Attached files
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EX-5.1 - EXHIBIT 5.1 - Upholstery International, Inc. | upholstery_s1a3ex5z1.htm |
EX-23.1 - EXHIBIT 23.1 - Upholstery International, Inc. | upholstery_s1a3ex23z1.htm |
1 |
Title of Each Class of Securities to be Registered
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Amount to be Registered
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Proposed Maximum Offering Price Per Unit1
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Proposed Maximum Aggregate Offering Price
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Amount of Registration Fee2
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Common Stock for sale by Upholstery International, Inc
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5,000,000
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$6.00
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$30,000,000
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$3,864
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-2- |
· Up to 5,000,000 shares of our common stock which we are offering on a direct basis (“Direct Offering Shares”) at a price of $6.00 per share
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This prospectus relates to our offering of 5,000,000 new shares of our common stock at an offering price of $6.00 per share. The offering will commence promptly after the date of this prospectus and close no later than 120 days after the date of this prospectus. However, we may extend the offering for up to 90 days following the 120 day offering period. We will pay all expenses incurred in this offering. The shares are being offered by us on a “best efforts” basis and there can be no assurance that all or any of the shares offered will be subscribed. If less than the maximum proceeds are available to us, our development and prospects could be adversely affected. All funds received as a result of this offering will be immediately available to us for our general business purposes. The Maximum Offering amount is 5,000,000 shares ($30,000,000). Because there is no minimum amount of shares that must be sold in order for the Offering to close, there is a risk that we may not receive sufficient proceeds from the offering to pursue our business plan. As a result, there is an increased risk that you could lose the entire amount of your investment in our company.
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.
There is no guarantee that we will sell any of the securities being offered.
Proceeds of the Offering | ||||||
Per Common Share | 25% | 50% | 75% | 100% | ||
Offering proceeds, before expenses | $6.00 | $7,500,000 | $15,000,000 | $22,500,000 | $30,000,000 |
-3- |
Item 3.
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Summary Information.
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5
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Risk Factors
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10
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Item 4.
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Use of Proceeds.
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16
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Item 5.
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Determination of Offering Price.
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16
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Item 6.
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Dilution.
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17
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Item 7.
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Plan of Distribution.
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19
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Item 8.
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Description of Securities to be Registered.
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20
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Item 9.
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Interests of Named Experts and Counsel.
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22
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Item 10.
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Information with Respect to the Registrant.
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23
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Description of Property
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24
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Legal Proceedings
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24
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Financial Statements and Supplementary Data
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25
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Management’s Discussion and Analysis
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26
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Plan of Operations
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28
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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28
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Directors and Executive Officers
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28
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Executive Compensation
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31
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Security Ownership of Certain Beneficial Owners and Management
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31
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Certain Relationships and Related Transactions
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32
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Item 12.
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Available Information
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32
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Item 12A.
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Disclosure of Commission Position on Indemnification for Securities Act Liabilities.
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33
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PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
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33
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Item 13.
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Other Expenses of Issuance and Distribution.
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33
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Item 14.
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Indemnification of Directors and Officers.
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33
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Item 15.
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Recent Sales of Unregistered Securities.
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33
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Item 16.
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Exhibits.
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35
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Item 17. | Undertakings | 35 |
Signatures
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35
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-4- |
Upholstery International, Inc. (the “Company”) through its wholly owned subsidiary Ken’s Custom Upholstery, Inc. (“Ken’s”) operates one retail upholstery store which specialize in the reupholstering of furniture. The company does not sell new furniture at this time but hopes to in the future. The Company was incorporated under the laws of the state of Delaware on November 21, 2013 and Ken’s was formed under the laws of the state of Illinois on January 16, 1986.
Upholstery International, Inc. needs to raise a minimum of $7.5 million in order to implement its business plan.
The Company’s officers and director will own 42% of the issued and outstanding shares of the company after this offering is completed.
The company itself and its officers and directors have no plans to be used as a vehicle for a private company to become a reporting company.
As of March 31, 2014, the Company had $12,227 of cash on hand in the corporate bank account. The Company currently has total liabilities of $423,682. In addition, the Company anticipates incurring costs associated with this offering totaling approximately $35,000.
-5- |
- the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more
- the last day of the fiscal year following the fifth anniversary of the completion of this offering
- the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt
- the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, or the Exchange Act.
Securities being offered by the Company, common stock, par value $0.0001
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5,000,000 Direct Offering Shares of common stock are offered by the Company
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Offering price per share by the Company.
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A price, if and when the Company sells the shares of common stock, is set at $6.00.
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Number of shares outstanding before the offering of common shares.
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20,010,600 common shares are currently issued and outstanding.
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Number of shares outstanding after the offering of common shares.
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25,010,600 common shares will be issued and outstanding after this offering is completed.
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Minimum number of shares to be sold in this offering
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None.
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Market for the common shares
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There is no public market for the common shares. The price per share is $6.00.
Upholstery International may not be able to meet the requirement for a public listing or quotation of its common stock. Further, even if Upholstery Internationals common stock is quoted or granted listing, a market for the common shares may not develop.
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Termination of the offering
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The
offering will conclude when all 5,000,000 shares of common stock have been sold, or 120 days after this registration statement
becomes effective with the Securities and Exchange Commission. Upholstery International may at its discretion extend the offering
for an additional 120 days or such period as the Company deems reasonable (see Plan of Distribution).
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Terms of the offering
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The Company’s president and sole director will sell the common stock upon effectiveness of this registration statement.
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-6- |
Price to Public
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Underwriting Discounts and Commissions (1)
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Proceeds to company (2)
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||||||||
Per Share
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$
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6.00
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None
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$
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30,000,000
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|||||
Total Minimum
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$
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0
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None
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$
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0
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|||||
Total Maximum
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$
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30,000,000
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None
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$
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30,000,000
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(1)
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Represents the maximum underwriting discounts and commissions we will pay if broker-dealers are used to sell our Direct Offering Shares. As of the date of this prospectus we do not have any underwriting agreements.
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(2)
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Proceeds
to us are shown before deducting ancillary expenses payable by us in connection with the offering, estimated at approximately
$35,000 including legal and accounting fees and printing costs.
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The Company may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. Our Direct Offering Shares will be sold at a fixed price of $6.00 per share throughout the offering period. Upholstery International, Inc. will be selling all the Direct Offering Shares offered by the Company and will receive all proceeds from the sale. The Company will bear all expenses of the registration incurred in connection with this offering
-7- |
-8- |
March 31, 2014 | December 31, 2013 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | 12,227 | $ | 10,660 | |||||
Barter credits receivable | 19,167 | 18,480 | ||||||
Prepaid expenses | 15,000 | 15,000 | ||||||
Deferred finance charges | 6,250 | 8,750 | ||||||
TOTAL CURRENT ASSETS | 52,644 | 52,890 | ||||||
Property and Equipment | 56,177 | 55,938 | ||||||
Security deposits | 3,330 | 3,330 | ||||||
TOTAL ASSETS | 112,151 | $ | 112,158 | |||||
LIABILITIES AND STOCKHOLDERS' (DEFICIT) | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | $ | 4,422 | $ | 8,823 | ||||
Credit cards payable | 220,904 | 229,571 | ||||||
Customer deposits | 2,223 | 31,573 | ||||||
Loan payable - related party | 93,526 | 67,558 | ||||||
Notes payable | 94,521 | 81,718 | ||||||
Curent portion of long-term debt | 8,086 | 8,296 | ||||||
TOTAL CURRENT LIABILITIES | 423,682 | 427,539 | ||||||
Long-term debt | 28,053 | 30,215 | ||||||
TOTAL LIABILITIES | 451,735 | 457,754 |
UPHOLSTERY INTERNATIONAL, INC
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
2013 | 2012 | ||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash | $ | 10,660 | $ | 7,209 | |||
Barter credits receivable | 18,480 | 135 | |||||
Prepaid expenses | 15,000 | 2,967 | |||||
Deferred finance charges | 8,750 | — | |||||
TOTAL CURRENT ASSETS | 52,890 | 10,311 | |||||
Property and Equipment | 55,938 | 47,567 | |||||
Security Deposit | 3,330 | 3,300 | |||||
TOTAL ASSETS | $ | 112,158 | $ | 61,208 | |||
CURRENT LIABILITIES | |||||||
Accounts payable and accrued expenses | $ | 8,823 | $ | 7,256 | |||
Credit cards payable | 229,571 | 262,625 | |||||
Customer deposits | 31,573 | 14,277 | |||||
Loan payable - related party | 67,558 | 89,779 | |||||
Notes payable | 81,718 | — | |||||
Current portion of long-term debt | 8,296 | 6,667 | |||||
TOTAL CURRENT LIABILITIES | 427,539 | 380,604 | |||||
Long-term debt | 30,215 | 16,396 | |||||
TOTAL LIABILITIES | 457,754 | 397,000 |
-9- |
-10- |
UI’s agreement with Lambert Private Equity LLC has specific registration rights that could affect potential shareholder rights.
