Attached files
As filed with the Securities and Exchange Commission on March 6, 2014
Registration No. 333-192877
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
AMENDMENT NO. 2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ASIYA PEARLS, INC.
(Exact name of registrant as specified in its charter)
Nevada 5961 33-1230229
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
H. 2434, Tengengar Galli, near Sheetal Hotel,
Belgaum, Karnataka, India 590001
Telephone: 011 91 97 65 24 89 53
Email: asiyapearls@gmail.com
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Mr. Shabbir Shaikh
President/Treasurer/Secretary
H. 2434, Tengengar Galli, near Sheetal Hotel,
Belgaum, Karnataka, India 590001
Telephone: 011 91 97 65 24 89 53
Email: asiyapearls@gmail.com
National Registered Agents, Inc. of Nevada
311 S. Division Street
Carson City, NV 89703
(US)
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of all communications to:
Kristen A. Baracy, Esq.
Carol S. McMahan, Esq.
Synergy Law Group, LLC
730 West Randolph Street, 6th Floor
Chicago, IL 60661
(312) 454-0015
Fax (312) 454-0261
Email: cmcmahan@synergylawgroup.com
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [ ] Accelerated Filer [ ]
Non-accelerated Filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
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Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to Amount to Be Offering Price Aggregate Offering Registration
Be Registered Registered per Share (1) Price Fee(2)
---------------------------------------------------------------------------------------------------
Common Stock 5,000,000 $0.01 $50,000 $6.44
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Total 5,000,000 $0.01 $50,000 $6.44
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(1) In accordance with Rule 416(a), the registrant is also registering
hereunder an indeterminate number of shares that may be issued and resold
resulting from stock splits, stock dividends or similar transactions
(2) There is no public market for our common stock. The offering price has been
arbitrarily determined by the registrant and bears no relationship to
assets, earnings, or any other valuation criteria. No assurance can be
given that the shares offered hereby will have a market value or that they
may be sold at this, or at any price. We cannot give any assurance that the
shares being offered will be able to be resold at the offered price if and
when an active secondary market might develop, or that a public market for
our securities may be sustained even if developed. The absence of a public
market for our stock will make it difficult to sell your shares. We intend
to apply to the Over-The-Counter Bulletin Board (the "OTCBB") through a
market maker that is a licensed broker dealer, to allow the quotation of
our common stock on the OTCBB upon our becoming a reporting entity under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
offering price of the shares being registered herein is fixed at $0.01 per
share. (3) Estimated solely for the purpose of calculating the registration
fee in accordance with Rule 457 under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED ______________________, 2014
PRELIMINARY PROSPECTUS
ASIYA PEARLS, INC.
5,000,000 SHARES OF COMMON STOCK AT $0.01 PER SHARE
OFFERED BY ASIYA PEARLS, INC.
This prospectus relates to an "all or nothing" offering by Asiya Pearls, Inc.
("Asiya," "we," "our," the "Company," "Asiya" or the "Registrant") of a total of
5,000,000 shares (the "Shares") of our common stock on a "self-underwritten"
basis at a fixed price of $0.01 per share.
There is no minimum number of Asiya shares that an investor is required to
purchase. This offering of shares by the Company will terminate 180 days from
the date of this prospectus, although we may close the offering on any date
prior if the offering is fully subscribed. The Company does not reserve the
right to extend the offering beyond the 180-day offering period. In the event
that all of the 5,000,000 Asiya shares are not sold within 180 days from the
date of this prospectus, on the 181st day from the effective date all money
received by us will be returned to each subscriber without interest or deduction
of any kind. If all the 5,000,000 Asiya shares offered pursuant to this
prospectus are sold within 180 days from the date of this prospectus, all money
received will be available to us to fund our business and operations, and there
will be no refund.
We intend to open a checking account to be used exclusively for the deposit of
funds received from the sale of shares in this offering. Our management will
have sole control over the withdrawal of funds from this account. We have not
made arrangements to place the funds in an escrow account with a third party
escrow agent due to the costs involved. As a result, investors are subject to
the risk that creditors could attach these funds during the offering process.
See "Use of Proceeds" and "Plan of Distribution."
This is our initial public offering. Prior to this offering there has been no
public market for our common stock and we have not applied for listing or
quotation on any public market. We plan to contact a market maker immediately
following the effectiveness of this Registration Statement and apply to have the
Shares quoted on the OTC Bulletin Board (OTCBB). There can be no assurance that
our common stock will qualify for quotation on the OTCBB.
The Company is a Shell Company as defined in Rule 405. As such, no shares will
be eligible to be sold or transferred under Rule 144 until in excess of one year
from the filing of the equivalent of Form 10 information by the Company with the
SEC.
Number of Offering Underwriting Discounts Proceeds to
Shares Price & Commissions the Company
------ ----- ------------- -----------
Per Share 1 $ 0.01 $0.00 $ 0.01
Maximum 5,000,000 $50,000 $0.00 $50,000
This Prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted. The price of $0.01 per share is a fixed for the duration of
this offering.
Our sole officer will market our common stock and offer and sell the securities
on our behalf. This is a direct "all or nothing" offering that will not utilize
broker-dealers. Our sole officer will not receive any compensation for his role
in selling shares in the offering.
Any investment in the shares offered herein involves a high degree of risk. You
should only purchase shares if you can afford a loss of your investment. Our
independent registered public accountant has issued an audit opinion which
includes a statement expressing substantial doubt as to our ability to continue
as a going concern. There currently is no market for our securities and a public
market may never develop, or, if any market does develop, it may not be
sustained. Our common stock is not traded on any exchange or on the
over-the-counter market. There can be no assurance that our common stock will
ever be quoted on a stock exchange or a quotation service or that any market for
our stock will develop.
THE COMPANY IS CONSIDERED TO BE IN UNSOUND FINANCIAL CONDITION. PERSONS SHOULD
NOT INVEST UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
BEFORE PURCHASING ANY OF THE COMMON STOCK COVERED BY THIS PROSPECTUS, CAREFULLY
READ AND CONSIDER THE RISK FACTORS INCLUDED IN THE SECTION ENTITLED "RISK
FACTORS" BEGINNING ON PAGE 6. THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK,
AND PROSPECTIVE PURCHASERS SHOULD BE PREPARED TO SUSTAIN THE LOSS OF THEIR
ENTIRE INVESTMENT. THERE IS CURRENTLY NO PUBLIC TRADING MARKET FOR THE
SECURITIES.
You should rely only on the information contained in this prospectus. We have
not authorized any person to provide you with any information about this
offering, Asiya Pearls, Inc., or the shares offered hereby that is different
from the information included in this prospectus. If anyone provides you with
different information, you should not rely on it.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE IN WHICH THE OFFER OR SALE IS NOT PERMITTED.
THE DATE OF THIS PROSPECTUS IS _______________, 2014.
TABLE OF CONTENTS
Page No.
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Summary 3
Risk Factors 6
Cautionary Statement Regarding Forward-Looking Statements 17
Tax Considerations 17
Use of Proceeds 17
Determination of Offering Price 18
Dilution 18
Plan of Distribution 19
Description of Securities to be Registered 20
Shares Eligible for Future Resale 21
Interests of Named Experts and Counsel 21
Information with Respect to the Registrant 22
Market for Common Equity and related Stockholder Matters 32
Legal Matters 33
Management's Discussion and Analysis of Financial Condition and
Results of Operations 33
Directors and Management 37
Executive Compensation 39
Security Ownership of Certain Beneficial Owners and Management 40
Corporate Governance 41
Transactions with Related Persons, Promoters and Certain Control Persons 41
Incorporation of Certain Information by Reference 42
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities 42
Financial Statements 43
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
TO THIS PROSPECTUS IN DECIDING WHETHER TO PURCHASE THE SHARES. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED
IN THIS PROSPECTUS. UNDER NO CIRCUMSTANCES SHOULD THE DELIVERY TO YOU OF THIS
PROSPECTUS OR ANY SALE MADE PURSUANT TO THIS PROSPECTUS CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME
AFTER THE DATE OF THIS PROSPECTUS. TO THE EXTENT THAT ANY FACTS OR EVENTS
ARISING AFTER THE DATE OF THIS PROSPECTUS, INDIVIDUALLY OR IN THE AGGREGATE,
REPRESENT A FUNDAMENTAL CHANGE IN THE INFORMATION PRESENTED IN THIS PROSPECTUS,
THIS PROSPECTUS WILL BE UPDATED TO THE EXTENT REQUIRED BY LAW.
THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL TO SELL THESE SECURITIES.
CERTAIN JURISDICTIONS MAY RESTRICT THE DISTRIBUTION OF THESE DOCUMENTS AND THE
OFFERING OF THESE SECURITIES. WE REQUIRE PERSONS RECEIVING THESE DOCUMENTS TO
INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS. WE HAVE NOT TAKEN
ANY ACTION THAT WOULD PERMIT AN OFFERING OF THESE SECURITIES OR THE DISTRIBUTION
OF THESE DOCUMENTS IN ANY JURISDICTION THAT REQUIRES SUCH ACTION.
UNLESS OTHERWISE INDICATED, INFORMATION CONTAINED IN THIS PROSPECTUS CONCERNING
OUR INDUSTRY, INCLUDING OUR MARKET OPPORTUNITY, IS BASED ON INFORMATION FROM
INDEPENDENT INDUSTRY ANALYSTS, THIRD-PARTY SOURCES AND MANAGEMENT ESTIMATES.
MANAGEMENT ESTIMATES ARE DERIVED FROM PUBLICLY-AVAILABLE INFORMATION RELEASED BY
INDEPENDENT INDUSTRY ANALYSTS AND THIRD PARTY SOURCES, AS WELL AS DATA FROM OUR
INTERNAL RESEARCH, AND ARE BASED ON ASSUMPTIONS MADE BY US USING DATA AND OUR
KNOWLEDGE OF SUCH INDUSTRY AND MARKET, WHICH WE BELIEVE TO BE REASONABLE. IN
ADDITION, WHILE WE BELIEVE THE MARKET OPPORTUNITY INFORMATION INCLUDED IN THIS
PROSPECTUS IS GENERALLY RELIABLE AND IS BASED ON REASONABLE ASSUMPTIONS, SUCH
DATA INVOLVES RISKS AND UNCERTAINTIES AND IS SUBJECT TO CHANGE BASED ON VARIOUS
FACTORS, INCLUDING THOSE DISCUSSED UNDER THE HEADING "RISK FACTORS."
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SUMMARY
This summary provides a brief overview of the key aspects of our offering. It
may not contain all of the information that is important to you. You should read
the entire prospectus carefully, including the more detailed information
regarding our Company, the risks of purchasing the Shares discussed under "Risk
Factors," and our financial statements and their accompanying notes.
IN THIS PROSPECTUS, "ASIYA", THE "COMPANY," "WE," "US," AND "OUR," REFER TO
ASIYA, UNLESS THE CONTEXT OTHERWISE REQUIRES. UNLESS OTHERWISE INDICATED, THE
TERM "FISCAL YEAR" REFERS TO OUR FISCAL YEAR ENDING OCTOBER 31. UNLESS OTHERWISE
INDICATED, THE TERM "COMMON STOCK" REFERS TO SHARES OF THE COMPANY'S COMMON
STOCK, PAR VALUE $0.0001 PER SHARE.
OUR COMPANY
Asiya Pearls, Inc. was incorporated under the laws of the State of Nevada on
September 25, 2013. We are a development stage company with plans to enter into
the business of the online retail sale of high grade loose pearls which we
intend to obtain from suppliers in Hyderabad, one of the major pearl centers in
India. We intend to offer pearls to consumers in our online store. We will
maintain a small inventory of peals. For most orders, however, we will access
the inventory maintained by our supplier. Our product line will consist of
pearls of different sizes, colors and characteristics (drilled and whole). The
concept is that our customers have their own jewelry designers who, with our
pearls, will custom-make their jewelry. Our president has ample experience in
online retail and our second director has experience in pearls and jewelry. We
intend to sell these products through an internet website (the "Website"). To
implement our plan of operations, we require total funding of $75,000 for the
next twelve months. In the event we do not raise sufficient capital to implement
its planned operations, your entire investment could be lost.
We have not realized any revenues to date, and our accumulated deficit as of
October 31, 2013 is $1,120. To date we have raised an aggregate of $25,000
through a private placement of 5,000,000 shares of common stock to our two
directors. Proceeds from the private placement are being used for working
capital. Our offices are located at the premises of our President, Shabbir
Shaikh, who provides such space to us on a rent-free basis at H. 2434, Tengengar
Galli, near Sheetal Hotel, Belgaum, Karnataka, India. Our telephone number is
011 91 97 65 24 89 53.
The rationale to make the Company become a public company is based on our
President's subjective belief that potential investors are more inclined to
invest in the Company if the Company is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
provides investors with updated material information about the Company and the
ability of the Company's investors to resell securities through the facilities
of the securities markets, assuming the Company finds a market maker in order to
have its shares of common stock quoted on the OTC Bulletin Board or the OTCQX
tier of the OTC Markets. Our President believes that the disadvantages of
becoming a public company are the continuing reporting costs of being a
reporting issuer under the Exchange Act and reluctance of qualified persons to
serve as directors of the Company because of a director's exposure to possible
legal claims.
Because we are a shell company, the Rule 144 safe harbor is not available for
the resale of any restricted securities issued by us in any subsequent
unregistered offering. This will likely make it more difficult for us to attract
additional capital through subsequent unregistered offerings because purchasers
of securities in such unregistered offerings will not be able to resell their
securities in reliance on Rule 144, a safe harbor on which holders of restricted
securities usually rely to resell securities.
From inception until the date of this filing we have had limited activities,
primarily consisting of the incorporation of our company, the initial equity
funding by our directors and registering our website.
Our financial statements from inception (September 25, 2013) through October 31,
2013 report no revenues and a net loss of $1,120 and our assets constitute our
cash balance of $25,000, which was generated from the issuance of shares to our
two shareholders.
We will need to complete our offering in order to cover the cost of this
registration statement estimated at approximately $16,000, legal and audit costs
relating to our reporting obligations as a public company estimated at $14,000,
Edgar and XBRL formatting and conversion expenses estimated at $2,000, website
development of approximately $20,000, purchase inventory at a cost of
approximately $10,000, marketing expenses of approximately $2,000 and office and
administrative costs of about $11,000. We will require the funds from this
offering in order to fully implement Stage II of our business plan as discussed
in the "Plan of Operation" section of this prospectus. Our business plan
anticipates that once we have secured the financing and the website is
operational, our sales will begin in October 2014. Currently, our President
devotes approximately two hours per week to the Company.
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Investors must be aware that we do not have sufficient capital to independently
finance our own plans. We have no plans, arrangements or contingencies in place
in the event that we cease operations, in which case investors would likely lose
their entire investment.
We plan to raise the additional funding for Stage III of our business plan by
way of private debt or equity financing, but have not commenced any activities
to raise such funds. We cannot provide any assurance that we will be able to
raise sufficient funds to proceed with Stage III of our business plan.
Investors should be aware that our independent auditors have issued an audit
opinion which includes a statement expressing substantial doubt as to our
ability to continue as a going concern. This means that our auditors believe
there is substantial doubt that we can continue as an on-going business for the
next 12 months. Our auditor's opinion is based on us having limited operations
and limited working capital. Our only source for cash at this time other than
this offering is investments or loans. However, we do not have any written
agreements in place for any investments or loans. We must raise cash to
implement our projects and expand our operations.
The Company has no or nominal operations and has assets consisting solely of
cash and cash equivalents and is, therefore, a shell company as defined by Rule
405 under the Securities Act. The Company's status as a shell company imposes
certain restrictions inapplicable to non-shell companies and operates to limit
certain transfer of its securities as discussed in detail herein.
As of the date of this prospectus, there is no public trading market for our
common stock and no assurance that a trading market for our securities will ever
develop.
We are an "emerging growth company" within the meaning of the federal securities
laws. For as long as we are an emerging growth company, we will not be required
to comply with the requirements that are applicable to other public companies
that are not "emerging growth companies" including, but not limited to, not
being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements and the
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 intend to take advantage of these reporting
exemptions until we are no longer an emerging growth company. For a description
of the qualifications and other requirements applicable to emerging growth
companies and certain elections that we have made due to our status as an
emerging growth company, see "Risk Factors" on page 6 of this prospectus.
This is a direct participation offering since we are offering the stock directly
to the public without the participation of an underwriter. Our sole officer will
be solely responsible for selling shares under this offering and no commission
will be paid on any sales.
There has been no market for our securities and a public market may never
develop, or, if any market does develop, it may not be sustained. Our common
stock is not traded on any exchange or quoted on the over-the-counter market.
After the effective date of the registration statement relating to this
prospectus, we hope to have a market maker file an application with the
Financial Industry Regulatory Authority ("FINRA") for our common stock to be
eligible for quotation on the OTCBB. We do not yet have a market maker who has
agreed to file such an application.
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of our common stock.
Potential investors should be aware that our two directors, Mr. Shaikh and Ms.
Shaikh (who are husband and wife), presently own 5,000,000 shares, which would
represent 50% of the issued and outstanding common shares of the Company if the
offering closes and all our offered shares are sold. All of these shares owned
by Mr. Shaikh and Ms. Shaikh are restricted shares which were purchased by Mr.
Shaikh and Ms. Shaikh at a price of $0.005 per share representing a total cost
of $25,000.
PENNY STOCK RULES
Under U.S. federal securities legislation, our common stock will be
characterized as "penny stock". Penny stock is any equity that has a market
price of less than $5.00 per share, subject to certain exceptions. For any
transaction involving a penny stock, unless exempt, the rules require that a
broker or dealer approve a potential investor's account for transactions in
penny stocks, and the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve an investor's account for
transactions in penny stocks, the broker or dealer must obtain financial
information and investment experience objectives of the person, and make a
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reasonable determination that the transactions in penny stocks are suitable for
that person and the person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form sets forth the basis on which the broker
or dealer made the suitability determination. Brokers may be less willing to
execute transactions in securities subject to the "penny stock" rules. This may
make it more difficult for investors to dispose of our common stock and cause a
decline in the market value of our stock. Disclosure also has to be made about
the risks of investing in penny stocks in both public offerings and in secondary
trading and about the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and the rights
and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.
THE OFFERING
We are offering, on a self-underwritten basis, a total of 5,000,000 shares of
the common stock of our Company at a price of $0.01 per share. This is a fixed
price offering. In order to close the Offering, all of the offered shares must
be sold. This Offering of shares by our Company will terminate 180 days from the
date of this Prospectus, although we may close the Offering on any date prior if
the Offering is fully subscribed. This is an "all or nothing" offering. In the
event that all 5,000,000 shares of our common stock are not sold within 180 days
from the date of this prospectus, on the 181st day from such date all money
received by us will be promptly returned to each subscriber without interest or
deduction of any kind. If all of the shares of common stock of our Company
offered under this Offering are sold within 180 days from the date of this
Prospectus, all money received will be available to us to fund our business and
operations, and there will be no return of any funds.
The offering price of the common stock has been arbitrarily determined and bears
no relationship to any objective criterion of value. The price does not bear any
relationship to our assets, book value, historical earnings or net worth.
The purchase of the common stock in this offering involves a high degree of
risk. The common stock offered in this Prospectus is for investment purposes
only and currently no market for our common stock exists. Please refer to "RISK
FACTORS" beginning on page 6 and "DILUTION" on page 18 before making an
investment in our stock.
Securities Being Offered 5,000,000 shares of common stock.
Offering Price $0.01 per share
Offering Period The shares are being offered for a period not to
exceed 180 days from the date of this Prospectus,
This is an "all or nothing" offering. In the event
we do not sell all of the shares before the
expiration date of the offering, all funds raised
will be promptly returned to the investors,
without interest or deduction.
No Public Market There is no public market for our common stock. We
cannot give any assurance that the shares being
offered will have a market value, or that they can
be resold at the offered price if and when an
active secondary market might develop, or that a
public market for our securities may be sustained
even if developed. The absence of a public market
for our stock will make it difficult to sell your
shares. If in the future a market does exist for
our securities, it is likely to be highly illiquid
and sporadic.
