SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended December
[ ] TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission File Number 333-198615
(Exact name of registrant issuer as specified
in its charter)
(State or other jurisdiction
of incorporation or
||(I.R.S. Employer Identification No.)|
Irvine, CA 92602
|(Address of principal executive offices, including zip code)|
|Registrant’s phone number, including area code (714) 791-1305|
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 [ ]
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 (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the
registrant was required to submit and post such files).
YES [ ] NO [x]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act. (Check one):
Large Accelerated Filer [ ] Accelerated
Filer [ ] Non-accelerated Filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes [x] No [ ]
Indicate the number of shares outstanding of each of the
issuer’s classes of common stock, as of the latest practicable date.
||Outstanding at January 9, 2015|
|Common Stock, $.001 par value
||Balance Sheet as of December 31, 2014 (unaudited)
Statements of Operations for the Three Month
and Period from May 14, 2014 (inception) through December 31, 2014 (unaudited)
||Statement of Cash Flows for the Period from May 14, 2014 (inception) through December 31, 2014 (unaudited)
Notes to Financial Statements (unaudited)
| ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
CONTROLS AND PROCEDURES
||UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
||DEFAULTS UPON SENIOR SECURITIES
||(REMOVED AND RESERVED)
PART I - FINANCIAL INFORMATION
ITEM I — FINANCIAL STATEMENTS
December 31, 2014 (Unaudited)
|| || || |
|| || || |
|| || || |
|| || || |
|| || || |
|LIABILITIES AND STOCKHOLDERS’ DEFICIT||
|| || || |
|| || || |
|| || || |
|Note payable and interest payable – related party||
|| ||112,405|| |
|| ||187,405|| |
|| || || |
|| || || |
|| || || |
|Preferred stock, $0.001 par value; 25,000,000 shares authorized; none issued or outstanding||
|| ||— || |
|Common stock, $0.001 par value; 150,000,000 shares authorized; 20,050,000 shares issued and outstanding||
|| ||20,050|| |
|Additional paid in capital||
|TOTAL STOCKHOLDERS’ DEFICIT||
|| || || |
|TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT||
|| || || |
The accompanying notes are an integral
part of these financial statements.
Statement of Operations
For the Three Months Ended December 31,
2014 and the Period from May 14, 2014 (inception) through December 31, 2014 (Unaudited)
||Three Months Ended December 31,||
||Period from May 14, 2014 (inception) through December 31,|
|| || || ||
|| || || |
|| || || ||
|| || || |
|Development, general and administration||
|| ||30,925|| ||
|| ||99,702|| |
|| || || ||
|| || || |
|| ||30,925|| ||
|| ||99,702|| |
|| || || ||
|| || || |
|| || || ||
|| || || |
|| || || ||
|| || || |
|Basic and diluted loss per share||
|| || || ||
|| || || |
|Weighted average common shares outstanding - basic and diluted||
|| ||20,050,000|| ||
|| ||20,026,087|| |
The accompanying notes are an integral
part of these financial statements.
Statement of Cash Flows
For the Period from May 14, 2014 (inception)
through December 31, 2014 (Unaudited)
|CASH FLOW FROM OPERATING ACTIVITIES:||
|| || || |
|Stock compensation expense||
|| ||20,000|| |
|Change in current assets and liabilities: |
|| ||75,000|| |
|Accrued interest payable - related party||
|| ||2,405|| |
|| || || |
|Net Cash Used In Operating Activities||
|| || || |
|CASH FLOW FROM FINANCING ACTIVITIES:||
|| || || |
|Note payable – related party||
|| ||110,000|| |
|| || || |
|Net Cash Provided By Financing Activities||
|| ||110,000|| |
|| || || |
|CHANGE IN CASH||
|| ||105,298|| |
|CASH AT BEGINNING OF PERIOD||
|| ||— || |
|CASH AT END OF PERIOD||
|| || || |
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION||
|| || || |
|| || || |
|Cash paid for:||
|| || || |
||$||— || |
||$||— || |
|| || || |
The accompanying notes are an integral
part of these financial statements.
Notes to the Financial Statements
December 31, 2014
NOTE 1 – ORGANIZATION
(the Company) was incorporated under the laws of the State of Nevada on May 14, 2014. The Company issued 17,000,000 shares of its
common stock to our founder, Thomas Chen, as consideration for the purchase of a business plan.
on marketing and distribution for the next generation of wearable health and wellness devices. WeWearables is targeting the next
generation of devices which focus on smart, wearable products to help with specific diseases or solve direct healthcare issues.
NOTE 2 – SUMMARY OF SIGNIFICANT
a. Basis of Accounting
financial statements are prepared using the accrual method of accounting. The Company has elected a March 31 fiscal year-end.
b. Cash Equivalents
For purposes of
the balance sheet and statement of cash flows, the Company considers all highly liquid instruments with maturity of three months
or less at the time of issuance to be cash equivalents.
c. Stock-based Compensation
The Company follows
ASC 718-10, Stock Compensation, which addresses the accounting for transactions in which an entity exchanges its equity
instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based
payment transactions. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from
subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and
has not granted any stock options.
d. Use of Estimates
Preparation of the
financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those
estimates. The Company has adopted the provisions of ASC 260.
e. Loss per Share
The basic loss per
share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of
common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common
shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number
of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted loss
per share are the same as basic earnings loss per share due to the lack of dilutive items in the Company.
f. Fair Value Measurements
ASC Topic 820 defines
fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair
value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency
of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 - Inputs
to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Inputs
to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 - Inputs
to the valuation methodology are unobservable and significant to the fair value measurement.
adoption of fair value measurements and disclosures did not have a material impact on the financial statements and financial statement
g. Income Taxes
Income taxes are
provided in accordance with ASC 740, Income Taxes. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from
the net change during the year of deferred tax assets and liabilities.
Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
No provision was
made for Federal or State income taxes.
be expensed in the period in which it is incurred. There have been no advertising expenses for the reporting period presented.
i. Recently Issued Accounting
In June 2014,
the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU
2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination
of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10
will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those
annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the period ended December 31, 2014,
thereby no longer presenting or disclosing any information required by Topic 915.
The Company reviewed
all recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and
they did not or are not believed by management to have a material impact on the Company's present or future financial statements.
NOTE 3 – GOING CONCERN
financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying
financial statements, the Company had a negative working capital of $82,107 and an accumulated deficit of $102,107 at December
31, 2014. As of December 31, 2014, the Company had not generated any revenue and had no committed sources of capital or financing.
While the Company
is attempting to generate revenues from selling digital fitness and wireless sensor healthcare products, the Company’s cash
position may not be significant enough to support the Company’s daily operations. Management believes that the actions presently
being taken to further implement its business plan and generate additional products and revenues provide the opportunity for the
Company to continue as a going concern. While the Company believes in the viability of its strategy to realize revenues and in
its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a
going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing.
The financial statements
do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – NOTE PAYABLE –
On August 19, 2014,
the Company issued a note payable to a related party, our CEO, Thomas Chen for $110,000. The notes are due on March 31, 2015 and
have an interest rate of 6%. As of December 31, 2014, there is $2,405 of accrued interest.
NOTE 5 – SHARE CAPITAL
The Company is authorized
to issue 150,000,000 shares of common stock and 25,000,000 shares of preferred stock. The Company issued 17,000,000 shares of its
common stock to its president, and chief executive officer as founder shares. The Company issued 3,050,000 shares of our common
stock for services with a value attributed to them of $20,000.
At December 31,
2014, there are 20,050,000 shares of common stock issued and outstanding.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this
Form 10-Q is intended to update the information contained in our Form S-1 dated December 10, 2014 and presumes that readers have
access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and other information contained in such Form S-1/A. The following discussion and analysis also should be read together
with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.
The following discussion contains
certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future
performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking
statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We
strongly encourage investors to carefully read the factors described in our form S-1/A in the section entitled “Risk Factors”
for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.
We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following
should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.
We are an emerging
growth company as defined in Section 2(a)(19) of the Securities Act. We will continue to be an emerging growth company until: (i)
the last day of our fiscal year during which we had total annual gross revenues of $1,000,000,000 or more; (ii) the last day of
our fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration
statement under the Securities Act; (iii) the date on which we have, during the previous 3-year period, issued more than $1,000,000,000
in non-convertible debt; or (iv) the date on which we are deemed to be a large accelerated filer, as defined in Section 12b-2 of
the Exchange Act.
As an emerging growth
company, we are exempt from:
||Sections 14A(a) and (b) of the Exchange Act, which require companies to hold stockholder advisory votes on executive compensation and golden parachute compensation;|
||The requirement to provide, in any registration statement, periodic report or other report to be filed with the Securities and Exchange Commission (the “Commission” or “SEC”), certain modified executive compensation disclosure under Item 402 of Regulation S-K or selected financial data under Item 301 of Regulation S-K for any period before the earliest audited period presented in our initial registration statement;|
||Compliance with new or revised accounting standards until those standards are applicable to private companies;|
||The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002 to provide auditor attestation of our internal controls and procedures; and|
||Any Public Company Accounting Oversight Board (“PCAOB”) rules regarding mandatory audit firm rotation or an expanded auditor report, and any other PCAOB rules subsequently adopted unless the Commission determines the new rules are necessary for protecting the public.|
We have elected
to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the Jumpstart
Our Business Startups Act.
We are also a smaller
reporting company as defined in Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are not required to provide
selected financial data pursuant to Item 301 of Regulation S-K, nor are we required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act of 2002. We are also permitted to provide certain modified executive compensation disclosure
under Item 402 of Regulation S-K.
a Nevada corporation, (“WeWearables” “Company” “we,” “us,” or “our”)
was incorporated on May 14, 2014. Most of the activity through December 31, 2014 involved incorporation efforts, development of
our internet portal and mobile applications.
We are a development
stage company and have limited financial resources. We have not established a source of equity or debt financing. Our financial
statements include a note emphasizing the uncertainty of our ability to remain as a going concern.
to market and distribute the next generation of wearable health and wellness devices. The “wearables” mainly consists
of tracking devices that are worn on your wrist, waist, ankle or shoe that tie to your smart phone to track and report on your
fitness and activity levels. WeWearables is targeting the next generation of devices that focus on smart, wearable products to
help with specific diseases or solve direct healthcare issues. The human body is an untapped information source and consumers are
looking for better ways to track and manage their health or improve their fitness or wellness. WeWearables is focused on the distribution
of wearable products that target this industry.
WeWearables is focused
on the following three business models:
eCommerce Market place – an online marketplace to shop, compare, review, rate and purchase the latest wearable technology.
The marketplace will be modeled after zappos.com or casa.com, similar to how other e-commerce websites focus on specific products
and target markets. Amazon currently owns and/or operates over 20+ specialty e-commerce websites such as Diapers.com (for kids),
Fabric.com (for sewing), Wag.com (for pets) and many others.
Machines – Vending machines can be placed in fitness centers, medical groups, doctors’ offices and other locations
where people with specific diseases or chronic conditions are visiting. The vending machines will be stocked with devices specific
to the market they are placed in. For example, a cardiology practice would have a vending machine with a wearable blood pressure
cuff and heart monitoring equipment and fitness tracker (pedometer). An OB/GYN practice would have a vending machine with fitness,
weight loss, baby monitors and other related wearable devices. A custom designed vending machine will be created with a large flat
screen monitor to display ads and promote wearables products at each vending machine location. The WeWearables Marketplace software
will allow wearable vendors to place their products at these vending locations and to run advertising on the vending machine.
