Attached files
U.S. 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 June 30, 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 No. 333-194145
MERECOT CORP.
(Exact name of registrant as specified in its charter)
Nevada 7373 68-0683374
(State or Other Jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or Organization) Classification Number) Identification No.)
616 Corporate Way
Suite 2-6621
Valley Cottage, NY 10989
929-200-1255
merecot.corp@gmail.com
(Address and telephone number of principal executive offices)
Indicate by check mark whether the issuer: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 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 (ss. 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 filed, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
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 [ ]
Applicable Only to Issuer Involved in Bankruptcy Proceedings During the
Preceding Five Years.
N/A
Indicate by check mark whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act
of 1934 after the distribution of securities under a plan confirmed by a court.
Yes[ ] No [X]
Applicable Only to Corporate Registrants
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the most practicable date:
Class Outstanding as of June 30, 2015
----- -------------------------------
Common Stock: $0.001 7,160,000
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation. 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk. 18
Item 4. Controls and Procedures. 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 19
Item 3. Defaults upon Senior Securities. 19
Item 4. Mine Safety Disclosures. 19
Item 5. Other Information. 19
Item 6. Exhibits. 19
Signatures 20
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
June 30, 2015
Index to the Financial Statements
Contents Page(s)
-------- -------
Condensed Balance sheet at June 30, 2015 (unaudited) and
December 31, 2014....................................................... 4
Condensed Statement of operations for the three and six months ended
June 30, 2015 and June 30, 2014 (unaudited)............................. 5
Condensed Statement of cash flows for the six months ended
June 30, 2015 and 2014 (unaudited)...................................... 6
Notes to the Condensed financial statements (unaudited)................. 7
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Merecot Corp.
Condensed Balance Sheets
June 30, 2015 December 31, 2014
------------- -----------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 9,952 $ 13,627
-------- --------
Total current assets 9,952 13,627
-------- --------
Equipment, net of depreciation 553 658
-------- --------
Total assets $ 10,505 $ 14,285
======== ========
LIABILITIES AND STOCKHOLDERS" EQUITY
CURRENT LIABILITIES
Advances from stockholder $ 1,015 $ 1,001
Loan payable - stockholder 10,000 5,000
-------- --------
Total current liabilities 11,015 6,001
-------- --------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $0.001; 75,000,000 shares authorized,
7,160,000 and 5,000,000 shares issued and outstanding, respectively 7,160 7,160
Additional paid-in capital 19,440 19,440
Accumulated deficit (27,110) (18,316)
-------- --------
Total stockholders' equity (deficit) (510) 8,284
-------- --------
Total liabilities and stockholders' equity $ 10,505 $ 14,285
======== ========
The accompanying notes are an integral part of these financial statements.
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Merecot Corp.
Condensed Statements of Operations (unaudited)
For the For the For the For the
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014
------------- ------------- ------------- -------------
Revenues earned during the development stage $ -- $ -- $ -- $ --
OPERATING EXPENSES
Professional fees 7,797 1,870 8,097 4,853
General and administrative expenses 436 767 696 848
---------- ---------- ---------- ----------
Total operating expenses 8,233 2,637 8,793 5,711
Loss before Income Tax Provision (8, 33) (2,637) (8,793) (5,711)
Income Tax Provision -- -- --
---------- ---------- ---------- ----------
Net Loss $ (8,233) $ (2,637) $ (8,793) $ (5,711)
========== ========== ========== ==========
Net loss per common share
- Basic and Diluted $ 0.00 $ 0.00 $ (0.00) $ 0.00
========== ========== ========== ==========
Weighted average common shares outstanding
- Basic and Diluted 6,012,727 5,020,104 7,160,000 5,010,608
The accompanying notes are an integral part of these financial statements.
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Merecot Corp.
