Maiden Lane Jewelry, Ltd. - FORM 10-K

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EX-32.1 - EXHIBIT 32.1 - Maiden Lane Jewelry, Ltd.	v419902_ex32-1.htm
EX-32.2 - EXHIBIT 32.2 - Maiden Lane Jewelry, Ltd.	v419902_ex32-2.htm
EX-31.2 - EXHIBIT 31.2 - Maiden Lane Jewelry, Ltd.	v419902_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Maiden Lane Jewelry, Ltd.	v419902_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year 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 No. 000-54990

Maiden Lane Jewelry, Ltd.

(Exact name of registrant as specified in its charter)

New York	3911	46-0956015
(State or Other Jurisdiction	(Primary Standard Industrial	(I.R.S. Employer
of Incorporation or Organization)	Classification Number)	Identification No.)

64 West 48th Street, Suite 1107, New York, New York 10036

(Address of Principal Executive Offices) (Zip Code)

(212) 840-8477

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of exchange on which registered
Common Stock, par value $0.0001 per share		OTC Markets

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No x

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 ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

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 Act).Yes ¨ No x

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of August 31, 2015 was approximately $6.4 million based upon a closing price of $2.50 reported for such date by OTC Markets. Common shares held by each executive officer and director and by each person who owns 5% or more of the outstanding common shares have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of outstanding shares of common stock of the registrant as of August 31, 2015 was 10,494,428.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for the 2015 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days following the end of the registrant’s fiscal year-end are incorporated by reference into Part III of this report.

NOTE ABOUT REFERENCES TO MAIDEN LANE JEWELRY, LTD. ^TM

In this Annual Report on Form 10-K (this “Annual Report”), the “Company”, “Maiden Lane”, “we”, “us” and “our” refer to Maiden Lane Jewelry, Ltd. unless the context otherwise requires.

NOTE ABOUT TRADEMARKS

Maiden Lane Jewelry, Ltd^TM our logo and other trademarks of Maiden Lane Jewelry, Ltd. (including “Aspiri”^TM and “C⁵”^TM) are the property of Maiden Lane Jewelry, Ltd. All other trademarks or trade names referred to in this Annual Report are the property of their respective owners.

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report includes forward-looking statements. The matters discussed in this Annual Report, as well as in future oral and written statements by management of Maiden Lane that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words, although not all forward-looking statements include these words. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Annual Report should not be regarded as a representation by us that our plans or objectives will be achieved. The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from historical results or those anticipated or predicted by these forward-looking statements:

our future operating results;

our ability to implement our business strategy in a timely and effective manner;

our business prospects and the prospects of our existing and prospective products, production and sales;

fluctuations in raw materials prices;

the return or impact of current and future capital investments, public relations and other items that may impact our sales and profitability;

our contractual arrangements and other relationships with third parties;

our reliance on a limited number of suppliers;

the reliance of our business on limited production facilities;

the dependence of our future success on the general economy and its impact on the jewelry and retail industries in which we participate;

loss of significant customers or customer relationships;

competitive factors and pressures;

the financial condition and our ability to achieve our financial and operational objectives;

our substantial indebtedness and our ability to service the indebtedness;

our expected financings and sources of capital;

the impact of changes in applicable law and regulations, including legislation and tax treatment;

the adequacy of our cash resources and working capital and timing of cash flows;

the impact of a decline in the liquidity of credit markets on our business;

the impact of fluctuations in interest rates on our business;

control by our shareholders; and

market conditions and our ability to access additional capital.

We caution you not to place undue reliance on these forward-looking statements, and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date they are made, are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements in light of new information, future events or otherwise, except as required by law. Comparisons of results for current and prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

For a discussion of factors that could cause our actual results to differ from forward-looking statements contained in this Annual Report, please see the discussion under “Risk Factors” in Item 1A. You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Annual Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this Annual Report unless required by law.

AVAILABLE INFORMATION

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We therefore file periodic reports and other information with the Securities and Exchange Commission (“SEC”). We make available free of charge on our Internet website at http://www.MaidenLaneLtd.com our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Exchange Act that are filed with the SEC. These reports are available as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. From time to time, we may use our Internet website as a channel of distribution of material company information. Financial and other material information regarding us is routinely posted on our website and is readily accessible. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Furthermore, the public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The reference to our website address does not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document. In addition, the SEC maintains an Internet site at http://www.sec.gov that contains periodic reports and other information regarding issuers that file electronically.

Table of Contents		Page

PART I		4

Item 1. Business		4

Item 1a. Risk Factors		7

Item 1b. Unresolved Staff Comments		14

Item 2. Properties		14

Item 3. Legal Proceedings		15

Item 4. Mine Safety Disclosures		15

PART II		16

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		16

Item 6. Selected Financial Data		17

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

Item 7A. Quantitative and Qualitative Disclosures About Market Risk		24

Item 8. Financial Statements and Supplementary Data		24

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		24

Item 9a. Controls and Procedures		24

Item 9B. Other Information		24

PART III		25

Item 10. Directors, Executive Officers and Corporate Governance		25

Item 11. Executive Compensation		25

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		25

Item 13. Certain Relationships and Related Transactions and Director Independence		25

Item 14. Principal Accountant Fees and Services		25

PART IV		25

Item 15. Exhibits and Financial Statement Schedules		25

PART I

Item 1. Business

General

We are a wholesaler and manufacturer of jewelry with sales to independent jewelry retailers. Currently, our primary sales are complete engagement rings with a focus on bridal jewelry featuring uniquely cut stones and settings. Our complete engagement rings include both stone and setting and, using our managements’ experience in the jewelry industry, we create rings that show the stones to their best advantage. In addition, we also sell pendants and earrings that complement the designs and stones of our engagement ring jewelry.

We were incorporated on September 6, 2012, under the laws of the state of New York as Ramantique Jewelry Ltd. On October 3, 2012, we amended our certificate of incorporation to change our name to Romantique Jewelry Ltd., and on December 3, 2012, we amended our certificate of incorporation to change our name to Romantique Ltd. In connection with recent branding efforts, on May 27, 2014, we amended our certificate of incorporation to change our name to Maiden Lane Jewelry, Ltd.

We began operations on October 1, 2012 by selling fashion rings, pendants, earrings and bracelets to independent retailers. In December 2012, we commenced a line of generic bridal engagement rings (“engagement rings”), featuring both settings and diamonds. Currently, most independent retailers in the jewelry industry purchase engagement rings in two steps: they purchase the setting from one party and the stone from another. We believe that we are one of the few companies selling complete engagement rings that include the center diamonds to independent retailers.

Beginning in December 2013, we began focusing production on bridal jewelry featuring uniquely cut diamonds that utilize an advanced cutting technique that visually and physically increases the crown size (the top and most visible part of the diamond) of a similarly weighted diamond by at least 25%. We call this increased look of the crown size “coverage” or what we call C^{5 TM} – the fifth “C” – an additional “C” after the traditional “4Cs” of carat weight, color, clarity and cut. Given production lead times for this new design, our first sales of this line of bridal jewelry began in the last two weeks of February 2014. Because this unique cutting technique significantly increases the crown size of the diamond while decreasing the pavilion (bottom end below the crown) of the stone which is usually not seen, our diamonds appear to be much larger than typically cut diamonds of the same weight. In addition, because our Company creates each ring based on a specific diamond, as each stone’s measurements and appearance is unique, we are able to design rings which accentuate a diamond’s brilliance and other positive attributes.

As part of a major sales roll-out for this new product, we branded and began marketing such uniquely cut diamonds as the Aspiri^TM (“Aspiri”) cut diamond in May 2014. In addition, in July 2014 we began to broaden the collection of Aspiri products by producing pendants and earrings; given production lead times for these products and styles, our first significant sales of this product expansion occurred in November 2014.

Emerging Growth Company

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the Jumpstart Our Business Startups Act (“JOBS Act”) also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.

We will remain an “emerging growth company” for up to five years although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30.

To the extent that we continue to qualify as a “smaller reporting company”, as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years.

Our Corporate Information

Our principal executive offices are located at 64 West 48 ^th Street, Suite 1107, New York, New York 10036, and our telephone number is (212) 840-8477. We maintain a website on the Internet at http://www.MaidenLaneLtd.com. The information contained in our website is not incorporated by reference into this Annual Report. We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance with the Securities Exchange Act of 1934 (the “Exchange Act”). These include our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.

The Market

We market our branded line of Aspiri engagement rings to independent jewelers. Our target market is jewelers with between $750,000 and $5,000,000 in annual sales. We offer engagement rings that will retail between $5,000 and $10,000. We believe that by selling Aspiri engagement rings, pendants and earrings, independent jewelers will be able to compete with jewelry chain stores which sell such items in this price range. In addition to the “bigger” look of an Aspiri cut diamond we have designed our rings in such a way that we believe consumers will find appealing.

The jewelry industry is comprised of companies that are involved in the creation, chasing, etching, or engraving of jewelry. Jewelry products can be created with precious metal solid or precious metal clad jewelry. They can be made with or without stones. Traditionally, jewelry is not branded and as a result, purchasers require a good deal of service and expertise. The primary procedures in manufacturing jewelry are: design, mold, cast, polish, finish, and plate.

Jewelry is often split into three different classifications: bridal jewelry, such as engagement, wedding, and anniversary rings; fashion jewelry, like an assortment of necklaces, rings, earrings, pendants, bracelets, and pins; and other miscellaneous giftware.

Diamonds are responsible for the majority of jewelry store monetary sales; other prominent products are platinum, gold, and silver jewelry, as well as a variety of other metals, pearls, and gemstones. Engagement rings are typically the most important and one of the highest cost jewelry purchases by a consumer. For the independent retailer, engagement ring sales are also one of the most important as they represent a sale to a consumer who will hopefully be a long-time customer for additional jewelry and gift purchases.

In recent years the price of diamonds has remained relatively stable. For example, year-over year diamond price changes (2014 to 2015) per the Rapaport Diamond Report indicate stable prices with virtually no change in prices per carat based on a matrix of carat weight, color and clarity. Any changes noted generally are limited to select carat weights over 1 carat and at the mid-to-lower end of the clarity scale and such variance are typically within 1% to 4%.

Recent census data and other data most recently available indicates that 4.32 million adults (18 years or older) were newlywed in 2012, a 3% increase from the prior year.¹ Most recent industry reports indicate the retail jewelry market was $65 billion in 2012², and the market for wedding jewelry was $11 billion³ in 2012.

The demand for jewelry is dependent upon consumer income, as well as the global cost of gold, silver, diamonds, and other precious metals or stones. Bridal jewelry sales are generally less impacted by general economic conditions (consumers still get married) and are generally less seasonal relative to traditional holiday jewelry gift sales.

Larger jeweler businesses are capable or offering a larger line of products to easily meet the wants of customers, and are generally able to be efficient in the operations of production and distribution. Smaller jewelry companies continue to have a hold in the market due to the fact that customization and quality, rather than cost, is the main factor in their retail of jewelry. They typically offer specific pieces that are individualizing to a consumer, as well as unique lines. Generally, the profitability of individual jewelry companies depends upon how efficient their operations are, cost controls and volume. Furthermore, the overall profitability of any jewelry business is dependent upon the effectiveness of their merchandising and marketing strategies.

