Maiden Lane Jewelry, Ltd. - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - Maiden Lane Jewelry, Ltd.	Financial_Report.xls
EX-32.1 - SECTION 906 CERTIFICATION - Maiden Lane Jewelry, Ltd.	f10q0214ex32i_romantique.htm
EX-31.2 - SECTION 302 CERTIFICATION - Maiden Lane Jewelry, Ltd.	f10q0214ex31ii_romantique.htm
EX-31.1 - SECTION 302 CERTIFICATION - Maiden Lane Jewelry, Ltd.	f10q0214ex31i_romantique.htm
EX-32.2 - SECTION 906 CERTIFICATION - Maiden Lane Jewelry, Ltd.	f10q0214ex32ii_romantique.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-1574097

ROMANTIQUE LTD.

(Exact name of registrant as specified in its charter)

New York		46-0956015
(State or Other Jurisdiction of		(IRS Employer
Incorporation or Organization)		Identification No.)

64 West 48th Street, Suite 1107, New York, NY		10036
(Address of Principal Executive Offices)		(Zip Code)

212-840-8477

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of April 4, 2014, there were 10,441,250 shares of the registrant’s common stock outstanding.

ROMANTIQUE LTD.

INDEX

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements		F-1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1
Item 3. Quantitative and Qualitative Disclosures about Market Risk		6
Item 4. Controls and Procedures		6
PART II. OTHER INFORMATION		7
Item 1. Legal Proceedings		7
Item 1A. Risk Factors		7
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		7
Item 3. Defaults Upon Senior Securities		7
Item 4. [Removed and Reserved]		7
Item 5. Other Information		7
Item 6. Exhibits		8
Signatures		9

Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to U.S.C. Section 1350
Certification of CFO Pursuant to U.S.C. Section 1350

ROMANTIQUE LTD.

CONDENSED BALANCE SHEET

		February 28, 2014			May 31, 2013
	(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents		$	3,622		$	39,086
Accounts Receivable, Net			1,783,850			752,923
Inventories			1,313,369			1,789,394
Prepaid Expenses			200,763			32,031
Deferred Taxes			13,500			13,500
Total Current Assets			3,315,104			2,626,934
Property and Equipment, Net			9,712			10,967
Security Deposits			2,000			2,000
Total Assets		$	3,326,816		$	2,639,901

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable		$	1,480,758		$	1,679,891
Accrued Expenses			15,470			75,526
Loans Payable - Factor			745,961			-
Loans Payable – Related Parties			209,632			-
Income Tax (Benefit) Payable			-			36,600
Total Current Liabilities			2,451,821			1,792,017
Long-Term Debt:
Convertible Note Payable – Related Party			74,000			74,000
Total Liabilities			2,525,821			1,866,017

Commitments and Contingencies

Stockholders’ Equity:
Preferred Stock, $.0001 par value; 10,000,000 shares authorized, none issued and outstanding at February 28, 2014 and May 31, 2013			-			-
Common Stock, $.0001 par value; 50,000,000 shares authorized, 10,441,250 and 10,353,750 shares issued and outstanding at February 28, 2014 and May 31, 2013, respectively			1,044			1,035
Additional Paid-In Capital			845,558			685,567
Retained Earnings (Deficit)			(45,607	)		87,282
Total Stockholders’ Equity			800,995			773,884
Total Liabilities and Stockholders’ Equity		$	3,326,816		$	2,639,901

The accompanying notes are an integral part of these financial statements.

F-1

ROMANTIQUE LTD.

CONDENSED STATEMENT OF OPERATIONS

	Three Months Ended February 28, 2014			Three Months Ended February 28, 2013			Nine Months Ended February 28, 2014			Period September 6, 2012 (Inception) to February 28, 2013
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Sales - Net	$	789,030		$	149,250		$	4,605,345		$	1,609,734

Costs and Expenses:
Cost of Sales		905,977			131,803			3,723,140			1,323,308
Officers’ Compensation		20,833			4,634			99,389			48,884
Professional and Consulting Fees		81,708			20,850			432,875			35,575
Selling, General and Administrative Expenses		52,625			28,450			428,882			42,956
Provision for Bad Debts		-			1,547			1,824			16,147
Total Costs and Expenses		1,061,143			187,284			4,686,110			1,466,870

Income (Loss) from Operations		(272,113	)		(38,034	)		(80,765	)		142,864

Other Income (Expense):
Interest Expense – Related Party		( 714	)		( 740	)		(2,194	)		( 1,340	)
Interest Expense – Accounts Receivable Financings		(31,434	)		-			(44,904	)		-
Total Costs and (Expenses)		(32,148	)		(740	)		(47,098	)		(1,340	)