Kiosks – Small retail kiosks inside malls will help promote the brand and online marketplace and also have direct retail
sales. Kiosks will be designed to have interactive equipment that connects with people’s mobile phones and tablet devices.
Kiosks can be owned directly by us or franchised by territory.
All three business
models will be supported by advertising revenue. Wearables technology requires user education before the consumer can purchase
the device. There are large advertising budgets around wearable technology from companies such as Nike, Adidas, Fitbit, Withings,
and many others.
Our plan to continue
as a going concern is to reach the point where we begin generating sufficient revenues from our product(s) or services to meet
our obligations on a timely basis. We may not be able to finish the development of any products in the future because of a lack
of available funds or financing to do so. In the early stages of our operations, we will continue to keep costs to a minimum. The
cost to develop our business plan as currently outlined below may be in excess of $100,000. To the extent the development is more
costly and our current funds to undertake the business plan are insufficient, we will need to obtain additional funding. If we
are unable to obtain adequate funding or financing, the Company faces the ultimate likelihood of business failure. There are no
assurances that we will be able to raise any funds or establish any financing program for the Company’s growth.
The following outlines
the steps or stages that we expect to encounter and the necessary funding needed for each stage. Within each stage we have outlined
the metrics or performance that we must accomplish as we move forward with our business plan. This should enable the Company to
continue as a going concern as long as we are able to seek additional financing on acceptable terms.
Stage One (Months
1 – 3) ($25,000 est. costs)
be an e-commerce platform and advertising system that powers the website, vending machines and retail kiosks. This will allow us
to sell products in multiple locations and and/or advertise products in these locations.
||outline the scope of work and framework to initiate the development of our mobile application which will allow you to purchase items from your phone. The same software application framework will be used to power the website, vending machines and retail kiosks. This will allow WeWearables to manage orders, sales, inventory and advertising in multiple locations|
||setup development and production servers and define database architecture and APIs|
||setup coding platform and coding of our software based upon the initial scope of work and development framework |
||finish building our Company web site to provide our identity and service offering|
Stage Two (Months
3 – 5) ($20,000 est. costs)
||begin e-commerce website and mobile app development based on scope of work and framework defined in stage one |
||initiate testing of our e-commerce and mobile software application to improve and refine components of our system to uphold quality and application usability|
||analyze and test software for integration capabilities with other 3rd party software applications|
||Partner with third party vending machine providers|
||Contract kiosk supplier to build prototype kiosks|
Stage Three (Months
6 – 8) ($30,000 est. costs)
||initiate a multi-faceted marketing campaign to attract new customers |
||work with wearables vendors on registering products on the WeWearables platform and advertising rates|
||research and refine our target market of potential customers by using geographic, demographic, and business needs analysis of specific industries|
||finalize application development and software integration components of our software and commence alpha testing with select target customers and partners|
||refine and improve the software based on simple feedback, bugs, fixes, and needs of our alpha testing group|
Install pilot vending
||Install pilot kiosks in medical offices and key retail locations|
Stage Four (Month
9 - 12) ($40,000 est. costs)
||release software to the marketplace in a controlled marketing campaign to specific target market as a beta release|
||refine and release new versions of software based upon feedback and bug fixes, as well as meet the needs of specific industry sectors |
machines in Southern California market
||Rollout kiosks in Southern California market |
As mentioned above
the time-line estimate(s) (stages) are predicated upon the Company obtaining the necessary financing either through equity or debt
financing. If we are not able to obtain the necessary levels of financing as determined by the above stages, we will not be able
to meet or achieve any of the time-line objectives. In that case the Company will be forced to proceed on a piecemeal basis using
primarily the services of our president and chief executive officer and limited use of outside contractors when and if limited
funds are obtained. Our president and chief executive officer devotes in excess of twenty (20) hours a week to our continued business
efforts. There is no realistic way to predict the timing or completion in that scenario.
Our business plan
requires further completion of these tasks which will require the hiring of employees and/or outside contractors. With the level
of sophistication and expertise of our president and chief executive officer, as well as other various industry professionals that
he knows, the Company should make further progress in its development of the intended products and services for its planned divisions,
but currently no specific timeframe can be provided. Most if not all of these actions will be predicated on the Company obtaining
the necessary financing to accomplish these steps. If financing is not available on terms reasonable to the Company and its shareholders,
then the progression steps of this business plan will not occur as planned and may never occur.
We currently have
no additional sources of financing and no commitments for financing. There are no assurances that we will obtain sufficient financing
or the necessary resources to enter into contractual agreements with outside developers or sales/marketing firms. If we do not
receive any funding or financing, our business is likely to be maintained with limited operations for at least the next 12 months
because our president and chief executive officer, will continue providing his professional services without current compensation.
We do not currently have a formal agreement in place with our president and chief executive officer covering this period; however,
our president and chief executive officer’s current plan is to do substantially all administrative and planning work as well
as basic programming and marketing work on his own without cash compensation while he seeks other sources of funding for the Company.
As a corporate policy, we
will not incur any cash obligations that we cannot satisfy with known resources, of which there are currently none except as described
in “Liquidity” below and/or elsewhere in this prospectus. We believe that the perception that many people have of a
public company make it more likely that they will accept restricted securities from a public company as consideration for indebtedness
to them than they would from a private company. We have not performed any studies of this matter. Our conclusion is based on our
own observations. However, there can be no assurances that we will be successful in any of those efforts even if we become a public
entity. Additionally, the issuance of restricted shares will dilute the percentage of ownership interest of our stockholders.
Three Months Ending December 31,
General and Administrative Expenses
and administrative expenses were $30,925 for the three months ended December 31, 2014. The expenses consisted primarily
of $7,500 for website, $23,425 for accounting expenses and legal fees.
arisen from related party loan was $1,664 for the three months ended December 31, 2014.
