UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

  Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One) 

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

 

For the quarterly period ended May 31, 2015

 

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

 

For the transition period from __________ to __________

 

COMMISSION FILE NUMBER 333-136663

 

THE RADIANT CREATIONS GROUP, INC. 

(Exact name of registrant as specified in its charter)

 

NEVADA		45-2753483
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Harbour Financial Center 2401 PGA Boulevard, Suite 280-B Palm Beach Gardens, FL 33410		33410
(Address of principal executive offices)		(Zip code)

 

(561) 420-0380

(Registrant's telephone number, including area code)

 

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

 

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.

 

Large accelerated filer          [  ]	Accelerated filer                      [   ]
Non-accelerated filer            [  ]	Smaller reporting company   [ X ]
(Do not check if a smaller reporting company)

 

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

Yes [ ] No [X]

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock and preferred stock, as of the latest practicable date: As of July 20, 2015, the Issuer had 387,812,945 shares of common stock outstanding and 1,000,000 share of Series A Super Voting Control preferred stock and 20,000,000 Series B preferred stock issued and outstanding.

 

 

 

 

 

THE RADIANT CREATIONS GROUP, INC.
MAY 31, 2015
	PART I – FINANCIAL INFORMATION	Page
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of May 31, 2015 (Unaudited) and February 28, 2015	3
	Condensed Consolidated Statements of Operations for the three months ended May 31, 2015 and 2014 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months ended May 31, 2015 and 2014 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis and Plan of Operation	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mining Safety Disclosure	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
	Signatures	20

 

ITEM 1. FINANCIAL INFORMATION

THE RADIANT CREATIONS GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
			May 31,				February 28,
			2015				2015
			(Unaudited)
ASSETS
Cash		$	57,465			$	15,293
Holdback receivable			73,697				75,447
Prepaid expenses and other assets			51,900				15,150
Inventory			37,967				39,752
Total current assets			221,029				145,642
Property and equipment, net of depreciation			8,485				8,935
Total assets		$	229,514			$	154,577
LIABILITIES AND DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilities		$	26,468			$	13,100
Accrued interest			180,680				171,908
Notes payable - related party			-				124,237
Convertible notes payable, current portion			462,770				596,515
Notes payable – current portion			277,500				135,000
Derivative liabilities			55,626				130,103
Total current liabilities			1,003,044				1,170,863
LONG-TERM LIABILITIES:
Convertible notes payable, net of discounts and current portion			609,947				192,237
Note payable – net of discount and current portion			14,396				40,000
Total long-term liabilities			624,343				232,237
Total liabilities			1,627,387				1,403,100
DEFICIT
Series A Preferred at $0.00001 par value, 1,000,000 shares authorized, 1,000,000 shares issued and outstanding			10				10
Series B Preferred at $0.00001 par value, 100,000,000 shares authorized, 20,000,000 shares issued and outstanding			200				200
Common stock at $0.00001 par value: 900,000,000 shares authorized, 290,043,282 and 70,016,390 shares issued and outstanding, respectively			2,900				700
Additional paid in capital			8,689,186				7,812,010
Accumulated deficit			(10,049,939	)			(9,093,629	)
Total Radiant stockholder deficit			(1,357,643	)			(1,280,709	)
Non-controlling interest in subsidiary			40,230				32,186
Total Deficit			(1,397,873	)			(1,248,523	)
TOTAL LIABILITIES AND DEFICIT		$	229,514			$	154,577
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

 

 

THE RADIANT CREATIONS GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

		For the Three Months Ended				For the Three Months Ended
		May 31, 2015				May 31, 2014
REVENUE, NET		$	20,442			$	566,085
COST OF REVENUE			3,785				29,550
GROSS PROFIT			16,657				536,535
Operating Expenses:
General and administrative expenses (includes stock based compensation of $138,767 and $1,849,379, respectively)			515,630				2,315,243
Depreciation			450				450
Inventory write-off			-				3,676
Total operating expenses			516,080				2,319,369
Operating loss			(499,423)				(1,782,834)
Other Income (Expense):
Interest expense			(452,469)				(50,257)
Loss on derivative liabilities			(76,834)				(64,040)
Total other expense, net			(529,303				(114,297)
NET LOSS		$	(1,028,726)			$	(1,897,131)
LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST IN SUBSIDIARY		$	72,416			$	-
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	(956,310)			$	(1,897,131)
NET LOSS PER COMMON SHARE  - Basic and Diluted		$	(0.01)			$	(0.03)
Weighted Common Shares Outstanding
- Basic and Diluted			175,408,371				54,271,336

 

  

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements  

 

THE RADIANT CREATIONS GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

 