On December 17th, 2014 Upholstery International, Inc signed an agreement with Lambert Private Equity, LLC., which is a voluntary agreement on the part of Upholstery International, Inc. That is, according to the Agreement, in the event that Upholstery International, Inc is actually trading on an agreed upon exchange, after a 30 day trading period, in which price and volume are established, Upholstery International, Inc, may seek a draw down wherein Lambert, using the 30 day price trading average, would purchase up to $1,000,000.00 of Upholstery Internationals Stock per draw down at a 10% discount from the established price.
This would cause a dilution to existing shareholders. Consequently, Upholstery International, Inc will utilize the Lambert Agreement only when and if absolutely necessary to meet financial demands. As an inducement to Lambert to enter into this Agreement, Upholstery International, Inc has issued 80,000 Shares, representing a fee of 2% the total Commitment of $10,000,000.00
Upholstery International’s agreement with Lambert Private Equity LLC has specific registration rights that could affect potential shareholder rights. Lambert Private Equity holds shares within Upholstery International, Inc per a commitment fee and will not be able to add additional funding if the company holds more than 4.9% ownership. Further, there is no assurance that Lambert will provide funding if needed nor that Upholstery International, Inc will need to activate the agreement.
-11- |
-12- |
SINCE OUR COMPANY’S OFFICERS AND DIRECTOR WILL OWN 52% OF THE OUTSTANDING COMMON STOCK, INVESTORS MAY FIND THAT THEIR DECISIONS ARE CONTRARY TO THEIR INTERESTS.STS.
-13- |
-14- |
-15- |
GROSS PROCEEDS FROM THIS OFFERING
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$ | 7,500,000 | $ | 15,000,000 | $ | 22,500,000 | $ | 30,000,000 | ||||||||
Talent & Onboarding
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$ | 625,000 | $ | 1,250,000 | $ | 1,875,000 | $ | 2,500,000 | ||||||||
Acquisitions
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$ | 5,000,000 | $ | 10,000,000 | $ | 15,000,000 | $ | 20,000,000 | ||||||||
Technology
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$ | 125,000 | $ | 250,000 | $ | 375,000 | $ | 500,000 | ||||||||
Real Estate/Lease
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$ | 375,000 | $ | 750,000 | $ | 1,125,000 | $ | 1,500,000 | ||||||||
Marketing & Advertising
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$ | 250,000 | $ | 500,000 | $ | 750,000 | $ | 1,000,000 | ||||||||
Operating Expenses
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$ | 375,000 | $ | 750,000 | $ | 1,125,000 | $ | 1,500,000 | ||||||||
Supplies& Materials
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$ | 250,000 | $ | 500,000 | $ | 750,000 | $ | 1,000,000 | ||||||||
Working Capital
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$ | 500,000 | $ | 1,000,000 | $ | 1,500,000 | $ | 2,000,000 | ||||||||
Total
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$ | 7,500,000 | $ | 15,000,000 | $ | 22,500,000 | $ | 30,000,000 |
Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. Our Company will be offering the shares of common stock being covered by this prospectus at a price of $6.00 per share. Such offering price does not have any relationship to any established criteria of value, such as book value or earnings per share. No valuation or appraisal has been prepared for our business and potential business expansion.
-16- |
-17- |
Existing Stockholders if all of the Shares are Sold: | ||||
Price per share | $ | 6.00 | ||
Net tangible book value per share before offering | $ | (0.02 | ) | |
Potential gain to existing shareholders | $ | 29,645,654 | ||
Net tangible book value per share after offering | $ | 1.48 | ||
Increase to present stockholders in net tangible book value per share | ||||
after offering | $ | 1.50 | ||
Capital contributions | $ | 0 | ||
Number of shares outstanding before the offering | 20,000,000 | |||
Number of shares after offering assuming the sale of the maximum | ||||
number of shares | 25,000,000 | |||
Percentage of ownership after offering | 80 | % | ||
Purchasers of Shares in this Offering if all Shares Sold | ||||
Price per share | $ | 6.00 | ||
Dilution per share | $ | 4.83 | ||
Capital contributions | $ | 30,000,000 | ||
Number of shares after offering held by public investors | 5,000,000 | |||
Percentage of capital contributions by existing shareholders | 0 | % | ||
Percentage of capital contributions by new investors | 100 | % | ||
Percentage of ownership of new investors after offering | 20 | % | ||
Upholstery International |
Dilution Table |
100 | % | 75 | % | 50 | % | 75 | % | |||||||||
Assumed offering price | $ | 6.00 | $ | 6.00 | $ | 6.00 | $ | 6.00 | ||||||||
Net tangible book deficit per share at March 31, 2014 | (0.02 | ) | (0.02 | ) | (0.02 | ) | (0.02 | ) | ||||||||
Increase in net tangible book value per share attributable to new investors after offering | 1.20 | 0.95 | 0.67 | 0.35 | ||||||||||||
Pro forma net tangible book value share of common stock, as adjusted to give effect to this offering | 1.18 | 0.93 | 0.65 | 0.34 | ||||||||||||
Dilution per share to new investors in this offering | $ | 4.82 | $ | 5.07 | $ | 5.35 | $ | 5.66 | ||||||||
Calculations: | ||||||||||||||||
Tangible Book Value March 31, 2014: | ||||||||||||||||
Deficiency | $ | (339,584 | ) | $ | (339,584 | ) | $ | (339,584 | ) | $ | (339,584 | ) | ||||
Less: Deferred finance charge | (6,250 | ) | (6,250 | ) | (6,250 | ) | (6,250 | ) | ||||||||
Tangible book value | $ | (345,834 | ) | $ | (345,834 | ) | $ | (345,834 | ) | $ | (345,834 | ) | ||||
Shares outstanding March 31, 2014 | 20,100,600 | 20,100,600 | 20,100,600 | 20,100,600 | ||||||||||||
Tangible book deficit per share | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
Shares being offered | 5,000,000 | 3,750,000 | 2,500,000 | 1,250,000 | ||||||||||||
Proceeds from Offering | $ | 30,000,000 | $ | 22,500,000 | $ | 15,000,000 | $ | 7,500,000 | ||||||||
Less: Expenses of offering - at 10% of Proceeds | $ | — | $ | — | $ | — | $ | — | ||||||||
Tangible Book Value | (345,834 | ) | (345,834 | ) | (345,834 | ) | (345,834 | ) | ||||||||
Adjusted Tangible book value after offering | $ | 29,654,166 | $ | 22,154,166 | $ | 14,654,166 | $ | 7,154,166 | ||||||||
Shares outstanding December 31, 2013 | 20,100,600 | 20,100,600 | 20,100,600 | 20,100,600 | ||||||||||||
Shares to be issued in offering | 5,000,000 | 3,750,000 | 2,500,000 | 1,250,000 | ||||||||||||
Adjusted Shares after offering | 25,100,600 | 23,850,600 | 22,600,600 | 21,350,600 | ||||||||||||
Pro forma net tangible book value share of common stock, as adjusted to give effect to this offering | $ | 1.18 | $ | 0.93 | $ | 0.65 | $ | 0.34 |
-18- |
The offering will conclude on the earlier of; (1) when all 5,000,000 shares of common stock have been sold, or (2) 120 days after this registration statement becomes effective with the Securities and Exchange Commission. There is no minimum number of common shares that we have to sell. There are no minimum purchase requirements. The Company may at its discretion extend the offering for an additional 120 days or such period as the Company deems reasonable.
