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EX-4.1 - EXHIBIT 4.1 - Sigyn Therapeutics, Inc.s101393_ex4-1.htm
EX-23.2 - EXHIBIT 23.2 - Sigyn Therapeutics, Inc.s101393_ex23-2.htm

As filed with the Securities and Exchange Commission on August 18 , 2015 

Registration No. 333 -204486

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

 

 

Amendment No. 1 to  

FORM S-1 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

 

 

REIGN SAPPHIRE CORPORATION
(Exact name of registrant as specified in its charter)

 

Delaware   5944   47-2573116
(State or Other Jurisdiction of Incorporation)   (Primary Standard Classification Code)  

(IRS Employer

Identification No.)

 

9465 Wilshire Boulevard
Beverly Hills, California 90212
Telephone: 213 457 3772

 

(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)

 

 

 

Joseph Segelman
9465 Wilshire Boulevard
Beverly Hills, California 90212
Telephone: 213 457 3772

 

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

 

 

 

Please send copies of all correspondence to:

 

Willa Qian, Esq.
Alan S. Gutterman, Esq.
Qian & Company, A California Professional Law Corporation
135 Main Street, Ninth Floor
San Francisco, California 94105
TELEPHONE: 415 267 1880 x 1
FAX: 415 267 1899
Email: willa@qcolaw.com

 

 

 

Approximate date of commencement of proposed sale to the public: From time to time 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, check the following box. ☒

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please 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 amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, 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 amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, 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 ☐ (Do not check if a smaller reporting company)   Smaller reporting company ☒

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered   Amount of
Shares to be
Registered
  Proposed
Maximum
Offering Price
Per Share(1)
  Proposed
Maximum
Aggregate
Offering
Price(2)
  Amount of
Registration
Fee (3)
Common Stock, $0.0001 par value     13,923 ,000   $ 0.50   $ 6,961 ,500   $ 871.50

 

 
(1)The securities are not traded in any public market and the offering price has been arbitrarily determined by the Company solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o) of the Securities Act of 1933, as amended (the “Securities Act”) and bears no relationship to assets, earnings, or any other valuation criteria. No assurance can be given that the shares offered hereby will have a market value or that they may be sold at this, or at any price. The offering price is a fixed price at the which the Company and the selling stockholders may sell their shares until the shares are quoted on the OTCBB and/or OTCQB, at which time the selling stockholders may sell their shares at prevailing market prices or in privately negotiated transactions.
(2)Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) of the Securities Act.
(3) Amount of registration fee previously calculated and paid based on proposed maximum aggregate offering price that has subsequently been reduced.

 

In the event of stock splits, stock dividends, or similar transactions involving the registrant’s common shares, the number of shares registered shall, unless otherwise expressly provided, automatically be deemed to cover the additional securities to be offered or issued pursuant to Rule 416 promulgated under the Securities Act.

 

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY OUR 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 SAID SECTION 8(A), MAY DETERMINE.

 

 

 
 

 

The information in this preliminary prospectus is not complete and may be changed. The company and the selling shareholders 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. There is no minimum purchase requirement for the offering by the company to proceed.

 

PRELIMINARY PROSPECTUS

 

SUBJECT TO COMPLETION DATED AUGUST 18 , 2015

 

REIGN SAPPHIRE CORPORATION

 

13,923 ,000 SHARES OF COMMON STOCK

 

$0.50 PER SHARE

 

Prior to this offering, no public market has existed for the common stock of Reign Sapphire Corporation (sometimes referred to herein as “RSC”, the “Company”, “us”, “we” or “our”) and it is not presently traded on any market or securities exchange. Upon completion of this offering, we will attempt to have the shares quoted under the symbol “RSAP” on the OTC Bulletin Board (“OTCBB”) operated by FINRA (Financial Industry Regulatory Authority) and OTCQB operated by the OTC Markets Group, Inc. There is no assurance that our shares will ever be quoted on the OTCBB or OTCQB. To be quoted on the OTCBB or OTCQB, a market maker must apply to make a market in our common stock. As of the date of this prospectus, we have not made any arrangement with any market makers to quote our shares.

