Attached files
As filed with the Securities and Exchange Commission on May 13, 2014
Registration No. 333-194145
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM S-1/A
(AMENDMENT NO. 2)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MERECOT CORP.
(Exact name of registrant as specified in its charter)
Nevada 7373 68-0683374
(State or Other Jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or Organization) Classification Number) Identification No.)
Evgenia Gonikman
President/Secretary
616 Corporate Way, Suite 2-6621
Valley Cottage, NY 10989
Telephone: (929) 200-1255
Fax: 905-695-9252
E-mail: merecot.corp@gmail.com
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
INCORP SERVICES, INC.
2360 CORPORATE CIRCLE STE 400
HENDERSON, Nevada 89074-7722
Telephone: (702) 866-2500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies To:
David Lubin, Esq.
David Lubin & Associates, PLLC
10 Union Avenue
Lynbrook, NY 11563
(516) 887-8200
Fax: (516) 887-8250
david@dlubinassociates.com
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box: [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this form is a post-effective registration statement filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If this form is a post-effective registration statement filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
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 [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
===========================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to be Amount of Shares Offering Price Aggregate Offering Registration
Registered to be Registered per Share (1) Price Fee
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Common Stock 10,000,000 $0.01 $100,000 $12.88
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Total 10,000,000 $0.01 $100,000 $12.88
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(1) There is no current market for the securities and the price at which the
shares are being offered has been arbitrarily determined by us and used for
the purpose of computing the amount of the registration fee in accordance
with Rule 457(a) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED _____ __, 2014
PRELIMINARY PROSPECTUS
MERECOT CORP.
10,000,000 SHARES OF COMMON STOCK AT $0.01 PER SHARE
This prospectus relates to the offering by Merecot Corp. ("Merecot," "we,"
"our," the "Company" or the "Registrant") of a total of 10,000,000 shares (the
"Shares") of our common stock on a "self-underwritten" basis at a fixed price of
$0.01 per share.
There is no minimum offering of the Merecot shares.
We are a development stage company with nominal operations and assets . As a
result, we are considered a shell company under Rule 405 of the Securities Act
and are subject to additional regulatory requirements as a result of this
status, including limitations on our shareholders' ability to re-sell their
shares in our company, as well as additional disclosure requirements.
Accordingly, investors should consider our shares to be a high-risk and illiquid
investment. See "Risk Factors" for the risks of investing in a shell company.
Our management will have sole control over the withdrawal of funds from
company's account. We have not made arrangements to place the funds in an escrow
account with a third party escrow agent due to the costs involved. As a result,
investors are subject to the risk that creditors could attach these funds during
the offering process. See "Use of Proceeds" and "Plan of Distribution."
This is our initial public offering. Prior to this offering there has been no
public market for our common stock and we have not applied for listing or
quotation on any public market. After the effective date of the registration
statement, we intend to seek a listing of our common stock on the
Over-The-Counter Bulletin Board ("OTCBB"), which is maintained by the Financial
Industry Regulatory Authority, Inc. ("FINRA").
Our officer and director will market our common stock and offer and sell the
securities on our behalf. This is a best efforts direct participation offering
that will not utilize broker-dealers. No officer or director will receive any
compensation for his role in selling shares in the offering.
THE COMPANY IS CONSIDERED TO BE IN UNSOUND FINANCIAL CONDITION. PERSONS SHOULD
NOT INVEST UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
THE COMPANY IS CONSIDERED AN "EMERGING GROWTH COMPANY" AS DEFINED IN THE
JUMPSTART OUR BUSINESS STARTUPS ACT AND WILL BE SUBJECT TO REDUCED PUBLIC
COMPANY REPORTING REQUIREMENTS.
BEFORE PURCHASING ANY OF THE COMMON STOCK COVERED BY THIS PROSPECTUS, CAREFULLY
READ AND CONSIDER THE RISK FACTORS INCLUDED IN THE SECTION ENTITLED "RISK
FACTORS".
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK, AND PROSPECTIVE PURCHASERS
SHOULD BE PREPARED TO SUSTAIN THE LOSS OF THEIR ENTIRE INVESTMENT. THERE IS
CURRENTLY NO PUBLIC TRADING MARKET FOR THE SECURITIES.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
You should rely only on the information contained in this prospectus. We have
not authorized any person to provide you with any information about this
offering, Merecot Corp., or the shares offered hereby that is different from the
information included in this prospectus. If anyone provides you with different
information, you should not rely on it.
THE DATE OF THIS PROSPECTUS IS _______________, 2014.
TABLE OF CONTENTS
The following table of contents has been designed to help you find information
contained in this prospectus. We encourage you to read the entire prospectus.
SUMMARY.................................................................... 3
RISK FACTORS............................................................... 5
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.................. 12
USE OF PROCEEDS............................................................ 13
DETERMINATION OF OFFERING PRICE............................................ 13
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................... 13
DILUTION................................................................... 15
PLAN OF DISTRIBUTION....................................................... 16
DESCRIPTION OF SECURITIES TO BE REGISTERED................................. 18
SHARES ELIGIBLE FOR FUTURE RESALE.......................................... 18
DESCRIPTION OF OUR BUSINESS................................................ 20
LEGAL MATTERS.............................................................. 25
MANAGEMENT................................................................. 25
EXECUTIVE COMPENSATION..................................................... 27
COMPENSATION OF DIRECTORS.................................................. 28
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................. 28
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 29
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES............................................................ 30
MANAGEMENT'S DISCUSSION AND ANALYSIS....................................... 30
WHERE YOU CAN GET MORE INFORMATION......................................... 36
FINANCIAL STATEMETNS....................................................... F-1
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PART I
SUMMARY
This summary provides a brief overview of the key aspects of our offering. It
may not contain all of the information that is important to you. You should read
the entire prospectus carefully, including the more detailed information
regarding our company, the risks of purchasing our common stock discussed under
"Risk Factors," and our financial statements and their accompanying notes.
In this prospectus, "Merecot", "the Company," "we," "us," and "our," refer to
Merecot Corp., unless the context otherwise requires. Unless otherwise
indicated, the term "fiscal year" refers to our fiscal year ending December 31.
Unless otherwise indicated, the term "common stock" refers to shares of the
Company's common stock, par value $0.001 per share.
THE COMPANY
Merecot Corp. was incorporated in the State of Nevada on June 21, 2013. Our
offices are located at 6 Corporate Way, Suite 2-6621, Valley Cottage, NY 10989.
We are a development stage company with nominal revenue earned to date and
minimum operations and assets. Since our incorporation, our management has
determined our business plan to create automated supply chain Web Services to
the SPA and Wellness industry, identified our target market and obtained initial
funding of $10,000 from our sole director. We will require additional funding in
order to pursue our business objectives and there is no guarantee that we will
be successful in this regard.
Our plan of operation is to design, develop, and run Web Services that will
connect manufacturers and distributors of the SPA products and equipment with
individual SPA and Wellness outlets. The Web Services will perform multiple
business functions including automated inventory control, delivery scheduling,
introduction of the new products and equipment.
We will need to complete our offering in order to cover an estimated $8,000 in
federal securities law compliance costs which includes $5,000 in accounting and
auditing costs for the 12 month period following the effectiveness of our
registration statement.
Currently, our President devotes approximately ten hours a week to the Company.
We will require the funds from this offering in order to fully implement our
business plan as discussed in the "Plan of Operation" section of this
prospectus.
Our financial statements from inception (June 21, 2013) through March 31, 2014
report nominal revenue and a net loss of ($6,240) and our assets and our cash
balance of $4,788 which was generated from our sale of 5,000,000 shares
purchased by our president and director and loans from our president and
director. We anticipate incurring average quarterly operational costs of about
$6,250 until our offering is completed.
Investors should be aware that our independent auditors have issued an audit
opinion which includes a statement expressing substantial doubt as to our
ability to continue as a going concern. This means that our auditors believe
there is substantial doubt that we can continue as an on-going business for the
next 12 months. Our auditor's opinion is based on our suffering initial losses,
having limited operations, and having limited working capital. Our only source
for cash at this time is investments or loans by others in our Company. However,
we do not have any written agreements in place for any investments or loans from
third parties. We must raise cash to implement our projects and expand our
operations.
Investors must be aware that we do not have sufficient capital to independently
finance our own plans. We have no plans, arrangements or contingencies in place
in the event that we cease operations, in which case investors would lose their
entire investment.
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THE OFFERING
We are offering, on a self-underwritten basis, a total of 10,000,000 shares of
the common stock of our Company at a price of $0.01 per share. This is a fixed
price offering. In order to close the Offering all of the offered shares must be
sold. This Offering of shares by our Company will terminate 180 days from the
effective date of this Prospectus, although we may close the Offering on any
date prior if the Offering is fully subscribed. The offering price of the common
stock has been arbitrarily determined and bears no relationship to any objective
criterion of value. The price does not bear any relationship to our assets, book
value, historical earnings or net worth.
There is no minimum offering of the Merecot shares and investors will not
receive a return of their investment if all shares are not sold.
The purchase of the common stock in this offering involves a high degree of
risk. The common stock offered in this Prospectus is for investment purposes
only and currently no market for our common stock exists. Please refer to "RISK
FACTORS" and "DILUTION" sections before making an investment in our stock.
Securities Being Offered 10,000,000 shares of common stock.
Offering Price $0.01 per share
Offering Period The shares are being offered for a period not to
exceed 180 days from the effective date of this
Prospectus.
Number of Common Stock
Issued and Outstanding
Before Offering 5,000,000, all of which are held by our president.
Number of Common Stock
to be Issued and Outstanding
After Offering 15,000,000 shares
Net Gross Proceeds to
Our Company $100,000
Use of Proceeds We intend to use the proceeds to develop our
business operations.
Risk Factors The securities offered hereby involve a high
degree of risk and should not be purchased by
investors who cannot afford the loss of their
entire investment. See "Risk Factors" section.
Going Concern From inception until the date of this filing, we
have had very limited operating activities. Our
financial statements from inception (June 21,
2013) through December 31, 2013, report only
nominal revenue and a net loss of ($3,166). Our
independent registered public accounting firm has
issued an audit opinion for Merecot which includes
an explanatory paragraph as to an uncertainty with
respect to the Company's ability to continue as a
going concern.
Our sole officer, director, control person and/or her affiliates do not intend
to purchase any shares in this offering.
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SUMMARY FINANCIAL INFORMATION
The following tables set forth a summary of the Company's financial information
as provided in its year-end financial statements. You should read this
information together with our audited financial statements and the notes thereto
appearing elsewhere in this prospectus and the information under "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
BALANCE SHEETS
March 31, 2014 December 31, 2013
-------------- -----------------
Cash $ 4,788 $ 7,830
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Total current assets $ 4,788 $ 7,830
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Current liabilities $ 6,028 $ 5,996
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Total stockholder's equity (deficit) $ (1,240) $ 1,834
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STATEMENTS OF OPERATIONS
For the Period from
For the Three June 21, 2013
Months Ended (inception) through
March 31, 2014 December 31, 2013
-------------- -----------------
Revenue $ -- $ 420
-------- --------
Total operating expenses $ 3,074 $ 3,586
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Net loss $ (3,074) $ (3,166)
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed.
We do not plan to register our common stock under Section 12(g) of the
Securities Exchange Act of 1934 ("Exchange Act") by filing a Form 8-A on a
pre-effective basis. The consequences to investors of us being a Section 15(d)
registrant in comparison to a Section 12(g) registrant are as follows: Under
Section 15(d) of the Exchange Act, we are not required to file periodic reports
if we have less than 300 holders of record for the fiscal year after the year of
effectiveness. if we do not register our securities under Section 12 of the
Exchange Act, we may not have an ongoing periodic reporting obligation and will
not be subject to the Commission's proxy rules and Section 16 of the Exchange
Act.
RISKS RELATED TO OUR BUSINESS
WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS TO SUCCEED.
Our independent auditors state in their audit report, which is included with
this prospectus, that since we have no business operations to date and must
secure additional financing to commence our plan of operations, these matters
raise substantial doubt about our ability to continue as a going concern. To
date, we have completed only the preliminary stages of our business plan, which
has consisted of the formation of our company as well as the identification of
our plan of operation and our target market. We cannot assure you that we will
be able to generate enough revenue to achieve profitability. At this time, we
cannot predict with assurance the potential success of our business. Our ability
to design, develop and operate Web Services is dependent upon us obtaining
sufficient finances. Even if we are successful in obtaining enough money, we
still have a risk to not complete design and development to the customer
satisfaction. This increases the risk that we may not be able to continue as a
going concern.
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AS A DEVELOPMENT STAGE COMPANY, AN INVESTMENT IN OUR COMPANY IS CONSIDERED A
HIGH RISK INVESTMENT WHEREBY YOU COULD LOSE YOUR ENTIRE INVESTMENT.
We have not commenced significant operations; we have concluded an agreement
with Salon Victoria of 2165 South Green Rd., Cleveland, OH (Service Provider)
with view to provide website service to them.
We will incur significant expenses in order to implement our business plan, as
well as an estimated $8,000 in federal securities law compliance costs which
includes $5,000 in accounting and auditing costs for the 12 month period
following the effectiveness of our registration statement. As an investor, you
should be aware of the difficulties, delays and expenses normally encountered by
an enterprise in its development stage, many of which are beyond our control,
including unanticipated developmental expenses, inventory costs, employment
costs, and advertising and marketing expenses. We cannot assure you that our
proposed business plan as described in this prospectus will materialize or prove
successful, or that we will ever be able to operate profitably. If we cannot
operate profitably, you could lose your entire investment.
WE HAVE NOT YET GENERATED ANY INTEREST FROM THE SUPPLIERS AND MANUFACTURERS OF
THE SPA PRODUCT AND EQUIPMENT WHO ARE POTENTIAL CUSTOMERS WILL BE THE MAIN
SOURCE OF OUR INCOME.
We may not find enough suppliers and distributors who would be interested in our
services and our business will fail.
THE SUPPLY CHAIN BUSINESS IS HIGHLY COMPETITIVE AND INCLUDES LARGE WELL
ESTABLISHED COMPANIES. IF WE CANNOT DEVELOP OUR SPA WEB SERVICES AND DO NOT
ATTRACT CUSTOMERS, WE WILL NOT BE ABLE TO COMPETE SUCCESSFULLY, OUR BUSINESS MAY
BE ADVERSELY AFFECTED AND WE MAY NOT BE ABLE TO GENERATE ANY REVENUE.
We have not demonstrated that we currently can compete successfully against
these competitors and we may not be able to compete in the future. If we are
unable to effectively compete, our results would be negatively affected, we may
be unable to implement our plan and we might ultimately fail.
WE ARE DEPENDENT UPON THE FUNDS TO BE RAISED IN THIS OFFERING TO EXPAND OUR
BUSINESS. WE MAY NEED TO OBTAIN ADDITIONAL FINANCING WHICH MAY NOT BE AVAILABLE.
We need the proceeds from this offering to expand our operations. If this amount
is raised, it will enable us, after paying the expenses of this offering, to
design and develop SPA Web Services in 2014 and potentially expand operations in
2015. We estimate that it will cost us $25,000 to design Web Services and cover
all related licensing fees and the SEC compliance and filing expenses including
legal fees.
It will also enable us to initiate our marketing plans and print support
material such as brochures and flyers with an estimated initial cost of $900. We
may need additional funds to complete further development of our business plan
and to achieve a sustainable sales level where ongoing operations and expansion
can be funded out of revenues. There is no assurance that any additional
financing will be available or if available, on terms that will be acceptable to
us.
BECAUSE WE HAVE NOT YET COMMENCED SIGNIFICANT BUSINESS OPERATIONS, IT MAKES
EVALUATING OUR BUSINESS DIFFICULT.
We were incorporated on June 21, 2013 and to date have been involved primarily
in organizational activities.
We have generated nominal revenues of $420 as of the date of this prospectus and
have incurred total losses of ($6,240) from our incorporation to March 31, 2014.
Accordingly, you cannot evaluate our business or our future prospects, due to
our lack of operating history. To date, our business development activities have
consisted solely of organizational activities. Potential investors should be
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aware of the difficulties normally encountered by development stage companies
and the high rate of failure of such enterprises. In addition, there is no
guarantee that we will commence business operations. Even if we do commence
operations, at present, we do not know exactly when.
Furthermore, we anticipate that we will incur increased operating expenses
without realizing any significant revenues. We therefore expect to incur
significant losses into the foreseeable future. We recognize that if we are
unable to generate significant revenues from operating our Web Services, we will
not be able to earn profits or continue operations.