-19- |
*
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have equal ratable rights to dividends from funds legally available if and when declared by our Board of Directors;
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*
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are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;
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*
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do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights;
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*
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and are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.
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No Preferred shares have been issued and have not been designated.
-20- |
-21- |
-22- |
Our timeframe for implementation is immediate. We intend on utilizing the following steps pre and post IPO.
· | Send out mailers to a targeted group of qualified companies that meet our initial minimum financial requirements. We will be targeting furniture manufacturing facilities, fabric Manufacturing facilities as well as other upholstery specific businesses. At this time the financial requirements have not been determined since we don’t know how successful our funding activities will be and what our budget allows. |
· | Our Plan is to Initiate negotiations and on-board the newly acquired organization. |
Some issues that we may encounter might be the inability to close these acquisitions in a timely manner thus making it difficult to accomplish our business plan. We will face an acquisition cost that will be associated with finding these deals and bring them to the closing table. We intend to raise additional capital through utilizing our private equity partners if needed.
Our goal is to strategically acquire companies that fit within an aggressive model that will allow us to compete with our top competition. We are currently looking at many companies to acquire, however, we have not entered into any agreements with any yet as we are in the early stages of negotiations. Our business plan is based off of growing our existing company internally within the Upholstery related sector, while placing a focus on acquiring furniture manufacturing outlets as well. We are reaching out to a target list of potential companies that we feel will best suit our grow plans. We are and always will be in acquisition mode as this is our how we plan to grow.
Our timeframe for implementation is immediate. We intend on utilizing the following steps pre and post IPO.
- Send out mailers to a targeted group of qualified companies that meet our initial minimum financial requirements. We will be targeting furniture manufacturing facilities, fabric manufacturing facilities as well as other upholstery specific businesses.
- Our Plan is to Initiate negotiations and on-board the newly acquired organization.
-23- |
Suppliers
Active Foam Products, Chicago, IL, Charlotte Fabrics, Minneapolis, MN. Luxury Fabrics, Grand Rapids, MI.
We have a variety of competitors in our sector; Lazyboy, Ethan Allen and Walter E. Smith Furniture to name three.
Distribution Methods:
Currently we have and operate 3 delivery trucks for local orders, we utilize Fed-EX and UPS for local and long distance orders.
Upholstery International, Inc. has a total of 11 full-time employees
We own and operate equipment that is necessary to perform our daily jobs within our core business.
Website – Under construction
-24- |
Page | ||
Independent Auditors' Report | F-1 | |
Balance Sheet | F-2 | |
Statement of Operations | F-3 | |
Statement of Stockholder's' Deficiency | F-4 | |
Statement of Cash Flows | F-5 | |
Notes to Financial Statements | F-6 |
-25- |
We have audited the accompanying consolidated balance sheets of Upholstery International, Inc. (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the years ended December 31, 2013 and 2012. These consolidated 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.
F-1 |
2013 | 2012 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 10,660 | $ | 7,209 | ||||
Barter credits receivable | 18,480 | 135 | ||||||
Prepaid expenses | 15,000 | 2,967 | ||||||
Deferred finance charges | 8,750 | — | ||||||
TOTAL CURRENT ASSETS | 52,890 | 10,311 | ||||||
Property and Equipment | 55,938 | 47,567 | ||||||
Security Deposit | 3,330 | 3,300 | ||||||
TOTAL ASSETS | $ | 112,158 | $ | 61,208 | ||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | $ | 8,823 | $ | 7,256 | ||||
Credit cards payable | 229,571 | 262,625 | ||||||
Customer deposits | 31,573 | 14,277 | ||||||
Loan payable - related party | 67,558 | 89,779 | ||||||
Notes payable | 81,718 | — | ||||||
Current portion of long-term debt | 8,296 | 6,667 | ||||||
TOTAL CURRENT LIABILITIES | 427,539 | 380,604 | ||||||
Long-term debt | 30,215 | 16,396 | ||||||
TOTAL LIABILITIES | 457,754 | 397,000 | ||||||
STOCKHOLDERS' (DEFICIT) | ||||||||
Preferred stock, $.0001 par value; 10,000,000 shares authorized | ||||||||
No shares issued and outstanding at December 31, 2013 and 2012 | — | — | ||||||
Common stock, $.0001 par value; 100,000,000 shares authorized 20,000,000 and 13,450,000 shares issued and outstanding at December 31,2013 and 2012, respectively | 2,000 | 1,345 | ||||||
Additional paid-in capital | 9,650 | 9,650 | ||||||
Accumulated deficit | (356,646 | ) | (346,787 | ) | ||||
Stock subscription receivable | (600 | ) | — | |||||
TOTAL STOCKHOLDERS' (DEFICIT) | (345,596 | ) | (335,792 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) | $ | 112,158 | $ | 61,208 |
F-2 |
Year ended December 31, | ||||||||
2013 | 2012 | |||||||
REVENUE | $ | 559,159 | 577,978 | |||||
COST OF REVENUE | 386,858 | 372,333 | ||||||
GROSS PROFIT | 172,301 | 205,645 | ||||||
OPERATING EXPENSES (INCOME) | ||||||||
General and administrative expenses | 149,370 | 151,795 | ||||||
Income from Operations | 22,931 | 53,850 | ||||||
Other expense (income): | ||||||||
Interest expense | 44,687 | 34,379 | ||||||
Gain on settlement of credit card debt | (11,897 | ) | (13,194 | ) | ||||
32,790 | 21,185 | |||||||
Income (loss) before income taxes | (9,859 | ) | 32,665 | |||||
Provision for income taxes | — | — | ||||||
Net Income (Loss) | $ | (9,859 | ) | 32,665 | ||||
Net Income (loss) per share - basic and diluted | (0.00 | ) | 0.00 | |||||
Weighted average common shares outstanding - basic and diluted | 13,557,671 | 13,450,000 |
F-3 |
Common
Stock
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Additional
Paid-in
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Accumulated
Stock
Subscription
|
||||||||||||||||||||||
Shares | Amount | Capital
|
(Deficit)
|
Receivable
|
Total
|
|||||||||||||||||||
Balance,
January 1, 2012
|
13,450,000 | $ | 1,345 | $ | 9,650 | $ | (379,452 | ) | $ | - | $ | (368,457 | ) | |||||||||||
Net
income for the year ended December 31, 2012
|
32,665 | 32,665 | ||||||||||||||||||||||
Balance,
December 31, 2012
|
13,450,000 | $ | 1,345 | $ | 9,650 | $ | (346,787 | ) | $ | - | $ | (335,792 | ) | |||||||||||
Stock
issued on subscription
|
6,000,000 | 600 | - | (600 | ) | - | ||||||||||||||||||
Stock
issued for services
|
550,000 | 55 | - | 55 | ||||||||||||||||||||
Net
loss for the year ended December 31, 2013
|
(9,859 | ) | (9,859 | ) | ||||||||||||||||||||
Balance,
December 31, 2013
|
20,000,000 | $ | 2,000 | $ | 9,650 | $ | (356,646 | ) | $ | (600 | ) | $ | (345,596 | ) |
F-4 |
2013 | 2012 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | (9,859 | ) | $ | 32,665 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation expense | 18,077 | 15,431 | ||||||
Amortization of deferred finance charges | 1,250 | |||||||
Stock based compensation | 55 | |||||||
Changes in operating assets and liabilities: | ||||||||
Barter credits receivable | (18,345 | ) | 10,046 | |||||
Prepaid expenses | (12,035 | ) | — | |||||
Accounts payable and accrued expenses | 1,568 | 2,887 | ||||||
Credit cards payable | (33,054 | ) | 36,546 | |||||
Customer deposits | 17,297 | 6,714 | ||||||
Net cash provided by (used in) operating activities | (35,046 | ) | 104,289 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (1,885 | ) | ||||||
Net cash used in financing activities | (1,885 | ) | — | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of debt | 90,000 | |||||||
Payment of finance costs | (10,000 | ) | ||||||
Repayment of related party loans | (22,221 | ) | (26,775 | ) | ||||
Repayment of long-term debt | (17,397 | ) | (79,026 | ) | ||||
Net cash provided by (used in) financing activities | 40,382 | (105,801 | ) | |||||
Increase (decrease) in cash | 3,451 | (1,512 | ) | |||||
Cash - beginning of year | 7,209 | 8,721 | ||||||
Cash - end of year | $ | 10,660 | $ | 7,209 |
F-5 |
Upholstery International, Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2013 and 2012
NOTE 1 – Organization and Business
Upholstery International, Inc. (the “Company”) through its wholly owned subsidiary Ken’s Custom Upholstery, Inc. (“Ken’s”) operates a retail upholstery store which specializes in the reupholstering of furniture. The Company was incorporated under the laws of the state of Delaware on November 21, 2013 and Ken’s was formed under the laws of the state of Illinois on January 16, 1986.