Condensed Statements of Cash Flows
For the For the
Six Months Six Months
Ended Ended
June 30, 2015 June 30, 2014
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (8,793) $ (5,711)
Adjustments to reconcile net loss to net
cash (used in) operating activities:
Changes in operating assets and liabilities:
Depreciation expense 104 35
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (8,689) (5,676)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment -- (692)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES -- (692)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from stockholder 14 (13)
Loan payable - stockholder 5,000 --
Proceeds from sale of common shares -- 1,600
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,014 1,587
-------- --------
NET CHANGE IN CASH (3,675) (4,781)
CASH, BEGINNING OF THE PERIOD 13,627 7,830
-------- --------
CASH, END OF THE PERIOD $ 9,952 $ 3,049
======== ========
Supplemental Cash Flow Information:
Interest paid $ -- $ --
Income taxes paid $ -- $ --
The accompanying notes are an integral part of these financial statements.
6
Merecot Corp.
June 30, 2015
Notes to the Condensed unaudited Financial Statements
NOTE 1 - ORGANIZATION AND OPERATIONS
MERECOT CORP.
Merecot Corp. (the "Company") was incorporated on June 21, 2013 under the laws
of the State of Nevada. The Company engages in creating automated supply chain
Web Services to the SPA and Wellness industry.
NOTE 2 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial positions,
results of operations, and cash flows on June 30, 2015, and for all periods
presented herein, have been made.
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
2014 audited financial statements. The results of operations for the six months
ended June 30, 2015 are not necessarily indicative of the operating results for
the full year.
NOTE 3 -SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
The Management of the Company is responsible for the selection and use of
appropriate accounting policies and the appropriateness of accounting policies
and their application. Critical accounting policies and practices are those that
are both most important to the portrayal of the Company's financial condition
and results and require management's most difficult, subjective, or complex
judgments, often as a result of the need to make estimates about the effects of
matters that are inherently uncertain. The Company's significant and critical
accounting policies and practices are disclosed below as required by generally
accepted accounting principles.
BASIS OF PRESENTATION
The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").
USE OF ESTIMATES AND ASSUMPTIONS AND CRITICAL ACCOUNTING ESTIMATES AND
ASSUMPTIONS
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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(s)
of the financial statements and the reported amounts of revenues and expenses
during the reporting period(s).
Critical accounting estimates are estimates for which (a) the nature of the
estimate is material due to the levels of subjectivity and judgment necessary to
account for highly uncertain matters or the susceptibility of such matters to
change and (b) the impact of the estimate on financial condition or operating
performance is material. The Company's critical accounting estimate(s) and
assumption(s) affecting the financial statements was (were):
(i) ASSUMPTION AS A GOING CONCERN: Management assumes that the Company
will continue as a going concern, which contemplates continuity of
operations, realization of assets, and liquidation of liabilities in
the normal course of business.
(ii) VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS: Management assumes that
the realization of the Company's net deferred tax assets resulting
from its net operating loss ("NOL") carry-forwards for Federal income
tax purposes that may be offset against future taxable income was not
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considered more likely than not and accordingly, the potential tax
benefits of the net loss carry-forwards are offset by a full valuation
allowance. Management made this assumption based on (a) the Company
has incurred recurring losses, (b) general economic conditions, and
(c) its ability to raise additional funds to support its daily
operations by way of a public or private offering, among other
factors.
These significant accounting estimates or assumptions bear the risk of change
due to the fact that there are uncertainties attached to these estimates or
assumptions, and certain estimates or assumptions are difficult to measure or
value.
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop
the estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such
evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph
820-10-35-37") to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair
value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value into three (3) broad levels. The fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities and the lowest priority to unobservable inputs.
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37
are described below:
Level 1 Quoted market prices available in active markets for identical assets or
liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in
Level 1, which are either directly or indirectly observable as of the
reporting date.
Level 3 Pricing inputs that are generally observable inputs and not corroborated
by market data.
Financial assets are considered Level 3 when their fair values are determined
using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the
lowest priority to unobservable inputs. If the inputs used to measure the
financial assets and liabilities fall within more than one level described
above, the categorization is based on the lowest level input that is significant
to the fair value measurement of the instrument.