We currently have approximately 150 Aspiri independent jeweler retailers who are designated dealers of such product with approximately another 25 stores carrying a lesser amount of Aspiri products. We expect our market penetration to increase as we build our inventory levels, sales force (and geographic expansion) and select industry memberships. There are an estimated 19,000 jewelry retailers in the United States of which approximately 14,800 are independent (non-chain/non-mass market) jewelry retailers.⁴ In December 2014, the Company became a vendor member of the Independent Jewelers Association (“IJO”), a consortium of over 800 credit qualified, independent jeweler retailers across the country. Becoming a member of the IJO is by invitation only and includes a vetting process regarding a vendor’s product, stability, customer service and financial capabilities. The Company’s access to IJO’s retailers is primarily through two jewelry shows held each year, typically in February and June. Being a vendor member of IJO and their two annual jewelry shows allows concentrated access to many jewelers who are in secondary markets where otherwise sending our sales staff to their stores may not be optimal or economical. For the six months ended May 31, 2015, our half year of IJO membership, over 17% of such period’s gross sales were to IJO retailers.

¹Pew Research Center FactTank, February 6, 2014.

²U.S. Department of Commerce in 2012

³Knot Market Intelligence of the XO Group Inc.

⁴U.S. Census bureau 2011 data extrapolated between independent and mass-market retailers.

Competition

While we began our business selling various types of jewelry, we now focus on bridal jewelry. In December 2013, we began focusing production on bridal jewelry featuring uniquely cut diamonds that utilize an advance cutting technique that visually and physically increases the crown size (the top and most visible part of the diamond) of similarly weighted diamonds by at least 25%. We call this increased look of the crown size “coverage” or what we call C^{5 TM} – the fifth “C” – an additional “C” after the traditional “4Cs” of carat weight, color, clarity and cut. Because this unique cutting technique significantly increases the crown size of the diamond while decreasing the pavilion (bottom end below the crown) of the stone which is usually not seen, our diamonds appear to be much larger than traditionally cut diamonds of the same weight. In addition, because our company creates each ring based on a specific diamond, as each stone’s measurements and appearance is unique, we are able to design rings which accentuate a diamond’s brilliance and other positive attributes. We believe that our new line of bridal jewelry featuring uniquely cut diamonds will appeal to both retailers and customers due to their perceived size, quality, cost and value.

As part of a major sales roll-out for this new product, we branded and began marketing such uniquely cut diamonds as the Aspiri^TM (“Aspiri”) cut diamond in May 2014. In addition, in July 2014 we began to broaden the collection of Aspiri^TM products by producing pendants and earrings; given production lead times for these products and styles, our first significant sales of this product expansion occurred in November 2014.

Our plan is to expand our Aspiri cut diamond sales, predominately in the new style of uniquely cut stones. We believe that there are competitive barriers to entry for our Aspiri products, including the sourcing of rough diamonds, cutting technique and limitations on mass production as each stone is unique as well as the engagement ring mountings. The creation of an Aspiri cut diamond does not lend itself to mass production whereby approximately 92% of diamonds are cut and polished by lower cost, high volume Asian and Russian cutters which rely primarily on the manufacture of similar and common cuts rather than the careful evaluation and cutting tailored to the unique attributes of each stone. Instead, the rough for each diamond is carefully evaluated and uniquely cut whereby the dimensions, faceting and other factors are taken into consideration to maximize the face coverage of the diamond while maintaining its brilliance. Similarly, our ring and jewelry mountings are not mass produced. Instead of a one-size fits many approach and because each Aspiri stone is unique, our mountings are custom designed around the stone.

Currently, warehouse discounters and chain stores such as Wal-Mart, Costco, Zales and Kay Jewelers sell complete products to customers, while many small retailers sell center stones and settings as separate items to be paired for final sale. Since December 2012, we have focused our business on selling complete bridal rings (stone and setting) to independent retailers and with the addition of our Aspiri line, we believe that Maiden Lane’s business model changes the paradigm and allows independent retailers the opportunity to compete with larger jewelry retailers. We believe that providing independent jewelers a complete ring allows such jewelers to increase their profit margins by providing efficiencies in the supply chain (fewer middlemen) and timing of manufacture and delivery of a fully finished product. In addition, providing jewelers with both center stone and setting allows us to maintain control of both the design and manufacturing process – leading to a maximally designed, high quality engagement ring accentuating the best attributes of both stone and setting.

Employees

As of May 31, 2015, we had 9 full-time employees. Generally, our sales representatives are paid on a commission basis.

Item 1a. Risk Factors

RISK FACTORS RELATING TO OUR COMPANY

If we fail to implement our business strategy, our business, financial condition and results of operations could be materially and adversely affected.

Our future financial performance and success are dependent in large part upon our ability to implement our business strategy successfully. Our business strategy envisions several initiatives, including branding, marketing and selling efforts to drive growth, moving into new product and service offerings and geographies, enhancing our core product and service offerings and continuing to improve operating efficiencies and asset utilization. We may not be able to implement our business strategy successfully or achieve the benefits of our business plan. If we are unable to do so, our long-term growth and profitability may be adversely affected. Even if we are able to implement some or all of the initiatives of our business plan successfully, our operating results may not improve to the extent we expect, or at all.

Implementation of our business strategy could also be affected by a number of factors beyond our control, such as increased competition, changes in demand and buying habits, legal and regulatory developments, economic conditions, and the credit and capital markets environment, developments within the primary industry we serve and increased operating costs or expenses. In addition, to the extent we have misjudged the nature and extent of industry trends or our competition we may have difficulty achieving our strategic objectives. We may also decide to alter or discontinue certain aspects of our business strategy at any time. Any failure to successfully implement our business strategy may adversely affect our business, results of operations, cash flows and financial condition and thus our ability to service our indebtedness.

Our viability, growth and profitability will depend upon both raising funds and successfully marketing our products, company and website. It also depends upon our ability to purchase raw materials (primarily diamonds and precious metals), semi-mounts (engagement rings without a center stone), and certain finished goods and resell the finished product at a profit, and to develop relationships with jewelry retailers. Even if we raise necessary funds and develop such relationships, there is no guarantee that we will generate a profit.

Our business plan depends on our new diamond cutting techniques, which, if widely replicated, would result in increased competition for the Company.

In February 2014, our bridal jewelry operations began to focus on engagement rings featuring uniquely cut stones which in May 2014 we branded as an Aspiri^TM (“Aspiri”) cut diamond. These stones utilize an advanced cutting technique that requires both raw diamonds of certain characteristics and skilled expertise to effectuate the unique cut. We believe that such uniquely cut stones will be difficult to successfully replicate or mass produce. If such raw diamonds and cutting techniques were to be widely replicated, or if our sources of supply and cutters were to become scarce or broadly distributed, or if the costs of such supply or cutting became economically unfeasible, such events could have a material adverse effect on our operations and profitability. The Company does not have any intellectual property rights with respect to our Aspiri cut diamonds which could decrease the barrier for entry of potential competitors; however, we believe that we have accumulated significant know-how regarding this uniquely cut diamond, which cannot be easily replicated.

We are subject to fluctuations in the cost and availability of raw materials and the possible loss of suppliers.

Our business is focused on the manufacture of bridal rings, which we sell to independent retailers. We purchase rings and diamonds separately, combine them into a single ring and sell the finished product to our customers. We are dependent upon the availability of raw materials to produce our products. The principal raw materials are diamonds and gold and other precious metals. The price of gold and other precious metals has been highly volatile since 2009, and we anticipate continued volatility in the price of gold for the foreseeable future driven by numerous factors, such as changes in supply and demand and investor sentiment. The volatility of metal prices has impacted, and could further impact, our jewelry sales and product lines.

The price and availability of these raw materials are affected by numerous factors beyond our control. These factors include:

the level of consumer demand for these materials and downstream products containing or using these materials;

the supply of these materials and the impact of industry consolidation, particularly overseas low labor cost markets;

foreign government regulation and taxes;

market uncertainty;

volatility in the capital and credit markets;

environmental conditions and regulations; and

political and global economic conditions.

Any material increase in the price of these raw materials could adversely impact our cost of sales. When these fluctuations result in significantly higher raw material costs, our operating results are adversely affected to the extent we are unable to pass on these increased costs to our customers or to the extent they materially affect customer buying habits. Therefore, significant fluctuations in prices for diamonds, gold stones and other of our critical materials could have a material adverse effect on our business, results of operations, cash flows and financial condition.

We rely on a limited number of suppliers for certain of our raw materials and outside services. Global market and economic conditions may affect our suppliers and impact their viability and their ability to fulfill their obligations to us. If access to our limited suppliers is lost or curtailed, we may not be able to secure alternative supply arrangements in a timely and cost-efficient fashion. Any failure to obtain raw materials and certain services for our business on a timely basis at an affordable cost, or any significant delays or interruptions of supply, would have a material adverse effect on our business, results of operations, cash flows and financial condition.

Our operations are not diversified and are limited to the production and sales of jewelry.

The jewelry industry and the retailers which are our customers typically sell a diverse range of jewelry products, including bridal, diamond jewelry, watches, fashion, colored stones, etc., at a wide range of price points and quality. Currently, we are primarily limited to the production and sale of bridal diamond engagement rings and have recently expanded to pendants and earrings featuring our Aspiri cut diamond.

Our ability to generate revenue will depend on our success in obtaining raw materials (primarily diamonds and precious metals) and semi-mounts (engagement rings without a center stone) and the fabrication thereof into complete engagement rings, as well as our ability to sell our products at a profit and to build a network of wholesale clients. There can be no assurance that any such events will occur, that we will attain revenues from sale of our products, or that we will be able to maintain profitable operations.

We may lack the financial resources required to continue operations.

To the extent that our resources are insufficient to fund our future activities, we may need to raise additional funds through public or private financing. However, additional funding, if needed, may not be available on terms attractive to us, or at all. Our inability to raise capital when needed could have a material adverse effect on our business, operating results and financial condition. If additional funds are raised through the issuance of equity securities, the percentage ownership of our Company by our current shareholders would be diluted.

Until we start generating increased revenue we anticipate that a portion of our capital requirements will be met through financing and it is not certain we will be able to find financing to meet our operating requirements.

Because we are a relatively new company, it is difficult for us to determine our monthly or annual operating expenses. Until we start generating increased revenue, and possibly even after that, we will be dependent on financing to fund our operations as well as other working capital requirements. There can be no assurance that we can raise sufficient capital to meet our future working capital needs, or that if we do, it will be on terms favorable to our company. It is not anticipated that any of the officers, directors or current shareholders of the Company will provide any significant portion of our future financing requirements.

Because we have a limited operating history on which an evaluation of our prospects can be made, we may not be able to effectively manage the demands required of a new business in the jewelry industry.

We are an emerging growth company and, to date, have a limited operating history upon which an evaluation of our prospects can be made. There can be no assurance that we will effectively execute our business plan or manage any growth or that our future operating and financial forecast will be met. Future development and operating results will depend on many factors, including access to adequate capital, the demand for our products, price competition, our ability to market our products, our success in setting up and expanding distribution channels, and whether we can control costs. Many of these factors are beyond our control. In addition, our future prospects must be considered in light of the risks, expenses, and difficulties frequently encountered in establishing a new business in the jewelry industry, which is characterized by intense competition.

We expect our operating expenses to continue to increase, and this may affect profit margins and the market value of the company’s common stock.

