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EXCEL - IDEA: XBRL DOCUMENT - Maiden Lane Jewelry, Ltd.Financial_Report.xls
EX-31 - CERTIFICATION - Maiden Lane Jewelry, Ltd.f10q1113ex31_romantique.htm
EX-32 - CERTIFICATION - Maiden Lane Jewelry, Ltd.f10q1113ex32_romantique.htm


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 10-Q
 
x                 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended November 30, 2013
 
OR
 
o                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     
 
Commission File Number 000-1574097
 
ROMANTIQUE LTD.
(Exact name of registrant as specified in its charter)
                                                                     
 New York
 
46-0956015
(State or Other Jurisdiction of
 
(IRS Employer
Incorporation or Organization)
 
Identification No.)
 
64 West 48th Street, Suite 1107, New York, NY
 
10036
(Address of Principal Executive Offices)
 
(Zip Code)
 
212-840-8477
(Registrant’s Telephone Number, Including Area Code)
 
 
(Former Name, Former Address and Former Fiscal year, if changed since last report)
 
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 o
 
            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  o  No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company:
 
Large accelerated filer o
 
Accelerated filer                   o
Non-accelerated filer   o
 
Smaller reporting company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
 
Yes o  No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
 
As of  January 20, 2014, there were 10,441,250 shares of the registrant’s common stock outstanding.
 


 
 

 
 
ROMANTIQUE LTD.

INDEX
                                                                                                                                                    
PART I. FINANCIAL INFORMATION
   
Item 1. Financial Statements
 
F-1 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
2
Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
6
Item 4. Controls and Procedures
 
6
PART II. OTHER INFORMATION
 
7
Item 1. Legal Proceedings
 
7
Item 1A. Risk Factors
 
7
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
7
Item 3. Defaults Upon Senior Securities
 
7
Item 4. [Removed and Reserved]
 
7
Item 5. Other Information
 
7
Item 6. Exhibits
 
7
Signatures
 
8
     
Certification of CEO Pursuant to Section 302
   
Certification of CFO Pursuant to Section 302
   
Certification Pursuant to U.S.C. Section 1350
   
 
 
 

 
 
ROMANTIQUE LTD.
CONDENSED BALANCE SHEET

   
November 30,
2013
   
May 31,
2013
 
   
(Unaudited)
       
ASSETS
Current Assets:
           
Cash and Cash Equivalents
 
$
26,793
   
$
39,086
 
Accounts Receivable, Net
   
2,684,243
     
752,923
 
Inventories
   
1,550,234
     
1,789,394
 
Prepaid Expenses
   
7,640
     
32,031
 
Deferred Taxes
   
13,500
     
13,500
 
Total Current Assets
   
4,282,410
     
2,626,934
 
                 
Property and Equipment, Net
   
10,514
     
10,967
 
                 
Security Deposits
   
2,000
     
2,000
 
                 
Total Assets
 
$
4,294,924
   
$
2,639,901
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
               
Accounts Payable
 
$
1,884,367
   
$
1,679,891
 
Accrued Expenses
   
22,320
     
75,526
 
Loans Payable - Factor
   
978,480
     
-
 
Loans Payable – Related Parties
   
209,632
     
-
 
Income Taxes Payable
   
78,743
     
36,600
 
Total Current Liabilities
   
3,173,543
     
1,792,017
 
                 
Long-Term Debt:
               
Convertible Note Payable – Related Party
   
74,000
     
74,000
 
                 
Total Liabilities
   
3,247,542
     
1,866,017
 
                 
Commitments and Contingencies
               
                 
Stockholders’ Equity:
               
Preferred Stock, $.0001 par value; 10,000,000 shares authorized, none issued and outstanding at
November 30, 2013 and May 31, 2013
   
-
     
-
 
Common Stock, $.0001 par value; 50,000,000 shares authorized, 10,441,250 and 10,353,750 shares issued and outstanding at
November 30, 2013 and May 31, 2013, respectively
   
1,044
     
1,035
 
Additional Paid-In Capital
   
845,558
     
685,567
 
Retained Earnings
   
200,780
     
87,282
 
                 
Total Stockholders’ Equity
   
1,047,382
     
773,884
 
                 
Total Liabilities and Stockholders’ Equity
 
$
4,294,924
   
$
2,639,901
 

The accompanying notes are an integral part of these financial statements.
 