8
The carrying amounts of the Company's financial assets and liabilities, such as
cash and accrued expenses approximate their fair values because of the short
maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on
an arm's-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties,
if made, shall not imply that the related party transactions were consummated on
terms equivalent to those that prevail in arm's-length transactions unless such
representations can be substantiated.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less at the time of purchase to be cash equivalents.
RELATED PARTIES
The Company follows subtopic 850-10 of the FASB Accounting Standards
Codification for the identification of related parties and disclosure of related
party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the
Company; b. entities for which investments in their equity securities would be
required, absent the election of the fair value option under the Fair Value
Option Subsection of Section 825-10-15, to be accounted for by the equity method
by the investing entity; c. trusts for the benefit of employees, such as pension
and profit-sharing trusts that are managed by or under the trusteeship of
management; d. principal owners of the Company; e. management of the Company; f.
other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests; and g. other parties that can significantly
influence the management or operating policies of the transacting parties or
that have an ownership interest in one of the transacting parties and can
significantly influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own separate
interests.
The financial statements shall include disclosures of material related party
transactions, other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business. However, disclosure of
transactions that are eliminated in the preparation of consolidated or combined
financial statements is not required in those statements. The disclosures shall
include: a. the nature of the relationship(s) involved; b. a description of the
transactions, including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which income statements are presented, and
such other information deemed necessary to an understanding of the effects of
the transactions on the financial statements; c. the dollar amounts of
transactions for each of the periods for which income statements are presented
and the effects of any change in the method of establishing the terms from that
used in the preceding period; and d. amounts due from or to related parties as
of the date of each balance sheet presented and, if not otherwise apparent, the
terms and manner of settlement.
COMMITMENT AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Certain conditions may
exist as of the date the financial statements are issued, which may result in a
loss to the Company but which will only be resolved when one or more future
events occur or fail to occur. The Company assesses such contingent liabilities,
and such assessment inherently involves an exercise of judgment. In assessing
loss contingencies related to legal proceedings that are pending against the
9
Company or unasserted claims that may result in such proceedings, the Company
evaluates the perceived merits of any legal proceedings or unasserted claims as
well as the perceived merits of the amount of relief sought or expected to be
sought therein.
If the assessment of a contingency indicates that it is probable that a material
loss has been incurred and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company's financial statements.
If the assessment indicates that a potential material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, and an estimate of the range of
possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they
involve guarantees, in which case the guarantees would be disclosed. Management
does not believe, based upon information available at this time, that these
matters will have a material adverse effect on the Company's financial position,
results of operations or cash flows. However, there is no assurance that such
matters will not materially and adversely affect the Company's business,
financial position, and results of operations or cash flows.
REVENUE RECOGNITION
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue when it is
realized or realizable and earned. The Company considers revenue realized or
realizable and earned when all of the following criteria are met: (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the
services have been rendered to the customer, (iii) the sales price is fixed or
determinable, and (iv) collectability is reasonably assured.
INCOME TAX PROVISION
The Company accounts for income taxes under Section 740-10-30 of the FASB
Accounting Standards Codification. Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the statements
of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification ("Section 740-10-25"). Section 740-10-25 addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under Section 740-10-25,
the Company may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
fifty percent (50%) likelihood of being realized upon ultimate settlement.
Section 740-10-25 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis
of assets and liabilities are reported in the accompanying balance sheets, as
well as tax credit carry-backs and carry-forwards. The Company periodically
reviews the recoverability of deferred tax assets recorded on its balance sheets
and provides valuation allowances as management deems necessary.
10
Management makes judgments as to the interpretation of the tax laws that might
be challenged upon an audit and cause changes to previous estimates of tax
liability. In addition, the Company operates within multiple taxing
jurisdictions and is subject to audit in these jurisdictions. In management's
opinion, adequate provisions for income taxes have been made for all years. If
actual taxable income by tax jurisdiction varies from estimates, additional
allowances or reversals of reserves may be necessary.