WE ARE VULNERABLE TO THE CURRENT ECONOMIC CRISIS THAT MAY NEGATIVELY AFFECT OUR
PROFITABILITY
The recent global recession has placing severe constraints on the ability of all
companies, particularly smaller ones, to raise capital, operate effectively and
profitably and to plan for the future. Currently, it is not clear whether the
economy will recover appreciably in the near future. As a small, start-up
company we are especially vulnerable to these conditions. If current economic
conditions do not improve, or if they worsen, our business will likely be
negatively affected and will suffer.
IF OUR PRESIDENT LEAVES PRIOR TO SECURING REPLACEMENTS, WE WILL BE LEFT WITHOUT
MANAGEMENT AND OUR BUSINESS OPERATIONS WOULD CEASE.
We depend on the services of our President, Evgenia Gonikman, and our success
depends on the decisions made by her. The loss of the services of our President
could have an adverse effect on our business, financial condition and results of
operations. There is no assurance that our President will not leave us or
compete against us in the future, as we presently have no employment agreement
with her. In such circumstance, we may have to recruit qualified personnel with
competitive compensation packages, equity participation and other benefits that
may affect the working capital available for our operations. Our failure to
attract additional qualified employees or to retain the services of Ms. Gonikman
could have a material adverse effect on our operating results and financial
condition. Even if we are able to find additional personnel, it is uncertain
whether we could find someone who could successfully operate our business. We
will fail without appropriate replacements.
ALTHOUGH OUR PRESIDENT IS NOT CURRENTLY RECEIVING COMPENSATION FOR HER SERVICES,
SHE MAY DECIDE TO PAY HERSELF, WHICH WILL ADVERSELY IMPACT ANY POTENTIAL NET
PROFIT THAT WE MAY GENERATE.
We are not currently compensating our President for providing management
services to us. In the future we might pay her compensation if the cash flow
that we generate from operations significantly exceeds our total expenses. Ms.
Gonikman, as our president and director, has the power to set her own
compensation as she sees fit. If she determines to compensate herself, it could
have an adverse effect on our net profit, if any.
OUR MANAGEMENT HAS LIMITED PRIOR EXPERIENCE IN THE WEB SERVICES AND THEREFORE
MAY NOT BE ABLE TO SUCCESSFULLY MANAGE THE DEVELOPMENT AND GROWTH OF OUR COMPANY
IN THIS FIELD.
Our management has minimal experience in developing Web Services. Although Ms.
Gonikman has over 10 years of experience in SPA and Wellness industry, she has
limited experience in IT and software development this limited experience may
cause us to make serious mistakes in the development or implementation of our
business plan. Our management may be unable to develop or grow a business in
this field due to her inexperience.
BECAUSE OUR PRESIDENT AND DIRECTOR HAS NO FORMAL TRAINING IN FINANCIAL
ACCOUNTING AND MANAGEMENT, IN THE FUTURE, OUR DISCLOSURE AND ACCOUNTING CONTROLS
MAY NOT BE EFFECTIVE TO COMPLY WITH APPLICABLE LAWS AND REGULATIONS, WHICH COULD
RESULT IN FINES, PENALTIES AND ASSESSMENTS AGAINST US.
Our president and director has no formal training in financial accounting and
management; however, she has been preparing the financial statements that have
been audited and reviewed by our auditors and included in this prospectus.
Furthermore, she is responsible for our managerial and organizational structure,
which will include preparation of disclosure and accounting controls pursuant to
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Section 404 of the Sarbanes-Oxley Act of 2002 (the "SOX Act"). Accordingly, she
may be incapable of creating and implementing the disclosure and accounting
controls which are required under the SOX Act, which could result in fines,
penalties and assessments against us and which ultimately could cause you to
lose your entire investment.
THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR PRESIDENT AND DIRECTOR COULD
ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S.
SECURITIES LAWS.
Ms. Evgenia Gonikman, our president and director, has had no responsibility for
managing a public company in the United States, which could impair our ability
to comply with legal and regulatory requirements such as those imposed by the
Sarbanes-Oxley Act of 2002. Such responsibility includes complying with federal
securities laws and making required disclosures on a timely basis. In addition,
Ms. Gonikman may not be able to implement programs and policies in an effective
and timely manner or in a manner which adequately responds to such increased
legal, regulatory compliance and reporting requirements, including establishing
and maintaining internal controls over financial reporting. Any such
deficiencies, weaknesses or lack of compliance could have a materially adverse
effect on our ability to comply with the reporting requirements of the Exchange
Act, which is necessary to maintain our public company status. If we were to
fail to fulfill those obligations, our ability to continue as a U.S. public
company would be in jeopardy, in which event you could lose your entire
investment in our company.
OUR PRESIDENT AND DIRECTOR WILL ALLOCATE ONLY A PORTION OF HER TIME TO OUR
BUSINESS, WHICH COULD HAVE A NEGATIVE IMPACT ON OUR SUCCESS.
Currently, our president and director allocates only a portion of her time to
the operation of our business. If our business develops faster than anticipated,
or if her other commitments require her to devote more substantial amounts of
time than is currently planned, there is no guarantee that she will devote the
time necessary to assure our successful operations. As a result, there is a
substantial risk that we will not be successful in our endeavors.
OUR EXECUTIVE OFFICERS DO NOT RESIDE IN THE UNITED STATES. THE U.S. STOCKHOLDERS
WOULD FACE DIFFICULTY.
Our executive officers do not reside in the United States. The U.S. stockholders
would face difficulty in:
* effecting service of process within the United States on our officers;
* enforcing judgments obtained in U.S. courts based on the civil
liability provisions of the U.S. federal securities laws against the
officers;
* enforcing judgments of U.S. courts based on civil liability provisions
of the U.S. federal securities laws in foreign courts against our
officers; and
* bringing an original action in foreign courts to enforce liabilities
based on the U.S. federal securities laws against our officers.
WE ARE AN "EMERGING GROWTH COMPANY" AND WE INTEND TO TAKE ADVANTAGE OF REDUCED
DISCLOSURE AND GOVERNANCE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES,
WHICH COULD RESULT IN OUR COMMON STOCK BEING LESS ATTRACTIVE TO INVESTORS.
We are an "emerging growth company," as defined in the Jumpstart Our Business
Startups Act of 2012 and we intend to 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 will rely on these exemptions. If some investors find our
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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. We may
take advantage of these reporting exemptions until we are no longer an emerging
growth company, which in certain circumstances could be for up to five years.
AS AN EMERGING GROWTH COMPANY, EXEMPTIONS FROM THE FOLLOWING PROVISIONS ARE
AVAILABLE TO US:
1. Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires
auditor attestation of internal controls;
2. Section 14A(a) and (b) of the Securities Exchange Act of 1934, which
require companies to hold shareholder advisory votes on executive
compensation and golden parachute compensation;
3. Section 14(i) of the Exchange Act (which has not yet been
implemented), which requires companies to disclose the relationship
between executive compensation actually paid and the financial
performance of the company;
4. Section 953(b)(1) of the Dodd-Frank Act (which has not yet been
implemented), which requires companies to disclose the ratio between
the annual total compensation of the CEO and the median of the annual
total compensation of all employees of the companies; and
5. The requirement to provide certain other executive compensation
disclosure under Item 402 of Regulation S-K. Instead, an emerging
growth company must only comply with the more limited provisions of
Item 402 applicable to smaller reporting companies, regardless of the
issuer's size.
RISKS RELATING TO OUR COMMON STOCK
There is no minimum offering of the Merecot shares and investors will not
receive a return of their investment if all shares are not sold.
BECAUSE OUR PRESIDENT AND DIRECTOR, WHO IS ALSO OUR SOLE PROMOTER, WILL OWN 33%
OF THE OUTSTANDING SHARES AFTER THIS OFFERING, SHE WILL RETAIN SIGNIFICANT
CONTROL OF US AND BE ABLE TO ELECT DIRECTORS WHICH COULD DECREASE THE PRICE AND
MARKETABILITY OF THE SHARES.
Even if we sell all 10,000,000 shares of common stock in this offering, Ms.
Gonikman will still own 5,000,000 shares and will continue to control us. As a
result, Ms. Gonikman will have significant influence to:
* elect or defeat the election of our directors;
* amend or prevent amendment of our articles of incorporation or bylaws;
* effect or prevent a merger, sale of assets or other corporate
transaction; and
* affect the outcome of any other matter submitted to the stockholders
for vote.
Moreover, because of the significant ownership position held by our insider, new
investors may not be able to effect a change in the Company's business or
management, and therefore, shareholders would be subject to decisions made by
management and the majority shareholder.
In addition, sales of significant amounts of shares held by Ms. Gonikman, or the
prospect of these sales, could adversely affect the market price of our common
stock. Management's stock ownership may discourage a potential acquirer from
making a tender offer or otherwise attempting to obtain control of us, which in
turn could reduce our stock price or prevent our stockholders from realizing a
premium over our stock price.
WE ARE SELLING SHARES IN THIS OFFERING WITHOUT AN UNDERWRITER AND MAY BE UNABLE
TO SELL ALL OF THE SHARES, IN WHICH CASE, WE MAY HAVE TO SEEK ALTERNATIVE
FINANCING TO IMPLEMENT OUR BUSINESS PLANS AND YOU WOULD RECEIVE A RETURN OF YOUR
ENTIRE INVESTMENT.
This offering is self-underwritten, that is, we are not going to engage the
services of an underwriter to sell the shares. We intend to sell them through
our president and director, who will receive no commissions. She will offer the
shares to friends, relatives, acquaintances and business associates; however,
there is no guarantee that she will be able to sell any of the shares. In the
9
event we do not sell all of the shares before the expiration date of the
offering, all funds raised will be promptly returned to the investors, without
interest or deduction.
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION OF THE PRICE YOU PAY FOR YOUR
SHARES.
Our existing stockholder acquired her shares at a cost of $0.001 per share, a
cost per share that is substantially less than the amount you will pay for the
shares you purchase in this offering. Accordingly, any investment you make in
these shares will result in the immediate and substantial dilution of the net
tangible book value of those shares from the $0.01 you pay for them. Upon
completion of the offering, the net tangible book value of your shares will be
substantially less than what you pay for them, see the Dilution table.
BECAUSE THE PROCEEDS OF OUR OFFERING WILL BE HELD IN A STANDARD CORPORATE
CHECKING ACCOUNT RATHER THAN AN ESCROW ACCOUNT, UNTIL THE OFFERING CLOSES, IT IS
POSSIBLE THAT CREDITORS OF THE COMPANY COULD ATTACH THESE FUNDS AND WE MAY NOT
BE ABLE TO RETURN YOUR FUNDS IF THE OFFERING IS NOT COMPLETED.
Our management will have sole control over the withdrawal of funds. We have not
made arrangements to place the funds in an escrow account with a third party
escrow agent due to the costs involved. As a result, investors are subject to
the risk that creditors could attach these funds during the offering process.
THERE IS CURRENTLY NO PUBLIC MARKET FOR OUR SECURITIES, AND THERE CAN BE NO
ASSURANCE THAT ANY PUBLIC MARKET WILL DEVELOP OR THAT OUR COMMON STOCK WILL BE
QUOTED FOR TRADING.
There is no public market for our securities and there can be no assurance that
an active trading market for the securities offered herein will develop after
this offering by the selling stockholders, or, if developed, be sustained. After
the effective date of the registration statement of which this prospectus is a
part, we intend to identify a market maker to file an application with the
Financial Industry Regulatory Authority ("FINRA") to have our common stock
quoted on the Over-the-Counter Bulletin Board. We will have to satisfy certain
criteria in order for our application to be accepted. We do not currently have a
market maker that is willing to participate in this application process, and
even if we identify a market maker, we cannot assure you that we will meet the
requisite criteria or that our application will be accepted. Our common stock
may never be quoted on the Over-the-Counter Bulletin Board, or, even if quoted,
a public market may not materialize.
If our securities are not eligible for initial quotation, or if quoted, are not
eligible for continued quotation on the Over-the-Counter Bulletin Board or a
public trading market does not develop, purchasers of the shares of common stock
may have difficulty selling or be unable to sell their securities should they
desire to do so, rendering their shares effectively worthless and resulting in a
complete loss of their investment.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
OUR STOCK.
The shares offered by this prospectus constitute penny stock under the Exchange
Act. The shares will remain penny stock for the foreseeable future. "Penny
stock" rules impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited
investors, that is, generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with a 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
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 our shares of
common stock. The market price of our shares would likely suffer as a result.
10
FINRA SALES PRACTICE REQUIREMENTS MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND
SELL OUR STOCK.
FINRA has adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for believing that the
investment is suitable for that customer. Prior to recommending speculative low
priced securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative
low priced securities will not be suitable for certain customers. FINRA
requirements will likely make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which may have the effect of reducing
the level of trading activity in our common stock. As a result, fewer
broker-dealers may be willing to make a market in our common stock, reducing a
stockholder's ability to resell shares of our common stock.
STATE SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES
IN WHICH YOU CAN SELL THE SHARES OFFERED BY THIS PROSPECTUS.
If you purchase shares of our common stock sold pursuant to this offering, you
may not be able to resell the shares in a certain state unless and until the
shares of our common stock are qualified for secondary trading under the
applicable securities laws of such state or there is confirmation that an
exemption, such as listing in certain recognized securities manuals, is
available for secondary trading in such state. There can be no assurance that we
will be successful in registering or qualifying our common stock for secondary
trading, or identifying an available exemption for secondary trading in our
common stock in every state. If we fail to register or qualify, or to obtain or
verify an exemption for the secondary trading of, our common stock in any
particular state, the shares of common stock could not be offered or sold to, or
purchased by, a resident of that state. In the event that a significant number
of states refuse to permit secondary trading in our common stock, the market for
the common stock will be limited, which could drive down the market price of our
common stock and reduce the liquidity of the shares of our common stock and a
stockholder's ability to resell shares of our common stock at all or at current
market prices, which could increase a stockholder's risk of losing some or all
of her investment.
IF QUOTED, THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE, WHICH MAY
SUBSTANTIALLY INCREASE THE RISK THAT YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT
OR ABOVE THE PRICE THAT YOU MAY PAY FOR THE SHARES.
Even if our shares are quoted for trading on the Over-the-Counter Bulletin
Board following this offering and a public market develops for our common stock,
the market price of our common stock may be volatile. It may fluctuate
significantly in response to the following factors:
* variations in quarterly operating results;
* our announcements of significant commissions and achievement of
milestones;
* our relationships with other companies or capital commitments;
* additions or departures of key personnel;
* sales of common stock or termination of stock transfer restrictions;
* changes in financial estimates by securities analysts, if any; and
* fluctuations in stock market price and volume.
Your inability to sell your shares during a decline in the price of our stock
may increase losses that you may suffer as a result of your investment.
BECAUSE WE DO NOT INTEND TO PAY ANY DIVIDENDS ON OUR COMMON STOCK, HOLDERS OF
OUR COMMON STOCK MUST RELY ON STOCK APPRECIATION FOR ANY RETURN ON THEIR
INVESTMENT.
We have not declared or paid any dividends on our common stock since our
inception, and we do not anticipate paying any such dividends for the
foreseeable future. Accordingly, holders of our common stock will have to rely
on capital appreciation, if any, to earn a return on their investment in our
common stock.
11
ADDITIONAL ISSUANCES OF OUR SECURITIES MAY RESULT IN IMMEDIATE DILUTION TO
EXISTING SHAREHOLDERS.
We must raise additional capital in order for our business plan to succeed. Our
most likely source of additional capital will be through the sale of additional
shares of common stock. We are authorized to issue up to 75,000,000 shares of
common stock, of which 5,000,000 shares of common stock are currently issued and
outstanding. Our Board of Directors has the authority to cause us to issue
additional shares of common, and to determine the rights, preferences and
privilege of such shares, without consent of any of our stockholders. We may
issue shares in connection with financing arrangements or otherwise. Any such
issuances will result in immediate dilution to our existing shareholders'
interests, which will negatively affect the value of your shares.
WE MAY BE EXPOSED TO POTENTIAL RISKS RESULTING FROM NEW REQUIREMENTS UNDER
SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002.
Pursuant to Section 404 of the SOX Act, we will be required to include in our
annual report our assessment of the effectiveness of our internal control over
financial reporting once this registration statement becomes effective and we
commence filing financial reports with the Securities & Exchange Commission. We
expect to incur additional expenses and diversion of management's time as a
result of performing the system and process evaluation, testing and remediation
required in order to comply with the management certification and auditor
attestation requirements.
We currently do not have a sufficient number of employees to segregate
responsibilities and may be unable to afford increasing our staff or engaging
outside consultants or professionals to overcome our lack of employees. During
the course of our testing, we may identify other deficiencies that we may not be
able to remediate in time to meet the deadline imposed by the SOX Act for
compliance with the requirements of Section 404. In addition, if we fail to
achieve and maintain the adequacy of our internal controls, as such standards
are modified, supplemented or amended from time to time, we may not be able to
ensure that we can conclude on an ongoing basis that we have effective internal
controls over financial reporting in accordance with Section 404 of the SOX Act.