Income (Loss) before Income Tax Provision		(304,261	)		(38,774	)		(127,863	)		141,524

Income Tax Provision		(57,874	)		(20,000	)		5,026			41,000
Net Income (Loss)		(246,387	)		(18,774	)		(132,889	)		100,524

Income (Loss) Per Common Share - Basic	$	(0.02	)	$	(0.00	)	$	(0.01	)	$	0.01

Basic Weighted Average Shares		10,441,250			10,000,000			10,387,404			10,000,000

Income (Loss) Per Common Share – Diluted	$	(0.02	)	$	(0.00	)	$	(0.01	)	$	0.01

Diluted Weighted Average Shares		10,441,250			10,000,000			10,387,404			10,031,062

The accompanying notes are an integral part of these financial statements.

F-2

ROMANTIQUE LTD.

CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED FEBRUARY 28, 2014

(Unaudited)

	Common Stock				Additional Paid-In			Retained
	Shares		Amount		Capital			Earnings			Total

Balance, June 1, 2013		10,353,750	$	1,035	$	685,567		$	87,282		$	773,884

Issuance of Common Stock for services		87,500		9		174,991			-			175,000

Offering Costs		-		-		(15,000	)		-			(15,000	)

Net Loss for the Nine Months Ended February 28, 2014		-		-		-			(132,889	)		(132,899)

Balance, February 28, 2014		10,441,250	$	1,044	$	845,558		$	(45,607	)	$	800,985

The accompanying notes are an integral part of these financial statements.

F-3

ROMANTIQUE LTD.

CONDENSED STATEMENT OF CASH FLOWS

	Nine Months Ended February 28, 2014			Period September 6, 2012 (Inception) to February 28, 2013
Cash Flows from Operating Activities:	(Unaudited)			(Unaudited)
Net Income (Loss)	$	(132,889	)	$	100,524
Adjustments to Reconcile Net Income to Net Cash
(Used) in Operating Activities:
Depreciation		2,405			320
Common Stock Issued for Services		175,000			-
Deferred Taxes		-			(7,000	)
Reserve for Doubtful Accounts and Sales Returns and Allowances		1,824			35,513
Changes in Assets and Liabilities:
Increase in Accounts Receivable		(1,032,751	)		(1,007,107	)
Decrease (Increase) in Inventories		476,026			(452,032	)
Decrease (Increase) in Prepaid Expenses		(168,733	)		(27,674	)
Increase (Decrease) in Accounts Payable		(199,133	)		1,221,883
Increase (Decrease) in Accrued Expenses		(60,056	)		56,346
Increase (Decrease) in Income Taxes Payable		(36,600	)		48,000
Net Cash (Used) in Operating Activities		(974,907	)		(31,227	)

Cash Flows from Investing Activities:
Capital Expenditures		(1,150	)		(4,808	)
Net Cash (Used) In Investing Activities		(1,150	)		(4,808	)

Cash Flows from Financing Activities:
Proceeds from Sale of Common Stock		-			1,000
Proceeds of Convertible Note – Related Party		-			74,000
Proceeds of Loans Payable – Related Parties		354,632			-
Payments of Loans Payable – Related Parties		(145,000	)		-
Payments of Offering Costs		(15,000	)		(16,200	)
Draws from Loans Payable – Factor		2,907,500			-
Repayments to Loans Payable – Factor		(2,161,539	)		-
Net Cash (Used) In Financing Activities		940,593			58,800

Increase (Decrease) in Cash and Cash Equivalents		(35,464	)		22,765

Cash and Cash Equivalents – Beginning of Period		39,086			-

Cash and Cash Equivalents – End of Period	$	3,622		$	22,765

Supplemental Disclosure of Cash Flow Information:
Interest Paid	$	40,808		$	-
Income Taxes Paid	$	27,194		$	-

The accompanying notes are an integral part of these financial statements.

F-4

ROMANTIQUE LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1 - Summary of Significant Accounting Policies

Organization and Basis of Presentation

Romantique Ltd. (“the Company”) was incorporated on September 6, 2012 under the laws of the State of New York. The Company is a wholesaler and manufacturer of jewelry including pendants, bracelets and earrings. We began operations on October 1, 2012 by selling fashion rings, pendants, earrings and bracelets to independent retailers. In December 2012, we commenced a line of bridal (engagement) rings, featuring both settings and diamonds.