UNCERTAIN TAX POSITIONS
The Company did not take any uncertain tax positions and had no adjustments to
its income tax liabilities or benefits pursuant to the provisions of Section
740-10-25 for the period from June 21, 2013 (inception) through June 30, 2015.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed pursuant to section 260-10-45 of
the FASB Accounting Standards Codification. Basic net income (loss) per common
share is computed by dividing net income (loss) by the weighted average number
of shares of common stock outstanding during the period. Diluted net income
(loss) per common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock and potentially dilutive
outstanding shares of common stock during the period to reflect the potential
dilution that could occur from common shares issuable through contingent share
arrangements, stock options and warrants.
There were no potentially dilutive common shares outstanding for the period from
June 21, 2013 (inception) through June 30, 2015.
CASH FLOWS REPORTING
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards
Codification 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 paragraph 230-10-45-25
of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow
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. The Company
reports the reporting currency equivalent of foreign currency cash flows, using
the current exchange rate at the time of the cash flows and the effect of
exchange rate changes on cash held in foreign currencies is reported as a
separate item in the reconciliation of beginning and ending balances of cash and
cash equivalents and separately provides information about investing and
financing activities not resulting in cash receipts or payments in the period
pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards
Codification.
SUBSEQUENT EVENTS
The Company follows the guidance in Section 855-10-50 of the FASB Accounting
Standards Codification for the disclosure of subsequent events. The Company will
evaluate subsequent events through the date when the financial statements were
issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification,
the Company as an SEC filer considers its financial statements issued when they
are widely distributed to users, such as through filing them on EDGAR.
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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
On June 10, 2014, the Financial Accounting Standards Board ("FASB") issued
update ASU 2014-10, Development Stage Entities (Topic 915). Amongst other
things, the amendments in this update removed the definition of development
stage entity from Topic 915, thereby removing the distinction between
development stage entities and other reporting entities from US GAAP. In
addition, the amendments eliminate the requirements for development stage
entities to (1) present inception-to-date information on the statements of
income, cash flows and shareholders equity, (2) label the financial statements
as those of a development stage entity; (3) disclose a description of the
development stage activities in which the entity is engaged and (4) disclose in
the first year in which the entity is no longer a development stage entity that
in prior years it had been in the development stage. The amendments are
effective for annual reporting periods beginning after December 31, 2014 and
interim reporting periods beginning after December 15, 2015, however entities
are permitted to early adopt for any annual or interim reporting period for
which the financial statements have yet to be issued. The Company has elected to
early adopt these amendments and accordingly have not labeled the financial
statements as those of a development stage entity and have not presented
inception-to-date information on the respective financial statements.
NOTE 3 - GOING CONCERN
The financial statements have been prepared assuming that the Company will
continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of
business.
As reflected in the financial statements, the Company had a deficit accumulated
during the development stage at June 30, 2015, a net loss and net cash used in
operating activities for the period from June 21, 2013 (inception) through June
30, 2015. These factors raise substantial doubt about the Company's ability to
continue as a going concern.
Although the Company has recognized some nominal amount of revenues since
inception, the Company is devoting substantially all of its efforts on
establishing the business and its planned principal operations have not
commenced. The Company is attempting to commence operations and generate
sufficient revenue; however, the Company's cash position may not be sufficient
to support its daily operations. While the Company believes in the viability of
its strategy to commence operations and generate sufficient revenue and in its
ability to raise additional funds, there can be no assurances to that effect.
The ability of the Company to continue as a going concern is dependent upon its
ability to further implement its business plan and generate sufficient revenue
and its ability to raise additional funds by way of a public or private
offering.
The financial statements do not include any adjustments related to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
NOTE 4 - STOCKHOLDER'S EQUITY
SHARES AUTHORIZED
Upon formation the total number of shares of all classes of stock which the
Company is authorized to issue is Seventy-Five Million (75,000,000) shares of
which Seventy-Five Million (75,000,000) shares shall be Common Stock, par value
$0.001 per share.
12
COMMON STOCK
On December 3, 2013 the Company sold 5,000,000 shares of common stock to the
founder of the Company at $0.001 per share, or $5,000 in cash. Between June 18,
2014 and September 26, 2014 the Company sold 2,160,000 shares of common stock to
27 stockholders at $0.01 per share, or $21,600 in aggregate for cash.