On December 16, 2013 the Company completed a Share Exchange agreement with Ken’s, whereby the Company issued 13,450,000 shares of its common stock to the shareholders of Ken’s. The merger was accounted for as a reverse merger, whereby Ken’s being the accounting survivor and the Company being the legal acquirer. Accordingly, the historical financial statements presented herein are those of Ken’s Custom Upholstery, Inc. The stockholders’ equity section of Ken’s has been retroactively restated for all periods presented to reflect the accounting effect of the reverse merger transaction.
NOTE 2 – Significant Accounting Policies
Use of Estimates
The preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) 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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary.
Cash and Cash Equivalents
The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents.
Revenue Recognition
The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 104 for revenue recognition and Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” Accordingly, revenue is recorded when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured.
The Company’s source of revenue is derived from the reupholstering of furniture and revenue is recorded upon completion of the services upon pick up or delivery to the customer. The Company receives a deposit when the order is received and records the deposit as a customer deposit until the revenue is recognized.
F-6 |
Barter Transactions
The Company periodically enters into barter transactions for goods and services. The Company uses a third party to facilitate the exchange. The barter transactions are accounted for in accordance with ASC 845-10 in which the fair value of the nonmonetary assets exchanged is more clearly evident than the fair value of the barter credits received and that the barter credits shall be reported at the fair value of the nonmonetary asset exchanged. A loss on barter credits will be recognized if it subsequently becomes apparent that the fair value of any remaining credits is less that the carrying value of the credits or it is probable that all remaining credits will not be used. The Company did not recognize any losses on barter credits during the years ended December 31, 2013 and 2012. The Company evaluates the recoverability of the credits on a quarterly basis. The Company uses barter transactions regularly in the normal course of its business. The types of transactions that the company exchanges its upholstering services are merchandise materials, supplies, advertising, and other normal operating expenses incurred during the course of business. The fair market value is determined by a third party record keeper of the barter transactions as the regular prevailing prices on a one hundred percent trade basis, as stipulated by the seller of the goods and services. During the year ended December 31, 2013 the company bartered $22,831 in transactions. The Company expects to use at least the same and probably more in the year 2014, and has accordingly recognized the barter credits receivable as a current asset in the balance sheet at December 31, 2013.
Deferred Financing Costs
Deferred financing costs represent commitment fees, legal and other third party costs associated with obtaining commitments for financing which result in a closing of such financings. These costs are amortized, using the effective interest method, into earnings through interest expense over the terms of the respective agreements. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the three year useful lives of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred.
Advertising
Advertising and marketing expenses are charged to operations as incurred.
Fair Value Measurements
The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of the Company’s short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
F-7 |
ASC 820 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 most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 — quoted prices in active markets for identical assets or liabilities
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a stockholders’ deficit of $345,596, an accumulated deficit of $356,646, and a working capital deficit of $374,649 at December 31, 2013. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving capital from third parties. The company is currently in the process of implementing a strategic growth plan through acquiring a number of industry related businesses. By acquiring additional revenue sources and launching our internal growth plans, we feel as a company, we will be able to reach our profitability marks efficiently. No assurance can be given that the Company will be successful in these efforts.
NOTE 4 – PROPERTY AND EQUIPMENT
A summary of property and equipment and the estimated useful lives used in the computation of depreciation is as follows:
--------December 31,--------- | ||||||
2013 | 2012 | |||||
------------Amount------------ | Useful Life | |||||
Transportation equipment | $ 94,827 | $ 92,690 | 5 years | |||
Equipment | 13,075 | 13,075 | 5 years | |||
Furniture and fixtures | 9,180 | 9,180 | 7 years | |||
Leasehold improvements | 29,766 | 29,766 | 10 years | |||
146,848 | 144,711 | |||||
Less accumulated depreciation | 90,910 | 97,144 | ||||
$ 55,938 | $ 47,567 |
F-8 |
NOTE 5 – NOTES PAYABLE
On November 15, 2013 the Company issued a promissory note in the amount of $70,000 to an unrelated third party. The note bears interest at 11% per annum and matures on November 15, 2014, or within seven days after the Company is listed on a national stock exchange, whichever is earlier. The note is payable in monthly installments of interest only until the maturity date, and is personally guaranteed by two officers of the Company.
In August 2013, the Company entered into a funding agreement for the sale of future credit card receivables pursuant to which the purchaser acquired $27,600 of future credit card receivables for a purchase price of $20,000 which amount is payable at the rate of 20% of the amount of credit card receivables collected. The Company is amortizing the $7,600 original discount as interest expense proportionally to the collection of the credit card receivables. The amount outstanding at December 31, 2013 was $11,718. In addition, borrowings under the agreement are guaranteed by a stockholder of the Company.
NOTE 6 – LONG-TERM DEBT
Long-term debt consists of two automobile loans which are payable in monthly installments of $897, including interest at rates of 5.6% and 8.0%. These loans are collateralized by the specific automobile owned by the company and mature as follows:
Year ended December 31, 2014 | $8,296 | ||
2015 | 8,861 | ||
2016 | 9,467 | ||
2017 | 5,349 | ||
2018 | 4,790 | ||
2019 | 1,749 |
NOTE 7 – LOAN PAYABLE – RELATED PARTY
As of December 31, 2013 and 2012, the Company was obligated to a director, who is also an officer and a stockholder, for a non-interest bearing demand loan in the amounts of $67,558 and $89,779, respectively. The Company plans to pay the loan back as cash flows become available.