		For the Three				For the Three
		Months Ended				Months Ended
		May 31, 2015				May 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss		$	(1,028,726)			$	(1,897,131)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation Expense			450				450
(Gain)/Loss on derivative liabilities			76,834				64,040
Amortization of debt discounts			432,705				15,106
Stock based compensation			138,767				1,849,379
Write off of inventory			-				3,676
Changes in operating assets and liabilities:
Inventory			1,785				(13,480)
Prepaid expenses			(36,750)				-
Accounts receivable			-				51,045
Holdback Receivable			1,750				(98,757)
Accounts payable and accrued interest			22,140				7,037
NET CASH USED IN OPERATING ACTIVITIES			(391,045)				(18,635)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets			-				(1,767)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash payments on convertible debt			-				(32,912)
Cash payments on related party debt			(124,237)				(27,400)
Cash borrowings from notes payable			150,000				-
Cash payments on notes payable			(7,500)				-
Cash proceeds from sale of common stock of subsidiary			414,954				-
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES			433,217				(60,312)
NET CHANGE IN CASH			42,172				(80,714)
Cash at Beginning of Period			15,293				120,875
Cash at End of Period		$	57,645			$	40,161
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest		$	11,066			$	17,213
Cash paid for income taxes		$	-			$	-
NON-CASH FINANCING AND INVESTMENT ACTIVITIES:
Debt discount		$	27,199			$	465,230
Conversion of convertible debt and accounts payable to common shares		$	144,910			$	-
Reclassification of derivative to additional paid in capital		$	153,808			$	-

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements  

 

THE RADIANT CREATIONS GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 

NOTE 1 – Organization and Significant Accounting Policies

 

 

Nature of Business

 

On June 20, 2013, following a change of control and subsequent acquisition of an exclusive license agreement, certain assets and processes to innovative technologies in skin protection and enhancement, which consist of various proprietary products including an anti-aging and revitalizing skin cream generally sold under the "Radiant Creations" label, the Company changed its principal business to the development and marketing of unique and proprietary scientific technologies and cosmetic and over-the-counter personal enhancement products and devices. The Company currently sells its products exclusively over the internet to customers located globally.

 

Basis of presentation

 

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

 

Principles of consolidation

 

The condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

 

Non-controlling interest in consolidated financial statements

 

Accounting guidance on non-controlling interests in consolidated financial statements requires that a non-controlling interest in the equity of a subsidiary be accounted for and reported as equity and provides revised guidance on the treatment of net income and losses attributable to the non-controlling interest and changes in ownership interests in a subsidiary. The revised guidance requires additional disclosures that identify and distinguish between the interests of the controlling and non-controlling owners.

 

Use of Estimates 

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include the valuation of stock-based compensation and derivative liabilities estimates for future chargebacks, allowance for slow moving or obsolete inventory.

 

Fair Value of Financial Instruments

 

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis.

 

As of May 31, 2015: 

 

Recurring Fair Value Measures		Level 1				Level 2				Level 3				Total
Embedded conversion derivative liability		$	—			$	—			$	55,626			$	55,626

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents.

 

Inventory

 

Inventory consists of finished goods and is valued at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow moving inventory is made based on management analysis or inventory levels and future sales forecasts.

 

Property and Equipment

Property and equipment are stated at cost, net of depreciation provided by use of a straight-line method over the estimated useful lives of the assets, of five years. The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable.

 

Basic and diluted net loss per share

 

Basic loss per share is computed using the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the dilutive effects of common stock equivalents on an “as if converted” basis. As of May 31, 2015, the number of potentially dilutive shares consisted of 499,483,529 shares underlying convertible debt as well as options to acquire 38,050,000 shares. As of May 31, 2014, the number of potentially dilutive shares consisted of 240,351,587 shares underlying convertible debt. For the three months ended May 31, 2015 and 2014, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

Related parties

 

The Company follows subtopic ASC 850, Related Party Disclosure, for the identification of related parties and disclosure of related party transactions.

 

Revenue Recognition

 

The Company follows guidance under ASC 605, Revenue Recognition, in determining when to report income from operations. The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery and acceptance has occurred, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Revenue recognized by the Company normally occurs upon shipment of our product to the customer.

 

Cost of Revenue

 

Amounts recorded as cost of revenue relate to direct expenses incurred in order to fulfill orders of our products. Such costs are recorded as incurred. Our cost of revenue consists primarily of the cost of product; payment processing fees; and the cost of product samples.

 

Cash flows reporting

 

The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flows from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.

 

 

Share-based Expense

 

ASC 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

 

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

 

Share-based expense for the three month periods ended May 31, 2015 and 2014 was $138,767 and $1,849,379, respectively.

 

Income Taxes

 

The Company utilizes the asset and liability method to measure and record deferred income tax assets and liabilities. Deferred tax assets and liabilities reflect the future income tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

The Company follows the provisions of Accounting for Uncertainty in Income Taxes, which clarified the accounting for uncertainties in tax positions and required that the Company recognizes in its financial statements the impact of an uncertain tax position, if that position has more likely than not chance of not being sustained on audit, based on technical merits of that position.

 

The Company is subject to the United States federal and state income tax examinations by the tax authorities for the 2014, 2013, and 2012 tax years.

 

Recently issued accounting pronouncements

 

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

 

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU however, for the current period, management does not believe that it has met conditions which would subject these financial statements to additional disclosure.

 

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted. Management has reviewed the ASU and believes that they currently account for these awards in a manner consistent with the new guidance; therefore there is no anticipation of any effect to the financial statements.