We intend to apply to the OTCBB, through a market
maker that is a licensed broker dealer, to allow
the quotation of our common stock upon our
becoming a reporting company. There can be no
guarantee that our common stock will be accepted
for quotation on the OTCBB.
Number of Common Stock
Issued and Outstanding
Before Offering 5,000,000 shares of our common stock are issued
and outstanding as of the date of this prospectus.
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Number of Common Stock
to be Issued and
Outstanding After Fully
Subscribed Offering 10,000,000 shares
Net Proceeds to Our Company $50,000
Use of Proceeds We intend to use the proceeds to develop our
business operations.
Risk Factors The securities offered hereby involve a high
degree of risk and should not be purchased by
investors who cannot afford the loss of their
entire investment. See "Risk Factors" beginning on
page 6.
Dividend Policy We have not declared or paid any dividends on our
common stock since our inception, and we do not
anticipate paying any such dividends for the
foreseeable future.
Neither our officer, directors, control persons nor their affiliates intend to
purchase any shares in this offering.
SUMMARY FINANCIAL INFORMATION
We have not earned any revenues to date and do not anticipate earning revenues
until we have completed our website and commenced sales.
The following tables set forth a summary of the Company's financial information
as provided in its year-end financial statements. You should read this
information together with our audited financial statements and the notes thereto
appearing elsewhere in this prospectus and the information under "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Balance Sheet Data October 31, 2013
----------------
Cash $25,000
Total Current Assets $25,000
Current Liabilities $ 1,120
Total Stockholder's Equity $23,880
Statement of Operations From
Incorporation on
September 25, 2013 to
October 31, 2013
----------------
Revenue $ --
Net Loss $(1,120)
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS
PROSPECTUS BEFORE INVESTING IN OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS
OCCUR, OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION COULD BE
SERIOUSLY HARMED.
RISKS RELATED TO OUR BUSINESS
WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS TO SUCCEED.
Our independent auditors state in their audit report, which is included with
this prospectus, that since we have no business operations to date and must
secure additional financing to commence our plan of operations, these matters
raise substantial doubt about our ability to continue as a going concern. To
date, we have completed only the preliminary stages of our business plan, which
has consisted of the formation of our Company and the identification of our
business strategy. We anticipate that we will need approximately $16,000 to
continue as a going concern over the next 12 months. We cannot assure you that
6
we will be able to generate enough revenue to achieve profitability. At this
time, we cannot predict with assurance the potential success of our business.
This increases the risk that we may not be able to continue as a going concern.
AS A START-UP OR DEVELOPMENT STAGE COMPANY, AN INVESTMENT IN OUR COMPANY IS
CONSIDERED A HIGH RISK INVESTMENT WHEREBY YOU COULD LOSE YOUR ENTIRE INVESTMENT.
We have not commenced operations and, therefore, we are considered a "start-up"
or "development stage" company. There is no meaningful historical data for an
investor to evaluate. The revenue and income potential of our business and the
market for online sales of loose pearls has not been proven. We will encounter
risks and difficulties commonly faced by early-stage companies in new and
rapidly evolving markets. We intend to make significant investments in our
website. As a result, we will have a net loss from operations and may not be
able to reach or sustain profitability in the future. If we fail to become
profitable, we will be forced to cease operations.
We will incur significant expenses in order to implement our business plan,
including funds to develop our website, purchase our pearl inventory as well as
legal and regulatory compliance costs for the 12 month period following the
effectiveness of our registration statement. As an investor, you should be aware
of the difficulties, delays and expenses normally encountered by an enterprise
in its development stage, many of which are beyond our control, including
unanticipated developmental expenses, inventory costs, and advertising and
marketing expenses. We cannot assure you that our proposed business plan as
described in this prospectus will materialize or prove successful, or that we
will ever be able to operate profitably. If we cannot operate profitably, you
could lose your entire investment.
BECAUSE WE HAVE NOT YET COMMENCED BUSINESS OPERATIONS, IT MAKES EVALUATING OUR
BUSINESS DIFFICULT.
We were incorporated on September 25, 2013 and to date have been involved
primarily in organizational activities. We have not earned revenues as of the
date of this prospectus and have incurred total losses of $1,120 from our
incorporation to October 31, 2013.
Accordingly, you cannot evaluate our business or future prospects due to our
lack of operating history. To date, our business development activities have
consisted solely of organizational and planning activities. Potential investors
should be aware of the difficulties normally encountered by development stage
companies and the high rate of failure of such enterprises. In addition, there
is no guarantee that we will commence business operations. Even if we do
commence operations, at present, we do not know when such operations will
commence.
Furthermore, we anticipate that we will incur increased operating expenses
without realizing any revenues. We therefore expect to incur significant losses
into the foreseeable future. We recognize that if we are unable to generate
significant revenues from the development of our website, we will not be able to
earn profits or continue operations.
AS A RESULT OF PLACING YOUR SUBSCRIPTION FUNDS INTO AN OPERATING ACCOUNT (NOT AN
ESCROW ACCOUNT), THE FUNDS ARE SUBJECT TO ATTACHMENT BY CREDITORS OF THE
COMPANY, THEREBY SUBJECTING YOU TO A POTENTIAL LOSS OF THE FUNDS.
Because subscription funds are being placed by the Company in an operating
account during the offering period, rather than an escrow account, creditors of
the Company could attempt to attach, and ultimately could be successful in
obtaining or attaching the funds before the offering closes. In such case,
investors would lose all or part of their investments, regardless of whether or
not the offering closes.
THE RECENTLY ENACTED JOBS ACT WILL ALSO ALLOW THE COMPANY TO POSTPONE THE DATE
BY WHICH IT MUST COMPLY WITH CERTAIN LAWS AND REGULATIONS INTENDED TO PROTECT
INVESTORS AND TO REDUCE THE AMOUNT OF INFORMATION PROVIDED IN REPORTS FILED WITH
THE SEC.
The recently enacted JOBS Act is intended to reduce the regulatory burden on
"emerging growth companies". The Company meets the definition of an "emerging
growth company" and so long as it qualifies as an "emerging growth company," it
will, among other things:
* be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley
Act requiring that its independent registered public accounting firm
provide an attestation report on the effectiveness of its internal
control over financial reporting;
* be exempt from the "say on pay" provisions (requiring a non-binding
shareholder vote to approve compensation of certain executive
officers) and the "say on golden parachute" provisions (requiring a
non-binding shareholder vote to approve golden parachute arrangements
for certain executive officers in connection with mergers and certain
other business combinations) of The Dodd-Frank Wall Street Reform and
Consumer Protection Act (the "Dodd-Frank Act") and certain disclosure
requirements of the Dodd-Frank Act relating to compensation of Chief
Executive Officers;
* be permitted to omit the detailed compensation discussion and analysis
from proxy statements and reports filed under the Securities Exchange
Act of 1934, as amended and instead provide a reduced level of
disclosure concerning executive compensation; and
7
* be exempt from any rules that may be adopted by the Public Company
Accounting Oversight Board (the "PCAOB") requiring mandatory audit
firm rotation or a supplement to the auditor's report on the financial
statements.
Although the Company is still evaluating the JOBS Act, it currently intends to
take advantage of all of the reduced regulatory and reporting requirements that
will be available to it so long as it qualifies as an "emerging growth company".
The Company has elected not to opt out of the extension of time to comply with
new or revised financial accounting standards available under Section 102(b)(1)
of the JOBS Act. Among other things, this means that the Company's independent
registered public accounting firm will not be required to provide an attestation
report on the effectiveness of the Company's internal control over financial
reporting so long as it qualifies as an "emerging growth company", which may
increase the risk that weaknesses or deficiencies in the internal control over
financial reporting go undetected. Likewise, so long as it qualifies as an
"emerging growth company", the Company may elect not to provide certain
information, including certain financial information and certain information
regarding compensation of executive officers, which would otherwise have been
required to provide in filings with the SEC, which may make it more difficult
for investors and securities analysts to evaluate the Company. As a result,
investor confidence in the Company and the market price of its common stock may
be adversely affected.
Notwithstanding the above, we are also currently a "smaller reporting company",
meaning that we are not an investment company, an asset-backed issuer, or a
majority-owned subsidiary of a parent company that is not a smaller reporting
company and have a public float of less than $75 million and annual revenues of
less than $50 million during the most recently completed fiscal year. In the
event that we are still considered a "smaller reporting company", at such time
are we cease being an "emerging growth company", the disclosure we will be
required to provide in our SEC filings will increase, but will still be less
than it would be if we were not considered either an "emerging growth company"
or a "smaller reporting company". Specifically, similar to "emerging growth
companies", "smaller reporting companies" are able to provide simplified
executive compensation disclosures in their filings; are exempt from the
provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that
independent registered public accounting firms provide an attestation report on
the effectiveness of internal control over financial reporting; are not required
to conduct say-on-pay and frequency votes until annual meetings occurring on or
after January 21, 2013; and have certain other decreased disclosure obligations
in their SEC filings, including, among other things, only being required to
provide two years of audited financial statements in annual reports. Decreased
disclosures in our SEC filings due to our status as an "emerging growth company"
or "smaller reporting company" may make it harder for investors to analyze the
Company's results of operations and financial prospects.
WE ARE AN "EMERGING GROWTH COMPANY" UNDER THE JOBS ACT OF 2012, AND WE CANNOT BE
CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH
COMPANIES WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.
We are an "emerging growth company," as defined in the Jumpstart Our Business
Startups Act of 2012 ("JOBS Act"), and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other
public companies that are not "emerging growth companies" including, but not
limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved. We cannot predict if investors will
find our common stock less attractive because we may rely on these exemptions.
If some investors find our common stock less attractive as a result, there may
be a less active trading market for our common stock and our stock price may be
more volatile.
In addition, Section 107 of the JOBS Act also provides that an "emerging growth
company" can take advantage of the extended transition period provided in
Section 7(a)(2)(B) of the Securities Act for complying with new or revised
accounting standards. In other words, an "emerging growth company" can delay the
adoption of certain accounting standards until those standards would otherwise
apply to private companies. We are choosing to take advantage of the extended
transition period for complying with new or revised accounting standards. As a
result, our financial statements may not be comparable to those of companies
that comply with public company effective dates.
We will remain an "emerging growth company" for up to five years, although we
will lose that status sooner if our revenues exceed $1 billion, if we issue more
than $1 billion in non-convertible debt in a three year period, or if the market
value of our common stock that is held by non-affiliates exceeds $700 million.
8
WE MUST BUILD A WEBSITE IN ORDER TO BE ABLE TO SELL LOOSE PEARLS TO ONLINE
PURCHASERS.
In order to establish a venue to market our products, we must establish an
Internet website highlighting our inventory and our prices at which the pearls
are being offered for sale.
The construction of our website is in the early stage of development and will
require substantial time and resources to complete. We intend to launch a basic
interim website funded by the proceeds of this Offering to initiate our business
plan.
THE OVERALL JEWELRY ONLINE RETAIL (INCLUDING PEARL JEWELRY) INDUSTRY IS
INCREASINGLY COMPETITIVE AS THERE ARE NO SUBSTANTIAL BARRIERS TO ENTER THE
INDUSTRY. WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST DOMINANT COMPANIES.
IF WE CANNOT PRESENT PRODUCTS ATTRACTIVE TO CONSUMERS, WE WILL NOT BE ABLE TO
COMPETE SUCCESSFULLY, OUR BUSINESS MAY BE ADVERSELY AFFECTED AND WE MAY NOT BE
ABLE TO GENERATE ANY REVENUE.
The number of online retail jewelry organizations in India is increasing, and
the online retail jewelry industry on international level is intensely
competitive. Barriers to entry are minimal; and current and new competitors can
launch new websites.
There are numerous, well-financed competitors who offer larger jewelry product
lines along with other products. We have not demonstrated that we can compete
successfully against these competitors and we may not be able to compete in the
future. If we are unable to effectively compete, our results would be negatively
affected, we may be unable to implement our plan and we might ultimately fail.
In addition, we cannot prevent unauthorized persons from copying aspects of our
business, including our website design or functionality, product line or
marketing materials.
OUR ONLINE, OFFLINE AND OTHER MARKETING INITIATIVES MAY NOT BE SUCCESSFUL AND
THIS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION
OR RESULTS OF OPERATIONS.
Our success depends on our ability to attract customers on cost-effective terms.
We intend to develop relationships with online services, search engines, and
other websites and e-commerce businesses to provide links which would direct
potential customers to our website. Such services are expensive and may not
result in cost-effective acquisition of customers. We will be relying on the
offline and online marketing initiatives as a source of traffic to our website.
If these initiatives are not successful, our business, financial condition and
results of operations will be adversely affected.
OUR FAILURE TO EFFICIENTLY RESPOND TO CHANGING CONSUMER PREFERENCES AND DEMAND
FOR NEW PRODUCTS AND SERVICES COULD SIGNIFICANTLY HARM OUR PRODUCT SALES AND
CUSTOMER RELATIONSHIPS AND OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL
CONDITION COULD BE MATERIALLY AND ADVERSELY AFFECTED.
Our success will depend, in part, on our ability to anticipate and respond to
changing consumer trends and preferences. We may not be able to respond in a
timely or commercially appropriate manner to these changes. Our failure to
accurately predict these trends could negatively impact our inventory levels,
sales and consumer opinion of us as a source for the latest products. The
success of our new product offerings depends upon a number of factors, including
our ability to:
1. accurately anticipate customer needs;
2. competitively price our products;
3. procure and maintain products in sufficient volumes and in a timely
manner; and
4. differentiate our product offerings from those of our competitors.
If we do not introduce new products, make enhancements to existing products or
maintain the appropriate inventory levels to meet customers' demand in a timely
manner, our business, results of operations and financial condition could be
materially and adversely affected.
TEMPORARY POPULARITY OF SOME TYPES AND STYLES OF PEARLS MAY RESULT IN SHORT-TERM
INCREASES, FOLLOWED BY DECREASES, IN THE VOLUME OF SALES, WHICH COULD CAUSE OUR
REVENUES TO FLUCTUATE.
Temporary consumer popularity or "fads" among consumers may lead to short-term
or temporary increases, followed by decreases in the volume and in the average
price of certain types and styles of pearls which we intend to sell. These
trends may result in significant period-to-period fluctuations in our operating
results and could result in declines in our net revenues and profitability, not
only because of a resulting decline in the volume of selling certain types of
pearls, but also because such trends could lead to increased price competition,
which could require us to reduce the sales prices of certain of our inventory in
order to maintain market share.
9
INDUSTRY SALES CYCLES CAN BE UNPREDICTABLE.
Sales cycles for customers who purchase pearls are generally unpredictable due
primarily to the discretionary nature of the purchase of jewelry. Customers will
typically purchase jewelry when discretionary income is abundant. Sales of
jewelry are typically seasonal, with heightened sales occurring during holiday
periods and bridal seasons. When economic conditions preclude consumers from
purchasing pearls or during a season of low sales, such downturns in sales will
affect our financial projections and could adversely affect results of
operations.
SALES OF PEARLS ARE SUBJECT TO DISRUPTION.
As with all sales operations, the marketing of pearls will subject us to certain
operating risks, including:
* Supply of pearls is dependent on independent wholesale suppliers who
may encounter problems with their supply chain, weather in producing
countries, labor and others difficulties;
* Procurement of pearls is subject to the effects of price increases
which the Company may or may not be able to pass through to its
customers;
* India imports pearls and any political tension between India and
supplier countries will impact the supply and price of pearls; and
* disputes with labor unions in which certain personnel involved in the
operation of pearl production and processing facilities are members
and disputes under various collective bargaining agreements applicable
to those plants.
All of these factors may affect the Company's ability to access suitable
products on acceptable terms, are beyond the Company's control and could
significantly affect our business, results of operations and financial
condition.
WE MAY EXPERIENCE LOSSES WHICH ARE NOT COVERED BY INSURANCE.
Our initial business plan contemplates acquiring a small inventory of pearls
with access to a larger supplier inventory. Because we intend to maintain only a
small inventory of pearls at the commencement of our business, we may not obtain
insurance to cover the loss of that inventory. If we experience a loss of
inventory which is uninsured, the loss would negatively affect our business. The
extent of the loss would be limited to the value of the inventory which we
anticipate to be modest during the initial stage of our business. If we acquire
a more substantial inventory, we will reconsider our decision and obtain
insurance when it is viable to do so.
THE FUTURE OF THE CULTURED PEARL IS COMPROMISED BY ENVIRONMENTAL CONCERNS.
Pearl-bearing mollusks tolerate a limited range of ocean and freshwater
environments. The environments which support such mollusks have diminished as
pollution has increased. Commercial oyster beds are jeopardized by polluted
water which has decreased the size of pearls produced and has resulted in
discoloration of pearls and production of pearls with a less translucent
appearance. If fewer pearls or only pearls of inferior quality are available to
the Company as a result of damaging environmental effects, such factors could
negatively affect our business, results of operations and financial condition.
WE DEPEND ON OUR ABILITY TO MAINTAIN AND DEVELOP NEW SOURCES OF LOOSE PEARLS IN
A TIMELY AND CONSISTENT MANNER, AND FAILURE TO DO SO WOULD ADVERSELY AFFECT OUR
OPERATIONS AND FINANCIAL PERFORMANCE.
Our success in the industry will require additional and continuing development
to become and remain competitive. Our future success will depend, in part, on
our ability to continue to find and retain suppliers of pearls. We expect to
make investments in activities to develop suppliers. This development activity
will require investment in order to establish our market position. We may
experience unforeseen problems in our development endeavors. We may not achieve
widespread market acceptance of our loose pearls. We may not meet some of these
requirements or may not meet them on a timely basis. We may have to modify plans
for the procurement and sale of pearl jewelry which may substantially increase
our expenses. These factors could materially affect our ability to forecast
operations and negatively affect our stock price, results of operations, cash
flow and financial condition.
CUSTOMERS MAY BE UNWILLING TO USE THE INTERNET TO PURCHASE GOODS.
Our long-term future depends entirely upon consumers' willingness to use the
Internet as a means to purchase goods and specifically loose pearls. Although
e-commerce remains a relatively new concept, large numbers of customers are
using the Internet to purchase goods. The demand for and acceptance of products
sold over the Internet are highly uncertain, and most e-commerce businesses have
a short track record. Concerns about the security and privacy of transactions
over the Internet could inhibit the growth of the Internet and e-commerce. If
consumers are unwilling to use the Internet to conduct business, our business
may not develop profitably.
10
THE SECURITY RISKS OR PERCEPTION OF RISKS OF E-COMMERCE MAY DISCOURAGE CUSTOMERS
FROM PURCHASING GOODS FROM US.
In order for the e-commerce market to develop successfully, we and other market
participants must be able to transmit confidential information securely over
public networks. Third parties may have the technology or know-how to breach the
security of customer transaction data. Any breach could cause customers to lose
confidence in the security of our website and choose not to purchase from us.
We will rely on encryption and authentication technology licensed from third
parties to provide the security and authentication necessary to effect secure
transmission of confidential information such as customer credit card numbers.
We cannot assure you that advances in computer capabilities, new discoveries in
the field of cryptography or other events or developments will not result in a
compromise or breach of the algorithms that we will use to protect customer
transaction data. If any such compromise of our security were to occur, it could
harm our reputation, business, prospects, financial condition and results of
operations. A party who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our operations.
We may be required to expend significant capital and other resources to protect
against such security breaches or to alleviate problems caused by such breaches.
We cannot assure you that our security measures will prevent security breaches
or that failure to prevent such security breaches will not harm our business,
prospects, financial condition and results of operations.
FAILURE OF THIRD-PARTY SYSTEMS OR THIRD-PARTY SERVICE AND SOFTWARE PROVIDERS
UPON WHICH WE RELY COULD ADVERSELY AFFECT OUR BUSINESS.