NOTE 5 - RELATED PARTY TRANSACTIONS
RELATED PARTIES
Related parties with whom the Company had transactions are:
Related Parties Relationship
--------------- ------------
Evgenia Gonikman Chairman, CEO, significant stockholder and director
FREE OFFICE SPACE
The Company has been provided office space by its Chief Executive Officer at no
cost. Management determined that such cost is nominal and did not recognize the
rent expense in its financial statement.
ADVANCES FROM STOCKHOLDER
From time to time, the Chairman, CEO and significant stockholder of the Company
advances funds to the Company for working capital purpose. Those advances are
unsecured, non-interest bearing and due on demand.
The Chairman, CEO and significant stockholder of the Company advanced $1,015 in
aggregate to the Company for the period from June 21, 2013 (inception)
through June 30, 2015.
LOAN PAYABLE - CHIEF EXECUTIVE OFFICER
On July 5, 2013, the Company executed a loan agreement in the amount of $5,000
payable to the Chairman, CEO and significant stockholder of the Company. Second
borrowing installment of Director's loan in the amount of $5,000 was received
from CEO on April 4, 2015.
Total loan from CEO as of June 30, 2015 is $10,000.
The loan is unsecured, non-interest bearing with no fixed term of repayment.
NOTE 7 - SUBSEQUENT EVENTS
The Company has evaluated all events that occur after the balance sheet date
through the date when the financial statements were issued to determine if they
must be reported. The Management of the Company determined that there were no
reportable subsequent event(s) to be disclosed.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
GENERAL
We are a development stage company with nominal revenue earned to date and
minimum operations and assets. Since our incorporation, our management has
determined our business plan to create automated supply chain Web Services to
the SPA and Wellness industry, identified our target market and obtained initial
funding of $10,000 from our director. We will require additional funding in
order to pursue our business objectives and there is no guarantee that we will
be successful in this regard.
Our plan of operation is to design, develop, and run Web Services that will
connect manufacturers and distributors of the SPA products and equipment with
individual SPA and Wellness outlets. The Web Services will perform multiple
business functions including automated inventory control, delivery scheduling,
introduction of the new products and equipment.
Our principal executive office is located at 616 Corporate Way Suite 2-6621,
Valley Cottage, NY 10989. Our telephone number is (929) 200-1255, and our
registered agent for service of process is the INCORP SERVICES, INC, located at
2360 CORPORATE CIRCLE STE 400, HENDERSON, Nevada, 89074-7722. We were
incorporated in the State of Nevada on June 21, 2013. Our fiscal year end is
December 31.
PRODUCT
DESCRIPTION OF PRODUCT OR SERVICES
The services offered by Merecot Corp. are based on a distributed Cloud location
with well defined interfaces. There are 2 types of interfaces. One interface is
for suppliers and manufacturers of SPA products and equipment and another is for
consumers (individual SPA and Wellness locations). These services will fulfill
the following functionality:
1. Provide consumers with detailed information about products available
in their geographical area
2. Complete single and/or recurring purchases
3. Setup delivery schedule
4. Preset minimum inventory levels that will trigger next delivery
5. Provide facility to return damaged or unwanted items
6. Limit access to the services only to authorized personnel
There will be a grace period for the consumers who want to try services and see
how they can improve the productivity and effectiveness of their company.
TARGET MARKET AND CLIENTS/POTENTIAL CLIENTS
Our target clients are divided in two categories:
Category 1: the individual SPA and Wellness locations, small and medium size
franchises.
