Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [√] No
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
Indicate by check mark whether the registrant (1) has filed all reports required 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 day. [√] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 Regulations S-K is not contained herein, and will not be contained, to the best of registrants 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. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). [√] Yes [ ] No
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter. n/a
Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date. The issuer had 5,557,500 shares of common stock issued and outstanding as of June 15, 2012.
Item 1. Business
DESCRIPTION OF BUSINESS
We are a development stage company with plans to become a US-based online retail store, specializing in the sale of all natural pet products, with an emphasis on over-the-counter health care solutions, under categories that include grooming, health care, treats, flea and tick control, toys and accessories, calming, dental, and more, through its website www.gaiaremedies.com. We seek to combine our product selection and pet health information with the shopping ease of the Internet to deliver a convenient and personalized shopping experience. Our target audience is dog and cat owners with web-enabled computers or mobile devices.
We have no plans to change our planned business activities or to engage in a merger or acquisition with an unidentified company or companies, or other entity or person, and we are not aware of any events or circumstances that might cause these plans to change.
To date our operations have been limited to organizational activities, and we will not start operations until our website is completed.
The continued growth of e-commerce has been widely reported. According to a March 8, 2010 press release from Forrester Research, a technology and market research company, excerpting projections contained in two Forrester Research reports that are available to Forrester Research subscribers, US online retail will grow at a 10 percent compound annual growth rate (CAGR) over the next five years to reach nearly $249 billion by 2014. The Forrester online retail forecasts for the US include business-to-consumer sales excluding auto, travel, and prescription drugs.
According to the American Pet Products Association (the APPA), the leading not-for-profit trade association serving the interests of the pet industry, U.S. pet industry sales are expected to exceed $50 billion in 2011, up from $48.35 billion in 2010. These figures are contained in an March 17, 2011 APPA press release, available to the public, without charge, on the APPA website. The spending statistics in the press release were gathered by the APPA from various market research sources and are not included in the organization's bi-annual National Pet Owners Survey.
Included in the spending numbers for 2011 contained in the March 17, 2011 APPA press release, is $11.4 billion for pet supplies and over-the-counter medicines.
According to the APPAs 2011-2012 National Pet Owners Survey, as excerpted in the APPA press release dated April 5, 2011, available to the public, without charge, on the APPA website, the number of U.S. households that own a pet has increased by 2.1% to an all-time high of 72.9 million; 38.9% of U.S. households own a cat and 46.3% of U.S. households own a dog. According to the same survey, the number of cats owned in the U.S. totals 86.4 million and the number of dogs owned in the U.S. totals 78.2 million. The APPA National Pet Owners Survey is available free to APPA members. Non-members of the APPA can order copies for $2,995 each.
We plan to offer a comprehensive line of non-prescription medications, vitamins, supplements and other health products, for dogs and cats. We have researched and selected approximately 150 products, which will be more than sufficient to address the most common dog and cat health conditions such as bad breath, fleas and ticks, joint health, mouth infections, skin/coat infections, hotspots, sunburn, sore paw pads, and so forth.
We will research new products, and regularly select new products or the latest generation of existing products to become part of our product selection. In addition, we will also refine our current products to respond to changing consumer-purchasing habits and needs. Our website will be designed to give us the flexibility to change featured products or promotions.
Natural Products Focus
Management believes that one of the keys to living a healthier life, whether for humans or animals, is to use products created from natural ingredients. Our focus in product selection will be to aim for products with natural ingredients.
The Company has identified potential suppliers that include Animal's Apawthecary, Animal Essentials, Nordic Naturals, Flora Health, Dr. Rose's Remedies and Pops Pet Products. These companies are already established and we believe that they are perceived by consumers as superior, leading brands. Although we have identified potential suppliers, we have not contacted any suppliers. Nor have we entered into negotiations or executed any supply agreements.
Warehousing and Shipping
We plan to inventory our products with and fill all customer orders from a third party warehouse and fulfillment facility (3PF) located in Ferndale, Washington. Customers will purchase products using a state-of-the-art online shopping cart supported by a Secure Sockets Layer security merchant gateway. Orders will be sent in real-time to our 3PF partner for picking, packing and shipping. We will ship to anywhere in the United States served by the United States Postal Service, United Parcel Service, or Federal Express. Our goal is to ship products the same day that an order is received. We expect orders within the Continental U.S. to be delivered within one week.
We expect that our inventory database will be updated in real-time, allowing us to display on our Website only those items available for sale.