 

NOTE 2 – Going Concern

 

The accompanying financial statements have been prepared on the basis of accounting principles applicable to a “going concern”, which assume that the Company will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations.

 

Several conditions and events cast substantial doubt about the Company’s ability to continue as a going concern. The Company has a working capital deficit of $782,015 and has incurred net losses since inception. The Company’s future capital requirements will depend on numerous factors including, but not limited to, executing its marketing and business plans and the pursuit of business opportunities. The Company is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained. In the interim, shareholders of the Company have committed to meeting its operating expenses. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

 

These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 3 –Notes Payable

 

Notes payable

 

The Company has two notes with outstanding balances as of May 31, 2015 of $75,000 and $7,500 which are subject to annual interest of 15% and mature on November 29, 2014 and January 31, 2015, respectively.

 

In July 2014, the Company issued a note payable in the amount of $40,000 for cash. The note matures in 36 months and accrues interest at an annual rate of 10%, payable quarterly. As of May 31, 2015, the principle balance remaining on the note is $40,000.

 

In October 2014, the Company issued a demand note in the amount of $50,000 for cash. The note is due on demand and accrues interest at an annual rate of 12%. As of May 31, 2015, the principle balance on the note was $45,000.

 

In April 2015, the Company issued a note payable in the amount of $150,000 for cash. The note matures in 24 months and accrues interest at an annual rate of 12%. The holder of the note also received 15,000,000 shares of common stock with a fair value of $33,000 based on the trading price of the shares on the date of issuance. The Company allocated $27,049 of the proceeds from the note to the common stock, which was recorded as a discount against the debt to be amortized through maturity. During the three months ended May 31, 2015, the Company recorded amortization expense of $1,445. As of May 31, 2015, the note is carried at $124,396, net of unamortized discount of $25,604.

 

Notes payable - related parties

 

In July 2014, the Company issued a note payable in the aggregate amount of $250,000 for the purchase of intellectual property from a commonly owned entity. Because of the common ownership, the intellectual property was not marked to fair value and the Company recognized a loss for the amount of the notes, which is included in loss on acquisition of intellectual property from a commonly controlled entity on the consolidated statements of operations. The note is non-interest bearing, matures in 24 months from issuance, and requires principal payments of at least $25,000 every 180 days. During the three months ended May 31, 2015, the remaining balance of $116,337 was paid in full.

 

In September 2014, the Company issued a note in the amount of $7,900 for cash. The note is payable in two years from issuance, and accrues interest, payable monthly, at an annual rate of 10%. During the three months ended May 31, 2015, the remaining balance of $7,900 was paid in full.

 

NOTE 4 – Convertible Notes Payable

 

Note Date	Maturity Date	Face Amount	Eligible for Conversion	Conversion Date	Amounts Converted / Cash Paid*	Balance Outstanding
05/21/2013	09/20/2016	$900,448	06/15/2013	N/A 09/19/2013 11/20/2013	$31,000* $100,000 $70,000	$869,448 $769,448 $699,448
06/27/2013	- $100,000 due 12/12/2014 (in default) -$270,000 no due date	370,000	06/27/2013	-	-	$370,000
11/19/2013	08/21/2014	$78,500       $10,000 Default	05/19/2014	06/13/2014 07/01/2014 07/11/2014 07/21/2014     11/19/2014 12/01/2014 12/12/2014 12/16/2014 01/23/2015	$12,000 $12,000 $15,000 $19,500     $7,235 $5,635 $6,395 $5,780 $4,955	$66,500 $54,500 $39,500 $20,000 $30,000   $22,765 $17,130 $10,735 $4,955 $ -0-
12/17/2013	09/21/2014	$32,500 $16,250 Default	06/15/2014	N/A   02/02/2015 02/05/2015 03/06/2015 03/09/2015 03/16/2015 03/23/2015 03/24/2015 03/31/2015 03/31/2015	-   $4,430 $6,030 $3,515 $3,515 $3,515 $3,760 $9,560 $2,675 $11,750	$32,500 $48,750 $44,320 $38,290 $34,775 $31,260 $27,445 $23,985 $14,425 $11,750 $-0-
01/27/2014	10/29/2014	$32,500 $16,250 Default	07/26/2014	-   04/07/2015 04/08/2015 04/15/2015 04/22/2015 04/29/2015 05/01/2015	-   $7,495 $10,685 $10,500 $11,540 $8,000 $530	$32,500 $48,750 $41,225 $30,570 $20,070 $8,530 $530 $-0-
07/08/2014	04/09/2015	$21,150 $10,575 Default	01/04/2015	-   05/07/2015 05/14/2015 05/19/2015 05/26/2015	-   $4,320 $3,165 $2,400 $1,820	$21,150 $31,725 $27,405 $24,240 $21,840 $20,020
09/03/2014	06/05/2015	$32,500 $16,250 Default	03/03/2015	-	-	$32,500 $48,750
09/10/2014	09/10/2016	$35,000	09/10/2014	03/27/2015 03/31/2015 04/07/2015 04/15/2015 04/22/2015 05/01/2015 05/07/2015 05/15/2015	- $3,320 $3,802 $4,373 $5,013 $6,630 $4,608 $5,232 $2,023	$35,000 $31,680 $21,878 $23,506 $18,493 $11,863 $7,255 $2,023 $-0-
01/12/2015	10/14/2015	$16,000 $8,000 Default	07/11/2015	-	-	$16,000 $24,000
Totals		$1,595,923	-	-	$433,705	$1,162,218

