, your investment in our common stock will be adversely affected, and you could lose part or all of your investment.
Should we fail to establish, maintain and
increase our brand name recognition, our results of operations will be negatively affected.
We have little brand name recognition in the
e-commerce collectible and memorabilia industry. If we fail to attain, maintain and increase our brand name recognition, our results
of operations will be negatively affected.
Our processing, storage, use and disclosure
of personal data will expose us to risks of internal or external security breaches and could give rise to liabilities as a result
of governmental regulation, conflicting legal requirements or differing views of personal privacy rights.
The security of data when engaging in electronic
commerce is essential in maintaining consumer and supplier confidence in our services. Substantial or ongoing security breaches
whether instigated internally or externally on our systems or other Internet based systems could significantly harm our future
business. It is possible that advances in computer circumvention capabilities, new discoveries or other developments, including
our own acts or omissions, could result in a compromise or breach of customer transaction data.
Our website may experience slower response
times or interruptions as a result of increased traffic or other reasons. These delays and interruptions resulting from failure
to maintain Internet service connections to our site could frustrate visitors and reduce our future web site traffic.
We will manage our
website and e-commerce platform internally and as a result any compromise of our security or misappropriation of proprietary information
could have a material adverse effect on our business, financial condition and results of operations. We rely on encryption and
authentication technology licensed from third parties to provide the security and authentication necessary to effect secure Internet
transmission of confidential information, such as credit and other proprietary information. Advances in computer capabilities,
new discoveries in the field of cryptography or other events or developments may result in a compromise or breach of the technology
used by us to protect client transaction data. Anyone who is able to circumvent our security measures could misappropriate proprietary
information or cause material interruptions in our operations. We may be required to expend significant capital and other resources
to protect against security breaches or to minimize problems caused by security breaches. To the extent that our activities or
the activities of others involve the storage and transmission of proprietary information, security breaches could damage our reputation
and expose us to a risk of loss and/or litigation.
We cannot guarantee that our security measures
will prevent security breaches or attacks. A party (whether internal, external, an affiliate or unrelated third party) that is
able to circumvent our security systems could steal customer information or transaction data, proprietary information or cause
significant interruptions in our operations. For instance, from time to time, companies have experienced “denial-of-service”
type attacks that have made portions of websites slow or unavailable for periods of time. We may need to expend significant
resources to protect against security breaches or to address problems caused by breaches, and reductions in website availability
and response time could cause loss of substantial business volumes during the occurrence of any such incident. Security breaches
could result in negative publicity, damage our reputation, expose us to risk of loss or litigation and possible liability and subject
us to regulatory penalties and sanctions. Security breaches could also cause customers and potential customers to lose confidence
in our security, which would have a negative effect on the value of our brand.
We also face risks associated with security
breaches affecting third parties conducting business over the Internet. Consumers generally are concerned with security and privacy
on the Internet, and any publicized security problems could inhibit the growth of the Internet and, therefore, our services as
a means of conducting commercial transactions. Additionally, security breaches at third parties such as supplier or distributor
systems upon which we may rely could result in negative publicity, damage our reputation, expose us to risk of loss or litigation
and possible liability and subject us to regulatory penalties and sanctions.
In our processing transactions, we will receive
and store a large volume of personally identifiable data. We could be adversely affected if legislation or regulations are
expanded to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or
regulations in ways that negatively affect our business, results of operations and financial condition.
We may be unable to keep pace with technologies
that impact our e-commerce industry
The markets in which we will compete are characterized
by rapidly changing technology, evolving industry standards, consolidation, frequent new service announcements, introductions and
enhancements and changing consumer demands. We may not be able to keep up with these rapid changes. In addition, these market characteristics
are heightened by the emerging nature of the Internet. As a result, our future success will depend on our ability to adapt to rapidly
changing technologies, to adapt our services to evolving industry standards and to continually improve the performance, features
and reliability of our service in response to competitive service offerings and the evolving demands of the marketplace. In addition,
the widespread adoption of new internet, networking or telecommunications technologies or other technological changes could require
us to incur substantial expenditures to modify or adapt our services or infrastructure.
We may have issues related to “Marks”
we have applied to items, as well as have problems identifying these “Marks”.
The technology, protocols, and procedures used
in creating, applying, and verifying the Marks may not prevent damage to the marks in creation, application, or verification, which
may cause financial and/or brand name recognition to be negatively impacted, which may result in negatively affecting our business,
and you may lose all of your investment.
Users that sell or buy on our site may act
fraudulently to profit from a transaction, or we may suffer considerable financial losses if too many items sold on the site are
returned.
A seller or a buyer
may attempt to manipulate our processes for making a transaction and thereby profit by:
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listing items for sale that are registered in our system, but not shipping the same item to a buyer; |
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by claiming to have shipped an item that hasn’t shipped and receiving payments for such erroneous shipments; |
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buyers claiming to not have received shipments that have been received, or having payments rescinded by their credit cards or banks after payments are made; |
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sellers selling items that are counterfeit; and |
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a variety of other unforeseen ways either party can attempt to defraud us and the other party to the transaction. |
Further, we will be
guaranteeing the authenticity of items sold on the site with a 100% money back guarantee; however, we may experience a large amount
of returned items, which require us to be reimbursed from payments made to the sellers of these items, which may be difficult.
Any one or a combination of the above could adversely affect our brand, financial results and ability to continue our operations.
We will depend on search engines to attract
a significant percentage of our customers, and if those search engines change their listings or our relationship with them deteriorates
or terminates, we may be unable to attract new customers, which would adversely affect our business and results of operations.
Many of our customers locate our website by
clicking through on search results displayed by search engines such as Google, which typically provide two types of search results,
algorithmic and purchased listings. Algorithmic listings cannot be purchased, and instead are determined and displayed solely by
a set of formulas designed by the search engine. Purchased listings can be purchased by advertisers in order to attract users to
their website. We rely on both algorithmic and purchased listings to attract a significant percentage of the customers we serve
to our website. Search engines revise their algorithms from time to time in an attempt to optimize their search result listings.
If search engines on which we rely for algorithmic listings modify their algorithms, this could result in fewer customers clicking
through to our website, requiring us to resort to other costly resources to replace this traffic, which, in turn, could reduce
our revenue and negatively impact our operating results, harming our business. If one or more search engines on which we rely for
purchased listings modifies or terminates its relationship with us, our expenses could rise, or our revenue could decline and our
business may suffer. The cost of purchased search listing advertising fluctuates and may increase as demand for these channels
grows, and any such increases could negatively affect our financial results. Search engines may choose to limit our advertising
due to changes in their policies, which may adversely affect our financial results.
If we are unable to replace credit card
payment processors and merchant accounts that have terminated our relationship with them, our results of operations will be negatively
impacted.
We will be accepting credit cards as a means
of payment for the sale of our products. If we are unable to find suitable credit card providers or an alternative method of payment
for our customers, our cash flow will be constrained and our sales may be effected which may have a material adverse effect on
our performance, financial condition and results of operations.
We may be unable to protect our proprietary
software.
Our business will be dependent upon our ability
to protect our proprietary software technologies and processes. Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to obtain and use proprietary information. Our efforts to protect our future proprietary software technologies
and processes are subject to significant risks, including that others may independently develop equivalent proprietary information
and techniques, gain access to our proprietary information, our proprietary information being improperly disclosed, or that we
may ineffectively protect our rights to unpatented trade secrets or other proprietary information.
There is no assurance that our future software
and technology systems will be able to handle increased traffic or implementation of changes to our website.
The satisfactory performance, reliability and
availability of our Website, transaction processing systems and network infrastructure are critical to our reputation and our ability
to attract and retain customers, as well as maintain adequate customer service levels. Our net sales depend on the number of visitors
who buy and sell on our Website and the volume of listings and sales we can handle. Unavailability of our website, due from our
server provider, or an inability to process listings and sales in real time could also adversely affect consumer perception of
our brand name. We may experience periodic system interruptions from time to time. If there is a substantial increase in the volume
of traffic on our Website or the number of listings or sales placed by customers, we will be required to expand and upgrade further
our technology, transaction processing systems and network infrastructure. There can be no assurance that we will be able to accurately
project the rate or timing of increases, if any, in the use of our Website or expand and upgrade our systems and infrastructure
to accommodate such increases on a timely basis. In order to remain competitive, we must continue to enhance and improve the responsiveness,
functionality and features of our Website, which is particularly challenging given the rapid rate at which new technologies, customer
preferences and expectations and industry standards and practices are evolving in the online commerce industry. Accordingly, we
redesign and enhance various functions on our Website on a regular basis, and we may experience instability and performance issues
as a result of these changes.
Because we are small and we have limited
capital, our operations may be negatively impacted, which will increase the risks in investing in our common stock.
Because we are small and have limited capital,
our operations may be negatively impacted, as follows:
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We may have to limit our marketing and advertising activities; and
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We may have to limit our business development, which may require us to restrict the variety and amount of products offered for sale on our site. |
An investment in our common stock is characterized
by a high degree of risk. Investors should take caution when considering our limited revenues, lack of earnings, and lengthy plans
for business development and expansion.
We may incur substantial losses in the future
as we expand our operations and invest in our website
We will incur costs related to advertising
our website and offering new product categories for sale. When making investments to grow our user base and to expand our website’s
capabilities, it is likely that we will incur costs for a prolonged period prior to generating revenues, if any. The foregoing
costs and expenses will likely give rise to substantial near-term operating losses and may prevent us from achieving profitability
for an extended period of time. We expect to rely on equity and debt financing to fund potential operating losses and other cash
requirements until we are able to generate larger profits from operations. We may experience negative cash flow, which will hamper
current operations and prevent our planned expansion. We may be unable to attain, sustain or increase profitability on a quarterly
or annual basis in the future, which could require us to scale back or terminate our operations.
In the event that key management personnel
leave us, our operations and results of operations could be negatively impacted.
Because we are almost entirely dependent on
the efforts of our sole officer and director, William Bollander, and 3 other individuals working on designing and coding the website,
and developing business relationships, their departures could have a material adverse effect on our business We do not maintain
key man life insurance on William Bollander.
We may be subject to charge-backs, credit
limits, and other unanticipated credit interruptions with credit card processors and online payment processors.
In the event that we sell products on our website
to customers that are either dissatisfied with purchases, deny the charges, are victimized by fraud, or otherwise dispute purchases
with credit providers, we may not receive payment from credit card and online payment processors. In addition, we may be subject
to credit limits, credit interruptions, minimum deposits, or other limitations imposed by credit card processors and online payment
providers. Charge-backs, credit limits, credit interruptions, minimum deposits, or other credit limitations will adversely affect
our cash flow and profitability. In addition, it may cause operational disruptions or cause us to cease operations entirely. In
the event that we are faced with the aforementioned credit issues from credit card processors and online payment processors, you
could lose your investment. Credit card processors may change policies and not offer their services for online platforms that allow
users to offer items for sale for others to buy in a direct purchase sites, or substantially increase rates charged per transaction,
which may adversely affect our business model.
A reduction in spending due to economic
downturns could result in a decrease in demand for our products.
If national retail sales levels decrease due
to a broader economic downturn, discretionary spending and as a result, the demand for our services and products would likely decline.
This decrease could reduce our opportunity for growth, increase our marketing and sales costs, and reduce our sales volume and
force us to receive lower fees for our services, which could reduce our revenue and operating results.
Because our business operates in the retail
industry, primarily in collectible and memorabilia items, we are subject to changes in industry trends and customer preferences,
which may adversely affect our results of operations.
Changes in customer preferences for products
may make the products that we offer for sale less desirable to potential buyers. If customers lose interest in the products that
are offered on our site, we will receive less bidding activity and therefore lower fees, also, if customer trends put a lower value
on these collectibles and memorabilia, our revenue fees will by lower, and as a result, may adversely affect our revenues, cash
flow, balance sheet and results of operations.
Competition from new and existing competitors
within our industry could have an adverse effect on our results of operations.
The electronic sports, entertainment, and pop
culture commerce industry and the online shopping industry generally are highly competitive. Our principal competitors include
local and international companies capable of competing effectively in our markets; most of which possess substantially greater
financial and other resources than we do, such as eBay, Amazon, and Steiner Sports Memorabilia, which have substantially more resources
with which to operate. In addition to online retailers, we also face intense competition from conventional brick-and-mortar
retailers selling collectibles and memorabilia, and other retailers that sell sports and entertainment products. Brick-and-mortar
retailers may pose a substantial risk to our business by potentially offering lower prices, more convenience and better customer
service. Additionally, our larger competitors may be able to devote greater resources to developing, promoting and selling their
products and services. We may also face increased competition due to the entry of new competitors offering authentication processes
for collectibles and memorabilia. As a result of this competition, our sales and revenues may be adversely affected or force us
to curtail or abandon our business plan, in which case you would lose your entire investment in our common stock.
Our success depends on the continued growth
and acceptance of email as a communications tool and the related expansion and reliability of the Internet infrastructure. If consumers
do not continue to use email or alternative communications tools gain popularity, demand for our email marketing products may decline.
The future success of our business depends
on the continued and widespread adoption of email as a primary means of communication. Security problems such as “viruses,”
“worms” and other malicious programs or reliability issues arising from outages and damage to the Internet infrastructure
could create the perception that email is not a safe and reliable means of communication, which would discourage businesses and
consumers from using email. Use of email by businesses and consumers also depends on the ability of ISPs to prevent unsolicited
bulk email, or “spam,” from overwhelming consumers’ inboxes. In recent years, ISPs have developed new technologies
to filter unwanted messages before they reach users’ inboxes. In response, spammers have employed more sophisticated techniques
to reach consumers’ inboxes. Although companies in the anti-spam industry have started to address the techniques used by
spammers, if security problems become widespread or frequent or if ISPs cannot effectively control spam, the use of email as a
means of communication may decline as consumers find alternative ways to communicate. In addition, if alternative communications
tools, such as those available on social networking sites, gain widespread acceptance, the need for email may lessen. Any decrease
in the use of email would reduce demand for our email-marketing product and harm our business.
Our long-term financial condition is dependent
on the continued and secure use of the Internet.
Our business is dependent upon the continued
availability of the Internet to users in a secure environment. Should the infrastructure that provides the essential
functions necessary for the operation of the Internet experience temporary or prolonged failure, our business will not be able
to operate. Furthermore, should the security of making online purchases become compromised, consumer confidence in making online
transactions could decrease, and as a result, our business operations and financial condition could be adversely affected.
RISKS RELATED TO OUR STATUS AS AN EMERGING
GROWTH COMPANY AND IF THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE, AN SEC REPORTING ISSUER
Reporting requirements under the Exchange
Act and compliance with the Sarbanes-Oxley act of 2002, including establishing and maintaining acceptable internal controls over
financial reporting, are costly and may increase substantially.
The rules and regulations of the SEC require
a public company to prepare and file periodic reports under the Exchange Act, which will require that the Company engage legal,
accounting, auditing and other professional services. The engagement of such services is costly. Additionally, the Sarbanes-Oxley
Act of 2002 (the “Sarbanes-Oxley Act”) requires, among other things, that we design, implement and maintain adequate
internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act and the limited technically
qualified personnel we have may make it difficult for us to design, implement and maintain adequate internal controls over financial
reporting. In the event that we fail to maintain an effective system of internal controls or discover material weaknesses in our
internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our overall financial
condition and result in loss of investor confidence and a decline in our share price.
As a public company, we will be subject to
the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act of 2010 and other applicable securities
rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless
increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand
on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires,
among other things, that we file annual, quarterly, and current reports with respect to our business and operating results.
We are working with our legal, accounting and
financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage
our growth and our obligations as a public company. These areas include corporate governance, corporate control, disclosure controls
and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other
areas. However, we anticipate that the expenses that will be required in order to adequately prepare for being a public company
could be material. We estimate that the aggregate cost of increased legal services; accounting and audit functions; personnel,
such as a chief financial officer familiar with the obligations of public company reporting; consultants to design and implement
internal controls; and financial printing alone could be several hundred thousand dollars per year. In addition, if and when we
retain independent directors and/or add senior management, we may incur additional expenses related to director compensation and/or
premiums for directors’ and officers’ liability insurance, the costs of which we cannot estimate at this time. We may
also incur additional expenses associated with investor relations and similar functions, the cost of which we also cannot estimate
at this time. However, these additional expenses individually, or in the aggregate, may also be material.
In addition, being a public company could make
it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability
insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the
same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons
to serve on our Board, our Board committees or as executive officers.
The increased costs associated with operating
as a public company may decrease our net income or increase our net loss, and may cause us to reduce costs in other areas of our
business or increase the prices of our products or services to offset the effect of such increased costs. Additionally, if these
requirements divert our management’s attention from other business concerns, they could have a material adverse effect on
our business, financial condition and results of operations.
We are an “emerging growth company,”
and any decision on our part to comply only with certain reduced disclosure requirements applicable to “emerging growth companies”
could make our common stock less attractive to investors.
We are an “emerging growth company,”
as defined in the JOBS Act, and, for as long as we continue to be an “emerging growth company,” we expect and fully
intend to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging
growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and shareholder approval of any golden parachute payments not previously approved. We could be an “emerging growth company”
for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues
exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under
the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million
as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued
more than $1 billion in non-convertible debt during the preceding three year period.
In addition, Section 107 of the JOBS Act also
provides that an “emerging growth company” can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth
company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We
have elected to opt in to the extended transition period for complying with the revised accounting standards. We have elected to
rely on these exemptions and reduced disclosure requirements applicable to “emerging growth companies” and expect to
continue to do so.
Our internal control over financial reporting
does not currently meet the standards required by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain
effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a
material adverse effect on our business and stock price.
We previously have not been required to maintain
internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a)
of the Sarbanes-Oxley Act (“Section 404(a)”). Internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements in accordance with GAAP. We are not currently in compliance with, and we cannot be certain when we will
be able to implement the requirements of Section 404(a). We may encounter problems or delays in implementing any changes necessary
to make a favorable assessment of our internal control over financial reporting. If we cannot favorably assess the
effectiveness of our internal control over financial reporting, or if our independent registered public accounting firm is unable
to provide an unqualified attestation report on our internal controls, investors could lose confidence in our financial information
and the price of our common stock could decline.
Additionally, the existence of any material
weakness or significant deficiency would require management to devote significant time and incur significant expense to remediate
any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses
or significant deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting
could also result in errors in our financial statements that could require us to restate our financial statements causing us to
fail to meet our reporting obligations and cause stockholders to lose confidence in our reported financial information, all of
which could materially and adversely affect us.
RISKS RELATED TO OUR SECURITIES
We will issue additional shares of common
stock or derivative securities that will dilute the percentage ownership interest of our existing shareholders and may dilute the
book value per share of our common stock and adversely affect the terms on which we may obtain additional capital.
We will issue additional shares common stock
shares or derivative securities for any one or a combination of the following:
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Paying our officers, directors, consultants and professionals; |
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Acquiring other companies that have compatible businesses; |
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Providing financing for our operations. |
Our authorized capital consists of 190,000,000
shares of common stock and 10,000,000 shares of preferred stock. Our Board of Directors has the authority, without action by or
vote of our shareholders, to issue all or part of the authorized shares of common stock for any corporate purpose, including for
the conversion or retirement of debt. We are likely to seek additional equity capital in the future as we develop our business
and expand our operations. Any issuance of additional shares of common stock or derivative securities, such as convertible promissory
notes, will dilute the percentage ownership interest of our shareholders and may dilute the book value per share of our common
stock. Additionally, the exercise or conversion of derivative securities could adversely affect the terms on which we can obtain
additional capital. Holders of derivative securities are most likely to voluntarily exercise or convert their derivative securities
when the exercise or conversion price is less than the market price for the underlying common stock. Holders of derivative securities
will have the opportunity to profit from any rise in the market value of our common stock or any increase in our net worth without
assuming the risks of ownership of the underlying shares of our common stock. It is possible that, due to additional share issuances,
you could lose a substantial amount, or all, of your investment.
Our Board of Directors may attempt to use non-cash
consideration to satisfy obligations, which would likely consist of restricted shares of our common stock. Our Board of Directors
has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common
stock. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our
common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing shareholders,
may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing
management’s ability to maintain control because the shares may be issued to parties or entities committed to supporting
existing management.
Our shareholders
will experience significant dilution deriving from the conversion of convertible debt instruments.
In October and November
2014, we entered into 10% convertible promissory note agreements with 7 investors with an aggregate principal amount
of $400,000. The investors are entitled, at their option, at any time after the issuance of these Convertible Notes, to convert
all or any lesser portion of the outstanding principal amount and accrued but unpaid interest into our common stock at a conversion
price for each common stock share of $0.02, resulting in a maximum conversion of 26,000,000 shares. Additionally, In
the event we fail to file an S-1 registration statement within 60 days following the completion of the Convertible Note Offering,
or the full amount of Conversion Shares are not included in the first registration statement filed by either entity, or if such
registration statement including the Conversion Shares is not declared effective within 180 days following the completion of the
Offering, the Notes shall then be convertible at the option of the Convertible Note Holders into shares of our
common stock at a conversion price equal to the lesser of $0.02 per share or a 25% discount to our average
closing bid price of the Parent Company’s stock for the five days immediately prior to the day upon which we receive a written
conversion notice from the Holder for any portion of the Notes. We determine the completion of the offering to be January 1, 2015
as this was the date that we received the final completed and signed subscription agreement. The Penalty Conversion terms
remain in effect until such time as the S-1 registration statement Shares is declared effective by the SEC. Should the convertible
note investors convert the notes into 26,000,000 shares and should they receive penalty shares from breaches of the foregoing terms,
our shareholders will experience significant dilution of their common stock shares.