 
F-1

 
 
ROMANTIQUE LTD.
CONDENSED STATEMENT OF INCOME

 
       
For the Period
         
For the Period
 
   
For the Three
   
September 6, 2012
   
For the Six
   
September 6, 2012
 
   
Months Ended
   
(Inception) to
   
Months Ended
   
(Inception) to
 
   
November 30, 2013
   
November 30, 2012
   
November 30, 2013
   
November 30, 2012
 
   
(Unaudited)
         
(Unaudited)
       
                         
Sales - Net
  $ 1,525,577     $ 1,460,484     $ 3,816,315     $ 1,460,484  
                                 
Costs and Expenses:
                               
Cost of Sales
    1,192,704       1,191,505       2,817,163       1,191,505  
Officer’s Compensation
    6,001       44,250       78,556       44,250  
Professional and Consulting Fees
    155,530       14,725       351,167       14,725  
Selling, General and Administrative Expenses
    166,175       14,506       378,081       14,506  
Provision for Bad Debts
    -       14,600       -       14,600  
Total Costs and Expenses
    1,520,410       1,279,586       3,624,967       1,279,586  
                                 
Income from Operations
    5,167       180,898       191,348       180,898  
                                 
Other Income (Expense):
                               
Interest Expense – Related Party
    ( 740 )     ( 600 )     ( 1,480 )     ( 600 )
Interest Expense – Accounts Receivable Financings
    ( 13,470 )     -       ( 13,470 )     -  
Total Other Income (Expense)
    ( 14,210 )     ( 600 )     ( 14,950 )     ( 600 )
                                 
Income (Loss) before Income Tax Provision
    ( 9,043 )     180,298       176,398       180,298  
                                 
Income Tax Provision
    3,700       61,000       62,900       61,000  
Net Income (Loss)
  $ ( 12,743 )   $ 119,298     $ 113,498     $ 119,298  
                                 
Income (Loss) Per Common Share - Basic
  $ ( 0.00 )   $ 0.01     $ 0.01     $ 0.01  
 
                               
Basic Weighted Average Shares
    10,368,173       10,000,000       10,360,922       10,000,000  
                                 
Income (Loss) Per Common Share – Diluted
  $ ( 0.00 )   $ 0.01     $ 0.01     $ 0.01  
                                 
Diluted Weighted Average Shares
    10,405,173       10,023,639       10,397,922       10,023,639  

The accompanying notes are an integral part of these financial statements.
 
 
F-2

 
 
ROMANTIQUE LTD.
CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2013
(Unaudited)
    Common Stock    
Additional
Paid-In
    Retained        
   
Shares
   
Amount
   
Capital
   
Earnings
   
Total
 
                               
Balance, June 1, 2013
    10,353,750     $ 1,035     $ 685,567     $ 87,282     $ 773,884  
                                         
Issuance of Common Stock for services
                                       
November 13, 2013
    87,500       9       174,991       -       175,000  
                                         
Offering Costs
    -       -       (15,000 )     -       (15,000 )
                                         
Net Income for the Six Months Ended
                                       
November 30, 2013
    -       -       -       113,498       113,498  
                                         
Balance, November 30, 2013
    10,441,250     $ 1,044     $ 845,558     $ 200,780     $ 1,047,382  
 
The accompanying notes are an integral part of these financial statements.
 
 
F-3

 
 
ROMANTIQUE LTD.
CONDENSED STATEMENT OF CASH FLOWS
 
   
For the Six
Months Ended
November 30, 2013
   
For the Period
September 6, 2012
(Inception) to 
November 30, 2012
 
    (Unaudited)        
Cash Flows from Operating Activities:
           
Net Income
  $ 113,498     $ 119,298  
Adjustments to Reconcile Net Income to Net Cash
               
(Used) in Operating Activities:
               
Depreciation
    1,603       80  
Common Stock Issued for Services
    175,000       -  
Deferred Taxes
    -       (7,000 )
Reserve for Doubtful Accounts and Sales Returns and Allowances
   
1,824
      28,600  
Changes in Assets and Liabilities:
               