Moreover, effective internal controls, particularly those related to revenue
recognition, are necessary for us to produce reliable financial reports and are
important to help prevent financial fraud. If we cannot provide reliable
financial reports or prevent fraud, our business and operating results could be
harmed, investors could lose confidence in our reported financial information,
and the trading price of our common stock, if a market ever develops, could drop
significantly.
BECAUSE THE OFFERING PRICE HAS BEEN ARBITRARILY SET BY THE COMPANY, YOU MAY NOT
REALIZE A RETURN ON YOUR INVESTMENT UPON RESALE OF YOUR SHARES.
The offering price and other terms and conditions relative to the Company's
shares have been arbitrarily determined by us and do not bear any relationship
to assets, earnings, book value or any other objective criteria of value.
Additionally, as the Company was formed on June 21, 2013 and has only a limited
operating history and nominal earnings, the price of the offered shares is not
based on its past earnings and no investment banker, appraiser or other
independent third party has been consulted concerning the offering price for the
shares or the fairness of the offering price used for the shares, as such our
stockholders may not be able to receive a return on their investment when they
sell their shares of common stock.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements and information relating to
our business that are based on our beliefs as well as assumptions made by us or
based upon information currently available to us. These statements reflect our
current views and assumptions with respect to future events and are subject to
risks and uncertainties. Forward-looking statements are often identified by
words like: "believe," "expect," "estimate," "anticipate," "intend," "project"
and similar expressions or words which, by their nature, refer to future events.
In some cases, you can also identify forward-looking statements by terminology
such as "may," "will," "should," "plans," "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, including the risks in the section entitled "Risk Factors", that
12
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. In addition, you are directed to factors discussed
in the "Management's Discussion and Analysis of Financial Condition and Results
of Operation" section, and the section entitled "Description of Our Business",
as well as those discussed elsewhere in this prospectus. Other factors include,
among others: general economic and business conditions; industry capacity;
industry trends; competition; changes in business strategy or development plans;
project performance; availability, terms, and deployment of capital; and
availability of qualified personnel.
These forward-looking statements speak only as of the date of this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, or achievements. Except as required by applicable law, including the
securities laws of the United States, we expressly disclaim any obligation or
undertaking to disseminate any update or revisions of any of the forward-looking
statements to reflect any change in our expectations with regard thereto or to
conform these statements to actual results.
USE OF PROCEEDS
Our offering is being made on a self-underwritten basis: no minimum number of
shares must be sold in order for the offering to proceed. The offering price per
share is $0.01. The following table sets forth the uses of proceeds assuming the
sale of 25%, 50%, 75% and 100%, respectively, of the securities offered for sale
by the Company. There is no assurance that we will raise the full $100,000 as
anticipated.
$25,000 $50,000 $75,000 $100,000
------- ------- ------- --------
Legal and professional fees $ 8,000 $ 8,000 $ 8,000 $ 8,000
Establish office $ 1,650 $ 4,000 $ 6,000 $ 9,000
Developing website $ 1,650 $ 4,000 $ 6,000 $ 9,000
Salaries $ 3,000 $11,000 $18,000 $23,000
Advertising $ 3,700 $11,000 $20,000 $26,000
Developing/Testing system $ 7,000 $12,000 $17,000 $25,000
The amounts actually spent by us for any specific purpose may vary and will
depend on a number of factors. Non-fixed cost, sales and marketing and general
and administrative costs may vary depending on the business progress and
development efforts, general business conditions and market reception to our
services. Accordingly, our management has broad discretion to allocate the net
proceeds to non-fixed costs.
An example of changes to this spending allocation for non-fixed costs include
management deciding to spend less of the allotment on product development and
more on sales and marketing.
If necessary, Evgenia Gonikman, our officer and director, has verbally agreed to
loan the company funds to complete the registration process but we will require
full funding to implement our complete business plan. If insufficient funds are
raised we plan to borrow funds from our management.
DETERMINATION OF OFFERING PRICE
There is no established market for our stock. The offering price of the shares
has been determined arbitrarily by us. The price does not bear any relationship
to our assets, book value, earnings, or other established criteria for valuing a
privately held company. In determining the number of shares to be offered and
the offering price, we took into consideration our capital structure and the
amount of money we would need to implement our business plans. Accordingly, the
offering price should not be considered an indication of the actual value of our
securities.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Upon the effectiveness of the registration statement of which this prospectus
forms a part, we intend to seek a market maker to file an application with the
FINRA to have our stock quoted on the OTC Bulletin Board. However, we cannot
assure you that our shares will be quoted on the OTC Bulletin Board or, if
quoted, that a public market will materialize.
13
The Securities and Exchange Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00, other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
quotation system. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the Securities and Exchange Commission, that:
a. contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
b. contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation of such duties or other requirements of the
securities laws;
c. contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance of
the spread between the bid and ask price;
d. contains a toll-free telephone number for inquiries on disciplinary
actions;
e. defines significant terms in the disclosure document or in the conduct
of trading in penny stocks; and
f. contains such other information and is in such form, including
language, type, size and format, as the Securities and Exchange
Commission shall require by rule or regulation.
The broker or dealer also must provide, prior to effecting any transaction in a
penny stock, the customer with:
(a) bid and offer quotations for the penny stock;
(b) the compensation of the broker-dealer and its salesperson in the
transaction;
(c) the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
(d) a monthly account statement showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a suitably written statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock. Therefore, if our common stock
becomes subject to the penny stock rules, stockholders may have difficulty
selling those securities.
HOLDERS
We had one holder of record of our common stock as of April 30, 2014.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any securities authorized for issuance under any equity
compensation plans.
PENNY STOCK REGULATION
The SEC has adopted regulations which generally define "penny stock" to be any
equity security that has a market price (as defined) of less than $5.00 per
share or an exercise price of less than $5.00 per share. Such securities are
subject to rules that impose additional sales practice requirements on
broker-dealers who sell them. For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchaser 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 rules require the delivery, prior to the
14
transaction, of a disclosure schedule prepared by the SEC relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative, current quotations for
the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, among other requirements, monthly statements must be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks. As the Shares immediately
following this Offering will likely be subject to such penny stock rules,
purchasers in this Offering will in all likelihood find it more difficult to
sell their Shares in the secondary market.
DIVIDENT POLICY
We have not paid any cash dividends to shareholders. The declaration of any
future cash dividends is at the discretion of our board of directors and depends
upon our earnings, if any, our capital requirements and financial position,
general economic conditions, and other pertinent conditions. It is our present
intention not to pay any cash dividends in the foreseeable future, but rather to
reinvest earnings, if any, in our business operations.
DILUTION
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this offering. Net
tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
result of our arbitrary determination of the offering price of the shares being
offered. Dilution of the value of the shares you purchase is also a result of
the lower book value of the shares held by our existing stockholders.
In this offering, the level of dilution is increased as a result of the
relatively low book value of Merecot's presently issued and outstanding stock.
This is due to the shares of common stock issued to the Company's founder
totaling 5,000,000 shares at $0.001 per share for $5,000 cash versus the current
offering price of $0.01 per share.
The Company's net tangible book value on March 31, 2014 was ($212), or
approximately $0.000 per share, based upon 5,000,000 shares outstanding. Upon
completion of this offering, but without taking into account any change in the
net tangible book value after completion of this offering other than that
resulting from the sale of the shares and receipt of the total proceeds of
$100,000, the net tangible book value of the 15,000,000 shares to be outstanding
will be $102,830 or approximately $0.0069 per share.
DILUTION TABLE
The price of the current offering is fixed at $0.01 per common share. This price
is significantly higher than the price paid by our director and officer for
common equity since the Company's inception on June 21, 2013. Ms. Gonikman, our
officer and director, paid $0.001 per share for the 5,000,000 common shares
Assuming completion of the offering, there will be up to 15,000,000 common
shares outstanding. The following table illustrates the per common share
dilution that may be experienced by investors at various funding levels.
Percentage of funding 100% 75% 50% 25%
--------------------- ----------- ----------- ----------- -----------
Offering price $ 0.01 $ 0.01 $ 0.01 $ 0.01
Shares after offering 15,000,000 12,500,000 10,000,000 7,500,000
Amount of new funding $ 100,000 $ 75,000 $ 50,000 $ 25,000
Book value before offering (per share) $ 0.00057 $ 0.00057 $ 0.00057 $ 0.00057
Book value after offering (per share) $ 0.00686 $ 0.00623 $ 0.00528 $ 0.00371
Increase per share $ 0.00629 $ 0.00566 $ 0.00472 $ 0.00314
Dilution to investors $ 0.00314 $ 0.00377 $ 0.00472 $ 0.00629
Dilution as percentage 31% 38% 47% 63%
15
The following table summarizes the number and percentage of shares purchased the
amount and percentage of consideration paid and the average price per share paid
by our existing stockholder and by new investors in this offering:
Price per Total Number of Percentage of Consideration
Share Shares Held Ownership Paid
----- ----------- --------- ----
Existing Stockholder $0.001 5,000,000 33.3% $ 5,000
Investors in This Offering $ 0.01 10,000,000 66.7% $10,000
PLAN OF DISTRIBUTION
This is a self-underwritten offering. There are no plans or arrangements to
enter into any contracts or agreements to sell the Shares with a broker or
dealer. Ms. Gonikman, our officer and director, will sell the shares and intends
to offer them to friends, family members and business acquaintances with no
commission or other remuneration payable to her for any Shares she sells. In
offering the securities on our behalf, she will rely on the safe harbor from
broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange
Act of 1934.
She will not register as a broker-dealer pursuant to Section 15 of the
Securities Exchange Act of 1934, in reliance upon Rule 3a4-1, which sets forth
those conditions under which a person associated with an issuer, may participate
in the offering of the issuer's securities and not be deemed to be a
broker-dealer. Our officer and director satisfies the requirements of Rule
3a4-1, because she:
(a) is not subject to a statutory disqualification, as that term is
defined in Section 3(a)(39)of the Act, at the time of her
participation; and
(b) will not be compensated in connection with her participation by the
payment of commissions or other remuneration based either directly or
indirectly on transactions in securities; and
(c) is not, nor will she be at the time of her participation in the
offering, an associated person of a broker-dealer; and
(d) meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the
Exchange Act, in that she (A) primarily performs, or is intended
primarily to perform at the end of the offering, substantial duties
for or on behalf of our company, other than in connection with
transactions in securities; and (B) is not a broker or dealer, or been
associated person of a broker or dealer, within the preceding twelve
months; and (C) has not participated in selling and offering
securities for any Issuer more than once every twelve months other
than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Only after our registration statement is declared effective by the SEC, do we
intend to advertise, through our website, and hold investment meetings in Arad,
Israel. We will not utilize the internet to advertise our offering. Ms. Gonikman
will also distribute the prospectus to potential investors at the meetings, to
business associates and to her friends and relatives who are interested in us
and a possible investment in the offering. No Shares purchased in this offering
will be subject to any kind of lock-up agreement.
Our officer, director, control person and her affiliates do not intend to
purchase any Shares in this offering.
We intend to sell our Shares outside the United States, particularly in Israel.
SECTION 15(g) OF THE EXCHANGE ACT
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rules
15g-1 through 15g-6 and Rule 15g-9 promulgated there under, impose additional
sales practice requirements on broker/dealers who sell our securities to persons
other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
16
with their spouses). While Section 15(g) and Rules 15g-1 through 15g-6 apply to
brokers-dealers, they do not apply to us.
Rule 15g-1 exempts a number of specific transactions from the scope of the penny
stock rules. Rule 15g-2 declares unlawful broker/dealer transactions in penny
stocks unless the broker/dealer has first provided to the customer a
standardized disclosure document.
Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny
stock transaction unless the broker/dealer first discloses and subsequently
confirms to the customer current quotation prices or similar market information
concerning the penny stock in question.
Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for
a customer unless the broker/dealer first discloses to the customer the amount
of compensation or other remuneration received as a result of the penny stock
transaction.
Rule 15g-5 requires that a broker/dealer executing a penny stock transaction,
other than one exempt under Rule 15g-1, disclose to its customer, at the time of
or prior to the transaction, information about the sales persons compensation.
Rule 15g-6 requires broker/dealers selling penny stocks to provide their
customers with monthly account statements.
Rule 15g-9 requires broker/dealers to approve the transaction for the customer's
account; obtain a written agreement from the customer setting forth the identity
and quantity of the stock being purchased; obtain from the customer information
regarding her investment experience; make a determination that the investment is
suitable for the investor; deliver to the customer a written statement for the
basis for the suitability determination; notify the customer of her rights and
remedies in cases of fraud in penny stock transactions; and, the FINRA's toll
free telephone number and the central number of the North American Securities
Administrators Association, for information on the disciplinary history of
broker/dealers and their associated persons.
The application of the penny stock rules may affect your ability to resell your
Shares.
TERMS OF THE OFFERING
The Shares will be sold at the fixed price of $0.01 per share until the
completion of this offering. There is no minimum amount of subscription required
per investor, and subscriptions, once received, are irrevocable.
This offering will commence on the date of this prospectus is effective and
continue for a period not to exceed 180 days (the "Expiration Date").
PROCEDURES AND REQUIREMENTS FOR SUBSCRIPTION
If you decide to subscribe for any shares in this offering, you will be required
to execute a Subscription Agreement and tender it, together with a check or
certified funds to us. Subscriptions, once received by the company, are
irrevocable.
RIGHT TO REJECT SUBSCRIPTIONS
We maintain the right to accept or reject subscriptions in whole or in part, for
any reason or for no reason. All monies from rejected subscriptions will be
returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours of our
having received them.
17
DESCRIPTION OF SECURITIES TO BE REGISTERED
CAPITAL STOCK
Our authorized capital stock consists of 75,000,000 shares of common stock with
a par value of $0.001 per share.
COMMON STOCK
The holders of our common stock currently have (i) equal ratable rights to
dividends from funds legally available therefore, when, as and if declared by
the Board of Directors of the Company; (ii) are entitled to share ratably in all
of the assets of the Company available for distribution to holders of common
stock upon liquidation, dissolution or winding up of the affairs of the Company
(iii) do not have preemptive, subscription or conversion rights and there are no
redemption or sinking fund provisions or rights applicable thereto; and (iv) are
entitled to one non-cumulative vote per share on all matters on which stock
holders may vote.
NON-CUMULATIVE VOTING
Holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose, and, in that event, the holders of the remaining shares will not
be able to elect any of our directors. After this offering is completed,
assuming the sale of all of the shares of common stock, our present stockholder
will own approximately 33% of our outstanding shares.
Please refer to the Company's Articles of Incorporation, Bylaws and the
applicable statutes of the State of Nevada for a more complete description of
the rights and liabilities of holders of the Company's securities.
PREFERRED STOCK
We do not have an authorized class of preferred stock.
OPTIONS, WARRANTS AND RIGHTS
There are no outstanding options, warrants, or similar rights to purchase any of
our securities.
SHARES ELIGIBLE FOR FUTURE RESALE
GENERAL
There is no public market for our common stock. We cannot predict the effect, if
any, that market sales of shares of our common stock or the availability of
shares of our common stock for sale will have on the market price of our common
stock. Sales of substantial amounts of our common stock in the public market
could adversely affect the market prices of our common stock and could impair
our future ability to raise capital through the sale of our equity securities.
Upon completion of this offering, based on our outstanding shares as of April
30, 24, 2014, we will have outstanding an aggregate of 15,000,000 shares of our
common stock. Of these shares, upon effectiveness of the registration statement
of which this prospectus forms a part, the 10,000,000 shares covered hereby will
be freely transferable without restriction or further registration under the
Securities Act.
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The remaining 5,000,000 restricted shares of common stock to be outstanding are
owned by our officer and director, known as our "affiliate," and may not be
resold in the public market except in compliance with the registration
requirements of the Securities Act or under an exemption under Rule 144 under
the Securities Act, if available, or otherwise.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this Prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest exceeding $100,000, directly or indirectly, in the Company or any of
its parents or subsidiaries. Nor was any such person connected with Merecot
Corp. or any of its parents or subsidiaries as a promoter, managing or principal
underwriter, voting trustee, director, officer, or employee.
EXPERTS
Li and Company, PC, our independent registered public accounting firm, has
audited our financial statements included in this prospectus and registration
statement to the extent and for the periods set forth in their audit report.
LEGAL MATTERS
RULE 144 SHARES
Currently, none of our securities may be resold pursuant to Rule 144.
We are a "shell company" within the meaning of Rule 405, promulgated pursuant to
Securities Act, because we have nominal assets and nominal operations.