 

 

Convertible notes payable – third parties

 

During 2011, 2012 and 2013, the Company obtained loans totaling $720,000. These loans were unsecured and bore interest at 10%. The loans (including accrued interest of $140,448) in the amount of $900,448 were converted to a Convertible Note Payable due to Southwest Financial bearing interest at 10% per annum. Following cash payments of $31,000 and conversions to common stock of $170,000 later in fiscal 2013, the Company owed $699,448. The notes were initially convertible at the option of the Holder at fixed rate of $0.075 per share and mature on September 20, 2015. In September 2014, the conversion rate was amended to a fixed rate of $0.003 per share. The Company paid no principal cash payments on these notes during the three months ended May 31, 2015. This note was deemed tainted on the date that another convertible note became convertible on May 18, 2014. A derivative liability of $252,313 was recorded as a debt discount and amortized over the term of the note. The principle balance of the note was $699,448 as of May 31, 2015.

 

As of February 28, 2015, the Company owed convertible notes totaling $370,000 to third parties including accrued interest of another $4,041. Interest is 10% annually and is to be paid currently. The notes may be converted at the option of the Holder at a fixed rate of $0.075 per share. These notes were deemed tainted on the date that another note became convertible on May 18, 2014. A net derivative liability of $148,771 was recorded as a debt discount to be amortized over the terms of the notes. In February 2014, the notes were amended to modify the conversion rate to $0.003 per share. The principle balance of the notes as of May 31, 2015 was $370,000, which is due on demand.

 

On December 17, 2013, the Company signed a convertible note agreement with a third party in which the party loaned $32,500 subject to annual interest of 8%. The note matured on September 21, 2014 and is convertible into the Company’s common stock after 180 days from the date of issuance at 58% of the average of the lowest prices of the common stock during the ten days preceding the date of conversion. On June 25, 2014, the note became convertible and the embedded conversion option required derivative accounting for the variable conversion rate. On June 25, 2014, a derivative liability of $25,723 was recorded as a debt discount and amortized over the term of the note. The embedded conversion option of the note also tainted the outstanding convertible notes. On December 1, 2014, default interest in the amount of $16,250 was added to the principle balance of the note. During the three months ended May 31, 2015, the lender converted $38,290 in principle in exchange for 39,750,796 shares of common stock and the note was paid in full.

 

On January 27, 2014, the Company signed a convertible note agreement with a third party in which the party loaned $32,500 subject to annual interest of 8%. The note matured on October 29, 2014 and is convertible into the Company’s common stock after 180 days from the date of issuance at 58% of the average of the lowest prices of the common stock during the ten days preceding the date of conversion. On July 26, 2014, the note became convertible and the embedded conversion option required derivative accounting to the variable conversion rate. On July 26, 2014, a derivative liability of $23,228 was recorded as a debt discount and amortized over the term of the note. The embedded conversion option of the note also tainted the outstanding convertible notes. During the twelve months ended February 28, 2015, default interest of $16,250 was added to the principle balance of the note and an additional derivative liability of $11,014 was recorded. During the three months ended May 31, 2015, the lender converted $51,350 in principle in exchange for 54,275,893 shares of common stock and the note was paid in full.

 

On July 8, 2014, the Company signed a convertible note agreement with a third party in which the party loaned $21,150 subject to annual interest of 8%. The note matures on April 9, 2015 and is convertible into the Company’s common stock after 180 days from the date of issuance at 58% of the average of the lowest prices of the common stock during the ten days preceding the date of conversion. On January 4, 2015, the note became convertible and the embedded conversion option required derivative accounting to the variable conversion rate. On January 4, 2015, a derivative liability of $11,138 was recorded as a debt discount to be amortized over the term of the note. The embedded conversion option of the note also tainted the outstanding convertible notes. During the twelve months ended February 28, 2015, default interest of $10,575 was added to the principle balance of the note and an additional derivative liability of $7,136 was recorded. During the three months ended May 31, 2015, the lender converted $11,705 in principle in exchange for 38,369,856 shares of common stock and the principle balance of the note as of May 31, 2015 was $20,020.

 

 

On September 3, 2014, the Company signed a convertible note agreement with a third party in which the party loaned $32,500 subject to annual interest of 8%. The note matures on June 5, 2015 and is convertible into the Company’s common stock after 180 days from the date of issuance at 58% of the average of the lowest prices of the common stock during the ten days preceding the date of conversion. On March 2, 2015, the note became convertible and the embedded conversion option will require derivative accounting due to the variable conversion rate. During the twelve months ended February 28, 2015, default interest of $16,250 was added to the principle balance of the note and an additional derivative liability of $9,264 was recorded. The principle balance of the note as of May 31, 2015 was $48,750.