Over the next twelve months, the Company expects to increase its operating expenses to expand its marketing operations and to increase inventory and production of finished goods. Such increases in operating expense levels and capital expenditures may adversely affect the Company’s operating results and profit margins, which may in turn significantly affect the market value of the Company’s Common Stock. There can be no assurance that the Company will achieve profitability or generate sufficient profits from its business operations in the future.

We may be required to make significant capital expenditures for our business in order to remain technologically and economically competitive.

We are required to invest capital in order to expand and update our capabilities in our business. We expect our capital expenditure requirements to relate primarily to growth initiatives, including branding, marketing and information technology. Changing competitive conditions that impact branding and marketing or the emergence of any significant technological advances utilized by competitors could require us to invest significant capital in order to remain competitive. If we are unable to fund any such investment, including as a result of constraints in the availability of capital, or otherwise fail to invest in branding, marketing or new technologies, our business, results of operations, cash flows and financial condition could be materially and adversely affected.

Our business is subject to changes arising from developments in technology and changes in consumer behavior. Such developments could render our products obsolete or reduce product consumption.

Emerging technologies, including those involving the Internet, social networking and alternative methods of content delivery, have resulted in new distribution channels and new products and services being provided that may compete with our products. As a result, our ability to compete effectively and our growth and future financial performance may depend on our ability to develop and market new products to address the new distribution channels and technologies, while enhancing existing products and distribution channels, in order to incorporate the latest technological advances and accommodate changing customer and consumer preferences and demands.

If we fail to anticipate or respond adequately to changes in technology, consumer behavior and user preferences and demands or are unable to finance the capital expenditures necessary, or develop an ability to respond to such changes, our business, results of operations, cash flows and financial condition could be materially and adversely affected.

We are dependent upon certain members of our senior management.

We are substantially dependent on the personal efforts, relationships and abilities of certain members of our senior management, including Michael Wirth (Chief Executive Officer), Yitzchok Gurary (President and Chief Financial Officer), Mordechai Gurary (Director of Sales) and Samantha Manburg (Chief Operating Officer). The loss of the services of members of senior management could have a material adverse effect on our Company. In particular, we are dependent on our Chief Executive Officer, Michael Wirth, for his public company, managerial and financial experience and our President, Yitzchok Gurary, and Director of Sales, Mordechai Gurary, each of whom have developed contacts and experience in the jewelry business, and whose affiliation with a related party provided us with merchandise with which we commenced our operations and from which we purchase a large percentage of our inventory components (ring mountings, or “semi-mounts”). Further, Mordechai Gurary, as Director of Sales, was responsible for a majority of our sales. In addition he is involved with other businesses within the jewelry industry, and does not devote all of his time to the Company. Although the Company believes that currently this poses no conflict, there is no assurance that a conflict would not arise in the future.

In the event either Yitzchok or Mordechai Gurary leaves the Company, we may lose a substantial portion of our business. For the years ended May 31, 2015 and 2014, respectively, we purchased, in dollar terms, approximately 41% and 63%, respectively, of our merchandise from Classique Creations LLC (“Classique”), a jewelry manufacturing company owned 98% by Mr. Isaac Gurary’s mother (and Mordechai Gurary’s wife), and 2% by his brother, Chaim Gurary (and Mordechai Gurary’s son), a shareholder of MLJ. If either Yitzchok or Mordechai Gurary were to leave the Company, there is no guarantee that Classique would continue to sell us merchandise or that we would be able to purchase merchandise from another manufacturer on similar terms.

We currently purchase many of our settings from one company, which is an affiliated company and with which company we have no written contract.

For the period September 6, 2012 (inception) to May 31, 2015 we purchased 100% of our ring settings from Classique a company owned by relatives of our President, Yitzchok Gurary, and our Director of Sales, Mordechai Gurary. If Classique experiences financial difficulties or refuses to sell ring settings to us or raises its prices, we would be forced to find another jewelry manufacturer to work with. There is no guarantee that other jewelry manufacturers would sell products to our company on the same terms, which could diminish our profit; nor is there a guaranty that the quality of products purchased from other third parties would be of the same quality as the products we are currently purchasing from Classique. Further, we have no written contract with Classique and, as a result, that company may stop supplying with jewelry or raise its prices without notice.

We intend to eliminate our reliance on Classique for the creation of the semi-mount (the ring exclusive of a center stone diamond) and bring in-house such processes for the creation of our complete finished products.

We currently rely on Classique for the manufacture of our semi-mounts, one of the key components of our finished products. Semi-mounts include the cast settings for engagement rings, pendants and earrings exclusive of the center diamond. Similar to the production model of Classique, and when we deem financially feasible, we plan to internalize the CAD (computer-aided design) design of semi-mounts, creation of the wax molds, sorting of melee stones (smaller stones on the semi-mount ring shank) and the logistics of outsourcing the casting of the semi-mount and diamond setting. There is no guarantee that we will be successful in internalizing such operations, hiring additional capable personnel or maintaining high-quality outsourced relationships for the casting and stone setting.

We are reliant on a select type of rough diamond and one vendor for the sourcing and cutting of our Aspiri^TM cut diamonds.

We currently rely on one vendor for the sourcing and cutting of our center stone diamonds that meet our Aspiri^TM specifications and quality. Furthermore, this vendor sources the appropriate rough diamond that lends itself to an Aspiri^TM cut finished diamond. While we have an exclusive contract with this vendor, there is no assurance that this vendor will be able to continue to produce Aspiri^TM cut diamonds. If this vendor were to lose its sources of rough diamonds, experience labor shortages of highly trained stone cutters or experience some sort of business interruption, our supply of such diamonds may be curtailed. In such event, there is no assurance that we may be able to source an alternative vendor of equal or better caliber which would then result in our inability to produce Aspiri cut diamond products.

Currently our two largest shareholders own approximately 76% of the controlling interest in our voting stock which could result in decisions adverse to our general shareholders.

Currently our two largest shareholders beneficially own and have the right to vote approximately 76% of our outstanding Common Stock. As a result, these shareholders have the ability to control substantially all matters submitted to our shareholders for approval. These shareholders are able to control matters including:

election of our board of directors;

removal of any of our directors;

amendment of our Certificate of Incorporation or Bylaws, each as amended;

adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us; and

approval of significant corporate transactions.

Accordingly, all other shareholders are subject to the decision making of these two shareholders.

Current economic conditions may prevent us from generating increasing revenue.

Our business and operating results can be affected by global economic conditions and, in particular, conditions in our customers’ and suppliers’ businesses and the market segments they serve. Broad and industry economic conditions affect the demand for certain of our products and raw materials. As a result of uncertainty about global economic conditions, including factors such as unemployment, bankruptcies, financial market volatility, sovereign debt issues, government budget deficits and other factors which continue to affect the global economy, our customers and suppliers may experience deterioration of their businesses, suffer cash flow shortages or file for bankruptcy. In turn, existing or potential customers may delay or decline to purchase our products, and our suppliers and customers may not be able to fulfill their obligations to us in a timely fashion.

Although our primary focus is on bridal engagement rings, and the timing of marriages is generally less susceptible to economic conditions, customers may view the purchase of certain of our products, including pendants, earrings and other fashion jewelry, as discretionary. A reduction in consumer discretionary spending or disposable income and/or adverse trends in the general economy (and consumer perceptions of those trends) may affect us more significantly than other industries as consumers may be less likely to purchase non-essential goods such as jewelry. In addition, customer difficulties could result in increases in bad debt write-offs and increases to our allowance for doubtful accounts receivable. Further, our suppliers may experience similar conditions as our customers, which may impact their viability and their ability to fulfill their obligations to us. Negative changes in the economy, including as a result of political actions or inactions, a slow economic recovery or a prolonged period of uncertainty in the economic environment, could materially adversely affect our business, results of operations, cash flows and financial condition.

In addition, as a result of the economic downturn in the United States, credit and private financing is becoming difficult to obtain at reasonable rates, if at all. We may be required to obtain additional funding from other sources, including loans and/or private financings. If we are unable to achieve such capital infusions on reasonable terms, if at all, our operations may be negatively affected.

Because we are significantly smaller than the majority of our competitors we may lack the financial resources needed to capture market share.

We face competition in our business from a number of companies, some of which have substantial financial and other resources. The market in which we operate is dominated by much larger firms with established brand names and distribution channels, and our success is dependent upon interest in and awareness of our products by both retailers and the general public. It may be difficult or impossible for us to achieve such acceptance of our products. In addition, our competitors are more financially stable than we are, and because they have greater volume, can work with smaller profit margins than we may be able to. Moreover, even if we successfully bring our products to market ahead of our projected competitors, established competitors could quickly bring products to market that would compete.

It is possible that certain of our competitors may be able to adapt more quickly to new or emerging technologies and changes in customer preferences or to devote greater resources to the promotion and sale of their products than we can. We expect to meet significant competition from existing competitors with entrenched positions as well as from new entrants and channels of competition, both with respect to our existing product and service lines and new products and services. Further, competitors might expand their product or service offerings, either through internal product development or acquisitions of our direct competitors. These competitors could introduce products or establish prices for their products or services in a manner that could adversely affect our ability to compete or could otherwise result in downward pressure on pricing. To maintain a competitive advantage, we may need to increase our investment in product and service development, manufacturing capabilities and sales, branding and marketing and will need to continue to improve our cost structure and operating efficiencies. Increases in competition could have a material and adverse effect on our business, results of operations, cash flows and financial condition.

Because of our limited operating history, we may lack the ability to recruit suitable candidates for employment, or to attract them to the Company should they be identified.

Because our revenues and operating history have been limited to date, we may have difficulty attracting potential employees. In addition, we may be dependent upon skills of individuals with whom we may have little familiarity, and who may not perform as expected.

Our membership in certain jeweler and trade organizations may be curtailed due to membership restrictions, costs or other factors.

We are members of various trade and jeweler organizations, many of which have certain standards for membership, fees and other requirements. Other groups, such as our membership in the Independent Jewelers Association (“IJO”), a consortium of over 800 credit qualified, independent jeweler retailers across the country, are by invitation only and include a vetting process and continual review regarding a vendor’s product, stability, customer service and financial capabilities. Other groups of which we members provide access to certain information (for example credit worthiness of retail jewelers), jewelry shows, etc. Although we are members in good standing in the organizations of which we are members, there is no assurance of our continued membership in such organizations or that such organization themselves will remain viable.

Any potential acquisition strategies may not be successful.

As part of our growth strategy, we may seek to acquire additional companies in the jewelry industry. Such acquisitions, if undertaken, may pose substantial risks to our business, financial condition, and results of operations. Should we pursue an acquisition opportunity, we will compete with other companies, many of which have greater financial and other resources to acquire attractive companies and assets. Even if we were to be successful in acquiring additional companies, some of the companies may not produce revenues at anticipated levels or within specified time periods. There is no assurance that we will be able to successfully integrate acquired companies, which could result in substantial costs and delays or other operational, technical or financial problems. Further, any acquisition effort could disrupt ongoing business operations. If any of these events occur, it would have a material adverse effect upon our operations and results from operations.