Accordingly, the securities sold in this offering can only be resold through
registration under Section 5 the Securities Act of 1933, Section 4(1), if
available, for non-affiliates or by meeting the conditions of Rule 144(i). A
holder of our securities may not rely on the safe harbor from being deemed
statutory underwriter under Section 2(11) of the Securities Act, as provided by
Rule 144, to resell his or her securities. Only after we (i) are not a shell
company, and (ii) have filed all reports and other materials required to be
filed by section 13 or 15(d) of the Exchange Act, as applicable, during the
preceding 12 months (or for such shorter period that we may be required to file
such reports and materials, other than Form 8-K reports); and have filed current
"Form 10 information" with the SEC reflecting our status as an entity that is no
longer a shell company for a period of not less than 12 months, can our
securities be resold pursuant to Rule 144. "Form 10 information" is, generally
speaking, the same type of information as we are required to disclose in this
prospectus, but without an offering of securities. These circumstances regarding
how Rule 144 applies to shell companies may hinder your resale of your shares of
the Company.
David Lubin & Associates, PLLC has opined on the validity of the shares of
common stock being offered hereby.
Instruction 1 to Item 509 of Regulation S-K requires disclosing whether the
interest of any expert or counsel named in the prospectus exceeds $50,000. The
interest of any expert or counsel named in the prospectus does not exceed
$50,000 according to Instruction 1 Item 509 of Regulation S-K.
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DESCRIPTION OF OUR BUSINESS
OVERVIEW
We were incorporated on June 21, 2013 in the State of Nevada. We have never been
involved in any reclassification, merger, consolidation or purchase or sale of a
significant amount of assets nor have we ever declared bankruptcy, been in
receivership, or been involved in any legal action or proceedings.
Our independent auditor has issued an audit opinion which includes a statement
expressing substantial doubt as to our ability to continue as a going concern.
EMERGING GROWTH COMPANY STATUS
Because we generated less than $1 billion in total annual gross revenues during
our most recently completed fiscal year, we qualify as an "emerging growth
company" under the Jumpstart Our Business Startups ("JOBS") Act.
We will lose our emerging growth company status on the earliest occurrence of
any of the following events:
1. on the last day of any fiscal year in which we earn at least $1
billion in total annual gross revenues, which amount is adjusted for
inflation every five years;
2. on the last day of the fiscal year of the issuer following the fifth
anniversary of the date of our first sale of common equity securities
pursuant to an effective registration statement;
3. on the date on which we have, during the previous 3-year period,
issued more than $1 billion in non-convertible debt; or
4. the date on which such issuer is deemed to be a `large accelerated
filer', as defined in section 240.12b-2 of title 17, Code of Federal
Regulations, or any successor thereto."
A "large accelerated filer" is an issuer that, at the end of its fiscal year,
meets the following conditions:
1. it has an aggregate worldwide market value of the voting and
non-voting common equity held by its non-affiliates of $700 million or
more as of the last business day of the issuer's most recently
completed second fiscal quarter;
2. It has been subject to the requirements of section 13(a) or 15(d) of
the Act for a period of at least twelve calendar months; and
3. It has filed at least one annual report pursuant to section 13(a) or
15(d) of the Act.
As an emerging growth company, exemptions from the following provisions are
available to us:
1. Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires
auditor attestation of internal controls;
2. Section 14A(a) and (b) of the Securities Exchange Act of 1934, which
require companies to hold shareholder advisory votes on executive
compensation and golden parachute compensation;
3. Section 14(i) of the Exchange Act (which has not yet been
implemented), which requires companies to disclose the relationship
between executive compensation actually paid and the financial
performance of the company;
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4. Section 953(b)(1) of the Dodd-Frank Act (which has not yet been
implemented), which requires companies to disclose the ratio between
the annual total compensation of the CEO and the median of the annual
total compensation of all employees of the companies; and
5. The requirement to provide certain other executive compensation
disclosure under Item 402 of Regulation S-K. Instead, an emerging
growth company must only comply with the more limited provisions of
Item 402 applicable to smaller reporting companies, regardless of the
issuer's size.
Pursuant to Section 107 of the JOBS Act, an emerging growth company may choose
to forgo such exemption and instead comply with the requirements that apply to
an issuer that is not an emerging growth company. We have elected under this
section of the JOBS Act to maintain our status as an emerging growth company and
take advantage of the JOBS Act provisions relating to complying with new or
revised accounting standards under Section 102(b)(1) of the JOBS Act..
BUSINESS OF ISSUER
INDUSTRY
According to International SPA Association(R) * number of SPA locations in
United Sates along is about 19,960 at the end of 2012.
Global Spa Economy Report 2007** shows that number of Spa locations in North
America is about 20,662 (2007) with total revenues of $13.5 billion.
Another source Spafinder Wellness, Inc.(R)*** also indicates that number and
variety of services provided by SPA will grow in the future.
Our approximation shows that combine number of SPA locations in both US and
Canada has been growing at steady rate and may reach up to 25,000 locations in
2014 with total revenue approximately $17 billion.
The majority of the spas are small businesses with single owner. Most SPA
locations manage their supplier relationship and inventory in an old fashion
time consuming way by phone calls and lots of paperwork. Our company's goal is
to facilitate and simplify consumer-supplier relationship reduce the burden of
complicated logistics and automate SPA inventory management, provide suppliers
with extended market to introduce new products existing and potential consumers.
This goal can be achieved by introducing our Cloud based Web Services with well
defined interfaces for both consumers and suppliers. These services will allow
automating manual work and creating marketing environment for the new products.
The main source of our revenue will be generated through the suppliers and
manufacturers of SPA products and equipment and will depend on the volume of
products sold through our services.
* Publisher and source: International SPA Association(R)
http://www.experienceispa.com/media/facts-stats/
** Source: (C) 2014 Global Spa Summit Global Spa Economy Report 2007
http://www.globalspaandwellnesssummit.org/2009/resources/2007-Global-Spa-
Economy-Report.php
*** Publisher and source: Spafinder Wellness, Inc.(R) SpaFinder 2012 spa
trend report
http://www.spafinder.com/about/press_release.jsp?relId=240
DESCRIPTION OF PRODUCT OR SERVICES
The services offered by Merecot Corp. are based on a distributed Cloud location
with well defined interfaces. There are 2 types of interfaces. One interface is
for suppliers and manufacturers of SPA products and equipment and another is for
consumers (individual SPA and Wellness locations). These services will fulfill
the following functionality:
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1. Provide consumers with detailed information about products available
in their geographical area
2. Complete single and/or recurring purchases
3. Setup delivery schedule
4. Preset minimum inventory levels that will trigger next delivery
5. Provide facility to return damaged or unwanted items
6. Limit access to the services only to authorized personnel
There will be a grace period for the consumers who want to try services and see
how they can improve the productivity and effectiveness of their company.
TARGET MARKET AND CLIENTS/POTENTIAL CLIENTS
Our target clients are divided in two categories:
Category 1: the individual SPA and Wellness locations, small and medium size
franchises.
Category 2: SPA and Wellness product and equipment manufacturers and
distributors
Geographically both categories could be located anywhere in the world although
at the initial stage of our development we'll target the North American markets
SOURCE OF REVENUE
The key factor in estimating pricing is to attract more SPA and Wellness
locations because of that we will charge them a very modest fee just to cover
the expenses to support them in using our services. Moreover the first 6 months
will be free so they can appreciate the convenience and benefits of our
services.
Consumer (Individual SPA and Wellness locations)
Fixed monthly fee
-----------------
First 6 month free $39.99 USD
The main source of our revenue will be commissions paid by suppliers and
manufacturers. This is the flat fixed fee and the percentage of the sold
products through our services. To attract suppliers and encourage them to build
up the sales network we propose to charge sales commissions based on the volume
of sold products. That means the more volume of the sold product using our
services the less percentage the Supplier will be charged.
Supplier
--------
Fixed monthly fee Percentage of the total amount of sold products
$99.99 USD % based on the volume of sales
CONTRACT FOR WEB SITE SERVICES
We have concluded an agreement with Salon Victoria of 2165 South Green Rd.,
Cleveland, OH (Service Provider) with view to provide website service to them.
The material terms of the agreement are as follows:
TARGET/SERVICE
AND SOURCE/TARGET 1. Service Provider shall provide a web interface and
website to the Client to purchase spa products and
equipment from various vendors
DUE DATE 2. Service Provider grants Client free 6 months trial
period. After trial period expires Client has option
to pay for the next service period or cancel this
contract without any penalties.
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METHOD OF DELIVERY 3. Service Provider shall deliver URL address for the
interface and the website
FEE 4. If after the trial period Client choose to continue
to use services Client shall provide a written
notice and pay Service Provider a monthly fee of
$39.99 USD.
TERMS OF PAYMENT 5. Payment is due within 30 days since first invoice
issue date.
OWNERSHIP 6. The website and the interface are a property of the
Service Provider.
CONFIDENTIALITY 7. All knowledge and information acquired during the
term of this Contract with respect to the business
and products of the client will be treated by
Service Provider as confidential until and unless
stipulated by client.
CHANGES 8. This contract can be modified orally or in writing
by agreement of both parties
TERMINATION 9. Either party may terminate this contract by giving
30 days notice in writing.
MARKETING STRATEGY
The marketing approach is to offer our services for free for a trial period of 6
months to the SPA locations and 3 months to the suppliers and manufacturers.
Suppliers and manufacturers will be contacted directly by our sales
representatives.
Individual SPA locations will receive published information and free offers via
regular mail. Extended information and offers will be also available on our
website. We will use Google and YouTube web advertisement campaign that targets
both categories of our customers.
COMPETITION AND COMPETITIVE STRATEGY
Currently there are no direct competitors that are offering the same services.
There are numbers of potential competitors that provide some elements of what
Merecot Crop. will offer to their customers as integrated package. We can
categorize our competitors into two groups:
1. The companies that sell SPA products and equipment.
2. The companies that sell Vendor Management, Supplier Management, and
Inventory Management Systems.
We cannot guarantee that we will be able to attract enough customers and that we
will be able to compete effectively because we have not yet begun operations. We
do not have a competitive position relative to these other companies. Once we
launch operations, we hope to compete on the basis of price, quality and the
novelty of our services. We intend to offer new services to the SPA and Wellness
industry. We intend to capitalize on our president's knowledge of SPA business.
We intend to compete on price for our Web Services. While our profit margins
will be smaller on our SPA services, we intend to compensate for this by having
larger margins on services offered to manufacturers and distributors of the SPA
products and equipment.
Our operations and our ability to generate revenues will be harmed if we are
unable to establish a reputation as a provider of quality services.
Currently, our competitive position within the industry is negligible in light
of the fact that we have not started our operations.
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SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
We believe that with our President's industry experience and connections will
enable us to develop the various aspects of the business. Ms. Gonikman has
experience with the SPA industry and also experience in arranging promotion and
marketing packages.
We believe there are no constraints on the sources or availability of products
and supplies related to the development of our SPA Web Services.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We believe that, because of the potentially broad base of customers for our
services, we will not rely on one or few major customers.
PATENT, TRADEMARK, LICENSE & FRANCHISE RESTRICTIONS AND CONTRACTUAL OBLIGATIONS
& CONCESSIONS
There are no inherent factors or circumstances associated with this industry, or
any of the products or services that we expect to be providing that would give
rise to any patent, trademark or license infringements or violations. We have
not entered into any franchise agreements or other contracts that have given, or
could give rise to obligations or concessions.
We do not own, either legally or beneficially, any patents or trademarks, nor do
we intend to apply for any in the near future. We do not expose IP address to
our clients, only secure URL address (https) will be used to access our
services.
GOVERNMENTAL AND INDUSTRY REGULATIONS
We will be subject to federal and state laws and regulations that relate
directly or indirectly to our operations including federal securities laws. We
will also be subject to common business and tax rules and regulations pertaining
to the operation of our business. There are no specific laws and rules for Cloud
Service Providers (CSP) although there are requirements to CSP's who provide
services to the government. FedRAMP (http://www.fedramp.gov) has set of special
requirements. Currently we do not have any intention to provide services to the
government organizations. Although we could use FedRAMP recommendation to
increase the security of our services and doing so attract more reputable large
clients.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have not spent any funds on research and development activities to date.
COMPLIANCE WITH ENVIRONMENTAL LAWS
Our operations are not subject to any environmental laws.
FACILITIES
We do not own or rent facilities of any kind. We plan to conduct our operations
from the office of our President who provides this space to us free of charge.
EMPLOYEES
We have commenced only limited operations, and currently have two employees -
our officer and director, who spends approximately fifteen hours a week on our
business and our treasurer Marina Konevetsky, who spends up to five hours a week
on the operation of our company.
REPORTS TO STOCKHOLDERS
We are not currently a reporting company, but upon effectiveness of the
registration statement, of which this prospectus forms a part, we will be
required to file reports with the SEC pursuant to the Securities Exchange Act of
1934, as amended. These reports include annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K. You may obtain copies of
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these reports from the SEC's Public Reference Room at 100 F Street, NE.,
Washington, DC 20549, on official business days during the hours of 10 a.m. to 3
p.m. or on the SEC's website, at www.sec.gov. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We will also make these reports available on our website-www.merecot.com
DESCRIPTION OF PROPERTY
We do not currently own any property. We are currently operating out of the
premises of our President, on a rent-free basis during our development stage. We
consider our current principal office space arrangement adequate.
LEGAL MATTERS
We know of no existing or pending legal proceedings against us, nor are we
involved as a plaintiff in any proceeding or pending litigation. There are no
proceedings in which any of our director, officer or any of their respective
affiliates, or any beneficial stockholder, is an adverse party or has a material
interest adverse to our interest. Our address for service of process in Nevada
is 1802 North Carson Street, Suite 108, Carson City, Nevada 89701.
MANAGEMENT
Our executive officer and our treasurer their age as of the date of this
prospectus is as follows:
Name Age Position
---- --- --------
Evgenia Gonikman 34 President, Secretary, Chief Executive Officer
and member of the Board of Directors
Marina Konevetsky 55 Treasurer
The person named above has held her offices/positions since the inception of our
company and is expected to hold her offices/positions until the next annual
meeting of our stockholders.
BIOGRAPHICAL INFORMATION
EVGENIA GONIKMAN
Set forth below is a brief description of the background and business experience
of our executive officer and director:
Evgenia Gonikman has been our President, Secretary, and a member of the Board of
Directors since our inception on June 21, 2013. Ms. Gonikman has SPA and
Wellness experience as well as technical experience in IT field.
1999-2003 worked in Hospitality Industry, Arad, Israel.
In 2004 Completed one year Esthetician program, Israel.
In 2005 Ms. Gonikman opened her own SPA business in Arad, Israel. Name: Jenny
SPA, Rishon LeZion, Israel.
From 2005 till present Ms. Gonikman owned her own SPA outlet.
Ms. Gonikman obtained an international certificates in SPA and Wellness
industry.
In 2008 she successfully completed Traditional Chinese Medicine course at
Complementary Medicine College of Canada and entitled to practice Acupuncture
and Herbal Medicine and utilize the suffix D.Ac. (Doctor of Acupuncture).
In 2008 She was granted designation of Certified Skin Care Therapist (C.S.C.T)
by Canadian Examining Board Health Care Practitioners.
Since 2012, Ms Gonikman was a member of Canadian Association of Acupuncture and
Traditional Chinese Medicine.
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Ms. Gonikman' schedule currently allows her to spend up to fifteen hours a week
on the operations of our company. She indicates that she is willing to spend
more time with the business as it grows and her services are needed. We
anticipate that she will eventually be required to spend about 60 hours a week
on matters relating to our business during the tourist season. In such
circumstances, she will have her relatives assume responsibility for the
management of her private guest house during peak tourist season.
The specific experience, qualifications, attributes, and skills that led to the
conclusion that Ms. Gonikman serve as our director were: her business experience
in the SPA industry in Israel and managing her own SPA business.
MARINA KONEVETSKY
Set forth below is a brief description of the background and business experience
of our treasurer: Marina Konevetsky.
Marina Konevetsky has been our Treasurer since our inception on June 21, 2013.
Ms. Konevetsky schedule currently allows her to spend up to five hours a week on
the operations of our company. She indicates that she is willing to delegate
more of her business time as our business grows and her services are needed.
Marina Konevetsky has a master degree in biology.
In 2012 graduated from Robetech Institute, Toronto, Canada.
2005-2011 Quality Control technologist, Solbar Industries Ltd., Ashdod, Israel.
2001-2005 Engineer laboratory building materials, Ashdod, Israel.
1981 to 2001 she worked as a chemist in the state research institute Irkutsk,
Russia.
In 1981 Marina Konevetsky graduated with Master Degree from the State
University, Irkutsk, Russia.