NOTE 8 – CREDIT CARDS PAYABLE
The Company utilized several major credit cards during the normal course of its operations. These borrowings are used to finance the company's business operations and ordinary operating expenses. Interest rates on the credit cards range from 11% to 30%. The Company also utilizes the services of a third party to negotiate settlements with the credit card companies. During the years ended December 31, 2013 and 2012 the Company recorded gains from the settlement of credit card debt of $11,897 and $13,194, respectively. The Company currently has total available credit card financing of approximately $50,000 to finance its ongoing operations. The total of credit card payable on the accompanying balance sheet exceeds this amount due to existing credit cards in which no additional credit has been extended to the Company, which the Company is currently making payments towards the outstanding balances. The Company is not currently in default under payment arrangements on any of the credit cards. The credit cards are all personally guaranteed by the president of the Company.
F-9 |
NOTE 9 - INCOME TAXES
2013 | 2012 | |||||||
Income tax (benefit) at statutory rate | $ | (3,450 | ) | $ | 11,400 | |||
Change in valuation all | $ | 3,450 | $ | (11,400 | ) | |||
Income tax expense per books | $ | — | — |
The tax effects of temporary differences that give rise to the Company’s net deferred tax assets as of December 31, 2013 and 2012 are as follows:
Net Operating Loss | $ | 125,000 | $ | 121,000 | ||||
Valuation allowance | (125,000 | ) | (121,000 | ) | ||||
Net deferred tax asset | $ | — | $ | — |
The Company has approximately $350,000 of net operating losses (“NOL”) carried forward to offset taxable income in future years which expire commencing in fiscal 2028. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.
NOTE 10 – STOCKHOLDERS’ DEFICIENCY
Authorized Stock
The Company has authorized 100,000,000 common shares and 10,000,000 preferred shares, both with a par value of $0.0001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
On December 26, 2013 the Company issued 6.000,000 shares in association with a subscription agreement for $600.
On December 26, 2013 the Company issued 550,000 shares for consulting services. The Company valued these shares at the price per share issued with the subscription agreement referred to above.
F-10 |
Page | ||
Balance Sheet as of March 31, 2014 and December 31, 2013 (unaudited) | F-12 | |
Statement of Cash Flows for the period ended March 31, 2014 and 2013 (unaudited) | F-13 | |
Statement of Operations for the period ended March 31, 2014 and 2013 (unaudited) | F-14 | |
Notes to Financial Statements as of March 31, 2014 (unaudited) | F-15 | |
F-11 |
UPHOLSTERY
INTERNATIONAL, INC
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March
31, 2014 | December
31, 2013 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | 12,227 | $ | 10,660 | |||||
Barter credits receivable | 19,167 | 18,480 | ||||||
Prepaid expenses | 15,000 | 15,000 | ||||||
Deferred finance charges | 6,250 | 8,750 | ||||||
TOTAL CURRENT ASSETS | 52,644 | 52,890 | ||||||
Property and Equipment | 56,177 | 55,938 | ||||||
Security deposits | 3,330 | 3,330 | ||||||
TOTAL ASSETS | 112,151 | $ | 112,158 | |||||
LIABILITIES AND STOCKHOLDERS' (DEFICIT) | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | $ | 4,422 | $ | 8,823 | ||||
Credit cards payable | 220,904 | 229,571 | ||||||
Customer deposits | 2,223 | 31,573 | ||||||
Loan payable - related party | 93,526 | 67,558 | ||||||
Notes payable | 94,521 | 81,718 | ||||||
Curent portion of long-term debt | 8,086 | 8,296 | ||||||
TOTAL CURRENT LIABILITIES | 423,682 | 427,539 | ||||||
Long-term debt | 28,053 | 30,215 | ||||||
TOTAL LIABILITIES | 451,735 | 457,754 | ||||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Preffered stock, $.0001 par value; 10,000,000 shares authorized | ||||||||
No shares issued and outstanding at December 31, 2013 and 2012 | ||||||||
Common stock, $.0001 par value; 100,000,000 shares authorized | ||||||||
20,010,600 and 20,000,000 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 2,011 | 2,000 | ||||||
Additional paid-in capital | 25,539 | 9,650 | ||||||
Accumulated deficit | (367,134 | ) | (356,646 | ) | ||||
Stock subscription receivable | (600 | ) | ||||||
TOTAL STOCKHOLDERS' (DEFICIT) | (339,584 | ) | (345,596 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) | $ | 112,151 | $ | 112,158 |
F-12 |
UPHOLSTERY INTERNATIONAL, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31, | ||||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income (loss) | (10,488 | ) | 21,106 | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation expense | 4,500 | 3,986 | ||||||
Amortization of deferred finance charges | 2,500 | |||||||
Changes in operating assets and liabilities: | ||||||||
Barter credits receivable | (687 | ) | ||||||
Accounts payable and accrued expenses | (4,401 | ) | (3,578 | ) | ||||
Credit cards payable | (8,667 | ) | (16,871 | ) | ||||
Customer deposits | (29,350 | ) | 3,465 | |||||
Net cash provided by (used in) operating activities | (46,593 | ) | 8,108 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (4,739 | ) | ||||||
Net cash used in financing activities | (4,739 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of debt | 21,500 | |||||||
Proceeds from issuance of common stock | 16,500 | |||||||
Repayment of related party loans | 25,968 | (3,266 | ) | |||||
Repayment of long-term debt | (11,070 | ) | (2,297 | ) | ||||
Net cash provided by (used in) financing activities | 52,898 | (5,563 | ) | |||||
Increase in cash | 1,566 | 2,545 | ||||||
Cash - beginning of period | 10,661 | 7,209 | ||||||
Cash - end of period | $ | 12,227 | $ | 9,754 |
F-13 |
UPHOLSTERY INTERNATIONAL, INC | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Unaudited) | ||||||||
Three months ended March 31, | ||||||||
2014 | 2013 | |||||||
REVENUE | $ | 147,828 | 131,675 | |||||
COST OF REVENUE | 100,080 | 84,466 | ||||||
GROSS PROFIT | 47,748 | 47,209 | ||||||
OPERATING EXPENSES (INCOME) | ||||||||
General and administrative expenses | 40,669 | 28,787 | ||||||
Income from Operations | 7,079 | 18,422 | ||||||
Other expense (income): | ||||||||
Interest expense | 15,067 | 9,213 | ||||||
Gain on settlement of credit card debt | — | (11,897 | ) | |||||
15,067 | (2,684 | ) | ||||||
Income (Loss) before income taxes | $ | (10,488 | ) | 21,106 | ||||
Provision for income taxes | — | — | ||||||
Net Income (loss) per share - basic and diluted | (0.00 | ) | 0.00 | |||||
Weighted average common shares outstanding - basic and diluted | 20,005,955 | 13,450,000 | ||||||
F-14 |
Upholstery International, Inc.
Notes to the Consolidated Financial Statements
March 31, 2014
(unaudited)
NOTE 1 – BASIS OF PRESENTATION and Business
The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with the Company’s most recent audited consolidated financial statements and notes hereto as of December 31, 2013. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014, or any other period.
Upholstery International, Inc. (the “Company”) through its wholly owned subsidiary Ken’s Custom Upholstery, Inc. (“Ken’s”) operates a retail upholstery store which specializes in the reupholstering of furniture. The Company was incorporated under the laws of the state of Delaware on November 21, 2013 and Ken’s was formed under the laws of the state of Illinois on January 16, 1986.
On December 16, 2013 the Company completed a Share Exchange agreement with Ken’s, whereby the Company issued 13,450,000 shares of its common stock to the shareholders of Ken’s. The merger was accounted for as a reverse merger, whereby Ken’s being the accounting survivor and the Company being the legal acquirer. Accordingly, the historical financial statements presented herein are those of Ken’s Custom Upholstery, Inc. The stockholders’ equity section of Ken’s has been retroactively restated for all periods presented to reflect the accounting effect of the reverse merger transaction.