We intend to implement a broad array of commercially available, licensed technologies that facilitate Website management, complex database search functionality, customer interaction and personalization and transaction processing.
To address the critical issues of privacy and security on the Internet, we plan to incorporate, for transmission of credit card and personal information between customers and our Web server, industry standard Secure Sockets Layer (SSL) security technology. SSL is the standard security technology for creating an encrypted link between a web server and a browser. This link ensures that all data passed between our web server and the browser on a customers computing device remains private and secure. This system is used by millions of websites worldwide to allow secure internet transactions for customers.
Our systems will provide our customers with real time product availability information and updated customer information to enhance our customer care.
We will have an integrated direct connection for processing credit cards to ensure that a valid credit card number and authorization have been received at the same time a customer submits an order on our website.
Our information systems will provide our customer care representatives with records of all prior contact with a customer, including the customers address, phone number, e-mail address, fax number, prescription information, order history, payment history, and notes.
We believe that the principal competitive factors in our market include website design and features, website content, product selection and availability, brand recognition, price, proprietary products and customer service.
Website Design and Features
From our home page, customers will be able to search our website for products and access resources on a variety of information on dogs and cats. Customers will be able to shop at our website by category, product line, or individual product.
Many shopping carts are tricky to navigate and lose customers who often leave without buying, because the sign-up registration process asks for more personal information than what's needed to complete the transaction. Our store design will be engineered for speed and ease. Once shoppers place an order, the checkout process will be streamlined and simplified down to one page, thus reducing the chances of shopping cart abandonment.
The Website will contain an automatic shipment feature, for customers who wish to purchase products on a regular, recurring, basis by leaving their credit card details on file within our secure server platform.
Success in todays online retailing world includes addressing the needs of mobile device users. We will engineer our Website to ensure compatibility with mobile devices, including smart phones and tablets like the iPad and BlackBerry Playbook.
Our website will contain rich content, informative 'how-to' videos, blogs and social media platforms, all designed to educate, entertain and inform pet owner consumers about the health benefits of natural medications, vitamins and supplements, which we believe will add value and trigger repeat purchases.
Product Selection and Availability
We intend to offer a comprehensive line of non-prescription medications, vitamins, supplements and other health products, for dogs and cats. We have researched and selected approximately 150 products, which will be more than sufficient to address the most common dog and cat health conditions such as bad breath, fleas and ticks, joint health, mouth infections, skin/coat infections, hotspots, sunburn, sore paw pads, and so forth.
We intend to research new products, and regularly select new products or the latest generation of existing products to become part of our product selection. In addition, we will also refine our current products to respond to changing consumer-purchasing habits. Our website is designed to give us the flexibility to change featured products or promotions.
We are a start up company without brand recognition. We intend to create and build our brand through providing a superior shopping experience, which in the interim will include the sale of some of the most popular and well-recognized natural pet remedies under established brand names and, in due course, the sale of proprietary products under our own label.
Price and Positioning
We intend to offer a broad selection of products for dogs and cats, ranging in price from $5 to $300. Generally, our products will be competitively priced, but we are not positioning ourselves as a discount retailer. We believe discerning pet owner consumers will pay our prices and remain loyal based on the totality of our offering, including cutting edge website design, innovative and imaginative offerings, informative content, top notch customer service, the opportunity to participate in our social media communities and, in due course, proprietary blends.
We intend to focus initially on selling leading brands and products, with the goal, however, of replacing part of the product array with white labeled products under the Gaia Remedies brand, thus allowing us to charge more and achieve higher gross margins. Additionally, we intend to secure exclusive contracts with several leading manufacturers of unique natural products for pets and to enhance their formulations with our proprietary blends. We feel these strategies are critical to competing effectively with and distinguishing ourselves from competitors that sell large volumes of pet products at discount prices with slim margins.
We believe that a high level of customer service and support is critical to differentiating ourselves from other online retailers of all natural pet remedies and maximizing customer acquisition and retention efforts. Our customer service effort starts with our website, which will be designed to provide an easy-to-navigate and intuitive shopping experience. A well-organized help center will be available on the Website and will be designed to answer many of our customers most frequently asked questions. For customers who prefer e-mail or telephone assistance, a customer service representative will be available seven days a week to provide assistance. To ensure that customers are satisfied with their shopping experience, we generally plan to allow returns for any reason within 30 days of the date of sale for a full refund.
Our competition for customers comes from a variety of sources, including existing bricks and mortar retailers that are using the Internet to expand their channels of distribution, traditional retailers, veterinarians and established mail-order and online retailers of pet medications and other health products. Many of these competitors have longer operating histories, significantly greater resources, greater brand recognition and more firmly established supply relationships. Moreover, we expect additional competitors to emerge in the future.