(Increase) in Accounts Receivable
    (1,965,228 )     (1,462,379 )
Decrease in Inventories
    239,160       -  
Decrease in Prepaid Expenses
    24,391       -  
Increase in Accounts Payable
    204,476       1,172,358  
Increase (Decrease) in Accrued Expenses
    (21,122 )     54,090  
Increase in Income Taxes Payable
    42,143       68,000  
Net Cash (Used) in Operating Activities
    (1,184,255 )     (26,953 )
                 
Cash Flows from Investing Activities:
               
Capital Expenditures
    (1,150 )     (4,808 )
Net Cash (Used) In Investing Activities
    (1,150 )     (4,808 )
                 
Cash Flows from Financing Activities:
               
Proceeds from Sale of Common Stock
    -       1,000  
Proceeds of Convertible Note – Related Party
    -       74,000  
Proceeds of Loans Payable – Related Parties
    354,632       -  
Payments of Loans Payable – Related Parties
    (145,000 )     -  
Payments of Offering Costs
    (15,000 )     (16,200 )
Proceeds from Loans Payable – Factor
    978,480       -  
Net Cash Provided by Financing Activities     1,173,112       58,800  
                 
Increase (Decrease) in Cash and Cash Equivalents     (12,293 )     27,039  
                 
Cash and Cash Equivalents – Beginning of Period     39,086       -  
                 
Cash and Cash Equivalents – End of Period   $ 26,793     $ 27,039  
                 
Supplemental Disclosure of Cash Flow Information                
     Interest Paid   $ 7,309     $ -  
     Income Taxes Paid   $ 25,850     $ -  
 
The accompanying notes are an integral part of these financial statements.
 
 
F-4

 
 
ROMANTIQUE LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 
NOTE 1 -                Summary of Significant Accounting Policies

Organization and Basis of Presentation

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.  Operations commenced on October 1, 2012 and the Company has selected May 31 as its fiscal year.

In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein.  These financial statements are condensed and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  These condensed financial statements should be read in conjunction with the Company’s May 31, 2013 audited financial statements and notes included in the registration statement on Form S-1, Amendment No. 3 filed on September 3, 2013.

Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

                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 November 30, 2013 and 2012, the Company did not have any cash equivalents.

Inventories

Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out method.

Property and Equipment

Property and equipment is carried at cost less accumulated depreciation.  Depreciation is computated 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 $30,190 for the six months ended November 30, 2013 and $14,000 for the period September 6, 2012 (inception) to November 30, 2012.
 
 
F-5

 

ROMANTIQUE LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 
NOTE 1 -                Summary of Significant Accounting Policies (Continued)

Advertising Costs

Advertising costs are charged to operations when incurred.  Advertising costs during the six months ended November 30, 2013 was $2,100.  There were no advertising costs incurred during the period September 6, 2012 (inception) through November 30, 2012.

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 Per Share

Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding.

The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented:
 
   
For the Six
Months Ended
November 30,
2013
   
For the Period
September 6, 2012
(Inception) to
November 30,
2012
 
   
(Unaudited)
       
Numerator:            
   Net income   $ 113,498     $ 119,298  
Denominator:                
   Basic weighted-average shares     10,360,922       10,000,000  
Effect of dilutive securities:
               
   Convertible Debt     37,000       23,639  
   Diluted weighted-average shares     10,397,922       10,023,639  
 
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-6

 

ROMANTIQUE LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1 -                Summary of Significant Accounting Policies (Continued)

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 and accounts 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, accrued expenses, 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:
 
   
November 30,
2013
   
May 31,
2013
 
    (Unaudited)        
Raw Materials   $ 1,127,955     $ 1,508,981  
Finished Goods     378,648       228,848  
Sales Samples     43,631       51,565  
    $ 1,550,234     $ 1,789,394  
 
Inventories are pledged as security for the Company’s Accounts Receivable Financing Agreement (see Note 8).
 
 
F-7

 

ROMANTIQUE LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 
NOTE 3 -                Property and Equipment
 
Property and equipment consists of the following:
 
   
November 30,
2013
   
May 31,
2013
 
    (Unaudited)        
Office Equipment   $ 8,066     $ 6,916  
Computers     4,808       4,808  
      12,874       11,724  
Less:  Accumulated Depreciation     2,360       757  
    $ 10,514     $ 10,967  
 
Depreciation expense was $1,603 for the six months ended November 30, 2013 and $80 for the period September 6, 2012 (inception) through November 30, 2012.