In February 2014 the Company began focusing on bridal jewelry featuring uniquely cut stones (“Unique Cushion Brilliant Cut stones”). These stones utilize an advanced cutting technique that can visually and physically increase the crown size (the top and most visible part of the stone) of similarly weighted stones by 150% to 200%. Because this unique cutting technique significantly increases the crown size of the stone while decreasing the pavilion (bottom end below the crown) of the stone which is usually not seen, these diamonds appear to be much larger than typically cut diamonds of the same weight. In addition, because our company creates each ring based on a specific stone, as each stone’s measurements and appearance is unique, the Company will design rings which accentuate a diamond’s brilliance and other positive attributes.

The Company has selected May 31 as its fiscal year. In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. These financial statements are condensed and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These condensed financial statements should be read in conjunction with the Company’s May 31, 2013 audited financial statements and notes included in the registration statement on Form S-1, Amendment No. 3 filed on September 3, 2013.

Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

Cash and Cash Equivalents

The Company considers all highly-liquid investments purchased with a maturity of three months or less to be cash equivalents. As of February, 2014 and 2013, the Company did not have any cash equivalents.

Inventories

Raw materials are stated at the lower of cost or market, with cost determined by specific identification for unique items (such as diamond stones, each with a particular carat weight, color, clarity and cut) and using the first-in, first-out method for generic items or styles (certain semi-mounts and fashion jewelry). Finished goods which we fabricate are stated at the lower of cost or market, with cost determined by specific identification for each component making up the item plus direct labor and other direct fees (primarily diamond certification).

Property and Equipment

Property and equipment is carried at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the related assets, which is five years.

F-5

ROMANTIQUE LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Revenue Recognition

For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” (SAB No. 104), which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB No. 101). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowance, and other adjustments are provided for in the same period the related sales are recorded. Provisions for sales returns and allowances that were netted against sales amounted to $72,045 for the nine months ended February 28, 2014 and $14,000 for the period September 6, 2012 (inception) to February 28, 2013.

Advertising Costs

Advertising costs are charged to operations when incurred. Advertising costs during the nine months ended February 28, 2014 was $12,405. Advertising costs incurred during the period September 6, 2012 (inception) through February 28, 2013 was $485.

Deferred Income Taxes

The Company accounts for deferred income taxes using the asset and liability method, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting and the tax bases of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Net Income Per Share

Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding.

The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented:

	Three Months Ended February 28, 2014			Three Months Ended February 28, 2013			Nine Months Ended February 28, 2014			Period September 6, 2012 (Inception) to February 28, 2013
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Numerator:
Net Income	$	(246,387	)	$	(18,774	)	$	(132,889	)	$	100,524
Denominator:
Basic weighted-average shares		10,441,250			10,000,000			10,387,404			10,000,000
Effect of dilutive securities:
Convertible Debt1		-	2		-			-	2		31,062
Diluted weighted-average shares		10,441,250			10,000,000			10,387,404			1,031,062


Per Share Income (Loss):
Basic	$	(0.02	)	$	(0.00	)	$	(0.01	)	$	0.01
Diluted	$	(0.02	)	$	(0.00	)	$	(0.01	)	$	0.01

1 Convertible debt is convertible into 37,000 shares of common stock.

2 Convertible debt for the three and nine months ended February 28, 2013 is not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive.

F-6

ROMANTIQUE LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Management uses its best judgment in valuing these estimates, and may, as warranted, solicit external professional advice and other assumptions believed to be reasonable.

Fair Value Measurements

The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, or which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities.

The Company's financial instruments include cash and cash equivalents, accounts receivable and accounts payable. These items are determined to be a Level 1 fair value measurement.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and loans payable approximates fair value because of the short maturity of these instruments. The recorded value of long-term debt approximates its fair value as the terms and rates approximate market rates.

Recent Accounting Pronouncements

Management does not believe there would have been a material effect on the accompanying financial statements had any recently issued, but not yet effective, accounting standards been adopted in the current period.

F-7

ROMANTIQUE LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 2 - Inventories

Inventories consist of the following:

		February 28, 2014		May 31, 2013
	(Unaudited)
Raw Materials		$	549,128	$	1,508,981
Finished Goods			764,241		280,413
Total Inventory		$	1,313,369	$	1,789,394

Inventories are pledged as security for the Company’s Accounts Receivable Financing Agreement (see Note 8).