Our common stock is considered a penny stock,
which may be subject to restrictions on marketability, so you may be unable to sell your shares.
We may be subject now and in the future to
the SEC’s “penny stock” rules if our shares of Common Stock sell below $5.00 per share. Penny stocks generally
are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk
disclosure document prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny
stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information
must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing
before or with the customer’s confirmation.
In addition, the penny stock rules require
that prior to a transaction, the broker dealer must make a special written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to the transaction. The penny stock rules are burdensome
and may reduce purchases of any offerings and reduce the trading activity for shares of our Common Stock. As long as our shares
of Common Stock are subject to the penny stock rules, the holders of such shares of Common Stock may find it more difficult to
sell their securities.
Because
we do not intend to pay any dividends on our common stock, investors seeking dividend income or liquidity should not purchase shares
of our common stock in this offering.
We do not currently
anticipate declaring and paying dividends to our stockholders in the foreseeable future. It is our current intention to apply net
earnings, if any, in the foreseeable future to increasing our working capital. Prospective investors seeking or needing dividend
income or liquidity should, therefore, not purchase our common stock. We currently have no material revenues and a history of losses,
so there can be no assurance that we will ever have sufficient earnings to declare and pay dividends to the holders of shares of
our common stock, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors,
which currently do not intend to pay any dividends on shares of our common stock for the foreseeable future.
Shares of our stock may suffer from low
trading volume and wide fluctuations in market price.
Should FINRA approve of our common stock for
quotation on the OTCQB, the value of our common stock could be affected by actual or anticipated variations in our operating results,
changes in the market valuations of other similarly situated companies serving similar markets, announcements by us or our competitors
of significant acquisitions, strategic partnerships, collaborations, joint ventures or capital commitments; adoption of new accounting
standards affecting our industry; additions or departures of key personnel; introduction of new products or services by us or our
competitors; actual or expected sales of our common stock or other securities in the open market; conditions or trends in the market
in which we operate; and other events or factors, many of which are beyond our control.
Shareholders may experience wide fluctuations
in the market price of our securities. These fluctuations may have a negative effect on the market price of our securities and
may prevent a shareholder from obtaining a market price equal to the purchase price such shareholder paid when the shareholder
attempts to sell our securities in the open market. In these situations, the shareholder may be required either to sell our securities
at a market price, which is lower than the purchase price the shareholder paid, or to hold our securities for a longer period of
time than planned. An inactive market may also impair our ability to raise capital by selling shares of capital stock and may impair
our ability to acquire other companies by using common stock as consideration or to recruit and retain managers with equity-based
incentive plans.
FINRA sales practice requirements may limit
a stockholder’s ability to buy and sell our stock.
FINRA has adopted rules that require broker-dealers
to have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative
low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about
the customer’s financial status, tax status, investment objectives and other information. Under interpretations of
these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at
least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy
our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock.
Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker-dealers may
be willing to make a market in our common stock, which may limit your ability to buy shares of our common stock.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares offered
by the selling shareholders.
DILUTION
Not applicable, as we are not offering any shares in this registration
statement. All shares are being offered on behalf of our selling shareholders.
SELLING SHAREHOLDERS
The seven selling security holders named in
this prospectus are offering 26,000,000 common shares reflecting their conversion rights of 26,000,000 shares pursuant to seven
convertible promissory notes, 20,000,000 shares of which correspond to the aggregate principal loan amount of $400,000 and 6,000,000
shares that correspond to interest accrued should the notes be carried to maturity. We will not receive any proceeds from the sale
of shares being sold by selling security holders.
The number of shares underlying the convertible
notes represents the principal amount of the notes of $400,000 divided by the $0.02 conversion price of the convertible notes. The
number also includes interest of 10% on the notes mentioned in (ii) above through the notes’ maturity date of November 19,
2017 divided by the conversion price of the convertible notes.
The following table sets forth the names of
the selling security holders, the number of shares of Common Stock beneficially owned by each of the selling security holders as
of January 20, 2015 (the shares being offered hereby are being registered to permit public secondary trading, and the selling security
holders may offer all or part of the shares for resale from time to time. However, the selling security holders are under no obligation
to sell all or any portion of such shares nor are the selling security holders obligated to sell any shares immediately upon effectiveness
of this prospectus. The selling security holders have furnished all information with respect to share ownership.
|
|
Shares |
|
|
|
Amount |
|
Percent |
|
|
Beneficially |
|
|
|
Beneficially |
|
Beneficially |
|
|
Owned |
|
|
|
Owned |
|
Owned |
|
|
Prior to |
|
Shares to |
|
After |
|
After |
Name |
|
|
Offering |
|
|
|
be Offered (1) |
|
|
|
Offering(2) |
|
|
|
Offering(2) |
|
DTMFS, LP (3) |
|
|
0 |
|
|
|
1,625,000 |
|
|
|
0 |
|
|
|
0 |
% |
Eisenberg Family Foundation (4) |
|
|
0 |
|
|
|
9,750,000 |
|
|
|
0 |
|
|
|
0 |
% |
Gerald Commissiong |
|
|
0 |
|
|
|
325,000 |
|
|
|
0 |
|
|
|
0 |
% |
Ascendant Partners, LLC (5) |
|
|
0 |
|
|
|
6,175,000 |
|
|
|
0 |
|
|
|
0 |
% |
Plantation Partners LLC (6) |
|
|
0 |
|
|
|
1,625,000 |
|
|
|
0 |
|
|
|
0 |
% |
David Stefansky |
|
|
0 |
|
|
|
1,625,000 |
|
|
|
0 |
|
|
|
0 |
% |
Dina M. Palermo or Jeffrey Smith |
|
|
0 |
|
|
|
4,875,000 |
|
|
|
0 |
|
|
|
0 |
% |
Total |
|
|
0 |
|
|
|
26,000,000 |
|
|
|
0 |
|
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This Registration Statement covers the
resale by seven selling security holders of a maximum of 26,000,000 common stock shares reflecting their conversion rights collectively
to 26,000,000 shares pursuant to seven convertible promissory notes.
(2) Assuming the sale of all shares registered
hereunder.
(3) DTMFS, LP’s principal is Brian Herman
who has sole voting and investment control over the shares.
(4) Eisenberg Family Foundation’s principal
is Solomon Eisenberg who has sole voting and investment control over the shares.
(5) Ascendant Partners, LLC’s principal
is Richard Galterio who has sole voting and investment control over the shares.
(6) Plantation Partners, LLC principal is Frederic
W. Sommer III who has sole voting and investment control over the shares.
PLAN OF DISTRIBUTION
Shares Offered by the Selling Stockholders
The selling security
holders may sell some or all of their shares up to 26,000,000 at a fixed price of $0.02 per share until our shares are quoted on
the OTC Markets and thereafter at prevailing market prices or privately negotiated prices. The 26,000,000 shares are to be
issued pursuant to seven convertible promissory notes with an aggregate principal balance of $400,000, incurring interest
at 10% per annum and are convertible into common shares at $0.02 per share.
Prior to being quoted on the OTC Markets, shareholders
may sell their shares in private transactions to other individuals. Our common stock is currently quoted on OTC Pinks under the
symbol “TRTB”. We will be filing to obtain a quotation on the OTC Markets OTCQB. In order to be quoted on the OTC Markets,
a market maker must file an application and other necessary documents with the Financial Industry Regulatory Authority (“FINRA”)
on our behalf in order to make a market for our common stock. We have not yet engaged a market maker to file such application..
There cannot be any assurance that such an application for quotation will be approved. However, sales by selling security holder
must be made at the fixed price of $0.02 until a market develops for the stock.
Once a market has developed for our common
stock, the shares may be sold or distributed from time to time by the selling stockholders, who may be deemed to be underwriters,
directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The
distribution of the shares may be effected in one or more of the following methods:
• |
|
ordinary brokers transactions, which may include long or short sales, |
• |
|
transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading, |
• |
|
through direct sales to purchasers or sales effected through agents, |
• |
|
through transactions in options, swaps or other derivatives (whether exchange listed of otherwise), or exchange listed or otherwise), or |
• |
|
any combination of the foregoing. |
In addition, the selling stockholders may enter
into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course
of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other
transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter
pursuant to this prospectus. None of the selling security holders are broker-dealers or affiliates of broker dealers.
We will advise the selling security holders
that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities
of the selling security holders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented
or amended from time to time) available to the selling security holders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling security holders may indemnify any broker-dealer that participates in transactions involving
the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
Brokers, dealers, or agents participating in
the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which
compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor
we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders
and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any
proceeds from the sale of the shares of the selling security holders pursuant to this prospectus.
INTEREST OF NAMED EXPERTS
The legality of the shares offered under
this registration statement is being passed upon by Frederick M. Lehrer, Esquire, Attorney and Counselor at Law. Frederick M. Lehrer,
Esquire owns 200,000 restricted shares of our common stock.
The consolidated financial statements as of
March 31, 2014 and 2013 and for the years ended March 31, 2014 and 2013 included in this prospectus and the registration statement
have been audited by Salberg & Company P.A., an independent registered public accounting firm, to the extent and for the periods
set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such
report given upon the authority of said firm as experts in auditing and accounting.
DESCRIPTION
OF BUSINESS
Industry
Background
Online
Shopping
The collectible and
memorabilia business is a multi-billion-dollar industry, ranging from sports related products to home, business and personal goods.
Many companies specialize in authenticating items of value, using expert opinions, holograms, videos, and other means of guaranteeing
items are real. We intend to enhance the existing market for authentic memorabilia utilizing anti-counterfeiting technologies to
enable each item sold on the site to have a “Mark” applied to either it’s surface or sealed packaging around
the item. These “ Marks” in most cases will be invisible unless a dye is added to ensure visibility by the naked eye.
“Marks” will either contain Plant DNA or Rare Earth Minerals, depending upon the particular items surface. The “Marks”
will be applied through the use of either ink or a small brush. These “Marks” will adhere to surfaces through the lifespan
of the item, and in most cases cannot be removed or counterfeited unless the item is destroyed. These “Marks” will
provide the basis for tracking ownership and ongoing verification to ensure the item has been “Marked “ by LegacyXChange.
Ebay (eBay) currently
is the leading platform for selling memorabilia and collectibles items, but does not provide technology for ensuring authenticity
of an item. SportsMemorabilia.com is one of the leading online sites for selling authenticated merchandise, using many of the available
processes for guaranteeing authenticity, such as expert opinion, holograms, videos, signed affidavits.
Ebay (eBay)
generated $16 billion in net sales for fiscal 2013, with an estimated $110 billion in total value of items sold in fiscal
2014 in the US. Numerous competitors have developed sites to compete with various portions of eBay’s overall
marketplace, including ETSY, Bonanza, Yard Sale, and Sell Simple. We will be focused primarily on sports, pop culture and
celebrity related collectibles and memorabilia.
SportsMemorabilia.com
has partnered with many of the leading sports collectible authentication companies, including Collectors Universe, Inc. (PSACard),
Steiner Sports Inc., Beckett Media LLC, and JSA, James Spence Authentication. Their primary methodology for ensuring authenticity
is holograms and first person witness, which are commonly used by industry leaders.
Authentication Services
In the past 5 years,
significant improvements have been made in the ability to utilize technology to affix a “Mark” to an item, having the
mark stay affixed for the life of the product. Applied DNA Sciences has entered into a Heads Of Agreement with LegacyXChange, Inc.
to provide a “Mark” using their technology and work cooperatively to develop the logistical procedures to mark, follow
chain of custody, and authenticate “Marks” for a wide range of product surfaces. The
significant difference between DNA and hologram technology, is that one cannot physically see DNA; it is incorporated
into the substrate, whereas one can see a hologram. With the availability of digital printing systems, counterfeiters are
able to re-create or replicate the “look of holograms”.
Applied DNA’s development
efforts have yielded a flexible and durable marker with all the accuracy provided by nature. Their primary product, called
SigNature DNA is based on full, double stranded plant DNA, and provides forensic power and protection for a wide array of
applications. Highly secure, robust and durable, SigNature DNA markers are an ingredient that can be used to fortify brand
protection efforts; mark, track and convict criminals; and strengthen supply chain security. Custom DNA sequences can be embedded
into a wide range of host carriers including ink, varnish, thread, laminates and metal coatings. These items can then
be tested for the presence of SigNature DNA Markers through optical screening or a forensic level authentication. Hundreds
of millions of SigNature DNA marks now exist in the public domain on items ranging from consumer product packaging to microcircuits
to guitars.
We will also incorporate other authentication
technologies for “Marks”, including Rare Earth Minerals, which can be applied through visible or invisible ink, and
can be identified through a hand held scanner that only reads Rare Earth Mineral “Marks” when placed above the “Mark”
on an item.
We obtained
the foregoing information from sites for each of the following companies:
Business
Online Shopping Platform
We intend to operate an e-commerce business
through an online shopping website at LegacyXChange.com. As of January 15, 2015, the
site is approximately 65% completed, including all of the underlying coding for the database structure, security, registration,
and many other key components, as well as the basic design, functionality, and content for the site.
The site will be
focused on selling items that can either be won through a conventional time specified bidding process or purchased at an
amount set by the seller and agreed to by the buyer. Some auctions will allow reserve pricing, which provides the seller the ability
to set a minimum amount for the auction to be won. We will potentially feature a wide variety of products for sale, including
collectibles and memorabilia of sports items, pop culture, entertainment, coins, music and movies, stamps, jewelry, home furnishings,
clothes, and business product equipment and parts.
The listing, selling,
and buying processes require a user to establish a User Account before engaging in any trading activity, and which requires name,
address, contact information, and credit card or banking information only when a transaction of money changing hands takes place.
Account Information will be automatically available through multiple touch points throughout the process, with little or no requirement
to duplicate information input. Users will be provided easy access to all merchandise, terms and policies, storefronts, and account
information.
Access to the site
will be worldwide, provided the domain is not restricted in any country. For the first year, Original products will primarily be
offered from sellers within the United States. Secondary items will be able to be listed for sale from anywhere in the world.
We intend to acquire
listings of products through the development of business relationships with entities already selling merchandise in other online
formats, regardless of whether they are using alternative counterfeiting measures, and which may include companies and individuals.
We are currently working to develop relationships with possible Originators of new memorabilia directly, from sports and entertainment
celebrities to leading brands.
The platform will
provide an ongoing revenue share model for sellers of an item being sold for the first time and buyers of an item that is being
sold for the first time, for the specific item, provided the product is traded again on our site. Our website is planned
to be operational and publicly available by approximately May 2015 or sooner.
Authentication and Verification Services
All marking, authentication
and verification services for the first year will be provided solely in the U.S.
We will provide marking and authentication
services for Original items only, which are those that we document as authentic when they are created. This includes following
a chain of custody for the “Mark”, marking the item, guaranteeing the creators identity is validated, and ownership
registered in the LegacyXChange database. Chain of custody requires control of the “Mark” throughout the creation process,
not allowing the “Mark” to be used for any other purpose than to “Mark” the specified items. This includes
a designated handler for the mark and a video of the handling of the “Mark”.
Secondary items, which are those that already
exist in the marketplace with no way for us to witness creation, will only be marked the first time they are sold on the site,
once a sale has been completed. The items will be sent to our offices for marking, and once marked will be sent to the buyer. We
reserves the right to terminate any transaction for a Secondary item if such item is deemed counterfeit, either through outside
authentication services or through information acquired that suggests an item may not be authentic.
The “Mark” will be placed either
on the item or on the packaging surrounding the item. If applied to the packaging, it will also be embedded in the ink used in
a tamper proof bar code attached to packaging over the item. All items sold on the site will be affixed
with a product identification number, which will allow for tracking of ownership. Identification numbers will be attached directly
to an item through placement of a bar code directly on the items packaging, as well as on documentation that we provide for each
item.
The site will also contain
a list of known counterfeiters in various product categories that are not allowed to post items for sale on the site. This list
has been created by other leading experts and information provided by competing online sites.
Categories of Items to be Sold
Original
An original item is
documented and marked at time of origin and also includes items which were created without our involvement at the time of origin,
but are in the possession of the person identified with the value creation of the item, and who will attest to the authenticity
of the item.
Secondary
Secondary items have
no way of proving their original authenticity. Secondary items will be marked once they have been sold on the site.
How our Website will Work at LegacyXChange.com
The site will provide multiple
formats for buying merchandise, including auctions, reserve pricing (reserve pricing allows the seller to indicate a minimum price
required for item to be sold), and fixed pricing. The platform will provide an ongoing revenue share model for sellers of the first
time an item is sold and buyers of an item the first time it is sold, for the specific item, provided the product is traded on
our site.
The site will offer
a guarantee that provides both sellers and buyers comfort that products offered for sale can be marked and verified easily, in
a cost effective manner, at no charge. All items sold on the site will be 100% guaranteed, if a buyer does not believe an item
is authentic, it can be returned to the seller for a complete 100% refund.
Markings on items will be done either on our
premises or in the case of creation of Original items, at a designated location the we agree upon.. Verification of “Marks”
will take place either in our facilities or at Applied DNA Sciences, depending upon the type of “Mark” used. All items
will be accompanied with a bar code that can be read through a conventional bar code reader. The aforementioned bar code will provide
the buyer the preliminary knowledge that the item most probably has been marked by LegacyXChange.
Every item on the
site will receive a dedicated serial number, created by the company, which will enable the respective item to be marked, sold,
and tracked.
The site will provide
a format for listing auctions of merchandise, with features that specify type of auction, pricing, amount of time until the sale
closes, and search and marketing tools to enhance sales. A photo and a brief description of the item must accompany all items.
Buyers of products
on the site will have the ability to rate the sellers that sold them their item, creating a rating system for future buyers.
The site will guarantee
buyers only pay for items received, funds will be withheld to sellers until either proof of shipment or delivery has been received.
If a buyer receives an item that is determined to not be a marked item, buyer will receive a refund and seller will be charged
back the full value received for the item.
First time sellers (those that sell an item
the first time it is offered on LegacyXChange.com) and those that purchase an item the first time it is sold on the site, will
receive an ongoing revenue share every time the respective item is sold on the site after they have sold it. The ongoing revenue
share will range from 3% for Original items to 1% for Secondary items. For example, if someone is the first time seller of an Original
item on the site, anytime that item sells again on the site, the Original seller will receive 3% of the sale price, with a maximum
of $300 per item per time sold. If someone is the first time seller of a Secondary item on the site, they will receive 1% of all
future sales, not to exceed $100 per item per time sold. Any person that purchases any item on the site the first time it is sold,
will receive 1% of all future sales of the item, with a maximum of $100 per item per time sold, once they sell the item.
Selling
Sellers are required to either have items marked
prior to listing, if Original, or once they are sold if they are being sold for the first time as Secondary. The site provides
registration for any item, which includes a designated serial number unique to every item registered. Once an item is registered,
and marked, if Original, it can be listed for sale. If an item is Secondary and being sold for the first time, it can be registered
and listed for sale without being marked prior to listing. All auctions are allowed a maximum of 30 days for listing. Ownership
transference takes place each time an item is sold, with new owners creating their own account.
Payments for revenue share for any items sold
will be sent on the first day of the following month after the sale, payments will be made automatically to either a PayPal account
or some other form of secure transfer of funds. Their respective accounts will provide up to date information regarding serial
numbers of all items eligible for future revenue share.
Buying
Buyers are required to create an account prior
to bidding or purchasing any item. Purchasing an item requires payment via either a credit card or PayPal. Refunds are provided
if an item is never shipped or deemed counterfeit, or do not have a mark.
The
site will provide multiple formats for buying merchandise, including auctions, reserve pricing, and fixed pricing:
Auctions
generally offer Buyers the ability to increase offers in specified increments, with a specific ending time for the last bid. If
the Seller has not set a minimum bid for purchase, referred to as a Reserve Price, the last bidder wins the item. If the Seller
indicates a Reserved Price, the last offer must be equal to or greater than the Reserve price to win the item.
Many
items will be offered for a fixed price, with a timeframe to make the purchase, based upon inventory.
Payments for revenue share for any items sold
will be sent on the first day of the following month after the sale, payments will be made automatically to either a PayPal account
or some other form of secure transfer of funds. Their respective accounts will provide up to date information regarding serial
numbers of all items eligible for future revenue share.
Shipment of Products
Products will be primarily shipped directly
from the seller to the buyer, except in cases where the item must first be sent to us for marking, in which case the item will
be shipped to the buyer from us once it has been marked. . Seller customarily charges buyer for all freight.
Business Strategies
We intend to acquire
listings of products through the development of business relationships with entities already selling collectibles and memorabilia
merchandise in other online formats, through the general public offering items for sale, and with possible originators of new memorabilia
directly, from sports and entertainment celebrities to leading brands.
Our goal is to acquire
sellers that will list products for sale, the more products for sale, the more viable the site for potential buyers. We prefer
to have a wide variety of product categories, which can attract a wider audience, and at the same time developing strength in a
few categories, especially products of higher value.
Marketing Strategies
We will be targeting those that currently engage
in full time or part time participation in buying and selling memorabilia, as well as those that are in need of selling something
of value or interested in purchasing an item of potential personal or financial value.
Our marketing will include attracting potential
users through value driven offerings, including discounts to our basic cost structure, and access to upgraded features for selling.
It will include advertising in print and television, as well as attending numerous trade shows, advertising online, working with
leading brands and celebrities, and promoting items on the site of particular high value.
We plan to use the following marketing methods:
|
· |
Google Ad Words/other web search engines/social media sites |
|
· |
Recognition through the sports world by engaging professional athletes, retired or active. |
|
· |
Attending and sponsoring events with celebrities. |
|
· |
Attending trade shows peculiar to specific product categories |
|
· |
Television and print advertising |
Target Market
Our target market is male and female between
the ages 18 and 65 that are currently engaged or are interested in selling and purchasing products of value online.