NOTE 2 – Significant Accounting Policies
Use of Estimates
The preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) 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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary.
F-15 |
Revenue Recognition
The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 104 for revenue recognition and Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” Accordingly, revenue is recorded when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured.
The Company’s source of revenue is derived from the reupholstering of furniture and revenue is recorded upon completion of the services upon pick up or delivery to the customer. The Company receives a deposit when the order is received and records the deposit as a customer deposit until the revenue is recognized.
Barter Transactions
The Company periodically enters into barter transactions for goods and services. The Company uses a third party to facilitate the exchange. The barter transactions are accounted for in accordance with ASC 845-10 in which the fair value of the nonmonetary assets exchanged is more clearly evident than the fair value of the barter credits received and that the barter credits shall be reported at the fair value of the nonmonetary asset exchanged. A loss on barter credits will be recognized if it subsequently becomes apparent that the fair value of any remaining credits is less that the carrying value of the credits or it is probable that all remaining credits will not be used. The Company did not recognize any losses on barter credits during the three months ended March 31, 2014 and 2013. The Company evaluates the recoverability of the credits on a quarterly basis. The Company uses barter transactions regularly in the normal course of its business. The types of transactions that the company exchanges its upholstering services are merchandise materials, supplies, advertising, and other normal operating expenses incurred during the course of business. The fair market value is determined by a third party record keeper of the barter transactions as the regular prevailing prices on a one hundred percent trade basis, as stipulated by the seller of the goods and services. During the year ended December 31, 2013 the company bartered $22,831 in transactions. The Company expects to use at least the same and probably more in the year 2014, and has accordingly recognized the barter credits receivable as a current asset in the balance sheet at March 31, 2014.
Deferred Financing Costs
Deferred financing costs represent commitment fees, legal and other third party costs associated with obtaining commitments for financing which result in a closing of such financings. These costs are amortized, using the effective interest method, into earnings through interest expense over the terms of the respective agreements. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the three year useful lives of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred.
Advertising
Advertising and marketing expenses are charged to operations as incurred.
Fair Value Measurements
F-16 |
The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of the Company’s short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC 820 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 most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 — quoted prices in active markets for identical assets or liabilities
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a stockholders’ deficit of $339,584, an accumulated deficit of $367,134, and a working capital deficit of $371,038 at March 31, 2014. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving capital from third parties. The company is currently in the process of implementing a strategic growth plan through acquiring a number of industry related businesses. By acquiring additional revenue sources and launching our internal growth plans, we feel as a company, we will be able to reach our profitability marks efficiently. No assurance can be given that the Company will be successful in these efforts.
F-17 |
NOTE 4 – NOTES PAYABLE
On November 15, 2013 the Company issued a promissory note in the amount of $70,000 to an unrelated third party. The note bears interest at 11% per annum and matures on November 15, 2014, or within seven days after the Company is listed on a national stock exchange, whichever is earlier. The note is payable in monthly installments of interest only until the maturity date, and is personally guaranteed by two officers of the Company.
In August 2013, the Company entered into a funding agreement for the sale of future credit card receivables pursuant to which the purchaser acquired $27,600 of future credit card receivables for a purchase price of $20,000 which amount is payable at the rate of 20% of the amount of credit card receivables collected. In addition, on February 25, 2014 the Company entered into another funding agreement in which the purchase acquired $28,380 of future credit card receivables for a purchase price of $21,500. The Company is amortizing the original discount as interest expense proportionally to the collection of the credit card receivables. The aggeregate amount outstanding at March 31, 2014 was $24,521. In addition, borrowings under the agreement are guaranteed by a stockholder of the Company.
NOTE 5 – LONG-TERM DEBT
Long-term debt consists of two automobile loans which are payable in monthly installments of $897, including interest at rates of 5.6% and 8.0%. These loans are collateralized by the specific automobile owned by the company.
NOTE 6 – LOAN PAYABLE – RELATED PARTY
As of March 31, 2014 and December 31, 2013, the Company was obligated to a director, who is also an officer and a stockholder, for a non-interest bearing demand loan in the amounts of $93,526 and $67,558, respectively. The Company plans to pay the loan back as cash flows become available.
NOTE 7 – CREDIT CARDS PAYABLE
The Company utilized several major credit cards during the normal course of its operations. Interest rates on the credit cards range from 11% to 30%. The Company also utilizes the services of a third party to negotiate settlements with the credit card companies. During the three months ended March 31, 2014 and 2013 the Company recorded gains from the settlement of credit card debt of $0 and $11,896, respectively. The Company currently has total available credit card financing of approximately $50,000 to finance its ongoing operations. The total of credit card payable on the accompanying balance sheet exceeds this amount due to existing credit cards in which no additional credit has been extended to the Company, which the Company is currently making payments towards the outstanding balances. The Company is not currently in default under payment arrangements on any of the credit cards. The credit cards are all personally guaranteed by the president of the Company.
NOTE 8 - INCOME TAXES
The Company has approximately $350,000 of net operating losses (“NOL”) carried forward to offset taxable income in future years which expire commencing in fiscal 2028. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.
F-18 |
NOTE 9 – STOCKHOLDERS’ DEFICIENCY
Authorized Stock
The Company has authorized 100,000,000 common shares and 10,000,000 preferred shares, both with a par value of $0.0001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
On December 26, 2013 the Company issued 6.000,000 shares in association with a subscription agreement for $600. The subscription was received in February, 2014.
On December 26, 2013 the Company issued 550,000 shares for consulting services. The Company valued these shares at the price per share issued with the subscription agreement referred to above.
During the three months ended March 31, 2014, the company issued 10,600 shares of common stock to private investors for gross proceeds of $15,900.
F-19 |
On December 17th, 2014 Upholstery International, Inc signed an agreement with Lambert Private Equity, LLC., which is a voluntary agreement on the part of Upholstery International, Inc. That is, according to the Agreement, in the event that Upholstery International, Inc is actually trading on an agreed upon exchange, after a 30 day trading period, in which price and volume are established, Upholstery International, Inc, may seek a draw down wherein Lambert, using the 30 day price trading average, would purchase up to $1,000,000.00 of Upholstery Internationals Stock per draw down at a 10% discount from the established price.
This would cause a dilution to existing shareholders. Consequently, Upholstery International, Inc will utilize the Lambert Agreement only when and if absolutely necessary to meet financial demands. As an inducement to Lambert to enter into this Agreement, Upholstery International, Inc has issued 80,000 Shares, representing a fee of 2% the total Commitment of $10,000,000.00
Upholstery International’s agreement with Lambert Private Equity LLC has specific registration rights that could affect potential shareholder rights. Lambert Private Equity holds shares within Upholstery International, Inc per a commitment fee and will not be able to add additional funding if the company holds more than 4.9% ownership. Further, there is no assurance that Lambert will provide funding if needed nor that Upholstery International, Inc will need to activate the agreement.
We are highly dependent upon the success of the anticipated offering described herein. Therefore, the failure thereof would result in need to seek capital from other resources such as private placements in the Company’s common stock or debt financing, which may not even be available to the Company. However, if such financing were available, , it would likely have to pay additional costs associated with such financing and in the case of high risk loans be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such financing. If the company cannot raise additional proceeds via such financing, it would be required to cease business operations.
Business credit cards are used to purchase materials needed to complete the reupholstery of furniture, to operate and maintain the business vehicles, as well as general office supplies, and business maintenance. We currently have a maximum credit line of $50,000 and owe $34,798 leaving a balance of $15,202 we can draw on.