Period from May 14, 2014 (inception)
to December 31, 2014
General and Administrative Expenses
and administrative expenses were $99,702 for May 14, 2014 (inception) to December 31, 2014. The expenses consisted primarily
of $18,750 for website, $60,940 for accounting expenses and legal fees, and $20,000 for stock compensation.
arisen from related party loan was $2,405 for May 14, 2014 (inception) to December 31, 2014.
the business plan and website, most of our resources and work have been devoted to planning our business, web site development,
mobile application development, implementing systems and controls, and completing our registration statement. When those procedures
are done, which we believe will occur over the next few months, we will primarily work on our intended service offerings as well
further internal development of software for which we have developed our initial framework of and completed some coding of this
software. We believe that the work needed to initiate and complete our software development, attract developers, and initiate our
marketing plans, including the development of a saleable product suite, will range between $80,000 and $150,000 if outside contractors
and experts are used. If we are able to secure funding to outsource these procedures, of which there are no assurances, we can
commence the launch of our intended services and software products to the public. If we are only able to use internal resources
only (primarily consisting of the services of our president and chief executive officer), the process will take much longer and
our initial launch may be limited to a much smaller target market. If we are unable to raise any funds, the development costs would
have to be provided by our president and chief executive officer to the extent that he is capable and willing to provide such funds.
While we have engaged the services of an established software development firm which we use on an as “needed basis”
their function and assistance is limited by our availability of financing. Our goal would be to have multiple sales channels
and a comprehensive corporate website up and running within one year, but there is no way of estimating what the likelihood of
achieving that goal would be.
if sought, we believe will be sought from former business associates of our president and chief executive officer or through private
investors referred to us by those same business associates. To date, we have received a loan for $110,000 through Mr. Chen, our
CEO and President. . We have limited our cash use to approximately $5,000 per month. Our cash can sustain our current operations
for approximately 12 months.
If a market for
our shares ever develops, of which there can be no assurances, we may use restricted shares of our common stock to compensate employees/consultants
and independent contractors wherever possible. We cannot predict the likelihood or source of raising capital or funds that may
be needed to complete the development of our business plan and its stages as outlined above.
We have embarked
upon an effort to become a public company and, by doing so, have incurred and will continue to incur additional significant expenses
for legal, accounting and related services. Once we become a public entity, subject to the reporting requirements of the Exchange
Act of 1934, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses
including annual reports and proxy statements, if required. We estimate that these costs will range up to $50,000 per year over
the next few years and may be significantly higher if our business volume and transactional activity increases but should be lower
during our first year of being public because our overall business volume (and financial transactions) will be lower, and we will
not yet be subject to the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 relating to having our independent
registered public accounting firm attest to, and report on, management’s assessment of its internal controls until we exceed
$75 million in market capitalization (if ever). These obligations will certainly reduce our ability and resources to expand our
business plan and activities. We hope to be able to use our status as a public company to increase our ability to use noncash means
of settling outstanding obligations (i.e. issuance of restricted shares of our common stock) and compensate independent contractors
who provide professional services to us, although there can be no assurances that we will be successful in any of these efforts.
We will also reduce compensation levels paid to management (if we attract or retain outside personnel to perform this function)
if there is insufficient cash generated from operations to satisfy these costs.
There are no current
plans to seek private investment. We do not have any current plans to raise funds through the sale of securities except as set
forth herein. We hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations
and compensate persons and/or firms providing services to us, although there can be no assurances that we will be successful in
any of those efforts. However, these actions, if successful, will result in dilution of the ownership interests of existing shareholders,
may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing
management’s ability to maintain control of WeWearables because the shares may be issued to parties or entities committed
to supporting existing management. No negotiations have taken place with any professional and no assurances can be made as to the
likelihood that any professional will accept shares in settlement of obligations due them.
As of December 31,
2014, we owed $75,000 in connection with organizational costs, professional services related to this offering, business and framework
development costs incurred. We have not entered into any formal agreements, written or oral, with any vendors or other providers
for payment of services or expenses and to our as “needed basis” software development firm as further described below.
There are no other significant liabilities at December 31, 2014.
On August 19, 2014,
the Company issued a note payable to a related party, our CEO, Thomas Chen for $110,000. The notes are due on March 31, 2015 and
have an interest rate of 6%.
The Company has
implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe
that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial
position or results of operations.
We have sufficient
working capital currently and may secure additional working capital through loans or sales of common stock. Our unaudited financial
statements for the quarter ended December 31, 2014 include a "going concern" footnote contingent on us to be able to
raise working capital to grow our operations.
of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States
requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related
disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company's
critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results
of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need
to make estimates of matters that are inherently uncertain. We believe that our estimates and assumptions are reasonable under
the circumstances; however, actual results may vary from these estimates and assumptions. We have identified in Note 2 - "Summary
of Accounting Policies" to the Financial Statements contained in this Quarterly Report certain critical accounting policies
that affect the more significant judgments and estimates used in the preparation of the financial statements.
We have not noted
a significant seasonal impact in our business (or businesses like ours) although having just commenced operations it is too early
We have no off-balance
sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or
contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase our
operating costs or cash requirements in the future.
As a "smaller
reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 3 Quantitative and Qualitative
Disclosures About Market Risk.
As a "smaller reporting company"
as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item
Item 4 Controls and Procedures.
Evaluation of Disclosure
Controls and Procedures: We conducted an evaluation under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. The term "disclosure controls and procedures", as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities and Exchange Act of 1934, as amended ("Exchange Act"), means controls and other procedures of a
company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures also include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under
the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of December 31, 2014, that our disclosure
controls and procedures are effective to a reasonable assurance level of achieving such objectives. However, it should be
noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions,
regardless of how remote.
Management's Report on
Internal Control Over Financial Reporting: Our management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal
control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The
internal controls for the Company are provided by executive management's review and approval of all transactions. Our
internal control over financial reporting also includes those policies and procedures that:
- pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
- provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and
expenditures are being made only in accordance with the authorization of our management; and
- provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect
on the financial statements.
Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness
of the Company's internal control over financial reporting as of December 31, 2014. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated
Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting
and testing of the operational effectiveness of these controls.
Based on this assessment, management
has concluded that as of December 31, 2014, our internal control over financial reporting was effective to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles.
This quarterly report does not
include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
Changes in Internal Control over
Financial Reporting: There were no changes in our internal control over financial reporting during the quarter ending
December 31, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial
PART II -- OTHER INFORMATION
Item 1. Legal
To the best knowledge of our sole officer
and director, the Company is not a party to any legal proceeding or litigation.
Item 1A. Risk
You should be aware
that there are various risks to an investment in our common stock. You should carefully consider these risk factors, together with
all of the other information included in this prospectus, before you decide to invest in shares of our common stock.
If any of the following
risk were to occur, then our business, financial condition, results of operations and/or prospects could be materially adversely
affected. If that happens, the market price of our common stock, if any, could decline, and investors may lose all or part of their
Risks Related to the Business
||WeWearables has virtually no financial resources. Our independent registered auditors’ report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.|
WeWearables is an
early stage company and has virtually no financial resources. We had a cash balance of $105,298 as of December 31, 2014. We have
working capital deficit of $82,107 and a stockholders’ deficit of $102,107 at December 31, 2014. We may seek additional financing.
The financing sought may be in the form of equity or debt financing from various sources as yet unidentified. Most if not all of
our efforts will be spent on the development of our web portal. No assurances can be given that we will generate sufficient revenue
or obtain the necessary financing to continue as a going concern.
Our current resources
and source of funds, which primarily consist of officer debt are sufficient to keep our business operations functioning for the
next three months. We do not have a formal agreement with our president and chief executive officer to fund the Company’s
working capital needs; however our president and chief executive officer’s current plan is to do the majority of the work
on his own without cash compensation while he seeks other sources of funding. The Company has started the development of an initial
design and framework of its proposed portal platform, as well as through the efforts of a software development firm which the Company
has been working with on an as “needed basis.” We currently spend between $2,500 and $10,000 per month in operational
expenses. We have not generated any revenues from our business, and our expenses will be accrued and deferred until sufficient
financing is obtained or our president and chief executive officer or others who know our president and chief executive officer
loans the necessary funds to pay for these expenses. No assurances can be given that we will be able to receive funds from our
president and chief executive officer or others to continue our operations beyond a month-to-month basis.
is and will continue to be completely dependent on the services of our president and chief executive officer, Thomas Chen, the
loss of whose services may cause our business operations to cease, and we will need to engage and retain qualified employees and
consultants to further implement our strategy.
operations and business strategy are completely dependent upon the knowledge and business connections of Mr. Chen our president
and chief executive officer. He is under no contractual obligation to remain employed by us. If he should choose to leave us for
any reason or becomes ill and is unable to work for an extended period of time before we have hired additional personnel, our operations
will likely fail. Even if we are able to find additional personnel, it is uncertain whether we could find someone who could develop
our business along the lines described in this prospectus. We will likely fail without the services of Mr. Chen or an appropriate
We intend to acquire
key-man life insurance on the life of Mr. Chen naming us as the beneficiary when and if we obtain the resources to do so and if
he is insurable. We have not yet procured such insurance, and there is no guarantee that we will be able to obtain such insurance
in the future. Accordingly, it is important that we are able to attract, motivate and retain highly qualified and talented personnel
and independent contractors.
current employment does not limit or restrict him from being involved with our Company, and his employment allows him the flexibility
to provide at least 20 hours per week to our Company.
we have only recently commenced business operations, we face a high risk of business failure.
The Company was
formed in May 2014. All of our efforts to date have related to developing our business plan and beginning business activities.
Through December 31, 2014, we had no operating revenues. We face a high risk of business failure. The likelihood of the success
of the Company must be considered in light of the expenses, complications and delays frequently encountered in connection with
the establishment and expansion of new businesses and the competitive environment in which the Company will operate. There can
be no assurance that future revenues will occur or be significant enough or that we will be able to sell its products and services
at a profit, if at all. Future revenues and/or profits, if any, will depend on many various factors, including, but not limited
to both initial and continued market acceptance of the Company’s website and the successful implementation of its planned
The Company has
commenced internally developing our website. In the early stages of our operations, we will continue to keep costs to a minimum.
The cost to develop our business plan as currently outlined may be in excess of $250,000. We will need additional funds to market
our website. If we are unable to obtain adequate funding or financing, the Company faces the ultimate likelihood of business failure.
There are no assurances that we will be able to raise any funds or establish any financing program for the Company’s growth.
4. We may
not have or ever have the resources or ability to implement and manage growth strategy.
Although the Company
expects to experience growth based on being able to implement its business plan, actual operations may never occur because the
business plan may never be implemented because of lack of funds to do so. If the Company’s business plan and growth strategy
are implemented, of which no assurances can be given, a significant strain on the Company’s management, operating systems
and/or financial resources will be imposed. Failure by the Company’s management to manage this growth, if it occurs, or unexpected
difficulties encountered during growth, could have a material adverse impact on the Company’s results of operations or financial
ability to operate profitably will depend upon a number of factors, including (i) identifying distribution channels, (ii) generating
sufficient funds from our then existing operations or obtaining third-party financing or additional capital, (iii) the Company’s
management team and its financial and accounting controls and (iv) staffing, training and retaining of skilled personnel, if any
at all. Certain of these factors will be beyond the Company’s control and may be adversely affected by the economy or actions
taken by competing companies. There can be no assurance that the Company will be able to execute and manage a growth strategy effectively
or at all.
5. We may
not be successful in hiring technical personnel because of the competitive market for qualified technical people.
The Company's future
success depends largely on its ability to attract, hire, train and retain highly qualified technical personnel to provide the Company's
services. Competition for such personnel is intense. There can be no assurance that the Company will be successful in attracting
and retaining the technical personnel it requires to conduct and expand its operations successfully and to differentiate itself
from its competition. The Company's results of operations and growth prospects could be materially adversely affected if the Company
were unable to attract, hire, train and retain such qualified technical personnel.