We will rely on certain third-party computer systems or third-party service and
software providers, including data centers, technology platforms, back-office
systems, Internet service providers and communications facilities. Any
interruption in these third-party services, or deterioration in their
performance or quality, could adversely affect our business. If our arrangement
with any third party is terminated, we may not be able to find alternative
systems or service providers on a timely basis or on commercially reasonable
terms. This could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
We will host our platform and serve all of our customers from our network
servers, which will be located at various data center facilities. Problems faced
by our data center locations or with the telecommunications network providers
with whom we may contract could adversely affect the experience of our
customers. If our data centers are unable to keep up with our growing needs for
capacity or close without adequate notice, this could have an adverse effect on
our business. Any changes in third-party service levels at our data centers or
any errors, defects, disruptions, or other performance problems with our
services could harm our reputation and adversely affect the performance of our
platform. Interruptions in our services might reduce our sales revenues, subject
us to potential liability and thereby adversely affect our business, financial
condition, results of operations and cash flows.
WE MAY BE LIABLE IF THIRD PARTIES MISAPPROPRIATE OUR CUSTOMERS' PERSONAL
INFORMATION.
If third parties are able to penetrate our network security or otherwise
misappropriate our customers' personal information or credit card information,
or if we give third parties improper access to our customers' personal
information or credit card information, we could be subject to liability. This
liability could include claims for unauthorized purchases with credit card
information or other similar fraud claims. This liability could also include
claims for other misuses of personal information, including unauthorized
marketing purposes. These claims could result in litigation. Liability for
misappropriation of this information could adversely affect our business. We
could incur additional expenses if new regulations regarding the use of personal
information are introduced or if government agencies investigate our privacy
practices.
SYSTEM AND ONLINE SECURITY FAILURES COULD HARM OUR BUSINESS AND OPERATING
RESULTS.
Our services will depend on the efficient and uninterrupted operation of our
computer and communications hardware systems. Our systems and operations will be
vulnerable to damage or interruption from a number of sources, including fire,
flood, power loss, telecommunications failure, break-ins, earthquakes and
similar events. Our Internet host provider will not guarantee that our Internet
access will be uninterrupted, error-free or secure. Our servers will also be
vulnerable to computer viruses, physical, electrical or electronic break-ins and
similar disruptions. Any substantial interruptions could result in the loss of
data and could completely impair our ability to generate revenues from our
service. We do not presently have a full disaster recovery plan in effect to
cover the loss of all facilities and equipment. We may elect to obtain business
interruption insurance; however, we cannot be certain that any such coverage
will be sufficient to compensate us for losses that may occur as a result of
business interruptions.
WE ARE DEPENDENT UPON THE FUNDS TO BE RAISED IN THIS OFFERING TO START OUR
BUSINESS, THE PROCEEDS OF WHICH MAY BE INSUFFICIENT TO ACHIEVE REVENUES.
11
We need the proceeds from this offering to start our operations. If $50,000 is
raised, this amount will enable us, after paying the expenses of this offering,
to develop our website and advertise online our loose pearls. It will also
enable us to initiate the development of our marketing plans and initiate the
development of marketing and support material such as brochures, flyers and
"fact sheets." We need the proceeds of this offering to refine and implement our
business plan from which we hope to achieve a sustainable sales level where
ongoing operations can be funded out of revenues.
BECAUSE WE OPERATE IN A FOREIGN COUNTRY, OUR BUSINESS IS SUBJECT TO CURRENCY
FLUCTUATIONS AND RISKS WHICH COULD NEGATIVELY IMPACT OUR REVENUES AND RESULTS OF
OPERATIONS. ALSO, SINCE WE HOLD OUR CASH RESERVES IN US DOLLARS, WE MAY
EXPERIENCE WEAKENED PURCHASING POWER IN INDIAN RUPEES AND MAY NOT BE ABLE TO
AFFORD TO CONDUCT OUR PLANNED OPERATIONS.
Although we hold our cash reserves in US dollars, we intend to operate our
business in Indian rupees. Almost all of our operations and expenses will be
denominated in the Indian currency. Due to foreign exchange rate fluctuations,
the value of our reserves and the cash flow that we will experience will result
in both translation gains and losses in terms of Indian rupees.
We anticipate that we will raise all necessary funds for current and future
operations through the sale of our equity, which will be denominated in United
States dollars. If there occurs a significant decline in the US Dollar versus
the Indian rupee, our Indian rupees purchasing power in US dollars would
significantly decline. As well, if there was a significant decline in the Indian
rupee relative to the US dollar, the amount of revenue and net profit that we
may generate from our future operations would be reduced in terms of US dollars,
our financial statement reporting currency. We have not entered into derivative
instruments to offset the impact of foreign exchange fluctuations.
IF WE BECOME MORE INVOLVED IN INTERNATIONAL BUSINESS TRANSACTIONS, WE WILL BE
EXPOSED TO LOCAL BUSINESS RISKS IN DIFFERENT COUNTRIES, WHICH COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION OR RESULTS OF OPERATIONS.
We may expand our international sales efforts to consumers located in different
countries. Any such international operations would be subject to risks inherent
in doing business in other countries, including, but not necessarily limited to:
* new and different legal and regulatory requirements in local
jurisdictions;
* potentially adverse tax consequences, including imposition or increase
of taxes on transactions or withholding and other taxes on remittances
and other payments by subsidiaries;
* risk of nationalization of private enterprises by foreign governments;
* legal restrictions on doing business in or with certain nations,
certain parties and/or certain products; and
* local economic, political and social conditions, including the
possibility of hyperinflationary conditions and political instability.
We may not be successful in developing and implementing policies and strategies
to address the foregoing factors in a timely and effective manner in the
locations where we will do business. Consequently, the occurrence of one or more
of the foregoing factors could have a material adverse effect on our
international operations and upon our financial condition and results of
operations.
Our operations in developing markets could expose us to political, economic and
regulatory risks that are greater than those we may face in established markets.
Further, our international operations may require us to comply with additional
United States and international regulations.
WE ARE VULNERABLE TO THE CURRENT ECONOMIC CRISIS THAT MAY NEGATIVELY AFFECT OUR
PROFITABILITY
The recent global recession has placed severe constraints on the ability of all
companies, particularly smaller ones, to raise capital, operate effectively and
profitably and to plan for the future. Currently, it is not clear whether the
economy will recover appreciably in the near future. As a small, start-up
company we are especially vulnerable to these conditions. If current economic
conditions do not improve, or if they worsen, our business plan will likely be
negatively affected and will suffer.
DECLINES IN GENERAL ECONOMIC CONDITIONS COULD RESULT IN DECREASED DEMAND FOR OUR
PRODUCTS WHICH COULD ADVERSELY AFFECT OUR OPERATING RESULTS.
The availability of discretionary or disposable income and the confidence of
consumers about future economic conditions are important factors that can affect
the willingness and ability of consumers to purchase, and the prices that they
are willing to pay for, jewelry. As a result, economic uncertainties, downturns
and recessions can and will adversely affect our operating results by reducing
the purchases of jewelry in general and pearls in particular.
12
WE INTEND TO COMMENCE OPERATIONS IN THE AREA OF ONLINE SALES OF LOOSE HIGH GRADE
PEARLS. OUR BUSINESS WILL NOT BE DIVERSIFIED, WHICH COULD RESULT IN SIGNIFICANT
FLUCTUATIONS IN OUR OPERATING RESULTS. A DOWNTURN IN OUR INDUSTRY SECTOR MAY
REDUCE OUR STOCK PRICE, EVEN IF OUR BUSINESS IS SUCCESSFUL.
We intend to commence operations in the area of online sales of loose pearls,
and, accordingly, are dependent upon trends in jewelry sector. Downturns in our
industry could adversely affect our business. A downturn in our sector may
reduce our stock price, even if our business is successful. The popularity of
collecting jewelry can vary due to a number of factors, most of which are
outside of our control, including fashion trends, general consumer confidence
and their impact on disposable income and other general economic conditions.
IF OUR SOLE OFFICER RESIGNS, WE WILL BE LEFT WITHOUT MANAGEMENT AND OUR BUSINESS
OPERATIONS WOULD CEASE.
We depend on the services of our President, Shabbir Shaikh, and our success will
depend on the decisions made by him. The loss of the services of our President
could have an adverse effect on our business, financial condition and results of
operations. There is no assurance that our President will not leave us or
compete against us in the future, as we presently have no employment agreement
with him. In such circumstance, we may have to recruit qualified personnel with
competitive compensation packages, equity participation and other benefits that
may affect the working capital available for our operations. Our failure to
attract additional qualified employees, as required, or to retain the services
of Mr. Shaikh could have a material adverse effect on our operating results and
financial condition. Even if we are able to find substitute personnel, it is
uncertain whether we could find someone who could successfully operate our
business. We could fail without appropriate replacements.
ALTHOUGH OUR PRESIDENT IS NOT CURRENTLY RECEIVING COMPENSATION FOR HIS SERVICES,
HE ANTICIPATES RECEIVING MANAGEMENT FEES ONCE WE ARE ABLE TO AFFORD TO PAY THEM
FROM OPERATIONS, WHICH WILL ADVERSELY IMPACT ANY POTENTIAL NET PROFIT THAT WE
MAY GENERATE.
We are not currently compensating our President for providing management
services to us. We intend to pay management fees to him as compensation if the
cash flow that we generate from operations sufficiently exceeds our total
expenses. Mr. Shaikh, as a director and our sole officer, has the power, along
with our second director, to set his own compensation.
OUR MANAGEMENT HAS NO PRIOR EXPERIENCE IN THE MARKETING OF PRODUCTS AND SERVICES
VIA THE INTERNET AND THEREFORE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE THE
DEVELOPMENT OR GROWTH OF OUR COMPANY IN THIS FIELD.
Our management has no experience in marketing an online retail jewelry business.
Although Mr. Shaikh has extensive experience in retail sales, this experience
may not be totally useful in developing and marketing products that are
appealing to the internet shopper. Our inexperience may cause us to make serious
mistakes in the refinement and/or implementation of our business plan. Our
management may be unable to develop or grow a business in this field due to its
inexperience.
BECAUSE OUR SOLE OFFICER HAS NO FORMAL TRAINING IN US FINANCIAL ACCOUNTING AND
MANAGEMENT, IN THE FUTURE OUR DISCLOSURE AND ACCOUNTING CONTROLS MAY NOT BE
EFFECTIVE TO COMPLY WITH APPLICABLE LAWS AND REGULATIONS, WHICH COULD RESULT IN
FINES, PENALTIES AND ASSESSMENTS AGAINST US.
We have only one officer and two directors. Although our officer does have
formal training in financial accounting and management, he is not familiar with
United States reporting requirements. Furthermore, he will be responsible for
our managerial and organizational structure, which will include preparation of
disclosure and accounting controls pursuant to Section 404 of the Sarbanes-Oxley
Act of 2002 (the "SOX Act"). He may be incapable of creating and implementing
the disclosure and accounting controls which are required under the SOX Act,
which could result in fines, penalties and assessments against us and which
ultimately could cause you to lose your entire investment.
THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR DIRECTORS AND SOLE OFFICER COULD
ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S.
SECURITIES LAWS.
Shabbir Shaikh, a director and our sole officer, has had no responsibility for
managing a public company in the United States, which could impair our ability
to comply with legal and regulatory requirements such as those imposed by the
SOX Act. Such responsibility includes complying with federal securities laws and
making required disclosures on a timely basis. In addition, Mr. Shaikh may not
be able to implement programs and policies in an effective and timely manner or
in a manner which adequately responds to such increased legal, regulatory
compliance and reporting requirements, including establishing and maintaining
internal controls over financial reporting. Any such deficiencies, weaknesses or
lack of compliance could have a materially adverse effect on our ability to
comply with the reporting requirements of the Exchange Act, which is necessary
to maintain our public company status. If we were to fail to fulfill those
obligations, our ability to continue as a U.S. public company would be in
jeopardy, in which event you could lose your entire investment in our company.
13
OUR DIRECTOR AND SOLE OFFICER WILL ALLOCATE ONLY A PORTION OF HIS TIME TO OUR
BUSINESS, WHICH COULD HAVE A NEGATIVE IMPACT ON OUR SUCCESS.
Currently, Shabbir Shaikh, our sole officer allocates only a portion of his time
to the operation of our business. If our business develops faster than
anticipated, or if his other commitments require him to devote substantially
more time than is currently planned, there is no guarantee that he will be able
to devote the time necessary to assure our successful operations. The limited
ability of Mr. Shaikh to devote time and effort to our operations may have a
negative effect on us and our ability to implement our plan of operations
currently and in the future. This could negatively impact our business
development.
IF OUR ESTIMATES RELATED TO EXPENDITURES ARE ERRONEOUS OR INACCURATE, OUR
BUSINESS WILL FAIL AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.
Our success is dependent in part upon the accuracy of our management's estimates
of expenditures for legal and accounting services, including those we expect to
incur as a publicly reporting company, website development and advertising and
administrative expenses. If such estimates are erroneous or inaccurate, or we
encounter unforeseen expenses and delays, we may not be able to carry out our
business plan, which could result in the failure of our business and a loss of
your entire investment.
WE ARE SUBJECT TO THE MANY RISKS OF DOING BUSINESS INTERNATIONALLY INCLUDING BUT
NOT LIMITED TO THE DIFFICULTY OF ENFORCING LIABILITIES IN A FOREIGN
JURISDICTION.
Our sole officer and our two directors reside outside of the United States and
all of our substantial assets will be located outside of the United States. We
are a Nevada corporation and, as such, are subject to the jurisdiction of the
State of Nevada and the United States courts for purposes of any lawsuit, action
or proceeding by investors herein. However, even if a judgment is obtained
against us, it is will be difficult or impossible to enforce without obtaining a
judgment in India as well. Therefore, the cost of enforcing liabilities against
us will be high.
Our directors reside in India. Any action brought against either of the
directors in the United States, even if successful, either through default or on
the merits of the claim, that results in a financial award against them, may be
required to be enforced and/or collected in India, unless Mr. and Ms. Shaikh
owned assets located in the United States. Further, shareholder efforts to bring
an action in India against its citizens for any alleged breach of a duty in a
foreign jurisdiction may be difficult and effectively unfeasible.
BECAUSE WE ARE A SHELL COMPANY, IT WILL LIKELY BE DIFFICULT FOR US TO OBTAIN
ADDITIONAL FINANCING BY WAY OF PRIVATE OFFERINGS OF OUR SECURITIES.
We are a "shell company" within the meaning of Rule 405, promulgated pursuant to
Securities Act, because we have nominal assets and nominal operations.
Accordingly, the holders of securities purchased in private offerings of our
securities we make to investors will not be able to rely on the safe harbor from
being deemed an underwriter under SEC Rule 144 in order to resell their
securities. This will likely make it more difficult for us to attract additional
capital through subsequent unregistered offerings because purchasers of
securities in such unregistered offerings will not be able to resell their
securities in reliance on Rule 144, a safe harbor on which holders of restricted
securities usually rely to resell securities.
RISKS RELATING TO OUR COMMON STOCK
BECAUSE TWO DIRECTORS WILL OWN 50% OF THE OUTSTANDING SHARES AFTER THIS
OFFERING, THEY WILL RETAIN SIGNIFICANT CONTROL OF OUR COMPANY AND MAY BE ABLE TO
ELECT DIRECTORS WHICH COULD DECREASE THE PRICE AND MARKETABILITY OF THE SHARES.
Even if we sell all 5,000,000 shares of common stock in this offering, Mr.
Shaikh and Ms. Shaikh (who are husband and wife) will still own 5,000,000 shares
and will continue to exert significant control and influence over the Company.
As a result, Mr. Shaikh and Ms. Shaikh will have significant influence to:
* elect or defeat the election of our directors;
* amend or prevent amendment of our articles of incorporation or bylaws;
* effect or prevent a merger, sale of assets or other corporate
transaction; and
* effect the outcome of any other matter submitted to the stockholders
for vote.
Moreover, because of the significant ownership position held by our insiders,
new investors may not be able to effect a change in the Company's business or
management, and therefore, shareholders would be subject to decisions made by
management and the major shareholders.
In addition, sales of significant amounts of shares held by Mr. Shaikh and Ms.
Shaikh, or the prospect of these sales, could adversely affect the market price
of our common stock. Management's stock ownership may discourage a potential
14
acquirer from making a tender offer or otherwise attempting to obtain control of
us, which in turn could reduce our stock price or prevent our stockholders from
realizing a premium over our stock price.
THERE ARE SIGNIFICANT CONSEQUENCES TO THE OWNERSHIP OF SECURITIES OF A SHELL
COMPANY.
We are defined as a shell company because we have no or nominal operations and
either no or nominal assets, assets consisting solely of cash and cash
equivalents; or assets consisting of any amount of cash and cash equivalents and
nominal other assets. As a result of the Company's shell company status, we are
ineligible to file a registration of securities using Form S-8. Also, Rule 144
is unavailable for transfers of our securities until we have ceased to be a
shell company, are subject to the reporting requirements of the Exchange Act; we
have filed Exchange Reports for 12 months and a minimum of one year has elapsed
since the filing of Form 10 information on Form 8-K changing our status from a
shell company to a non-shell company.
WE ARE SELLING THIS OFFERING WITHOUT AN UNDERWRITER AND MAY BE UNABLE TO SELL
ALL OF THE SHARES, IN WHICH CASE, WE MAY HAVE TO SEEK ALTERNATIVE FINANCING TO
IMPLEMENT OUR BUSINESS PLANS AND YOU WOULD RECEIVE A RETURN OF YOUR ENTIRE
INVESTMENT.
This offering is self-underwritten; that is, we are not going to engage the
services of an underwriter to sell the shares. We intend to sell them through
our sole officer, who will receive no commission. He will offer the shares to
friends, relatives, acquaintances and business associates; however, there is no
guarantee that he will be able to sell any of the shares. This is an "all or
nothing" offering. In the event we do not sell all of the shares before the
expiration date of the offering, all funds raised will be promptly returned to
the investors, without interest or deduction.
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION OF THE PRICE YOU PAY FOR YOUR
SHARES.
Our existing stockholders acquired their shares at a cost of $0.005 per share, a
cost per share that is substantially less than the amount you will pay for the
shares you purchase in this offering. Accordingly, any investment you make in
these shares will result in the immediate and substantial dilution of the net
tangible book value of those shares from the $0.01 you pay for them. Upon
completion of the offering, the net tangible book value of your shares will be
$0.00579 per share, $0.00421 less than what you paid for them.
THERE IS CURRENTLY NO PUBLIC MARKET FOR OUR SECURITIES, AND THERE CAN BE NO
ASSURANCE THAT ANY PUBLIC MARKET WILL DEVELOP OR THAT OUR COMMON STOCK WILL BE
QUOTED FOR TRADING.
There is no public market for our securities and there can be no assurance that
an active trading market for the securities offered herein will develop after
this offering, or, if developed, be sustained. After the effective date of the
registration statement of which this prospectus is a part, we intend to identify
a market maker to file an application with FINRA to have our common stock quoted
on the Over-the-Counter Bulletin Board. We will have to satisfy certain criteria
in order for our application to be accepted. We do not currently have a market
maker that is willing to participate in this application process, and even if we
identify a market maker, we cannot assure you that we will meet the requisite
criteria or that our application will be accepted. Our common stock may never be
quoted on the Over-the-Counter Bulletin Board, or, even if quoted, a public
market may not materialize.
If our securities are not eligible for initial quotation, or if quoted, are not
eligible for continued quotation on the Over-the-Counter Bulletin Board or a
public trading market does not develop, purchasers of the shares of common stock
may have difficulty selling or be unable to sell their securities should they
desire to do so, rendering their shares effectively worthless and resulting in a
complete loss of their investment.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HIS ABILITY TO SELL
OUR STOCK.
The shares offered by this prospectus constitute penny stock under the Exchange
Act. The shares will remain penny stock for the foreseeable future. "Penny
stock" rules impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited
investors, that is, generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with a spouse. For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our shares of
common stock. The market price of our shares would likely suffer as a result.
IF QUOTED, THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE, WHICH MAY
SUBSTANTIALLY INCREASE THE RISK THAT YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT
OR ABOVE THE PRICE THAT YOU MAY PAY FOR THE SHARES.
15
Even if our shares are quoted for trading on the Over-the-Counter Bulletin Board
following this offering and a public market develops for our common stock, the
market price of our common stock may be volatile. It may fluctuate significantly
in response to the following factors:
* variations in quarterly operating results;
* our announcements of significant events and achievement of milestones;
* our relationships with other companies or capital commitments;
* additions or departures of key personnel;
* sales of common stock or termination of stock transfer restrictions;
* changes in financial estimates by securities analysts, if any; and
* fluctuations in stock market price and volume.