Brand Recognition and Characteristics
E-commerce websites are characterized by many
participants that offer very similar products. Most e-commerce websites focus on heavy marketing, brand recognition and quality
service for differentiation. However, despite these efforts, the industry remains highly commoditized. Therefore, our strategy
is to offer a buying/selling experience that is unique to e-commerce websites, with the ability to be assured of product authentication,
verification, and tracking, plus a revenue share for the sellers and buyers of items the first time they are sold or purchased
We believe that the combination of our marking and verification methods with Original merchandise from desired providers will be
a unique feature that is attractive to the online shopping community. Our goal is to establish and expand a customer base that
returns to our website on a regular basis to enter the selling and buying process.
Competition
The competition for all retail business as
well as e-commerce business is intense. While our most direct competition results from other e-commerce websites, we also compete
with conventional brick-and-mortar retail businesses, as well as companies that sell consumer products through catalogues. Although
we operate in a niche market with some esoteric components, many of our competitors have substantially more financial and operational
resources than us. For instance, eBay, and Amazon, have substantially more resources with which to operate.
We are competing against other e-commerce retailers
and conventional retailers from a position of extreme disadvantage due to capital constraints, lack of operating history, limited
brand recognition, very few barriers to entry for new participants, lack of contracts with sellers, and limited operational and
tangible assets with which to compete. The primary methods of competition in our industry include pricing tactics, offering quality
products, building brand name recognition through effective sales and marketing campaigns, and establishing customer loyalty by
providing superior customer service.
Revenue Generation
We will charge the following fees as the circumstances
dictate:
a. We will charge fees for listing auctions,
with the first 50 auctions each month free, with a $0.30 charge thereafter, unless seller chooses to pay a flat monthly fee of
$24.99 for unlimited listings, listings for all original merchandise is free.
b. We will offer high volume and high
value item sellers the ability to create stores within our site, charging either monthly fees or yearly-prepaid fees at a discount
to monthly fees. Fees will range from $17.99 to $199.99 per month depending upon the commitment of the seller.
c. We will charge varying fees
for selling items on the site, ranging from 10% to 15% per item, depending upon whether items are sold as Original or
Secondary.
d. We will offer sellers the ability to enhance
the visibility of their products through an advertising plan available for any item offered for sale on the site. This plan is
based upon page views of the product when it is placed on a particular page, allowing a seller to designate a total amount of dollars
to be spent advertising their product while it is for sale, and requiring choosing a specific dollar amount to be paid per page
view. Each time a page is viewed that contains the item advertised, the user will be charged the designated per page view amount,
reducing the total amount to be spent each time the page is viewed.
e. We will offer a Flash Sale section, which
allows any seller to discount the offer price of their item from the original price, provided they pay for posting their item for
sale into this section. Postings are paid based upon a pre-calculated value for a specific page view of the product when it is
placed on a particular page. The seller must designate a total amount of dollars to be spent placing their product while it is
for sale in the Flash Sale area, and requires choosing a specific dollar amount to be paid per page view. Each time a page is viewed
that contains the item advertised, the user will be charged the designated per page view amount, reducing the total amount to be
spent each time the page is viewed. LegacyXChange calculates the weighted value of each page based upon previous users agreed upon
fees and amount of times page is viewed.
Government Regulation
We are subject to general business
regulations and laws, as well as regulations and laws specifically governing the Internet, e-commerce, and electronic devices.
Existing and future laws and regulations may impede our growth. These regulations and laws may cover taxation, privacy, data protection,
pricing, content, copyrights, distribution, mobile communications, electronic device certification, electronic waste, electronic
contracts and other communications, competition, consumer protection, web services, the provision of online payment services, unencumbered
Internet access to our services, the design and operation of website, and the characteristics and quality of products and services.
It is not clear how existing laws governing issues such as property ownership, libel, and personal privacy apply to the Internet,
e-commerce, digital content, and web services. Jurisdictions may regulate consumer-to-consumer online businesses, including certain
aspects of our seller programs. Unfavorable regulations and laws could diminish the demand for our products and services and increase
our cost of doing business.
Environmental Issues
We do not believe that our business
is subject to environmental regulations or will otherwise be affected by environmental regulation.
Employees
We currently have 1 full time employee, William
Bollander, our Principal Executive Officer/Director. Additionally, we have a part time office associate and we employ our Chief
Financial Officer on a part-time basis. Subject to adequate funding and growth of our customer base and transactions on the
site, during the next 12 months, we plan to hire 10 additional employees on a full time basis, as follows: (a) 2 accounting
personnel; (b) 4 customer service personnel; (c) 2 business development personnel; (d) 1 programming personnel: and (e) 1 account
manager.
Seasonal Business
We do not anticipate
our business to be impacted by seasonal business throughout the year, with the exception for the Christmas holiday, highly visible
collectible events or specific offerings of extremely valuable memorabilia.
Research and Development
Since our inception,
we have had no research and development expenses.
Patents and Intellectual
Property/Trademarks/Licenses/Franchises
We do not
currently own any patents and have no intention of applying for patents. We currently have no trademarks. We are not a party
to any license, royalty or franchise agreements.
DESCRIPTION OF PROPERTY
Our executive offices
are located at 301 Yamato Road, Suite 1240, Boca Raton, Florida. We have a sublease between TDL Centers, Inc., the Lessor, and
us as the Lessee. Our lease became effective on February 1, 2012. We pay rent of $600 per month and our lease is on a month-to-
month basis. We have access to a conference/meeting room for 8 hours per month. Our office space consists of 120 square feet and
is sufficient for our use. This also provides us with a receptionist to answer our calls Monday thru Friday from 9am to 5pm eastern.
LEGAL PROCEEDINGS
From time to time, we may become involved in
various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent
uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently
not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial
condition or operating results.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Common Stock
We are authorized to issue 190,000,000 shares
of Common Stock, $0.001 par value per share. Currently we have 36,951,165 shares of Common Stock issued and outstanding.
Each share of Common Stock shall have one (1)
vote per share for all purposes. Our Common Stock does not provide preemptive, subscription or conversion rights and there are
no redemption or sinking fund provisions or rights. Our Common Stock holders are not entitled to cumulative voting for election
of the Board.
Preferred Stock
We are authorized to issue 10 million preferred
shares, no shares of which have been issued.
Warrants
There are 1,048,315
outstanding warrants to purchase our securities. Each Warrant entitles the Holder upon exercise to one Common Stock Share. The
Warrant Exercise Price is $0.40 with a 5-year term.
Options
There are no outstanding options to purchase
our securities.
Transfer Agent and Registrar
Our transfer agent is Empire Stock Transfer,
1859 Whitney Mesa Drive, Henderson, Nevada 89014.
Holders of Capital Stock:
As of the date of this Registration Statement,
we have 85 holders of our Common Stock.
Rule 144 Shares
As of the date of this Registration Statement,
we do not have any shares of our Common Stock that are currently available for sale to the public in accordance with the volume
and trading limitations of Rule 144.
Stock Option Grants
We do not have a stock option plan in place
and have not granted any stock options at this time.
Market Information
Our shares of common stock are quoted on the
Pink Sheets under the symbol “TRTB”. The following table sets forth the range of reported high and low closing bid
quotations for our common stock for the fiscal quarters indicated. These quotations reflect inter-dealer prices, without retail
markup, markdown or commission, and may not represent actual transactions. Consequently, the information provided below may not
be indicative of our common stock price under different conditions.
|
|
High |
|
Low |
Fiscal Year 2014 |
|
|
|
|
|
|
|
|
Fourth Quarter ended December 31, 2014 |
|
$ |
.09 |
|
|
$ |
.03 |
|
Third Quarter ended September 30, 2014 |
|
$ |
.03 |
|
|
$ |
.03 |
|
Second Quarter ended June 30, 2014 |
|
$ |
.05 |
|
|
$ |
.04 |
|
First Quarter ended March 31, 2014 |
|
$ |
.08 |
|
|
$ |
.07 |
|
Fiscal Year 2013 |
|
|
|
|
|
|
|
|
Fourth Quarter ended December 31, 2013 |
|
$ |
.08 |
|
|
$ |
.06 |
|
Third Quarter ended September 30, 2013 |
|
$ |
.08 |
|
|
$ |
.06 |
|
Second Quarter ended June 30, 2013 |
|
$ |
.19 |
|
|
$ |
.18 |
|
First Quarter ended March 31, 2013 |
|
$ |
.98 |
|
|
$ |
.98 |
|
Fiscal Year 2012 |
|
|
|
|
|
|
|
|
Fourth Quarter ended December 31, 2012 |
|
$ |
.42 |
|
|
$ |
.25 |
|
Third Quarter ended September 30, 2012 |
|
$ |
.49 |
|
|
$ |
.49 |
|
Second Quarter ended June 30, 2012 |
|
$ |
.55 |
|
|
$ |
.28 |
|
First Quarter ended March 31, 2012 |
|
$ |
.75 |
|
|
$ |
.51 |
|
DIVIDEND POLICY
We have not paid any cash dividends to our
shareholders. The declaration of any future cash dividends is at the discretion of our Board and depends upon our earnings, if
any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our
present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business
operations.
SHARES ELIGIBLE FOR FUTURE SALE
As of January 29, 2015, we had 36,951,165 shares
of common stock outstanding. Of the 26,000,000 shares being registered by selling security holders, all such shares have not previously
been issued.
All shares sold in this offering will be freely
tradable without restriction or further registration under the Securities Act, unless they are purchased by our “affiliates,”
as that term is defined in Rule 144 promulgated under the Securities Act.
The outstanding shares of our common stock
not included in this prospectus will be available for sale in the public market as follows:
Public Float
There are 8,051,007 remaining shares,
which constitute our public float.
Rule 144
In general, under Rule 144 as currently in
effect, once we have been subject to public company reporting requirements for 90 days, a person (or persons whose shares are aggregated)
who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially
owned restricted securities within the meaning of Rule 144 for a least six months (including any period of consecutive ownership
of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public
information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for
at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.
In general, under Rule 144 as currently in
effect, once we have been subject to public company reporting requirements for 90 days, our affiliates or persons selling shares
on behalf of our affiliates who own shares that were acquired from us or an affiliate of ours at least six months prior to the
proposed sale are entitled to sell upon expiration of the lock-up agreements described above, within any three-month period beginning
90 days after the date of this prospectus, a number of shares that does not exceed the greater of:
• |
|
1% of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering; or |
• |
|
the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale. |
Sales under Rule 144 by our affiliates or persons
selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to
the availability of current public information about us.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF OUR RESULTS OF
OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE
IN THIS REGISTRATION STATEMENT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE
FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL
RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE RISKS AND OTHER FACTORS INCLUDE, AMONG
OTHERS, THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND “RISK FACTORS” AND THOSE INCLUDED ELSEWHERE
IN THIS REGISTRATION STATEMENT.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial
condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements
requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to income
taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions
that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions
could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ
from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our
more significant judgments and estimates used in the preparation of the consolidated financial statements.
Revenue Recognition
We recognize revenue when persuasive evidence
of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and
collectability is reasonably assured. Our specific revenue recognition policies are as follows:
|
• |
Product sales from the sale of beauty products, which ceased in May 2013, and sales of products through the subsidiary’s auction website are recognized when the product is shipped to the customer and title is transferred. |
|
· |
Under the Company’s auction program, consumers are required to purchase bid packages directly from the Company. Proceeds from the sales of bid packages are recorded as deferred revenue until recognizable as discussed below. In connection with the sale of bid packages, the Company utilized the User-based Revenue Model (“UBRM”). The UBRM is based on the presumption that the period of delivery for the bid package is the estimated average user life, which was estimated by the Company to be 60 days. Consequently, revenue from the sale of bid packages is recognized ratably over the estimated user life of 60 days. |
Stock-based compensation
Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost
of employee and director services received in exchange for an award of equity instruments over the period the employee or director
is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement
of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share-based
payments to consultants and other third parties, compensation expense is determined at the “measurement date.” The
expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting
date.
Recent Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards
Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all-existing revenue recognition
guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred
to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services.
ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required
within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual
periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a
full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect
certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized
at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. The
adoption of this guidance is not expected to have a material impact on our consolidated financial statements.
In June 2014, the FASB issued Accounting Standards
Update No. 2014-12, Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of
an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging
Issues Task Force) (ASU 2014-12). The guidance applies to all reporting entities that grant their employees share-based
payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite
service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite
service period is treated as a performance condition. For all entities, the amendments in this Update are effective for annual
periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective
date is the same for both public business entities and all other entities. The adoption of this guidance is not expected
to have a material impact on our consolidated financial statements.
In August 2014, the FASB issued Accounting
Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties
about an Entities Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management’s
responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern as
well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial
statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s
ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued.
This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date
the financial statements are issued or are available to be issued, as well as whether it is probable that management’s plans
to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial
doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter.
Early application is permitted. The adoption of this guidance is not expected to have a material impact on our consolidated
financial statements.
RESULTS OF OPERATIONS
Comparison of Results of Operations for
the Years Ended March 31, 2014 and 2013
Revenue and gross profit (loss)
For the years ended March 31, 2014 and 2013,
we generated limited revenue of $35,240 and $79,498, and gross profit (loss) of $1,072 and (21,769), respectively, which related
primarily to the sale of remaining inventory of beauty products.
Operating expenses
For the years ended March 31, 2014 and 2013,
operating expenses amounted to $535,564 and $753,134, respectively, a decrease of $217,570 or 28.9%. Operating expenses consisted
of the following:
|
|
For the Years Ended March 31, |
|
|
2014 |
|
2013 |
Compensation and related taxes |
|
$ |
134,235 |
|
|
$ |
124,543 |
|
Professional fees |
|
|
200,797 |
|
|
|
376,891 |
|
Impairment loss |
|
|
— |
|
|
|
220,400 |
|
Other selling, general and administrative |
|
|
57,053 |
|
|
|
79,902 |
|
|
|
$ |
392,085 |
|
|
$ |
801,736 |
|
|
· |
For the years ended March 31, 2014 and 2013, compensation and related taxes amounted to $134,235 and $124,543, respectively, an increase of $9,692 or 7.8%. The increase during the year ended March 31, 2014 is mainly attributable to an increase in our CEO’s salary and related payroll taxes of approximately $13,000 due to the increase in his annual salary from $100,000 to $120,000, which was effective on January 1, 2013, offset by a decrease in compensation for our director, Chris Jarvis, of approximately $3,000. We expect administrative salaries to increase in 2015 as we increase our operations. |
|
· |
For the years ended March 31, 2014 and 2013, professional fees amounted to $200,797 and $376,891, respectively, a decrease of $176,094 or 46.7% primarily attributable to a decrease in consulting and legal fees as operations slowed in the 2014 period due to a lack of working capital. We expect professional fees to increase as we incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. |
|
· |
For the year ended March 31, 2013, we had an impairment loss of $220,400 related to a write off of the fair value of common shares issued in connection with the acquisition of beauty product intangible assets. We did not have corresponding expense in the year ended March 31, 2014. |
|
· |
For the years ended March 31, 2014 and 2013, other selling, general and administrative expenses amounted to $57,053 and $79,902, respectively, a decrease of $22,829 or 28.6%. The decrease is mainly attributable to a decrease in car expense of approximately $12,000 and a decrease in travel and entertainment expense of approximately $17,000, offset by an increase in other miscellaneous items of approximately $7,000. |
Other income (expense)
For the year ended March 31, 2014, we recognized
a gain from settlement of legal service fee of $34,594. Pursuant to a settlement agreement, on December 13, 2013, we issued 750,000
shares of common stock to a law firm for the settlement of $75,919 of legal fees payable. The shares were valued at total fair
value of $41,325 by using the recent sale price of the common stock on the date of grant of $0.0551 per common share. We recognized
a gain from settlement of service fee of $34,594, which represented the difference between legal fees due of $75,919 and the fair
value of shares, issued of $41,325. For the year ended March 31, 2014, we recognized interest expense of $7,510 for our two outstanding
loans and we did not incur any interest expense for the year ended March 31, 2013.
Net loss
As a result of the factors described above,
our net loss for the years ended March 31, 2014 and 2013 was $363,929 and $823,445, respectively, or a net loss per common
share of $0.01 and $0.04 (basic and diluted), respectively.
Comparison of Results of Operations for
the Six Months Ended September 30, 2014 and 2013
Revenue
For the six months ended September 30, 2014
and 2013, we generated limited revenue of $358 and $35,825, and gross profit (loss) of $(1,178) and $2,716, respectively, which
related primarily to the sale of remaining inventory of beauty products.
Operating expenses
For the six months ended September 30, 2014
and 2013, operating expenses amounted to $203,537 and $199,098, respectively, an increase of $4,439 or 2.2%. Operating expenses
consisted of the following:
|
|
For the Six Months Ended September 30, |
|
|
2014 |
|
2013 |
Compensation and related taxes |
|
$ |
86,562 |
|
|
$ |
65,204 |
|
Professional fees |
|
|
94,264 |
|
|
|
105,065 |
|
Other selling, general and administrative |
|
|
22,711 |
|
|
|
28,829 |
|
|
|
$ |
203,537 |
|
|
$ |
199,098 |
|
|
· |
For the six months ended September 30, 2014 and 2013, compensation and related taxes amounted to $86,562 and $65,204, respectively, an increase of $21,358 or 32.8%. The increase is attributable to an increase in board member fees of approximately $18,000 due to a one-time service fee incurred and paid in the six months ended September 30, 2014. |
|
· |
For the six months ended September 30, 2014 and 2013, professional fees amounted to $94,264 and $105,065, respectively, a decrease of $10,801 or 10.3%. The decrease during the six months ended September 30, 2014 is primarily attributable to a decrease in investor relations service charge of approximately $17,000, a decrease in consulting fees of $16,000, and a decrease in other miscellaneous items of approximately $1,000, offset by an increase in accounting fees of approximately $10,000 and an increase in legal service fees of approximately $13,000. We expect professional fees to increase as we incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. |
|
· |
For the six months ended September 30, 2014 and 2013, other selling, general and administrative expenses amounted to $22,711 and $28,829, respectively, a decrease of $6,118 or 21.2%. The decrease is mainly attributable to a decrease in bank service charge of approximately $1,000, a decrease in rent expense of approximately $3,000, and a decrease in other miscellaneous items of approximately $2,000 due to stricter control on corporation spending. |
Other income (expense)
For the six months ended September 30,
2014, we recognized a loss of $5,510 on settlement of our two outstanding loans and we did not incur any corresponding expense
for the six months ended September 30, 2013.
Net loss
As a result of the factors described above,
our net loss for the six months ended September 30, 2014 and 2013 was $210,225 and $196,382, respectively, or a net loss
per common share of $0.01 (basic and diluted) for the six months ended September 30, 2014 and 2013.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate
funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. At March
31, 2014 and 2013, we had cash balances of approximately $9,000 and $20,000, respectively.
Our working capital increased approximately
$113,000 to working capital deficit of approximately $169,000 at March 31, 2014 from working capital deficit of approximately $56,000
at March 31, 2013. The decrease in working capital is primarily attributable to a decrease in cash of approximately $10,000, a
decrease in prepaid expense of approximately $21,000, a decrease in prepaid salary to officer of approximately $27,000, a decrease
in inventories of approximately $29,000, an increase in loan payable of approximately $20,000, an increase in advances for common
stock purchases of approximately $113,500, an increase in accrued officer salary and director fees of approximately $21,000 and
an increase in due to shareholder of approximately $8,000, offset by a decrease i n accounts payable and accrued expenses of approximately
$136,000.
Our working capital deficit decreased approximately
$84,000 to working capital deficit of approximately $85,000 at September 30, 2014 from working capital deficit of approximately
$169,000 at March 31, 2014. The decrease in working capital deficit is primarily attributable to an increase in cash of approximately
$9,000, an increase in prepaid expenses of approximately $10,000, a decrease in loans payable of approximately $20,000, a decrease
in advances for common stock purchases of approximately $114,000 and a decrease in due to shareholders of approximately $3,000,
offset by an increase in accounts payable and accrued expenses of approximately $2,000, an increase in accrued officer salary and
director fees of approximately $14,000 and an increase in advances for convertible notes purchases of approximately $55,000.
During the year ended March 31, 2013, we sold
a total of 6,953,709 shares of common stock to investors at an average price of $0.0551 per common share. During the fiscal year
ended March 31, 2013, we received cash proceeds of $298,180 from the sale of the shares and had a subscription receivable of $10,000,
which was collected in fiscal 2014.
During the fiscal year ended March 31, 2014,
we sold a total of 145,200 shares of common stock at an average price of $0.0551 per common share to investors. The proceeds received
by us from the sale of these shares were $8,000 in fiscal 2014.
During the period between April 1, 2014 and
the filing date of this report, we sold a total of 3,365,334 shares of common stock at an average price of $0.0551 per common share
to investors. The proceeds received by us from the sale of these shares were $185,420.