Acquisitions and dispositions could involve a number of risks and present financial, managerial and operational challenges, including:

adverse developments with respect to our results of operations as a result of an acquisition which may require us to incur charges and/or substantial debt or liabilities;

disruption of our ongoing business and diversion of resources and management attention from existing business and strategic matters;

difficulty with assimilation and integration of operations, technologies, products, personnel or financial or other systems;

increased expenses, including compensation expenses resulting from newly hired employees and/or workforce integration and restructuring;

disruptions in relationships with current and new personnel, customers and suppliers;

integration challenges related to implementing or improving internal controls, procedures and/or policies at a business that prior to the acquisition lacked the same level of controls, procedures and/or policies;

the assumption of certain known and unknown liabilities of the acquired business;

regulatory challenges or resulting delays; and potential disputes (including with respect to indemnification claims) with the buyers of disposed businesses or with the sellers of acquired businesses, technologies, services or products.

We may not be able to consummate acquisitions or dispositions on favorable terms or at all. Our ability to consummate acquisitions will be limited by our ability to identify appropriate acquisition candidates, to negotiate acceptable terms for purchase and our access to financial resources, including available cash and borrowing capacity. In addition, we could experience financial or other setbacks if we are unable to realize, or are delayed in realizing, the anticipated benefits resulting from an acquisition, if we incur greater than expected costs in achieving the anticipated benefits or if any material business that we acquire or invest in encounters problems or liabilities which we were not aware of or were more extensive than believed.

A decline in the price of our Common Stock could affect our ability to raise further working capital and adversely impact our operations.

Because we intend to structure any future acquisitions through payment of our Common Stock, a decline in the price of our stock could result in a reduction in the liquidity of our Common Stock and a reduction in our ability to raise additional capital for our operations. A reduction in our ability to raise equity capital in the future would have a material adverse effect upon our business plan and operations, including our ability to continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

New York law and our certificate of incorporation may protect our directors from certain types of lawsuits.

New York law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers and directors against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

We are an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company”, as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.

We will remain an “emerging growth company” for up to five years, through May 31, 2019 (the last day of the fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective registration statement), although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30.

Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

Our elections under the JOBS Act may result in our financial statements not being comparable with those of other publicly traded companies.

We have elected to use the extended transition period for complying with new or revised accounting standards under § 102 (b) (1) of the JOBS Act. This election allows our company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until these standards apply to private companies. As a result of our election, our financial statements may not be comparable to companies that comply with public company effective dates.

RISK FACTORS RELATING TO OUR INDEBTEDNESS

Our high level of payables and indebtedness could adversely affect our cash flow and our ability to operate our business, limit our ability to react to changes in the economy or industry dynamics and prevent us from meeting our obligations with respect to our indebtedness.

As of May 31, 2015, total indebtedness under our credit facility with Rosenthal & Rosenthal, Inc. was $2.2 million, a loan payable to Yitzchok Gurary, a major shareholder and an officer of the Company, and other related parties was approximately $1.4 million and total payables outstanding were approximately $1.9 million including $1.7 million to Classique. Our substantial indebtedness could have important consequences. For example, it could:

make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including financial and other restrictive covenants, could result in an event of default under agreements governing our indebtedness;

require us to dedicate a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes;

limit our flexibility in planning for and reacting to changes in our business and in the industries in which we operate;

make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

limit our ability to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy and other purposes; and

place us at a disadvantage compared to our competitors who have less debt.

Additionally, our credit facility currently restricts our ability to incur any additional indebtedness or repay existing indebtedness prior to repayment of the credit facility and is also secured against substantially all of our assets. Any of the above listed factors could materially adversely affect our business, results of operations, cash flows and financial condition. Furthermore, our interest expense could increase if interest rates increase. If we do not have sufficient earnings to service our debt, we may be required to refinance all or part of our existing debt, sell assets, borrow more money or sell securities, all subject to our currently outstanding agreements, none of which we can guarantee we will be able to do.

In addition, we may incur significant additional indebtedness in the future, subject to our currently outstanding credit facility. For example, we may seek to obtain additional loans under another secured credit facility, or a new term facility, or other form of senior or junior debt financing. Current and potential future debt financings may contain restrictions on the incurrence of additional indebtedness and those restrictions may be subject to a number of important qualifications and exceptions, and under certain circumstances, the indebtedness incurred in compliance with those restrictions could be substantial. Restrictive covenants in our debt instruments, current and in the future, may restrict our current and future operations, particularly our ability to respond to changes in our business or to take certain actions. Failure to comply with these covenants may result in the acceleration of our indebtedness. To the extent we incur additional indebtedness; the risks described above will increase.

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could harm our business, results of operations, cash flows and financial condition.

Our ability to make required interest payments and payments with respect to the principal amount of our debt obligations primarily depends upon our future operating performance. As a result, prevailing economic conditions and financial, business and other factors, many of which are beyond our control, will affect our ability to make these payments. Economic weakness and uncertainty, including decreases in spending by or changes in buying habits of the customers we serve, may significantly impact our ability to generate funds from operation.

If we do not generate sufficient cash flow from operations to satisfy our debt service obligations, we may have to undertake alternative financing plans, such as refinancing our indebtedness, selling assets, reducing or delaying capital investments or seeking to raise additional capital. Our ability to refinance our debt or undertake alternative financing plans will depend on the credit markets and our financial condition at such time. Any refinancing of our debt could be on less favorable terms, including being subject to higher interest rates. In addition, the terms of our existing or future debt instruments may restrict certain of our alternatives. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance our obligations on commercially reasonable terms, would have an adverse effect, which could be material, on our business, results of operations, cash flows and financial condition, as well as on our ability to satisfy our obligations in respect of our indebtedness.

RISKS RELATING TO OUR COMMON STOCK

Our Common Stock is listed but not heavily traded.

Our Common Stock is currently listed on the OTC-QB under the symbol MDLN. Currently these is no active trading of our Common Stock. As a result, our Common Stock is relatively illiquid.

Our share price and volumes may be volatile and may fluctuate substantially.

The market price and liquidity of the market for shares of our Common Stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

price and volume fluctuations in the overall stock market from time to time;

significant volatility in the market price and trading volume of securities of other companies in our sector and those in the retail industry, which are not necessarily related to the operating performance of these companies;

our inability to deploy or invest our capital;

fluctuations in interest rates;

any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;

operating performance of companies comparable to us;

changes in regulatory policies or tax rules;

changes in earnings or variations in operating results;

fluctuations in the value of raw materials, particular diamonds and precious metals;

general economic conditions and trends; and

departure of key personnel.

We may, in the future, issue additional shares of Common Stock, which would reduce investors' ownership percentage in the Company, and may dilute our share value.

Our Certificate of Incorporation, as amended, authorizes the issuance of 50,000,000 shares of Common Stock. The future issuance of Common Stock may result in substantial dilution in the percentage of our Common Stock held by our then-existing shareholders. We may value any Common Stock issued in the future on an arbitrary basis. The issuance of Common Stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our Common Stock.

Penny stock regulation.

The Company's Common Stock and its Preferred Stock may be deemed a penny stock. Penny stocks generally are equity securities with a price of less than $5.00 per share other than securities registered on certain national securities exchanges or quoted on the Nasdaq Stock Market, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The Company's securities may be subject to "penny stock rules" that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the "penny stock rules" require the delivery, prior to the transaction, of a disclosure schedule prescribed by the Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. Consequently, the "penny stock rules" may restrict the ability of broker-dealers to sell the Company's securities. The foregoing required penny stock restrictions will not apply to the Company's securities if such securities maintain a market price of $5.00 or greater. There can be no assurance that the price of the Company's securities will reach or maintain such a level.

Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our shareholders have limited protection against interested director transactions, conflicts of interest and similar matters.

The Company does not currently have independent audit or compensation committee. As a result, our directors have the ability, among other things, to determine their own level of compensation. The Company intends to comply with all corporate governance measures relating to director independence as and when required. Until the Company complies with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave the Company’s shareholders without protections against interested director transactions or conflicts of interest. As a result, investors may be reluctant to provide the Company with funds necessary to expand its operations.

Compliance with changing regulation of corporate governance and public disclosure practices, as well as management's relative inexperience with such regulations will result in additional expenses for the Company and creates a risk of non-compliance.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and related SEC regulations, have created uncertainty for public companies and have significantly increased the costs and risks associated with accessing the public markets and with public reporting. The Company’s management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies in these areas, which will lead to increased general and administrative expenses and a diversion of management time and attention away from revenue generating activities and toward compliance activities. While our Chief Executive Officer, Michael Wirth, has experience in this area, other members of managements’ relative inexperience with respect to these regulated areas may cause us to fall out of compliance with applicable regulatory requirements, which in turn could lead to enforcement action against us and have a resulting negative impact on our stock price.

Item 1b. Unresolved Staff Comments

The Company has no unresolved written comments from the staff of the SEC regarding its periodic or current reports under the Exchange Act.

Item 2. Properties

Our corporate headquarters are located at: 64 West 48th Street, Suite 1107, New York, New York 10036. We currently lease this space, on a month-to-month arrangement, from Ocappi Inc., a company affiliated with our President, Yitzchok Gurary. We do not own any real property. Management believes that its current facilities are adequate for its needs through the next twelve months, and that, should it be needed, suitable additional space will be available to accommodate expansion of the Company's operations on commercially reasonable terms, although there can be no assurance in this regard.

Item 3. Legal Proceedings

In the normal course of business we may be involved in legal proceedings, such as when we pursue past due accounts. We are not aware of any material pending or threatened legal proceedings that involve us.

Item 4. Mine Safety Disclosures

Not Applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Price range of common stock

The OTC-QB under the symbol “MDNL.” Our stock became publicly traded with a registration statement effective October 4, 2013.

Our stock is not actively traded on the OTC-QB. The following table sets forth the range of high and low closing sales prices per share of our common stock as reported on The OTC Market in respect of the periods indicated. The stock quotations are interdealer quotations and do not include markups, markdowns or commissions and may not necessarily represent actual transactions.

	High		Low		Close
2014:
First fiscal quarter ended August 31	$	3.01	$	3.01	$	3.01
Second fiscal quarter ended November 30	$	2.00	$	2.00	$	2.00
2015:
Third fiscal quarter ended February 28	$	2.25	$	2.25	$	2.25
Fourth fiscal quarter ended May 31	$	2.25	$	2.25	$	2.25

Sales of Unregistered Securities

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

Holders

As of May 31, 2015, we had 10,494,428 shares of common stock outstanding held by 78 shareholders of record.

Dividends

We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that the Board of Directors considers relevant.

Item 6. Selected Financial Data

The Company’s selected historical financial data for fiscal years ended May 31, 2015 and 2014 have been derived from our audited historical financial statements.