Your inability to sell your shares during a decline in the price of our stock
may increase losses that you may suffer as a result of your investment.
BECAUSE WE DO NOT INTEND TO PAY ANY DIVIDENDS ON OUR COMMON STOCK, HOLDERS OF
OUR COMMON STOCK MUST RELY ON STOCK APPRECIATION FOR ANY RETURN ON THEIR
INVESTMENT.
We have not declared or paid any dividends on our common stock since our
inception, and we do not anticipate paying any such dividends for the
foreseeable future. Accordingly, holders of our common stock will have to rely
on capital appreciation, if any, to earn a return on their investment in our
common stock.
ADDITIONAL ISSUANCES OF OUR SECURITIES MAY RESULT IN IMMEDIATE DILUTION TO
EXISTING SHAREHOLDERS.
We may need to raise additional capital in order for our business plan to
succeed. Our most likely source of additional capital will be through the sale
of additional shares of common stock. We are authorized to issue up to
100,000,000 shares of common stock, of which 5,000,000 shares of common stock
are currently issued and outstanding. Our Board of Directors has the authority
to cause us to issue additional shares of common stock, and to determine the
rights, preferences and privilege of preferred shares, without consent of any of
our stockholders. We may issue shares in connection with financing arrangements
or otherwise. Any such issuances will result in immediate dilution to our
existing shareholders' interests, which will negatively affect the value of your
shares.
WE ARE AN "EMERGING GROWTH COMPANY" AND WE CANNOT BE CERTAIN IF THE REDUCED
DISCLOSURE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES WILL MAKE OUR
COMMON STOCK LESS ATTRACTIVE TO INVESTORS.
We are an "emerging growth company," as defined in the Jumpstart our Business
Startups Act of 2012, and we may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies,
including, but not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and shareholder approval of
any golden parachute payments not previously approved. We cannot predict if
investors will find our common stock less attractive because we will rely on
these exemptions. If some investors find our common stock less attractive as a
result, there may be a less active trading market for our common stock and our
stock price may be more volatile.
Under the Jumpstart Our Business Startups Act, "emerging growth companies" can
delay adopting new or revised accounting standards until such time as those
standards apply to private companies. We have elected to avail ourselves of this
exemption from new or revised accounting standards and, therefore, our financial
statements may not be comparable to those of other public companies that are not
"emerging growth companies."
STATE SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES
IN WHICH AND CONDITIONS UNDER WHICH YOU CAN SELL THE SHARES OFFERED BY THIS
PROSPECTUS.
Secondary trading in common stock sold in this offering will not be possible in
any state until the common stock is qualified for sale under the applicable
securities laws of the state or there is confirmation that an exemption, such as
listing in certain recognized securities manuals, is available for secondary
trading in the state. If we fail to register or qualify, or to obtain or verify
an exemption for the secondary trading of, the common stock in any particular
state, the common stock could not be offered or sold to, or purchased by, a
resident of that state. In the event that a significant number of states refuse
16
to permit secondary trading in our common stock, the liquidity for the common
stock could be significantly impacted thus causing you to realize a loss on your
investment.
The Company does not intend to seek registration or qualification of its shares
of common stock the subject of this offering in any State or territory of the
United States. Aside from a "secondary trading" exemption, other exemptions
under state law and the laws of US territories may be available to purchasers of
the shares of common stock sold in this offering.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO
OUR BUSINESS THAT ARE BASED ON OUR BELIEFS AS WELL AS ASSUMPTIONS MADE BY US OR
BASED UPON INFORMATION CURRENTLY AVAILABLE TO US. THESE STATEMENTS REFLECT OUR
CURRENT VIEWS AND ASSUMPTIONS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO
RISKS AND UNCERTAINTIES. FORWARD-LOOKING STATEMENTS ARE OFTEN IDENTIFIED BY
WORDS LIKE: "BELIEVE," "EXPECT," "ESTIMATE," "ANTICIPATE," "INTEND," "PROJECT"
AND SIMILAR EXPRESSIONS OR WORDS WHICH, BY THEIR NATURE, REFER TO FUTURE EVENTS.
IN SOME CASES, YOU CAN ALSO IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY
SUCH AS "MAY," "WILL," "SHOULD," "PLANS," "PREDICTS," "POTENTIAL" OR "CONTINUE"
OR THE NEGATIVE OF THESE TERMS OR OTHER COMPARABLE TERMINOLOGY. THESE STATEMENTS
ARE ONLY PREDICTIONS AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS, INCLUDING THE RISKS IN THE SECTION ENTITLED RISK FACTORS 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. IN
ADDITION, YOU ARE DIRECTED TO FACTORS DISCUSSED IN THE "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION" SECTION, AND THE
SECTION ENTITLED "DESCRIPTION OF OUR BUSINESS" AS WELL AS OTHER FACTORS
DISCUSSED ELSEWHERE IN THIS PROSPECTUS. SUCH OTHER FACTORS INCLUDE, AMONG
OTHERS: GENERAL ECONOMIC AND BUSINESS CONDITIONS; INDUSTRY CAPACITY; INDUSTRY
TRENDS; COMPETITION; CHANGES IN BUSINESS STRATEGY OR DEVELOPMENT PLANS; PROJECT
PERFORMANCE; AVAILABILITY, TERMS, AND DEPLOYMENT OF CAPITAL; AND AVAILABILITY OF
QUALIFIED PERSONNEL.
THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS PROSPECTUS.
ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING
STATEMENTS ARE REASONABLE, WE CANNOT GUARANTEE FUTURE RESULTS, LEVELS OF
ACTIVITY, OR ACHIEVEMENTS. EXCEPT AS REQUIRED BY APPLICABLE LAW, INCLUDING THE
SECURITIES LAWS OF THE UNITED STATES, WE EXPRESSLY DISCLAIM ANY OBLIGATION OR
UNDERTAKING TO DISSEMINATE ANY UPDATE OR REVISIONS OF ANY OF THE FORWARD-LOOKING
STATEMENTS TO REFLECT ANY CHANGE IN OUR EXPECTATIONS WITH REGARD THERETO OR TO
CONFORM THESE STATEMENTS TO ACTUAL RESULTS.
TAX CONSIDERATIONS
We are not providing any tax advice as to the acquisition, holding or
disposition of the securities offered herein. In making an investment decision,
investors are strongly encouraged to consult their own tax advisor to determine
the U.S. federal, state and any applicable foreign tax consequences relating to
their investment in our securities.
USE OF PROCEEDS
If all the shares are sold, the total proceeds from this offering will be
$50,000. We expect to expend the proceeds from this offering in the priority set
forth below, within the first 12 months after successful completion of this
offering:
Total Offering proceeds to us $50,000
Cash on hand 25,000
-------
TOTAL $75,000
=======
OFFERING EXPENSE
SEC Registration Fee $ 7
Legal and accounting expenses 12,000
Transfer Agent Fees 1,000
Edgar formatting and XBRL conversion 3,000
-------
TOTAL $16,007
=======
OPERATING EXPENSES
Legal and Professional fees $14,000
Edgar and XBRL formatting and conversion expenses 2,000
Website development and related expenses 20,000
Inventory of pearls 10,000
17
Brochures, Marketing and e-Promotion 2,000
Office, Transfer Agent and Administrative 10,993
-------
TOTAL $58,993
-------
TOTAL USE OF PROCEEDS AND CASH ON HAND $75,000
=======
DETERMINATION OF OFFERING PRICE
There is no established market for our stock. The offering price of the
5,000,000 shares has been determined arbitrarily by us. The price does not bear
any relationship to our assets, book value, earnings, or other established
criteria for valuing a company. In determining the number of shares to be
offered and the offering price, we took into consideration our capital structure
and the amount of money we would need to implement our business plans.
Accordingly, the offering price should not be considered an indication of the
actual value of our securities.
DILUTION
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this offering. Net
tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
result of our arbitrary determination of the offering price of the shares being
offered. Dilution of the value of the shares you purchase is also a result of
the lower book value of the shares held by our existing stockholders.
In this offering, the level of dilution is increased as a result of the
relatively low book value of Asiya`s presently issued and outstanding stock.
This is due to the shares of common stock issued to the Company's founder
totaling 5,000,000 shares at $0.005 per share for $25,000 cash versus the
current offering price of $0.01 per share.
The Company's net tangible book value on October 31, 2013 was $23,880, or
approximately $0.00478 per share, based upon 5,000,000 shares outstanding. Upon
completion of this offering, but without taking into account any change in the
net tangible book value after completion of this offering other than that
resulting from the sale of the shares and receipt of the total proceeds of
$50,000 less expenses for issuance and distribution of the securities being
registered ($16,007), the net tangible book value of the 10,000,000 shares to be
outstanding will be $57,873, or approximately $0.00579 per share. Therefore, any
investor will incur an immediate and substantial dilution of approximately
$0.0042 per share while the Asiya's present stockholders will receive an
increase of $0.0001 per share in the net tangible book value of the shares that
they hold. This will result in a 42% dilution for purchasers of stock in this
offering.
The following table illustrates the dilution to the purchasers of the common
stock in this offering. The table below includes an analysis of the dilution
that will occur if all shares are sold:
Dilution Table
100% of
Shares Sold
-----------
Price Per Share for existing shareholders $ 0.005
Offering Price Per Share $ 0.01
Net Tangible Book Value Per Share Before the Offering $0.00478
Net Tangible Book Value Per Share After the Offering $0.00579
Net Increase to Original Shareholders $0.00101
Decrease in Investment to New Shareholders $0.00421
Dilution to New Shareholders 42.1%
Note: Calculations based on after deducting Offering Expenses estimated in
aggregate, at $16,007.
The following table summarizes the number and percentage of shares purchased the
amount and percentage of consideration paid and the average price per share paid
by our existing stockholder and by new investors in this offering:
18
Price Total Number of Percentage Consideration
per Share Shares Held of Ownership Paid
--------- ----------- ------------ ----
Existing Stockholders $0.005 5,000,000 50% $25,000
Investors in This Offering $0.010 5,000,000 50% $50,000
PLAN OF DISTRIBUTION
SHARES IN THE OFFERING WILL BE SOLD BY OUR DIRECTOR AND SOLE OFFICER
This is a self-underwritten offering. This Prospectus is part of a registration
statement that permits Shabbir Shaikh, our director and sole officer to sell the
Shares directly to the public, with no commission or other remuneration payable
to him for any Shares he sells. There are no plans or arrangements to enter into
any contracts or agreements to sell the Shares with a broker or dealer. We do
not intend to use any mass-advertising methods such as the Internet or print
media. After the effective date of this prospectus, Mr. Shaikh will distribute
the prospectus to potential investors at meetings, to his business associates
and to his friends and relatives who are interested in Asiya as a possible
investment. In offering the securities on our behalf, Mr. Shaikh will rely on
the safe harbor from broker dealer registration set out in Rule 3a4-1 under the
Securities Exchange Act of 1934.
Mr. Shaikh will not register as a broker-dealer pursuant to Section 15 of the
Securities Exchange Act of 1934, in reliance upon Rule 3a4-1, which sets forth
the conditions under which a person associated with an Issuer, may participate
in the offering of the Issuer's securities and not be deemed to be a
broker-dealer.
Mr. Shaikh is an officer and director and is not subject to a statutory
disqualification, as that term is defined in Section 3(a)(39)of the Act, at the
time of his participation:
a. Mr. Shaikh is an officer and director and will not be compensated in
connection with his participation by the payment of commissions or
other remuneration based either directly or indirectly on transactions
in securities;
b. Mr. Shaikh is an officer and director and is not, nor will he be at
the time of his participation in the offering, an associated person of
a broker-dealer; and,
c. Mr. Shaikh is an officer and director and meets the conditions of
paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that he (A)
primarily performs, or is intended primarily to perform at the end of
the offering, substantial duties for or on behalf of our Company,
other than in connection with transactions in securities; and (B) is
not a broker or dealer, or been associated person of a broker or
dealer, within the preceding twelve months; and (C) has not
participated in selling and offering securities for any issuer more
than once every twelve months other than in reliance on Paragraphs
(a)(4)(i) (a) (4) (iii).
Our officer and directors do not intend to purchase any shares in this offering.
We may determine to sell our Shares in India only.
TERMS OF THE OFFERING
We are registering 5,000,000 shares of our common stock for offering to
investors. The Shares will be sold at the fixed price of $0.01 per share until
the completion of this offering. There is no minimum subscription amount
required per investor, and subscriptions, once received, are irrevocable by
subscribers. This offering will commence on the date of this prospectus is
effective and continue for a period not to exceed 180 days (the "Expiration
Date"). If the all-or-none fixed amount is not achieved within 180 days of the
date of this prospectus, all subscription funds will be returned to investors
promptly without interest or deduction of fees. The offering will terminate when
the sale of all 5,000,000 shares is completed or such earlier time as the
Company may terminate the offering.
We may not sell the shares registered herein until the registration statement
filed with the Securities and Exchange Commission is effective. Further, we will
not offer the shares through a broker-dealer or anyone affiliated with a
broker-dealer. Upon effectiveness, all of the shares being registered herein may
become tradable. The stock may be traded or listed only if a broker-dealer has
acted as a market maker in our stock and our application is accepted for
quotation on the OTCBB. Despite our best efforts, we may not be able to convince
any broker/dealers to act as market-makers and make quotations on the OTCBB. We
will pursue a quotation on the OTCBB after this registration statement becomes
effective and we have completed our offering.
There can be no assurance that all, or any, of the shares will be sold. As of
the date of this Prospectus, we have not entered into any agreements or
arrangements for the sale of the shares with any broker/dealer or sales agent.
19
DEPOSIT OF OFFERING PROCEEDS
This is an "all or none" offering and, as such, we will not be able to spend any
of the proceeds unless and until all shares are sold and all proceeds are
received. We intend to hold all monies collected for subscriptions in a bank
account until the total amount of $50,000 has been received. At that time, the
funds will be used in the implementation of our business plan. In the event the
offering is not sold out prior to the Expiration Date, all monies will be
returned to investors, without interest or deduction.
PROCEDURES AND REQUIREMENTS FOR SUBSCRIPTION
If you decide to subscribe for any shares in this offering, you will be required
to execute a Subscription Agreement and tender it, together with a check, bank
draft or certified funds to us. Subscriptions, once received by the Company, are
irrevocable by subscribers.
RIGHT TO REJECT SUBSCRIPTIONS
We maintain the right to accept or reject subscriptions in whole or in part, for
any reason or for no reason. All monies from rejected subscriptions will be
returned immediately by us to such subscribers, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours of our
having received them.
DESCRIPTION OF SECURITIES TO BE REGISTERED
CAPITAL STOCK
Our authorized capital stock consists of 125,000,000 shares, of which
100,000,000 shares are common stock and 25,000,000 shares are preferred stock,
each with a par value of $0.0001 per share. As of the date hereof, there are
5,000,000 shares of common stock issued and outstanding, and there are no issued
and outstanding shares of preferred stock.
COMMON STOCK
Each holder of common stock is entitled to one vote for each share of stock held
in his or her name on the books of the Company. Holders of our common stock have
no preemptive rights to purchase additional shares of common stock or other
subscription rights. The common stock carries no conversion rights and is not
subject to redemption or to any sinking fund provisions. All shares of common
stock are entitled to share equally in dividends from sources legally available
therefor, when, as and if declared by the Board of Directors, and upon our
liquidation or dissolution, whether voluntary or involuntary, to share equally
in our assets that are available for distribution to stockholders.
The Board of Directors is authorized to issue additional shares of common stock
not to exceed the amount authorized by our Articles of Incorporation, on such
terms and conditions and for such consideration as the Board may deem
appropriate without further stockholder action.
OPTIONS, WARRANTS AND RIGHTS
There are no outstanding options, warrants, or similar rights to purchase any of
our securities.
DIVIDEND POLICY
We have not paid any cash dividends to shareholders. The declaration of any
future cash dividends is at the discretion of our board of directors and depends
upon our earnings, if any, our capital requirements and financial position,
general economic conditions, and other pertinent conditions. It is our present
intention not to pay any cash dividends in the foreseeable future, but rather to
reinvest earnings, if any, in our business operations.
PENNY STOCK REGULATION
The SEC has adopted regulations which generally define "penny stock" to be any
equity security that has a market price (as defined) of less than $5.00 per
share or an exercise price of less than $5.00 per share. Such securities are
subject to rules that impose additional sales practice requirements on
broker-dealers who sell them. For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchaser of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prepared by the SEC relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative, current quotations for
the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, among other requirements, monthly statements must be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks. As the Shares immediately
20
following this Offering will likely be subject to such penny stock rules,
purchasers in this Offering will in all likelihood find it more difficult to
sell their Shares in the secondary market.
SHARES ELIGIBLE FOR FUTURE RESALE
GENERAL
There is no public market for our common stock. We cannot predict the effect, if
any, that sales of shares of our common stock or the availability of shares of
our common stock for sale will have on the market price of our common stock.
Sales of substantial amounts of our common stock in the public market could
adversely affect the market prices of our common stock and could impair our
future ability to raise capital through the sale of our equity securities.
Upon completion of this offering, based on our outstanding shares as of the date
of this Prospectus, we will have outstanding an aggregate of 10,000,000 shares
of our common stock. Of these shares, upon effectiveness of the registration
statement of which this prospectus forms a part, the 5,000,000 shares covered
hereby will be freely transferable without restriction or further registration
under the Securities Act since they will not be held by affiliates of the
Company.
The remaining 5,000,000 restricted shares of common stock to be outstanding are
owned by our directors, known as our "affiliates," and may not be resold in the
public market except in compliance with the registration requirements of the
Securities Act or under an exemption under the Securities Act, if available.
RULE 144
The 5,000,000 shares held by our directors are subject to the sale limitations
imposed by Rule 144 and rules applying to shell companies. The eventual
availability for sale of substantial amounts of common stock under Rule 144
could adversely affect prevailing market prices for our securities.
Our issued shares of common stock are not currently available for resale to the
public in accordance with Rule 144 under the Securities Act because we are a
shell company. Our shareholders cannot rely on Rule 144 for the resale of our
common stock until the following have occurred:
1. we have ceased to be a shell company;
2. we are subject to the reporting requirements of the Exchange Act;
3. we have filed all Exchange Act reports required for the past 12
months; and
4. a minimum of one year has elapsed since we filed current Form 10
information on Form 8-K changing our status from a shell company to a
non-shell company.
When Rule 144 is available, our affiliate stockholders shall be entitled to sell
within any three month period a number of shares that does not exceed the
greater of:
1. 1% of the number of shares of the company's common stock then
outstanding; or
2. the average weekly trading volume of the company's common stock during
the four calendar weeks preceding the filing of a notice on Form 144
with respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents or subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
The financial statements included herewith have been audited by LBB & Associates
LLP, registered independent certified public accountants, to the extent and for
the periods set forth in their report appearing elsewhere in this document and
in the registration statement filed with the Securities and Exchange Commission,
and are included in reliance upon such report given upon the authority of said
firm as experts in auditing and accounting.
Synergy Law Group, LLC has provided an opinion on the validity of our common
stock.
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INFORMATION WITH RESPECT TO THE REGISTRANT
GENERAL OVERVIEW
We were incorporated on September 25, 2013 in the State of Nevada. We are a
development stage company and plan to commence operation as an online retailer
of high grade loose pearls. We intend to launch a web-based platform that will
give our potential customers the ability to purchase our products which we will
purchase from a pearl supplier in Hyderabad. To date our operations have been
limited to organizational activities, and we will not start operations until our
website is completed. We intend to use the net proceeds from this offering to
develop our business operations.
BUSINESS OVERVIEW
We believe internet retailing is becoming increasingly popular. Internet
shopping is convenient, time-saving and allows customers to easily compare
prices online. Demand for online retailers is driven by consumer desire and
supported by consumers' disposable income. Profitability of individual companies
depends on effective marketing to build a customer base. Our goal is to attract
middle-aged female consumers with high disposable income.