In October and November 2014, the Company and
7 investors (the “Investors”) entered into convertible promissory note agreements, providing the issuance of a
10% convertible promissory notes (the “Convertible Notes”) with an aggregate principal amount of $400,000. The Convertible
Notes are due and payable on the third anniversary of the date of issuance through October 2017. The Investors are entitled, at
their option, at any time after the issuance of these Convertible Notes, to convert all or any lesser portion of the outstanding
principal amount and accrued but unpaid interest into the Company’s common stock at a conversion price for each share of
common stock equal to $0.02. In the event a registration statement is not filed by either the Company within 60 days following
the completion of this Offering, or the full amount of Conversion Shares are not included in the first registration statement filed
by either entity, or if such registration statement including the Conversion Shares is not declared effective within 180 days following
the completion of the Offering, the Convertible Notes shall then be convertible at the option of the Holder into shares of the
common stock, par value $.001 per share, of the Company at a conversion price equal to the lesser of $0.02 per share or a 25% discount
to the average closing bid price of the Parent Company’s stock for the five days immediately prior to the day upon which
the Company receives a written conversion notice from the Holder for any portion of the Notes. The Penalty Conversion shall remain
in effect until such time as a registration statement from the Company, including the Conversion Shares is declared effective by
the SEC. In connection with the issuance of these Convertible Notes above, the Company determined that the terms of the Convertible
Notes include a down-round provision under which the conversion price and exercise price could be affected by future equity offerings
undertaken by the Company or contain terms that are not fixed monetary amounts at inception. Accordingly, under the provisions
of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s Own Stock”, the convertible
instruments shall be accounted for as a derivative liabilities at the date of issuance and shall be adjusted to fair value through
earnings at each reporting date. On the measurement date, the Company shall record a derivative liability of $388,039
Cash Flow
For the Year Ended March 31, 2014 and 2013
Net cash flow used in operating activities
was approximately $162,000 for the year ended March 31, 2014 as compared to net cash flow used in operating activities of approximately
$288,000 for the year ended March 31, 2013, a decrease of approximately $126,000.
· |
Net cash flow used in operating activities for the year ended March 31, 2014 primarily reflected net loss of approximately $364,000 and the add-back of non-cash item, such as stock-based compensation and fees of approximately $89,000, stock issued for interest of approximately $5,500, and a gain from settlement of accounts payable of $34,594, offset by the changes in operating assets and liabilities primarily consisting of a decrease in prepaid expense of approximately $35,000, a decrease in prepaid salary to officer of approximately $27,000, a decrease in inventories of approximately $29,000, an increase in accounts payable and accrued expense of approximately $22,000, an increase in accrued officer salary and director fees of approximately $21,000 and an increase in due to shareholder of approximately $8,000. |
|
|
· |
Net cash flow used in operating activities for the year ended March 31, 2013 mainly reflected net loss of approximately $823,000 and the add-back of non-cash item such as stock-based compensation and fees of approximately $177,000 and an impairment loss from the impairment of acquired intangible assets of approximately $220,000, and the changes in operating assets and liabilities such as an increase in prepaid expense of approximately $26,000, offset by a decrease in accounts receivable of approximately $13,000, a decrease in prepaid salary to officer of approximately $2,000, a decrease in inventories of approximately $98,000, an increase in accounts payable and accrued expense of approximately $48,000, an increase in accrued officer salary and director fees of $750 and an increase in due to related party of approximately $600. |
We did not incur any investing activity in
the years ended March 31, 2014 and 2013.
Net cash flow provided by financing activities
was approximately $152,000 for the year ended March 31, 2014 as compared to approximately $298,000 for the year ended March 31,
2013. During the year ended March 31, 2014, we received proceeds from loan payable of approximately $20,000, proceeds from common
stock subscriptions of approximately $114,000 and proceeds from sale of common stock of approximately $18,000. During the year
ended March 31, 2013, we received proceeds from sale of common stock of approximately $298,000.
For the Six Months Ended September 30, 2014
and 2013
Net cash flow used in operating activities
was approximately $118,000 for the six months ended September 30, 2014 as compared to net cash flow used in operating activities
of approximately $82,000 for the six months ended September 30, 2013, an increase of approximately $36,000.
· |
Net cash flow used in operating activities for the six months ended September 30, 2014 primarily reflected net loss of approximately $210,000 and the add-back of non-cash item, such as stock-based compensation and fees of approximately $69,000 and loss on settlement of loans approximately $6,000, and the changes in operating assets and liabilities primarily consisting of a decrease in deferred revenue of approximately $300 and a decrease in due to shareholders of approximately $3,000, offset by a decrease in prepaid expenses of approximately $3,000, a decrease in security deposit of approximately $600, an increase in accounts payable and accrued expenses of approximately $4,000 and an increase in accrued officer salary and director fees of approximately $14,000. |
|
|
· |
Net cash flow used in operating activities for the six months ended September 30, 2013 mainly reflected net loss of approximately $196,000 and the add-back of non-cash item such as stock-based compensation and fees of approximately $30,000, and the changes in operating assets and liabilities such as: a decrease in accounts payable and accrued expenses of approximately $700, offset by a decrease in prepaid expenses of approximately $25,000, a decrease prepaid salary to officer of approximately $26,000, a decrease in inventories of approximately $29,000, an increase in accrued officer salary and director fees of approximately $3,000 and an increase in due to shareholders of approximately $3,000. |
We did not incur any investing activity in
the six months ended September 30, 2014 and 2013.
Net cash flow provided by financing activities
was approximately $127,000 for the six months ended September 30, 2014 as compared to approximately $65,000 for the six months
ended September 30, 2013. During the six months ended September 30, 2014, we received proceeds from convertible notes advances
of approximately $55,000 and proceeds from sale of common stock of approximately $72,000. During the six months ended September
30, 2013, we received proceeds from common stock subscription of approximately $47,000 and proceeds from sale of common stock of
approximately $18,000.
Our primary uses of cash have been for salaries
and fees paid to third parties for professional services. All funds received have been expended in the furtherance of growing the
business. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:
|
· |
An increase in working capital requirements to finance our current business, |
|
· |
Addition of administrative and sales personnel as the business grows, and |
|
· |
The cost of being a public company. |
We currently have no material commitments for
capital expenditures. We will need to raise additional funds, particularly if we are unable to generate positive cash flow as a
result of our operations. We estimate that based on current plans and assumptions, that our available cash will
be insufficient to satisfy our cash requirements under our present operating expectations. Other than working capital and funds
received pursuant to the Securities Purchase Agreement, we presently have no other significant alternative source of working capital.
We have used these funds to fund our operating expenses, pay our obligations and grow our company. We will need to raise significant
additional capital to fund our operations and to provide working capital for our ongoing operations and obligations. We do not
anticipate we will be profitable in 2015. Therefore our future operation is dependent on our ability to secure additional
financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities,
or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets
could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise
the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements
that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders
may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing
holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability
to continue to conduct business operations. If we are unable to obtain additional financing, we will be required to cease our operations.
We anticipate that depending on market conditions
and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our independent registered public
accounting firm has raised substantial doubt about our ability to continue as a going concern in their audit opinion for the years
ended March 31, 2014 and 2013.
Our liquidity is negatively impacted by the
significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange
Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance
costs and to make some activities more time consuming and costly.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations
No.
Off-balance Sheet Arrangements
The Company does not have any off-balance sheet
arrangements.
Plan
of Operations
We anticipate $480,000
of total expenses, including salaries, rent, marketing and advertising to conduct our operations for the next
12 months at a burn rate of $40,000 per month. Based on our current cash position of $120,000, we will be unable to
conduct our operations for more than 3 months. Additionally, we have total estimated Plan of Operations expenditures
of $900,000. Our entire Plan of Operations is contingent upon revenue levels and obtaining financing, of which there is no
assurance that we will be able to obtain or on terms acceptable to us.
Months 1-3 |
|
1) Move executive offices to Las Vegas, Nevada to consolidate our employees and consultants; our current employees, other than our CEO, reside in Las Vegas and our main consultant lives in California and can easily travel to Las Vegas |
$ 2,000 |
2) Continue development of online site: finish design work for each site page; program all graphic design, finish backend coding related to feature functionality. Create Quality Control department to monitor quality control as site is developed. |
15,000 |
3) Develop relationships with active and retired professional athletes: Currently, a consultant to the company, Bobby Grich, a retired professional baseball player is helping to create relationships with active and retired professional athletes, for the purpose of creating Original items for sale on the site at launch: |
5,000 |
4) Develop relationships with business entities interested in selling their products on our site; working with a consultant to the company with experience as a talent agent, helping to explore areas of business development with brand name products: |
5,000 |
5) Create 30 and 60 second spot commercials for launch; utilizing our business development director and graphics design person, who are experienced in producing television commercials in producing commercials for television: |
45,000 |
6) Create online and print advertisements; utilizing in house graphic designer and in house marketing specialist to design and implement concept: |
15,000 |
7) Plan for launch in approximately 4- months: create press material, develop social media, work with media agencies to determine air time for television commercials: |
7,500 |
8) Setup mechanics for marking at Applied DNA facilities: work with them on procedures and processes: |
12,500 |
9) Setup for procedures for verification at Applied DNA facilities: work with them on procedures and processes |
7,500 |
10) Setup procedures for marking at off- site locations: procedures and processes: |
7,500 |
11) Selling our own products: Explore possibilities of maintaining products in inventory that can be used by athletes to sell once they have added their signature: |
28,000 |
Total estimated cost – 1-3 months |
$ 150,000 |
Months 4-6 |
|
1) Increase Board of Directors from our 2 existing directors to 5 total directors with experience in finance, marketing or management |
$ — |
2) Increase working staff to approximately 10: includes another back end programmer 1, customer service-1, and account management- 3: |
90,000 |
3) Increase spending on online, print and television advertising; in an effort to increase brand awareness, and drive use: |
100,000 |
4) Commence attending trade shows to bring awareness of brand: designate one employee to plan, attend and follow up with all show leads: |
10,000 |
Total estimated cost – 4-6 months |
$ 200,000 |
Months 7-9 |
|
1) Increase online, print and television advertising; in an effort to increase brand awareness, and drive use: |
150,000 |
2) Increase staff to 15: includes customer service, account management, business development: $50,000 |
50,000 |
3) Develop site in other languages, in preparation for launch outside US in 2016: hire business development person with experience in launching websites outside the U.S.: |
15,000 |
4) We plan to offer Origination marking services outside the U.S. within 12 months after launch, as well as explore options for creating stand-alone sites for other countries. |
5,000 |
5) Develop mobile application for site: with planned release in fourth quarter 2015: |
30,000 |
Total estimated cost – 7-9 months |
$ 250,000 |
Months 10-12 |
|
1) Increase staff to 20-25: includes customer service, programmers, business development, accounting: |
200,000 |
2) Launch mobile application: online, print, and TV ads: create marketing campaign, produce TV spots: |
100,000 |
Total estimated cost – 10-12 months |
$ 300,000 |
Total Estimated Plan of Operations expenditures |
$ 900,000 |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no disagreements with accountants on accounting and
financial disclosure.
LEGAL PROCEEDINGS
There are no pending or threatened lawsuits
against us. From time to time, we may become involved in various lawsuits and legal proceedings that may arise in the ordinary
course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other
matters may arise from time to time that may have an adverse effect on our business, financial conditions, or operating results. We
are not aware of any legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on
our business, financial condition or operating results.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND
CORPORATE GOVERNANCE
Board of Directors
Directors are elected at our annual meeting
of shareholders and serve for one year until the next annual meeting of shareholders or until their successors are elected and
qualified. We reimburse all directors for their expenses in connection with their activities as our directors.
Board Leadership Structure and Role in Risk Oversight
Although we have not adopted a formal policy
on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have determined that it is in
our best interests and its shareholders to combine these roles. Due to the small size and our early development stage, we believe
it is currently most effective to have the Chairman and Chief Executive Officer positions combined.
Our board of directors is primarily responsible
for overseeing our risk management processes. The board of directors receives and reviews periodic reports from management, auditors,
legal counsel, and others, as considered appropriate regarding our assessment of risks. The board of directors focuses on the most
significant risks facing us and our general risk management strategy, and also ensures that risks undertaken by us are consistent
with the board’s appetite for risk. While the board oversees our risk management, management is responsible for day-to-day
risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks
facing us and that our board leadership structure supports this approach.
Directors and Executive Officers and Corporate Governance.
The following information sets forth the names
of our officers and directors, their present positions, and some brief information about their background.
Name |
Age |
Position(s) |
William Bollander |
44 |
Chief Executive Officer/President/Director/Secretary/Treasurer |
Adam Wasserman |
50 |
Chief Financial Officer |
Chris Jarvis |
42 |
Director |
Background of Officers and Directors
William Bollander has served as our President/Chief
Executive Officer/Chief Financial Officer/Chief Accountancy Officer/Director/Secretary/Treasurer since January 17, 2012. From November
2008 to March 2011, he was an independent financial consultant for Vfinance, a registered securities broker dealer located in located
in Boca Raton FL. From March 2011 to November 2011, William Bollander was our business consultant. William Bollander received a
Bachelors Degree in Accounting & Information Systems from Queens College/City University of New York in February 1992.
Adam Wasserman has served as our Chief Financial
Officer since November 2014. He has been a majority shareholder and chief executive officer of CFO Oncall, Inc. since 1999. CFO
Oncall provides chief financial officer services to a number of companies. Through CFO Oncall, Mr. Wasserman has served as the
Chief Financial Officer of a number of private and publicly held companies including: Cleantech Solutions International, Inc. since
December 2012, Oriental Dragon Corp. since June 2010, and Wally World Media, Inc. since November 2012. Mr. Wasserman also served
as chief financial officer for FAL Exploration Corp (formerly Apps Genius Corp) from January 2010 to December 2014, Yew Bio-Pharm
Group, Inc. (YEWB) from September 2011 to November 2013, and other companies, all under the terms of consulting agreements with
CFO Oncall. Mr. Wasserman served as a member of the Board of Directors of CD International, Inc., a public company, from
January 2010 to December 2011 and a member of the Board of Directors and audit committee chairman of Bohai Pharmaceuticals
Group, Inc. from July 2010 to February 2012. Mr. Wasserman is a member of the American Institute of Certified Public Accountants,
a director and executive board member of the Gold Coast Venture Capital Association. Mr. Wasserman holds a Bachelor of Science
Degree from the State University of New York at Albany.
Chris Jarvis has been
our Director since January 17, 2012. In 2006, Chris Jarvis founded Caprock Risk Management, a boutique commodities firm
registered with the National Futures Association that specializing in the energy markets. Chris Jarvis has over
twenty years of capital markets and investments experience covering the equity, commodity, and fixed income markets having worked
from 1999 to 2005 with Advest as a Senior Publishing Analyst and from 2005 to 2006 with Merrill
Lynch (following Merrill’s acquisition of Advest in November 2005) as an Oil & Natural Gas Analyst. In September
2001, Chris Jarvis, received a Master’s in Business Administration with a concentration in finance from the University
of Connecticut. Chris Jarvis has the designations Chartered Financial Analyst (CFA) and Chartered Market Technician (CMT)
designations.
Family Relationships
There are no family relationships among our directors and/or our
officers.
Committees of the Board of Directors
We presently do not have an audit committee,
compensation committee, nominating committee, corporate governance committee or any other committee of our board of directors. Our
entire Board of Directors meets to undertake the responsibilities that would otherwise be delegated to a committee of our board
of directors.
Meetings of our Board of Directors
We have had no meetings of our Board of Directors.
Our Board of Directors have approved corporate actions by Board resolution.
Terms of Office
Our directors are appointed for one-year terms
to hold office until the next annual general meeting of the holders of our Common Stock or until removed from office in accordance
with our by-laws. Our officers are appointed by our board of directors and hold office until removed by our Board of Directors
or terminated pursuant to their employment agreements.
Overview of Compensation Program
The following table sets forth the compensation
paid by us to our Officers for the fiscal years ended March 31, 2014 and 2013. This information includes the dollar value of base
salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed
addresses all compensation awarded to, earned by, or paid to named executive officers.
EXECUTIVE
COMPENSATION *
Name |
|
Year |
|
Fees Earned or Paid in Cash
($) |
|
Stock Awards
($) |
|
Option Awards Vested
($) |
|
Option Awards Unvested
($) |
|
Non-Equity Incentive Plan Compensation
($) |
|
Nonqualified Deferred Compensation Earnings
($) |
|
All Other Compensation
($) |
|
Total
($) |
William Bollander, Chief Executive Officer, President, and Director |
|
|
2013
2014 |
|
|
|
105,000
120,000 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
105,000
120,000 |
|
Adam Wasserman |
|
|
2014 |
|
|
|
3,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,000 |
|
* In accordance with the rules promulgated
by the Securities and Exchange Commission, certain columns relating to information that is not applicable have been omitted from
this table.
Compensation of Directors
Chris Jarvis, our Director, is compensated
for his service as our Director. The Board of Directors has not awarded any options to our Directors. There are no contractual
arrangements with any member of the Board of Directors. We have no Director’s service contracts.
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans that provide compensation
intended to serve as incentive for performance.
Indemnification
Under our Articles of Incorporation and Bylaws,
we may indemnify an Officer or Director who is made a party to any proceeding, including a lawsuit, because of his position, if
he acted in good faith and in a manner he 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 is to be indemnified, we must indemnify him 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT.
The following tables set forth the ownership,
as of the date of this prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of
our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge,
the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any
pending or anticipated arrangements that may cause a change in control.
The information presented below regarding beneficial
ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and
is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be “beneficial
owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to
dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person
has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible
security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The
percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially
owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment
power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such
person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such
percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property
laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect
to the shares shown. The business address for these shareholders is 301 Yamato Road, Suite 1240, Boca Raton, Florida, 33431.
|
|
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
Beneficial |
|
Direct |
|
Indirect |
|
Percent |
Name |
|
Title of Class |
|
Ownership |
|
Ownership |
|
Ownership |
|
of class |
|
|
|
|
|
|
|
|
|
|
|
William Bollander |
|
|
Common |
|
|
|
6,500,000 |
|
|
|
6,500.00 |
|
|
|
0 |
|
|
|
17.60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adam Wasserman |
|
|
Common |
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
0 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris Jarvis |
|
|
Common |
|
|
|
500,000 |
|
|
|
500,000 |
|
|
|
0 |
|
|
|
1.40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Darryl Cohen |
|
|
Common |
|
|
|
3,552,191 |
|
|
|
3,552,191 |
|
|
|
0 |
|
|
|
9.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
10,652,191 |
|
|
|
10,652,191 |
|
|
|
|
|
|
|
28.6 |
% |
(1) This table is based
upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with
respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 36,951,165
shares of common stock outstanding as of the date of this prospectus.
We are not registering common shares by any
stockholder who holds more than 5% of outstanding common shares and we are not registering shares held by our officers and directors.
Board of Directors
Director Compensation
Name |
|
|
Year |
|
|
|
Fees
Earned
or Paid
in Cash
($) |
|
|
|
Stock
Awards
($) |
|
|
|
Option
Awards
Vested
($) |
|
|
|
Option
Awards
Unvested
($) |
|
|
|
Non-Equity
Incentive Plan
Compensation
($) |
|
|
|
Nonqualified
Deferred
Compensation
Earnings
($) |
|
|
|
All Other
Compensation
($) |
|
|
|
Total
($) |
|
William
Bollander |
|
|
2013
2014 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
Chris
Jarvis |
|
|
2013
2014 |
|
|
|
6,000
6,000 |
|
|
|
5,510
2,204 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
0
0 |
|
|
|
11,510
8,204 |
|
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans
that provide compensation intended to serve as incentive for performance.
Director Independence
We have one independent director as defined
by the rules of any securities exchange or inter-dealer quotation system.
Code of Ethics
We have not yet adopted a formal, written Code
of Business Conduct and Ethics.
Audit, Nominating and Compensation Committee
We currently do not have audit, nominating
or compensation committees. Our Board of Directors as a whole will review audit, nominating and compensation matters.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors
or executive officers has, during the past ten years, been involved in any of the items below that we deem material to their service
on our behalf:
|
· |
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding trafficking violations and other minor offenses); |
|
· |
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
|
· |
been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with the persons engaged in any such activity; |
|
· |
been found by a court of competent jurisdiction in a civil action or by the SEC or Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and judgment has not been reversed, suspended or vacated; |
|
· |
been the subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud in connection with any business entity; or |
|
· |
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
There are currently no legal proceedings to
which any of our directors or officers is a party adverse to us or in which any of our directors or officers has a material interest
adverse to us.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND
DIRECTOR INDEPENDENCE.
None of our Officers or Directors have any
direct or indirect material interest in any transaction to which we are a party during the past two years, or in any proposed transaction
to which we are proposed to be a party.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
OF SECURITIES ACT LIABILITIES
Our directors and officers are indemnified
as provided by the Nevada corporate law and our bylaws. We have agreed to indemnify each of our directors and certain officers
against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described
above, or otherwise, we have been advised that in the opinion of the SEC 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 our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
We have been advised that in the opinion of
the SEC 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 a court of appropriate jurisdiction. We will then be governed by the court’s decision.
LEGAL MATTERS
The validity of the issuance of the common
stock hereby will be passed upon for us by Frederick M. Lehrer, Attorney and Counselor at Law. Frederick M. Lehrer was compensated
200,000 common stock shares and additionally will be paid a total of $10,000 for preparation of this Registration Statement.
REPORTS TO SHAREHOLDERS
As a result of this offering as required under
Section 15(d) of the Securities Exchange Act of 1934, we will file periodic reports with the Securities and Exchange Commission
as required under Section 15(d). However, if in the future we are not required to continue filing reports under Section 15(d),
for example because we have less than three hundred shareholders of record at the end of the first fiscal year in which this registration
statement is declared effective and we do not file a Registration Statement on Form 8-A upon the occurrence of such an event, our
securities can no longer be quoted on the OTC Bulletin Board. There is no guarantee that we will be able to meet the requirements
to be able to cease filing reports under Section 15(d), in which case we will continue filing those reports in the years after
the fiscal year in which this registration statement is declared effective. Filing a registration statement on Form 8-A will require
us to continue to file quarterly and annual reports with the SEC, even though we are no longer required to do so under Section
15(d), and will also subject us to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders will be
required to submit reports to the SEC on their stock ownership and stock trading activity. Thus the filing of a Form 8-A in such
event makes our securities continue to be able to be quoted on the OTC Bulletin Board. We are not required under Section 12(g)
or otherwise to become a mandatory 1934 Act filer unless we have more than 500 shareholders and total assets of more than $10 million;
however, we voluntarily intend to do so if we are no longer obligated to file reports under Section 15(d).