NOTE 3 - Property and Equipment

Property and equipment consists of the following:

	February 28, 2014		May 31, 2013
	(Unaudited)
Office Equipment	$	8,066	$	6,916
Computers		4,808		4,808
		12,874		11,724
Less: Accumulated Depreciation		3,162		757
	$	9,712	$	10,967

Depreciation expense was $2,405 for the nine months ended February 28, 2014 and $320 for the period September 6, 2012 (inception) through February 28, 2013.

NOTE 4 - Convertible Note Payable – Related Party

Convertible note payable to the Company’s president is summarized as follows:

		February 28, 2014		May 31, 2013
	(Unaudited)
Note Payable, bearing interest at 4% per annum, and due December 31, 2015. The note is Convertible into shares of the Company’s Common stock at a conversion rate of $2 per share, subject to adjustment upon the occurrence of certain events including stock dividends, stock split or combinations and reclassifications.		$	74,000	$	74,000

NOTE 5 - Loans Payable – Related Parties

Loans payable to related parties is summarized as follows:

		February 28, 2014		May 31, 2013
	(Unaudited)
Loans payable to the Company’s President. The loans are payable on demand and non-interest bearing, and are subordinated to the factor.		$	209,632	$	-

F-8

ROMANTIQUE LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 6 - Commitments and Contingencies

On July 26, 2013 the Company entered into a three year consulting agreement with Sands Point Associates, LLC and its CEO, Robert McMullan. Pursuant to this consulting agreement, the compensation for the first year was to be $125,000, the second year was $200,000 and the third year was $200,000. The agreement called for the Company to issue Mr. McMullan an aggregate of 500,000 shares of common stock of which 50,000 shares vested upon the commencement and 450,000 shares shall be subject to quarterly vesting over three years while the agreement is in full force and effect. This consulting agreement could be terminated by either party, with or without cause, upon thirty days written notice. The Company recorded consulting fee expense of $226,900 for the nine months ended February 28, 2014 of which $100,000 was in connection with the 50,000 shares vested. Additionally the Company issued 41,667 shares which were vested at $2 per share at November 1, 2013 for $75,000. On December 3, 2013, Sands Point Associates, LLC, notified the Company of its intent to terminate this consulting agreement pursuant to the terms of the consulting agreement, the termination took effect January 2, 2014. There is no additional compensation due Sands Point Associates, LLC.

On October 9, 2013 the Company entered into a four month consultant agreement with a consultant. The consultant agreement calls for the issuance of 25,000 shares of the Company’s common stock as compensation. The shares are to be issued under a Form S-8 Registration to be undertaken by the Company as soon as practicable. No shares have been earned or issued under this agreement.

NOTE 7 - Related Party Transactions

On October 1, 2012 the Company entered into a one-year consulting agreement with Isaac Gurary, under which he was to provide certain business and corporate marketing services to the Company for an annual consulting fee of 3% of net sales during the term of the agreement. As of February 28, 2014 $78,855 were owed to Mr. Gurary under this agreement. As of May 31, 2013, the Company had recorded accrued compensation to Mr. Gurary in the amount of $65,000 and such amount was included in accrued expenses. Mr. Gurary serves as the Company’s President and is a significant stockholder of the Company.

During the nine months ended February 28, 2014, the Company purchased approximately 68% (on average approximately 60%, the percentage among periods vary depend on the timing of bulk diamond stone purchases from non-affiliate parties) of its merchandise from Classique Creations LLC (“Classique”), a company that is owned by the mother of the Company’s President.

Included in accounts payable at February 28, 2014 and May 31, 2013 are amounts owed to Classique totaling approximately $1,202,000 and $656,000, respectively. Payment terms to Classique are one to twelve months and the manner of settlement is cash payment. Pursuant to the Accounts Receivable Financing Agreement (See Note 8), accounts payable to Classique totaling $500,000 are subordinated to the finance company.

The Company rents office space from a Company affiliated with the Company’s president on a month to month basis. The agreement calls for current rent at $2,122 per month. Rent expense was $20,602 for the nine months ended February 28, 2014, and $8,000 for the period September 6, 2012 (Inception) to February 28, 2013.

NOTE 8 - Financing Agreement

On September 30, 2013 the Company entered into an Account Receivable Financing Agreement with Rosenthal & Rosenthal, Inc. (“Rosenthal”) pursuant to which Rosenthal shall provide the Company with a line of credit up to $1,000,000. Loans made under the Accounts Receivable Financing Agreement bear interest at prime rate plus 3.5% (for an effective average rate of 7.5% for both the three months and nine months ended February 28, 2014) and are subject to certain financial covenants. As security for these loans, Rosenthal has placed liens on the Company’s accounts receivable, inventories, and all other assets. In addition, the loans have been personally guaranteed by Yitzchok Gurary, and his parents, Mordechai Gurary and Leah Gurary. In addition, the Company has granted Rosenthal a Landlord Subordination agreement.