We are a development stage company with plans to operate an Indian-based online
site for the retail sales of pearls specializing in high grade loose pearls. Our
goal is to provide consumers with savings. We will be able to offer discounted
prices because of our low overhead.
We will seek to provide our clientele with a wide collection of loose pearls
from which consumers then would use in custom designed pieces of jewelry
fashioned to their taste. We will not be providing the design or any
recommendations for jewelers or handicraft establishments for custom made
jewelry. India has a vast hand-crafting jewelry cottage industry. Asiya's sole
focus is to provide high grade loose pearls.
We will seek to provide a one-stop shop through our convenient website. This
website will provide our customers with the ease of shopping online and ability
to make online purchases. Our target audience is 40-70 year old Indian women
with web-enabled computers or mobile devices. We plan to maintain a small
inventory of certain products.
We intent to purchase pearls directly from pearl importers in Hyderabad, India.
We plan to identify suppliers and develop relationships with them. As of the
date of this prospectus, we do not have any arrangements with any potential
wholesalers.
To date our operations have been limited to organizational activities, and we
will not start operations until our website is completed.
Our plan of operations over the 12 month period following successful completion
of our offering is to develop and establish our pearl suppliers, develop our
website and develop an advertising and marketing plan. We have registered the
domain name www.asiyapearls.com.
Shabbir Shaikh, our President, CEO and director, has significant experience in
retail sales. Our director, Asiya Shaikh, has significant experience in jewelry
and retail fashion clothing. Mr. Shaikh and Ms. Shaikh will oversee the
continued development of our business plan and commencement of operations.
Our challenge will be to attract customers to the website. We believe that sales
are frequently lost because of complex websites which are not intuitive. We
intend to operate in a very competitive market and on popular search engines
such as Google, Firefox, Mozilla and similar sites. Through advertising on
popular search engines, our potential customers begin their search for online
merchandise through general searches rather than through the established
platforms of our competitors. In order to be successful, we believe an online
retailer must be a low-cost operator and establish a strong brand which will
attract high volume and offer quality merchandise at appealing prices supported
by superior customer service.
INDUSTRY OVERVIEW
Information regarding market and industry statistics contained in this
prospectus is derived from independent third party sources which are publicly
available, represents the most recently available data and remains reliable in
the judgment of management. Upon request, the Company will provide copies of
such sources cited herein at a nominal cost.
A Technopak report cited by the India Brand Equity Foundation projects the
domestic market for gems and jewellery in India will be $35 to $40 billion by
2015.
We expect sales of both genuine and fashion jewelry to increase as consumers
regain confidence in the economy. As consumers begin to discover and appreciate
the greater options for fashion jewelry, value sales are projected to increase.
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Growth in the fashion jewelry industry is attributable to the following factors:
1. Increase in personal disposable income of consumers leaving more to
spend on items outside of that such as fashion accessories.
2. Although the cost of jewelry has risen significantly in recent years,
customers want to find trendiest pieces of jewelry.
According to GEMS AND JEWELLERY INDUSTRY IN INDIA published by the India Brand
Equity Foundation in August 2013, jewellery is a luxury component and the Indian
luxury market is growing at a compounded annual growth rate of 25 to 30 percent
per annum. Jewellery, the largest segment of the luxury market, accounts for
about 50 percent of the total luxury products sold in India. India's appetite
for pearls is demonstrated by the fact that the Gemological Institute of America
announced that it is planning to offer a pearl grading lab class and a retail
jewellery management business course in India which is not accepting enrollment.
CURRENT OPERATIONS AND PLAN OF OPERATION
Since our incorporation on September 25, 2013, we have been engaged only in
organizational and planning activities, and we have not generated any revenues.
The Company will not be profitable until we derive sufficient revenues and cash
flow from sales of our products . We believe that if we obtain the proceeds from
this offering, we will be able to initiate our business plan and conduct
business for the following twelve months. Our organizational and planning
activities to date have consisted of registration of our domain name, initial
funding by our two shareholders, investigation of website development,
conducting pearl market research and exploration of pearl suppliers.
Upon receipt of a Notice of Effectiveness for our registration statement
covering this offering, we will begin the next phases of operations as follows:
1. We will begin raising funds through the sale of our common stock as
set forth herein;
2. We will hire a website developer to begin construction of our website;
3. We will identify and develop relationships with loose pearl suppliers;
4. We will not be able to provide our services until our website is fully
operational and our network infrastructure and transaction processing
systems are in place. We expect that our website will be fully
functional no later than four months after completing this Offering.
We believe that we will have to spend approximately $20,000 in order
to ensure that our website is fully operational and our network
infrastructure and transaction processing systems are in place.
Subsequently, we expect we will be required to spend approximately
$8,000 annually to maintain our website. If we are unable to negotiate
suitable terms with service providers to assist in the development and
maintenance of our website and software to attract users to our
website, we may have to suspend or cease operations.
5. We will conduct beta testing following the development of our website.
6. After our website is functional and we have entered into an agreement
with a supplier, we intend to purchase pearls at a cost of
approximately $10,000 and commence marketing to consumers.
7. We will then work to develop and implement a comprehensive marketing
strategy.
In order to implement our business plan, we will rely heavily on the efforts of
our President. In the weeks following our launch, the work of our website
developer will also be critical. We will expect our website developer to be able
to provide customary updates to our site to remedy any malfunctions and
accommodate web traffic.
Our financial statements from inception (September 25, 2013) through our fiscal
year ended October 31, 2013, report no revenues and a net loss of $1,120. Our
independent auditor has issued a report on our audited financial statements
which expresses substantial doubt about our ability to continue as a going
concern.
ABOUT PEARLS
The pearl, symbol of purity, virtue and modesty, is also one of the most
precious types of jewelry. India has a long history of appreciating pearls, and
since their introduction, they have never lost their importance and popularity.
Technically known as "organic gems" since they are formed by shellfish, pearls
have been harvested and worn for more than 4,000 years. The way they are
acquired - and their appearance - has changed dramatically over time, especially
in the past hundred years, but pearl jewelry nonetheless continues to be a
classic. Pearls are perhaps the best-loved gem of all times.
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A pearl is formed randomly in nature when an irritant, such as sand or a
parasite, becomes lodged in the shell of an oyster. The oyster deposits layers
of a semi-translucent crystalline material called "nacre" around the intruder,
where it builds up in layers like the rings of a tree. This process of building
up can continue for years, resulting in a pearl. In nature, pearls take many
years to develop and often have irregular shapes, ranging from slightly
off-spherical to twisting, bulging shapes called "baroque." Pearls are of
different shapes and sizes dependent upon the species of mollusk in which the
pearl develops and the time it took to form. While demand for white pearls
dominates the market, pearls range in color from golden to purple to pink, cream
and even black. In any shape, natural pearls are quite rare and very costly.
Around the beginning of the 20th century, it was learned that if a sphere of
material was placed into an oyster and the oyster stimulated correctly, the
oyster would coat the sphere with nacre, creating an almost perfectly round
pearl. The longer the pearl remains in the oyster, the larger and more valuable
the pearl becomes. These pearls created through human intervention are called
"cultured" pearls. Almost all pearls used in jewellery today, are cultured
pearls. Pearls are cultured around the world today, and different types of
oysters - or mollusks in freshwater - raised in different environments create
cultured pearls with different sizes, colors and other qualities. Cultured
pearls are popular for bead necklaces and bracelets or mounted in solitaires,
pairs or clusters for use in earrings, rings and pendants. Larger pearls with
unusual shapes are popular with creative jewelry designers. Freshwater cultured
pearls are considered one of the jewelry world's biggest bargains. Production is
large and lustrous examples are affordable, particularly in off-round shapes.
One reason that they are plentiful is that each mollusk produces dozens of
pearls unlike some others which only grow one pearl per shell.
Pearls are rated on five value factors:
1. Luster and orient: Luster is the sharpness and intensity of
reflections on the pearl's surface, and orient is the iridescent
colors one sees within the pearl. A pearl with excellent luster will
appear bright and shiny, while one with poor luster is dull. Fine
Akoya pearls tend to display a bright, mirror-like glaze, while others
tend to feature a softer, satiny luster. As a general rule, the higher
the luster and orient, the more valuable the pearl.
2. Color: Color describes both the main color (usually white, black or
yellow) and the undertone (often pink, rose, or even green.) Cultured
pearls display a broad palette of subtle hues. In addition, pearls can
be dyed any shade to meet personal preference.
3. Cleanliness and Surface: This characteristic describes the number,
nature and location of surface imperfections (abrasions, bumps, chips,
cracks, etc.) found on the surface of the pearl. Some imperfections
are expected on all real pearls, natural or cultured. Numerous or
severe surface irregularities can threaten the durability of the pearl
and cause it to break and result in a lower value. If a surface
imperfection is minor and located near a pearl's drill hole where it
is less noticeable, it will detract less from the pearl's appearance
and ultimate value. Other value factors can minimize the effect of
surface imperfections on a pearl's worth. If the pearl is large and
highly lustrous, for example, those factors can outweigh a slight
surface imperfection. Excellent luster actually makes some surface
imperfections less noticeable.
4. Shape: In general, spherical pearls are the most prized. Pearls come
in many shapes. No matter the shape, if a pearl is symmetrical, it is
generally more valuable and desirable than one that is irregular.
5. Size: Cultured pearls are sold by diameter, measured in millimeters.
In general, larger cultured pearls are rarer and more costly. Price
rises significantly with the size of a pearl.
TYPES OF PEARLS
There are four major types of cultured whole pearls:
* Akoya - This type of pearl is most familiar to jewelry customers.
Japan and China both produce saltwater akoya cultured pearls.
* South Sea - These saltwater cultured pearls are produced primarily in
Australia, Indonesia and the Philippines.
* Tahitian - These saltwater cultured pearls usually ranging in color
from black to white are cultivated primarily around the islands of
French Polynesia.
* Freshwater - These pearls are cultured in freshwater lakes and ponds
and are produced in a wide range of sizes, shapes and colors. China
and the United States are the leading sources of freshwater pearls.
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HOW TO IDENTIFY GENUINE PEARLS
For general information and testing:
1. Run a pearl over the edge of teeth. A real pearl will feel sandy and
gritty, while fake pearls have a smooth texture.
2. Rubbing two pearls against each other. The layers of nacre from real
pearls will leave a powdery residue.
3. Put the pearls under a 30x jeweler's loupe. The surface of real pearls
looks scaly, while the surface of fake pearls will appear grainy.
4. Cut a pearl in half or even smash it open with a hammer. (This is not
recommended for a strung necklace, only an extra loose pearl). The
inside of real pearls consists of thin layers of nacre that look like
the layers of an onion.
HOW TO CARE FOR PEARLS
To retain their beauty, pearls need a certain amount of moisture, so pearls
should not be stored in an airtight or overly dry environment. The human body
provides the right amount of moisture pearls need, so wearing pearls frequently
is actually beneficial to the life of pearls. Pearls, however, are the most
durable of gems, and chemicals contained in perfume, makeup and hairspray can
permanently dull the nacre of pearls. Substances contained in cleaning products
can quickly damage pearls. Chlorinated swimming pool water is also hazardous to
pearls. The best way to clean pearls is with a soft damp cloth, ideally after
each wearing.
HYDERABAD, INDIA, THE "CITY OF PEARLS"
We intend to obtain our high grade loose pearls from Hyderabad, whose role in
the pearl trade has given it the name "CITY OF PEARLS". Hyderabad is the capital
of Andhra Pradesh and is one of the major pearl centers in India, The pearl
market of Hyderabad is dominated by China, and its position as a pearl center
dates back 400 years. After being imported, pearls are sorted by orient and
drilled. The art of drilling is second only to diamond cutting among the
exacting, unforgiving steps toward the creation of a fine jewel. By skewing the
way it hangs on a string, just a small slip of the drill can disqualify even the
most lustrous pearl from use in a piece of jewelry. Once they are drilled, the
pearls are bleached, washed and separated in accordance with their shape and
size.
China has been the world's biggest pearl producer for two decades, flooding the
world market with small and cheap pearls of costume-jewellery quality.
Freshwater pearl farms in east-central China are reported to be producing white
pearls that cost a fraction of the saltwater variety. Pearls are also imported
from Japan, Tahiti, Indonesia, Australia and Venezuela.
PRINCIPAL PRODUCTS
Our products will consist of an array of loose pearls (drilled and undrilled).
Pearls are appropriate to accessorize for all events including the following:
* Fanciest occasions: celebrations such as engagements, weddings,
graduations, birthday parties, special outings and parties
* Professional work wear: presentations, board meetings, client
meetings, conferences, suitable work wear, work events, work parties
* Every day wear: accessorize for summer, fall and winter for all every
day wear, casual outings with friends, family
We will not have to innovate and change our designs as the desirability of
pearls is timeless. We will sell our pearls to customers at a price which is
below market price because of our low overhead costs.
We intend to offer our customers secure online payment methods such as credit
card and PayPal.
PRINCIPAL SUPPLIERS
Through our network and connections of jewelers in Karnataka, we will meet loose
pearl suppliers in Hyderabad and then hope to form relationships with a limited
number of reputable importers of pearls who do not sell retail. We plan to
acquire a small inventory but have access to the supplier inventory which will
advertise on our website.
Although we plan to identify and deal with only one primary supplier, we will
have relationships with other producers and/or importers in case of unforeseen
circumstances such as price disputes, quality of pearls and others.
We intend to structure the purchase of loose pearls through the payment of cash,
initially on terms of 50% deposit and 50% credit. We will fund our initial
purchase of inventory from the proceeds of this offering and thereafter with
25
cash generated from operations. As of the date of this prospectus, we do not
have any arrangements with any potential wholesalers.
We will select suppliers on the basis of reputation, credit policy and
references.
TECHNOLOGY
We intend to implement a broad array of commercially available, licensed
technologies that facilitate website management, complex database search
functionality, customer interaction and personalization and transaction
processing.
To address the critical issues of privacy and security on the Internet, we plan
to incorporate, for transmission of credit card and personal information between
customers and our Web server, industry standard Secure Sockets Layer (SSL)
security technology. SSL is the standard security technology for creating an
encrypted link between a web server and a browser. This link ensures that all
data passed between our web server and the browser on a customer's computing
device remains private and secure. This system is used by countless websites
worldwide to allow secure internet transactions for customers.
Our systems will provide our customers with real time product availability
information and updated customer information to enhance our customer care.
We will have an integrated direct connection for processing credit cards to
ensure that a valid credit card number and authorization have been received at
the same time a customer submits an order on our website.
Our information systems will provide our customer care representatives with
records of all prior contact with a customer, including the customer's address,
phone number, e-mail address, fax number, order history, payment history, and
notes.
WEBSITE DESIGN AND FEATURES
We will design our website to provide an intuitive site with exceptional
functionality for online pearl shopping. We will strive to enhance customer
experience, enhance customer awareness and convert traffic into sales.
Online shoppers will be able to search our website for loose high grade pearls
which will be categorized by three characteristics: grade, size and color.
Many other websites force customers to search through pages and pages of
uncategorized items which result in customers getting lost or confused within
the product line when searching for a particular item. Our goal is to categorize
as much as possible so that customers can find the product that they are looking
for in the most expedient manner. Our website design will be simplified and
provide an easily navigational page. Once shoppers select items, these will be
added to their shopping cart and shoppers may then continue shopping or place an
order. The checkout process will be simplified and streamlined, reducing its
complication and encouraging shoppers to continue with the process.
WEBSITE CONTENT
We plan to hire a web designer to further develop our website. To date we have
secured the web address and our President Mr. Shaikh has put forth an effort so
our Company has a presence on the world wide web.
Our website will contain pictures and detailed descriptions of each type of
pearl. There will also be an option to zoom in to observe the quality of the
product through each picture listed. This will add value for consumers and
ensure that the product matches the needs of the occasion for which our
customers are purchasing the item.
We will design out website to enhance customer awareness of our products. For
instance, we will include on our website information about how to identify
genuine pearls and how to care for pearls.
To purchase products, consumers will click on the "add to cart" button to add
products to their virtual shopping cart. Consumers will be able to add and
subtract products from their shopping cart as they browse our online store prior
to making a final purchase decision. To execute orders, consumers can click on
the "checkout" button and, depending upon whether the consumer has previously
shopped at our online store, will be prompted to supply shipping details. Prior
to finalizing an order by clicking the "submit" button, consumers will be shown
their total charges along with the various options chosen at which point
consumers still have the ability to change their order or cancel it entirely.
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TECHNOLOGY DEVELOPMENT AND WEBSITE MAINTENANCE
Our success will depend in part upon our ability to maintain competitive
technologies in a timely and cost-effective manner that meets changing
conditions such as evolving customer needs, existing and new competitive product
and service offerings, emerging industry standards and changing technology.
There can be no assurance that we will be able to develop and market on a timely
basis, if at all, products, service or enhancements that respond to changing
market conditions or that will be accepted by customers. Any failure by us to
anticipate or to respond quickly to changing market conditions or any
significant delays in the introduction of enhancements could cause customers to
delay or decide against the purchase of our products.
PRICE AND POSITIONING
We plan to keep a small inventory of loose pearls. We expect our pricing will be
competitive with "brick-and-mortar" retailers.
We anticipate that the price of pearls will range from 400 rupees (US $6.00) to
6,000 rupees (US $100) per pearl, plus postage and handling fees which we
estimate would be approximately 120 rupees (US $2.00) per shipment in India. We
will be positioning ourselves as a competitively-priced online retailer. The
ease of navigation through our website, contemporary website design, latest and
trendiest product offerings and informative descriptions will assist us in the
positioning of our product line and help to ensure success of the line. We
anticipate that our pricing will be very competitive as our overhead will be
significantly lower that our competition as these organizations also have retail
establishments.
PEARL INVENTORY MANAGEMENT
Our pearl inventory will be physically maintained in a safe personally owned by
our President at his residence which is located in a gated community with
twenty-four hour security and guard. We do not intend to hold a large inventory
of pearls because we believe we will be able to procure inventory from our
supplier on a very timely basis. With a small inventory, any price differentials
can be passed on to the customer. Once our Company is operational, we intend to
review our inventory on a weekly basis with an inventory count.
We do not believe that our inventory level will ever reach a sufficient value to
warrant the cost of insurance. However, if it does, we will obtain and maintain
insurance to cover the inventory. Our budget for the initial purchase of
inventory is $10,000.
ONLINE MARKETING
In order for any online retailer to be successful, it must develop and increase
traffic to its website. We will use a broad array of marketing strategies
including social media, email blasts and print advertising to inform our market
about our products.
In an effort to drive clients to our site, we plan to utilize Search Engine
Marketing. One form of internet marketing involves the promotion of websites by
increasing our visibility through search engine results. This optimization is
achieved in many ways from simple listing on a search engine, to paid inclusion
or sponsored listings and advertising. Sponsored links or advertising could be
achieved by placing our Company as a banner advertisement with established sites
(at the present we do not have any agreements in place with any such sites).
Other Search Engine Marketing involves a search engine company charging a fee
for the inclusion of a website in their result pages. Most notable search engine
companies have paid inclusion products. Depending upon the marketing approach we
choose to adopt; it is possible that this form of marketing could dramatically
increase our visibility in the marketplace and is a less expensive alternative.
As part of our online marketing strategy, we plan to make our products and brand
available by having searchable terms available to internet consumers by using
targeted keywords in order to achieve priority placement on the top search
engines and search engine networks such as Google and Bing. We will optimize
each page of our website to allow for search engines and networks to pick up the
website. Search engine optimization strategy is most effective by researching
the most frequently searched terms that potential customers would use when
searching for fashion jewelry products on the Internet. We will incorporate
keywords in our product descriptions on each page of our website.
Additionally, after the Company is operational and has adequate financial
resources, we plan to join the LinkShare Network which is an affiliate program
for merchant clients and affiliate websites. This network develops and builds a
long term branded affiliate program to promote online sales and establish an
overall Internet presence. This will enable us to establish link arrangements
with other websites as well as portals and search engines.