Category 2: SPA and Wellness product and equipment manufacturers and
distributors
Geographically both categories could be located anywhere in the world although
at the initial stage of our development we'll target the North American markets
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SOURCE OF REVENUE
The key factor in estimating pricing is to attract more SPA and Wellness
locations because of that we will charge them a very modest fee just to cover
the expenses to support them in using our services. Moreover the first 6 months
will be free so they can appreciate the convenience and benefits of our services
Customer's fee (Individual SPA and Wellness locations)
The first 6 months free After the first 6 months fixed monthly fee of
$39.99 USD
The main source of our revenue will be commissions paid by suppliers and
manufacturers. This is the flat fixed fee and the percentage of the sold
products through our services. To attract suppliers and encourage them to build
up the sales network we propose to charge sales commissions based on the volume
of sold products. That means the more volume of the sold product using our
services the less percentage the Supplier will be charged.
Supplier's fees
Fixed monthly fee Percentage of the total amount of sold products
$99.99 USD % based on the volume of sales
MARKETING STRATEGY
The marketing approach is to offer our services for free for a trial period of 6
months to the SPA locations and 3 months to the suppliers and manufacturers.
Suppliers and manufacturers will be contacted directly by our sales
representatives.
Individual SPA locations will receive published information and free offers via
regular mail. Extended information and offers will be also available on our
website. We will use Google and YouTube web advertisement campaign that targets
both categories of our customers.
COMPETITION AND COMPETITIVE STRATEGY
Currently there are no direct competitors that are offering the same services.
There are numbers of potential competitors that provide some elements of what
Merecot Crop. will offer to their customers as integrated package.
We can categorize our competitors into two groups:
1. The companies that sell SPA products and equipment.
2. The companies that sell Vendor Management, Supplier Management, and
Inventory Management Systems.
We cannot guarantee that we will be able to attract enough customers and that we
will be able to compete effectively because we have not yet begun operations. We
do not have a competitive position relative to these other companies. Once we
launch operations, we hope to compete on the basis of price, quality and the
novelty of our services. We intend to offer new services to the SPA and Wellness
industry. We intend to capitalize on our president's knowledge of SPA business.
We intend to compete on price for our Web Services. While our profit margins
will be smaller on our SPA services, we intend to compensate for this by having
larger margins on services offered to manufacturers and distributors of the SPA
products and equipment.
Our operations and our ability to generate revenues will be harmed if we are
unable to establish a reputation as a provider of quality services.
Currently, our competitive position within the industry is negligible in light
of the fact that we have not started our operations.
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SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
Although we currently have no customers, we believe that with our President's
industry experience and connections will enable us to develop the various
aspects of the business. Ms. Gonikman has experience with the SPA industry and
also experience in arranging promotion and marketing packages.
We believe there are no constraints on the sources or availability of products
and supplies related to the development of our SPA Web Services.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
At present, we have no employees other than our officer and director. We
presently do not have pension, health, annuity, insurance, stock options, profit
sharing or similar benefit plans; however, we may adopt such plans in the
future. There are presently no personal benefits available to any officers,
directors or employees.
RESULTS OF OPERATION
Our financial statements have been prepared assuming that we will continue as a
going concern and, accordingly, do not include adjustments relating to the
recoverability and realization of assets and classification of liabilities that
might be necessary should we be unable to continue in operation. We expect we
will require additional capital to meet our long term operating requirements. We
expect to raise additional capital through, among other things, the sale of
equity or debt securities.
THREE MONTH PERIOD ENDED JUNE 30, 2015 AND 2014
Our net loss for the three month period ended June 30, 2015 was $8,233 and
$2,637 for the three month period ended June 30, 2014. We have not generated any
revenue in these periods.
During the three months period ended June 30, 2015 our operating expenses were
general and administrative $436 and professional fees of $7,797; for the three
month period ended June 30, 2014 our operating expenses were general and
administrative $767 and professional fees of $1,870.
SIX MONTH PERIOD ENDED JUNE 30, 2015 AND 2014
Our net loss for the three month period ended June 30, 2015 was $8,793 and
$5,711 for the six month period ended June 30, 2014. We have not generated any
revenue in these periods.
During the six months period ended June 30, 2015 our operating expenses were
general and administrative $696 and professional fees of $8,097; for the six
month period ended June 30, 2014 our operating expenses were general and
administrative $848 and professional fees of $4,853.