6. Our reliance
on referrals from outside contacts to develop business may not be effective.
The Company initially
will rely on our president and chief executive officer, Mr. Chen, for a majority of its leads and believes that independent outside
sales reps will also be an important source of sales referrals in the foreseeable future. However, as is typical within the industry,
there are no contractual requirements that an outside sales person use or recommend the Company. We currently have no contracts
or agreements in place with any outside sales professional. No assurances can be given that using independent outside sales reps
will result in any meaningful numbers of sales leads or referrals.
7. We will
face competition from companies with significantly greater resources and name recognition.
The markets in which
the Company will operate are characterized by intense competition from several types of solution and technical service providers.
The Company expects to face further competition from new market entrants and possible alliances among competitors in the future
as the convergence of information processing and telecommunications continues. Many of the Company's current and potential competitors
have significantly greater financial, technical, marketing and other resources than the Company. As a result, they may be better
able to respond or adapt to new or emerging technologies and changes in client requirements or to devote greater resources to the
development, marketing and sales of their services than the Company. There can be no assurance that the Company will be able to
compete successfully. In addition, the Company will be faced with numerous competitors, both strategic and financial, in attempting
to obtain competitive products. Many actual and potential competitors we believe are part of much larger companies with substantially
greater financial, marketing and other resources than the Company, and there can be no assurance that the Company will be able
to compete effectively against any of its future competitors.
are significant potential conflicts of interest.
Our personnel will
be required to commit substantial time to our affairs and, accordingly, these individual(s) (particularly our president and chief
executive officer) may have conflicts of interest in allocating management time among various business activities. In the course
of other business activities, certain key personnel (particularly our president and chief executive officer) may become aware of
business opportunities which may be appropriate for presentation to us, as well as other entities with which they are affiliated.
As such, there may be conflicts of interest in determining to which entity a particular business opportunity should be presented.
We cannot provide
assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.
9. We are
subject to the periodic reporting requirements of Section 15(d) of the Exchange Act that will require us to incur audit fees and
legal fees in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to
earn a profit.
We are required
to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. In order
to comply with these requirements, our independent registered public accounting firm will have to review our financial statements
on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and
assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted
at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot
be determined at this time and will have a major effect on the amount of time to be spent by our auditors and attorneys. However,
the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet
our overhead requirements and earn a profit. We may be exposed to potential risks resulting from any new requirements under Section 404
of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports or prevent fraud, our business and operating
results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common
stock, if a market ever develops, could drop significantly.
10. Our internal
controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated
to the public.
is responsible for establishing and maintaining adequate internal control over our financial reporting. As defined in Exchange
Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal
executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes those policies and procedures that:
||pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;|
||provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and|
||provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.|
Our internal controls
may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated
to the public. Investors relying upon this misinformation may make an uninformed investment decision.
11. The costs
of being a public company could result in us being unable to continue as a going concern.
As a public company,
we will have to comply with numerous financial reporting and legal requirements, including those pertaining to audits, quarterly
reporting and internal controls. The costs of this compliance could be significant. If our revenues are insufficient, and/or we
cannot satisfy many of these costs through the issuance of our shares, we may be unable to satisfy these costs through the normal
course of business which would result in our being unable to continue as a going concern.
only one director limits our ability to establish effective independent corporate governance procedures and increases the control
of our president and chief executive officer.
We have only one
director who also serves as our president and chief executive officer. Accordingly, we cannot establish board committees comprised
of independent members to oversee functions like compensation or audit issues. In addition, currently a vote of board members is
decided in favor of the chairman (who is our president, and chief executive officer), which gives him complete control over all
Until we have a
larger board of directors that would include some independent members, if ever, there will be limited oversight of our president
and chief executive officer’s decisions and activities and little ability for minority shareholders to challenge or reverse
those activities and decisions, even if they are not in the best interests of minority shareholders.
may limit the Company’s ability to get access to products and/or manufacturers of key products.
have limited access to products for sale on the e-Commerce, vending machine and retail locations. Until we build relationships
or have access to vendors and vendor terms, it will be difficult to purchase and resale wearable technologies.
may also have exclusive relationships with wearables products that WeWearables will not have access to, limiting WeWearables catalogs
will be a reseller of wearable technology, we may be subject to product liability claims if people or properties are harmed by
the products we sell. This liability may be mitigated by manufacturer. A significant product liability judgment or a widespread
product recall may negatively impact on sales and profitability of the affected brand or all brands for a period of time depending
on product availability, competitive reaction and consumer attitudes.
Risks Related to Our Common Stock
15. Because we have nominal
assets and no revenue, we are considered a "shell company" and will be subject to more stringent reporting requirements.
and Exchange Commission ("SEC") adopted Rule 405 of the Securities Act and Exchange Act Rule 12b-2 which defines a shell company
as a registrant that has no or nominal operations, and either (a) no or nominal assets; (b) assets consisting solely of cash and
cash equivalents; or (c) assets consisting of any amount of cash and cash equivalents and nominal other assets. Our balance sheet
reflects that we have no cash or any other tangible asset and, therefore, we are defined as a shell company. The new
rules prohibit shell companies from using a Form S-8 to register securities pursuant to employee compensation plans. However, the
new rules do not prevent us from registering securities pursuant to S-1 registration statements. Additionally, the new rule regarding
Form 8-K requires shell companies to provide more detailed disclosure upon completion of a transaction that causes it to cease
being a shell company. If an acquisition is undertaken (of which we have no current intention of doing), we must file
a current report on Form 8-K containing the information required pursuant to Regulation S-K within four business days following
completion of the transaction together with financial information of the acquired entity. In order to assist the SEC in the identification
of shell companies, we are also required to check a box on Form 10-Q and Form 10-K indicating that we are a shell company.