 

On September 9, 2014, the Company executed a $200,000 Convertible Promissory Note bearing interest on the unpaid balance at the rate of 12% on the original principal amount. The principle amount due on the note shall be prorated based upon the consideration actually received by the Company, plus an approximate 10% original issue discount that is prorated based upon the consideration actually received as well as any other interest or fees. Under the terms of the note, the Company is not required to repay any unfunded portion of the note. The Maturity Date is two years from the Effective Date of each payment and is the date upon which the principal sum of this Note, as well as any unpaid interest and other fees, shall be due and payable. The conversion price is the lesser of $0.045 or 60% of the lowest trade price in the 25 trading days previous to the conversion. During the three months ended May 31, 2015, the lender converted $11,876 in principle in exchange for 17,265,000 shares of common stock and the note was paid in full.

 

On January 12, 2015, the Company signed a convertible note agreement with a third party in which the party loaned $16,000 subject to annual interest of 8%. The note matures on October 14, 2015 and is convertible into the Company’s common stock after 180 days from the date of issuance at 58% of the average of the lowest prices of the common stock during the ten days preceding the date of conversion. On July 11, 2015, the note became convertible and the embedded conversion option required derivative accounting to the variable conversion rate. During the twelve months ended February 28, 2015, default interest of $8,000 was added to the principle balance of the note and an additional derivative liability of $4,636 was recorded. The principle balance of the note as of May 31, 2015 was $24,000.

 

Amortization expense on the debt discounts for the three months ended May 31, 2015 amounted to $432,705 and notes are carried at $1,162,218, net of unamortized discounts of $115,105.

 

NOTE 5– Derivative Liabilities

 

The Company records the fair value of the of the conversion features of the convertible notes disclosed in Note 4 in accordance with ASC 815, Derivatives and Hedging. The fair value of the derivative liability was calculated using a multi-nominal lattice model. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statements of operations. During the three months ended May 31, 2015, the Company recorded a loss on the change in fair value of derivative liability of $76,834.

 

The following table summarizes the changes in derivative liabilities during the three months ended May 31, 2015:

 

Balance as of February 28, 2015	$                   130,103
Fair value of embedded conversion derivative liability at issuance	33,216
Reclassification of derivatives upon conversion of convertible debt	(153,808)
Unrealized derivative losses included in other expense	46,115
Ending balance as of May 31, 2015	$           55,626

 

The Company determined that the instruments embedded in the convertible note should be classified as liabilities and recorded at fair value due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The fair value of the instruments was determined using a multinomial lattice model based on the following assumptions:

 

·

The projected volatility curve for each valuation period was based on the historical volatility of the Company and ranged from 191% to 198%.

 

·

An event of default would occur 5% of the time, increasing 1.00% per month to a maximum of 10%,

 

·

The monthly trading volume would average $175,000 to $136,000 and would increase at 1% per month. The variable conversion price of 58% of ask-bid or close prices over 10 trading days have effective discount rates of 42.42%,

 

·

The variable conversion price of the lesser of: (i) $0.045, or (ii) 60% of the lowest trade price over 25 trading days would have effective discount rates of 47.92% to 47.64%

 

·

The Note Holders would automatically convert fixed and variable conversion prices (with full ratchet resets) the notes at the stock price for the convertible Note if the registration was effective and the Company was not in default, and conversion price reset events are assumed every 3 months.

  

NOTE 6 – Equity

 

The following tables summarize the Company’s stock options activity as of May 31, 2015:

 

			Options		Weighted Average Exercise Price		Aggregate Intrinsic Value		Exercisable		Weighted Average Remaining Life
Balance, May 31, 2015			38,050,000	$	0.11		$             -		28,050,000		4.29

 

Expected future expense related to the expected vesting of options is $455,529.

 

During the three months ended May 31, 2015, the Company issued 204,276,892 shares of common stock upon the conversion of debt, for an aggregate value of $144,910. (see Note 4)

 

During the three months ended May 31, 2015, the Company issued 750,000 shares of common stock as compensation for services for an aggregate value of $158.

 

During the three months ended May 31, 2015, the Company issued 15,000,000 shares of common stock to an investor on a note payable. (see Note 4)

 

NOTE 7 – Commitments and Contingencies

 

Litigation

 

The Company may become involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, excepts as discussed herein, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity. As of May 31, 2015, the Company is not involved in any material legal matters.

 

NOTE 8 – Related Party Transactions

 

In July 2014, the Company issued a note payable in the aggregate amount of $250,000 for the purchase of intellectual property from a commonly owned entity. Because of the common ownership, the intellectual property was not marked to fair value and the Company recognized a loss for the amount of the notes, which is included in loss on acquisition of intellectual property from a commonly controlled entity on the consolidated statements of operations. The note is non-interest bearing, matures in 24 months from issuance, and requires principal payments of at least $25,000 every 180 days. During the three months ended May 31, 2015, the remaining balance of $116,337 was paid in full.

 

In September 2014, the Company issued a note in the amount of $7,900 for cash. The note is payable in two years from issuance, and accrues interest, payable monthly, at an annual rate of 10%. During the three months ended May 31, 2015, the remaining balance of $7,900 was paid in full.