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SOCIAL MEDIA TOOLS
We believe social media tools are critically important to building brand and
community. As social media platforms (e.g. Facebook) mature past their college
roots, consumers and businesses have embraced them and these platforms have
become vital tools to connect consumers and promote product purchases. Our
social media strategy includes videos, talk-backs with fashion leaders,
contests, coupons, special offers and free gifts, among others. We intend to
select and place advertising on those social media platforms that are effective
in reaching our target audience. Costs for videos and contests are included in
our initial budget. No cash outlay is required for coupons and special offers.
INTELLECTUAL PROPERTY AND AGREEMENTS
Presently, we have no intellectual property, patents or trademarks. We have no
royalty agreement or any labor contracts.
We anticipate that our website developer will have license agreements and
intellectual property rights in the technology used.
COMPETITION
There are many jewelry retailers in India, and it is management's opinion, based
on their experience in the retail industry, that Indian consumer spending for
discretionary goods such as jewelry is strong. The Indian consumption of jewelry
is growing. As the economy becomes stronger, we anticipate more spending by
professionals especially in luxury goods. With the growth of the fashion jewelry
industry, we expect the continued entrance of additional competitors in the
future particularly considering the vast size of the Indian market.
The retail jewelry industry is extremely competitive and has low barriers to
entry. Many retail jewelry establishments have their own website for the online
sale of jewelry, but there are few online retailers of loose pearls in India.
Although we believe we will be able to compete favorably against existing
jewelry retailers, we anticipate that established jewelers will compete with us.
Most of our competitors have longer operating histories, significantly greater
financial, technical, marketing and other resources and larger customer bases
than we do. These factors may allow our competitors to benefit from their
existing customer base with lower costs and respond more quickly to customer
demand than we may be able to. Our competitors may engage in more extensive
research and undertake more far-reaching marketing campaigns and adopt more
aggressive pricing policies which may allow them to generate more revenue than
we will be able to do.
Easy entry does not necessarily mean that a new entrant can build a web
presence, traffic and customer base.
Our current or potential competitors include the following:
* Large online merchants such as Amazon, Indian Jewellery.com,
Myantra.com, pearlparadise.com, eBay, olx.in and others.
* Retailers who offer a large variety of items for online purchase with
delivery options.
* Specialized Indian wedding retailers which specifically cater to the
bridal market offering a wide variety of Indian jewelry (including
pearls) for wedding ceremonies.
Our ability to compete successfully will depend on many factors including the
following:
* Volume of our online traffic;
* Quality of our customer service;
* Effectiveness of our marketing efforts;
* Our ability to purchase pearls at favorable prices;
* Our capacity to respond to consumer preferences and changes in
demographic trends;
* Pricing strategies of our competitors; and
* General economic conditions.
We will continually assess our business to ensure that we offer a high quality,
user-friendly website and evaluate our discount offers to ensure that we offer
the most attractive products at affordable prices. We may be required to
increase overall spending and expand online advertising to meet our goals.
28
We believe that the large Indian market, the strong Indian retail economy and
the consumers' desire for bargains will allow us to be competitive because we
intend to price at the lower end. We believe that we can attract sufficient
website traffic who will view our products and purchase our loose pearls.
EXISTING GOVERNMENT REGULATIONS
There are no government regulations specifically relating to online retail
sales.
As the Internet is becoming a popular mode of buying, it is possible that a
number of laws and regulations may be adopted by the Indian Government with
respect to the Internet. Laws may cover issues such as privacy, freedom of
expression, contents, advertising, information security and others.
In addition, because our products will be available for the Internet in multiple
states and perhaps in foreign countries, other jurisdictions may claim that we
are required to qualify to do business in that state or country. Our failure to
qualify in a jurisdiction where we are required to do so can subject us to taxes
and/or penalties. The application of laws or regulations from jurisdictions
whose laws do not currently apply to us could have a material adverse effect on
our results of operations and our financial condition.
JOBS ACT
In April 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted
into law. The JOBS Act provides, among other things:
* Exemptions for "emerging growth companies" from certain financial
disclosure and governance requirements for up to five years and
provides a new form of financing to small companies;
* Amendments to certain provisions of the federal securities laws to
simplify the sale of securities and increase the threshold number of
record holders required to trigger the reporting requirements of the
Securities Exchange Act of 1934, as amended;
* Relaxation of the general solicitation and general advertising
prohibition for Rule 506 offerings;
* Adoption of a new exemption for public offerings of securities in
amounts not exceeding $50 million; and
* Exemption from registration by a non-reporting company of offers and
sales of securities of up to $1,000,000 that comply with rules to be
adopted by the SEC pursuant to Section 4(6) of the Securities Act and
exemption of such sales from state law registration, documentation or
offering requirements.
In general, under the JOBS Act a company is an "emerging growth company" if its
initial public offering ("IPO") of common equity securities was effected after
December 8, 2011 and the company had less than $1 billion of total annual gross
revenues during its last completed fiscal year. A company will no longer qualify
as an "emerging growth company" after the earliest of
(i) the completion of the fiscal year in which the company has total
annual gross revenues of $1 billion or more,
(ii) the completion of the fiscal year of the fifth anniversary of the
company's IPO;
(iii)the company's issuance of more than $1 billion in nonconvertible debt
in the prior three-year period, or
(iv) the company becoming a "larger accelerated filer" as defined under the
Securities Exchange Act of 1934, as amended.
The JOBS Act provides additional new guidelines and exemptions for non-reporting
companies and for non-public offerings. Those exemptions that impact the Company
are discussed below.
FINANCIAL DISCLOSURE
The financial disclosure in a registration statement filed by an "emerging
growth company" pursuant to the Securities Act of 1933, as amended, will differ
from registration statements filed by other companies as follows:
(i) audited financial statements required for only two fiscal years
(provided that "smaller reporting companies" such as the Company are
only required to provide two years of financial statements);
(ii) selected financial data required for only the fiscal years that were
audited (provided that "smaller reporting companies" such as the
Company are not required to provide selected financial data as
required by Item 301 of Regulation S-K); and
(iii)executive compensation only needs to be presented in the limited
format now required for "smaller reporting companies".
29
However, the requirements for financial disclosure provided by Regulation S-K
promulgated by the Rules and Regulations of the SEC already provide certain of
these exemptions for smaller reporting companies. The Company is a smaller
reporting company. Currently a smaller reporting company is not required to file
as part of its registration statement selected financial data and only needs to
include audited financial statements for its two most current fiscal years with
no required tabular disclosure of contractual obligations.
The JOBS Act also exempts the Company's independent registered public accounting
firm from having to comply with any rules adopted by the Public Company
Accounting Oversight Board ("PCAOB") after the date of the JOBS Act's enactment,
except as otherwise required by SEC rule.
The JOBS Act further exempts an "emerging growth company" from any requirement
adopted by the PCAOB for mandatory rotation of the Company's accounting firm or
for a supplemental auditor report about the audit.
INTERNAL CONTROL ATTESTATION.
The JOBS Act also provides an exemption from the requirement of the Company's
independent registered public accounting firm to file a report on the Company's
internal control over financial reporting, although management of the Company is
still required to file its report on the adequacy of the Company's internal
control over financial reporting.
Section 102(a) of the JOBS Act exempts "emerging growth companies" from the
requirements in ss.14A(e) of the Securities Exchange Act of 1934 for companies
with a class of securities registered under the Securities Exchange Act of 1934,
as amended, to hold shareholder votes for executive compensation and golden
parachutes.
OTHER ITEMS OF THE JOBS ACT.
The JOBS Act also provides that an "emerging growth company" can communicate
with potential investors that are qualified institutional buyers or institutions
that are accredited to determine interest in a contemplated offering either
prior to or after the date of filing the respective registration statement. The
JOBS Act also permits research reports by a broker or dealer about an "emerging
growth company" regardless of whether such report provides sufficient
information for an investment decision. In addition the JOBS Act precludes the
SEC and FINRA from adopting certain restrictive rules or regulations regarding
brokers, dealers and potential investors, communications with management and
distribution of research reports on the "emerging growth company's" IPOs.
Section 106 of the JOBS Act permits "emerging growth companies" to submit
registration statements under the Securities Act of 1933, as amended, on a
confidential basis provided that the registration statement and all amendments
thereto are publicly filed at least 21 days before the issuer conducts any road
show. This is intended to allow "emerging growth companies" to explore the IPO
option without disclosing to the market the fact that it is seeking to go public
or disclosing the information contained in its registration statement until the
company is ready to conduct a roadshow.
ELECTION TO OPT OUT OF TRANSITION PERIOD:
Section 102(b)(1) of the JOBS Act exempts "emerging growth companies" from being
required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act of 1933, as
amended, registration statement declared effective or do not have a class of
securities registered under the Securities Exchange Act of 1934, as amended) are
required to comply with the new or revised financial accounting standard.
Pursuant to Section 107 of the JOBS Act, an emerging growth company may choose
to forgo such exemption and instead comply with the requirements that apply to
an issuer that is not an emerging growth company. We have elected under this
section of the JOBS Act to maintain our status as an emerging growth company and
take advantage of the JOBS Act provisions relating to complying with new or
revised accounting standards under Section 102(b)(1) of the JOBS Act.
Our exemption from the requirement of compliance with the auditor attestation
requirements, reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, exemptions from the requirements of
holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved may render our
common stock less attractive than other companies who are subject the such
requirements. Also, our financial statements may not be comparable to those of
companies which comply with public company effective dates. As a result, there
may be a less active trading market for our common stock and our stock price may
be more volatile.
We will remain an "emerging growth company" for up to five years, although we
will lose that status sooner if our revenues exceed $1 billion, if we issue more
than $1 billion in non-convertible debt in a three year period, or if the market
value of our common stock that is held by non-affiliates exceeds $700 million.
30
SUBSIDIARIES
We currently have no subsidiaries.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS AND
LABOR CONTRACTS
We have no patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have not spent any funds on research and development activities to date.
COMPLIANCE WITH ENVIRONMENTAL LAWS
Our operations will not be subject to any environmental laws.
DESCRIPTION OF PROPERTY AND FACILITIES
We do not own or rent facilities of any kind. We plan to conduct our operations
from the office of our President who provides this space to us free of charge.
We expect to continue to be able to use the office of our President without
charge until the business is profitable and operations warrant renting a larger
space in a commercial building.
EMPLOYEES
We have commenced only limited operations related to the organization of the
Company, and therefore currently have no paid employees. Mr. Shaikh serves as
our director and sole officer and spends approximately two hours per week on our
business without compensation. Upon commencement of operations, our President
plans to devote 20 hours per week to the Company's business. We intend to rely
on the unpaid services of our President and have no plans to hire any employees
in the short term.
GOING CONCERN CONSIDERATION
Our auditors have issued a going concern opinion, meaning that there is
substantial doubt if we can continue as an ongoing business for the next twelve
months unless we obtain additional capital. No revenues are anticipated until we
have completed the financing from this offering and implemented our plan of
operations. Our only source for cash at this time is investments by others in
this offering. We must raise cash to implement our strategy and stay in
business. The proceeds from the offering will likely allow us to operate for at
least one year and have the capital resources required to cover the material
costs of becoming a public reporting company. We anticipate over the next twelve
months the cost of being a public reporting company will be approximately
$16,000.
We are highly depending upon the success of the public offering of equity as
described herein. The failure to obtain the proceeds from this offering would
result in the need to seek capital from other sources such as loans or private
placements of securities or cease operations, in which case our investors would
lose all of their investment.
REPORTS TO STOCKHOLDERS
We are not currently a reporting company, but upon effectiveness of the
registration statement, of which this prospectus forms a part, we will be
required to file reports with the SEC pursuant to the Securities Exchange Act of
1934, as amended. These reports include annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K. You may obtain copies of
these reports from the SEC's Public Reference Room at 100 F Street, NE.,
Washington, DC 20549, on official business days during the hours of 10 a.m. to 3
p.m. or on the SEC's website, at www.sec.gov. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
SHELL COMPANY STATUS
Rule 405 of the Securities Act defines the term "shell company" as a registrant,
other than an asset-backed issuer, that has:
(1) No or nominal operations; and
(2) Either:
(i) No or nominal assets;
(ii) Assets consisting solely of cash and cash equivalents; or
(iii)Assets consisting of any amount of cash and cash equivalents and
nominal other assets.
For purposes of this definition, the determination of a registrant's assets
(including cash and cash equivalents) is based solely on the amount of assets
that would be reflected on the registrant's balance sheet prepared in accordance
31
with generally accepted accounting principles on the date of that determination.
The Company has no or nominal operations and has assets consisting solely of
cash and cash equivalents and is, therefore, a shell company as defined under
Rule 405.
The Company's shell company status results in the following consequences:
* The Company is ineligible to file a registration of securities using
Form S-8; and
* Rule 144 is unavailable for transfers of our securities until we have
ceased to be a shell company, are subject to the reporting
requirements of the Exchange Act; we have filed Exchange Reports for
12 months and a minimum of one year has elapsed since the filing of
Form 10 information on Form 8-K changing our status from a shell
company to a non-shell company.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Upon the effectiveness of the registration statement of which this prospectus
forms a part, we intend to seek a market maker to file an application with the
FINRA to have our stock quoted on the OTC Bulletin Board. However, we cannot
assure you that our shares will be quoted on the OTC Bulletin Board or, if
quoted, that a public market will materialize.
The Securities and Exchange Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00, other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
quotation system. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the Securities and Exchange Commission, that:
a. contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
b. contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation of such duties or other requirements of the
securities laws;
c. contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance of
the spread between the bid and ask price;
d. contains a toll-free telephone number for inquiries on disciplinary
actions;
e. defines significant terms in the disclosure document or in the conduct
of trading in penny stocks; and
f. contains such other information and is in such form, including
language, type, size and format, as the Securities and Exchange
Commission shall require by rule or regulation.
The broker or dealer also must provide, prior to effecting any transaction in a
penny stock, the customer with:
(a) bid and offer quotations for the penny stock;
(b) the compensation of the broker-dealer and its salesperson in the
transaction;
(c) the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
(d) a monthly account statement showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a suitably written statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock. Therefore, if our common stock
becomes subject to the penny stock rules, stockholders may have difficulty
selling those securities.
HOLDERS
As of the date of this Prospectus, we have two holders of record of our common
stock.
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any securities authorized for issuance under any equity
compensation plans.
LEGAL MATTERS
We know of no existing or pending legal proceedings against us, nor are we
involved as a plaintiff in any proceeding or pending litigation. There are no
proceedings in which any of our directors, officer or any of their respective
affiliates, or any beneficial stockholder, is an adverse party or has a material
interest adverse to our interest. Our address for service of process in Nevada
is 311 S. Division Street, Carson City, Nevada 89703.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES
THAT APPEAR ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION CONTAINS
FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO OUR BUSINESS THAT REFLECT
OUR CURRENT VIEWS AND ASSUMPTIONS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT
TO RISKS AND UNCERTAINTIES, INCLUDING THE RISKS IN THE SECTION ENTITLED RISK
FACTORS BEGINNING ON PAGE 6, THAT MAY CAUSE OUR OR OUR INDUSTRY'S ACTUAL
RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.
THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS PROSPECTUS.
ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING
STATEMENTS ARE REASONABLE, WE CANNOT GUARANTEE FUTURE RESULTS, LEVELS OF
ACTIVITY, OR ACHIEVEMENTS. EXCEPT AS REQUIRED BY APPLICABLE LAW, INCLUDING THE
SECURITIES LAWS OF THE UNITED STATES, WE EXPRESSLY DISCLAIM ANY OBLIGATION OR
UNDERTAKING TO DISSEMINATE ANY UPDATE OR REVISIONS OF ANY OF THE FORWARD-LOOKING
STATEMENTS TO REFLECT ANY CHANGE IN OUR EXPECTATIONS WITH REGARD THERETO OR TO
CONFORM THESE STATEMENTS TO ACTUAL RESULTS.
OUR FINANCIAL STATEMENTS ARE STATED IN UNITED STATES DOLLARS (US$) AND ARE
PREPARED IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES.
OVERVIEW
We are a development stage company and have not commenced operations or
generated or realized any revenues. We will not be in a position to commence
operations until the offering is closed.
Because we have not generated any revenues and no revenues are anticipated until
we implement our business plan, our auditors have issued a going concern
opinion. This means that our auditors believe there is substantial doubt that we
can continue as an on-going business for the next twelve months unless we obtain
additional capital.
We believe that we will be able to raise enough money through this offering to
begin operations but we cannot assure you that we will remain in business even
if we are able to commence operations. If we are unable to successfully develop
a website, negotiate a supply of high grade loose pearls, develop and execute a
marketing strategy, or if we are unable to attract enough customers to purchase
our products, we may quickly use up the proceeds from this offering and will
need to find alternative sources, such as a second public offering, a private
placement of securities, or loans from our officer or others in order for us to
maintain our operations. At the present time, we have not made any arrangements
to raise additional cash, other than through this offering.
Our office is located at the premises of our President, Shabbir Shaikh, who
currently provides such space to us on a rent-free basis at H. 2434, Tengengar
Galli, near Sheetal Hotel, Belgaum, Karnataka, India.
PLAN OF OPERATION
We are a development stage company with limited operations and assets. We are in
the process of establishing an online retail business selling high grade loose
pearls.
In our plan of operation, we have registered www.asiyapearls.com and we plan to
develop this website where we will catalogue and market our pearls and create a
method of payment for the pearls and arrange delivery of the products. We seek
to provide a convenient shopping experience. We will require additional funding
in order to pursue further business objectives and there is no guarantee that we
will be successful in this regard.
Our business plan anticipates that our sales will begin during November 2014.
Currently, our President devotes approximately two hours per week to the
Company's business. Mr. Shaikh has indicated that he is willing to spend more
time with the business as it grows and his services are needed. We anticipate
that he will be required to spend about 20 hours a week on matters relating to
our business when operations commence.
33
We will require the funds from this offering in order to initiate our business
plan. We have been issued a "substantial doubt" going concern opinion from our
auditors and our major asset is our cash balance of $25,000 at October 31, 2013,
which was generated from the issuance of shares to our directors who are our
only shareholders. If we do not obtain funds from this Offering, we will not be
able to continue. We estimate that our cash on hand, assuming that we do not
obtain funds from this offering, will allow us to continue as a going concern
only through July 31, 2014.
We have not conducted any formal market research into the likelihood of success
of our operations or the acceptance of our products or services by the public.
We are relying on the experience of our President, Mr. Shabbir Shaikh, for
developing a business plan.
Our complete budget for our business plan is as follows:
Net proceeds to us from this Offering $50,000
Cash on hand 25,000
-------
TOTAL $75,000
=======
OFFERING EXPENSE
SEC Registration Fee $ 7
Legal and accounting expenses 12,000
Transfer Agent Fees 1,000
Edgar formatting and XBRL conversion 3,000
OPERATING EXPENSES
Legal and Professional fees 14,000
Edgar and XBRL formatting and conversion expenses 2,000
Website development and related expenses 20,000
Inventory of pearls 10,000
Brochures, Marketing and e-Promotion 2,000
Office, Transfer Agent and Administrative 10,993
-------
TOTAL $75,000
=======
We do not expect to realize any revenues and do not expect to commence
operations until approximately October 2014.
The legal counsel and auditor fees are based on our estimates for preparing
necessary filings with the Securities & Exchange Commission upon us becoming a
reporting issuer. This will include the filing of our annual report with audited
financial statements, quarterly reports with unaudited interim financial
statements and any necessary current reports. The Office and Administrative
costs are comprises of equipment purchases (primarily a computer and printer).
As of the date of this registration statement, our current cash balance is
$25,000 with liabilities of $1,120.
During the first stages of our growth, Mr. Shaikh will provide all the labor
required without compensation. Since we intend to operate with very limited
administrative support, Mr. Shaikh will oversee the business for at least the
first year of operations without hiring any employees, although we may engage
contractors to conduct shipping and handling activities.
SATISFACTION OF OUR CASH OBLIGATIONS FOR THE NEXT 12 MONTHS.
We have accomplished the goal of developing our business plan; however, we are
in the early stages of setting up an operational company capable of realizing
revenues. We are conducting this Offering to obtain the basic minimum amount of
funds necessary for the Company to advance from a development stage company to
an operational company with the potential to realize revenues. If we are
unsuccessful in generating cash proceeds from Offering, we will be forced to
curtail expenditures. Our sole officer and director, Mr. Shaikh, has agreed to
continue his part time work without pay, until such time as there are sufficient
funds from operations or from an additional securities offering in the future.