As of March 31, 2014, we had $12,227 in cash as compared to $10,660 as at December 31, 2013. As of the date of this registration statement, the Company’s sole officer and director, Mr. Kovie has secured a loan with Georgia Peaches, LLC in order to fund the entire process of going public and all associated expenses that pertain to this process. Currently, Mr. Kovie has enough capital to fund the final stages of reaching the OTCBB, which is the exchange we are hoping to reach. This Promissory Note is dated November 30, 2013,and in the amount of Seventy Thousand and 00/100 Dollars ($70,000), payable to the Lender (the “Term Note”) over a period of twelve (12) months at a rate of eleven percent (11%) per annum, which is attached as Exhibit A to this Agreement;
-26- |
Three months ended March 31, 2014 compared to the three months ended March 31, 2013
Sales
Sales for the period ended March 31, 2014 and 2013 was $147,828, and $131,675 respectively. The increase in revenue of $16,153 or 11% primarily was attributable to increases in customer orders.
Cost of Sales and Gross Profit
Cost of sales for the period ended March 31, 2014 and 2013 was $100,080 and $84,466, respectively, resulting in gross profit of $47,748 and $47,209, respectively. The gross profit percentage for the periods ended March 31, 2014 and 2013 was 32% and 36% respectively. The decrease in the gross profit percentage was due to increases in payroll and raw material costs, which we were unable to pass along to customers. The increase in gross profit of $539 or .1% was primarily attributable to increased end user demand for our products.
Operating Expenses
We had total operating expenses of $40,669 for the period ended March 31, 2014 as compared to $28,787 for the period ended March 31, 2013. The increase in operating expenses of $11,882 is due to an increase in general and administrative expenses primarily due to an increase in employees as well as increases in various other accounts.
Interest Expense
We incurred interest expense of $15,067 for the period ended March 31, 2014 as compared to $9,213 for the period ended March 31, 2013. The increase in interest expense of $5,854 is due primarily to credit card fees.
Net Loss / Income
As a result of the foregoing, we realized a net loss of ($10,488) for the period ended March 31, 2014 as compared to a net profit of $21,106 for the period ended March 31, 2013.
Year Ended December 31, 2013 Compared to the Year Ended December 31, 2012
Sales
Sales for the years ended December 31, 2013 and 2012 was $559,159 and $577,978 respectively. The decrease in revenue of $18,819 or 3% primarily was attributable to delays in customer orders due to an extremely harsh winter and decreased end-user demand.
Cost of Sales and Gross Profit
Cost of sales for the year ended December 31, 2013 and 20120 was $386,858 and $372,333, respectively, resulting in gross profit of $172,301 and $205,645, respectively. The gross profit percentage for the year ended December 31, 2013 and 2012 was 31% and 36% respectively. The decrease in gross profit of $33,344 was primarily attributable to was primarily attributable to decreased end user demand for our products.
Operating Expenses
We had total operating expenses of $149,370 for the year ended December 31, 2013 as compared to $151,795 for the year ended December 31, 2012. The decrease in operating expenses of $2,425 is due to a decrease in general and administrative expenses,
Interest Expense
We incurred interest expense of $44,687 for the year ended December 31, 2013 as compared to $34,379 for the year ended December 31, 2012. The increase in interest expense of $10,308 is due primarily to credit card interest.
Net Loss / Income
As a result of the foregoing, we realized a net loss of ($9,859) for the year ended December 31, 2013 as compared to a net profit of $32,665 for the year ended December 31, 2012.
-27- |
The company has a loan agreement with Georgia Peaches, LLC filed as Exhibit 99.3,
· | The $70,000 loan is between Ken’s Custom Upholstery, Inc. and Georgia Peaches, LLC; |
· | Ken’s Custom Upholstery received net proceeds of $60,000 pursuant to the loan agreement with Georgia Peaches due to the requirement to immediately pay Georgia Peaches’ legal counsel $10,000 from the loan proceeds; |
· | The loan is due the earlier of November 15, 2014 or seven calendar days after “Borrower has been first listed on a stock exchange in connection with Borrower’s initial public offering.” this would include quotation of Upholstery International’s common stock on an over-the-counter quotation system rather than an exchange; |
· | The loan is guaranteed by Ken Kovie; |
· | The loan is secured by all the assets of Ken’s Custom Upholstery; and |
· | Georgia Peaches received a warrant to purchase 350,000 shares of common stock. Disclose the material terms of the warrant. |
We are highly dependent upon the success of the offering described herein. Therefore, the failure thereof would result in need to seek capital from other resources such as private placements in the Company’s common stock or debt financing, which may not even be available to the Company. However, if such financing were available, it would likely have to pay additional costs associated with such financing and in the case of high risk loans be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such financing. If the company cannot raise additional proceeds via such financing, it would be required to cease business operations.
GROSS PROCEEDS FROM THIS OFFERING | $ | 7,500,000 | $ | 15,000,000 | $ | 22,500,000 | $ | 30,000,000 | ||||||||
Talent & Onboarding | $ | 625,000 | $ | 1,250,000 | $ | 1,875,000 | $ | 2,500,000 | ||||||||
Acquisitions | $ | 5,000,000 | $ | 10,000,000 | $ | 15,000,000 | $ | 20,000,000 | ||||||||
Technology | $ | 125,000 | $ | 250,000 | $ | 375,000 | $ | 500,000 | ||||||||
Real Estate/Lease | $ | 375,000 | $ | 750,000 | $ | 1,125,000 | $ | 1,500,000 | ||||||||
Marketing & Advertising | $ | 250,000 | $ | 500,000 | $ | 750,000 | $ | 1,000,000 | ||||||||
Operating Expenses | $ | 375,000 | $ | 750,000 | $ | 1,125,000 | $ | 1,500,000 | ||||||||
Supplies& Materials | $ | 250,000 | $ | 500,000 | $ | 750,000 | $ | 1,000,000 | ||||||||
Working Capital | $ | 500,000 | $ | 1,000,000 | $ | 1,500,000 | $ | 2,000,000 | ||||||||
Total |
$ | 7,500,000 | $ | 15,000,000 | $ | 22,500,000 | $ | 30,000,000 |
The above figures represent only estimated costs
-28- |
Name | Age | Position(s) | ||
Ken Kovie1 | 56 | President, Treasurer, Chief Financial Officer and Chairman of the Board of Directors. | ||
Secretary |
Ken Kovie
SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||||||||||||||||
Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
Ken Kovie,President | 2013 | 80,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
-29- |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | |||||||||
OPTION AWARDS | STOCK AWARDS | ||||||||
Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Ken Kovie | - | - | - | - | - | - | - | - | - |
- | - | - | - | - | - | - | - | - |
-30- |
DIRECTOR
COMPENSATION
|
|||||||
Name
|
Fees
Earned or
Paid
in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Ken
Kovie
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Title of Class | Name and Address Beneficial Owner [1] | Amount and Nature of Beneficial Owner | Percent of Class | |||
Common Stock | Ken Kovie | 10,440,000 | 52% | |||
Common Stock | All Officers as a Group | 10,440,000 | 52% | |||
Common Stock issued after this offering | 25,010,600 | 42% | ||||
Common Stock | Pathway Financial LLC [3] | 6,000,000 | 30% |
[1]
|
The
person named above may be deemed to be a “parent” and “promoter” of our company, within the meaning of
such terms under the Securities Act of 1933, as amended, by virtue of his direct and indirect stock holdings. Mr. Kovie is the
only “promoter” of our company.
|
[2]
|
Beneficial
ownership is determined in accordance with the Rule 13d-3(d)(1) of the Exchange Act, as amended and generally includes voting
or investment power with respect to securities. Pursuant to the rules and regulations of the Securities and Exchange Commission,
shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or
warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group and includes
shares that could be obtained by the named individual within the next 60 days.
|
[3] | Pathways Financial LLC has assigned 3,000,000 shares to Rose M. Gallagher family Trust and 3,000,000 shares to Synergistic |
-31- |
- no established public market for the Company’s shares;
- our lack of operating capital and,
- the risk associated with our lack of profitable operating history.