During the past ten years, Ms Gonikman & Ms. Konevetsky has not been the subject
of the following events:
1. Any bankruptcy petition filed by or against any business of which Ms
Konevetsky was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that time.
2. Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding.
3. An order, judgment, or decree, not subsequently reversed, suspended or
vacated, or any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting Ms.
Gonikman' involvement in any type of business, securities or banking
activities.
4. Found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Future Trading
Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or
vacated.
BOARD COMPOSITION
Our Bylaws provide that the Board of Directors shall consist of at least one
member, and that our shareholders shall determine the number of directors from
time to time. Each director serves for a term that expires until the next annual
meeting of shareholders and until her successor shall have been elected and
qualified, or until her earlier resignation, removal from office, or death.
COMMITTEES OF THE BOARD OF DIRECTORS
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. Nor do we have an audit committee "financial expert." As
such, our entire Board of Directors acts as our audit committee and handles
matters related to compensation and nominations of directors.
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POTENTIAL CONFLICTS OF INTEREST
Since we do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our sole director, who is also our sole executive officer. Thus,
there is an inherent conflict of interest.
DIRECTOR INDEPENDENCE
As of the date of this Registration Statement filed on Form S-1, we have no
independent directors.
SIGNIFICANT EMPLOYEES
We have no significant employees other than the executive officers described
above.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No director, person nominated to become a director, executive officer, promoter
or control person of our company has, during the last ten years: (i) been
convicted in or is currently subject to a pending a criminal proceeding
(excluding traffic violations and other minor offenses); (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to any federal or state securities or banking or commodities
laws including, without limitation, in any way limiting involvement in any
business activity, or finding any violation with respect to such law, nor (iii)
any bankruptcy petition been filed by or against the business of which such
person was an executive officer or a general partner, whether at the time of the
bankruptcy or for the two years prior thereto.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
We have not implemented a formal policy or procedure by which our stockholders
can communicate directly with our Board of Directors. Nevertheless, every effort
will be made to ensure that the views of stockholders are heard by the Board of
Directors, and that appropriate responses are provided to stockholders in a
timely manner. During the upcoming year, our Board will continue to monitor
whether it would be appropriate to adopt such a process.
EXECUTIVE COMPENSATION
Since our incorporation on June 21st, 2013, we have not compensated and have no
arrangements to compensate our president and director Ms. Gonikman for her
services to us as an officer. However, we anticipate that Ms. Gonikman will
receive compensation from the Company once cash flow that we generate from
operations significantly exceeds our total expenses. We have not granted any
stock options to Ms. Gonikman; there are no stock option, retirement, pension,
or profit sharing plans for the benefit of Ms. Gonikman; and, we have not
entered into any employment or consulting agreements with Ms. Gonikman. However,
as president and director of the company Ms. Gonikman has the power to set her
own compensation.
The following table sets forth the compensation paid by us for the period from
inception until March 31st, 2014, and subsequent thereto, for our sole officer
and director. This information includes the dollar value of base salaries, bonus
awards and number of stock options granted, and certain other compensation, if
any. The compensation addresses all compensation awarded to, earned by, or paid
to our named executive officers.
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Change in
Pension
Value and
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- ---------
Evgenia Gonikman 2014 Nil Nil Nil Nil Nil Nil Nil Nil
President,
Chief Executive
Officer and Director
Marina Konevetsky 2014 Nil Nil Nil Nil Nil Nil Nil Nil
Treasurer
OUTSTANDING EQUITY AWARDS AT MARCH 31ST 2014
We do not currently have a stock option plan nor did any long-term incentive
plans that provide compensation intend to serve as an incentive for performance.
No individual grants of stock options or other equity incentive awards have been
made to our president and director since our inception; accordingly, none were
outstanding at March 31, 2014.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS
There are currently no employments or other contracts or arrangements with our
executive officer. There are no compensation plans or arrangements, including
payments to be made by us, with respect to our sole officer or director that
would result from the resignation, retirement or any other termination of such
person from us. There are no arrangements for our director or officer that would
result from a change-in-control.
LONG-TERM INCENTIVE PLAN AWARDS
We do not have any long-term incentive plans that provide compensation intended
to serve as incentive for performance.
COMPENSATION OF DIRECTORS
The sole member of our board of directors is not compensated for her services as
a director. The board has not implemented a plan to award options to any
directors. There are no contractual arrangements with any member of the board of
directors. We have no director's service contracts.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the transactions discussed below, none of the following parties has,
since the date of incorporation, had any material interest, direct or indirect,
in any transaction with us or in any presently proposed transaction that has or
will materially affect us:
- The Officers and Directors;
- Any Person proposed as a nominee for election as a director;
- Any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to the outstanding
shares of common stock;
- Any relative or spouse of any of the foregoing persons who have the
same house as such person.
On October 19, 2013, we issued an aggregate of 5,000,000 shares of our common
stock to our president and director, Evgenia Gonikman, for a purchase price of
$0.001 per share or for aggregate consideration of $5,000. The shares were
issued under Regulation S of the Securities Act of 1933.
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Since inception date June 21st, 2014 until March 31, 2014, our president,
Evgenia Gonikman, advanced $5,000 to us as a secured non-interest bearing loan
with no fixed terms of repayment.
Ms. Gonikman currently manages her own private business, which owns and operates
a SPA salon. Our business plan contemplates that we will eventually enter into a
management agreement with Ms. Gonikman whereby she will provide management
services to us in consideration of a monthly fee. However, we do not anticipate
entering into such an agreement with Ms. Gonikman until our cash flow from
operations justifies such an agreement.
We have not entered into any other transaction, nor are there any proposed
transactions, in which our president and director, or any significant
stockholder, or any member of the immediate family of any of the foregoing, had
or is to have a direct or indirect material interest.
Our president and director may be considered a promoter of the Company due to
her participation in and management of the business since our incorporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On October 19, 2013, we issued an aggregate of 5,000,000 shares of our common
stock to our director for aggregate consideration of $5,000.
The following table sets forth information regarding the beneficial ownership of
our common stock as of April 30, 2014 for our director. There is no other person
or group of affiliated persons, known by us to beneficially own more than 5% of
our common stock.
We have determined beneficial ownership in accordance with the rules of the
Securities and Exchange Commission. These rules generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or
investment power with respect to those securities. The person is also deemed to
be a beneficial owner of any security of which that person has a right to
acquire beneficial ownership within 60 days. Unless otherwise indicated, the
person identified in this table has sole voting and investment power with
respect to all shares shown as beneficially owned by her, subject to applicable
community property laws, and the address for each person listed in the table is
Merecot Corp., 6 Corporate Way, Suite 2-6621, Valley Cottage, NY 10989.
The percentage ownership information shown in the table below is calculated
based on 5,000,000 shares of our common stock issued and outstanding as of April
30, 2014. We do not have any outstanding options, warrants or other securities
exercisable for or convertible into shares of our common stock.
No. of Common No. of Common Percentage of
Name and Address of Stock Stock Ownership
Beneficial Owner Before Offering After Offering Before Offering
---------------- --------------- -------------- ---------------
Evgenia Gonikman 5,000,000 5,000,000 100%
6 Corporate Way, Suite 2-6621,
Valley Cottage, NY 10989
Marina Konevetsky 0 0 0
Officers and directors
(2 persons) 5,000,000 5,000,000 100%
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission initial reports of
29
ownership and reports of changes of ownership of our common stock. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to our directors,
officers or persons controlling us, we have been advised that it is the
Securities and Exchange Commission's opinion that such indemnification is
against public policy as expressed in such act and is, therefore, unenforceable.
MANAGEMENT'S DISCUSSION AND ANALYSIS
You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and the related notes and other financial information included elsewhere in this
prospectus. Some of the information contained in this discussion and analysis or
set forth elsewhere in this prospectus, including information with respect to
our plans and strategy for our business and related financing, includes
forward-looking statements that involve risks and uncertainties. You should
review the "Risk Factors" section of this prospectus for a discussion of
important factors that could cause actual results to differ materially from the
results described in or implied by the forward-looking statements contained in
the following discussion and analysis.
Our cash balance is $4,788 as of March 31, 2014. We believe our cash balance is
not sufficient to fund our limited levels of operations for any period of time.
We have been utilizing funds received from our president and director from the
purchase of shares. She has no commitment, arrangement or legal obligation to
advance or loan funds to the company. In order to implement our plan of
operations for the next twelve month period, we require a minimum of $25,000
(approximately $8,000 of which we anticipate will be costs associated with being
a public company) of funding from this offering. Being a development stage
company, we have very limited operating history. After twelve months period we
may need additional financing. We do not currently have any arrangements for
additional financing. Our principal executive offices are located at 616
Corporate Way, Suite 2-6621, Valley Cottage, NY 10989. Our phone number is (929)
200-1255.
Our independent registered public accountant has issued a going concern opinion.
This means that there is substantial doubt that we can continue as an on-going
business for the next twelve months unless we obtain additional capital to pay
our bills. This is because we have generated nominal revenues of $420 as of the
date of this prospectus only and no revenues are anticipated until we complete
our initial business development. There is no assurance we will ever reach that
stage.
To meet our need for cash we are attempting to raise money from this offering.
We believe that we will be able to raise enough money through this offering to
start our proposed operations but we cannot guarantee that once we start
operations we will stay in business after doing so. If we are unable to
successfully attract customers to buy our Web Services we may quickly use up the
proceeds from this offering and will need to find alternative sources. At the
present time, we have not made any arrangements to raise additional cash, other
than through this offering.
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 an annual
non-binding advisory vote on executive compensation and nonbinding stockholder
approval of any golden parachute payments not previously approved. 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)
30
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. However, we are choosing to "opt out" of such extended transition
period, and as a result, we will comply with new or revised accounting standards
on the relevant dates on which adoption of such standards is required for
non-emerging growth companies. Section 107 of the JOBS Act provides that our
decision to opt out of the extended transition period for complying with new or
revised accounting standards is irrevocable.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2014
For the three months ended March 31, 2014, our operating expenses were comprised
of professional fees of $2,983 and general and administrative expenses of $91.
We have generated no revenue during the period.
RESULTS OF OPERATIONS FROM INCEPTION ON JUNE 21, 2013 TO DECEMBER 31, 2013
During the period from inception to December 31, 2013, our operating expenses
were comprised of professional fees of $2,500 and general and administrative
expenses of $1,586. We have generated nominal revenues of $420 from Salon
Victoria providing them with IT consulting services. We currently anticipate
that our legal and accounting fees will increase over the next 12 months as a
result of becoming a reporting company with the SEC, and will be approximately
$8000. We have prepared an internal business plan. We have not started our
proposed business operations and do not expect to do so until approximately 180
days after we have completed this offering.
ACTIVITIES TO DATE
A substantial portion of our activities to date has involved developing a
business plan. Our President has also developed Plan of Operations. We have
established the company office and provided information session and consulting
about our services to one prospective customer.
PLAN OF OPERATIONS
We currently anticipate that our legal and accounting fees will increase over
the next 12 months as a result of becoming a reporting company with the SEC, and
will be approximately $8000. We have prepared an internal business plan. We have
not started our proposed business operations and do not expect to do so until
approximately 180 days after we have completed this offering.
We do not rely on Ms. Gonikman technical expertise in software and website
development to develop our services. Instead we are In the process of
researching a customizable turnkey software solution that will suit our
requirements and we intend to utilize the services of the third parties.
Our plan of operations in case we only raise 25% of our offering includes the
following activities and expenditures:
1ST MONTH
1. Prepare high level solution design for the Web Services and business
engine.
2. Research available solutions to implement Web Services or to find available
ready solutions.
3. Perform SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis
for selected solutions
4. Develop company website - $1,150.00
5. Purchase accounting software - $250.00
31
s
2RD MONTH
1. Start developing two application programming interfaces (API)
a) Spa to Web Services API
b) Supplier to Web Services API
2. Research hosting solutions for Web Services - in house or external
3. Provide SWOT analysis for selected hosting solutions
3RD MONTH
1. Continue developing both API's
2. Identify geographical area for the pilot project
3. Identify the most important suppliers in the selected area
4. Identify several spas that would participate in the pilot project
5. Prepare presentations for prospected customers - $500
a) Day spa outlets
b) Suppliers - distributors, manufacturers
6. Print advertising materials, presentations - $900
7. Start Marketing Campaign to promote our services - $400
a) Print and distribute materials for the manufacturers and suppliers
b) Print and distribute materials for the day spa and beauty salons
1st Quarter Total - $3,200
4TH MONTH
1. Complete draft API's
2. Contact prospective customer over the phone and send presentation materials
3. Setup meetings with customers
4. Research hosting solution for the hardware
5. Analyze available options for the hardware hosting
6. Rent hardware for the pilot server - $1,350
7. Setup office pilot server to install the software
8. Continue marketing campaign - $400
a) Advertise on Google
b) Place ads on the spa association website
(http://www.thespaassociation.com/) and similar spa related websites
c) Create a sample video to explain how the Web Services will enhance the
communication between suppliers and consumers
5TH MONTH
1. Purchase two workstations(PC) to simulate spa workstation and supplier
workstation $1,200
2. Start integrating workstations and server
3. Purchase license to Java Development Toolkit - $300
4. Customize shrink wrap solution/ develop in house Web Services
5. Continue marketing campaign - $400
a) Advertise on Google
b) Place ads on the spa association websites e.g.
http://www.thespaassociation.com and similar spa related websites
c) Print and distribute add materials to the day spas and beauty salons
6TH MONTH
1. Continue software customization/development
2. Start testing API for completed services
3. Continue marketing campaign - $400
a) Advertise on Google
b) Place ads on the spa association websites e.g.
http://www.thespaassociation.com and similar spa related websites
c) Advertise on local radio stations
2nd Quarter Total - $4,050
32
7TH MONTH
1. Start testing services in development environment
2. Continue software development
3. Continue marketing campaign - $400
a) Advertise on Google
b) Place ads on the spa association websites e.g.
http://www.thespaassociation.com and similar spa related websites
c) Advertise on local radio stations
8TH MONTH
1. Setup workstations at participated client sites (at least one spa location
and one distributor location) - $1,800
2. Provide customer training materials for both day spa salons and suppliers
3. Purchase QA testing tools - $550
4. Set up QA environment to test Web Services - $500
5. Continue testing Web Services in development environment
6. Continue marketing campaign - $400
a) Advertise on Google
b) Place ads on the spa association websites e.g.
http://www.thespaassociation.com and similar spa related websites
c) Advertise on local radio stations
9TH MONTH
1. Start testing available services in QA - $500
2. Star testing client's connection to the Web Services
3. Prepare first version of API's and publish it on the server
4. Continue marketing campaign - $400
a) Advertise on Google
b) Place ads on the spa association websites e.g.
http://www.thespaassociation.com and similar spa related websites
c) Advertise on local radio station
3rd Quarter Total - $4,550
10TH MONTH
1. Setup hardware at selected production locations. Hosting fees - $500
2. Begin testing ready services from client's locations
3. Prepare documentation for the developed solution
4. Complete testing all services in development environment
5. Continue testing available services in QA environment
6. Adjust API's as necessary
7. Continue marketing campaign - $700
a) Advertise on Google
b) Place ads on the spa association websites e.g.
http://www.thespaassociation.com and similar spa related websites
33
c) Advertise on local radio stations
d) Place ads in the local newspapers
11TH MONTH
1. Server hosting fees - $500
2. Prepare for QA sign off for completed Web Services
3. Continue testing ready services from client's locations
4. Establish office - $1500
12TH MONTH
1. Server hosting fees - $500
2. Start supervised transactions between clients (no real money yet)
3. Analyze result of first real time transactions
4. Salaries - $1,500
4th Quarter Total: $5,200
Legal expenses: $8,000
Total for 12 months: $25,000
OFF BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2014, the Company had $4,788 cash and liabilities of $6,028. The
available capital reserves of the Company are sufficient for the Company to
remain operational.
Our estimation of the number of months we can sustain operations: Our negative
cash flow per month is: 3,074/3=1,025 (Last quarter expenses/3=monthly rate).
Based on this estimate and on currently cash on hand we can sustain operations
until (4,788/1,025 = 4.7 months) August 2014.
Since inception, we have sold 5,000,000 shares of common stocks to our president
and director, at a price of $0.001 per share, for aggregate proceeds of $5,000.
Our president and director also provided $5,000 long term loan to the company.
We are attempting to raise funds to proceed with our plan of operation. Our
current cash on hand will be used to pay the fees and expenses of this offering.
We will have to utilize funds from our sole officer and director. However, she
has no formal commitment, arrangement or legal obligation to advance or loan
funds to the company. To proceed with our operations for 12 months, we need a
minimum of $25,000. We cannot guarantee that we will be able to sell all the
shares required to satisfy our 12 months financial requirement. If we are
successful, any money raised will be applied to the items set forth in the Use
of Proceeds section of this prospectus. In the long term we may need additional
34
financing. We do not currently have any arrangements for additional financing.