F-9

ROMANTIQUE LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The Accounts Receivable Financing Agreement calls for the subordination of certain of the Company’s debt as follows:

Accounts Payable – Classique Creations, LLC		$	500,000
Demand Loans Payable – Yitzchok Gurary		$	209,000

In connection with the Accounts Receivable Finance Agreement, the Company has borrowed $746,000 net as of February 28, 2014. Total draws and repayments for the nine months ended February 28, 2014 totaled $2.9 million and $2.2 million, respectively. The Accounts Receivable Financing Agreement expires September 30, 2015.

NOTE 9 - Preferred Stock

The Company’s Board of Directors may issue shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitation of each series. The holders of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of the Company before any payment is made to the holders of the common stock. Furthermore, the board of directors could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of the common stock.

NOTE 10 - Major Suppliers

During the nine months ended February 28, 2014, the Company purchased approximately $2,087,000 (approximately 68%) of its merchandise from one manufacturer that is a related party (see Note 7).

In addition, the Company purchased merchandise from another vendor which amounted to approximately 29% of total purchases during the nine months ended February 28, 2014.

NOTE 11 - Income Taxes

Income tax provision consists of the following:

	Three Months Ended February 28, 2014			Three Months Ended February 28, 2013			Nine Months Ended February 28, 2014		Period September 6, 2012 (Inception) to February 28, 2013
	(Unaudited)			(Unaudited)			(Unaudited)		(Unaudited)
Current:
Federal	$	(57,400	)	$	(20,000	)	$	-	$	43,000
State and Local		(474	)		-			5,026		5,000
		(57,874	)		(20,000	)		5,026		48,000
Deferred:
Federal	$	-		$	-		$	-	$	(5,000	)
State and Local		-			-			-		(2,000	)
		-			-			-		(7,000	)

	$	(57,874	)	$	(20,000	)	$	5,026	$	41,000

F-10

ROMANTIQUE LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Deferred tax assets consist of the following:

		February 28, 2014		May 31, 2013
	(Unaudited)
Reserve for Bad Debts		$	7,000	$	7,000
Reserves for Sales Returns and Allowances			6,500		6,500
		$	13,500	$	13,500

The federal statutory income tax rate is reconciled to the effective rate as follows:

	Nine Months Ended February 28, 2014			Period September 6, 2012 (Inception) to February 28, 2013
	(Unaudited)

Tax provision at Federal Statutory rate		34.0	%		34.0	%
State and local income taxes, net of federal tax benefit		2.6			2.3
Stock issued for services		(23.3	)		-
Other		(9.4	)		-
Provision for bad debts and allowances for sales returns		-			(7.3	)

Tax provision at effective tax rate		3.9	%		29.0	%

Note 12 - Subsequent Events

None.

F-11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

You should read the following discussion in conjunction with our financial statements and related notes thereto. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Our actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors

This quarterly report contains forward-looking statements as that term is defined in the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “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 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.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “common stock” refer to our shares of common stock.

As used in this quarterly report, the terms “we”, “us”, “our”, “the Company” and “Romantique” means Romantique Ltd., unless otherwise indicated.

Critical Accounting Policies and Estimates

The condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates.

Revenue Recognition

For revenue from product sales, the we recognize revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” (SAB No. 104), which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB No. 101). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the products delivered and the collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowance, and other adjustments are provided for in the same period the related sales are recorded.

EMERGING GROWTH COMPANY

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. 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.

General

We were incorporated on September 6, 2012, under the laws of the state of New York as Ramantique Jewelry Ltd. On October 3, 2012, we amended our certificate of incorporation to change our name to Romantique Jewelry Ltd., and on December 3, 2012, we amended our certificate of incorporation to change our name to Romantique Ltd. We began operations on October 1, 2012 by selling fashion rings, pendants, earrings and bracelets to independent retailers. In December 2012, we commenced a line of bridal (engagement) rings, featuring both settings and diamonds. We believe that we are one of the few companies selling complete engagement rings which include the center diamonds to independent retailers. For the period September 6, 2012 (inception) to May 31, 2013, we purchased approximately 60% of our merchandise from Classique Creations LLC, a jewelry manufacturer owned 98% by the mother of our President, Mr. Yitzchok Gurary, and 2% by Mr. Gurary’s brother, Chaim Gurary, a shareholder of Romantique. During the nine months ended February 28, 2014, we purchased approximately 68% of our merchandise from Classique Creations, LLC. On average, we purchase approximately 60% of our merchandise from Classique Creations LLC. In addition, purchases from another vendor amounted to approximately 29% of total purchases during the nine months ended February 28, 2014.