The data presented below should be read in conjunction with the financial statements and related notes included herein and Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

	Year Ended May 31, 2015			Year Ended May 31, 2014
Income Statement Data:
Net sales	$	8,852,807		$	5,409,013
Cost of goods sold		6,637,910			4,304,056
Gross profit		2,214,897			1,104,957
Selling, administrative and other expenses		1,962,250			1,467,168
Operating income (loss) income		252,647			(362,211	)
Interest expense		281,648			64,489
Provision (benefit) for income taxes		17,540			(70,840	)
Net income (loss)	$	(46,541	)	$	(355,860	)
Per Share Data:
Earnings (loss) per share - basic	$	(0.00	)	$	(0.03	)
Earnings (loss) per share - diluted		(0.00	)		(0.03	)

	May 31, 2015			May 31, 2014
Balance Sheet Data:
Cash and cash equivalents	$	41,731		$	15,269
Accounts receivable, net		3,991,158			1,594,010
Inventories		2,589,231			2,094,929
Total current assets		6,931,650			3,854,140
Total assets		6,980,926			3,866,191
Total current liabilities		5,201,385			3,164,167
Long-term debt		288,196			74,000
Total liabilities		6,089,579			3,238,167
Total stockholders’ equity		891,347			628,024
Other Data:
Gross Margin		25.0	%		20.4	%

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this annual report. In addition to historical information, the following discussion and other parts of this annual report contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under “Item 1A. Risk Factors” and “Note About Forward-Looking Statements” appearing elsewhere in this annual report.

As used in this annual report, the terms “we”, “us”, “our”, “the Company” and “Maiden Lane” means Maiden Lane Jewelry, Ltd., unless otherwise indicated.

Overview

We began operations on October 1, 2012 by selling fashion rings, pendants, earrings and bracelets to independent retailers. In December 2012, we commenced a line of generic bridal engagement rings (“engagement rings”), featuring both settings and diamonds. Currently, most independent retailers in the jewelry industry purchase engagement rings in two steps: they purchase the setting from one party and the stone from another. We believe that we are one of the few companies selling complete engagement rings which include the center diamonds to independent retailers.

We believe that there are competitive barriers to entry for our Aspiri products, including the sourcing of rough diamonds, cutting technique and limitations on mass production as each stone is unique as well as the engagement ring mountings. The creation of an Aspiri cut diamond does not lend itself to mass production whereby approximately 92% of diamonds are cut and polished by lower cost, high volume Asian and Russian cutters which rely primarily on the manufacture of similar and common cuts rather than the careful evaluation and cutting tailored to the unique attributes of each stone.⁵ Instead, the rough for each diamond is carefully evaluated and uniquely cut whereby the dimensions, faceting and other factors are taken into consideration to maximize the face coverage of the diamond while maintaining its brilliance. Similarly, our ring and jewelry mountings are not mass produced. Instead of a one-size fits many approach and because each Aspiri stone is unique, our mountings are custom designed around the stone.

Our Aspiri cut engagement rings, including both stone and setting, show the center Aspiri diamond to its best advantage, i.e. accentuating its brilliance and hiding its imperfections. To maintain high quality standards, our manufacturing of the ring mountings and setting of stones is done in the United States. We believe that our line of Aspiri bridal, pendant and earring jewelry will appeal to both retailers and customers due to their perceived size, quality, cost and value.

Our sales are comprised of primarily three major products: Aspiri Cut Rings, Complete Rings and Fashion Jewelry. We may also on occasion sell loose stone inventory.

A breakdown of gross sales for the three months and year ended May 31, 2015 and 2014, respectively:

⁵MSNBC: “A Diamond’s Journey: On the Cutting Edge”; Indian Mirror

	Year Ended May 31,
	2015			2014

Aspiri^TM Cut Jewelry		47	%		14	%
Complete Rings (not Aspiri)		32			60
Fashion Jewelry & Other		21			26

In February 2014 we began the sale of Aspiri bridal engagement rings. The first full quarter of Aspiri sales occurred during the three months ended May 31, 2104; at this initial roll-out of the Aspiri product line, there was less of a focus on the sales of non-Aspiri products. At the end of February 2015, we decided to phase out our line of fashion jewelry in order to focus on its Aspiri cut diamond engagement rings, pendants and jewelry. The three months and year ended May 31, 2015 and 2014 had returns of Complete Rings that were not Aspiri cut rings as some customers substituted such rings for Aspiri Cut Rings.

We expanded our Aspiri cut diamond line in November 2014 to include pendants and earrings. A breakdown of Aspiri jewelry to gross sales for the three months and year ended May 31, 2015 and 2014, respectively:

	Year Ended May 31,
	2015			2014
	(unaudited)			(unaudited)

Aspiri Engagement Rings		43	%		14	%
Aspiri Engagement Pendants		2			0
Aspiri Engagement Earrings		1			0

Our sales are comprised of primarily three major products: Aspiri Cut Rings, Complete Rings and Fashion Jewelry. We may also on occasion sell loose stone inventory.

We currently purchase the diamonds we use in our jewelry from a select diamond cutter contractor and we purchase the bridal jewelry, exclusive of the center diamond, from Classique Creations LLC, (“Classique”) a jewelry manufacturer owned 98% by the mother of our President, Mr. Yitzchok Gurary (and wife of Mordechai Gurary, our Director of Sales), and 2% by Mr. Gurary’s brother, Chaim Gurary, a shareholder of the Company (and son of Mordechai Gurary). For the years ended May 31, 2015 and 2014, we purchased, in dollar terms, approximately 41% and 63%, respectively, of our merchandise from Classique, the sole provider of our semi-mounts. In addition, purchases from another vendor amounted to approximately 53% of total purchases during the year ended May 31, 2015.

Our corporate website is located at www.maidenlaneltd.com.

Emerging Growth Company

Critical Accounting Policies and Estimates

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

Recent Accounting Pronouncements

See Note 2 to the financial statements included in this annual report, for a description of recent accounting pronouncements.

Inventory

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

At May 31, 2015 and 2014, inventories consist of the components:

	May 31, 2015		May 31, 2014

Raw Materials	$	775,312	$	257,598
Finished Goods		1,813,919		1,837,331
Total Inventory	$	2,589,231	$	2,094,929

At May 31, 2015 and 2014, inventories consist of the product mix:

	May 31, 2015			May 31, 2014

Aspiri Cut Diamond Jewelry		56	%		17	%
Other Engagement Rings (not Aspiri)		28			67
Fashion Jewelry		6			6
Loose Stones and other		10			10
Total Inventory		100	%		100	%

We recently began to focus our production and sales efforts on Aspiri cut diamond jewelry product line. As a result, non-Aspiri products will be reduced over time as to both a percentage of production, inventory and sales.

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

Revenue Recognition

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

Description of Revenues

Prior to December 2012, most of our revenues were generated through the sale of rings, pendants, necklaces and earrings with stones such as diamonds, rubies and emeralds (“Fashion Jewelry”). In December 2012, we launched our line of bridal engagement rings inclusive of its diamond center stone (“Complete Rings”) and in February 2014, we began to sell our Aspiri^TM cut diamond engagement ring. In November 2014, we began the sales of our expanded Aspiri product line that includes pendants and earrings.

Beginning in December 2013, we began focusing on bridal jewelry featuring uniquely cut stones that we subsequently branded in May 2014 as an Aspiri^TM diamond. These stones utilize an advanced cutting technique that visually and physically increases the crown size (the top and most visible part of the stone) of similarly weighted stones by at least 25%. Because this unique cutting technique significantly increases the crown size of the stone while decreasing the pavilion (bottom end below the crown) of the stone that is usually not seen, our diamonds appear to be much larger than typically cut diamonds of the same weight. In addition, because our company creates each ring based on a specific stone, as each stone’s measurements and appearance is unique, we are able to design rings that accentuate a diamond’s brilliance and other positive attributes. We believe that our new line of bridal jewelry featuring uniquely cut stones will appeal to both retailers and customers due to their perceived size, quality, cost and value.

Our plan is to expand our Aspiri bridal ring sales that we believe are less seasonal and less subject to economic downturn.

Our sales are comprised of primarily three major products: Aspiri Cut Rings, Complete Rings and Fashion Jewelry. We may also on occasion sell loose stone inventory.

A breakdown of gross sales for the three months and year ended May 31, 2015 and 2014, respectively:

	Year Ended May 31,
	2015			2014

Aspiri^TM Cut Jewelry		47	%		14	%
Complete Rings (not Aspiri)		32			60
Fashion Jewelry & Other		21			26

	Year Ended May 31,
	2015			2014

Aspiri Engagement Rings		43	%		14	%
Aspiri Engagement Pendants		3			0
Aspiri Engagement Earrings		1			0

Results of Operations

Comparison of the Year Ended May 31, 2015 to the Year Ended May 31, 2014

The principal measures of our financial performance are sales revenues from the sale of our products to independent retailers, the related cost of sales related to such inventory and the resultant net sales. Net income is also a key measure of financial performance which further adjusts net sales by administrative expenses, professional fees, interest expense and income taxes.

Set forth below is a discussion of our results of operations for the years ended May 31, 2015 and 2014.

Sales Revenues

For the year ended May 31, 2015, we had net sales revenues of $8.9 million a 165% increase from $5.4 million of net sales from the year ended May 31, 2014. These revenues arose from the sale of jewelry to various retailers. The increase in sales performance is due to the change in focus from Fashion Jewelry sales to our the recent emphasis on Aspiri^TM cut diamond rings, pendants and earrings which became the focus of our sales efforts during the year ended May 31, 2015.

In addition, in December 2014, the Company became a vendor member of the Independent Jewelers Association (“IJO”), a consortium of over 800 credit qualified, independent jeweler retailers across the country. Becoming a member of the IJO is by invitation only and includes a vetting process regarding a vendor’s product, stability, customer service and financial capabilities. The Company’s access to IJO’s retailers is primarily through two jewelry shows held each year, the first of which was held at the end of February. For the six months ended May 31, 2015, our half year of IJO membership, over 17% of such period’s gross sales were to IJO retailers.

The primary difference between gross and net sales for each period relate to sales credits, returns and allowances adjustment which totaled approximately $428,000 and $201,000 for the years ended May 31, 2015 and 2014, respectively. The current amount for sales credits, returns and allowances are primarily related to previous and current non-Aspiri product sales. Although customers are generally not granted rights to return products after the purchase has been made, in certain circumstances, we accepted returns and issued credits although we were not contractually obligated to do so. On a quarterly basis, we estimate sales returns based on historical experience and record a provision for sales returns which are included in net sales. Our sales return reserve balance was approximately $228,000 and $84,000, respectively, May 31, 2015 and 2014, respectively.

In addition, at the end of February 2015, we decided to phase out our line of fashion jewelry in order to focus on its Aspiri cut diamond engagement rings, pendants and jewelry. In so doing, we sold much of our remaining fashion line inventory with further discounts and reduced margins during the year ended May 31, 2015.

Our three largest customers frequently vary from period to period. For the year ended May 31, 2015, our three largest customers accounted for approximately 17% of our total revenues. For the year ended May 31, 2014, our three largest customers accounted for approximately 16% of our total revenues.

Cost of Sales

Cost of sales increased 153% to approximately $6.6 million for the year ended May 31, 2015 from $4.3 million for the year ended May 31, 2014 primarily due to a 165% increase in sales volume during the period. Gross profit for the year ended May 31, 2015 increased approximately 201% to approximately $2.2 million from approximately $1.1 million for year ended May 31, 2014. Gross margins for the years ended May 31, 2015 and 2014 were approximately 25.4% and 20.4%, respectively. Increased gross margins for the current fiscal year relative to the prior year are primarily as a result of a change in product mix and focus on Aspiri cut diamond rings, pendants and earrings. In addition, the current fiscal year had less of a focus on fashion jewelry sales (largely phased out after February 28, 2015), which has lower gross margins. Furthermore, the Company increased the sales discount (further lowering total gross margins) for non-Aspiri products in order to increase its future focus on Aspiri products.