Obtaining additional funding will be subject to a number of factors, including
general market conditions, investor acceptance of our business plan and initial
results from our business operations. These factors may impact the timing,
amount, terms or conditions of additional financing available to us. There is no
assurance that any additional financing will be available or if available, on
terms that will be acceptable to us.
GOING CONCERN CONSIDERATION
Our auditors have issued a "going concern" opinion, meaning that there is
substantial doubt if we can continue as an on-going business for the next twelve
months unless we obtain additional capital. No substantial revenues are
anticipated until we have completed the financing from this offering and
implemented our plan of operations. Our only source for cash at this time is
investments by others in this offering. We must raise cash to implement our
strategy and stay in business. If we sell at least 25% of the shares in the
offering we believe that we will have the resources to operate for the next 12
months, including for the costs associated with becoming a publicly reporting
company. The company anticipates over the next 12 months the cost of being a
reporting public company will be approximately $10,000.
LIMITED OPERATING HISTORY AND NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us upon which to base an
evaluation of our performance. We are in start-up stage operations and have
generated nominal revenues of $420 from Salon Victoria as of the date of this
prospectus. We cannot guarantee we will be successful in our business
operations. Our business is subject to risks inherent in the establishment of a
new business enterprise, including limited capital resources and possible cost
overruns due to price and cost increases in services and products.
AVAILABLE INFORMATION
We do not plan to register our common stock under Section 12(g) of the
Securities Exchange Act of 1934 ("Exchange Act") by filing a Form 8-A on a
pre-effective basis. The consequences to investors of us being a Section 15(d)
registrant in comparison to a Section 12(g) registrant are as follows: Under
Section 15(d) of the Exchange Act, we are not required to file periodic reports
if we have less than 300 holders of record for the fiscal year after the year of
effectiveness. if we do not register our securities under Section 12 of the
Exchange Act, we may not have an ongoing periodic reporting obligation and will
not be subject to the Commission's proxy rules and Section 16 of the Exchange
Act.
We have not previously been required to comply with the reporting requirements
of the Securities Exchange Act. We have filed with the SEC a registration
statement on Form S-1 to register the securities offered by this prospectus. For
future information about us and the securities offered under this prospectus,
you may refer to the registration statement and to the exhibits filed as a part
of the registration statement. In addition, after the effective date of this
prospectus, we will be required to file annual, quarterly and current reports,
or other information with the SEC as provided by the Securities Exchange Act.
You may read and copy any reports, statements or other information we file at
the SEC's public reference facility maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. Our SEC filings are available to the public through the
SEC Internet site at www.sec.gov.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The Nevada General Corporation Law requires us to indemnify officers and
directors for any expenses incurred by any officer or director in connection
with any actions or proceedings, whether civil, criminal, administrative, or
investigative, brought against such officer or director because of his or her
35
status as an officer or director, to the extent that the director or officer has
been successful on the merits or otherwise in defense of the action or
proceeding. The Nevada General Corporation Law permits a corporation to
indemnify an officer or director, even in the absence of an agreement to do so,
for expenses incurred in connection with any action or proceeding if such
officer or director acted in good faith and in a manner in which he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and such indemnification is authorized by the stockholders, by a
quorum of disinterested directors, by independent legal counsel in a written
opinion authorized by a majority vote of a quorum of directors consisting of
disinterested directors, or by independent legal counsel in a written opinion if
a quorum of disinterested directors cannot be obtained.
The Nevada General Corporation Law prohibits indemnification of a director or
officer if a final adjudication establishes that the officer's or director's
acts or omissions involved intentional misconduct, fraud, or a knowing violation
of the law and were material to the cause of action. Despite the foregoing
limitations on indemnification, the Nevada General Corporation Law may permit an
officer or director to apply to the court for approval of indemnification even
if the officer or director is adjudged to have committed intentional misconduct,
fraud, or a knowing violation of the law.
The Nevada General Corporation Law also provides that indemnification of
directors is not permitted for the unlawful payment of distributions, except for
those directors registering their dissent to the payment of the distribution.
According to Article 11 of our Bylaws, we are authorized to indemnify our
directors to the fullest extent authorized under Nevada law subject to certain
specified limitations.
Insofar as indemnification for liabilities arising under the Securities Act may
be provided to directors, officers or persons controlling us pursuant to the
foregoing provisions, we have been informed that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
WHERE YOU CAN GET MORE INFORMATION
We have filed with the SEC a Registration Statement on Form S-1 (including
exhibits) under the Securities Act with respect to the shares to be sold in this
Offering. This Prospectus, which forms part of the Registration Statement, does
not contain all the information set forth in the Registration Statement as some
portions have been omitted in accordance with the rules and regulations of the
SEC. For further information with respect to our Company and the Shares offered
in this Prospectus, reference is made to the Registration Statement, including
the exhibits filed thereto, and the financial statements and notes filed as a
part thereof. With respect to each such document filed with the SEC as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved. We are not currently subject
to the informational requirements of the Securities Exchange Act of 1934 (the
"Exchange Act"). As a result of the offering of the Shares of our common stock,
we will become subject to the informational requirements of the Exchange Act,
and, in accordance therewith, we will file quarterly and annual reports and
other information with the SEC and send a copy of our annual report together
with audited consolidated financial statements to each of our shareholders. The
Registration Statement, such reports and other information may be inspected and
copied at the Public Reference Room of the SEC located at 100 F Street, N. E.,
Washington, D. C. 20549. Copies of such materials, including copies of all or
any portion of the Registration Statement, may be obtained from the Public
Reference Room of the SEC at prescribed rates. You may call the SEC at
1-800-SEC-0330 to obtain information on the operation of the Public Reference
Room. Such materials may also be accessed electronically by means of the SEC's
home page on the internet (http://www.sec.gov).
36
Merecot Corp.
December 31, 2013
Index to the Financial Statements
Contents Page(s)
-------- -------
Report of Independent Registered Public Accounting Firm ............... F-2
Balance sheet at December 31, 2013..................................... F-3
Statement of operations for the period from June 21, 2013 (inception)
through December 31, 2013.............................................. F-4
Statement of stockholder's equity for the period from June 21, 2013
(inception) through December 31, 2013.................................. F-5
Statement of cash flows for the period from June 21, 2013 (inception)
through December 31, 2013.............................................. F-6
Notes to the financial statements ..................................... F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholder of
Merecot Corp.
(A Development Stage Company)
We have audited the accompanying balance sheet of Merecot Corp. (the "Company")
as of December 31, 2013 and the related statements of operations, stockholder's
equity and cash flows for the period from June 21, 2013 (inception) through
December 31, 2013. 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 audit.
We conducted our audit 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 audit 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. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides 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 the Company as of December 31,
2013 and the results of its operations and its cash flows for the period from
June 21, 2013 (inception) through December 31, 2013 in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company had a deficit accumulated during the
development stage at December 31, 2013 and had a net loss and net cash used in
operating activities for the period from June 21, 2013 (inception) through
December 31, 2013. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regards to these
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/Li and Company, PC
----------------------------------
Li and Company, PC
Skillman, New Jersey
February 26, 2014
F-2
Merecot Corp.
(A Development Stage Company)
Balance Sheet
December 31, 2013
-----------------
ASSETS
CURRENT ASSETS
Cash $ 7,830
--------
Total current assets 7,830
--------
Total assets $ 7,830
========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Advances from stockholder $ 996
Loan payable - stockholder 5,000
--------
Total current liabilities 5,996
--------
STOCKHOLDER'S EQUITY
Common stock par value $0.001: 75,000,000 shares authorized;
5,000,000 shares issued and outstanding 5,000
Deficit accumulated during the development stage (3,166)
--------
Total stockholder's equity 1,834
--------
Total liabilities and stockholder's equity $ 7,830
========
See accompanying notes to the financial statements.
F-3
Merecot Corp.
(A Development Stage Company)
Statement of Operations
For the Period from
June 21, 2013
(inception) through
December 31, 2013
-----------------
Revenue earned during the development stage $ 420
Operating Expenses
Professional fees 2,500
General and administrative expenses 1,086
----------
Total operating expenses 3,586
----------
Loss before Income Tax Provision (3,166)
Income Tax Provision --
----------
Net Loss $ (3,166)
==========
Net loss per common share
- Basic and Diluted $ (0.00)
==========
Weighted average common shares outstanding
- Basic and Diluted 5,000,000
==========
See accompanying notes to the financial statements.
F-4
Merecot Corp.
(A Development Stage Company)
Statement of Stockholder's Equity
For the period from June 21, 2013 (inception) through December 31, 2013
Deficit
Common stock par value $0.001 Accumulated
----------------------------- during the Total
Shares Development Stockholders'
Number of Amount Stage Equity
--------- ------ ----- ------
June 21, 2013 (inception) -- $ -- $ -- $ --
Issuance of common shares
for cash upon formation 5,000,000 5,000 5,000
Net loss (3,166) (3,166)
---------- -------- -------- --------
Balance, December 31, 2013 5,000,000 $ 5,000 $ (3,166) $ 1,834
========== ======== ======== ========
See accompanying notes to the financial statements.
F-5
Merecot Corp.
(A Development Stage Company)
Statements of Cash Flows
For the Period from
June 21, 2013
(inception) through
December 31, 2013
-----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,166)
--------
NET CASH USED IN OPERATING ACTIVITIES (3,166)
--------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from stockholder 996
Loan payable - stockholder 5,000
Proceeds from sale of common shares 5,000
--------
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,996
--------
NET CHANGE IN CASH 7,830
CASH - BEGINNING OF PERIOD --
--------
CASH - END OF PERIOD $ 7,830
========
Supplemental disclosure of cash flow information:
Interest paid $ --
========
Income tax paid $ --
========
See accompanying notes to the financial statements.
F-6
Merecot Corp.
(A Development Stage Company)
December 31, 2013
Notes to the Financial Statements
NOTE 1 - ORGANIZATION AND OPERATIONS
MERECOT CORP.
Merecot Corp. (the "Company") was incorporated on June 21, 2013 under the laws
of the State of Nevada. The Company engages in creating automated supply chain
Web Services to the SPA and Wellness industry.
NOTE 2 - SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
The Management of the Company is responsible for the selection and use of
appropriate accounting policies and the appropriateness of accounting policies
and their application. Critical accounting policies and practices are those that
are both most important to the portrayal of the Company's financial condition
and results and require management's most difficult, subjective, or complex
judgments, often as a result of the need to make estimates about the effects of
matters that are inherently uncertain. The Company's significant and critical
accounting policies and practices are disclosed below as required by generally
accepted accounting principles.
BASIS OF PRESENTATION
The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by section 915-10-20 of
the FASB Accounting Standards Codification. Although the Company has recognized
some nominal amount of revenues since inception, the Company is devoting
substantially all of its efforts on establishing the business and its planned
principal operations have not commenced. All losses accumulated since inception
have been considered as part of the Company's development stage activities.
USE OF ESTIMATES AND ASSUMPTIONS AND CRITICAL ACCOUNTING ESTIMATES AND
ASSUMPTIONS
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date(s)
of the financial statements and the reported amounts of revenues and expenses
during the reporting period(s).
Critical accounting estimates are estimates for which (a) the nature of the
estimate is material due to the levels of subjectivity and judgment necessary to
account for highly uncertain matters or the susceptibility of such matters to
change and (b) the impact of the estimate on financial condition or operating
performance is material. The Company's critical accounting estimate(s) and
assumption(s) affecting the financial statements was (were):
(i) ASSUMPTION AS A GOING CONCERN: Management assumes that the Company
will continue as a going concern, which contemplates continuity of
operations, realization of assets, and liquidation of liabilities in
the normal course of business.
(ii) VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS: Management assumes that
the realization of the Company's net deferred tax assets resulting
from its net operating loss ("NOL") carry-forwards for Federal income
tax purposes that may be offset against future taxable income was not
considered more likely than not and accordingly, the potential tax
benefits of the net loss carry-forwards are offset by a full valuation
F-7
allowance. Management made this assumption based on (a) the Company
has incurred recurring losses, (b) general economic conditions, and
(c) its ability to raise additional funds to support its daily
operations by way of a public or private offering, among other
factors.
These significant accounting estimates or assumptions bear the risk of change
due to the fact that there are uncertainties attached to these estimates or
assumptions, and certain estimates or assumptions are difficult to measure or
value.
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop
the estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such
evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph
820-10-35-37") to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair
value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value into three (3) broad levels. The fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities and the lowest priority to unobservable inputs.
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37
are described below:
Level 1 Quoted market prices available in active markets for identical assets
or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in
Level 1, which are either directly or indirectly observable as of the
reporting date.
Level 3 Pricing inputs that are generally observable inputs and not
corroborated by market data.
Financial assets are considered Level 3 when their fair values are determined
using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the
lowest priority to unobservable inputs. If the inputs used to measure the
financial assets and liabilities fall within more than one level described
above, the categorization is based on the lowest level input that is significant
to the fair value measurement of the instrument.
The carrying amounts of the Company's financial assets and liabilities, such as
cash and accrued expenses approximate their fair values because of the short
maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on
an arm's-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties,
if made, shall not imply that the related party transactions were consummated on
terms equivalent to those that prevail in arm's-length transactions unless such
representations can be substantiated.
F-8
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less at the time of purchase to be cash equivalents.
RELATED PARTIES
The Company follows subtopic 850-10 of the FASB Accounting Standards
Codification for the identification of related parties and disclosure of related
party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the
Company; b. entities for which investments in their equity securities would be
required, absent the election of the fair value option under the Fair Value
Option Subsection of Section 825-10-15, to be accounted for by the equity method
by the investing entity; c. trusts for the benefit of employees, such as pension
and profit-sharing trusts that are managed by or under the trusteeship of
management; d. principal owners of the Company; e. management of the Company; f.
other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests; and g. other parties that can significantly
influence the management or operating policies of the transacting parties or
that have an ownership interest in one of the transacting parties and can
significantly influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own separate
interests.
The financial statements shall include disclosures of material related party
transactions, other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business. However, disclosure of
transactions that are eliminated in the preparation of consolidated or combined
financial statements is not required in those statements. The disclosures shall
include: a. the nature of the relationship(s) involved; b. a description of the
transactions, including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which income statements are presented, and
such other information deemed necessary to an understanding of the effects of
the transactions on the financial statements; c. the dollar amounts of
transactions for each of the periods for which income statements are presented
and the effects of any change in the method of establishing the terms from that
used in the preceding period; and d. amounts due from or to related parties as
of the date of each balance sheet presented and, if not otherwise apparent, the
terms and manner of settlement.
COMMITMENT AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Certain conditions may
exist as of the date the financial statements are issued, which may result in a
loss to the Company but which will only be resolved when one or more future
events occur or fail to occur. The Company assesses such contingent liabilities,
and such assessment inherently involves an exercise of judgment. In assessing
loss contingencies related to legal proceedings that are pending against the
Company or unasserted claims that may result in such proceedings, the Company
evaluates the perceived merits of any legal proceedings or unasserted claims as
well as the perceived merits of the amount of relief sought or expected to be
sought therein.
If the assessment of a contingency indicates that it is probable that a material
loss has been incurred and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company's financial statements.
If the assessment indicates that a potential material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, and an estimate of the range of
possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they
involve guarantees, in which case the guarantees would be disclosed. Management
does not believe, based upon information available at this time, that these
matters will have a material adverse effect on the Company's financial position,
results of operations or cash flows. However, there is no assurance that such
matters will not materially and adversely affect the Company's business,
financial position, and results of operations or cash flows.
F-9
REVENUE RECOGNITION
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue when it is
realized or realizable and earned. The Company considers revenue realized or
realizable and earned when all of the following criteria are met: (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the
services have been rendered to the customer, (iii) the sales price is fixed or
determinable, and (iv) collectability is reasonably assured.
INCOME TAX PROVISION
The Company accounts for income taxes under Section 740-10-30 of the FASB
Accounting Standards Codification. Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the statements
of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification ("Section 740-10-25"). Section 740-10-25 addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under Section 740-10-25,
the Company may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
fifty percent (50%) likelihood of being realized upon ultimate settlement.
Section 740-10-25 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis
of assets and liabilities are reported in the accompanying balance sheets, as
well as tax credit carry-backs and carry-forwards. The Company periodically
reviews the recoverability of deferred tax assets recorded on its balance sheets
and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might
be challenged upon an audit and cause changes to previous estimates of tax
liability. In addition, the Company operates within multiple taxing
jurisdictions and is subject to audit in these jurisdictions. In management's
opinion, adequate provisions for income taxes have been made for all years. If
actual taxable income by tax jurisdiction varies from estimates, additional
allowances or reversals of reserves may be necessary.