Our website is located at www.myromantique.com.

Description of Revenues

To date, most of our revenues have been generated through the sale of rings, pendants, necklaces and earrings with stones such as diamonds, rubies and emeralds (“Fashion Jewelry”). In December 2012, we launched our line of bridal engagement rings inclusive of its diamond center stone (“Complete Rings”).

Beginning in December 2013, we began focusing on bridal jewelry featuring uniquely cut stones (“Unique Cushion Brilliant Cut stones”). Given production lead times for this new design, our first sales of this line of bridal jewelry began in the last two weeks of February 2014. These stones utilize an advanced cutting technique that can visually and physically increase the crown size (the top and most visible part of the stone) of similarly weighted stones by 150% to 200%. Because this unique cutting technique significantly increases the crown size of the stone while decreasing the pavilion (bottom end below the crown) of the stone which is usually not seen, our diamonds appear to be much larger than typically cut diamonds of the same weight. In addition, because our company creates each ring based on a specific stone, as each stone’s measurements and appearance is unique, we are able to design rings which accentuate a diamond’s brilliance and other positive attributes. We believe that our new line of bridal jewelry featuring uniquely cut stones will appeal to both retailers and customers due to their perceived size, quality, cost and value.

Our plan is to expand our bridal ring sales, predominately in the new style of Unique Cushion Brilliant Cut stones, which we believe are less seasonal and less subject to economic downturn.

Our Unique Cushion Brilliant Cut Rings and Complete Rings, including both stone and setting, and, using our managements’ experience in the jewelry industry, create rings that show the stone’s to their best advantage, i.e. accentuating their brilliance and hiding their imperfections. We generally have all our Unique Cushion Brilliant Cut stones certified by one of the major recognized international gemological laboratories for carat, color, clarity and cut as a Cushion Brilliant stone.

Romantique markets its line of engagement rings to independent jewelers. Our target market is jewelers with between $750,000 and $5,000,000 in annual sales. We offer engagement rings that will generally retail between $5,000 and $10,000. We believe that by selling Romantique rings, independent jewelers will be able to compete with jewelry chain stores which sell rings in this price range. We have designed our rings to have a sophisticated look, which we believe customers will find appealing.

Currently, most independent jewelers purchase center stones and settings separately. We believe that providing independent jewelers a complete ring allows such jewelers to increase their profit margins by providing efficiencies in the supply chain (fewer middlemen) and timing of manufacture and delivery of a fully finished product. In addition, providing jewelers with both center stone and setting allows us to maintain control of both the design and manufacturing process – leading to a maximally designed, high quality engagement ring accentuating the best attributes of both stone and setting.

Our sales are comprised of primarily three major products: our Unique Cushion Brilliant Cut Rings, Complete Rings and Fashion Jewelry. We may also on occasion sell loose stone inventory. A breakdown of sales for the three and nine months ended February 28, 2014 follows:

	Three Months Ended February 28, 2014			Nine Months Ended February 28, 2014
Unique Cushion Brilliant Cut Rings		19	%		4	%
Complete Rings		38	%		55	%
Fashion Jewelry		15	%		36	%
Loose Stones		28	%		5	%

Sales for the three months ended February 28, 2013 and September 6, 2012 (inception) to February 28, 2013 were 100% Fashion Jewelry.

Employees

We currently have five (5) full time employees.

Results of Operations

Sales Revenues

For the three months ended February 28, 2014, we had net sales revenues of $789,000, a 530% increase from $149,000 of net sales for the three months ended February 28, 2013. These revenues arose from the sale of jewelry to various retailers. However, for the three months ended February 28, 2014, net sales declined by approximately 48% relative to the prior quarter. This decline is attributable primarily to wholesale jewelry industry norms where the third quarter (December to February) is typically the lowest sales quarter of the year (retail jewelers typically stock up for the holidays in the prior two quarters), as well as the impact of unusually adverse weather during the quarter which, in some cases, limited access to retailers or salesperson visits.