NOTE 4 -                Convertible Note Payable – Related Party

Convertible note payable to the Company’s president is summarized as follows:
 
   
November 30,
2013
   
May 31,
2013
 
    (Unaudited)        
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:
 
   
November 30,
2013
   
May 31,
2013
 
    (Unaudited)        
Loans payable to the Company’s President and CEO. The loans are payable on demand and non-interest bearing, and are subordinated to the factor.
  $ 209,632     $ -  
 
NOTE 6 -                Commitments and Contingencies

In July 2013 the Company entered into a three year consulting agreement with Sands Point Associates, LLC and its CEO, Robert McMullan.  The compensation for the first year is $125,000, the second year is $200,000 and the third year is $200,000.  The agreement calls 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.  In addition, the consultant may be eligible for performance bonuses and calls for reimbursement of out of pocket expenses.  This consulting agreement may 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 six months ended November 30, 2013 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.
 
 
F-8

 

ROMANTIQUE LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS


NOTE 6 -                Commitments and Contingencies (Continued)

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 under a Form S-8 Registration to be undertaken by the Company as soon as practicable.  No shares have been earned or issued under this agreement.
 
NOTE 7 -                 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 net sales during the term of the agreement.  As of November 30, 2013 the amount owed to Mr. Gurary was $78,556.  As at May 31, 2013, the Company has recorded accrued compensation to Mr. Gurary in the amount of $64,531.  These amounts are included in accounts payable and accrued expenses respectively at November 30, 2013 and May 31, 2013, respectively.  Mr. Gurary serves as the Company’s President and is a significant stockholder of the Company.
 
During the six months ended November 30, 2013, the Company purchased approximately 59% of its merchandise from Classique Creations LLC (“Classique”), a company that is owned by the mother of the Company’s President.

Included in accounts payable at November 30, 2013 and May 31, 2013 are amounts owed to Classique totaling $1,650,428 and $656,002, respectively.

Included in cost of sales for the six months ended November 30, 2013 are amounts attributable to Classique of approximately $1,643,000.

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 8), accounts payable to Classique totaling $500,000 are subordinated to the finance company.
 
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 $14,360 for the six months ended November 30, 2013, and $4,000 for the period September 6, 2012 (Inception) to November 30, 2012.

NOTE 8 -                Financing Agreement
 
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.  Loans made under the Accounts Receivable Financing Agreement bear interest at prime rate plus 3.5% 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.
 
 
F-9

 
 
ROMANTIQUE LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 
NOTE 8 -                Financing Agreement (Continued)

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          $ 209,000  
                        
In addition, the Company has granted Rosenthal a Landlord Subordination agreement.

In connection with the Accounts Receivable Finance Agreement, the Company has borrowed $978,480 net as of November 30, 2013.  The Accounts Receivable Financing Agreement expires September 30, 2015.

NOTE 9 -                Preferred Stock
 
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 10 -              Major Suppliers

During the six months ended November 30, 2013, the Company purchased approximately $1,643,000 (approximately 59%) of its merchandise from one manufacturer that is a related party (see Note 7).

In addition, the Company purchased merchandise from 1 vendor which amounted to approximately 18% of total purchases during the six months ended November 30, 2013.

NOTE 11 -              Income Taxes

Income tax provision consists of the following:
 
   
For the Six
Months Ended
November 30,
2013
   
For the Period
September 6, 2012
(Inception) to
November 30,
2012
 
   
(Unaudited)
       
Current:            
   Federal   $ 57,400     $ 63,000  
   State and Local     5,500       5,000  
      62,900       68,000  
 Deferred:                
   Federal (Benefit)
    -       (5,000 )
   State and Local (Benefit)     -       (2,000 )
      -       (7.000 )
    $ 62,900     $ 61,000  

 
F-10

 
 
ROMANTIQUE LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 
NOTE 11 -              Income Taxes (Continued)

Deferred tax assets consist of the following:
 
   
November 30,
2013
   
May 31,
2013
 
    (Unaudited)        
             
   Reserve for Bad Debts
  $ 7,000     $ 7,000  
   Reserves for Sales Returns and Allowances
    6,500       6,500  
      13,500       13,500  
 