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement, of
which this Prospectus is a part, with the SEC under the Securities Act with respect to our common stock. This Prospectus, which
constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement,
parts of which are omitted as permitted by the rules and regulations of the SEC. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete. For further information pertaining to our common stock,
and us we refer you to our registration statement and the exhibits thereto, copies of which may be inspected without charge at
the SEC’s Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549. Information concerning the operation of the
SEC’s Public Reference Room is available by calling the SEC at 1-800-SEC-0330. Copies of all or any part of the registration
statement may be obtained at prescribed rates from the SEC. The SEC also makes our filings available to the public on its Internet
site (http://www.sec.gov).
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
CONTENTS
Report of Independent Registered Public Accounting Firm |
F-2 |
|
|
Consolidated Financial Statements: |
|
|
|
Consolidated Balance Sheets - As of March 31, 2014 and 2013 |
F-3 |
|
|
Consolidated Statements of Operations - |
|
For the Years Ended March 31, 2014 and 2013 |
F-4 |
|
|
Consolidated Statements of Changes in Stockholders’ Deficit - |
|
For the Years Ended March 31, 2014 and 2013 |
F-5 |
|
|
Consolidated Statements of Cash Flows – |
|
For the Years Ended March 31, 2014 and 2013 |
F-6 |
|
|
Notes to Consolidated Financial Statements |
F-7 to F-18 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Stockholders of:
True 2 Beauty, Inc.
We have audited the accompanying consolidated
balance sheets of True 2 Beauty, Inc. and Subsidiary as of March 31, 2014 and 2013 and the related consolidated statements of operations,
changes in stockholder's deficit, and cash flows for each of the two years in the period ended March 31, 2014. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the
consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of True 2 Beauty, Inc. and Subsidiary as of March 31, 2014 and 2013 and the consolidated results of its operations
and its cash flows for each of the two years in the period ended March 31, 2014 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying consolidated financial statements
have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial
statements, the Company had a net loss and net cash used in operations of $363,929 and $161,801, respectively for the year ended
March 31, 2014. The Company has a working capital deficit, accumulated deficit and stockholders’ deficit of $169,197, $8,243,601
and $169,197, respectively, at March 31, 2014. These matters raise substantial doubt about the Company’s ability to continue
as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Salberg & Company, P.A.
SALBERG & COMPANY, P.A.
Boca Raton, Florida
January 30, 2015
2295 NW Corporate Blvd., Suite 240 • Boca
Raton, FL 33431-7328
Phone: (561) 995-8270 • Toll Free: (866)
CPA-8500 • Fax: (561) 995-1920
www.salbergco.com • info@salbergco.com
Member National Association of Certified
Valuation Analysts • Registered with the PCAOB
Member CPAConnect with Affiliated Offices
Worldwide • Member AICPA Center for Audit Quality
TRUE 2 BEAUTY, INC. AND SUBSIDIARY |
CONSOLIDATED BALANCE SHEETS |
|
|
March 31, |
|
|
2014 |
|
2013 |
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
9,345 |
|
|
$ |
19,621 |
|
Prepaid expenses |
|
|
18,225 |
|
|
|
39,405 |
|
Prepaid salary to officer |
|
|
— |
|
|
|
26,666 |
|
Security deposit |
|
|
636 |
|
|
|
636 |
|
Inventories |
|
|
— |
|
|
|
29,282 |
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
|
28,206 |
|
|
|
115,610 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
28,206 |
|
|
$ |
115,610 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Loans payable |
|
$ |
20,000 |
|
|
$ |
— |
|
Deferred revenue |
|
|
327 |
|
|
|
— |
|
Accounts payable and accrued expenses |
|
|
33,575 |
|
|
|
169,744 |
|
Accrued officer salary and director fees |
|
|
21,250 |
|
|
|
750 |
|
Advances for common stock purchases |
|
|
113,525 |
|
|
|
— |
|
Due to shareholder |
|
|
8,218 |
|
|
|
— |
|
Due to officer |
|
|
508 |
|
|
|
630 |
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
|
197,403 |
|
|
|
171,124 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS (Note 11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT: |
|
|
|
|
|
|
|
|
Preferred stock ($0.001 par value; 10,000,000 shares authorized; |
|
|
|
|
|
|
|
|
No shares issued or outstanding at March 31, 2014 and 2013) |
|
|
— |
|
|
|
— |
|
Common stock, ($0.001 par value; 190,000,000 shares authorized; |
|
|
|
|
|
|
|
|
31,601,531 and 27,241,331 shares issued and outstanding |
|
|
|
|
|
|
|
|
at March 31, 2014 and 2013, respectively) |
|
|
31,601 |
|
|
|
27,241 |
|
Additional paid-in capital |
|
|
8,042,803 |
|
|
|
7,806,917 |
|
Common stock subscription receivable |
|
|
— |
|
|
|
(10,000 |
) |
Accumulated deficit |
|
|
(8,243,601 |
) |
|
|
(7,879,672 |
) |
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' DEFICIT |
|
|
(169,197 |
) |
|
|
(55,514 |
) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
$ |
28,206 |
|
|
$ |
115,610 |
|
The accompanying notes are an integral part of these consolidated financial statements. |
TRUE 2 BEAUTY, INC. AND SUBSIDIARY |
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
For the Years Ended March 31, |
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
REVENUE |
|
$ |
35,240 |
|
|
$ |
79,498 |
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
|
34,168 |
|
|
|
101,207 |
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT (LOSS) |
|
|
1,072 |
|
|
|
(21,709 |
) |
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Compensation and related taxes |
|
|
134,235 |
|
|
|
124,543 |
|
Professional fees |
|
|
200,797 |
|
|
|
376,891 |
|
Impairment loss |
|
|
— |
|
|
|
220,400 |
|
Other selling, general and administrative |
|
|
57,053 |
|
|
|
79,902 |
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES |
|
|
392,085 |
|
|
|
801,736 |
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
|
(391,013 |
) |
|
|
(823,445 |
) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Gain from settlement of accounts payable |
|
|
34,594 |
|
|
|
— |
|
Interest expense |
|
|
(7,510 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER INCOME (EXPENSE) |
|
|
27,084 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
$ |
(363,929 |
) |
|
$ |
(823,445 |
) |
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
29,745,802 |
|
|
|
21,466,635 |
|
The accompanying notes are an integral part of these consolidated financial statements. |
TRUE 2 BEAUTY, INC. AND SUBSIDIARY |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT |
For the Years Ended March 31, 2014 and 2013 |
|
|
Preferred Stock |
|
Common Stock |
|
Additional |
|
Common Stock |
|
|
|
Total |
|
|
Number of |
|
|
|
Number of |
|
|
|
Paid-in |
|
Subscription |
|
Accumulated |
|
Stockholders' |
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Receivable |
|
Deficit |
|
Deficit |
Balance at March 31, 2012 |
|
|
— |
|
|
$ |
— |
|
|
|
12,980,262 |
|
|
$ |
12,980 |
|
|
$ |
7,101,952 |
|
|
$ |
— |
|
|
$ |
(7,056,227 |
) |
|
$ |
58,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for purchase of assets |
|
|
— |
|
|
|
— |
|
|
|
4,000,000 |
|
|
|
4,000 |
|
|
|
216,400 |
|
|
|
— |
|
|
|
— |
|
|
|
220,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
|
— |
|
|
|
— |
|
|
|
3,460,000 |
|
|
|
3,460 |
|
|
|
187,186 |
|
|
|
— |
|
|
|
— |
|
|
|
190,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock cancelled |
|
|
— |
|
|
|
— |
|
|
|
(152,640 |
) |
|
|
(153 |
) |
|
|
153 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock sold for cash and subscription receivable |
|
|
— |
|
|
|
— |
|
|
|
6,953,709 |
|
|
|
6,954 |
|
|
|
301,226 |
|
|
|
(10,000 |
) |
|
|
— |
|
|
|
298,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(823,445 |
) |
|
|
(823,445 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2013 |
|
|
— |
|
|
|
— |
|
|
|
27,241,331 |
|
|
|
27,241 |
|
|
|
7,806,917 |
|
|
|
(10,000 |
) |
|
|
(7,879,672 |
) |
|
|
(55,514 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
|
— |
|
|
|
— |
|
|
|
1,865,000 |
|
|
|
1,865 |
|
|
|
100,896 |
|
|
|
— |
|
|
|
— |
|
|
|
102,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to settle accounts payable |
|
|
|
|
|
|
|
|
|
|
2,250,000 |
|
|
|
2,250 |
|
|
|
121,725 |
|
|
|
— |
|
|
|
— |
|
|
|
123,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock sold for cash and receipt of subscriptions receivable |
|
|
— |
|
|
|
— |
|
|
|
145,200 |
|
|
|
145 |
|
|
|
7,855 |
|
|
|
10,000 |
|
|
|
— |
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for payment of loan fees |
|
|
— |
|
|
|
— |
|
|
|
100,000 |
|
|
|
100 |
|
|
|
5,410 |
|
|
|
— |
|
|
|
— |
|
|
|
5,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(363,929 |
) |
|
|
(363,929 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2014 |
|
|
— |
|
|
$ |
— |
|
|
|
31,601,531 |
|
|
$ |
31,601 |
|
|
$ |
8,042,803 |
|
|
$ |
— |
|
|
$ |
(8,243,601 |
) |
|
$ |
(169,197 |
) |
The accompanying notes are an integral part of these consolidated financial statements. |
TRUE 2 BEAUTY, INC. AND SUBSIDIARY |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
For the Years Ended March 31, |
|
|
2014 |
|
2013 |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(363,929 |
) |
|
$ |
(823,445 |
) |
Adjustments to reconcile net loss to net cash |
|
|
|
|
|
|
|
|
used in operating activities: |
|
|
|
|
|
|
|
|
Stock-based compensation and fees |
|
|
88,986 |
|
|
|
176,871 |
|
Stock issued for loan fees |
|
|
5,510 |
|
|
|
— |
|
Gain from settlement of accounts payable |
|
|
(34,594 |
) |
|
|
— |
|
Impairment of purchased assets |
|
|
— |
|
|
|
220,400 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
— |
|
|
|
13,133 |
|
Prepaid expense |
|
|
34,955 |
|
|
|
(25,630 |
) |
Prepaid salary to officer |
|
|
26,666 |
|
|
|
2,250 |
|
Inventories |
|
|
29,282 |
|
|
|
98,130 |
|
Accounts payable and accrued expenses |
|
|
22,400 |
|
|
|
48,455 |
|
Deferred revenue |
|
|
327 |
|
|
|
— |
|
Accrued officer salary and director fees |
|
|
20,500 |
|
|
|
750 |
|
Due to shareholder |
|
|
8,218 |
|
|
|
— |
|
Due to officer |
|
|
(122 |
) |
|
|
630 |
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(161,801 |
) |
|
|
(288,456 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds received from loans payable |
|
|
20,000 |
|
|
|
— |
|
Proceeds received as advance for future common stock subscriptions |
|
|
113,525 |
|
|
|
— |
|
Proceeds received from sale of stock |
|
|
18,000 |
|
|
|
298,180 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
151,525 |
|
|
|
298,180 |
|
|
|
|
|
|
|
|
|
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
(10,276 |
) |
|
|
9,724 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR |
|
|
19,621 |
|
|
|
9,897 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - END OF YEAR |
|
$ |
9,345 |
|
|
$ |
19,621 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
— |
|
|
$ |
— |
|
Income taxes |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Stock issued for future services |
|
$ |
82,650 |
|
|
$ |
82,650 |
|
Stock issued for accounts payable |
|
$ |
123,975 |
|
|
$ |
— |
|
Stock issued for common stock subscription |
|
$ |
— |
|
|
$ |
10,000 |
|
Assets acquired in exchange for shares |
|
$ |
— |
|
|
$ |
220,400 |
|
The accompanying notes are an integral part of these consolidated financial statements. |
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 1 – ORGANIZATION AND NATURE OF
OPERATIONS
True 2 Beauty Inc. (the "Company")
was originally incorporated as Burrow Mining, Inc., a Nevada corporation, on December 11, 2006. In February 2010, the Company shifted
its focus to the beauty industry and later amended its Articles of Incorporation and changed its name to its current name, True
2 Beauty, Inc., to better reflect its then new business focus.
On July 10, 2012, the Company formed a new
wholly owned subsidiary True2Bid, Inc. (“True2Bid”) which was incorporated in the state of Nevada. This subsidiary’s
name was changed to LegacyXChange, Inc. in December 2014. The Company continued to sell existing inventory of beauty products through
May 2013 when the final inventory was sold. True2Bid operates an online e-commerce platform focus on delivering users a wide array
of sports and entertainment related products that can be won in an action packed environment of a live auction.
In addition to its e-commerce platform,
the Company has recently signed an eight-month agreement with Applied DNA to work together, in good faith, on a business
partnership focused on using Applied DNA Sciences’ unique SigNature© DNA taggant platform, digitalDNA ©
software platform and other products as required for DNA marking, tracking and authentication of sports collectibles and
sports memorabilia uniquely and authentically identified to an athlete (“Goods”) and offered either within an
online auction exchange environment or through other means of sale.
NOTE 2 – BASIS OF PRESENTATION, GOING
CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The Company’s consolidated financial
statements include the financial statement of its wholly-owned subsidiary, True2Bid, Inc. All intercompany accounts and transactions
have been eliminated in consolidation.
Going concern
These consolidated financial statements have
been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization
of assets and the satisfaction of liabilities in the normal course of business.
As reflected in the accompanying consolidated
financial statements, the Company had a net loss of $363,929 and $823,445 for the years ended March 31, 2014 and 2013, respectively,
and net cash used in operations of $161,801 and $288,456 for the years ended March 31, 2014 and 2013, respectively, and an accumulated
deficit and stockholders’ deficit of $8,243,601 and $169,197, respectively, at March 31, 2014, and has minimal gross profit
for the year ended March 31, 2014 and a gross loss for the year ended March 31, 2013. These matters raise substantial doubt about
the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent
on the Company’s ability to raise additional capital, implement its business plan, and generate significant revenues. The
consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as
a going concern. The Company plans on raising capital through the sale of equity or debt instruments to implement its business
plan. There is no assurance these plans will be realized.
Use of estimates
The preparation of the consolidated financial
statements in conformity with generally accepted accounting principles in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from these estimates. Significant estimates during the years ended March 31, 2014 and 2013 include the valuation of
deferred tax assets, valuation of inventories and the valuation of stock-based compensation and fees.
Fair value of financial instruments and fair value measurements
The Company adopted the guidance of Accounting
Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes
methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as
follows:
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 2 – BASIS OF PRESENTATION, GOING
CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value of financial instruments and fair value measurements
(continued)
· |
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. |
· |
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. |
· |
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. |
The carrying amounts reported in the
consolidated balance sheets for cash, loans payable, accounts payable and accrued expenses, accrued officer salary and director
fees, advance for common stock purchases, due to shareholder, and due to officer approximate their fair market value based on the
short-term maturity of these instruments. The Company did not have any non-financial assets or liabilities that are measured at
fair value on a recurring basis as of March 31, 2014 and 2013.
ASC 825-10 “Financial Instruments”,
allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The
fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If
the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings
at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
Cash and cash equivalents
Cash and cash equivalents consist of cash and
short-term highly liquid investments purchased with original maturities of three months or less. There were no cash equivalents
at March 31, 2014 and 2013.
Inventories and cost of revenue
Inventories are stated at the lower of cost
or market value. Cost is determined using the cost to acquire inventory and is valued using the first-in, first-out method. Any
inventory adjustments are based upon management’s review of inventories on hand compared to estimated future usage and sales.
At March 31, 2013, the Company wrote down the inventory to its lower of cost or market resulting in a charge to cost of revenue
of $23,446. As of March 31, 2014 the Company has no inventory on hand because after May 2013 products sold were drop shipped from
the Company's vendors to the Company's customers.
Prepaid salary to officer
Since December of 2011, Mr. William Bollander
acted as the Interim Chief Executive Officer (“CEO”). In January 2012, the Company announced Mr. William Bollander
as its formal CEO. Mr. Bollander was paid $100,000 per year in his capacity as the CEO until December 31, 2012. Effective January
1, 2013, the Company increased its CEO’s salary from $100,000 to $120,000 annually. As of March 31, 2014 and 2013, the prepayment
of salary to CEO was $0 and $26,666, respectively, and was included as prepaid salary to officer in the accompanying consolidated
balance sheets.
Deferred revenue
Deferred revenue represents revenue collected
from the sale of bid packages for the Company’s online auctions but not earned as of the report date. Deferred revenue totaled
$327 and $0 as of March 31, 2014 and 2013, respectively.
Common stock subscription receivable
Common stock subscription receivable represents
common stock issued to investors but the corresponding payments have not yet been received as of the report date. The Company decreases
the subscription receivable at the time of payment collection. At March 31, 2014 and 2013, the Company had common stock subscription
receivable of $0 and $10,000, respectively.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 2 – BASIS OF PRESENTATION, GOING
CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Advances for common stock purchases
Advances for common stock purchases consists
of prepayments from investors for the purchased of common stock prior to the signing of a stock subscription agreement which was
signed after the period end. The Company reclassified to equity the advances for common stock purchases at the time the stock subscription
was signed. At March 31, 2014 and 2013, the Company had advances for common stock purchases of $113,525 and $0, respectively.
Revenue recognition
The Company recognizes revenue when persuasive
evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable
and collectability is reasonably assured. The Company’s specific revenue recognition policies are as follows:
|
· |
Product sales from the sale of beauty products by the parent entity (which ceased in May 2013) and sales of products through the subsidiary’s auction site are recognized when the product is shipped to the customer and title is transferred. |
|
· |
Under the Company’s auction program, consumers are required to purchase bid packages directly from the Company. Proceeds from the sales of bid packages are recorded as deferred revenue until recognizable as discussed below. In connection with the sale of bid packages, the Company utilized the User-based Revenue Model (“UBRM”). The UBRM is based on the presumption that the period of delivery for the bid package is the estimated average user life which was estimated by the Company to be 60 days. Consequently, revenue from the sale of bid packages is recognized ratably over the estimated user life of 60 days. |
Stock-based compensation
Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost
of employee and director services received in exchange for an award of equity instruments over the period the employee or director
is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement
of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share-based
payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The
expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting
date.
Income taxes
Deferred income tax assets and liabilities
arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities,
as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and
liabilities are classified as current or non-current, depending upon the classification of the asset or liabilities to which they
relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending
on the periods in which the temporary differences are expected to reverse. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
The Company follows the provisions of FASB
ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10). Certain recognition thresholds must be met before a tax position
is recognized in the financial statements. An entity may only recognize or continue to recognize tax positions that meet a "more-likely-than-not"
threshold. As of March 31, 2014 and 2013, the Company does not believe it has any uncertain tax positions that would require either
recognition or disclosure in the accompanying consolidated financial statements.
Shipping costs
Shipping costs are included in other selling,
general and administrative expense and totaled $4,039 and $5,680 for the years ended March 31, 2014 and 2013, respectively.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 2 – BASIS OF PRESENTATION, GOING
CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Advertising
Advertising is expensed as incurred and is
included in other selling, general and administrative expense and totaled $0 and $831 for the years ended March 31, 2014 and 2013,
respectively.
Research and development
Expenditures for research and product development
costs are expensed as incurred. The Company did not incur any research and development during the years ended March 31, 2014 and
2013.
Basic and diluted earnings per share
Pursuant to ASC 260-10-45, basic earnings
per common share is computed by dividing income (loss) available to common shareholders by the weighted average number of shares
of common stock outstanding for the periods presented. Diluted income per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during
each period. Diluted income (loss) per share reflects the potential dilution that could occur if securities were exercised or converted
into common stock or other contracts to issue common stock resulting in the issuance of common stock that would then share in the
Company’s income (loss) subject to anti-dilution limitations. Potentially dilutive common shares consist of common stock
issuable for stock warrants (using the treasury stock method). In period where the Company has a net loss, all potentially dilutive
securities are excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact. The
following table sets forth the computation of basic and diluted earnings per share for the years ended March 31, 2014 and 2013.
|
|
Years Ended March 31, |
|
|
2014 |
|
2013 |
Net loss available to common stockholders for basic and diluted net loss per share of common stock |
|
$ |
(363,929 |
) |
|
$ |
(823,445 |
) |
Weighted average common stock outstanding – basic |
|
|
29,745,802 |
|
|
|
21,466,635 |
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
Stock warrants |
|
|
— |
|
|
|
— |
|
Weighted average common stock outstanding – diluted |
|
|
29,745,802 |
|
|
|
21,466,635 |
|
Net loss per common share – basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.04 |
) |
The Company's aggregate common stock equivalents
at March 31, 2014 and 2013 included the following:
|
|
March 31, 2014 |
|
March 31, 2013 |
Stock warrants |
|
|
733,609 |
|
|
|
718,608 |
|
Total |
|
|
733,609 |
|
|
|
718,608 |
|
Related parties
Parties are considered
to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled
by, or are under common control with the Company. Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its management and other parties with which the Company
may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent
that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all
related party transactions. All transactions are recorded at fair value of the goods or services exchanged.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 2 – BASIS OF PRESENTATION, GOING
CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent accounting pronouncements
In May 2014, the FASB issued Accounting Standards
Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition
guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred
to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services.
ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required
within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual
periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a
full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect
certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized
at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. The
adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
In June 2014, the FASB issued Accounting Standards
Update No. 2014-12, Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of
an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging
Issues Task Force) (ASU 2014-12). The guidance applies to all reporting entities that grant their employees share-based
payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite
service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite
service period is treated as a performance condition. For all entities, the amendments in this Update are effective for annual
periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective
date is the same for both public business entities and all other entities. The adoption of this guidance is not expected
to have a material impact on the Company’s consolidated financial statements.
In August 2014, the FASB issued Accounting
Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties
about an Entities Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management's
responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern as well
as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements,
management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to
continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This
evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the
financial statements are issued or are available to be issued, as well as whether it is probable that management's plans to address
the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt.
ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter.
Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s
consolidated financial statements.
NOTE 3 – PREPAID EXPENSES
At March 31, 2014 and 2013, prepaid expenses
consisted of the following:
|
|
March 31, 2014 |
|
March 31, 2013 |
Prepaid consulting fees |
|
$ |
13,775 |
|
|
$ |
13,775 |
|
Prepaid travel and other expense |
|
|
4,450 |
|
|
|
25,630 |
|
|
|
$ |
18,225 |
|
|
$ |
39,405 |
|
NOTE 4 – LOANS PAYABLE
On November 4, 2013, the Company and an individual
entered into a loan agreement, providing for the issuance of a loan in the principal amount of $10,000, with a fixed $1,000 interest
and also issued the lender 50,000 common shares as a loan fee valued at $2,755 and reflected as interest expense. All principal
and accrued interest were due on December 31, 2013. For the year ended March 31, 2014, interest and loan fees related to the loan
totaled $3,755 were included in interest expense in the accompanying consolidated statements of operations. On April 8, 2014, the
principal amount of $10,000 and all accrued and unpaid interest of the loan were settled for 249,650 shares of the Company’s
common stock, resulting in a loss on settlement of $2,755.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 4 – LOANS PAYABLE (continued)
On November 20, 2013, the Company and an individual
entered into a loan agreement, providing for the issuance of a loan in the principal amount of $10,000, with a fixed $1,000 interest
and also issued the lender 50,000 common shares as a loan fee valued at $2,755 and reflected as interest expense. All principal
and accrued interest were due on December 31, 2013. For the year ended March 31, 2014, interest and loan fees related to the loan
totaled $3,755 were included in interest expense in the accompanying consolidated statements of operations. On April 8, 2014, the
principal amount of $10,000 and all accrued and unpaid interest of the loan were settled for 249,650 shares of the Company’s
common stock, resulting in a loss on settlement of $2,755.
At March 31, 2014, the total principal for
the above loan payable amounted to $20,000, which amount was included in loan payable in the accompanying consolidated balance
sheets. During the year ended March 31, 2014, the total interest expense for the above two loans amounted to $7,510.
NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED
EXPENSES
At March 31, 2014 and 2013, accounts payable
and accrued expenses consisted of the following:
|
|
March 31, 2014 |
|
March 31, 2013 |
Accrued interest |
|
$ |
2,000 |
|
|
$ |
— |
|
Accrued office lease payable |
|
|
— |
|
|
|
720 |
|
Accrued professional fees |
|
|
12,922 |
|
|
|
156,401 |
|
Accrued payroll taxes |
|
|
18,653 |
|
|
|
12,623 |
|
|
|
$ |
33,575 |
|
|
$ |
169,744 |
|
NOTE 6 - ACCRUED OFFICER SALARY AND DIRECTOR
FEES
In January 2012, the Company announced Mr.
Christopher Jarvis as a member of the Board of Director. In connection with Mr. Jarvis’ employment as a director, the Company
has agreed to compensate him as follows: an initial payment of $1,500 and quarterly payments of $1,500 during the term which he
serves as a director of the Company. As of March 31, 2014 and 2013, the amount due to Christopher Jarvis was $6,750 and $750, respectively,
and was included in accrued officer salary and director fees in the accompanying consolidated balance sheets.
As of March 31, 2014 and 2013, the accrued
and unpaid CEO’s salary was $14,500 and $0, respectively, and was included in accrued officer salary and director fees in
the accompanying consolidated balance sheets.
As of March 31, 2014 and 2013, accrued officer
salary and director fees consisted of the following:
|
|
March 31, 2014 |
|
March 31, 2013 |
Accrued director's salary |
|
$ |
6,750 |
|
|
$ |
750 |
|
Accrued officer salary |
|
|
14,500 |
|
|
|
— |
|
|
|
$ |
21,250 |
|
|
$ |
750 |
|
NOTE 7 – DUE TO SHAREHOLDER
At March 31, 2014, the Company owed a shareholder
$8,218 for payments made on behalf of the Company and which has been reimbursed during the period from May 2014 through October
2014.
NOTE 8 – INCOME TAXES
The Company maintains deferred tax assets and
liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets at March 31, 2014 and 2013 consist
of net operating loss carryforwards. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty
of the attainment of future taxable income. The items accounting for the difference between income taxes at the effective statutory
rate and the provision for income taxes for the years ended March 31, 2014 and 2013 were as follows:
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 8 – INCOME TAXES (continued)
|
|
Years Ended March 31, |
|
|
2014 |
|
2013 |
Income tax expense (benefit) at U.S. statutory rate of 34% |
|
$ |
(123,736 |
) |
|
$ |
(279,971 |
) |
Income tax benefit - State |
|
|
(18,196 |
) |
|
|
(41,172 |
) |
Non-deductible expenses |
|
|
52,970 |
|
|
|
154,936 |
|
Change in valuation allowance |
|
|
88,962 |
|
|
|
166,207 |
|
Total provision for income tax |
|
$ |
— |
|
|
$ |
— |
|
The Company’s approximate net deferred tax asset as of March
31, 2014 and 2013 was as follows:
Deferred Tax Asset: |
|
March 31, 2014 |
|
March 31, 2013 |
Net operating loss carryforward |
|
$ |
841,031 |
|
|
$ |
752,069 |
|
Valuation allowance |
|
|
(841,031 |
) |
|
|
(752,069 |
) |
Net deferred tax asset |
|
$ |
— |
|
|
$ |
— |
|
The net operating loss carryforward was $2,156,489
at March 31, 2014. The Company provided a valuation allowance equal to the deferred income tax asset for the years ended March
31, 2014 and 2013 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward. The
increase in the allowance was $88,962 in fiscal 2014. The potential tax benefit arising from the loss carryforward will expire
in 2034.
Additionally, the future utilization of the
net operating loss carryforward to offset future taxable income may be subject to an annual limitation as a result of ownership
changes that could occur in the future. If necessary, the deferred tax assets will be reduced by any carryforward that expires
prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance.
The Company does not have any uncertain tax
positions or events leading to uncertainty in a tax position. The Company’s 2012, 2013 and 2014 Corporate Income Tax Returns
are subject to Internal Revenue Service examination.
NOTE 9 – RELATED PARTY TRANSACTIONS
Due to officer
At March 31, 2014 and 2013, the Company owed
Mr. William Bollander, its CEO, $508 and $630, respectively, for payments made on behalf of the Company and which has been included
in Due to officer in the accompanying consolidated balance sheets.
note
10 – STOCKHOLDERS’ (DEFICIT) EQUITY
Authorized shares
The Company is authorized to issue 10,000,000
shares of its $0.001 par value preferred stock. As of March 31, 2014 and 2013, no preferred shares were issued and outstanding.
The Company is authorized to issue 190,000,000
shares of its $0.001 par value common stock. As of March 31, 2014 and 2013, 31,601,531 and
27,241,331 shares of common stock were issued and outstanding, respectively.
Common stock issued for asset purchase
On April 2, 2012, the Company issued
4,000,000 shares of common stock for the purchase of intangible assets of a beauty supply company. These common shares were
valued on the grant date at their fair value of $220,400 based on recent sales price of the common stock of $0.0551 per
share. In connection with issuance of these common shares, for the year ended March 31, 2013, the Company recorded the assets
on the purchase date and then a full impairment loss of $220,400 at March 31, 2013.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
note 10 – STOCKHOLDERS’
(DEFICIT) EQUITY (continued)
Common stock issued for service
During the year ended March 31, 2013, the Company
issued 3,460,000 shares of common stock for services rendered, including 100,000 shares to a board member of the Company. The shares
were valued on the dates of grant at their fair value aggregating $190,646 based on the recent sales price of the common stock
of $0.0551 per share. The Company recorded stock-based compensation and fees $176,871 and had a remaining prepaid expense of $13,775
at March 31, 2013, which was amortized in the fiscal year of 2014.
On December 13, 2013, the Company issued 750,000
shares of common stock to a law firm to exchange for the settlement of accounts payable of $75,919 pursuant to a settlement agreement
between the Company and the law firm. The shares were valued on the date of grant at their fair value of $41,325 based on the recent
sales price of the common stock of $0.0551 per share. In connection with the issuance of these common shares, the Company recognized
a gain from settlement of accounts payable of $34,594 which represented the difference between accounts payable at March 31, 2013
of $75,919 for legal fees incurred and the amount of fair value of shares issued of $41,325.
In June 2013, the Company issued 1,500,000
common shares to settle accounts payable of $82,650. The shares were valued on the date of grant at their fair value of $82,650
based on the recent sales price of the common stock of $0.0551 per share. No gain or loss was recognized on this settlement.
During the year ended March 31, 2014, the Company
issued 1,865,000 shares of common stock for services, including 40,000 shares to the board member, Mr. Christopher Jarvis. The
shares were valued on the date of grant at their fair value of $102,761 based on recent sales price of the common stock of $0.0551
per share. The Company recorded stock-based compensation and fees of $88,986, and recorded a remaining prepaid expense of $13,775
at March 31, 2014, which was amortized in fiscal year 2015.
Common stock cancelled
On March 4, 2013, the Company cancelled a total
of 152,640 shares of previously issued common stock for the payment of consulting fees since the consultant did not perform the
services agreed to. In connection with the cancellation of these common shares, the Company decreased common stock by the par value
of $153 with a corresponding increase in additional paid-in capital of $153.
Common stock sold for cash
During the year ended March 31, 2013, the Company
sold a total of 6,953,709 shares of common stock to investors at an average price of $0.0551 per common share. The Company had
received $75,000 towards the purchase of these shares as of March 31, 2012. During the fiscal year ended March 31, 2013, the Company
received cash proceeds of $298,180 from the sale of the shares and had a subscription receivable of $10,000 which was collected
in fiscal 2014.
During the fiscal year ended March 31, 2014,
the Company sold a total of 145,200 shares of common stock at an average price of $0.0551 per common share to investors. The proceeds
received by the Company from the sale of these shares were $8,000 in fiscal 2014.
Common stock issued for payment of loan fees
During the year ended March 31, 2014, the Company
issued a total of 100,000 shares of common stock to two debtors for loan fees. The common shares were valued on the date of grant
at their fair value of $5,510 based on recent sales price of the common stock of $0.0551per share. The $5,510 is reflected as interest
expense.
Warrants
The Company issued warrants with common stock sold during 2014 and
2013. The warrants have an exercise price of $0.40 per share and expire in 5 years from issuance date.
Warrant activities for the years ended March 31, 2014 and 2013 were
summarized as follows:
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
note 10 – STOCKHOLDERS’
(DEFICIT) EQUITY (continued)
Warrants (continued)
|
|
Number of Warrants |
|
Weighted Average Exercise Price |
|
Balance at March 31, 2012 |
|
|
|
— |
|
|
$ |
— |
|
|
Issued |
|
|
|
718,608 |
|
|
|
0.40 |
|
|
Exercised/forfeited/expired |
|
|
|
— |
|
|
|
— |
|
|
Balance at March 31, 2013 |
|
|
|
718,608 |
|
|
|
0.40 |
|
|
Issued |
|
|
|
15,001 |
|
|
|
0.40 |
|
|
Exercised/forfeited/expired |
|
|
|
— |
|
|
|
— |
|
|
Balance at March 31, 2014 |
|
|
|
733,609 |
|
|
$ |
0.40 |
|
|
Warrant exercisable at March 31, 2014 |
|
|
|
733,609 |
|
|
$ |
0.40 |
|
There was no intrinsic value of the warrants as of March 31, 2014.
The following table summarizes the shares of the Company's common
stock issuable upon exercise of warrants outstanding at March 31, 2014:
Warrants Outstanding |
|
Warrants Exercisable |
Range of
Exercise
Price |
|
Number
Outstanding at
March 31, 2014 |
|
Weighted
Average
Remaining
Contractual
Life (Years) |
|
Weighted
Average
Exercise
Price |
|
Number
Exercisable at
March 31, 2014 |
|
Weighted
Average
Exercise
Price |
$ |
0.40 |
|
|
|
356,250 |
|
|
|
3.5 |
|
|
$ |
0.40 |
|
|
|
356,250 |
|
|
$ |
0.40 |
|
|
0.40 |
|
|
|
25,000 |
|
|
|
3.6 |
|
|
|
0.40 |
|
|
|
25,000 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
25,500 |
|
|
|
3.7 |
|
|
|
0.40 |
|
|
|
25,500 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
161,543 |
|
|
|
3.8 |
|
|
|
0.40 |
|
|
|
161,543 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
103,438 |
|
|
|
3.9 |
|
|
|
0.40 |
|
|
|
103,438 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
46,877 |
|
|
|
4.0 |
|
|
|
0.40 |
|
|
|
46,877 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
15,001 |
|
|
|
4.1 |
|
|
|
0.40 |
|
|
|
15,001 |
|
|
|
0.40 |
|
|
|
|
|
|
733,609 |
|
|
|
3.7 |
|
|
$ |
0.40 |
|
|
|
733,609 |
|
|
$ |
0.40 |
|
NOTE 11 – CONCENTRATIONS
AND COMMITMENTS
Concentrations
Concentration of credit risk
The Company maintains its cash in bank and
financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in
such accounts through March 31, 2014. There were no balances in excess of FDIC insured levels as of March 31, 2014 and 2013.
Customers
No customer accounted for 10% or more of the
Company’s revenue during the years ended March 31, 2014 and 2013.
Suppliers
No supplier accounted for 10% or more of the
Company’s purchase during the years ended March 31, 2014 and 2013.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 11 – CONCENTRATIONS
AND COMMITMENTS (continued)
Commitments
Service contracts
On June 1, 2012, the Company entered into a
one-year service agreement with a one-year option for renewal with Darryl Cohen, a shareholder. The payment for Darryl Cohen’s
services includes 1,500,000 shares of common stock upon his acceptance of the service agreement. If the Company acquires any business
or products from any of his relationships, the Company agree to pay normal fees (to be negotiated at time of transaction) associated
with such transactions, in either cash or stock. In accordance with the service agreement, the Company issued Mr. Darryl Cohen
1,500,000 shares of common stock in June 2012. The service agreement was renewed on June 1, 2013 and the Company issued Mr. Darryl
Cohen 1,500,000 shares of common stock in June 2013. The term of the renewed service agreement was one year and expired on May
31, 2014. The common shares were valued at fair value using the recent sale price of the common stock on the dates of grant of
$0.0551 per common share, and the Company recorded stock-based compensation of $82,650 and $68,875 for the years ended March 31,
2014 and 2013, respectively, with a prepaid fee remaining at March 31, 2014 of $13,775.
On April 5, 2014, the Company entered into
a legal service agreement with Frederick M. Lehrer, Esquire (“FML”) who has agreed to perform corporate and securities
related legal services for the Company. The agreement expires upon the SEC issuing an effectiveness notice for S-1. In accordance
to this legal service agreement, the Company pays FML (a) a cash fee of $10,000 payable as follows (i) $2,000 upon execution of
this agreement; (ii) $3,000 upon filing the S-1; (iii) $5,000 upon the SEC issuing an effectiveness notice; and (b) 200,000 shares
of the Company’s common stock were issued to be issued within 20 days of the execution of this agreement. The Company made
the first $2,000 cash payment in May 2014 and issued the 200,000 shares of common stock in April 2014. The common shares were valued
at fair value using the recent sale price of the common stock on the date of grant of $0.0551 per common share and the Company
recorded stock-based compensation and fees of $11,020 in the six months ended September 30, 2014.
On April 28, 2014, the Company entered into
a service agreement with CFO Oncall Inc. In accordance to the service agreement, CFO Oncall Inc. provides the Company accounting
service and the Company issued CFO Oncall Inc. 100,000 shares of common stock in April 2014. The agreement expired on October 31,
2014. The common shares were valued at fair value using the recent sale price of the common stock on the date of grant of $0.0551
per common share and the Company recorded stock-based compensation and fees of $5,510 in the six months ended September 30, 2014.
On October 29, 2014, the Company entered into a new service agreement with CFO Oncall Inc., effective on November 1, 2014. In accordance
to the service agreement, the service fee is $5,000 per month which is payable as follows: $3,000 in cash payable in advance of
the 1st of each month, and $2,000 payable at the Company’s option in cash or the Company’s common stock.
In September 2014, the Company signed an eight-month
agreement with Applied DNA to work together, in good faith, on a business partnership focused on using Applied DNA Sciences’
unique SigNature© DNA taggant platform, digitalDNA © software platform and other products as required for DNA marking,
tracking and authentication of sports collectibles and sports memorabilia uniquely and authentically identified to an athlete (“Goods”)
and offered either within a True2Bid online auction exchange environment or through other means of sale. The agreement requires
a cash payment of $35,000 of which $10,000 has been paid, and the balance of $25,000 to be paid in two installments of $12,500
each on February 1, 2015 and June 1, 2015, respectively.
NOTE 12 – SUBSEQUENT EVENTS
During the period between April 1, 2014 and
the filing date of this report, the Company sold a total of 3,365,334 shares of common stock at an average price of $0.0551 per
common share to investors. The proceeds received by the Company from the sale of these shares were $185,420.
On April 8, 2014, the Company issued a total
of 499,300 shares of common stock to two debtors to pay off outstanding loans payable with the principal amount of $20,000 and
to pay off accrued interest of $2,000. The common shares were valued on the date of grant at their fair value of $27,510 based
on recent sales price of the common stock of $0.0551 per share resulting in a loss on settlement of $5,510.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 12 – SUBSEQUENT EVENTS (continued)
During the period from April 1, 2014 through
the filing date of this report, the Company issued an aggregate of 1,485,000 shares of common stock for services rendered and to
be rendered, including 360,000 shares to a director. The common shares were valued on the dates of grant at their fair values aggregating
$81,824 based on recent sales price of the common stock of $0.0551 per share. The Company recorded prepaid expenses of $81,824
which will be amortized over the related service period. Shares issued for services included the following:
- In July 2014, the Company granted 360,000 common shares to a director
for services rendered. The common shares were valued on the date of grant at their fair value of $19,836 based on the recent sales
price of $0.0551 per share. The $19,836 was expensed immediately.
- On April 5, 2014, the Company entered into a legal service agreement
with Frederick M. Lehrer, Esquire (“FML”) who has agreed to perform corporate and securities related legal services
for the Company. The agreement expires upon the SEC issuing an effectiveness notice for S-1. In accordance to this legal service
agreement, the Company pays FML (a) a cash fee of $10,000 payable as follows (i) $2,000 upon execution of this agreement; (ii)
$3,000 upon filing the S-1; (iii) $5,000 upon the SEC issuing an effectiveness notice; and (b) 200,000 shares of the Company’s
common stock, valued at fair value based on recent sales price of the common stock of $0.0551 per share and were issued within
20 days of the execution of this agreement. The Company made the first $2,000 cash payment in May 2014. The $11,020 value of the
shares was expensed immediately due to the indefinite term of the agreement.
- On April 18, 2014, the Company entered into a service agreement with
Robert Grich who is a consultant of the Company. The agreement is for a term of one year and requires 100,000 of common shares
and cash payment of $2,500 in total to Robert Grich. In accordance to the service agreement, the Company issued Mr. Robert Grich
100,000 shares of common stock and made cash payment of $2,500 in April 2014. The common shares were valued on the date of grant
at their fair value of $5,510 based on recent sales price of the common stock of $0.0551 per share. The Company recorded prepaid
expense of $5,510 in April 2014, which will be amortized in the corresponding service period.
- On April 28, 2014, the Company entered into a service agreement with
CFO Oncall Inc. In accordance to the service agreement, CFO Oncall Inc. provides the Company accounting service and the Company
issued CFO Oncall Inc. 100,000 shares of common stock in April 2014. The agreement expired on October 31, 2014. On October 29,
2014, the Company entered into a new service agreement with CFO Oncall Inc., effective on November 1, 2014. In accordance to the
service agreement, the service fee is $5,000 per month which is payable as follows: $3,000 in cash payable in advance of the 1st
of each month, and $2,000 payable at the Company’s option in cash or the Company’s common stock. The 100,000 shares
valued on the grant date at fair value of $5,510 based on recent sales price of the common stock of $0.0551. The Company expensed
the $5,510 immediately since the April 2014 agreement had an indefinite term.
- On July 1, 2014, the Company entered into a service agreement with
Patrick L. Stimson who is a consultant of the Company. The agreement is for a term of two years and requires 250,000 shares of
common stock. In accordance to the service agreement, the Company issued Patrick L. Stimson 250,000 shares of common stock in July
2014. The common shares were valued on the grant date at fair value of $13,775 based on recent sales price of the common stock
of $0.0551 per share. The Company recorded prepaid expense of $13,775 in July 2014, which will be amortized in the corresponding
service period.