For the nine months ended February 28, 2014, we had net sales revenues of $4,605,000, a 286% increase from $1,610,000 of net sales for the period September 6, 2012 (inception) to February 28, 2013. These revenues arose from the sale of jewelry to various retailers. During the period September 6, 2012 (inception) to February 28, 2013 the Company was in start-up phase and thus had less sales volume. In addition, the increase in sales performance is due to the change in focus from Fashion Jewelry sales to Complete Rings and, to a lesser extent, the recent emphasis on Unique Cushion Brilliant Cut Rings which has just recently become the focus of our sales efforts.

In addition, at the beginning of the quarter ended February 28, 2014, we began to transition our inventory into a new focus of bridal jewelry featuring Unique Cushion Brilliant Cut stones. These stones utilize an advanced cutting technique that can visually and physically increase the crown size (the top and most visible part of the stone) of similarly weighted stones by 150% to 200%. Because this unique cutting technique significantly increases the crown size of the stone while decreasing the pavilion (bottom end below the crown) of the stone which is usually not seen, our diamonds appear to be much larger than typically cut diamonds of the same weight. The lead time to source, design and fabricate the raw materials for this new style of inventory impacted sales for both the three and nine months ended February 28, 2014 in that during the transition period new inventory was being fabricated and, as a result, inventory on-hand for sale was limited. We expect future sales of complete engagement rings will predominately come from this new style of uniquely cut stones.

Our three largest customers frequently vary from period to period. For the three and nine months ended February 28, 2014, our three largest customers accounted for approximately 53% and 18% of our total revenues, respectively. For the three months ended February 28, 2013 and for the period September 6, 2012 (inception) to February 28, 2013, our three largest customers accounted for approximately 49% and 35% of our total revenues, respectively.

Cost of Sales

Cost of Sales was $906,000 for the three months ended February 28, 2014 increased from $132,000 for the three months ended February 28, 2013 primarily due to higher sales volume at higher margins during the year-to-date current period. A loss on sales (Net Sales less Cost of Goods Sold) of $117,000 for the three months ended February 28, 2014 was due primarily to adjustments due to sales returns of primarily non-engagement ring sales and sale of certain inventory no longer used in production at cost or below cost, in addition to cost adjustments from a physical inventory count at quarter-end.

Cost of Sales was $3,723,000 for the nine months ended February 28, 2014 and $1,323,000 for the period September 6, 2012 (inception) to February 28, 2013 primarily due to higher sales volume during the year-to-date current period. Gross margins for the nine months period ended February 28, 2014 and period September 6, 2012 (inception) to February 28, 2013 were approximately 19% and 18%, respectively. Gross margins for the current year to date period increased slightly due to less of a focus on Fashion Jewelry sales offset by adjustments due to sales returns of primarily non-engagement ring sales and sale of certain inventory no longer used in production at cost or below cost in addition to cost adjustments from a physical inventory count during the third quarter.

Operation Expenses

General, Selling and Administrative

General, Selling and Administrative expenses were approximately $53,000 for the three months ended February 28, 2014. This 89 % increase from approximately $28,000 for the three months ended February 28, 2013 is primarily related to increased payroll costs, as the number of employees increased from two to five.

General, Selling and Administrative expenses were approximately $429,000 for the nine months ended February 28, 2014 and $43,000 for the period September 6, 2012 (inception) to February 28, 2013. Besides the fewer days of operations relative to the prior year, the increase in such expenses primarily relate to personnel costs (approximately $187,000), sales commissions (approximately $110,000), shows and advertising (approximately $38,000) and rent (approximately $12,000).

Officers’ Compensation

For the three months ended February 28, 2014, officers’ compensation was approximately $21,000 as compared to approximately $5,000 for the three months ended February 28, 2013. For the nine months ended February 28, 2014, officers’ compensation was approximately $99,000 as compared to approximately $49,000 for the period September 6, 2012 (inception) to February 28, 2013. Officers’ compensation increased in each of the three and nine months ended February 28, 2014 in part due to the hiring of the Company’s CEO.

Professional and Consulting Fees

Professional and Consulting fees were approximately $82,000 for the three months ended February 28, 2014 an increase of $61,000 from approximately $21,000 for the three months ended February 28, 2013. The increase is attributable to increased professional services related to marketing, legal and accounting fees, mostly related to increased services due to the Company’s growth and public company infrastructure.

Professional and Consulting fees were approximately $432,000 for the nine months ended February 28, 2014 and $36,000 for the period September 6, 2012 (inception) to February 28, 2013. Besides the fewer days of operations relative to the prior year, approximately $242,000 of the increase is related to consulting services prior to our employment of executive management and operational staff. In addition to increased professional services related to marketing, legal and accounting fees, mostly related to increased services due to the Company’s growth and public company infrastructure.