To the extent that we are required to comply with additional disclosure because we are a shell company, we may be delayed
in executing any mergers or acquiring other assets that would cause us to cease being a shell company. The SEC adopted
a new Rule 144 effective February 15, 2008, which makes resales of restricted securities by shareholders of a shell company
16. The interests
of shareholders may be hurt because we can issue shares of our common stock to individuals or entities that support existing management
with such issuances serving to enhance existing management’s ability to maintain control of our company.
Our board of directors
has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such
issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management
which may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval serves
to enhance existing management’s ability to maintain control of our company.
17. Our articles
of incorporation provide for indemnification of officers and directors at our expense and limit their liability that may result
in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of
officers and/or directors.
Our Articles of
Incorporation at Article X provide for indemnification as follows: "No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided,
however, that the foregoing provision shall not eliminate or limit the liability of a director or officer: (i) for acts or omissions
which involve intentional misconduct, fraud or knowing violation of law; or (ii) the payment of dividends in violation of Section
78.300 of the Nevada Revised Statutes. Any repeal or modification of an Article by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation of the personal liability of a director or officer of the Corporation
for acts or omissions prior to such repeal or modification."
We have been advised
that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification for
liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer
or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling
person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled by controlling
precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this
matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of
which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.
there is no established public market for our securities, and there can be no assurances that any established public market will
ever develop or that our common stock will be quoted for trading and, even if quoted, it is likely to be subject to significant
Prior to the date
of this prospectus, there has not been any established trading market for our common stock, and there is currently no established
public market whatsoever for our securities. We have not found a market maker. There can be no assurance that we will find a market
maker willing to file an application with FINRA on our behalf and if we do that the market maker’s application will be accepted
by FINRA nor can we estimate as to the time period that the application will require. We are not permitted to file such application
on our own behalf. If the application is accepted, there can be no assurances as to whether
||any market for our shares will develop;|
||the prices at which our common stock will trade; or|
||the extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.|
If we become able
to have our shares of common stock quoted on the OTCQB and/or OTCBB, we will then try, through a broker-dealer and its clearing
firm, to become eligible with the Depository Trust Company ("DTC") to permit our shares to trade electronically. If an
issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which,
based on the realities of the marketplace as it exists today (especially the OTCQB/OTCBB), means that shares of a company will
not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option
for companies relying on broker dealers for stock transactions - like all companies on the OTCQB and OTCBB. What this boils down
to is that while DTC-eligibility is not a requirement to trade on the OTCQB or OTCBB, it is a necessity to process trades on the
OTCBB if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible
or, if they do, how long it will take.
In addition, our
common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for our
common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common
stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely
to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors,
including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including
the impact of the factors referred to elsewhere in these Risk Factors, investor perception of the Company and general economic
and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common
Because of the anticipated
low price of the securities being registered, many brokerage firms may not be willing to effect transactions in these securities.
Purchasers of our securities should be aware that any market that develops in our stock will be subject to the penny stock restrictions.
See “Plan of Distribution” and Risk Factor #22 below.
19. If we
were designated a shell your ability to resell your shares would be limited.
All of the presently
outstanding shares of our common stock are "restricted securities" as defined under Rule 144 promulgated under the Securities
Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. The SEC
has adopted final rules amending Rule 144 which have become effective on August 15, 2008. Pursuant to the new Rule 144, one year
must elapse from the time a “shell company,” as defined in Rule 405 of the Securities Act and Rule 12b-2 of the
Exchange Act, ceases to be a “shell company” and files a Form 8-K addressing Item 5.06 with such information as
may be required in a Form 10 Registration Statement with the SEC, before a restricted shareholder can resell their holdings in
reliance on Rule 144. The Form 10 information or disclosure is equivalent to the information that a company would be required to
file if it were registering a class of securities on Form 10 under the Exchange Act. Under amended Rule 144, restricted or unrestricted
securities that were initially issued by a reporting or non-reporting shell company or a company that was at anytime
previously a reporting or non-reporting shell company, can only be resold in reliance on Rule 144 if the following conditions
1) the issuer of
the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company;
2) the issuer of
the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
3) the issuer of
the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable,
during the preceding twelve months (or shorter period that the Issuer was required to file such reports and materials), other than
Form 8-K reports; and
4) at least one
year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity
that is not a shell company.
At the present time,
we are not classified as a “shell company” under Rule 405 of the Securities Act Rule 12b-2 of the Exchange Act.
To the extent the Company is designated a shell, you would be unable to sell your shares under Rule 144.
20. Any market
that develops in shares of our common stock will be subject to the penny stock regulations and restrictions pertaining to low priced
stocks that will create a lack of liquidity and make trading difficult or impossible.
The trading of our
securities, if any, will be in the over-the-counter market which is commonly referred to as the OTCBB as maintained by FINRA. As
a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.
Rule 3a51-1 of the
Exchange Act establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that
has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited
number of exceptions which are not available to us. It is likely that our shares will be considered to be penny stocks for the
immediately foreseeable future. This classification severely and adversely affects any market liquidity for our common stock.
For any transaction
involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions
in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity
and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker
or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination
that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer
must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock
market, which, in highlight form, sets forth:
||the basis on which the broker or dealer made the suitability determination, and|
||that the broker or dealer received a signed, written agreement from the investor prior to the transaction.|
has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable
to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because of these
regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter
difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other
holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary
market. These additional sales practice and disclosure requirements could impede the sale of our securities, if and when our securities
become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price
of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our
shareholders will, in all likelihood, find it difficult to sell their securities.
21. The market
for penny stocks has experienced numerous frauds and abuses that could adversely impact investors in our stock.
believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
||Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;|
||Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;|
||"Boiler room" practices involving high pressure sales tactics and unrealistic price projections by sales persons;|
||Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and|
||Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.|
22. Any trading
market that may develop may be restricted by virtue of state securities “Blue Sky” laws that prohibit trading absent
compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.