- On July 1, 2014, the Company entered into a service agreement with
Ronald Ellis who is a consultant of the Company. The agreement is for a term of two years and requires 250,000 shares of common
stock. In accordance to the service agreement, the Company issued Ronald Ellis 250,000 shares of common stock in July 2014. The
common shares were valued on the grant date at fair value of $13,775 based on recent sales price of the common stock of $0.0551
per share. The Company recorded prepaid expense of $13,775 in July 2014, which will be amortized in the corresponding service period.
- In June and July 2014, the Company issued an aggregate of 225,000 shares
to three separate consultants valued on their grant dates at fair values aggregating $13,397 based on recent sales price of the
common stock of $0.0551 per share. The Company expensed the $13,397 immediately since the shares were for either services rendered
or an indefinite service term.
In September 2014, the Company signed an eight-month
agreement with Applied DNA to work together, in good faith, on a business partnership focused on using Applied DNA Sciences’
unique SigNature© DNA taggant platform, digitalDNA © software platform and other products as required for DNA marking,
tracking and authentication of sports collectibles and sports memorabilia uniquely and authentically identified to an athlete (“Goods”)
and offered either within a True2Bid online auction exchange environment or through other means of sale. The agreement requires
a cash payment of $35,000.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2014 and 2013
NOTE 12 – SUBSEQUENT EVENTS (continued)
In October and November 2014, the Company and
7 investors (the “Investors”) entered into convertible promissory note agreements, providing the issuance of a
10% convertible promissory notes (the “Convertible Notes”) with an aggregate principal amount of $400,000. The Convertible
Notes are due and payable on the third anniversary of the date of issuance through October 2017. The Investors are entitled, at
their option, at any time after the issuance of these Convertible Notes, to convert all or any lesser portion of the outstanding
principal amount and accrued but unpaid interest into the Company’s common stock at a conversion price for each share of
common stock equal to $0.02. The conversion price of the Convertible Notes shall be subject to adjustment for issuances of common
stock at a purchase price of less than the then-effective conversion price. In the event a registration statement is not filed
by either the Company within 60 days following the completion of this Offering, or the full amount of Conversion Shares are not
included in the first registration statement filed by either entity, or if such registration statement including the Conversion
Shares is not declared effective within 180 days following the completion of the Offering, the Convertible Notes shall then be
convertible at the option of the Holder into shares of the common stock, par value $.001 per share, of the Company at a conversion
price equal to the lesser of $0.02 per share or a 25% discount to the average closing bid price of the Parent Company’s stock
for the five days immediately prior to the day upon which the Company receives a written conversion notice from the Holder for
any portion of the Notes. The Penalty Conversion shall remain in effect until such time as a registration statement from the Company,
including the Conversion Shares is declared effective by the SEC. In connection with the issuance of these Convertible Notes above,
the Company determined that the terms of the Convertible Notes include a down-round provision under which the conversion price
and exercise price could be affected by future equity offerings undertaken by the Company or contain terms that are not fixed monetary
amounts at inception. Accordingly, under the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts
in an Entity’s Own Stock”, the convertible instruments shall be accounted for as a derivative liabilities at the date
of issuance and shall be adjusted to fair value through earnings at each reporting date. On the measurement date, the Company shall
record a derivative liability of $388,039.
TRUE 2 BEAUTY, INC.
INTERIM REPORT
September 30, 2014
CONTENTS
Consolidated Financial Statements: |
|
|
|
Condensed Consolidated Balance Sheets - As of September 30, 2014 (Unaudited) and March 31, 2014 |
F-20 |
|
|
Condensed Consolidated Statements of Operations - |
|
For the Six Months Ended September 30, 2014 and 2013 (Unaudited) |
F-21 |
|
|
Condensed Consolidated Statements of Cash Flows – |
|
For the Six Months Ended September 30, 2014 and 2013 (Unaudited) |
F-22 |
|
|
Notes to Unaudited Condensed Consolidated Financial Statements |
F-23 to F-30 |
TRUE 2 BEAUTY, INC. AND SUBSIDIARY |
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
September 30, 2014 |
|
March 31, 2014 |
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
17,994 |
|
|
$ |
9,345 |
|
Prepaid expenses |
|
|
28,445 |
|
|
|
18,225 |
|
Security deposit |
|
|
— |
|
|
|
636 |
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
|
46,439 |
|
|
|
28,206 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
46,439 |
|
|
$ |
28,206 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Loans payable |
|
$ |
— |
|
|
$ |
20,000 |
|
Deferred revenue |
|
|
— |
|
|
|
327 |
|
Accounts payable and accrued expenses |
|
|
35,301 |
|
|
|
33,575 |
|
Accrued officer salary and director fees |
|
|
35,550 |
|
|
|
21,250 |
|
Advances for common stock purchases |
|
|
— |
|
|
|
113,525 |
|
Due to shareholders |
|
|
4,947 |
|
|
|
8,218 |
|
Due to officer |
|
|
310 |
|
|
|
508 |
|
Advances for convertible notes purchases |
|
|
55,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
|
131,108 |
|
|
|
197,403 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS (Note 11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT: |
|
|
|
|
|
|
|
|
Preferred stock ($0.001 par value; 10,000,000 shares authorized; |
|
|
|
|
|
|
|
|
No share issued or outstanding at September 30, 2014 and March 31, 2014) |
|
|
— |
|
|
|
— |
|
Common stock, ($0.001 par value; 190,000,000 shares authorized; |
|
|
|
|
|
|
|
|
36,951,165 and 31,601,531 shares issued and outstanding |
|
|
|
|
|
|
|
|
at September 30, 2014 and March 31, 2014, respectively) |
|
|
36,951 |
|
|
|
31,601 |
|
Additional paid-in capital |
|
|
8,332,206 |
|
|
|
8,042,803 |
|
Accumulated deficit |
|
|
(8,453,826 |
) |
|
|
(8,243,601 |
) |
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' DEFICIT |
|
|
(84,669 |
) |
|
|
(169,197 |
) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
$ |
46,439 |
|
|
$ |
28,206 |
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
For the Six Months Ended September 30, |
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
|
|
REVENUE, NET |
|
$ |
358 |
|
|
$ |
35,825 |
|
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
|
1,536 |
|
|
|
33,109 |
|
|
|
|
|
|
|
|
|
|
GROSS (LOSS) PROFIT |
|
|
(1,178 |
) |
|
|
2,716 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Compensation and related taxes |
|
|
86,562 |
|
|
|
65,204 |
|
Professional fees |
|
|
94,264 |
|
|
|
105,065 |
|
Other selling, general and administrative |
|
|
22,711 |
|
|
|
28,829 |
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES |
|
|
203,537 |
|
|
|
199,098 |
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
|
(204,715 |
) |
|
|
(196,382 |
) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Loss on settlement of loans |
|
|
(5,510 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER INCOME (EXPENSE) |
|
|
(5,510 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
$ |
(210,225 |
) |
|
$ |
(196,382 |
) |
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
35,340,520 |
|
|
|
28,495,569 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
TRUE 2 BEAUTY, INC. AND SUBSIDIARY |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
For the Six Months Ended September 30, |
|
|
2014 |
|
2013 |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(210,225 |
) |
|
$ |
(196,382 |
) |
Adjustments to reconcile net loss to net cash |
|
|
|
|
|
|
|
|
used in operating activities: |
|
|
|
|
|
|
|
|
Stock-based compensation and fees |
|
|
68,508 |
|
|
|
29,754 |
|
Loss on settlement of loans |
|
|
5,510 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
3,095 |
|
|
|
24,520 |
|
Prepaid salary to officer |
|
|
— |
|
|
|
26,166 |
|
Security deposit |
|
|
636 |
|
|
|
— |
|
Inventories |
|
|
— |
|
|
|
29,282 |
|
Accounts payable and accrued expenses |
|
|
3,726 |
|
|
|
(720 |
) |
Deferred revenue |
|
|
(327 |
) |
|
|
— |
|
Accrued officer salary and director fees |
|
|
14,300 |
|
|
|
3,000 |
|
Due to shareholders |
|
|
(3,271 |
) |
|
|
2,763 |
|
Due to officer |
|
|
(198 |
) |
|
|
(142 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(118,246 |
) |
|
|
(81,759 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds received from common stock subscriptions |
|
|
— |
|
|
|
46,725 |
|
Proceeds received from convertible notes advances |
|
|
55,000 |
|
|
|
— |
|
Proceeds received from sale of stock |
|
|
71,895 |
|
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
126,895 |
|
|
|
64,725 |
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
8,649 |
|
|
|
(17,034 |
) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - beginning of period |
|
|
9,345 |
|
|
|
19,621 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - end of period |
|
$ |
17,994 |
|
|
$ |
2,587 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
— |
|
|
$ |
— |
|
Income taxes |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Stock issued for future services |
|
$ |
33,060 |
|
|
$ |
82,650 |
|
Stock issued for accounts payable |
|
$ |
— |
|
|
$ |
82,650 |
|
Stock issued for loans' principal |
|
$ |
20,000 |
|
|
$ |
— |
|
Stock issued for accrued interest |
|
$ |
2,000 |
|
|
$ |
— |
|
Stock issued for common stock subscription advances |
|
$ |
113,525 |
|
|
$ |
— |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2014
NOTE 1 – ORGANIZATION AND NATURE OF
OPERATIONS
True 2 Beauty, Inc. (the "Company")
was originally incorporated as Burrow Mining, Inc., a Nevada corporation, on December 11, 2006. In February 2010, the Company shifted
its focus to the beauty industry and later amended its Articles of Incorporation and changed its name to its current name, True
2 Beauty, Inc., to better reflect its then new business focus.
On July 10, 2012, the Company formed a new
wholly owned subsidiary True2Bid, Inc. (“True2Bid”) which was incorporated in the state of Nevada. This subsidiary’s
name was changed to LegacyXChange, Inc. in December 2014. The Company continued to sell existing inventory of beauty products through
May 2013 when the final inventory was sold. True2Bid operates an online e-commerce platform focus on delivering users a wide array
of sports and entertainment related products that can be won in an action packed environment of a live auction.
In addition to its e-commerce platform, the
Company has recently signed an agreement with Applied DNA to work together, in good faith, on a business partnership focused on
using Applied DNA Sciences’ unique SigNature© DNA taggant platform, digitalDNA © software platform and other products
as required for DNA marking, tracking and authentication of sports collectibles and sports memorabilia uniquely and authentically
identified to an athlete (“Goods”) and offered either within a True2Bid online auction exchange environment or through
other means of sale.
NOTE 2 – BASIS OF PRESENTATION, GOING
CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
Management acknowledges its responsibility
for the preparation of the accompanying unaudited condensed consolidated financial statements which reflect all adjustments, consisting
of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position
and the consolidated results of its operations for the periods presented. The accompanying unaudited condensed consolidated financial
statements include the financial statement of its wholly-owned subsidiary, True2Bid, Inc. All intercompany accounts and transactions
have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements for True 2 Beauty
Inc. and its subsidiary have been prepared in accordance with accounting principles generally accepted in the United States of
America (the “U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03
of Regulation S-X. Operating results for interim periods are not necessarily indicative of results that may be expected for the
fiscal year as a whole. These unaudited condensed consolidated financial statements should be read in conjunction with the summary
of significant accounting policies and notes to consolidated financial statements included in the report elsewhere for the years
ended March 31, 2014 and 2013.
Going concern
These unaudited condensed consolidated financial
statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things,
the realization of assets and the satisfaction of liabilities in the normal course of business.
As reflected in the accompanying unaudited
condensed consolidated financial statements, the Company had a net loss of $210,225 and $196,382 for the six months ended September
30, 2014 and 2013, respectively, and net cash used in operations of $118,246 and $81,759 for the six months ended September 30,
2014 and 2013, respectively, and an accumulated deficit and stockholders’ deficit of $8,453,826 and $84,669, respectively,
at September 30, 2014, and has a gross loss for the six months ended September 30, 2014 and minimal gross profit for the six months
ended September 30, 2013. These matters raise substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital,
implement its business plan, and generate significant revenues. The unaudited condensed consolidated financial statements do not
include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company plans on raising
capital through the sale of equity or debt instruments to implement its business plan. There is no assurance these plans will be
realized.
Use of estimates
The preparation of the unaudited condensed
consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates. Significant estimates during the six months ended September 30, 2014
and 2013 include the valuation of deferred tax assets and the valuation of stock-based compensation and fees.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2014
NOTE 2 – BASIS OF PRESENTATION, GOING
CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value of financial instruments and fair value measurements
The Company adopted the guidance of Accounting
Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes
methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as
follows:
* |
Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. |
* |
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. |
* |
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. |
The carrying amounts reported in the unaudited
condensed consolidated balance sheets for cash, loans payable, accounts payable and accrued expenses, accrued officer salary and
director fees, advances from common stock purchases, due to shareholders, due to officer and advances for convertible notes purchases
approximate their fair market value based on the short-term maturity of these instruments. The Company did not have any non-financial
assets or liabilities that are measured at fair value on a recurring basis as of September 30, 2014 and March 31, 2014.
ASC 825-10 “Financial Instruments”,
allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The
fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If
the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings
at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
Cash and cash equivalents
Cash and cash equivalents consist of cash and
short-term highly liquid investments purchased with original maturities of three months or less. There were no cash equivalents
at September 30, 2014 and March 31, 2014.
Inventories and cost of revenue
Inventories are stated at the lower of cost
or market value. Cost is determined using the cost to acquire inventory and is valued using the first-in, first-out method. Any
inventory adjustments are based upon management’s review of inventories on hand compared to estimated future usage and sales.
The Company has no inventory on hand as of September 30, 2014 because after May 2013 products sold are drop shipped from the Company’s
vendors to the Company’s customers.
Deferred revenue
Deferred revenue represents revenue collected
from the sale of bid packages for the Company’s online auctions but not earned as of the report date. Deferred revenue totaled
$0 and $327 as of September 30, 2014 and March 31, 2014, respectively.
Advances for common stock purchases
Advances for common stock purchases consist
of prepayments from investors for the purchase of common stock prior to the signing of a stock subscription agreement which was
signed after the period end. The Company reclassified to equity the advances for common stock purchases at the time the stock subscription
was signed. At September 30, 2014 and March 31, 2014, the Company had advances for common stock purchases of $0 and $113,525, respectively.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2014
NOTE 2 – BASIS OF PRESENTATION, GOING
CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition
The Company recognizes revenue when persuasive
evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable
and collectability is reasonably assured. The Company’s specific revenue recognition policies are as follows:
|
· |
Product sales from the sale of beauty products by the parent company (which ceased in May 2013) and sales of products through the subsidiary auction web-site are recognized when the product is shipped to the customer and title is transferred. |
|
· |
To participate in the Company’s auction program, consumers are required to purchase bid packages directly from the Company. Proceeds from the sales of bid packages are recorded as deferred revenue until recognizable as discussed below. In connection with the sale of bid packages, the Company utilized the User-based Revenue Model (“UBRM”). The UBRM is based on the presumption that the period of delivery for the bid package is the estimated average user life which was estimated by the Company to be 60 days. Consequently, revenue from the sale of bid packages is recognized ratably over the estimated user life of 60 days. |
Stock-based compensation
Stock-based compensation is accounted for based
on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost
of employee and director services received in exchange for an award of equity instruments over the period the employee or director
is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement
of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share-based
payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The
expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting
date.
Income taxes
Deferred income tax assets and liabilities
arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities,
as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and
liabilities are classified as current or non-current, depending upon the classification of the asset or liabilities to which they
relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending
on the periods in which the temporary differences are expected to reverse. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
The Company follows the provisions of FASB
ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10). Certain recognition thresholds must be met before a tax position
is recognized in the financial statements. An entity may only recognize or continue to recognize tax positions that meet a "more-likely-than-not"
threshold. As of September 30, 2014 and March 31, 2014, the Company does not believe it has any uncertain tax positions that would
require either recognition or disclosure in the accompanying unaudited condensed consolidated financial statements.
Shipping costs
Shipping costs are included in other selling,
general and administrative expense and totaled $115 and $4,010 for the six months ended September 30, 2014 and 2013, respectively.
Advertising
Advertising is expensed as incurred and is
included in other selling, general and administrative expense. The Company did not incur any advertising expense for the six months
ended September 30, 2014 and 2013.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2014
NOTE 2 – BASIS OF PRESENTATION, GOING
CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Research and development
Expenditures for research and product development
costs are expensed as incurred. The Company did not incur any research and development during the six months ended September 30,
2014 and 2013.
Basic and diluted earnings per share
Pursuant to ASC 260-10-45, basic earnings
per common share is computed by dividing income (loss) available to common shareholders by the weighted average number of shares
of common stock outstanding for the periods presented. Diluted income per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during
each period. Diluted income (loss) per share reflects the potential dilution that could occur if securities were exercised or converted
into common stock or other contracts to issue common stock resulting in the issuance of common stock that would then share in the
Company’s income (loss) subject to anti-dilution limitations. Potentially dilutive common shares consist of common stock
issuable for stock warrants (using the treasury stock method). In period where the Company has a net loss, all potentially dilutive
securities are excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact. The
following table sets forth the computation of basic and diluted earnings per share for the six months ended September 30, 2014
and 2013.
|
|
Six Months Ended September 30, |
|
|
2014 |
|
2013 |
Net loss available to common stockholders for basic and diluted net loss per share of common stock |
|
$ |
(210,225 |
) |
|
$ |
(196,382 |
) |
Weighted average common stock outstanding – basic |
|
|
35,340,520 |
|
|
|
28,495,569 |
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
Stock warrants |
|
|
— |
|
|
|
— |
|
Weighted average common stock outstanding – diluted |
|
|
35,340,520 |
|
|
|
28,495,569 |
|
Net loss per common share – basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
The Company's aggregate common stock equivalents
at September 30, 2014 and 2013 included the following:
|
|
September 30, 2014 |
|
September 30, 2013 |
Stock warrants |
|
|
1,048,315 |
|
|
|
733,609 |
|
Total |
|
|
1,048,315 |
|
|
|
733,609 |
|
Related parties
Parties are considered
to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled
by, or are under common control with the Company. Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its management and other parties with which the Company
may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent
that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all
related party transactions. All transactions are recorded at fair value of the goods or services exchanged.
NOTE 3 – PREPAID EXPENSES
At September 30, 2014 and March 31, 2014, prepaid
expenses consisted of the following:
|
|
September 30, 2014 |
|
March 31, 2014 |
Prepaid consulting fees |
|
$ |
28,445 |
|
|
$ |
13,775 |
|
Prepaid travel and other expense |
|
|
— |
|
|
|
4,450 |
|
|
|
$ |
28,445 |
|
|
$ |
18,225 |
|
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2014
NOTE 4 – LOANS PAYABLE
On November 4, 2013, the Company and an individual
entered into a loan agreement, providing for the issuance of a loan in the principal amount of $10,000. The loan was due on December
31, 2013. On April 8, 2014, the principal amount of $10,000 and all accrued and unpaid interest of the loan were settled for 249,650
shares of the Company’s common stock, resulting in a loss on settlement of $2,755.
On November 20, 2013, the Company and an individual
entered into a loan agreement, providing for the issuance of a loan in the principal amount of $10,000. The loan was due on December
31, 2013. On April 8, 2014, the principal amount of $10,000 and all accrued and unpaid interest of the loan were settled for 249,650
shares of the Company’s common stock, resulting in a loss on settlement of $2,755.
At September 30, 2014 and March 31, 2014, the
total principal for the above loans payable amounted to $0 and $20,000, respectively, which amount was included in loans payable
in the accompanying consolidated balance sheets. During the six months ended September 30, 2014, the total loss on settlement of
the above two loans amounted to $5,510 which was included in loss on settlement of loans in the accompanying unaudited condensed
consolidated statements of operations.
NOTE 5 – ACCOUNTS PAYABLE AND
ACCRUED EXPENSES
At September 30, 2014 and March 31, 2014, accounts
payable and accrued expenses consisted of the following:
|
|
September 30, 2014 |
|
March 31, 2014 |
Accrued interest |
|
$ |
— |
|
|
$ |
2,000 |
|
Accrued professional fees |
|
|
12,922 |
|
|
|
12,922 |
|
Accrued payroll taxes |
|
|
22,379 |
|
|
|
18,653 |
|
|
|
$ |
35,301 |
|
|
$ |
33,575 |
|
NOTE 6 - ACCRUED OFFICER SALARY AND DIRECTOR
FEES
In January 2012, the Company announced Mr.
Christopher Jarvis as a member of the Board of Director. In connection with Mr. Jarvis’ employment as a director, the Company
has agreed to compensate him as follows: an initial payment of $1,500 and quarterly payments of $1,500 during the term which he
serves as a director of the Company. As of September 30, 2014 and March 31, 2014, the amount due to Christopher Jarvis was $9,750
and $6,750, respectively, and was included in accrued officer salary and director fees in the accompanying unaudited condensed
consolidated balance sheets.
As of September 30, 2014 and March 31, 2014,
the accrued and unpaid CEO’s salary was $25,800 and $14,500, respectively, and was included in accrued officer salary and
director fees in the accompanying unaudited condensed consolidated balance sheets.
At September 30, 2014 and March 31, 2014, accrued
officer salary and director fees consisted of the following:
|
|
September 30, 2014 |
|
March 31, 2014 |
Accrued director's salary |
|
$ |
9,750 |
|
|
$ |
6,750 |
|
Accrued officer salary |
|
|
25,800 |
|
|
|
14,500 |
|
|
|
$ |
35,550 |
|
|
$ |
21,250 |
|
NOTE 7 – DUE TO SHAREHOLDERS
At September 30, 2014 and March 31, 2014, the
Company owed two shareholders at the amount of $4,947 and $8,218 for payments made on behalf of the Company and which have been
reimbursed by October 2014.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2014
NOTE 8 – RELATED PARTY TRANSACTIONS
Due to officer
At September 30, 2014 and March 31, 2014, the
Company owed Mr. William Bollander, its CEO, $310 and $508, respectively, for payments made on behalf of the Company and which
has been included in Due to officer in the accompanying unaudited condensed consolidated balance sheets.
note
9 – STOCKHOLDERS’ (DEFICIT) EQUITY
Authorized shares
The Company is authorized to issue 10,000,000
shares of its $0.001 par value preferred stock. As of September 30, 2014 and March 31, 2014, no share was issued and outstanding.