Operating Expenses

General, Selling and Administrative

General, Selling and Administrative expenses were approximately $945,000 and $615,000 for the years ended May 31, 2015 and 2014. The increase in such expenses is related to an increase in show, advertising and promotion expense (an increase of approximately $200,000), an increase in directors and officers, health and inventory insurance (approximately $65,000), increase in sales related travel expenses (approximately $33,000) and increase in personnel costs to current staffing levels (an increase of approximately $24,000).

Officers’ Compensation

For the year ended May 31, 2015, officers’ compensation was approximately $496,000 as compared to approximately $187,000 for the prior year ended May 31, 2014. The increase in such expense is related to a full current year of staffing for the Chief Executive Officer (for the year ended May 31, 2014, a third party Chief Executive Officer was outsourced and included in professional and consulting fees) and the hiring of an in-house and full-time Chief Operating Officer during the year.

Professional and Consulting Fees

Professional and Consulting fees decreased approximately $160,000 to $499,000 from $659,000 for the years ended May 31, 2015 and 2014, respectively. Approximately $238,000 of the decrease is related to outsourced consulting services prior to our employment of executive management and operational staff during the year ended May 31, 2014, offset by an increase of approximately $121,000 in professional marketing fees during the year ended May 31, 2015.

Other Income (Expenses)

For the years ended May 31, 2015 and 2014, we had other expenses of approximately $278,000 and $64,000, respectively. These expenses were primarily related to interest expense on accounts receivable and loan financings with par balances of $4.1 million as of May 31, 2015 as compared to $1.3 million as of May 31, 2014. The amount of interest expense is dependent primarily on the interest rate charged and the average outstanding balance. For the years ended May 31, 2015 and 2014, the average outstanding balances on accounts receivable financings were $1.9 million and $859,000, respectively, and the average interest rate was 7.5%.

Net Income (Loss)

As a result of the above, for the year ended May 31, 2015, we had net loss of approximately $47,000 as compared to a net loss of $356,000 for the prior year ended May 31, 2014. Net loss per share for the year ended May 31, 2015 was $0.00; net loss per share for the prior year ended May 31, 2014 was $0.03.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments and other general business needs. We recognize the need to have funds available to purchase inventory and for operating our business. We seek to have adequate liquidity at all times to cover normal cyclical swings in funding availability and to allow us to meet irregular and unexpected funding requirements. We plan to satisfy our liquidity needs through normal operations with the goal of avoiding unplanned sales of assets or emergency borrowing of funds.

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

At May 31, 2015, we had long term liabilities of $888,000, which represents a note payable to a related party for $600,000 and $430,000 of par notes payable less unamortized discount of $142,000.

On September 30, 2013 the Company entered into an Account Receivable Financing Agreement with Rosenthal & Rosenthal, Inc. (“Rosenthal”) pursuant to which Rosenthal shall provide the Company with a line of credit up to $1,000,000. On October 6, 2014, this Accounts Receivable Financing Agreement was amended to increase the line of credit up to a maximum of $2,000,000. Loans made under the Accounts Receivable Financing Agreement bear interest at prime rate plus 3.5% (for an effective average rate of 7.5% for the years ended May 31, 2015 and 2014) and are subject to certain financial covenants. As security for these loans, Rosenthal has placed liens on the Company’s accounts receivable, inventories, and all other assets. In addition, the loans have been personally guaranteed by Yitzchok Gurary, and his parents, Mordechai Gurary and Leah Gurary. In addition, the Company has granted Rosenthal a Landlord Subordination agreement.

On March 9, 2015, this Accounts Receivable Financing Agreement was amended to increase the line of credit up to a maximum of $2,500,000. On May 7, 2015, the Accounts Receivable Financing Agreement was amended to increase the loan amount that Rosenthal & Rosenthal may make to the Company to the lesser of the Maximum Credit Facility (as defined in the Accounts Receivable Financing Agreement) or $600,000, minus such reserves Rosenthal & Rosenthal, Inc. may deem necessary. Prior to this amendment, the loan amount could not exceed the lesser of the Maximum Credit Facility or the Receivable Availability (as defined in the Accounts Receivable Financing Agreement) equal to 70% of the Net Amount of Eligible Receivables (as defined in the Accounts Receivable Financing Agreement) minus such reserves as Rosenthal & Rosenthal, Inc. may deem necessary. On June 29, 2015, this Accounts Receivable Financing Agreement was further amended to increase the line of credit up to a maximum of $2,800,000.

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

Accounts Payable Classique Creations, LLC -		$	500,000
Demand Loans Payable – Related Party		$	210,000

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

In connection with the Accounts Receivable Financing Agreement, the Company has borrowed approximately $2.2 million as of May 31, 2015. The Accounts Receivable Financing Agreement is in full force and effect until September 30, 2015 (the “Renewal Date”) and from year to year thereafter, unless sooner terminated as provided in the Accounts Receivable Financing Agreement.

At May 31, 2015 we had working capital of $1.7 million. As of May 31, 2015 we had $42,000 in cash and cash equivalents.

Cash Requirements

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

Off Balance Sheet Arrangements

Maiden Lane has no off balance sheet arrangements.

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual cash obligations and other commercial commitments as of May 31, 2015:

	Payments Due by Period
Contractual Obligations	Total		Less than one year		1 – 3 years		3 – 5 years		More than 5 years
Account Receivable Financing Agreement	$	2,242,000	$	2,242,000	$	—	$	—	$	—
Loan Payable – Related Party	$	1,402,000	$	802,000	$	600,000	$	—	$	—
Convertible Note Payable – Related Party	$	74,000	$	74,000	$	—	$	—	$	—
Long Term Note Payable	$	430,000	$	—	$	430,000	$	—	$	—

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are subject to market risk associated with changes in interest rates and commodity prices. Managing these risks is essential to our business. We consider our principal market risk to be fluctuations in the diamond and metal components of our inventory.

Commodity Price Risk

We are subject to market risk associated with changes in the price of precious metals. We do not enter into any hedging or other derivative contracts (such as forward contracts for the purchase of raw materials) to mitigate commodity price risk as we generally scale our production to near-term demand rather than longer-term demand projections whereby large amounts of raw material are warehoused.

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

Our manufacture of jewelry is typically for completed inventory with raw materials (individual inventory components of stones and metals) generally held to a minimum. Generally, significant increases or decreases in the market value of diamond and metal components of our inventory result in revised pricing to our customers.

Given that we do not hedge or enter into derivate contracts to address commodity price risks, we believe that such risk is immaterial as of May 31, 2015.

Interest Rate Risk

Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, variability of spread relationships and the effect that interest rates may have on our cash flows. Changes in the general level of interest rates can affect our net income as a result of interest expense incurred on outstanding debt.

We are subject to market risk associated with changes in the prime rate in connection with the Account Receivable Financing Agreement. If short-term interest rates or the prime rate averaged 10% more or less, interest expense would have changed by less than approximately $21,000 for the year ended May 31, 2015.

We did not hold any derivative financial instruments for hedging purposes as of May 31, 2015.

Item 8. Financial Statements and Supplementary Data

The financial statements are set forth herein commencing on page F-1 of this Report and are incorporated herein.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9a. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision of our Chief Executive Officer and President/Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) and internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and President/Chief Financial Officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the fourth fiscal quarter of 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

N/A

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated by reference to the information contained in our definitive proxy statement or definitive information statement to be filed with the SEC no later than 120 days after the end of our most recent fiscal year in connection with our 2015 Annual Meeting of Shareholders.

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)

Documents filed as part of this report:

For a list of the consolidated financial information included herein, see Index to the Consolidated Financial Statements on page F-1.

For a list of other exhibits included herein, see Exhibit List on page E-1.

(b)

Exhibits required by Item 601of Regulation S-K. Reference is made to the Exhibit List filed as a part of this report beginning on page E-1.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MAIDEN LANE JEWELRY, LTD.
	(Registrant)

Date: September 11, 2015	By:	/s/ Michael Wirth
		Michael Wirth
		Chief Executive Officer

* * * * *

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Michael Wirth	Chief Executive Officer (principal executive officer)	September 11, 2015
Michael Wirth

/s/ Yitzchok Gurary	Chief Financial Officer (principal financial and	September 11, 2015
Yitzchok Gurary	accounting officer), President, Chairman of the Board

/s/ Chaim Zfatman	Director	September 11, 2015
Chaim Zfatman

/s/ Shalom Schwartz	Director	September 11, 2015
Shalom Schwartz

Exhibit No.		Document

3.1		Certificate of Incorporation, as amended, incorporated by reference to our Registration Statement on Form S-1 filed with the SEC on April 15, 2013.

3.2		Certificate of Amendment of the Certificate of Incorporation, incorporated by reference to our definitive information statement filed with the SEC on May 6, 2014.

3.3		By-laws, incorporated by reference to our Registration Statement on Form S-1 filed with the SEC on April 15, 2013

31.1		Certification by the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*

31.2		Certification by the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*

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

32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS		XBRL Instance Document*

101.SCH		XBRL Taxonomy Extention Schema*

101.CAL		XBRL Taxonomy Extention Calculation Linkbase*

101.DEF		XBRL Taxonomy Extention Definition Linkbase*

101.LAB		XBRL Taxonomy Extention Label Linkbase*

101.PRE		XBRL Taxonomy Extention Presentation Linkbase*

* filed herewith

E-1

INDEX TO FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm		F-2
Balance Sheets as of May 31, 2015 and May 31, 2014		F-3
Statements of Operations for the years ended May 31, 2015 and 2014		F-4
Statements of Stockholders’ Equity for the years ended May 31, 2015 and 2014		F-5
Statements of Cash Flows for the years ended May 31, 2015 and 2014		F-6
Notes to Financial Statements		F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Maiden Lane Jewelry, Ltd.

We have audited the accompanying balance sheet of Maiden Lane Jewelry, Ltd. (“the Company”) as of May 31, 2015 and 2014, and the related statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended May 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Also, an audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Maiden Lane Jewelry, Ltd. at May 31, 2015 and 2014, and the results of its operations and its cash flows for each of the two years in the period ended May 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

/s/ WOLINETZ, LAFAZAN & COMPANY, P.C.

Rockville Centre, New York

September 11, 2015

F-2

MAIDEN LANE JEWELRY, LTD.

BALANCE SHEET

	May 31,			May 31,
	2015			2014

ASSETS
Current Assets:
Cash and Cash Equivalents	$	41,731		$	15,269
Accounts Receivable, Net		3,991,158			1,594,010
Inventories		2,589,231			2,094,929
Prepaid Expenses		187,230			64,092
Deferred Taxes		122,300			85,840
Total Current Assets		6,931,650			3,854,140
Property and Equipment, Net		47,277			10,051
Security Deposits		2,000			2,000
Total Assets	$	6,980,927		$	3,866,191

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	2,009,072		$	1,895,906
Accrued Expenses		30,220			49,474
Loans Payable - Factor		2,242,399			826,284
Loans Payable – Related Parties, net of discount of $4,825		797,007			359,632
Convertible Note Payable – Related Party		74,000			—
Common Stock to be Issued		—			32,871
Income Taxes Payable		48,687			—
Total Current Liabilities		5,201,385			3,164,167
Long-Term Debt:
Convertible Note Payable – Related Party		—			74,000
Notes Payable, net of debt discount of $141,804		288,196			—
Notes Payable - Related Parties		600,000			—
Total Liabilities		6,089,581			3,238,167

Commitments and Contingencies

Stockholders’ Equity:
Preferred Stock, $.0001 par value; 10,000,000 shares authorized, none issued and outstanding at May 31, 2015 and May 31, 2014		—			—
Common Stock, $.0001 par value; 50,000,000 shares authorized, 10,494,428 and 10,466,250 shares issued and outstanding at May 31, 2015 and May 31, 2014, respectively		1,049			1,047
Additional Paid-In Capital		1,205,417			895,555
Accumulated Deficit		(315,120	)		(268,578	)
Total Stockholders’ Equity		891,346			628,024
Total Liabilities and Stockholders’ Equity	$	6,980,927		$	3,866,191

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

F-3

MAIDEN LANE JEWELRY, LTD.