As of December 31, 2013 and 2012, the Company was obligated to a director, who is also an officer and a stockholder, for a non-interest bearing demand loan in the amounts of $67,558 and $89,779, respectively. The Company plans to pay the loan back as cash flows become available.
-32- |
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities.
|
Legal
and Accounting
|
$ | 30,000 | ||
SEC
Filing Fee
|
$ | 3,864 | ||
Printing
|
$ | 200 | ||
Transfer
Agent
|
$ | 1,000 | ||
TOTAL
|
$ | 35,064 |
The Company has authorized 100,000,000 common shares and 10,000,000 preferred shares, both with a par value of $0.0001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
On December 26, 2013 the Company issued 6.000,000 shares to Pathways Financial LLC in association with a subscription agreement for $600.
On December 26, 2013 the Company issued 350,000 shares to Georgia Peaches for consulting services. The Company valued these shares at the price per share issued with the subscription agreement referred to above.
On December 26, 2013 the company issued 200,000 shares to Lambert Equity LLC as an incentive to reach said agreement in their stock purchase agreement.
-33- |
Between February 12, 2014 and July 30, 2014 we sold 15,200 shares of common stock to 37 investors listed in the below table, at a price per share of $1.50 for an aggregate offering price of $22,800. All sold securities were paid for in cash. The Common Stock issued in this offering was issued in a transaction not involving a public offering in reliance upon an exemption from registration provided by Rule 506 of Regulation D of the Securities Act of 1933.
Date | Name | # of Shares | Total Price | |||||||||
2 | /12/2014 | Joshua Kopczyk | 100 | $ | 150.00 | |||||||
2 | /12/2014 | Abigail Kopczyk | 100 | $ | 150.00 | |||||||
2 | /12/2014 | Joyce Bryant | 100 | $ | 150.00 | |||||||
2 | /12/2014 | Tom Evoy | 100 | $ | 150.00 | |||||||
2 | /12/2014 | Andrea Kubida | 1500 | $ | 2,250.00 | |||||||
2 | /12/2014 | Donald Kubida | 1500 | $ | 2,250.00 | |||||||
2 | /12/2014 | John R. Walker | 100 | $ | 150.00 | |||||||
2 | /14/2014 | Benjamin Carlson | 100 | $ | 150.00 | |||||||
2 | /14/2014 | Gavin Carlson | 100 | $ | 150.00 | |||||||
2 | /14/2014 | Carianne Siegel | 500 | $ | 750.00 | |||||||
2 | /14/2014 | Mark J. Siegel | 500 | $ | 750.00 | |||||||
2 | /14/2014 | Danica A, Siegel | 300 | $ | 450.00 | |||||||
2 | /14/2014 | Dalanie L. Siegel | 300 | $ | 450.00 | |||||||
2 | /14/2014 | Carol L. Kalber | 1000 | $ | 1,500.00 | |||||||
3 | /3/2014 | Scott K. Walker | 100 | $ | 150.00 | |||||||
2 | /24/2014 | Lois O'Sullivan | 100 | $ | 150.00 | |||||||
2 | /24/2014 | Robert Kuenster | 100 | $ | 150.00 | |||||||
2 | /24/2014 | Joseph Lombardo | 100 | $ | 150.00 | |||||||
3 | /3/2014 | Annette & Charles Wagner | 500 | $ | 750.00 | |||||||
3 | /3/2014 | Abigail Rea | 100 | $ | 150.00 | |||||||
3 | /3/2014 | Katelyn Rea | 100 | $ | 150.00 | |||||||
3 | /3/2014 | Madelyn Rea | 100 | $ | 150.00 | |||||||
3 | /3/2014 | Jayne Wagner | 100 | $ | 150.00 | |||||||
3 | /3/2014 | Steven Wagner | 100 | $ | 150.00 | |||||||
3 | /11/2014 | Andrew Kopczyk | 500 | $ | 750.00 | |||||||
3 | /11/2014 | Anna Kopczyk | 500 | $ | 750.00 | |||||||
3 | /11/2014 | Lisa Kopczyk | 500 | $ | 750.00 | |||||||
3 | /17/2014 | Brian Walker | 100 | $ | 150.00 | |||||||
3 | /17/2014 | Kevin Walker | 100 | $ | 150.00 | |||||||
3 | /17/2014 | Peter Kopczyk | 1000 | $ | 1,500.00 | |||||||
3 | /25/2014 | Mike Levanowski | 100 | $ | 150.00 | |||||||
3 | /28/2014 | Anthony Guarino | 100 | $ | 150.00 | |||||||
6 | /16/2014 | Kristy L Kubida | 1000 | $ | 1,500.00 | |||||||
6 | /16/2014 | Carol L Kalber | 1000 | $ | 1,500.00 | |||||||
6 | /16/2014 | Carianne Siegel | 500 | $ | 750.00 | |||||||
6 | /16/2014 | Andrea Kubida | 2000 | $ | 3,000.00 | |||||||
7 | /30/2014 | Lois O'Sullivan | 100 | $ | 150.00 |
On July 30, 2014 we sold 5,000 shares of common stock to five (5) investors listed in the below table, at a price per share of $2.50 for an aggregate offering price of $12,500. All sold securities were paid for in cash. The Common Stock issued in this offering was issued in a transaction not involving a public offering in reliance upon an exemption from registration provided by Rule 506 of Regulation D of the Securities Act of 1933.
Date | Name | # of Shares | Total Price | |||||||||
7 | /30/2014 | John R. & Betty L Cory | 1000 | $ | 2,500.00 | |||||||
7 | /30/2014 | Constance R. Logan | 1000 | $ | 2,500.00 | |||||||
7 | /30/2014 | Michael W. Janeczko | 1000 | $ | 2,500.00 | |||||||
7 | /30/2014 | Ken & Mary Farris | 1000 | $ | 2,500.00 | |||||||
7 | /30/2014 | Greg & Ellen Daniel | 1000 | $ | 2,500.00 |
-34- |
Exhibit No. | Description of Exhibits |
---|---|
3.1(1) | Articles of Incorporation of Upholstery International, Inc. |
3.2(1) | Bylaws of Upholstery International, Inc. |
5.1 | Opinion of Novi & Wilkin regarding the legality of the securities being registered. |
10.4(1) | Subscription Agreement |
23.1 | Auditor Consent |
23.2 | Consent of council,(council’s consent is located in the legal opinion filed as Exhibit 5 to this registration statement). |
99.2(1) | Lambert Agreement |
99.3(1) | Georgia Peaches Agreement |
1. | To file, during any period in which it offers or sells securities, a post- effective amendment to this Registration Statement to: | |
a. | include any Prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
|
|
b. | reflect in the Prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth in this Registration Statement; and notwithstanding the
forgoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of Prospectus filed with the commission pursuant
to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; and
|
|
c. | include any additional or changed material information on the plan
of distribution.
|
|
2. | That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
|
|
3. | To remove from registration by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of the offering. | |
4. | That, for determining our liability under the
Securities Act to any purchaser in the initial distribution of the securities, we undertake that in a
primary offering of our securities pursuant to this Registration Statement, regardless of
the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, we will be a seller to
the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
a. | any preliminary Prospectus or Prospectus that we file relating to the
offering required to be filed pursuant to Rule 424 (Section 230.424 of this chapter);
|
|
b. | any free writing Prospectus relating to the offering prepared by or
on our behalf or used or referred to by us;
|
|
c. | the portion of any other free writing Prospectus relating to the offering
containing material information about us or our securities provided by or on behalf of us;
|
|
d. | and any other communication that is an offer in the offering made by
us to the purchaser.
|
-35- |
-36- |