The Company is authorized to issue 190,000,000
shares of its $0.001 par value common stock. As of September 30, 2014 and March 31, 2014, 36,951,165 and 31,601,531
shares of common stock were issued and outstanding, respectively.
Common stock issued for services
During the six months ended September 30,
2014, the Company issued 1,485,000 shares of common stock for services, including 360,000 shares to a board member of the Company.
The shares were valued on the grant date at their fair value of $81,824 based on the recent sales price of the common stock of
$0.0551 per share. The Company recorded stock-based compensation and fees of $54,733 and had a remaining prepaid expense of $27,091
at September 30, 2014, which will be amortized over the remaining service periods.
Common stock sold for cash
During the six months ended September 30, 2014,
the Company sold a total of 3,365,334 shares of common stock at an average price of $0.0551 per common share to investors. During
the six months ended September 30, 2014, the Company received cash proceeds of $71,895 from the sale of these shares and decreased
advances for common stock purchases of $113,525.
Common stock issued for loan settlements
During the six months ended September 30,
2014, the Company issued a total of 499,300 shares of common stock, valued on the grant date at their fair value of $27,510 based
on the recent sales price of the common stock of $0.0551 per share. These shares were issued in settlement of $20,000 in principal
and $2,000 of interest, resulting in a loss on settlement of $5,510 which is reflected in Other Expense in the accompanying unaudited
consolidated statement of operations.
Warrants
The Company issued warrants with common stock
during the six months ended September 30, 2014. The warrants have an exercise price of $0.40 per share and expire in 5 years from
issuance date. Warrant activities for the six months ended September 30, 2014 was as follows:
|
|
Number of Warrants |
|
Weighted Average Exercise Price |
|
Balance at March 31, 2014 |
|
|
|
733,609 |
|
|
$ |
0.40 |
|
|
Issued |
|
|
|
314,706 |
|
|
|
0.40 |
|
|
Exercised/forfeited/expired |
|
|
|
— |
|
|
|
— |
|
|
Balance at September 30, 2014 |
|
|
|
1,048,315 |
|
|
$ |
0.40 |
|
|
Warrant exercisable at September 30, 2014 |
|
|
|
1,048,315 |
|
|
$ |
0.40 |
|
There was no intrinsic value of the warrants
as of September 30, 2014.
The following table summarizes the shares of
the Company's common stock issuable upon exercise of warrants outstanding at September 30, 2014:
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2014
note
9 – STOCKHOLDERS’ (DEFICIT) EQUITY (continued)
Warrants (continued)
Warrants Outstanding |
|
Warrants Exercisable |
Range of
Exercise
Price |
|
Number
Outstanding at
September 30,
2014 |
|
Weighted
Average
Remaining
Contractual
Life (Years) |
|
Weighted
Average
Exercise
Price |
|
Number
Exercisable at
September 30,
2014 |
|
Weighted
Average
Exercise
Price |
$ |
0.40 |
|
|
|
356,250 |
|
|
|
3.0 |
|
|
$ |
0.40 |
|
|
|
356,250 |
|
|
$ |
0.40 |
|
|
0.40 |
|
|
|
25,000 |
|
|
|
3.1 |
|
|
|
0.40 |
|
|
|
25,000 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
25,500 |
|
|
|
3.2 |
|
|
|
0.40 |
|
|
|
25,500 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
161,543 |
|
|
|
3.3 |
|
|
|
0.40 |
|
|
|
161,543 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
103,438 |
|
|
|
3.4 |
|
|
|
0.40 |
|
|
|
103,438 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
46,877 |
|
|
|
3.5 |
|
|
|
0.40 |
|
|
|
46,877 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
15,001 |
|
|
|
3.6 |
|
|
|
0.40 |
|
|
|
15,001 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
106,912 |
|
|
|
4.6 |
|
|
|
0.40 |
|
|
|
106,912 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
205,919 |
|
|
|
4.7 |
|
|
|
0.40 |
|
|
|
205,919 |
|
|
|
0.40 |
|
|
0.40 |
|
|
|
1,875 |
|
|
|
4.8 |
|
|
|
0.40 |
|
|
|
1,875 |
|
|
|
0.40 |
|
|
|
|
|
|
1,048,315 |
|
|
|
3.6 |
|
|
$ |
0.40 |
|
|
|
1,048,315 |
|
|
$ |
0.40 |
|
NOTE 10 – CONCENTRATIONS
AND COMMITMENTS
Concentrations
Concentration of credit risk
The Company maintains its cash in bank and
financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in
such accounts through September 30, 2014. There were no balances in excess of FDIC insured levels as of September 30, 2014
and March 31, 2014.
Customers
No customer accounted for 10% or more of the
Company’s revenue during the six months ended September 30, 2014 and 2013.
Suppliers
No supplier accounted for 10% or more of the
Company’s purchase during the six months ended September 30, 2014 and 2013.
Commitments
Service contracts
On April 5, 2014, the Company entered into
a legal service agreement with Frederick M. Lehrer, Esquire (“FML”) who has agreed to perform corporate and securities
related legal services for the Company. The agreement expires upon the SEC issuing an effectiveness notice for S-1. In accordance
to this legal service agreement, the Company pays FML (a) a cash fee of $10,000 payable as follows (i) $2,000 upon execution of
this agreement; (ii) $3,000 upon filing the S-1; (iii) $5,000 upon the SEC issuing an effectiveness notice; and (b) 200,000 shares
of the Company’s common stock were issued to be issued within 20 days of the execution of this agreement. The Company made
the first $2,000 cash payment in May 2014 and issued the 200,000 shares of common stock in April 2014. The common shares were valued
at fair value using the recent sale price of the common stock on the date of grant of $0.0551 per common share and the Company
recorded stock-based compensation and fees of $11,020 in the six months ended September 30, 2014.
TRUE 2 BEAUTY, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2014
NOTE 10 – CONCENTRATIONS
AND COMMITMENTS (continued)
Commitments (continued)
Service contracts (continued)
On April 28, 2014, the Company entered into
a service agreement with CFO Oncall Inc. In accordance to the service agreement, CFO Oncall Inc. provides the Company accounting
service and the Company issued CFO Oncall Inc. 100,000 shares of common stock in April 2014. The agreement expired on October 31,
2014. The common shares were valued at fair value using the recent sale price of the common stock on the date of grant of $0.0551
per common share and the Company recorded stock-based compensation and fees of $5,510 in the six months ended September 30, 2014.The
Company entered into a new service agreement with CFO Oncall Inc. effective on November 1, 2014. In accordance to the service agreement,
the service fee is $5,000 per month which is payable as follows: $3,000 in cash payable in advance of the 1st of each
month, and $2,000 payable at the Company’s option in cash or the Company’s common stock.
In September 2014, the Company signed an eight-month
agreement with Applied DNA to work together, in good faith, on a business partnership focused on using Applied DNA Sciences’
unique SigNature© DNA taggant platform, digitalDNA © software platform and other products as required for DNA marking,
tracking and authentication of sports collectibles and sports memorabilia uniquely and authentically identified to an athlete (“Goods”)
and offered either within a True2Bid online auction exchange environment or through other means of sale. The agreement requires
a cash payment of $35,000, of which $10,000 has been paid and the balance of $25,000 to be paid in two payments of $12,500 each
on February 1, 2015 and June 1, 2015.
NOTE 11 – SUBSEQUENT EVENT
On October 29, 2014, the Company entered into
a service agreement with CFO Oncall Inc. and the agreement is effective on November 1, 2014. In accordance to the service agreement,
the service fee is $5,000 per month which is payable as follows: $3,000 in cash payable in advance of the 1st of each
month, and $2,000 payable at the Company’s option in cash or the Company’s common stock.
In October and November 2014, the Company and
7 investors (the “Investors”) entered into convertible promissory note agreements, providing the issuance of a
10% convertible promissory notes (the “Convertible Notes”) with an aggregate principal amount of $400,000. The Convertible
Notes are due and payable on the third anniversary of the date of issuance through October 2017. The Investors are entitled, at
their option, at any time after the issuance of these Convertible Notes, to convert all or any lesser portion of the outstanding
principal amount and accrued but unpaid interest into the Company’s common stock at a conversion price for each share of
common stock equal to $0.02. The conversion price of the Convertible Notes shall be subject to adjustment for issuances of common
stock at a purchase price of less than the then-effective conversion price. In the event a registration statement is not filed
by either the Company within 60 days following the completion of this Offering, or the full amount of Conversion Shares are not
included in the first registration statement filed by either entity, or if such registration statement including the Conversion
Shares is not declared effective within 180 days following the completion of the Offering, the Convertible Notes shall then be
convertible at the option of the Holder into shares of the common stock, par value $.001 per share, of the Company at a conversion
price equal to the lesser of $0.02 per share or a 25% discount to the average closing bid price of the Parent Company’s stock
for the five days immediately prior to the day upon which the Company receives a written conversion notice from the Holder for
any portion of the Notes. The Penalty Conversion shall remain in effect until such time as a registration statement from the Company,
including the Conversion Shares is declared effective by the SEC. In connection with the issuance of these Convertible Notes above,
the Company determined that the terms of the Convertible Notes include a down-round provision under which the conversion price
and exercise price could be affected by future equity offerings undertaken by the Company or contain terms that are not fixed monetary
amounts at inception. Accordingly, under the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts
in an Entity’s Own Stock”, the convertible instruments shall be accounted for as a derivative liabilities at the date
of issuance and shall be adjusted to fair value through earnings at each reporting date. On the measurement date, the Company shall
record a derivative liability of $388,039.
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following is an estimate of the expenses
that will be incurred by us in connection with the issuance and distribution of the securities being registered.
SEC Registration Fee |
|
$ |
60.42 |
|
Accounting Fees and Expenses* |
|
$ |
3,000.00 |
|
Legal Fees and Expenses* |
|
$ |
10,000.00 |
|
Blue Sky Fees and Expenses* |
|
$ |
0.00 |
|
Printing and Engraving* |
|
$ |
2,000.00 |
|
Miscellaneous* |
|
$ |
0.00 |
|
Total Estimated Expenses* |
|
$ |
15,060.42 |
|
*Estimated
Item 14. Indemnification of Directors and Officers
Section 78.138 of the Nevada Revised Statutes
provides that a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages
as a result of any act or failure to act in his capacity as a director or officer unless it is proven that (1) his act or
failure to act constituted a breach of his fiduciary duties as a director or officer and (2) his breach of those duties involved
intentional misconduct, fraud or a knowing violation of law.
This provision is intended to afford directors
and officer’s protection against and to limit their potential liability for monetary damages resulting from suits alleging
a breach of the duty of care by a director or officer. As a consequence of this provision, our stockholders will be
unable to recover monetary damages against directors or officers for action taken by them that may constitute negligence or gross
negligence in performance of their duties unless such conduct falls within one of the foregoing exceptions. The provision,
however, does not alter the applicable standards governing a director’s or officer’s fiduciary duty and does not eliminate
or limit our right or any stockholder to obtain an injunction or any other type of non-monetary relief in the event of a breach
of fiduciary duty.
Item 15. Recent Sales of Unregistered Securities
On January
31, 2012, in connection with our recapitalization, we issued 6,500,000 founder shares to our co-founder, William Bollander and
4,000,000 founder shares to our co-founder, Darryl Cohen or his assignees. These common shares were valued at par value of $0.001.
On April 2, 2012, we issued 4,000,000 shares of common stock to Darryl Cohen for the purchase of intangible assets of a beauty
supply company. These common shares were valued on the grant date at fair value of $220,400 based on the recent sales price of
the common stock of $0.0551 per share.
During the year ended March 31, 2013, we sold
a total of 6,953,709 shares of common stock to investors at an average price of $0.0551 per common share. The Company had received
$75,000 towards the purchase of these shares as of March 31, 2012. During the fiscal year ended March 31, 2013, we received cash
proceeds of $298,180 from the sale of the shares and had a subscription receivable of $10,000, which was collected in fiscal 2014.
In conjunction with the issuance of these common shares, the Company also issued 718,608 warrants at a weighted average exercise
price of $0.40, none of which have been exercised.
During the year ended March 31, 2013, we issued
3,460,000 shares of common stock for services rendered, including 100,000 shares to a Chris Jarvis, a board member of the Company,
1,500,000 common shares to Darryl Cohen, 800,000 shares to Jason Trawlick, 500,000 shares to Steve Shorr, 60,000 shares to Joseph
Dimicco, and 500,000 shares to Mirador Consulting LLC. These shares were valued on the grant dates at their fair value of $190,646
based on the recent sales price of the common stock of $0.0551 per share.
In June 2013, we issued 1,500,000 common shares
to Undiscovered Equities, Inc. to settle accounts payable of $82,650. The shares were valued on the grant date at their fair value
of $82,650 based on the recent sales price of the common stock of $0.0551 per share. No gain or loss was recognized on this settlement.
On December 13, 2013, we issued 750,000 shares
of common stock to a law firm, Davidoff, Hutcher & Citron, LLP in exchange for the settlement of accounts payable of $75,919
pursuant to a settlement agreement between us and the law firm. The shares were valued on the grant date at their fair value of
$41,325 based on the recent sales price of the common stock of $0.0551 per share.
During the year ended March 31, 2014, we issued
1,865,000 shares of common stock for services, including 40,000 shares to the board member, Mr. Christopher Jarvis, 1,500,000 shares
to Darryl Cohen, and 325,000 shares to Green Baron Ventures, Inc. The shares were valued on the grant dates at their fair values
aggregating $102,761 based on the recent sales price of the common stock of $0.0551 per share.
During the fiscal year ended March 31, 2014, we sold a total of 145,200 shares of common stock at an average
price of $0.0551 per common share to investors. The proceeds received by us from the sale of these common shares were $8,000 in
fiscal 2014. In conjunction with the issuance of these common shares, the Company also issued 15,001 warrants at a weighted average
exercise price of $0.40, none of which have been exercised.
During the year ended March 31, 2014, we issued
a total of 100,000 shares of common stock to two debtors for loan fees valued at $5,510. The common shares were valued on the grant
date at their fair value of $5.10 based on the recent sales price of the common stock of $0.0551 per share.
During the period between April 1, 2014 and
the filing date of this report, we sold a total of 3,365,334 shares of common stock at an average price of $0.0551 per common share
to investors. The proceeds received by the Company from the sale of these common shares were $185,420. In conjunction with the
issuance of these common shares, the Company also issued 314,706 warrants at a weighted average exercise price of $0.40, none of
which have been exercised.
On April 5, 2014, we entered into a legal service
agreement with Frederick M. Lehrer, Esquire who has agreed to perform corporate and securities related legal services for the Company.
In connection with these legal services, we issued 200,000 shares of common stock. These shares were valued on the grant date at
their fair value of $11,020 based on the recent sales price of $0.0551 per share and were expensed immediately.
On April 8, 2014, we issued a total of 499,300
shares of common stock to two debtors, Gene and Lois Vanderbur and Thomas and Rosetta Rickson, to pay off outstanding loans payable
with the principal amount of $20,000 and to pay off accrued interest of $2,000. The common shares were valued on the grant date
at their fair value of $27,510 based on the recent sales price of the common stock of $0.0551 per share, resulting in a loss on
settlement of $5,510.
On April 18, 2014, we entered into a service
agreement with Robert Grich who is a consultant of the Company. In accordance to the service agreement, we issued Mr. Robert Grich
100,000 shares of common stock. The common shares were valued on the grant date at fair value of $5,510 based on the recent sales
price of the common stock of $0.0551 per share.
On April 28, 2014, we entered into a service
agreement with CFO Oncall, Inc., a company majority owned by our chief financial officer, Adam Wasserman. In accordance to the
service agreement, CFO Oncall Inc. provides us accounting service and we issued CFO Oncall Inc. 100,000 shares of common stock
in April 2014. The 100,000 shares valued on the grant date at their fair value of $5,510 based on the recent sales price of common
stock of $0.0511 per share and were expensed at the grant date since the April 2014 agreement had an indefinite term.
In July 2014, we granted 360,000 common shares
to a director, Chris Jarvis, for services rendered. These shares were valued on the grant date at their fair value of $19,836 based
on the recent sales price of $0.0551 per share and were expensed immediately.
On July 1, 2014, we entered into a service agreement with Patrick L. Stimson who is a consultant of the Company.
The agreement is for a term of two years and requires 250,000 shares of common stock. In accordance to the service agreement,
we issued Patrick L. Stimson 250,000 shares of common stock in July 2014. The common shares were valued on the grant date at their
fair value of $13,775 based on the recent sales price of the common stock of $0.0551 per share.
On July 1, 2014, we entered into a service
agreement with Ronald Ellis who is our consultant. The agreement is for a term of two years and requires 250,000 shares of common
stock. In accordance to the service agreement, we issued Ronald Ellis 250,000 shares of common stock in July 2014. The common shares
were valued on the grant date at their fair value of $13,775 based on the recent sales price of the common stock of $0.0551 per
share.
In June and July 2014, we issued an aggregate
of 225,000 shares to three separate consultants, Terry DiCicco, Giampiero Palladino, and Carl D. Pahl. These shares were valued
on the grant dates at their fair value of $12,397 based on the recent sales price of $0.0551 per share. The value was expensed
immediately since the shares were for either services rendered or an indefinite service term.
The foregoing transactions pursuant to which the restricted shares were issued to purchasers did not involve
a public offering of our securities and, therefore, were exempt from the registration and prospectus delivery requirements of
the Securities Act pursuant to the provisions of Section 4(2) of that Act. In connection with the offer and sale of
the restricted shares, no general solicitation or advertising was used and no commissions were paid in connection with the offer
or sale of the shares.
Item 16. Exhibits and Financial Statement Schedules
The following is a complete list of Exhibits filed as part of this
Registration Statement:
Exhibit No. |
Description |
|
|
3.1 |
Articles of Incorporation* |
|
|
3.5 |
Bylaws* |
|
|
4.1 |
Form of Convertible Promissory Note* |
|
|
4.2 |
Form of Subscription Agreement* |
|
|
4.3 |
Form of Registration Rights Agreement* |
|
|
5 |
Opinion of Frederick M. Lehrer, Esquire |
|
|
21 |
Subsidiary of Registrant * |
|
|
23.1 |
Consent of Salberg & Company, P.A.* |
|
|
23.2 |
Consent of Counsel (included in Exhibit 5) * |
* Previously filed as exhibit to Form S-1 Registration
Statement filed on February 2, 2015.
Item 17. Undertakings.
The undersigned
registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i.
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
ii.
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price
set forth in the “Calculation of Registration Fee” table in the effective registration statement.
iii.
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2) That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(5) Each
prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in 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.
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant, True 2 Beauty, Inc. has duly caused this Registration Statement to authorize, in the
City of Boca Raton, Florida, February 2, 2015.
True 2 Beauty, Inc.
By: |
/S/ William Bollander |
|
|
William Bollander |
|
|
Chief Executive Officer |
|
|
Date: February 6, 2015 |
|
In accordance with the requirements of the
Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates
indicated.
By: |
/S/ William Bollander |
|
|
William Bollander, Chief Executive Officer |
|
|
Date: February 6, 2015 |
|
|
|
|
By: |
/S/ Adam Wasserman |
|
|
Adam Wasserman, Chief Financial Officer |
|
|
Date: February 6, 2015 |
|
|
|
|
By: |
/S/ Chris Jarvis |
|
|
Director |
|
|
Date: February 6, 2015 |
|
True 2 Beauty
S-1
EXHIBIT 5
Frederick M. Lehrer
Attorney and Counselor at Law
285 Uptown Blvd, 402
Altamonte Springs, Florida 32701
flehrer@securitiesattorney1.com
(321) 972-8060
True2Beauty, Inc.
301 Yamato Road, Suite 140
Boca Raton, Florida 33431
February 2, 2015
This letter will constitute an opinion upon the legality of the
sale by certain selling shareholders of True2Beauty, Inc., a Nevada corporation (the “Company”), of up to 26,000,000
common stock shares (the “Shares), all as referred to in the Registration Statement on Form S-1 filed by the Company with
the Securities and Exchange Commission. The Shares cover the resale by seven selling security holders of a maximum of 26,000,000
common stock shares reflecting their conversion rights of 26,000,000 shares pursuant to seven convertible promissory notes, 20,000,000
shares of which correspond to the aggregate principal loan amount of $400,000 and 6,000,000 shares that correspond to interest
accrued should the notes be carried to maturity.
I have examined the Company’s Articles of Incorporation, Bylaws,
and Board of Directors’ resolutions, the applicable laws of the State of Nevada and a copy of the Registration Statement.
In my opinion:
| · | the Company is authorized to issue the Shares to be held by the selling
shareholders and such shares will be validly issued and represent fully paid and non-assessable shares of the Company’s common
stock; and |
| · | the Company has authorized the Shares to be issued and such shares
will, when sold, be legally issued, fully paid and non-assessable. |
I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference of Frederick M. Lehrer, Esquire under the caption “Legal Matters” in the
registration statement.
Very truly yours,
Frederick M. Lehrer, Esquire
Attorney and Counselor at Law
/s/ Frederick M. Lehrer |
|
Frederick M. Lehrer, Esquire |
|
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