LIQUIDITY AND CAPITAL RESOURCES
SIX MONTHS PERIOD ENDED JUNE 30, 2015
As at June 30, 2015, our total assets were $10,505 compared with $14,285 as of
December 31, 2014. Total assets were comprised of cash and computer equipment.
As of June 30, 2015 our current liabilities were $11,015. Stockholders' equity
was ($510).
CASH FLOWS FROM OPERATING ACTIVITIES
We have not generated positive cash flows from operating activities. For the six
months period ended June 30, 2015 net cash flows used in operating activities
was ($8,689).
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CASH FLOWS FROM FINANCING ACTIVITIES
Net cash provided from financing activities was $5,016 for the six months ended
June 30, 2015 which consisted of $5,016 proceeds form director loan and
advances.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a
combination of our existing funds and further issuances of securities. Our
working capital requirements are expected to increase in line with the growth of
our business.
Existing working capital, further advances and debt instruments, and anticipated
cash flow are expected to be adequate to fund our operations over the next three
months. We have no lines of credit or other bank financing arrangements.
Generally, we have financed operations to date through the proceeds of the
private placement of equity and debt instruments. In connection with our
business plan, management anticipates additional increases in operating expenses
and capital expenditures relating to: (i) acquisition of inventory; (ii)
developmental expenses associated with a start-up business; and (iii) marketing
expenses. We intend to finance these expenses with further issuances of
securities, and debt issuances. Thereafter, we expect we will need to raise
additional capital and generate revenues to meet long-term operating
requirements. Additional issuances of equity or convertible debt securities will
result in dilution to our current shareholders. Further, such securities might
have rights, preferences or privileges senior to our common stock. Additional
financing may not be available upon acceptable terms, or at all. If adequate
funds are not available or are not available on acceptable terms, we may not be
able to take advantage of prospective new business endeavors or opportunities,
which could significantly and materially restrict our business operations. We
will have to raise additional funds in the next twelve months in order to
sustain and expand our operations. We currently do not have a specific plan of
how we will obtain such funding; however, we anticipate that additional funding
will be in the form of equity financing from the sale of our common stock. We
have and will continue to seek to obtain short-term loans from our directors,
although no future arrangement for additional loans has been made. We do not
have any agreements with our directors concerning these loans. We do not have
any arrangements in place for any future equity financing.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.
GOING CONCERN
The independent auditors' audit report accompanying our December 31, 2014
financial statements contained an explanatory paragraph expressing substantial
doubt about our ability to continue as a going concern. The financial statements
have been prepared "assuming that we will continue as a going concern," which
contemplates that we will realize our assets and satisfy our liabilities and
commitments in the ordinary course of business.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No report required.
ITEM 4. CONTROLS AND PROCEDURES.
Our management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act) that is designed to ensure that information required to
be disclosed by us in the reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
An evaluation was conducted under the supervision and with the participation of
our management of the effectiveness of the design and operation of our
disclosure controls and procedures as of June 30, 2015. Based on that
evaluation, our management concluded that our disclosure controls and procedures
were not effective as of such date to ensure that information required to be
disclosed in the reports that we file or submit under the Exchange Act, is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms. Such officer also confirmed that there was no change in
our internal control over financial reporting during the three-month period
ended June 30, 2015 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Management is not aware of any legal proceedings contemplated by any
governmental authority or any other party involving us or our properties. As of
the date of this Quarterly Report, no director, officer or affiliate is (i) a
party adverse to us in any legal proceeding, or (ii) has an adverse interest to
us in any legal proceedings. Management is not aware of any other legal
proceedings pending or that have been threatened against us or our properties.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
No report required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No report required.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
No report required.
ITEM 6. EXHIBITS.
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange
Act of 1934 Rule 13a-14(a) or 15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange
Act of 1934 Rule 13a-14(a) or 15d-14(a).
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b)
or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
101 Interactive Data Files pursuant to Rule 405 of Regulation S-T
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MERECOT CORP.
Dated: August 3, 2015 By: /s/ Evgenia Gonikman
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Evgenia Gonikman
President and Chief Executive Officer and
Chief Financial Officer
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