 

NOTE 9 – Subsequent Events

 

On various dates, the Company issued 97,769,663 shares of common stock to a third party lender in satisfaction of debt and accrued interest for an aggregate value of $17,040.

 

 

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operation

Cautionary Statement Regarding Forward-Looking Statements

 

Certain statements contained in this Quarterly Report constitute "forward-looking statements." These statements, identified by words such as "plan," "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Part II - Item 1A.Risk Factors" and elsewhere in this Quarterly Report. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents, particularly our Annual Reports, Quarterly Reports and our Current Reports we file from time to time with the Securities and Exchange Commission (the "SEC").

 

As used in this Quarterly Report, the terms "we," "us," "our," "Radiant," and the "Company" refer to The Radiant Creations Group, Inc. unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise indicated.

 

Introduction

 

Effective May 21, 2012, a change of control took place and Clarent Services Corp. acquired from Half Moon Bay Holdings, LLC, 25,000,000 shares of common stock of the Company, representing all of Half Moon Bay’s holdings of the Company.  The shares constituted approximately 83.33% of the thirty million (30,000,000) issued and outstanding shares of common stock of the Company. There are no arrangements or understandings among members of the former and new control groups and their associates with respect to election of directors or other matters.

 

Recent Corporate Developments

 

On June 20, 2013, a change of control of the Company occurred when Biodynamic Molecular Technologies, LLC a privately held company organized in the State of Florida acquired from Clarent Services Corp., the former majority stockholder of the Company, in a private transaction, 25,000,000 restricted shares of common stock, par value $0.00001 per share of the Company.

 

The Company is not aware of any arrangements, including any pledge of securities of the Company, the operation of which may at a subsequent date result in a change of control of the Company.

 

Involvement in Certain Legal Proceedings

During the past five years no director or executive officer of the company (i) has been involved as a general partner or executive officer of any business which has filed a bankruptcy petition; (ii) has been convicted in any criminal proceeding nor is subject to any pending criminal proceeding; (iii) has been subjected to any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (iv) has been found by a court, the Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law.

 

Family Relationships

 

Mr. Gary R. Smith, our CEO, directly owns fifty percent, Mr. Gary D. Alexander, our CFO, owns twenty five percent, Mr. Michael S. Alexander, our EVP, owns twenty five percent and Mr. Manpreet Singh Thaper has no direct or indirect financial interest in Biodynamic Molecular Technologies, LLC the majority shareholder of the Company.

 

Plan of Operation

On June 20, 2013, following a change of control and subsequent acquisition of an exclusive license agreement, certain assets and processes to innovative technologies in skin protection and enhancement, which consist of various proprietary products including an anti-aging and revitalizing skin cream generally under the "Radiant Creations" label, the Company changed its principal business to the development and marketing of unique and proprietary scientific technologies and cosmetic and over-the-counter personal enhancement products and devices.

 

As of May 31, 2015, we had cash of $57,465, a working capital deficit of $782,015, and an accumulated deficit of $10,049,939. As such, we anticipate that we will require substantial financing in the near future in order to meet our current obligations and to continue our operations. In addition, in the event that we are successful in identifying suitable alternative business opportunities, of which there is no assurance, we anticipate that we will need to obtain additional financing in order to pursue those opportunities.

 

Off-Balance Sheet Arrangements

None.

Financing Requirements

 

From December 29, 2005 (Inception) to May 31, 2015, we have suffered cumulative losses of $10,049,939. We expect to continue to incur substantial losses as we continue the growth of our business. Since our inception, we have funded operations through common stock issuances, related party loans, and the support of creditors in order to meet our strategic objectives.

 

Our management believes that sufficient funding will be available to meet our business objectives, including anticipated cash needs for working capital, and are currently evaluating several financing options, including a public offering of securities. However, we do not have any financing arrangements currently in place and there can be no assurance that we will be able to obtain sufficient financing when needed. As a result of the foregoing, our independent auditors believe there exists substantial doubt about our ability to continue as a going concern.

 

There is no assurance that we will be able to obtain additional financing if and when required. We anticipate that additional financing may come in the form of sales of additional shares of our common stock which may result in dilution to our current shareholders.

 

Going Concern Qualification

 

Several conditions and events cast substantial doubt about the Company’s ability to continue as a going concern.  The Company has a working capital deficit of $782,015 and has incurred net losses of $10,049,939 for the period from December 29, 2005 (inception) to May 31, 2015 and the Company will require additional financing in order to finance its business activities on an ongoing basis.  The Company’s future capital requirements will depend on numerous factors including, but not limited to, executing the company’s marketing and business plans and the pursuit of other business opportunities. The Company is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained.  In the interim, we are dependent upon shareholders of the Company to continue meeting our operating costs.  Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide them with the opportunity to continue as a going concern. 