STATEMENT OF OPERATIONS

	Years Ended
	May 31, 2015			May 31, 2014

Sales - Net	$	8,852,807		$	5,409,013

Costs and Expenses:
Cost of Sales		6,637,910			4,304,056
Officers’ Compensation		496,547			187,337
Professional and Consulting Fees		499,205			658,661
Selling, General and Administrative Expenses		945,237			615,047
Provision for Bad Debts		21,261			6,123
Total Costs and Expenses		8,600,160			5,771,224

Income (Loss) from Operations		252,647			(362,211	)

Other Income (Expense):
Interest Expense – Related Party		(2,960	)		(2,960	)
Interest Expense – Loans Payable		(26,261	)		—
Interest Expense – Notes Payable		(36,562	)		—
Interest Expense – Accounts Receivable Financings		(159,111	)		(61,529	)
Amortization of Debt Discount		(56,754	)		—
Total Other Income and (Expense)		(281,648	)		(64,489	)

(Loss) before Income Tax Provision (Benefit)		(29,001	)		(426,700	)
Income Tax Provision (Benefit)		17,540			(70,840	)
Net (Loss)	$	(46,541	)	$	(355,860	)

Loss Per Common Share – Basic and Diluted	$	(0.00	)	$	(0.03	)
Basic and Diluted Weighted Average Shares		10,478,745			10,403,031

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

F-4

MAIDEN LANE JEWELRY, LTD.

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED MAY 31, 2015 AND 2014

					Additional			Retained
	Common Stock				Paid-In			Earnings
	Shares		Amount		Capital			(Deficit)			Total
Balance, May 31, 2013		10,353,750	$	1,035	$	685,567		$	87,282		$	773,884
Issuance of Common Stock for services		112,500		12		224,988			—			225,000
Offering Costs		—		—		(15,000	)		—			(15,000	)
Net Loss for the Year Ended May 31, 2014		—		—		—			(355,860	)		(355,860	)

Balance, May 31, 2014		10,466,250		1,047		895,555			(268,578	)		628,024
Issuance of Common Stock for payment of Common Stock to be issued		10,604		1		32,870			—			32,871
Issuance of Common Stock for services		17,574		1		52,896			—			52,897
Debt Discount on Loans Payable		—		—		25,539			—			25,539
Debt Discount on Notes Payable		—		—		198,557			—			198,557
Net Loss for the Year Ended May 31, 2015		—		—		—			(46,541	)		(46,541	)
Balance, May 31, 2015		10,494,428	$	1,049	$	1,205,417		$	(315,120	)	$	891,346

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

F-5

MAIDEN LANE JEWELRY, LTD.

STATEMENT OF CASH FLOWS

	Years Ended
	May 31, 2015			May 31, 2014
Cash Flows from Operating Activities:
Net Loss	$	(46,541	)	$	(355,860	)
Adjustments to Reconcile Net Loss to Net Cash (Used) in Operating Activities:
Depreciation		5,033			3,271
Amortization of Note Discount		77,467			—
Common Stock Issued for Services		52,897			225,000
Deferred Taxes		(36,460	)		(72,340	)
Reserve for Doubtful Accounts and Sales Returns and Allowances		212,094			207,274
Changes in Assets and Liabilities:
(Increase) in Accounts Receivable		(2,609,241	)		(1,048,361	)
(Increase) in Inventories		(494,302	)		(305,535	)
(Increase) in Prepaid Expenses		(123,138	)		(32,061	)
Increase in Accounts Payable		113,166			216,015
(Decrease) in Accrued Expenses		(19,254	)		(26,052	)
Increase in Common Stock to be Issued		—			32,871
Increase (Decrease) in Income Taxes Payable		48,687			(36,600	)
Net Cash (Used) in Operating Activities		(2,819,592	)		(1,192,378	)

Cash Flows from Investing Activities:
Capital Expenditures		(42,259	)		(2,355	)
Net Cash (Used) In Investing Activities		(42,259	)		(2,355	)

Cash Flows from Financing Activities:
Payments of Offering Costs		—			(15,000	)
Proceeds of Note Issuance		430,000			—
Proceeds of Notes Payable – Related Parties		600,000			—
Proceeds of Loans Payable – Related Parties		1,544,300			934,341
Payments of Loans Payable – Related Parties		(1,102,100	)		(574,709	)
Proceeds from Loans Payable – Factor		7,888,470			3,990,500
Repayments to Loans Payable – Factor		(6,472,357	)		(3,164,216	)
Net Cash Provided by Financing Activities		2,888,313			1,170,916

Increase (Decrease) in Cash and Cash Equivalents		26,462			(23,817	)

Cash and Cash Equivalents – Beginning of Period		15,269			39,086

Cash and Cash Equivalents – End of Period	$	41,731		$	15,269

Supplemental Disclosure of Cash Flow Information:
Interest Paid	$	207,255		$	63,117
Income Taxes Paid	$	—		$	48,570

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Debt Discount on Notes Payable	$	198,557		$	—
Debt Discount on Loans Payable – Related Parties	$	25,539		$	—
Issuance of 10,604 shares of Common Stock as consideration for payment of obligation to issue common stock	$	32,871		$	—

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

F-6

MAIDEN LANE JEWELERY, LTD.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - Summary of Significant Accounting Policies

Organization and Basis of Presentation

Maiden Lane Jewelry, Ltd., formerly Romantique Ltd., (“the Company”) was incorporated on September 6, 2012 under the laws of the State of New York. The Company is a wholesaler and manufacturer of jewelry including pendants, bracelets and earrings. The Company began operations on October 1, 2012 by selling fashion rings, pendants, earrings and bracelets to independent retailers. In December 2012, the Company commenced a line of bridal (engagement) rings, featuring both settings and diamonds. In February 2014 the Company began the sale of bridal engagement rings featuring uniquely cut diamonds which in May 2014 was branded as an Aspiri^TM cut diamond. The Company expanded its Aspiri cut diamond line in November 2014 to include pendants and earrings. Beginning in February 2015, the Company decided to phase out its line of fashion jewelry in order to focus on its Aspiri cut diamond engagement rings, pendants and jewelry.

Cash and Cash Equivalents

The Company considers all highly-liquid investments purchased with a maturity of three months or less to be cash equivalents. As of May 31, 2015 and 2014, the Company did not have any cash equivalents.

Inventories

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

Property and Equipment

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

Revenue Recognition

For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” (SAB No. 104), which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (SAB No. 101). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowance, and other adjustments are provided for in the same period the related sales are recorded. Provision for sales returns and allowances that were netted against sales amounted to $84,000 and $201,000 for the years ended May 31, 2015 and 2014, respectively.

Concentration of Credit Risks

The Company primarily sells its products to retail jewelers focused on mid-to-high end consumers. Customers typically receive payment terms of ratable monthly payments over 90 to 120 days with exceptions based on credit quality or other terms and conditions. As a result, the Company is exposed to credit risk on its accounts receivable. The Company generally seeks to mitigate such risk by performing credit checks through jeweler trade associations it is a member of, by attending trade shows which selectively invite retailer attendees based on their credit worthiness and by checking references with other jewelers in the industry.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company may maintain cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation (“FDIC”) limit of $250,000 during the year.

Sales

The Company’s sales are comprised of primarily three major products: Aspiri Cut Rings, Complete Rings and Fashion Jewelry. The Company may also on occasion sell loose stone inventory.

F-7

MAIDEN LANE JEWELERY, LTD.

NOTES TO FINANCIAL STATEMENTS

A breakdown of gross sales for the year ended May 31, 2015 and 2014, respectively:

	Year Ended May 31,
	2015			2014

Aspiri^TM Cut Jewelry		47	%		14	%
Complete Rings (not Aspiri)		32			60
Fashion Jewelry & Other		21			26

In February 2014 the Company began the sale of Aspiri bridal engagement rings. The first full quarter of Aspiri sales occurred during the three months ended May 31, 2104; at this initial roll-out of the Aspiri product line, there was less of a focus on the sales of non-Aspiri products. At the end of February 2015, the Company decided to phase out our line of fashion jewelry in order to focus on its Aspiri cut diamond engagement rings, pendants and jewelry.

The Company expanded its Aspiri cut diamond line in November 2014 to include pendants and earrings. A breakdown of Aspiri jewelry to gross sales for the year ended May 31, 2015 and 2014, respectively:

	Year Ended May 31,
	2015			2014

Aspiri Engagement Rings		43	%		14	%
Aspiri Engagement Pendants		2			0
Aspiri Engagement Earrings		1			0

Advertising Costs

Advertising and show costs are charged to operations when incurred. Advertising costs during the years ended May 31, 2015 and 2014 was $308,000 and $109,000, respectively.

Deferred Income Taxes

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

Net Income (Loss) Per Share

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods presented. Diluted loss per common share is computed by dividing net loss by the weighted average number of dilutive common share equivalents and convertible securities then outstanding. Diluted loss per common share is based on the treasury stock method and includes the effect from potential issuance of common stock such as shares issuable pursuant to the exercise of warrants and conversion of debentures. Potentially dilutive securities as of May 31, 2015 consisted of 37,000 common shares from convertible debentures and 122,550 common shares from outstanding warrants. The 122,550 warrants were issued in connection with $430,000 of unsecured notes at an exercise price of $3.50 per warrant into one share of common stock. Potentially dilutive securities as of May 31, 2104 consisted of 37,000 common shares from convertible debentures. For each period, the dilutive and basic weighted average shares were the same, as potentially dilutive shares were anti-dilutive.

Accounting Estimates

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

F-8

MAIDEN LANE JEWELERY, LTD.

NOTES TO FINANCIAL STATEMENTS

Fair Value Measurements

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

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

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

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

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

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

Recent Accounting Pronouncements

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

NOTE 2 - Inventories

Inventories consist of the following:

	May 31, 2015		May 31, 2014
Raw Materials	$	775,312	$	257,598
Finished Goods		1,813,919		1,837,331
Total Inventory	$	2,589,231	$	2,094,929

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

NOTE 3 - Property and Equipment

Property and equipment consists of the following:

	May 31, 2015		May 31, 2014

Office Equipment	$	16,349	$	9,271
Computers	$	4,808	$	4,808
Capitalized Software		35,181		—
		56,338		14,079
Less: Accumulated Depreciation		9,061		4,028
	$	47,277	$	10,051

The Company is capitalizing new software related to inventory management and production. The cost of this software includes a base package cost plus current customization. Once the software is fully implemented, the Company will depreciate the total cost of the software over five years. Depreciation expense was approximately $5,000 and $3,300 for the years ended May 31, 2015 and 2014, respectively.