There is currently
no established public market for our common stock, and there can be no assurance that any established public market will develop
in the foreseeable future. Transfer of our common stock may also be restricted under the securities or securities regulations laws
promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance
with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder
have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to
purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue
sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions
prohibit the secondary trading of our common stock. We currently do not intend to and may not be able to qualify securities for
resale in at least 17 states which do not offer manual exemptions (or may offer manual exemptions but may not to offer one to us
if we are considered to be a shell company at the time of application) and require shares to be qualified before they can be resold
by our shareholders. Accordingly, investors should consider the secondary market for our securities to be a limited one. See also
“Plan of Distribution-State Securities-Blue Sky Laws.”
23. Our board
of directors (consisting of one person, our president and chief executive officer) has the authority, without stockholder approval,
to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely
stockholder voting power and perpetuate their control over us.
Our articles of
incorporation allow us to issue shares of preferred stock without any vote or further action by our stockholders. Our board of
directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors
also has the authority to issue preferred stock without further stockholder approval, including large blocks of preferred stock.
As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the
preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the
holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our
24. The ability
of our president, and chief executive officer to control our business may limit or eliminate minority shareholders’ ability
to influence corporate affairs.
Our president, and
chief executive officer, Mr. Chen will beneficially own an aggregate of approximately 76% of our outstanding common stock. Because
of their beneficial stock ownership, our president, and chief executive officer will be in a position to continue to elect our
board of directors, decide all matters requiring stockholder approval and determine our policies. The interests of our president,
and chief executive officer may differ from the interests of other shareholders with respect to the issuance of shares, business
transactions with or sales to other companies, selection of officers and directors and other business decisions. The minority shareholders
would have no way of overriding decisions made by our president and chief executive officer. This level of control may also have
an adverse impact on the market value of our shares because our president and chief executive officer may institute or undertake
transactions, policies or programs that may result in losses, may not take any steps to increase our visibility in the financial
community and/or may sell sufficient numbers of shares to significantly decrease our price per share.
25. All of
our presently issued and outstanding common shares are restricted under Rule 144 of the Securities Act, as amended. When the restriction
on any or all of these shares is lifted, and the shares are sold in the open market, the price of our common stock could be adversely
All of the presently
outstanding shares of common stock (20,050,000 shares) are "restricted securities" as defined under Rule 144 promulgated
under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration,
if available. Rule 144 provides in essence that a person who is not an affiliate and has held restricted securities for a prescribed
period of at least six (6) months if purchased from a reporting issuer or twelve (12) months (as is the case herein) if purchased
from a non-reporting Company, may, under certain conditions, sell all or any of his shares without volume limitation, in brokerage
transactions. Affiliates, however, may not sell shares in excess of 1% of the Company’s outstanding common stock every three
months. As a result of revisions to Rule 144 which became effective on August 15, 2008, there is no limit on the amount of restricted
securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for
at least 90 consecutive days) after the restricted securities have been held by the owner for the aforementioned prescribed period
of time. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of shares of
common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.
26. We do
not expect to pay cash dividends in the foreseeable future.
We have never paid
cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future.
The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other
factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return
on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.
we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have
limited protection against interested director transactions, conflicts of interest and similar matters.
Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq
Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These
measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that
are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate
governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance
any sooner than legally required, we have not yet adopted these measures.
Because none of
our directors (currently one person) are independent directors, we do not currently have independent audit or compensation committees.
As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply
with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate
governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any,
and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.
We intend to comply
with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult
or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective
management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series
of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived
increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting
28. You may
have limited access to information regarding our business because our obligations to file periodic reports with the SEC could be
automatically suspended under certain circumstances.
We are subject to
certain informational requirements of the Exchange Act, as amended and we will be required to file periodic reports (i.e., annual,
quarterly and material events) with the SEC which will be immediately available to the public for inspection and copying. In the
event during the year that our registration statement becomes effective, these reporting obligations may be automatically suspended
under Section 15(d) of the Exchange Act if we have less than 300 shareholders and do not file a registration statement on Form
8-A (of which we have no current plans to file). If this occurs after the year in which our registration statement becomes effective,
we will no longer be obligated to file such periodic reports with the SEC and access to our business information would then be
even more restricted. After this registration statement on Form S-1 becomes effective, we may be required to deliver periodic reports
to security holders as proscribed by the Exchange Act, as amended. However, we will not be required to furnish proxy statements
to security holders and our directors, officers and principal beneficial owners will not be required to report their beneficial
ownership of securities to the SEC pursuant to Section 16 of the Exchange Act until we have both 500 or more security holders and
greater than $10 million in assets. This means that access to information regarding our business and operations will be limited.
However, we plan to voluntarily continue reporting in the absence of an SEC reporting obligation.
are an emerging growth company within the meaning of the Securities Act, and as a consequence of taking advantage of certain exemptions
from reporting requirements that are available to emerging growth companies, our financial statements may not be comparable to
companies that comply with public company effective dates.
We are an
emerging growth company as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the “Securities Act”).
Pursuant to Section 107 of the Jumpstart Our Business Startups Act, we may 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, meaning that we can delay the
adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen to take
advantage of the extended transition period for complying with new or revised accounting standards applicable to public companies
to delay adoption of such standards until such standards are made applicable to private companies. Accordingly, our financial statements
may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.
For all of the foregoing reasons
and others set forth herein, an investment in our securities in any market that may develop in the future involves a high degree
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults
Upon Senior Securities.
Item 5. Other
| ITEM 6.
||Certification of President pursuant to Exchange Act Rule 13a-14 and 15d-14.|
||Certification of the Company’s Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.|
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.
Date: January 9, 2015
/ s/ Thomas Chen
Title: Chief Executive Officer, President and Chief