 

Liquidity and Capital Resources

It is the intent of our management, stockholders, and specifically the majority Shareholder, BioDynamic Molecular Technologies, LLC and our Chief Executive Officer, Gary R. Smith, our Chief Financial Officer, Gary D. Alexander and Our Chief Operating Officer, Manpreet Singh Thaper to provide sufficient working capital necessary to support and preserve the integrity of our Company as a corporate entity.  However, there is no legal obligation for either the majority Shareholder(s) or Officer(s) to provide additional future funding. If our management ceases to provide us the needed financing and we fail to identify any alternative sources of funding, we may have to alter or discontinue our business plan.

 

We have no current plans, proposals, arrangements or understandings with respect to the sale or issuance of additional securities.  As a result, there can be no assurance that sufficient funds will be available to us to enable us to pay the expenses related to such activities.

 

Regardless of whether or not our available cash proves to be adequate to meet our operational needs, we may have to compensate providers of services by issuances of our common stock in lieu of cash and there are no guarantees this will be on favorable terms, if accepted at all.

 

At May 31, 2015, we had $57,465 in cash, $1,627,387 in liabilities, and an accumulated deficit of $10,049,939. Our primary source of liquidity has been from loans from a majority shareholder(s) and loans from outside parties.  As of May 31, 2015, the Company owed $1,545,293 in notes and accrued interest.

  

Net cash used in operating activities was $391,045 during the quarter ended May 31, 2015.  

 

Cash used in investing activities was $0 during the quarter ended May 31, 2015.

 

Cash provided by financing activities was $433,217 during the quarter ended May 31, 2015.  

 

Our expenses to date are largely due to professional fees that include accounting and legal fees.

Net Loss

 

We incurred a net loss of $1,028,726 and $1,897,131 for the three months ended May 31, 2015 and 2014, respectively.  From inception, we have an accumulated net loss of $10,049,939.  Our basic and diluted loss per share was $(0.01) and $(0.03) for the three months ended May 31, 2015 and 2014, respectively.

 

Operating and Administration Expenses

 

Operating expenses decreased by $1,803,289 from $2,319,369 for the three months ended May 31, 2014 to $516,080 for the three months ended May 31, 2015.  The decrease is mainly attributable to lower stock compensation expense.

 

Operating expenses for the three months ended May 31, 2015 primarily consisted of office administration, professional and regulatory compliance, investor relations and interest expense.

 

Other Expenses 

Other expenses increased by $415,006 from $114,297 in the three months ended May 31, 2014, to $529,303 in the three months ended May 31, 2015, primarily as a result of interest expense from amortization of debt discounts and derivative related costs.

 

Common and Preferred Stock

We are authorized by our Amended and Restated Articles of Incorporation and our Additional Articles of Incorporation to issue an aggregate of 1,001,000,000 shares of capital stock, of which 900,000,000 are shares of common stock, par value $0.00001 per share and 101,000,000 are shares of preferred stock, par value $0.00001 per share.

 

As of May 31, 2015, 290,043,282 shares of Common Stock were issued and outstanding and there were 79 shareholders of our Common Stock. Also at May 31, 2015, there were 1,000,000 Series A – Super Voting Control shares outstanding and 20,000,000 Series B shares of Preferred Stock issued and outstanding.

 

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not Applicable.

 

ITEM 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

For purposes of this Item 4., the term disclosure controls and procedures means controls and other procedures of the Company (i) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (15 U.S.C. 78a  et seq. and hereinafter the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and (ii)  include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the 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. Our disclosure controls and procedures do not comply with the requirements in (i) and (ii) above and are not effective.  

 

On May 31, 2015, our President, Gary R. Smith, has reviewed the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) as of the end of the period covered by the report and has concluded that (i) the Company’s disclosure controls and procedures are not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Commission, and (ii) the Company’s controls and procedures have not been designed to ensure that information required to be disclosed by the 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.  

 

 

The material weakness identified relate to the lack of proper segregation of duties and lack of a formal audit committee.

 

Changes in Internal Controls over Financial Reporting

 

There were no changes in our internal control over financial reporting identified in connection with our evaluation of these controls as of the first fiscal quarter ended May 31, 2015 as covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Inherent Limitations on Effectiveness of Controls 

The Company's management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on 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. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

 

 

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

 

None.

 

ITEM 1A. Risk Factors

 

The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.

 

WE HAVE LIMITED BUSINESS OPERATIONS AND ONE PRODUCT AVAILABLE FOR SALE. WE HAVE NOT IDENTIFIED ANY ALTERNATIVE BUSINESS OPPORTUNITIES. OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS WILL CONSIST OF EXECUTING OUR MARKETING AND BUSINESS PLANS AND RESEARCHING NEW OPPORTUNITIES.

 

Our assets consist of an exclusive license purchased from Dr. Yin-Xiong Li, MD, Ph.D. to his patent in Enhanced Broad-Spectrum UV Radiation Filters and Methods as disclosed and claimed in U.S. Patent No. US Patent # 6,117,846 - Nucleic acid filters and US Patent Application # 20080233626 - Enhanced broad-spectrum UV radiation filters and methods, and the following international filings European Application # 07811023.6, and Australian Application # 2007281485 and as trade secrets associate with the above listed intellectual property and trade secrets and potential patent applications for an anti-aging skin rejuvenation cream, an acne OTC treatment, a wrinkle reduction cream, BioSalt redistribution technology using supplements.  The License Agreement, as of June 25, 2013 has added an addendum to it allowing Renewable to transfer the license agreement to The Radiant Creations Group.