F-9

MAIDEN LANE JEWELERY, LTD.

NOTES TO FINANCIAL STATEMENTS

NOTE 4 - Convertible Note Payable – Related Party

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

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

NOTE 5 - Loans Payable – Related Parties

Loans payable to related parties is summarized as follows:

	May 31, 2015		May 31, 2014
Loans payable to related parties, include a $401,832 payable to the Company’s President and CFO. The loans are payable on demand and non-interest bearing. Interest has been imputed at 3.25% per annum and the Company has recorded a debt discount of $25,539 against Additional Paid-In Capital. This discount is being amortized over two years.	$	801,832	$	359,632
Less: Unamortized discount		4,825		—
Loans Payable – Related Parties, Net	$	797,007	$	359,632

A portion of this loan payable to the Company’s President and CFO in the amount of $210,000 is subordinated to the factor.

NOTE 6 - Notes Payable – Related Parties

Notes payable to related parties is summarized as follows:

		May 31, 2015				May 31, 2014
Notes payable to the Company’s President and CFO bears interest at 4% per annum and is due December 31, 2016. Interest is payable quarterly and note is subordinated to the Factor.		$	600,000			$	—

NOTE 7 - Unsecured Notes Payable

On August 18, 2014, August 25, 2014 and September 15, 2014 the Company issued $250,000, $150,000 and $30,000, respectively, of unsecured, subordinated notes bearing 11% interest with 285 detachable and freely transferable warrants per $1,000 face value Note. The notes are due on the second anniversary of their issue date with warrants exercisable within ten years from their issue date at an exercise price of $3.50. The $150,000 of notes issued on August 25, 2014 are to an entity controlled by the brother of the Company’s president.

Pursuant to ASC 470-20, the Company recorded the value of the warrants using the Black-Scholes method, which was determined to be approximately $369,000. A portion of the debt proceeds was allocated to the warrants as debt discount using the relative fair value method, which approximated $199,000. As the warrants contain fixed settlement provisions and the exercise price cannot be adjusted, the Company recorded the fair value of the warrants as additional paid in capital with a corresponding debt discount which will be amortized over the two-year term of the notes using the interest method. For the year ended May 31, 2015, the Company recognized approximately $57,000 in amortization expense relating to these warrants.

	May 31, 2015			May 31, 2014

Notes Payable, Par	$	430,000		$	—
Initial Debt Discount		(198,557	)		—
Accumulated Amortization		56,753			—
Notes Payable, Net	$	288,196		$	—

F-10

MAIDEN LANE JEWELERY, LTD.

NOTES TO FINANCIAL STATEMENTS

The fair value of the warrants on the issuance date was calculated using the Black-Scholes method with the following weighted average assumptions:

Dividend yield		0.00	%
Volatility		310.78	%
Risk-free interest rate		2.40	%
Expected life (months)		120
Grant date price per share	$	3.01
Warrants issued		122,550
Aggregate grant date fair value	$	369,000

NOTE 8 - Financing Agreement

On September 30, 2013 the Company entered into an Account Receivable Financing Agreement with Rosenthal & Rosenthal, Inc. (“Rosenthal” or the “Factor”) pursuant to which Rosenthal shall provide the Company with a line of credit up to $1,000,000. On October 6, 2014, this Accounts Receivable Financing Agreement was amended to increase the line of credit up to a maximum of $2,000,000. Loans made under the Accounts Receivable Financing Agreement bear interest at prime rate plus 3.5% (for an effective average rate of 7.5% for the years ended May 31, 2015 and 2014) and are subject to certain financial covenants. As security for these loans, Rosenthal has placed liens on the Company’s accounts receivable, inventories, and all other assets. In addition, the loans have been personally guaranteed by Yitzchok Gurary, and his parents, Mordechai Gurary and Leah Gurary. In addition, the Company has granted Rosenthal a Landlord Subordination agreement.

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

Accounts Payable – Classique Creations, LLC		$	500,000
Demand Loans Payable – Yitzchok Gurary		$	210,000

In connection with the Accounts Receivable Finance Agreement, the Company has borrowed approximately $2.3 million net as of May 31, 2015. Total draws and repayments for the year ended May 31, 2015 totaled approximately $7.1 million. The Accounts Receivable Financing Agreement expires September 30, 2015.

On March 9, 2015, this Accounts Receivable Financing Agreement was amended to increase the line of credit up to a maximum of $2,500,000. On May 7, 2015, the Accounts Receivable Financing Agreement was amended to increase the loan amount that Rosenthal & Rosenthal may make to the Company to the lesser of the Maximum Credit Facility (as defined in the Accounts Receivable Financing Agreement) or $600,000, minus such reserves Rosenthal & Rosenthal, Inc. may deem necessary. Prior to this amendment, the loan amount could not exceed the lesser of the Maximum Credit Facility or the Receivable Availability (as defined in the Accounts Receivable Financing Agreement) equal to 70% of the Net Amount of Eligible Receivables (as defined in the Accounts Receivable Financing Agreement) minus such reserves as Rosenthal & Rosenthal, Inc. may deem necessary. On June 9, 2015, this Accounts Receivable Financing Agreement was further amended to increase the line of credit up to a maximum of $2,800,000.

NOTE 9 - Commitments and Contingencies

None.

NOTE 10 - Related Party Transactions

On October 1, 2012 the Company entered into a one-year consulting agreement with Isaac Gurary, under which he was to provide certain business and corporate marketing services to the Company for an annual consulting fee of 3% of certain net sales during the term of the agreement. This agreement was amended on December 1, 2014 to exclude certain sales made at selected jewelry shows by trade organizations for which the Company is a designated vendor. As of May 31, 2015 the amount owed to Mr. Gurary was approximately $63,000. As of May 31, 2014, the Company had recorded accrued compensation to Mr. Gurary in the amount of approximately $104,000. Mr. Gurary serves as the Company’s President and CFO and is a significant stockholder of the Company.

During the years ended May 31, 2015 and 2014, the Company purchased approximately 41% and 63%, respectively, of its merchandise from Classique Creations LLC (“Classique”), a company that is owned by the mother of the Company’s President.

F-11

MAIDEN LANE JEWELERY, LTD.

NOTES TO FINANCIAL STATEMENTS

Included in accounts payable at May 31, 2015 and 2014 are amounts owed to Classique totaling approximately $1.8 million and $1.5 million, respectively. Payment terms to Classique are one to twelve months and the manner of settlement is cash payment. Pursuant to the Accounts Receivable Financing Agreement (See Note 7), accounts payable to Classique totaling $500,000 are subordinated to the Factor.

The Company rents office space from a Company affiliated with the Company’s president on a month to month basis. The agreement calls for rent at $2,060 per month. Rent expense was approximately $26,000 and $25,000 for the years ended May 31, 2015 and 2014, respectively.

During the years ended May 31, 2015 and 2014, the Company engaged in sales of approximately $560,000 and $136,000, respectively, to an entity related to Chaim Zfatman, a director of the Company.

NOTE 11 - Stockholders’ Equity

On July 26, 2013 the Company entered into a three year consulting agreement with Sands Point Associates, LLC and its CEO, Robert McMullan. Pursuant to this consulting agreement, the compensation for the first year was to be $125,000, the second year was $200,000 and the third year was $200,000. The agreement called for the Company to issue Mr. McMullan an aggregate of 500,000 shares of common stock of which 50,000 shares vested upon the commencement and 450,000 shares shall be subject to quarterly vesting over three years while the agreement is in full force and effect. This consulting agreement could be terminated by either party, with or without cause, upon thirty days written notice. The Company recorded consulting fee expense of $226,900 for the year ended May 31, 2014 of which $100,000 was in connection with the 50,000 shares vested. Additionally the Company issued 37,500 shares which were vested at $2 per share at November 1, 2013 for $75,000. On December 3, 2013, Sands Point Associates, LLC notified the Company of its intent to terminate this consulting agreement pursuant to the terms of the consulting agreement and the termination took effect January 2, 2014. There is no additional compensation due Sands Point Associates, LLC.

On October 9, 2013 the Company entered into a four month consultant agreement with a consultant. The consultant agreement calls for the issuance of 25,000 shares of the Company’s common stock as compensation. The shares are to be issued and registered under a Form S-8 Registration on May 2, 2012. The Company issued 25,000 shares valued at $50,000 in connection with this agreement.

On August 4, 2014 the Company issued 10,604 shares of common stock at a price per share of $3.10 for marketing services rendered during the year ended May 31, 2014 for a total amount of $32,871. On December 23, 2014 the Company issued 17,574 shares of common stock at a price per share of $3.01 for marketing services rendered during the three months ended February 28, 2015 for a total amount of $52,898. Neither issuance of these shares has been registered.

In connection with the issuance of $430,000 principal notes payable, the Company issued 122,550 common stock purchase warrants. Such warrants have an exercise price of $3.50 per share and expire between August and September 2024. As of February 28, 2015, all common stock purchase warrants remained outstanding and exercisable with a weighted average exercise price of $3.50 per share and a remaining contractual life of 9.2 years.

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

NOTE 12 - Major Suppliers and Customers

During the years ended May 31, 2015 and 2014, the Company purchased approximately $3.3 million (approximately 41%) and $2.7 million (approximately 63%), respectively, of its merchandise from one manufacturer that is a related party (see Note 10).

In addition, the Company purchased merchandise from one vendor which amounted to approximately 53% of total purchases during the year ended May 31, 2015.

Our three largest customers frequently vary from period to period. For the years ended May 31, 2015 and 2014, our three largest customers accounted for approximately 17% and 16% of our total revenues, respectively.

NOTE 13 - Income Taxes

Income tax provision (benefit) consists of the following:

F-12

MAIDEN LANE JEWELERY, LTD.

NOTES TO FINANCIAL STATEMENTS

	Year Ended
	May 31, 2015			May 31, 2014

Current
Federal	$	43,000		$	—
State		11,000			1,500
		54,000			1,500

Deferred
Federal	$	(29,500	)	$	(61,568	)
State		(6.960	)		(10,772	)
		(36,460	)		(72,340	)
	$	17,540		$	(70,840	)

Deferred tax assets consist of the following:

	May 31, 2015		May 31, 2014

Reserves	$	95,700	$	38,640
Accrued Compensation		26,600		47,200
	$	122,300	$	85,840

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

	May 31, 2015			May 31, 2014

Tax provision at Federal Statutory rate		34.0	%		(34.0	)%
State and local income taxes, net of federal tax benefit		(2.0	)		—
Stock issued for services		—			16.1
Other		5.9			(7.2	)
Accrued Compensation		(30.3	)		10.7
Change in Valuation Allowance		—			5.8
Reserves		20.4			8.6
Tax provision		28.0			0.0

Note 14 - Subsequent Events

On June 9, 2015, this Accounts Receivable Financing Agreement with Rosenthal & Rosenthal was further amended to increase the line of credit up to a maximum of $2,800,000 (see Note 8).

The Company has evaluated subsequent events through the date the financial statements were issued and up to the time of filing of the financial statements with the Securities and Exchange Commission.

F-13

Attached files

Maiden Lane Jewelry, Ltd. Reports

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