We have not allocated any pay for Mr. Shaikh out of the funds being raised in
this Offering. If we receive no additional funds, including the funds from this
Offering, we could continue in business until July 2014 conducting only minimal
operations required to maintain our existence.
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EXPECTED PURCHASE OR SALE OF PLANT OR SIGNIFICANT EQUIPMENT.
The purchase of any plant or significant equipment is not required by us at this
time or in the next 12 months.
MILESTONES:
We are a development stage company with minimal amounts of equity capital
initially available ($25,000). We have, therefore, set our goals in three
stages: (1) Goals based upon the availability of our initial funding of $25,000;
(2) Goals based upon our proceeds from this Offering in the amount of $50,000;
and (3) Goals at such time as we are generating revenue as an operational
company.
STAGE I: DEVELOPMENT OF OUR BUSINESS OPERATIONS BASED UPON OUR FOUNDERS'
INVESTMENT OF $25,000.
* To set up our corporate structure (file for incorporation) set up
corporate governance which was accomplished through the incorporation
in Nevada in September of 2013;
* To retain counsel and an auditor to assist in preparation of documents
providing for the raising of $50,000 to complete Stage II of our Plan
of Operations by way of an initial filing with the SEC for a cost of
$16,000.
* We have registered our domain name, www.Asiyapearls.in.
* To have our registration statement deemed effective by the SEC so that
we may complete the Offering.
STAGE II: DEVELOPMENT OF OUR BUSINESS OPERATIONS.
After completion of the Offering, we intend to complete the following:
a. Meet all reporting requirements of a public company which is budgeted
at $16,000 per annum (primarily for audit of annual financial
statements and review of quarterly financial statements);
b. We plan to request bids for our website development from at least
three developers who are based in the state of Karnataka, India. We
have approached one such developer for an initial pricing and timing.
We have been advised that the theme design, payment module, website
development and social media module integration would cost
approximately $18,000 and would take approximately three months. The
search engine optimization would take approximately six months to
develop and would cost approximately $1,000. The domain plus the
server would cost approximately $400 per year. Custom Facebook page
and Twitter page with advertisement banner will cost approximately
$500. We also plan to develop the search engine optimization module.
The total cost for all these is estimated at $20,000. To develop our
website, we will begin to design an information page which will
utilize artwork and a logo and include our mission statement, our
product line, price list, contact information and ordering
instructions. This information page will serve as an "e-brochure." We
plan to distribute the e-brochure electronically via the internet in
accordance with all laws governing online solicitation known as spam
mail. We plan to obtain the email addresses from various alliances
such as various email address providers. We will contract web space
from a local Internet service provider.
c. While our website is being developed, we will select pearls for our
inventory. We estimate that this will be completed within three months
so that these are shown in our website while the website is being
developed. Initially, we will have a limited product line available
and our inventory cost is estimated to be $8,000 (leaving $2,000 in
reserve). We intend to establish an office in our President's premises
to maintain the website and database. This will include physical
office space, computer equipment, telephones and other equipment as
required to maintain the operations.
d. Part of our marketing plan is to produce three 10-second videos
showing our product and the video will be shown on our website.
e. We estimate that Asiya will be operational in nine months after
completion of the initial offering to be at estimated total cost of
approximately $59,000.
Until an infusion of capital from this Offering, we will not be able to complete
Stage II of our Plan of Operation. We currently have insufficient capital to
commence any significant website development. Our Plan of Operation is premised
upon having funds available from this Offering. We believe that the funds
received in the Offering will assist us in generating revenues. We have suffered
startup losses which raises substantial concern regarding our ability to
continue as a going concern. We believe that the proceeds of this Offering will
enable us to maintain our operations and working capital requirements for at
least the next 12 months, without taking into account any internally generated
funds from operations, if any.
There is still no assurance that, even with the funds from this Offering, we
will be able to maintain operations at a level sufficient for an investor to
obtain a return on an investment in our common stock. Further, we may continue
to be unprofitable.
35
STAGE III: GENERATION OF REVENUE AS AN OPERATIONAL BUSINESS.
Without rent and management fees payable to our President, we will need to
generate a profit (revenue less cost of inventory) of $30,000 ($16,000 for
operation as a public company, $3,000 for website maintenance and $11,000 for
general operating expense) to continue as an operating company.
RESULTS OF OPERATIONS
FROM INCEPTION ON SEPTEMBER 25, 2013 TO OCTOBER 31, 2013
We have not generated any revenues since our inception on September 25, 2013.
During the period from inception to October 31, 2013, our operating expenses
were comprised of professional fees of $1,120. We currently anticipate that our
legal and professional fees will increase over the next 12 months as a result of
becoming a reporting company with the SEC. We have prepared an internal business
plan. We have not started our proposed business operations and do not expect to
do so until at least 180 days after we have completed this offering.
Since inception, we have sold an aggregate of 5,000,000 shares of common stock
for total consideration of $25,000 to Shabbir Shaikh and Asiya Shaikh, our
directors and sole officer.
ACTIVITIES TO DATE
Our activities to date have involved organizing the Company and developing a
business plan.
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
LIQUIDITY AND CAPITAL RESOURCES
As of the date of this prospectus, we have yet to generate any revenues from our
business operations.
On October 25, 2013, we sold 5,000,000 shares of our common stock to our
directors for $25,000 in cash. As of the date of this Offering, Mr. Shaikh and
Ms. Shaikh are our only two stockholders.
The following table provides selected financial data about our Company for the
period from the date of incorporation through October 31, 2013. For detailed
financial information, see the financial statements included in this prospectus.
Balance Sheet Data October 31, 2013
------------------ ----------------
Cash $25,000
Total assets $25,000
Total liabilities $ 1,120
Shareholders' equity $23,880
We have no written or verbal commitments from stockholders, directors or
officers to provide the Company with any form of cash advances, loans or other
sources of liquidity to meet our needs.
We anticipate needing a minimum of $59,000 to implement Stage II of our business
plan, as described above. Currently, available cash is not sufficient to allow
us to commence full execution of our business plan.
We anticipate that our minimum expenses over the next ten to twelve months
following the effectiveness of our registration statement will be approximately
$59,000 for the full implementation of our business plan including general
administrative expenses, professional fees, development of our website platform,
marketing costs and others. The Company anticipates over the next twelve months
the cost of being a reporting public company will be approximately $16,000.
Based on our current cash on hand, we may be delayed or forced to cease
operations within six months. If we do not raise the financing from the
Offering, we may not be able to successfully carry out our plan of operation,
and investors may lose their entire investment. In that case, we would not be
able to meet the objections stated in this prospectus or eliminate the "going
concern" opinion in our auditor's report.
We have no written or verbal commitments from stockholders, directors or
officers to provide the Company with any form of cash advances, loans or other
sources of liquidity to meet our needs.
As of the date of this prospectus, the current funds available to us will be
sufficient to maintain a reporting status and minimal operations for
approximately six months.
We believe that current trends toward lower capital investment in start-up
companies pose a significant challenge to the Company's success over the next
year and in future years. The Company will have to meet financial disclosure and
36
reporting requirements associated with being a publicly reporting company, and
management will have to spend significant time on policies and procedures to
ensure that it is compliance with regulatory requirements which could limit the
time available to implement the Company's business plan.
Even though we intend to begin generating revenues, we can make no assurances
and we may incur operating losses in the next twelve months. The absence of any
operating history makes predictions of future operating results difficult to
ascertain. Our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets. Such
risks for us include, but are not limited to, an evolving business model and
management of growth. To address these risks, we must, among other things,
obtain investors for this Offering, implement and successfully execute our
business and marketing strategy, continually research new information on the
jewelry and accessories markets and trends, as well as attract, retain and
motivate qualified personnel. There can be no assurance that we will be
successful in addressing such risks, and the failure to do so can have a
material adverse effect on our business prospects, financial condition and
results of operations.
When we are profitable, we will need to generate a profit of $30,000 ($16,000
for operation as a public company, $3,000 for website maintenance and $11,000
for general operating expenses) to continue as an operating company without rent
and management fees payable to our President.
LIMITED OPERATING HISTORY AND NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us upon which to base an
evaluation of our performance. We are in the development stage of our operations
and have not generated any revenues. We cannot assure you that we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources and possible cost overruns due to price and cost increases in services
and products.
We cannot assure you that future financing will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be unable to
continue, develop or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
GOING CONCERN CONSIDERATION
The report of our independent registered accounting firm raises concern about
our ability to continue as a going concern based on the absence of an
established source of revenue, recurring losses from operations, and our need
for additional financing in order to fund our operations in 2014. Please see
footnote 2 to our financial statements for additional information.
CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
We have not had any changes in or disagreements with our accountants on
accounting and financial disclosure. LBB & Associates Ltd., LLP of Houston,
Texas has served as our accounting firm since our inception.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required under this caption is not required for the Company since it
is a smaller reporting company.
FINANCIAL DISCLOSURE
Our fiscal year end is October 31. We intend to provide financial statements
audited by an Independent Registered Accounting Firm to our shareholders in our
annual reports. The audited financial statements for the period from the date of
inception, September 25, 2013, through October 31, 2013 are located in the
section titled "Financial Statements".
DIRECTORS AND MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our sole executive officer and directors and their ages as of the date of this
prospectus are as follows:
Name Age Position
---- --- --------
Shabbir Shaikh 43 President, Secretary/Treasurer and Director
Asiya Shaikh 38 Director
37
The persons named above have held their offices/positions since the inception of
our Company. The Board of Directors appoint officers, and directors hold office
until the next annual meeting of our stockholders.
BACKGROUND INFORMATION ABOUT OUR DIRECTORS AND OFFICER
Set forth below is a brief description of the background and business experience
of our sole executive officer and our two directors:
SHABBIR SHAIKH has been our President, Secretary, Treasurer and a Director since
our inception on September 25, 2013. Mr. Shaikh obtained his Bachelor of
Commerce degree in 1991 from Akbar Peerbody College of Mumbai. From 2005 to
present, Mr. Shaikh works Treasurer and CFO for Green Filed Forex (Pvt) Ltd., a
firm involved in foreign exchange and transfers. Previously from 1991 to 1999,
Mr. Shaikh worked as an accountant for a CA (CPA) firm as computer operator and
tax filer; and from 1999 to 2005, Mr. Shaikh worked as an accountant/controller
for an investment company.
Mr. Shaikh reads and speaks English, Hindi and Marathi fluently. Management
believes that Mr. Shaikh understanding of the English language, his familiarity
with Indian culture and his business background will enable him to establish the
Company's website and deal with a myriad of issues involving customer service.
Mr. Shaikh currently spends approximately two hours per week on the operations
of our Company, and he has indicated that he is willing to spend more time with
the business as it grows and his services are needed. We anticipate that Mr.
Shaikh will eventually be required to spend about 20 hours a week on matters
relating to our business.
ASIYA SHAIKH (SPOUSE OF OUR PRESIDENT, MR. SHABBIR SHAIKH) has been a member of
the Board of Directors since our inception on September 25, 2013. From 2007 to
present, Ms. Shaikh has managed Royal Clothing and Jewelry Store, a clothing and
jewelry retail establishment, where she is responsible for the daily operation
of the store including product ordering, pricing, inventory control, staffing,
advertising, cash and banking activities, among others.
Ms. Shaikh reads and speaks English and Hindi fluently. Management believes that
Ms. Shaikh's knowledge of the English language, her familiarity with Indian
culture and her background in retail sales will assist the Company in
establishing and maintaining its presence in the industry.
The specific experience, qualifications, attributes, and skills that led to the
conclusion that Mr. and Mrs. Shaikh serve as our directors were: their business
experience in the financial reporting and retail industry; their ability to work
with staff and consultants with appropriate skills; their negotiation skills
which will be utilized in the future for leasing premises and purchasing
jewelry; his computer technology skills and their ability to read and speak
English and Hindi fluently.
Neither Mr. Shaikh nor Ms. Shaikh are officers or directors of any reporting
company that files annual, quarterly, or periodic reports with the United States
Securities and Exchange Commission.
During the past ten years, neither Mr. Shaikh nor Ms. Shaikh has been the
subject of the following events:
1. Any bankruptcy petition filed by or against any business of which they
were general partners or executive officers either at the time of the
bankruptcy or within two years prior to that time.
2. Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding.
3. An order, judgment, or decree, not subsequently reversed, suspended or
vacated, or any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting their
involvement in any type of business, securities or banking activities.
4. Found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Future Trading
Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or
vacated.
BOARD COMPOSITION
Our Bylaws provide that the Board of Directors shall consist of not less than
one or more than nine members, and that our shareholders shall determine the
number of directors from time to time. Each director serves for a term that
expires at the next annual meeting of shareholders and until a successor shall
have been elected and qualified, or until the director's earlier resignation,
removal from office or death.
COMMITTEES OF THE BOARD OF DIRECTORS
We do not presently have a separately constituted audit committee, compensation
committee, nominating committee, executive committee or any other committees of
our Board of Directors, and we do not have an audit committee "financial
38
expert." As such, our entire Board of Directors acts as our audit committee and
handles matters related to compensation and nominations of directors.
POTENTIAL CONFLICTS OF INTEREST
Since we do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our two directors.Thus, there is an inherent conflict of interest.
DIRECTOR INDEPENDENCE
As of the date of this Prospectus which is part of the Registration Statement
filed on Form S-1, we have no independent directors.
The Company has developed the following categorical standards for determining
the materiality of relationships that the Directors may have with the Company. A
Director shall not be deemed to have a material relationship with the Company
that impairs the Director's independence as a result of any of the following
relationships:
- the Director is an officer or other person holding a salaried position
of an entity (other than a principal, equity partner or member of such
entity) that provides professional services to the Company and the
amount of all payments from the Company to such entity during the most
recently completed fiscal year was less than two percent of such
entity's consolidated gross revenues;
- the Director is the beneficial owner of less than five percent of the
outstanding equity interests of an entity that does business with the
Company;
- the Director is an executive officer of a civic, charitable or
cultural institution that received less than the greater of $1 million
or two percent of its consolidated gross revenues, as such term is
construed by the New York Stock Exchange for purposes of Section
303A.02(b)(v) of the Corporate Governance Standards, from the Company
or any of its subsidiaries for each of the last three fiscal years;
- the Director is an officer of an entity that is indebted to the
Company, or to which the Company is indebted, and the total amount of
either the Company's or the business entity's indebtedness is less
than three percent of the total consolidated assets of such entity as
of the end of the previous fiscal year; and
- the Director obtained products or services from the Company on terms
generally available to customers of the Company for such products or
services. The Board retains the sole right to interpret and apply the
foregoing standards in determining the materiality of any
relationship.
The Board shall undertake an annual review of the independence of all
non-management Directors. To enable the Board to evaluate each non-management
Director, in advance of the meeting at which the review occurs, each
non-management Director shall provide the Board with full information regarding
the Director's business and other relationships with the Company, its affiliates
and senior management.
Directors must inform the Board whenever there are any material changes in their
circumstances or relationships that could affect their independence, including
all business relationships between a Director and the Company, its affiliates,
or members of senior management, whether or not such business relationships
would be deemed not to be material under any of the categorical standards set
forth above. Following the receipt of such information, the Board shall
re-evaluate the Director's independence.
SIGNIFICANT EMPLOYEES
We have no paid employees. Shabbir Shaikh serves as our director and sole
officer and spends approximately two hours per week on our business without
compensation.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
We have not implemented a formal policy or procedure by which our stockholders
can communicate directly with our Board of Directors. Nevertheless, every effort
will be made to ensure that the views of stockholders are heard by the Board of
Directors and that appropriate responses are provided to stockholders in a
timely manner. During the upcoming year, our Board will monitor whether it would
be appropriate to adopt such a process.
EXECUTIVE COMPENSATION
Since our incorporation on September 25, 2013, we have no arrangements to
compensate our sole officer for his services to us as an officer or director.
However, we anticipate that Mr. Shaikh will receive compensation from the
Company once cash flow that we generate from operations significantly exceeds
our total expenses. We expect that once we are in full operations, the
compensation that we will pay to Mr. Shaikh will not exceed $3,000
(approximately 180,000 rupees) per month.
39
We have not granted any stock options to Mr. Shaikh; there are no stock option,
retirement, pension, or profit sharing plans for the benefit of Mr. Shaikh; and,
we have not entered into any employment or consulting agreements with Mr.
Shaikh. However, as a director and sole officer of the Company Mr. Shaikh has
the power to set his own compensation.
The following table sets forth the compensation paid by us for the period from
inception until the fiscal year ending October 31, 2013, and subsequent thereto,
for our sole officer. This information includes the dollar value of base
salaries, bonus awards and number of stock options granted, and certain other
compensation, if any. The compensation discussed addresses all compensation
awarded to, earned by, or paid to our named executive officers.
Change in
Pension
Value and
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- --------
Shabbir Shaikh 2013 Nil Nil Nil Nil Nil Nil Nil Nil
President, Secretary,
Treasurer and Director
OUTSTANDING EQUITY AWARDS AT 2013 FISCAL YEAR-END
We do not currently have a stock option plan nor any long-term incentive plans
that provide compensation intended to serve as an incentive for performance. No
individual grants of stock options or other equity incentive awards have been
made to our directors or sole executive officer since our inception;
accordingly, none were outstanding at October 31, 2013.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS
There are currently no employments or other contracts or arrangements with our
executive officer. There are no compensation plans or arrangements, including
payments to be made by us, with respect to our directors or sole officer that
would result from the resignation, retirement or any other termination of such
person from us. There are no arrangements for our sole officer or directors that
would result from a change-in-control.
LONG-TERM INCENTIVE PLAN AWARDS
We do not have any long-term incentive plans that provide compensation intended
to serve as incentive for performance.
COMPENSATION OF DIRECTORS
The two members of our board of directors are not compensated for their services
as directors. The board has not implemented a plan to award options to any
directors. There are no contractual arrangements with any member of the board of
directors. We have no director's service contracts.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On October 25, 2013, we issued an aggregate of 5,000,000 shares of our common
stock to two shareholders who also serve as directors and our sole officer for
aggregate consideration of $25,000.
The following table sets forth information regarding the beneficial ownership of
our common stock as of the date of this Prospectus. There is no other person or
group of affiliated persons, known by us to beneficially own more than 5% of our
common stock.
We have determined beneficial ownership in accordance with the rules of the
Securities and Exchange Commission. These rules generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or
investment power with respect to those securities. The person is also deemed to
be a beneficial owner of any security of which that person has a right to
acquire beneficial ownership within 60 days. Unless otherwise indicated, the
persons identified in this table have voting and investment power with respect
to all shares shown as beneficially owned by them, subject to applicable
community property laws, and the address for each person listed in the table is
c/o Asiya Pearls, Inc., H. 2434, Tengengar Galli, near Sheetal Hotel, Belgaum,
Karnataka, India.
40
The percentage ownership information shown in the table below is calculated
based on 5,000,000 shares of our common stock issued and outstanding as of the
date of this Prospectus. We do not have any outstanding options, warrants or
other securities exercisable for or convertible into shares of our common stock.
Percentage of
No. of No. of Percentage of Ownership After
Name and Address Common Stock Common Stock Ownership Fully Subscribed
of Beneficial Owner Before Offering After Offering Before Offering Offering
------------------- --------------- -------------- --------------- --------
Shabbir Shaikh 5,000,000 (1) 5,000,000 (1) 100% 50%
H. 2434, Tengengar Galli,
Belgaum, Karnataka, India
Asiya Shaikh 5,000,000 (2) 5,000,000 (2) 100% 50%
H. 2434, Tengengar Galli,
Belgaum, Karnataka, India
----------
1. Consists of 4,000,000 shares owned by Mr. Shaikh and 1,000,000 shares owned
by Ms. Shaikh.
2. Consists of 1,000,000 shares owned by Ms. Shaikh and 4,000,000 shares owned
by Mr. Shaikh.
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes of ownership of our common stock. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
We do not have any issued and outstanding securities that are convertible into
common stock. Other than the shares covered by the registration statement of
which this prospectus is a part, we have not registered any shares for sale
under the Securities Act.