 

In the event the Company is unable to maintain compliance with the terms of the exclusive license agreement the grantor could elect to limit or terminate the agreement which would have a material impact on our financial condition.

 

We May Not be Able to Obtain Additional Financing

 

As of May 31, 2015, we had cash on hand of $57,465 and a working capital deficit of $782,015.

 

Currently, our ability to obtain additional financing may be substantially limited. If sufficient financing is not available or obtainable as and when needed, we may not be able to continue as a going concern and investors may lose a substantial portion or all of their investment. We currently do not have any financing arrangements in place and there are no assurances that we will be able to acquire financing on acceptable terms or at all.

 

We Have Limited Officers and Directors

 

Because management consists of only three persons, Gary R. Smith, President and CEO, Gary D. Alexander, CFO and Corporate Secretary and Manpreet Singh Thaper, COO will be the only individuals responsible in conducting the day-to-day operations of the Company.  We do not benefit from having access to multiple judgments that a greater number of directors or officers would provide, and we will rely completely on the judgment of our three officers when selecting a target products to market.  Mr. Smith, Mr. Alexander and Mr. Singh Thaper anticipate devoting only a limited amount of time per month to the business of the Company.  Mr. Smith, Mr. Alexander and Mr. Singh Thaper all anticipate executing written employment agreements with the Company in the near future however we do not anticipate obtaining key man life insurance on Mr. Smith, Mr. Alexander or Mr. Singh Thaper. The loss of the services of Mr. Smith, Mr. Alexander or Mr. Singh Thaper would adversely affect development of our business and our likelihood of continuing operations.

 

We Depend on Management and Management's Participation is Limited

 

We will be entirely dependent upon the experience of our officers and directors in seeking, investigating, and acquiring new business opportunities and in making decisions regarding our operations.  It is possible that, from time to time, the inability of such persons to devote their full time attention to the Company will cause the Company to lose an opportunity.

We May Conduct Further Offerings in the Future in Which Case Investors' Shareholdings' will be Diluted 

We may conduct equity offerings in the future to finance any future business projects that we decide to undertake. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. If we issue additional stock, investors' percentage interest in us will be diluted. The result of this could reduce the value of their stock.

 

Because Our Stock is a Penny Stock, Shareholder will be More Limited in Their Ability to Sell Their Stock

 

The shares of our common stock constitute "penny stocks" under the Exchange Act. The shares will remain classified as a penny stock for the foreseeable future. The classification as a penny stock makes it more difficult for a broker/dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker/dealer engaged by the purchaser for the purpose of selling his or her shares will be subject to rules 15g-1 through 15g-10 of the Exchange Act. Rather than having to comply with these rules, some broker-dealers will refuse to attempt to sell a penny stock.

 

The "penny stock" rules adopted by the SEC under the Exchange Act subjects the sale of the shares of our common stock to certain regulations which impose sales practice requirements on broker/dealers. For example, brokers/dealers selling such securities must, prior to effecting the transaction, provide their customers with a document that discloses the risks of investing in such securities.

Legal remedies, which may be available to an investor in "penny stocks," are as follows:

 

(a) if "penny stock" is sold to an investor in violation of his or her rights listed above, or other federal or states securities laws, the investor may be able to cancel his or her purchase and get his or her money back.

 

(b) if the stocks are sold in a fraudulent manner, the investor may be able to sue the persons and firms that caused the fraud for damages.

 

(c) if the investor has signed an arbitration agreement, however, he or she may have to pursue his or her claim through arbitration.

 

If the person purchasing the securities is someone other than an accredited investor or an established customer of the broker/dealer, the broker/dealer must also approve the potential customer's account by obtaining information concerning the customer's financial situation, investment experience and investment objectives. The broker/dealer must also make a determination whether the transaction is suitable for the customer and whether the customer has sufficient knowledge and experience in financial matters to be reasonably expected to be capable of evaluating the risk of transactions in such securities. Accordingly, the SEC's rules may limit the number of potential purchasers of the shares of our common stock.

 

ITEM 2. Unregistered Sale of Equity Securities and Use of Proceeds

 

None.

 

ITEM 3. Defaults on Senior Securities

 

None.

 

ITEM 4. Mining Safety Disclosure

 

Not Applicable.

 

ITEM 5. Other Information

 

None.

 

ITEM 6. Exhibits

 

EXHIBIT 31	Section 302 Certification of Chief Executive Officer and Chief Financial Officer
EXHIBIT 32	Section 906 Certification of Chief Executive Officer and Chief Financial Officer

 

 

SIGNATURES

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

 

 

THE RADIANT CREATIONS GROUP, INC.

 

 

Dated:  July 20, 2015	By: /s/ Gary R. Smith Gary R. Smith, Chief Executive Officer
Dated:  July 20, 2015	By: /s/ Gary D. Alexander Gary D. Alexander, Chief Financial Officer