Other Income (Expenses)

For the three and nine months ended February 28, 2014, we had other expenses of $32,000 and $47,000, respectively. These expenses were primarily related to interest expenses on accounts receivable financings of $31,000 and $45,000 for the three and nine months ended February 28, 2014, respectively. The amount of interest expense is dependent primarily on the interest rate charged and the average outstanding balance. For the three and nine months ended February 28, 2014, the average outstanding balances on accounts receivable financings were $796,000 and $791,000, respectively and, for both periods, the interest rate was 7.5%.

Net Income (Loss)

As a result of the above, for the three months ended February 28, 2014, we had a net loss of $246,000 after a reversal in the provision for income taxes of $57,874. Net loss per share was $(0.02). For the nine months ended February 28, 2014, we had a net loss of $133,000 after a provision for income taxes of $5,000. Net loss per share was $(0.01).

Liquidity and Capital Resources

Since our inception, in addition to internally generated funds, we have been dependent on investment capital and loans as a primary source of liquidity.

At February 28, 2014, we had long term liabilities of $74,000, which represents a note payable to a related party for $74,000.

On September 30, 2013 the Company entered into a financing agreement with Rosenthal & Rosenthal, Inc. (“Rosenthal”) pursuant to which Rosenthal shall provide the Company with a line of credit up to $1,000,000 (the “Accounts Receivable Financing Agreement”). Loans made under the Accounts Receivable Financing Agreement bear interest at prime rate plus 3.5% (effective average rate of 7.5% for both the three months and nine months ended February 28, 2014) and are subject to certain financial covenants. As security for these loans, Rosenthal has placed liens on the Company’s accounts receivable, inventories, and all other assets. In addition, the loans have been personally guaranteed by Yitzchok Gurary, and his parents, Mordechai Gurary and Leah Gurary.

The Accounts Receivable Financing Agreement calls for the subordination of certain of the Company’s debt as follows:

Accounts Payable – Classique Creations, LLC		$	500,000
Demand Loans Payable – Yitzchok Gurary		$	209,000

In addition, the Company has granted Rosenthal a Landlord Subordination agreement.

In connection with the Accounts Receivable Financing Agreement, the Company has borrowed approximately $746,000 as of February 28, 2014. The Accounts Receivable Financing Agreement expires September 30, 2015.

At February 28, 2014 we had working capital of $863,000. As of February 28, 2014, we had $3,600 in cash and cash equivalents.

Cash Requirements

We believe that we will need additional funds to continue operations over the next twelve months and for the implementation of our plan of operation.

Off Balance Sheet Arrangements

Romantique has no off balance sheet arrangements

Recent Private Placements

In March 2013, we closed on a private offering of our securities. Pursuant to this offering, we offered a minimum of 250,000 and a maximum of 750,000 shares of common stock at $2.00 per share. We sold 353,875 shares for a total of $707,750. Net proceeds after offering costs were $685,602. These shares were registered with the U.S. Securities and Exchange Commission in a registration statement declared effective by the Commission on October 4, 2013. On March 3, 2014 Romantique Ltd. closed on this offering of 353,875 shares of Common Stock offered by certain selling shareholders and, pursuant to this offering, a total of 263,200 shares were sold.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Management is required by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 to evaluate, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures.

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based on their evaluation, as of the end of the period covered by this Form 10-Q, the Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II — OTHER INFORMATION

Item 1. Legal Proceedings

There are no material legal proceedings to which we are a party, other than ordinary routine litigation incidental to our business.

Item 1A.Risk Factors

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. [Removed and Reserved]

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed as a part of this Form 10-Q (a) Exhibits required by Item 601 of Regulation S-K.

Number		Description

(31)		Section 302 Certification

31.1		Certification of Principal Executive Officer Rule 13a-14(a) pursuant to Rule13a- 14(a) of the Securities Exchange Act of 1934.

31.1		Certification of Principal Financial Officer Rule 13a-14(a) pursuant to Rule13a- 14(a) of the Securities Exchange Act of 1934.

(32)		Section 906 Certification

32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, required by Section 906 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, required by Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ROMANTIQUE LTD.
	(Registrant)

Date: April 11, 2014	By:	/s/ Michael Wirth
		Michael Wirth
		Chief Executive Officer,

Attached files

Maiden Lane Jewelry, Ltd. Reports

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