Our current or potential competitors include the following:
Online merchants such as 1800PetMeds.com, OnlyNaturalPet.com, PetWellBeing.com, NativeRemedies.com, PetMedStore.com, JeffersPet.com, FuturePets.com, PlanetBlueDog.com and Drugstore.com.
Big box pet supply retailers such as PetSmart, Petcetera, PETCO, who are among the dominant players, plus hundreds of smaller bricks and mortar stores.
Supermarkets and grocery stores, including traditional supermarkets, such as Safeway and Kroger, and natural-food markets, such as Whole Foods.
Manufacturers of pet vitamins, dietary supplements and medicinal formulators that operate their own online sites and who supply specialty pet stores and chains with the same products.
The goal of our marketing strategy is to build brand recognition, increase customer traffic, add new customers, build strong customer loyalty, maximize reorders, and develop incremental revenue opportunities. We have an integrated marketing program that will include direct mail, print advertising, e-mail campaigns, online marketing and social media strategy.
Direct Mail, Print Advertising and E-mail Campaigns
We will use direct mail, print advertising and e-mail campaigns to acquire new customers and to remind existing customers to reorder.
Online retail success means being found online and rising visitor traffic to the website. We expect to gain market share and become a heavily trafficked e-commerce site in the pet supplies and natural remedies space by using a broad array of online marketing strategies, including banner advertising, pay-per-click advertising, 'link backs' and on page-off page optimization.
As part our online marketing strategy, we intend to make our brand available to Internet consumers by using targeted keywords and achieving prominent placement on the top search engines and search engine networks, including Google and Yahoo. We also intend to optimize each page of our Website so that it can be found by search engines and search engine networks. Search Engine Optimization strategy begins by researching popular keywords that potential customers will use to search for a product on the Internet. In the context of our business, we intend to incorporate keywords in our product descriptions on each page of our Website.
We plan to become a member of the LinkShare Network, which is an affiliate program with merchant clients and affiliate websites. This network is designed to develop and build a long-term, branded affiliate program in order to increase online sales and establish an Internet presence. The LinkShare Network will enable us to establish link arrangements with other websites, as well as with portals and search engines.
Social Media Tools
We believe social media tools are critically important to building brand and community. As social media platforms (e.g. Facebook) mature past their college roots, consumers and businesses have embraced them and these platforms have become vital tools to connect consumers and promote product purchases. Our social media strategy includes videos, talk-backs with experts in pet care and pet health, contests, coupons, special offers, health and safety tips, give-aways, e-book distribution, among others. We intend to select and place advertising on those social media platforms that are effective in reaching our target audience.
Intellectual Property and Agreements
We own the domain name www.gaiaremedies.com, but we have no other intellectual property such as patents or trademarks. Additionally, we have no royalty agreements or labor contracts.
These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
As of June 15, 2012, there were 36 shareholders of record of our common stock.
We have not paid dividends on our common stock, and do not anticipate paying dividends on our common stock in the foreseeable future.
We have no compensation plans under which our equity securities are authorized for issuance.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Gaia Remedies, Inc. (Gaia or the Company) was incorporated in Nevada on December 15, 2010. Gaia is in the business of the online retail sale of all natural pet remedies. Gaia is a development stage company and has not yet realized any revenues from its planned or any other operations.
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.
Basic and diluted loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
The carrying value of cash and accounts payable approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is managements opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
The Company's functional currency is United States ("U.S.") dollars as substantially all of the Company's operations use this denomination. The Company uses the U.S. dollar as its reporting currency.
Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any exchange gains and losses would be included in Other Income (Expenses) on the Statement of Operations.
Company periodically evaluates the financial impact and effective date of all recently issued pronouncements of the Financial Accounting Standards Board (FASB) and other governing accounting and financial reporting bodies. Management does not feel any pronouncement that has been issued or becomes effective subsequent to March 31, 2012, through the date of this report, is expected to have a material impact on the financial statements of the Company.
Gaia has a loss and has a deficit accumulated during the development stage of $33,864 as of March 31, 2012. Gaia's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, Gaia has no current source of revenue. Without realization of additional capital, it would be unlikely for Gaia to continue as a going concern. Gaias management plans on raising cash from public or private debt or equity financing, on an as needed basis and in the longer term, revenues from the operations of its online retail businsess. Gaias ability to continue as a going concern is dependent on these additional cash financings, and, ultimately, upon achieving profitable operations through the operation of its online retail business or otherwise. These factors raise substantial doubt regarding the Companys ability to continue as a going concern.