CORPORATE GOVERNANCE
We are not subject to the corporate governance rules of any securities exchange
or securities association, because our securities are not traded on any
exchange. We have no audit, nominating or compensation committees. As a small
business, we do not have the resources to engage additional individuals to
perform these functions. Our directors perform these functions. When seeking
nominees to serve as director, our directors will evaluate the candidacy of an
individual based on his or her educational attainments, his or her relevant
experience and professional stature. Our directors also perform the function of
the audit committee by overseeing the quality and integrity of the financial
reporting practices of the Company.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Other than the transactions discussed below, none of the following parties has,
since the date of incorporation, had any material interest, direct or indirect,
in any transaction with us or in any presently proposed transaction that has or
will materially affect us:
- The Officers and Directors;
- Any Person proposed as a nominee for election as a director;
- Any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to the outstanding
shares of common stock;
- Any relative or spouse of any of the foregoing persons who are members
of the same household as such person.
On October 25, 2013, we issued an aggregate of 4,000,000 shares of our common
stock to our director and sole officer, Shabbir Shaikh, for a purchase price of
$0.005 per share or for aggregate consideration of $20,000; and we issued an
aggregate of 1,000,000 shares of our common stock to our director, Asiya Shaikh,
for a purchase price of $0.005 per share or for aggregate consideration of
$5,000. The shares were issued pursuant to an exemption from registration under
the Securities Act of 1933 provided by Regulation S promulgated thereunder.
Shabbir Shaikh, our director and sole officer, provides office space to the
Company at no cost.
We have not entered into any other transaction, nor are there any proposed
transactions, in which our directors or executive officer, or any significant
stockholder, or any member of the immediate family of any of the foregoing, had
or is to have a direct or indirect material interest.
41
Mr. Shabbir Shaikh and Ms. Asiya Shaikh are husband and wife.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We have filed a registration statement on Form S-1, of which this prospectus is
a part, with the U.S. Securities and Exchange Commission. Upon completion of the
registration, we will be subject to the informational requirements of the
Exchange Act and, in accordance therewith, will file all requisite reports, such
as Forms 10-K, 10-Q, and 8-K, proxy statements, under Section 14 of the Exchange
Act and other information as required with the Commission. Such reports, proxy
statements, this registration statement and other information, may be inspected
and copied at the public reference facilities maintained by the Commission at
100 F Street, NE, Washington, D.C. 20549. Copies of all materials may be
obtained from the Public Reference Section of the Commission's Washington, D.C.
office at prescribed rates. You may obtain information regarding the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
Commission also maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABLIITIES
Pursuant to the Articles of Incorporation and By-Laws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his/her position, if he/she acted in good faith
and in a manner he reasonably believed to be in our best interest. In certain
cases, we may advance expenses incurred in defending any such proceeding. To the
extent that the officer or director is successful on the merits in any such
proceeding as to which such person 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.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
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 is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
42
ASIYA PEARLS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
OCTOBER 31, 2013
43
LBB & ASSOCIATES LTD., LLP
10260 Westheimer Road, Suite 310
Houston, TX 77042
Phone: (713) 800-4343 Fax: (713) 456-2408
Report of Independent Registered Public Accounting Firm
To the Board of Directors of
Asiya Pearls, Inc. (A Development Stage Company)
Belgaum, Karnataka, India
We have audited the accompanying balance sheet of Asiya Pearls, Inc. (the
"Company") as of October 31, 2013, and the related statements of operations,
stockholder's equity and cash flows for the period from September 25, 2013
(inception) through October 31, 2013. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Asiya Pearls, Inc. as of
October 31, 2013, and the results of its operations and its cash flows for the
period from September 25, 2013 (inception) through October 31, 2013 in
conformity with accounting principles generally accepted in the United States of
America.
As discussed in Note 2 to the financial statements, the Company's absence of
significant revenues, losses from operations, and its need for additional
financing in order to fund its projected loss in 2013 raise substantial doubt
about its ability to continue as a going concern. The 2013 financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ LBB & Associates Ltd., LLP
-----------------------------------------
LBB & Associates Ltd., LLP
Houston, Texas
December 3, 2013
F-1
ASIYA PEARLS, INC.
(A Development Stage Company)
BALANCE SHEET
October 31,2013
---------------
ASSETS
Current assets
Cash $ 25,000
--------
Total current assets 25,000
--------
Total assets $ 25,000
========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Current liabilities
Accounts payables and accrued liabilities $ 1,120
--------
Total current liabilities 1,120
--------
Total liabilities 1,120
--------
STOCKHOLDER'S EQUITY
Preferred stock: $0.0001 par value, 25,000,000 shares
authorized, 0 shares issued and outstanding --
Common stock: $0.0001 par value, 100,000,000 shares
authorized, 5,000,000 shares issued and outstanding 500
Additional paid-in capital 24,500
Deficit accumulated during the development stage (1,120)
--------
Total stockholder's equity 23,880
--------
Total liabilities and stockholder's equity $ 25,000
========
(The accompanying notes are an integral part of these financial statements)
F-2
ASIYA PEARLS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period From
September 25, 2013
(inception) to
October 31, 2013
----------------
Expenses:
Professional fees $ 1,120
---------
Total operating expenses 1,120
---------
Net loss $ (1,120)
=========
Net loss per share - basic and diluted $ 0.00
=========
Weighted average shares outstanding -
basic and diluted 857,143
=========
(The accompanying notes are an integral part of these financial statements)
F-3
ASIYA PEARLS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY
For the period September 25, 2013 (Inception) to October 31, 2013
Deficit
Accumulated
Common Stock Additional During the
--------------------- Paid-in Development
Number Par Value Capital Stage Total
------ --------- ------- ----- -----
Balance, September 25, 2013 (inception) -- $ -- $ -- $ -- $ --
Common stock issued for cash 5,000,000 500 24,500 -- 25,000
Net loss -- -- -- (1,120) (1,120)
--------- ------ ------- ------- -------
Balance, October 31, 2013 5,000,000 $ 500 $24,500 $(1,120) $23,880
========= ====== ======= ======= =======
(The accompanying notes are an integral part of these financial statements)
F-4
ASIYA PEARLS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period From
September 25, 2013
(inception) to
October 31, 2013
----------------
Cash flows from operating activities
Net loss $ (1,120)
Adjustment to reconcile net loss to net
cash used in operating activities
Change in operating assets and liabilities
Accounts payables and accrued liabilities 1,120
--------
Net cash flows used in operating activities --
--------
Cash flows from financing activities
Proceeds from issuance of common stock 25,000
--------
Net cash flows provided by financing activities 25,000
--------
Change in cash 25,000
Cash - beginning of period --
--------
Cash - end of period $ 25,000
--------
Supplemental cash flow disclosures
Cash paid For:
Interest $ --
Income tax $ --
========
(The accompanying notes are an integral part of these financial statements)
F-5
ASIYA PEARLS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2013
1. NATURE AND CONTINUANCE OF OPERATIONS
Asiya Pearls, Inc. (the "Company") was incorporated in the state of Nevada on
September 25, 2013 ("Inception") and is in the development stage. The Company
intends to operate as an on-line loose pearl retailer. The Company's corporate
headquarters are located in Belgaum, India and its fiscal year-end is October
31.
In accordance with Accounting Standards Codification ("ASC") 915, the Company is
considered to be in the development stage. Its activities to date have been
limited to capital formation, organization and development of its business plan.
The Company has not commenced operations.
2. GOING CONCERN
These financial statements have been prepared on a going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future. The
Company has incurred a loss since inception resulting in an accumulated deficit
of $1,120 as at October 31, 2013 and further losses are anticipated in the
development of its business raising substantial doubt about the Company's
ability to continue as a going concern. In addition to operational expenses, as
the Company executes its business plan, it is incurring expenses related to
complying with its public reporting requirements. The Company will need to raise
capital in the next twelve months. in order to remain in business. The ability
to continue as a going concern is dependent upon the Company generating
profitable operations in the future and/or obtaining the necessary financing to
meet its obligations and repay its liabilities arising from normal business
operations when they come due. Management intends to finance operating costs
over the next twelve months with existing cash on hand and proceeds from its
public offering. The Company has no written or verbal commitments from
stockholders, directors or officers to provide the Company with any form of cash
advances, loans or other sources of liquidity to meet its working capital needs.
The accompanying financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classifications of liabilities that may result from the
possible inability of the Company to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America and are
presented in US dollars. The Company has elected October 31, year end. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the period presented have been reflected herein.
Development Stage Company
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles related to development stage companies.
A development-stage company is one in which planned principal operations have
not commenced or if its operations have commenced, there has been no significant
revenues generated from operations
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
F-6
ASIYA PEARLS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2013
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less when purchased to be cash equivalents. The Company
maintains cash and cash equivalent balances at one financial institution that is
insured by the Canadian Deposit Insurance Corporation (CDIC).
Fair Value of Financial Instruments
The Company has determined the estimated fair value of financial instruments
using available market information and appropriate valuation methodologies. The
fair value of financial instruments classified as current assets or liabilities
approximate their carrying value due to the short-term maturity of the
instruments.
Foreign Currency Translation
The Company's functional and reporting currency is the United States dollar.
Monetary assets and liabilities denominated in foreign currencies are translated
using the exchange rate prevailing at the balance sheet date. Non-monetary
assets and liabilities denominated in foreign currencies are translated at rates
of exchange in effect at the date of the transaction. Average monthly rates are
used to translate expenses. Revenue and expenses are translated at average rates
of exchange during the year. Gains and losses arising on translation or
settlement of foreign currency denominated transactions or balances are included
in the determination of net income (loss). The Company has not, to the date of
these financial statements, entered into derivative instruments to offset the
impact of foreign currency fluctuations.
Revenue Recognition
The Company has no current source of revenue; therefore the Company has not
adopted a policy regarding the recognition of revenue.
Basic and Diluted Loss per Share
Basic loss per share includes no dilution and is computed by dividing loss
available to common stockholders by the weighted average number of common shares
outstanding for the period. Dilutive loss per share reflects the potential
dilution of securities that could share in the losses of the Company. Since the
Company does not have any potentially dilutive securities, the accompanying
presentation shows basic and dilutive loss per share as one amount.
Stock-based Compensation
The Company records stock-based compensation using the fair value method of
valuing stock options and other equity-based compensation issued. The Company
has not granted any stock options since its inception. Accordingly, no
stock-based compensation has been recorded.
Intellectual Properties
The Company has adopted the provisions of ASC 350-50, Website Development Costs.
Costs incurred in the planning stage of a website are expensed as research and
development while costs incurred in the development stage are capitalized and
amortized over the life of the asset, estimated to be five years. Costs incurred
subsequent to the launch will be expensed as research and development. The
Company will expense the costs of upgrades and revisions to its website as
incurred. The Company has not incurred costs for the period ended October 31,
2013.
F-7
ASIYA PEARLS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2013
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company follows the liability method of accounting for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
balances. Deferred tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable income in the
years in which those differences are expected to be recovered or settled.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The effect of a change in tax rates on deferred
tax assets and liabilities is recognized in income or expense during the period
that includes the date of enactment or substantive enactment.
At October 31, 2013 a full deferred tax asset valuation allowance has been
provided and no deferred tax asset benefit has been recorded.
Recently Adopted and Recently Enacted Accounting Pronouncements
The Company has reviewed recent accounting pronouncements issued by the FASB
(including its EITF), the AICPA, and the SEC and believes that none of them will
have a material impact on the Company's financial statements.
4. CAPITAL STOCK
The total number of common shares authorized that may be issued by the Company
is 100,000,000 shares with a par value of $0.0001 per share.
The total number of preferred shares authorized that may be issued by the
Company is 25,000,000 shares with a par value of $0.0001 per share. The
preferred stock may be issued in one or more series, from time to time, with
each series to have such designation, relative rights, preference or
limitations, as adopted by the Company's Board of Directors.
During the period ended October 31, 2013, the Company issued 5,000,000 shares of
common stock for total cash proceeds of $25,000 to the Company's directors.
At October 31, 2013, there were no issued and outstanding stock options or
warrants.
5. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. Mr. Shabbir
Shaikh, officer and a director of the Company, is currently providing the
Company with use of office space and services at no charge. The Company's
officer and director is involved in other business activities and may face a
conflict in selecting between the Company and his other business interests. The
Company has adopted a Code of Business Conduct and Ethics.
Officer and directors of the Company will not be paid for any underwriting
services that they perform on behalf of the Company with respect to the
Company's public offering.
F-8
ASIYA PEARLS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 2013
6. INCOME TAXES
As of October 31, 2013, the Company had net operating loss carry forwards of
approximately $1,120 that may be available to reduce future years' taxable
income through 2033. Future tax benefits which may arise as a result of these
losses have not been recognized in these financial statements, as their
realization is determined not likely to occur in compliance with the liability
method of accounting for income taxes and accordingly, the Company has recorded
a valuation allowance for the deferred tax asset relating to these tax loss
carry-forwards.
The components of the deferred tax asset, the statutory tax rate, the effective
tax rate and the elected amount of the valuation allowance are indicated below:
For the Period
Ended
October 31, 2013
----------------
Operating loss $ 1,120
Statutory tax rate 34%
Refundable federal income tax attributable to
current operations 380
Change in valuation allowance (380)
-------
Net refundable amount $ --
=======
The cumulative tax effect at the expected rate of 34% of significant items
comprising the net deferred tax amount is:
October 31, 2013
----------------
Deferred tax asset attributed to:
Net operating loss $ 380
Less, valuation allowance (380)
--------
Net deferred tax assets $ --
========
The Company has provided a valuation allowance against its deferred tax assets
since there is substantial uncertainty as to the Company's ability to realize
future tax benefits through utilization of operating loss carry forwards.
7. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through December 3, 2013, the date
these financial statements were available for issuance. Subsequent to the fiscal
period ended October 31, 2013, the Company did not have any material
recognizable subsequent events.
F-9
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO GIVE YOU DIFFERENT INFORMATION. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR AN OFFER TO BUY THE SECURITIES REFERRED TO IN
THIS PROSPECTUS IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
THE INFORMATION CONTAINED IN THIS ARE CORRECT ONLY AS OF THE DATE SHOWN ON THE
COVER PAGE OF THESE DOCUMENTS, REGARDLESS OF THE TIME OF THE DELIVERY OF THESE
DOCUMENTS OR ANY SALE OF THE SECURITIES REFERRED TO IN THIS PROSPECTUS.
Dealer Prospectus Delivery Obligation
Until ________________, 2014, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
ASIYA PEARLS, INC.
5,000,000 SHARES OF COMMON STOCK
PROSPECTUS
___________________, 2014
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the issuance and
distribution of the securities being registered hereby, including those expenses
that we have incurred to date. All such expenses will be borne by the
registrant.
Securities and Exchange Commission registration fee $ 7
Legal and accounting expenses $ 12,000
Transfer Agent Fees $ 1,000
Edgar formatting and XBRL conversion $ 3,000
--------
Total $ 16,007
========
All amounts other than the Commission's registration fee are estimates. All
expenses will be borne by the registrant.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and the Bylaws.
The Company's Bylaws and Articles of Incorporation provide that we shall, to the
full extent permitted by the Nevada General Business Corporation Law, as amended
from time to time (the "Nevada Corporate Law"), indemnify all of our directors
and officers. Section 78.7502 of the Nevada Corporate Law provides in part that
a corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of another corporation or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe her conduct was unlawful.
Similar indemnity is authorized for such persons against expenses (including
attorneys' fees) actually and reasonably incurred in defense or settlement of
any threatened, pending or completed action or suit by or in the right of the
corporation, if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and
provided further that (unless a court of competent jurisdiction otherwise
provides) such person shall not have been adjudged liable to the corporation.
Any such indemnification may be made only as authorized in each specific case
upon a determination by the stockholders or disinterested directors that
indemnification is proper because the indemnitee has met the applicable standard
of conduct. Under our Bylaws and Articles of Incorporation, the indemnitee is
presumed to be entitled to indemnification and we have the burden of proof to
overcome that presumption. Where an officer or a director is successful on the
merits or otherwise in the defense of any action referred to above, we must
indemnify him against the expenses which such officer or director actually or
reasonably incurred. 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.
II-1
Our Bylaws provide that we will advance to any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or he is or was our director or officer, or is or was
serving at the request of us as a director or executive officer of another
company, partnership, joint venture, trust or other enterprise, prior to the
final disposition of the proceeding, promptly following request therefore, all
expenses incurred by any director or officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under our Bylaws or otherwise.
Our Bylaws provide that no advance shall be made by us to our officers except by
reason of the fact that such officer is or was our director in which event this
paragraph shall not apply, in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is reasonably and
promptly made: (a) by the Board by a majority vote of a quorum consisting of
directors who were not parties to the proceeding, or (b) if such quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, that the facts known
to the decision-making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of securities
without registration since inception. No such sales involved the use of an
underwriter; no advertising or public solicitation was involved; the securities
bear a restrictive legend; and no commissions were paid in connection with the
sale of any securities.
We have sold securities within the past three years without registering the
securities under the Securities Act of 1933 on one occasion:
On October 25, 2013, the Company issued a total of 5,000,000 shares of common
stock at $0.005 per share to Mr. Shabbir Shaikh and Ms. Asiya Shaikh for cash
for total proceeds of $25,000. This sale was completed pursuant to an exemption
from registration under the Securities Act provided by Regulation S promulgated
thereunder.
REGULATION S COMPLIANCE
For the above offering, we relied upon the following facts to make the
Regulation S exemption available:
Each offer or sale was made in an offshore transaction;
Neither we, a distributor, any respective affiliates, nor any person on behalf
of any of the foregoing, made any directed selling efforts in the United States;
Offering restrictions were, and are, implemented;
No offer or sale was made to a U.S. person or for the account or benefit of a
U.S. person;
Each purchaser of the securities certifies that it was not a U.S. person and was
not acquiring the securities for the account or benefit of any U.S. person;
Each purchaser of the securities agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and agreed not
to engage in hedging transactions with regard to such securities unless in
compliance with the Act;
The securities contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are required, either by contract or a provision in its bylaws, articles,
charter or comparable document, to refuse to register any transfer of the
securities not made in accordance with the provisions of Regulation S pursuant
to registration under the Act, or pursuant to an available exemption from
registration; provided, however, that if any law of any Canadian province
prevents us from refusing to register securities transfers, other reasonable
procedures, such as a legend described in paragraph (b)(3)(iii)(B)(3) of
Regulation S have been implemented to prevent any transfer of the securities not
made in accordance with the provisions of Regulation S.
II-2
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBITS
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
4.1 Specimen common stock certificate (1)
5.1 Legal opinion of Synergy Law Group, LLC (2)
23.1 Consent of Synergy Law Group, LLC (see Exhibit 5.1)
23.2 Consent of LBB & Associates Ltd., LLP, Certified Public Accountant,
for use of their report
----------
1. Included as an exhibit to the Company's Registration Statement on Form S-1
filed with the Commission on December 16, 2013
2. Included as an exhibit to the Company's Registration Statement on Form
S-1/A filed with the Commission on February 13, 2014
ITEM 17. UNDERTAKINGS
The undersigned registrant undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii)To include material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
2. That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
4. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
5. Each prospectus filed pursuant to Rule 424(b) as part of a Registration
Statement relating to an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the Registration Statement as of the date
it is first used after effectiveness. Provided, however, that no statement made
in the Registration Statement or prospectus that is part of the Registration
Statement or made in a document incorporated or deemed incorporated by reference
into the Registration Statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such date of first use.
6. That, for the purpose of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
i. Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
ii. Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
iii. The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
iv. Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Belgaum, State of
Karnataka, India on March 6, 2014.
ASIYA PEARLS, INC.
By: /s/ Shabbir Shaikh
--------------------------------------------
Shabbir Shaikh
President, Treasurer, Secretary and Director
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Name Title Date
---- ----- ----
/s/ Shabbir Shaikh
------------------------------- Principal Executive Officer, March 6, 2014
Shabbir Shaikh Principal Financial Officer,
Principal Accounting Officer,
President, Secretary, Treasurer
and Director
II-