The federal statutory income tax rate is reconciled to the effective rate as follows:
 
   
For the Six
Months Ended
November 30,
2013
   
For the Period
September 6, 2012
(Inception) to
November 30,
2012
 
   
(Unaudited)
       
             
Tax provision at Federal Statutory rate     34.0 %     34.0
                 
State and local income taxes, net of federal tax benefit       (2.1 )     1.7  
                 
Provision for bad debts and allowances for sales returns      -       (1.9 )
                 
Effective tax rate      31.9     33.8 %
 
Note 12 -                Subsequent Events
 
On December 3, 2013, Sands Point Associates, LLC, a consultant for the company, notified the company of its intent to terminate the consulting agreement dated July 26, 2013.  Pursuant to the terms of the consulting agreement, the termination took effect January 2, 2014.  There is no additional compensation due Sands Point Associates, LLC.
 
 
 
F-11

 
 
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Forward Looking Statements
 
You should read the following discussion in conjunction with our  financial statements and related notes thereto. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Our actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors
 
This quarterly report contains forward-looking statements as that term is defined in the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.  In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars.  All references to “common stock” refer to our shares of common stock.

Critical Accounting Policies and Estimates
 
The condensed  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.

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) collectibility 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 collectibility 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.
 
As used in this quarterly report, the terms “we”, “us”, “our”, “the Company” and “Romantique” means Romantique Ltd., unless otherwise indicated.
 
 
2

 
 
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 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.

General
 
OVERVIEW
 
Romantique Ltd. was 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. 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 bridal (engagement) rings, featuring both settings and diamonds. We believe that we are one of the few companies selling engagement rings which include the diamonds to independent retailers. For the period September 6, 2012 (inception) to May 31, 2013, we purchased over 52% of our merchandise from Classique Creations LLC, a jewelry manufacturer owned 98% by the mother of our President, Mr. Yitzchok Gurary, and 2% by Mr. Gurary’s brother, Chaim Gurary, a shareholder of Romantique.  During the six months ended November 30, 2013, we purchased approximately 59% of our merchandise from Classique Creations, LLC.  In addition, purchases from another vendor amounted to approximately18 % of total purchases during the six months ended November 30, 2013.

Currently, we purchase approximately 59% of our merchandise (excluding stones) from Classique Creations LLC.  Our website is located at www.myromantique.com.
 
Description of Revenues

To date, most of our revenues have been generated through the sale of rings, pendants, necklaces and earrings with stones such as diamonds, rubies and emeralds. In December 2012, we launched our line of bridal rings. Our plan is to expand our bridal ring sales, which we believe are less seasonal.
 
We have begun to offer complete engagement rings, including both stone and setting, and, using our managements’ experience in the jewelry industry, create rings that show the stones to their best advantage, i.e. accentuating their brilliance and hiding their imperfections.
 
Romantique intends to market its line of engagement rings to independent jewelers. Our target market is jewelers with between $750,000 and $5,000,000 in annual sales. Our goal is to offer engagement rings that will retail for under $5,000. We believe that by selling Romantique rings, independent jewelers will be able to compete with jewelry chain stores which sell rings in this price range. We have designed our rings to have a sophisticated look, which we believe customers will find appealing.
 
Employees

We currently have four (4) full time employees.
 
 
3

 
 
Results of Operations

Three Months Ended November 30, 2013.

Sales Revenues

For the three months ended November 30, 2013, we had net sales revenues of $ 1,525,577. These revenues arose from the sale of jewelry to various retailers.

For the three months ended November 30, 2013, our three largest customers accounted for approximately 33% of our total revenues.

Cost of Sales

Cost of Sales was $ 1,192,704 for the three months ended November 30, 2013.

Operation Expenses
 
General, Selling and Administrative

General, Selling and Administrative expenses were $ 166,175 for the three months ended November 30, 2013.

Officers’ Compensation

For the three months ended November 30, 2013, officers’ compensation was $6,001.
 
Professional and Consulting Fees

Professional and consulting fees totaled $155,530 for the quarter ended November 30, 2013.