A shareholder and director of the Company has offered a shareholder loan facility up to $100,000. The loan facility is unsecured and bears interest at 5% per annum and is payable on demand after June 30, 2012. As of March 31, 2012, the amount outstanding under the shareholder loan facility was $ nil.
Gaia follows Statement of Financial Accounting Standards ASC 740, Accounting for Income Taxes. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carryforward has been recognized, as it is not deemed likely to be realized.
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
At March 31, 2012, Gaia had an unused net operating loss carryover approximating $33,800 that is available to offset future taxable income and expires beginning in 2031.
During the period ended March 31, 2011, Gaia issued 3,400,000 shares of common stock to its founding shareholders for $3,400 cash and 2,157,500 shares of stock to non-affiliate shareholders for $43,150 cash.
Gaia neither owns nor leases any real or personal property. An officer has provided office services without charge. The officers and directors of Gaia are involved in other business activities and most likely will become involved in other business activities in the future.
Mr. Hedlys current term as a director, president and treasurer of the Company commenced on December 15, 2010 and runs until the next annual meeting of the stockholders, unless earlier terminated.
Peter Hedly has been president of Peter Hedly, Inc., a real estate sales and investment corporation since its inception in 2003. He has been in the real estate sales and investment area for over 20 years and previously was in the hotel and restaurant business with Keystone Resorts a AAA five diamond resort.
Mr. Hedly attended Lehigh University in Bethlehem, PA studying economics and business administration, but did not graduate with a degree. Currently he is a member of the National Association of Realtors and is a Certified Residential Specialist (CRS) (only 4% of all real estate professionals hold this designation).
We have no significant employees other than Mr. Hedly who is our sole executive officer and director. Mr. Hedly is currently devoting 12 hours per week or 15% of his business time to Company affairs. Joel Whitlock acts in the capacity as our corporate secretary. The Secretary acts under the direction of Mr. Hedly who is our sole executive officer and director. Subject to the direction of the President, the Secretary is responsible for maintaining the minute book of the Company, its updating, and general corporate administrative duties of the Company. The Secretary is not considered a named executive officer as the position is strictly limited to administrative responsibilities.
We conduct our business through agreements with consultants and arms-length third parties. Currently, we have no formal consulting agreements in place.
Mr. Hedly is serving as the principal accounting officer of the Company. Mr. Hedly has considerable practical working experience with the production and analysis of financial statements as a result of his past and current business activities.
Though Mr. Hedly does not work with pet supply companies other than ours, he may in the future. We do not have any written procedures in place to address conflicts of interest that may arise between our business and the future business activities of Mr. Hedly.
We do not presently have a separately constituted audit committee, compensation committee, nominating committee, executive committee or any other committees of our board of directors. As such, Mr. Hedly acts in those capacities as our sole director.
Mr. Hedly is our sole director and does not qualify as an audit committee financial expert. We believe that the cost related to retaining such a financial expert at this time is prohibitive. Further, because we are in the development stage of our business operations, we believe that the services of an audit committee financial expert are not warranted at this time.
The Board of Directors oversees the conduct and supervises the management of our business and affairs pursuant to the powers vested in it by and in accordance with the requirements of the Revised Statutes of Nevada. The Board of Directors holds regular meetings to consider particular issues or conduct specific reviews whenever deemed appropriate.
The Board of Directors considers good corporate governance to be important to the effective operations of the Company. Our directors are elected at the annual meeting of the stockholders and serve until their successors are elected or appointed. Officers are appointed by the Board of Directors and serve at the discretion of the Board of Directors or until their earlier resignation or removal.
We presently do not pay our directors or executive officers any salary or consulting fees and do not anticipate paying them any compensation during the next 12 months in their capacities as directors and officers.
There are no family relationships among directors or executive officers of the Company.
The Company has not adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company is currently considering a form of code of ethics to be adopted by the Company.
We made no grants of stock options or stock appreciation rights to Peter P. Hedly during the period from our inception on December 15, 2010 through the fiscal period ending March 31, 2012.
Our directors do not receive salaries for serving as directors.
There are no employment agreements between the Company and Peter P. Hedly.
The percent ownership of class is based on 5,557,500 shares of common stock issued and outstanding as of the date of this report.
Under the rules of the Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.
* Filed as an exhibit to our registration statement on Form S-1 filed June 15, 2011 and incorporated herein by this reference