UNCERTAIN TAX POSITIONS
The Company did not take any uncertain tax positions and had no adjustments to
its income tax liabilities or benefits pursuant to the provisions of Section
740-10-25 for the period from June 21, 2013 (inception) through December 31,
2013.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed pursuant to section 260-10-45 of
the FASB Accounting Standards Codification. Basic net income (loss) per common
share is computed by dividing net income (loss) by the weighted average number
of shares of common stock outstanding during the period. Diluted net income
(loss) per common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock and potentially dilutive
outstanding shares of common stock during the period to reflect the potential
dilution that could occur from common shares issuable through contingent share
arrangements, stock options and warrants.
F-10
There were no potentially dilutive common shares outstanding for the period from
June 21, 2013 (inception) through December 31, 2013.
CASH FLOWS REPORTING
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards
Codification for cash flows reporting, classifies cash receipts and payments
according to whether they stem from operating, investing, or financing
activities and provides definitions of each category, and uses the indirect or
reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25
of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow
from operating activities by removing the effects of (a) all deferrals of past
operating cash receipts and payments and all accruals of expected future
operating cash receipts and payments and (b) all items that are included in net
income that do not affect operating cash receipts and payments. The Company
reports the reporting currency equivalent of foreign currency cash flows, using
the current exchange rate at the time of the cash flows and the effect of
exchange rate changes on cash held in foreign currencies is reported as a
separate item in the reconciliation of beginning and ending balances of cash and
cash equivalents and separately provides information about investing and
financing activities not resulting in cash receipts or payments in the period
pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards
Codification.
SUBSEQUENT EVENTS
The Company follows the guidance in Section 855-10-50 of the FASB Accounting
Standards Codification for the disclosure of subsequent events. The Company will
evaluate subsequent events through the date when the financial statements were
issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification,
the Company as an SEC filer considers its financial statements issued when they
are widely distributed to users, such as through filing them on EDGAR.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 2013, the FASB issued ASU No. 2013-02, "COMPREHENSIVE INCOME (TOPIC
220): REPORTING OF AMOUNTS RECLASSIFIED OUT OF ACCUMULATED OTHER COMPREHENSIVE
INCOME." The ASU adds new disclosure requirements for items reclassified out of
accumulated other comprehensive income by component and their corresponding
effect on net income. The ASU is effective for public entities for fiscal years
beginning after December 15, 2013.
In February 2013, the Financial Accounting Standards Board, or FASB, issued ASU
No. 2013-04, "LIABILITIES (TOPIC 405): OBLIGATIONS RESULTING FROM JOINT AND
SEVERAL LIABILITY ARRANGEMENTS FOR WHICH THE TOTAL AMOUNT OF THE OBLIGATION IS
FIXED AT THE REPORTING Date." This ASU addresses the recognition, measurement,
and disclosure of certain obligations resulting from joint and several
arrangements including debt arrangements, other contractual obligations, and
settled litigation and judicial rulings. The ASU is effective for public
entities for fiscal years, and interim periods within those years, beginning
after December 15, 2013.
In March 2013, the FASB issued ASU No. 2013-05, "FOREIGN CURRENCY MATTERS (TOPIC
830): PARENT'S ACCOUNTING FOR THE CUMULATIVE TRANSLATION ADJUSTMENT UPON
DERECOGNITION OF CERTAIN SUBSIDIARIES OR GROUPS OF ASSETS WITHIN A FOREIGN
ENTITY OR OF AN INVESTMENT IN A FOREIGN ENTITY." This ASU addresses the
accounting for the cumulative translation adjustment when a parent either sells
a part or all of its investment in a foreign entity or no longer holds a
controlling financial interest in a subsidiary or group of assets that is a
nonprofit activity or a business within a foreign entity. The guidance outlines
the events when cumulative translation adjustments should be released into net
income and is intended by FASB to eliminate some disparity in current accounting
practice. This ASU is effective prospectively for fiscal years, and interim
periods within those years, beginning after December 15, 2013.
In March 2013, the FASB issued ASU 2013-07, "PRESENTATION OF FINANCIAL
STATEMENTS (TOPIC 205): LIQUIDATION BASIS OF ACCOUNTING." The amendments require
an entity to prepare its financial statements using the liquidation basis of
accounting when liquidation is imminent. Liquidation is imminent when the
F-11
likelihood is remote that the entity will return from liquidation and either (a)
a plan for liquidation is approved by the person or persons with the authority
to make such a plan effective and the likelihood is remote that the execution of
the plan will be blocked by other parties or (b) a plan for liquidation is being
imposed by other forces (for example, involuntary bankruptcy). If a plan for
liquidation was specified in the entity's governing documents from the entity's
inception (for example, limited-life entities), the entity should apply the
liquidation basis of accounting only if the approved plan for liquidation
differs from the plan for liquidation that was specified at the entity's
inception. The amendments require financial statements prepared using the
liquidation basis of accounting to present relevant information about an
entity's expected resources in liquidation by measuring and presenting assets at
the amount of the expected cash proceeds from liquidation. The entity should
include in its presentation of assets any items it had not previously recognized
under U.S. GAAP but that it expects to either sell in liquidation or use in
settling liabilities (for example, trademarks). The amendments are effective for
entities that determine liquidation is imminent during annual reporting periods
beginning after December 15, 2013, and interim reporting periods therein.
Entities should apply the requirements prospectively from the day that
liquidation becomes imminent. Early adoption is permitted.
Management does not believe that any other recently issued, but not yet
effective accounting pronouncements, if adopted, would have a material effect on
the accompanying financial statements.
NOTE 3 - GOING CONCERN
The financial statements have been prepared assuming that the Company will
continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of
business.
As reflected in the financial statements, the Company had a deficit accumulated
during the development stage at December 31, 2013, a net loss and net cash used
in operating activities for the period from June 21, 2013 (inception) through
December 31, 2013. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
Although the Company has recognized some nominal amount of revenues since
inception, the Company is devoting substantially all of its efforts on
establishing the business and its planned principal operations have not
commenced. The Company is attempting to commence operations and generate
sufficient revenue; however, the Company's cash position may not be sufficient
to support its daily operations. While the Company believes in the viability of
its strategy to commence operations and generate sufficient revenue and in its
ability to raise additional funds, there can be no assurances to that effect.
The ability of the Company to continue as a going concern is dependent upon its
ability to further implement its business plan and generate sufficient revenue
and its ability to raise additional funds by way of a public or private
offering.
The financial statements do not include any adjustments related to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
NOTE 4 - STOCKHOLDER'S EQUITY
SHARES AUTHORIZED
Upon formation the total number of shares of all classes of stock which the
Company is authorized to issue is Seventy-Five Million (75,000,000) shares of
which Seventy-Five Million (75,000,000) shares shall be Common Stock, par value
$0.001 per share.
COMMON STOCK
On June 21, 2013, upon formation, the Company sold 5,000,000 shares of common
stock to the founder of the Company at $0.001 per share, or $5,000 in cash.
F-12
NOTE 5 - RELATED PARTY TRANSACTIONS
RELATED PARTIES
Related parties with whom the Company had transactions are:
Related Parties Relationship
--------------- ------------
Evgenia Gonikman Chairman, CEO, significant stockholder and director
FREE OFFICE SPACE
The Company has been provided office space by its Chief Executive Officer at no
cost. Management determined that such cost is nominal and did not recognize the
rent expense in its financial statement.
ADVANCES FROM STOCKHOLDER
From time to time, the Chairman, CEO and significant stockholder of the Company
advances funds to the Company for working capital purpose. Those advances are
unsecured, non-interest bearing and due on demand.
The Chairman, CEO and significant stockholder of the Company advanced $996 in
aggregate to the Company for the period from June 21, 2013 (inception) through
December 31, 2013, none of which has been repaid.
LOAN PAYABLE - CHIEF EXECUTIVE OFFICER
On July 5, 2013, the Company executed a loan agreement in the amount of $5,000
payable to the Chairman, CEO and significant stockholder of the Company. The
loan is unsecured, non-interest bearing and due on demand.
NOTE 6 - INCOME TAX PROVISION
DEFERRED TAX ASSETS
At December 31, 2013, the Company had net operating loss ("NOL") carry-forwards
for Federal income tax purposes of $3,166 that may be offset against future
taxable income through 2033. No tax benefit has been recorded with respect to
these net operating loss carry-forwards in the accompanying consolidated
financial statements as the management of the Company believes that the
realization of the Company's net deferred tax assets of approximately $1,076 was
not considered more likely than not and accordingly, the potential tax benefits
of the net loss carry-forwards are offset by the full valuation allowance.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards.
The Company has provided a full valuation allowance on the deferred tax assets
because of the uncertainty regarding its realization. The valuation allowance
increased approximately $1,076 for the period from June 21, 2013 (inception)
through December 31, 2013.
Components of deferred tax assets are as follows:
December 31, 2013
-----------------
Net deferred tax assets - Non-current:
Expected income tax benefit from NOL carry-forwards $ 1,076
Less valuation allowance (1,076)
--------
Deferred tax assets, net of valuation allowance $ --
========
F-13
INCOME TAX PROVISION IN THE STATEMENT OF OPERATIONS
A reconciliation of the federal statutory income tax rate and the effective
income tax rate as a percentage of income before income taxes is as follows:
For the Period from
June 21, 2013
(inception) through
December 31, 2013
-----------------
Federal statutory income tax rate 34.0%
Increase (reduction) in income tax provision resulting from:
Net operating loss ("NOL") carry-forwards (34.0)
--------
Effective income tax rate 0.0%
========
NOTE 7 - SUBSEQUENT EVENTS
The Company has evaluated all events that occur after the balance sheet date
through the date when the financial statements were issued to determine if they
must be reported. The Management of the Company determined that there were no
reportable subsequent event(s) to be disclosed.
F-14
Merecot Corp.
March 31, 2014
Index to the Financial Statements
Contents Page(s)
-------- -------
Balance sheets at March 31, 2014 (Unaudited) and December 31, 2013...... F-16
Statements of operations for the three months ended March 31, 2014
and for the period from June 21, 2013 (inception) through
March 31, 2014 (Unaudited).............................................. F-17
Statement of stockholder's equity (deficit) for the period from
June 21, 2013 (inception) through March 31, 2014 (Unaudited)............ F-18
Statements of cash flows for the three months ended March 31, 2014
and for the period from June 21, 2013 (inception) through
March 31, 2014 (Unaudited).............................................. F-19
Notes to the financial statements (Unaudited)........................... F-20
F-15
Merecot Corp.
(A Development Stage Company)
Balance Sheets
March 31, 2014 December 31, 2013
-------------- -----------------
(Unaudited)
ASSETS
Cash $ 4,788 $ 7,830
-------- --------
Total current assets 4,788 7,830
-------- --------
Total assets $ 4,788 $ 7,830
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES
Advances from stockholder $ 1,028 $ 996
Loan payable - stockholder 5,000 5,000
-------- --------
Total current liabilities 6,028 5,996
-------- --------
STOCKHOLDER'S EQUITY (DEFICIT)
Common stock par value $0.001: 75,000,000 shares authorized;
5,000,000 shares issued and outstanding 5,000 5,000
Deficit accumulated during the development stage (6,240) (3,166)
-------- --------
Total stockholder's equity (deficit) (1,240) 1,834
-------- --------
Total liabilities and stockholder's equity (deficit) $ 4,788 $ 7,830
======== ========
See accompanying notes to the financial statements.
F-16
Merecot Corp.
(A Development Stage Company)
Statements of Operations
For the Period from
For the Three Months June 21, 2013
Ended (inception) through
March 31, 2014 March 31, 2014
-------------- --------------
(Unaudited) (Unaudited)
Revenue earned during the development stage $ -- $ 420
Operating Expenses
Professional fees 2,983 5,483
General and administrative expenses 91 1,177
---------- ----------
Total operating expenses 3,074 6,660
---------- ----------
Loss before Income Tax Provision (3,074) (6,240)
Income Tax Provision -- --
---------- ----------
Net Loss $ (3,074) $ (6,240)
========== ==========
Net loss per common share
- Basic and Diluted $ (0.00)
==========
Weighted average common shares outstanding
- Basic and Diluted 5,000,000
==========
See accompanying notes to the financial statements.
F-17
Merecot Corp.
(A Development Stage Company)
Statement of Stockholder's Equity (Deficit)
For the period from June 21, 2013 (inception) through March 31, 2014
(Unaudited)
Deficit
Common stock par value $0.001 Accumulated
----------------------------- during the Total
Shares Development Stockholders'
Number of Amount Stage Equity
--------- ------ ----- ------
June 21, 2013 (inception) -- $ -- $ -- $ --
Issuance of common shares
for cash upon formation 5,000,000 5,000 5,000
Net loss (3,166) (3,166)
---------- -------- -------- --------
Balance, December 31, 2013 5,000,000 5,000 (3,166) 1,834
Net loss (3,074) (3,074)
---------- -------- -------- --------
Balance, March 31, 2014 5,000,000 $ 5,000 $ (6,240) $ (1,240)
========== ======== ======== ========
See accompanying notes to the financial statements.
F-18
Merecot Corp.
(A Development Stage Company)
Statements of Cash Flows
For the Period from
For the Three Months June 21, 2013
Ended (inception) through
March 31, 2014 March 31, 2014
-------------- --------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,074) $ (6,240)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (3,074) (6,240)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from stockholder 32 1,028
Loan payable - stockholder -- 5,000
Proceeds from sale of common shares -- 5,000
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 32 11,028
-------- --------
NET CHANGE IN CASH (3,042) 4,788
CASH - BEGINNING OF PERIOD 7,830 --
-------- --------
CASH - END OF PERIOD $ 4,788 $ 4,788
======== ========
Supplemental disclosure of cash flow information:
Interest paid $ -- $ --
======== ========
Income tax paid $ -- $ --
======== ========
See accompanying notes to the financial statements.
F-19
(A Development Stage Company)
March 31, 2014
Notes to the Financial Statements
(Unaudited)
NOTE 1 - ORGANIZATION AND OPERATIONS
MERECOT CORP.
Merecot Corp. (the "Company") was incorporated on June 21, 2013 under the laws
of the State of Nevada. The Company engages in creating automated supply chain
Web Services to the Spa and Wellness industry.
NOTE 2 - SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
The Management of the Company is responsible for the selection and use of
appropriate accounting policies and the appropriateness of accounting policies
and their application. Critical accounting policies and practices are those that
are both most important to the portrayal of the Company's financial condition
and results and require management's most difficult, subjective, or complex
judgments, often as a result of the need to make estimates about the effects of
matters that are inherently uncertain. The Company's significant and critical
accounting policies and practices are disclosed below as required by generally
accepted accounting principles.
BASIS OF PRESENTATION - UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying unaudited interim financial statements and related notes have
been prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP") for the interim financial information,
and with the rules and regulations of the United States Securities and Exchange
Commission ("SEC") to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP
for complete financial statements. The unaudited interim financial statements
furnished reflect all adjustments (consisting of normal recurring accruals)
which are, in the opinion of management, necessary to a fair statement of the
results for the interim period presented. Unaudited interim results are not
necessarily indicative of the results for the full fiscal year. These financial
statements should be read in conjunction with the audited financial statements
of the Company for the reporting period ended December 31, 2013 and notes
thereto contained in the Company's Registration Statement on Form S-1, of which
this is a part.
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by section 915-10-20 of
the FASB Accounting Standards Codification. Although the Company has recognized
some nominal amount of revenues since inception, the Company is devoting
substantially all of its efforts on establishing the business and its planned
principal operations have not commenced. All losses accumulated since inception
have been considered as part of the Company's development stage activities.
USE OF ESTIMATES AND ASSUMPTIONS AND CRITICAL ACCOUNTING ESTIMATES AND
ASSUMPTIONS
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date(s)
of the financial statements and the reported amounts of revenues and expenses
during the reporting period(s).
Critical accounting estimates are estimates for which (a) the nature of the
estimate is material due to the levels of subjectivity and judgment necessary to
account for highly uncertain matters or the susceptibility of such matters to
change and (b) the impact of the estimate on financial condition or operating
performance is material. The Company's critical accounting estimate(s) and
assumption(s) affecting the financial statements was (were):
(i) ASSUMPTION AS A GOING CONCERN: Management assumes that the Company
will continue as a going concern, which contemplates continuity of
operations, realization of assets, and liquidation of liabilities in
the normal course of business.
F-20
(II) VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS: Management assumes that
the realization of the Company's net deferred tax assets resulting
from its net operating loss ("NOL") carry-forwards for Federal income
tax purposes that may be offset against future taxable income was not
considered more likely than not and accordingly, the potential tax
benefits of the net loss carry-forwards are offset by a full valuation
allowance. Management made this assumption based on (a) the Company
has incurred recurring losses, (b) general economic conditions, and
(c) its ability to raise additional funds to support its daily
operations by way of a public or private offering, among other
factors.