Other Income (Expenses)

For the three months ended November 30, 2013, we had other expenses of $14,210.  These expenses were interest expenses to a related party of $740 and  accounts receivable financings of  $13,470
 
 Net Income (Loss)

As a result of the above, for the three months ended November 30, 2013, we had  income from operations of $5,167 and net loss of $12,743 after provision for income taxes of $3,700.  Net loss per share was $(0.00).
 
 
4

 

Six Months Ended November 30, 2013.

Sales Revenues

For the six months ended November 30, 2013, we had net sales revenues of $ 3,816,315. These revenues arose from the sale of jewelry to various retailers.
 
For the six months ended November 30, 2013, our three largest customers accounted for approximately 21% of our total revenues.

Cost of Sales

Cost of Sales was $2,817,163 for the six months ended November 30, 2013.

Operation Expenses
Selling, General and Administrative Expenses
 
Selling, General and Administrative expenses were $378,081 for the six months ended November 30, 2013. 

Officers’ Compensation

For the six months ended November 30, 2013, officers’ compensation was $78,556.
 
Professional and Consulting Fees

Professional and consulting fees totaled $351,167 for the six months ended November 30, 2013.

Other Income (Expenses)

For the six months ended November 30, 2013, we had other expenses of $14,950.  These expenses were interest expense to a related party of $1,480 and accounts receivable financings of $13,470.
 
Net Income (Loss)

As a result of the above, for the six months ended November 30, 2013, we had  income from operations of $ 191,348 and net income of $113,498 after provision for income taxes of $62,900.  Net income per share was $0.01.
 
Liquidity and Capital Resources

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 November 30, 2013, we had long term liabilities of $74,000, which represents  a  note  payable to a related party for $74,000.
 
On September 30, 2013 the Company entered into a 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 (the “Accounts Receivable Financing Agreement”).  Loans made under the Accounts Receivable Financing Agreement bear interest at prime rate plus 3.5% 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.
 
 
5

 

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,
  $ 209,000  
 
In addition, the Company has granted Rosenthal a Landlord Subordination agreement.
 
In connection with the Accounts Receivable Financing Agreement, the Company has borrowed approximately $978,480 net as of November 30, 2013.  The Accounts Receivable Financing Agreement expires September 30, 2015.
 
At November 30, 2013 we had working capital of $1,108,867.
As of November 30, 2013, we had $26,793 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

Romantique has no off balance sheet arrangements
 
Recent Private Placements
 
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.
 
Item 3.    Quantitative and Qualitative Disclosures about Market Risk
 
Not applicable.   
 
Item 4.    Controls and Procedures
 
Management is required by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 to evaluate, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures.
 
 
6

 
 
Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based on their evaluation, as of the end of the period covered by this Form 10-Q, the Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective.
 
Changes in Internal Control over Financial Reporting
 
There have been no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
Part II — OTHER INFORMATION
 
Item 1.    Legal Proceedings
 
There are no material legal proceedings to which we are a party, other than ordinary routine litigation incidental to our business.
 
Item 1A. Risk Factors
 
Not applicable.
 
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

None.
 
Item 3.    Defaults Upon Senior Securities
 
None.
 
Item 4.    [Removed and Reserved]
 
Item 5.    Other Information
 
On December 3, 2013, Sands Point Associates, LLC, a consultant for the company, notified the company of its intent to terminate the consulting agreement dated July 26, 2013.  Pursuant to the terms of the consulting agreement, the termination took effect January 2, 2014.  There is no additional compensation due Sands Point Associates, LLC.
  
Item 6.    Exhibits
 
The following exhibits are filed as a part of this Form 10-Q (a) Exhibits required by Item 601 of Regulation S-K.

Number           
 
Description 
     
(31)
 
Section 302 Certification
     
31.1
 
Certification of Principal Executive Officer and Principal Financial Officer Rule 13a-14(a) pursuant to Rule13a- 14(a) of the Securities Exchange Act of 1934.
     
(32)
 
Section 906 Certification
     
32.1
 
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, required by Section 906 of the Sarbanes-Oxley Act of 2002.

 
7

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
ROMANTIQUE LTD.
 
(Registrant)
     
Date: January 20, 2014 
By:  
/s/ Yitzchok Gurary
   
Yitzchok Gurary
   
President, Chief Executive Officer,
   
Chief Financial Officer, Director
 
 
8