These significant accounting estimates or assumptions bear the risk of change
due to the fact that there are uncertainties attached to these estimates or
assumptions, and certain estimates or assumptions are difficult to measure or
value.
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop
the estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such
evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph
820-10-35-37") to measure the fair value of its financial instruments. Paragraph
820-10-35-37 establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair
value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value into three (3) broad levels. The fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities and the lowest priority to unobservable inputs.
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37
are described below:
Level 1 Quoted market prices available in active markets for identical assets
or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in
Level 1, which are either directly or indirectly observable as of the
reporting date.
Level 3 Pricing inputs that are generally observable inputs and not
corroborated by market data.
Financial assets are considered Level 3 when their fair values are determined
using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the
lowest priority to unobservable inputs. If the inputs used to measure the
financial assets and liabilities fall within more than one level described
above, the categorization is based on the lowest level input that is significant
to the fair value measurement of the instrument.
The carrying amounts of the Company's financial assets and liabilities, such as
cash and accrued expenses approximate their fair values because of the short
maturity of these instruments.
Transactions involving related parties cannot be presumed to be carried out on
an arm's-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties,
if made, shall not imply that the related party transactions were consummated on
terms equivalent to those that prevail in arm's-length transactions unless such
representations can be substantiated.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less at the time of purchase to be cash equivalents.
F-21
RELATED PARTIES
The Company follows subtopic 850-10 of the FASB Accounting Standards
Codification for the identification of related parties and disclosure of related
party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the
Company; b. entities for which investments in their equity securities would be
required, absent the election of the fair value option under the Fair Value
Option Subsection of Section 825-10-15, to be accounted for by the equity method
by the investing entity; c. trusts for the benefit of employees, such as pension
and profit-sharing trusts that are managed by or under the trusteeship of
management; d. principal owners of the Company; e. management of the Company; f.
other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests; and g. other parties that can significantly
influence the management or operating policies of the transacting parties or
that have an ownership interest in one of the transacting parties and can
significantly influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own separate
interests.
The financial statements shall include disclosures of material related party
transactions, other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business. However, disclosure of
transactions that are eliminated in the preparation of consolidated or combined
financial statements is not required in those statements. The disclosures shall
include: a. the nature of the relationship(s) involved; b. a description of the
transactions, including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which income statements are presented, and
such other information deemed necessary to an understanding of the effects of
the transactions on the financial statements; c. the dollar amounts of
transactions for each of the periods for which income statements are presented
and the effects of any change in the method of establishing the terms from that
used in the preceding period; and d. amounts due from or to related parties as
of the date of each balance sheet presented and, if not otherwise apparent, the
terms and manner of settlement.
COMMITMENT AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Certain conditions may
exist as of the date the financial statements are issued, which may result in a
loss to the Company but which will only be resolved when one or more future
events occur or fail to occur. The Company assesses such contingent liabilities,
and such assessment inherently involves an exercise of judgment. In assessing
loss contingencies related to legal proceedings that are pending against the
Company or unasserted claims that may result in such proceedings, the Company
evaluates the perceived merits of any legal proceedings or unasserted claims as
well as the perceived merits of the amount of relief sought or expected to be
sought therein.
If the assessment of a contingency indicates that it is probable that a material
loss has been incurred and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company's financial statements.
If the assessment indicates that a potential material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, and an estimate of the range of
possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they
involve guarantees, in which case the guarantees would be disclosed. Management
does not believe, based upon information available at this time, that these
matters will have a material adverse effect on the Company's financial position,
results of operations or cash flows. However, there is no assurance that such
matters will not materially and adversely affect the Company's business,
financial position, and results of operations or cash flows.
REVENUE RECOGNITION
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue when it is
realized or realizable and earned. The Company considers revenue realized or
realizable and earned when all of the following criteria are met: (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the
services have been rendered to the customer, (iii) the sales price is fixed or
determinable, and (iv) collectability is reasonably assured.
INCOME TAX PROVISION
The Company accounts for income taxes under Section 740-10-30 of the FASB
Accounting Standards Codification. Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax
F-22
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the statements
of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification ("Section 740-10-25"). Section 740-10-25 addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under Section 740-10-25,
the Company may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
fifty percent (50%) likelihood of being realized upon ultimate settlement.
Section 740-10-25 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis
of assets and liabilities are reported in the accompanying balance sheets, as
well as tax credit carry-backs and carry-forwards. The Company periodically
reviews the recoverability of deferred tax assets recorded on its balance sheets
and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might
be challenged upon an audit and cause changes to previous estimates of tax
liability. In addition, the Company operates within multiple taxing
jurisdictions and is subject to audit in these jurisdictions. In management's
opinion, adequate provisions for income taxes have been made for all years. If
actual taxable income by tax jurisdiction varies from estimates, additional
allowances or reversals of reserves may be necessary.
UNCERTAIN TAX POSITIONS
The Company did not take any uncertain tax positions and had no adjustments to
its income tax liabilities or benefits pursuant to the provisions of Section
740-10-25 for the reporting period ended March 31, 2014.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed pursuant to section 260-10-45 of
the FASB Accounting Standards Codification. Basic net income (loss) per common
share is computed by dividing net income (loss) by the weighted average number
of shares of common stock outstanding during the period. Diluted net income
(loss) per common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock and potentially dilutive
outstanding shares of common stock during the period to reflect the potential
dilution that could occur from common shares issuable through contingent share
arrangements, stock options and warrants.
There were no potentially dilutive common shares outstanding for the reporting
period ended March 31, 2014.
CASH FLOWS REPORTING
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards
Codification for cash flows reporting, classifies cash receipts and payments
according to whether they stem from operating, investing, or financing
activities and provides definitions of each category, and uses the indirect or
reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25
of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow
from operating activities by removing the effects of (a) all deferrals of past
operating cash receipts and payments and all accruals of expected future
operating cash receipts and payments and (b) all items that are included in net
income that do not affect operating cash receipts and payments. The Company
reports the reporting currency equivalent of foreign currency cash flows, using
the current exchange rate at the time of the cash flows and the effect of
exchange rate changes on cash held in foreign currencies is reported as a
separate item in the reconciliation of beginning and ending balances of cash and
cash equivalents and separately provides information about investing and
financing activities not resulting in cash receipts or payments in the period
pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards
Codification.
SUBSEQUENT EVENTS
The Company follows the guidance in Section 855-10-50 of the FASB Accounting
Standards Codification for the disclosure of subsequent events. The Company will
evaluate subsequent events through the date when the financial statements were
issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification,
the Company as an SEC filer considers its financial statements issued when they
are widely distributed to users, such as through filing them on EDGAR.
F-23
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2013, the FASB issued ASU No. 2013-11, INCOME TAX (TOPIC 740):
PRESENTATION OF AN UNRECOGNIZED TAX BENEFIT WHEN A NET OPERATING LOSS
CARRY-FORWARD, A SIMILAR TAX LOSS, OR A TAX CREDIT CARRY-FORWARD EXISTS. This
ASU provides guidance on the financial statement presentation of an unrecognized
tax benefit when a net operating loss carry-forward, a similar tax loss, or a
tax credit carry-forward exists. An unrecognized tax benefit, or a portion of an
unrecognized tax benefit, should be presented in the financial statements as a
reduction to a deferred tax asset for a net operating loss carry-forward, a
similar tax loss, or a tax credit carry-forward, except as follows. To the
extent a net operating loss carry-forward, a similar tax loss, or a tax credit
carry-forward is not available at the reporting date under the tax law of the
applicable jurisdiction to settle any additional income taxes that would result
from the disallowance of a tax position or the tax law of the applicable
jurisdiction does not require the entity to use, and the entity does not intend
to use, the deferred tax asset for such purpose, the unrecognized tax benefit
should be presented in the financial statements as a liability and should not be
combined with deferred tax assets. The amendments in this Update are effective
for fiscal years, and interim periods within those years, beginning after
December 15, 2013.
In April 2014, the FASB issued ASU No. 2014-08, PRESENTATION OF FINANCIAL
STATEMENTS (TOPIC 205) AND PROPERTY, PLANT, AND EQUIPMENT (TOPIC 360): REPORTING
DISCONTINUED OPERATIONS AND DISCLOSURES OF DISPOSALS OF COMPONENTS OF AN ENTITY.
The amendments in this Update change the requirements for reporting discontinued
operations in Subtopic 205-20.
Under the new guidance, a discontinued operation is defined as a disposal of a
component or group of components that is disposed of or is classified as held
for sale and "represents a strategic shift that has (or will have) a major
effect on an entity's operations and financial results." The ASU states that a
strategic shift could include a disposal of (i) a major geographical area of
operations, (ii) a major line of business, (iii) a major equity method
investment, or (iv) other major parts of an entity. Although "major" is not
defined, the standard provides examples of when a disposal qualifies as a
discontinued operation.
The ASU also requires additional disclosures about discontinued operations that
will provide more information about the assets, liabilities, income and expenses
of discontinued operations. In addition, the ASU requires disclosure of the
pre-tax profit or loss attributable to a disposal of an individually significant
component of an entity that does not qualify for discontinued operations
presentation in the financial statements.
The ASU is effective for public business entities for annual periods beginning
on or after December 15, 2014, and interim periods within those years.
Management does not believe that any other recently issued, but not yet
effective accounting pronouncements, if adopted, would have a material effect on
the accompanying financial statements.
NOTE 3 - GOING CONCERN
The financial statements have been prepared assuming that the Company will
continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of
business.
As reflected in the financial statements, the Company had a deficit accumulated
during the development stage at March 31, 2014, a net loss and net cash used in
operating activities for the reporting period then ended. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Although the Company has recognized some nominal amount of revenue since
inception, the Company is devoting substantially all of its efforts on
establishing the business and its planned principal operations have not
commenced. The Company is attempting to commence operations and generate
sufficient revenue; however, the Company's cash position may not be sufficient
to support its daily operations. While the Company believes in the viability of
its strategy to commence operations and generate sufficient revenue and in its
ability to raise additional funds, there can be no assurances to that effect.
The ability of the Company to continue as a going concern is dependent upon its
ability to further implement its business plan and generate sufficient revenue
and its ability to raise additional funds by way of a public or private
offering.
F-24
The financial statements do not include any adjustments related to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
NOTE 4 - STOCKHOLDER'S EQUITY (DEFICIT)
SHARES AUTHORIZED
Upon formation the total number of shares of all classes of stock which the
Company is authorized to issue is Seventy-Five Million (75,000,000) shares of
which Seventy-Five Million (75,000,000) shares shall be Common Stock, par value
$0.001 per share.
COMMON STOCK
On June 21, 2013, upon formation, the Company sold 5,000,000 shares of common
stock to the founder of the Company at $0.001 per share, or $5,000 in cash.
NOTE 5 - RELATED PARTY TRANSACTIONS
RELATED PARTIES
Related parties with whom the Company had transactions are:
Related Parties Relationship
--------------- ------------
Evgenia Gonikman Chairman, CEO, significant stockholder and director
FREE OFFICE SPACE
The Company has been provided office space by its Chief Executive Officer at no
cost. Management determined that such cost is nominal and did not recognize the
rent expense in its financial statement.
ADVANCES FROM STOCKHOLDER
From time to time, the Chairman, CEO and significant stockholder of the Company
advances funds to the Company for working capital purpose. Those advances are
unsecured, non-interest bearing and due on demand.
The Chairman, CEO and significant stockholder of the Company advanced $996 in
aggregate to the Company for the period from June 21, 2013 (inception) through
December 31, 2013, none of which has been repaid.
The Chairman, CEO and significant stockholder of the Company advanced $32 in
aggregate to the Company for the reporting period ended March 31, 2014, none of
which has been repaid.
LOAN PAYABLE - CHIEF EXECUTIVE OFFICER
On July 5, 2013, the Company executed a loan agreement in the amount of $5,000
payable to the Chairman, CEO and significant stockholder of the Company. The
loan is unsecured, non-interest bearing and due on demand.
NOTE 6 - SUBSEQUENT EVENTS
The Company has evaluated all events that occur after the balance sheet date
through the date when the financial statements were issued to determine if they
must be reported. The Management of the Company determined that there were no
reportable subsequent event(s) to be disclosed.
F-25
UNTIL _________________, ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE YOU DIFFERENT
INFORMATION. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL NOR ARE THEY
SEEKING AN OFFER TO BUY THE SECURITIES REFERRED TO IN THIS PROSPECTUS IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED
IN THIS ARE CORRECT ONLY AS OF THE DATE SHOWN ON THE COVER PAGE OF THESE
DOCUMENTS, REGARDLESS OF THE TIME OF THE DELIVERY OF THESE DOCUMENTS OR ANY SALE
OF THE SECURITIES REFERRED TO IN THIS PROSPECTUS.
MERECOT CORP.
10,000,000 SHARES OF COMMON STOCK
PROSPECTUS
PART II
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs (assuming all shares are sold) of this offering are as
follows:
SEC Registration Fee $ 12.88
Auditor Fees and Expenses $2,500.00
Legal Fees and Expenses $2,500.00
EDGAR fees $1,000.00
Transfer Agent Fees $1,000.00
---------
TOTAL $7,012.88
=========
(1) All amounts are estimates, other than the SEC's registration fee.
INDEMNIFICATION OF DIRECTOR AND OFFICERS
Merecot Corp.'s Bylaws allow for the indemnification of the officer and/or
director in regards each such person carrying out the duties of her or her
office. The Board of Directors will make determination regarding the
indemnification of the director, officer or employee as is proper under the
circumstances if she has met the applicable standard of conduct set forth under
the Nevada Revised Statutes.
As to indemnification for liabilities arising under the Securities Act of 1933,
as amended, for a director, officer and/or person controlling Merecot Corp., we
have been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy and unenforceable.
RECENT SALES OF UNREGISTERED SECURITIES
Since inception, the Registrant has sold the following securities that were not
registered under the Securities Act of 1933, as amended.
Name and Address Date Shares Consideration
---------------- ---- ------ -------------
Evgenia Gonikman October 23, 2013 5,000,000 $5,000.00
We issued the foregoing restricted shares of common stock to our sole officer
and director pursuant to Section 4(2) of the Securities Act of 1933. she is a
sophisticated investor, is our sole officer and director, and is in possession
of all material information relating to us. Further, no commissions were paid to
anyone in connection with the sale of the shares and general solicitation was
not made to anyone.
EXHIBITS
Exhibit
Number Description of Exhibit
------ ----------------------
3.1 Articles of Incorporation of the Registrant *
3.2 Bylaws of the Registrant *
5.1 Opinion of David Lubin & Associates, PLLC *
10.1 Customer Contract *
10.2 Form of Subscription Agreement *
10.3 Loan Agreement with Evgenia Gonikman *
23.1 Consent of Li and Company, PC.
23.2 Consent of David Lubin & Associates, PLLC (contained in exhibit 5.1) *
----------
* Prevously filed
II-1
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales of securities
are being made, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 383(b)
(ss.230.383(b) of this chapter) if, in the aggregate, the changes in
volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser:
(i) If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 383(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule
430B or other than prospectuses filed in reliance on Rule 430A, shall
be deemed to be part of and included in the registration statement as
of the date it is first used after effectiveness. Provided, however,
that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date
of first use.
II-2
(5) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 383;
(ii) Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or our securities provided by or on behalf of the
undersigned registrant; and (iv) Any other communication that is an
offer in the offering made by the undersigned registrant to the
purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to our directors, officers and controlling
persons pursuant to the provisions above, or otherwise, we have been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
II-3
Signatures
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Valley Cottage, State of
New York, on May 12, 2014.
MERECOT CORP.
By: /s/ Evgenia Gonikman
-------------------------------------
Name: Evgenia Gonikman
Title: President, Secretary and Director
(Principal Executive, Financial
and Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates stated.
Signature Capacity in Which Signed Date
--------- ------------------------ ----
/s/ Evgenia Gonikman President, Secretary and Director May 12, 2014
------------------------------ (Principal Executive, Financial
Evgenia Gonikman and Accounting Officer)
II-4
EXHIBIT INDX
Exhibit
Number Description of Exhibit
------ ----------------------
3.1 Articles of Incorporation of the Registrant *
3.2 Bylaws of the Registrant *
5.1 Opinion of David Lubin & Associates, PLLC *
10.1 Customer Contract *
10.2 Form of Subscription Agreement *
10.3 Loan Agreement with Evgenia Gonikman *
23.1 Consent of Li and Company, PC.
23.2 Consent of David Lubin & Associates, PLLC (contained in exhibit 5.1) *
----------
* Prevously file