 

In this public offering we are offering 10,000,000 shares of our authorized but unissued common stock and our selling shareholders are offering 3,923 ,000 shares of our common stock which have previously been issued to them and are currently outstanding. We will not receive any of the proceeds from the sale of shares by the selling shareholders. Shareholders may also sell their shares at prevailing market prices or for negotiated prices in private transactions if at such time are shares are quoted on the OTCBB or OTCQB.

 

This offering is being made on a self-underwritten, “best efforts” basis directly by the Company without the participation of an underwriter to market, distribute or sell the shares offered under this prospectus. The shares offered by the Company will be sold on our behalf by our President and CEO Joseph Segelman. Mr. Segelman is deemed to be an underwriter within the meaning of the Securities Act of 1933, as amended, with respect to the shares offered by the Company in this offering. He will not receive any commissions or proceeds for selling the shares on our behalf, nor will any underwriting discounts be paid. All of the shares being registered for sale by the Company will be sold at a fixed price of $0.50 per share for the duration of the offering. There is no minimum number of shares required to be purchased by any investor. All expenses incurred in this offering are being paid for by Mr. Segelman, who will be reimbursed for amounts paid out of the proceeds from the offering received by the Company.

 

PRIMARY OFFERING
SHARES OFFERED BY COMPANY
  Number of
Shares
   Price to Public    Underwriting
Discounts &
Commissions
    Proceeds to
the Company
 
Per Share   1   $0.50   $0.00   $0.50 
25% of shares are sold   2,500,000   $0.50   $0.00   $1,250,000 
50% of shares are sold   5,000,000   $0.50   $0.00   $2,500,000 
75% of shares are sold   7,500,000   $0.50   $0.00   $3,750,000 
Maximum Offering   10,000,000   $0.50   $0.00   $5,000,000 

 

There is no minimum amount we are required to raise from the shares being offered by the Company and the proceeds from the sale of the securities will be placed directly into the Company’s account and be immediately available to us; any investor who purchases shares will have no assurance that any monies, beside their own, will be subscribed to the prospectus. All proceeds from the sale of the securities are non-refundable, except as may be required by applicable laws. There is no guarantee that we will sell any of the securities being offered in this offering. Additionally, there is no guarantee that this offering will successfully raise enough funds to cover the costs of the offering, which the Company estimates at $ 165 ,000, or institute the Company’s business plan. Additionally, there is no guarantee that a public market for our shares will ever develop and you may be unable to sell your shares and your investment in the Company will be illiquid.

 

This primary offering will automatically terminate upon the earliest of (i) such time as all of the shares of common stock offered by the Company have been sold pursuant to the registration statement covering such shares or (ii) 365 days from the effective date of this prospectus, unless extended by our board of directors for an additional 90 days. We may however, at our discretion terminate the offering at any time.

 

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act which became law in April 2012, and thus will be subject to reduced public company reporting requirements. Please refer to “Summary of Consolidated Financial Data” for more information about our status as an “emerging growth company”.

 

The Company is an early stage company and has a limited history of operations. We presently do not have the funding to execute our business plan. As of the date of this prospectus, we have been primarily involved in organizing the company, and we have developed minimal revenue from our development stage business operations.

 

THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD THE COMPLETE LOSS OF YOUR INVESTMENT. PLEASE REFER TO ‘RISK FACTORS’ SECTION IN THIS PROSPECTUS BEGINNING ON PAGE 8.

 

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 THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

 
 

 

The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus.

 

TABLE OF CONTENTS

 

    PAGE
PART I. INFORMATION REQUIRED IN PROSPECTUS    
PROSPECTUS SUMMARY   1
RISK FACTORS   10
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS   17
USE OF PROCEEDS   18
DILUTION   20
SELECTED FINANCIAL DATA   21
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   23
DESCRIPTION OF BUSINESS   38
DETERMINATION OF OFFERING PRICE   44
SECURITY OWNERSHIP OF PRINCIPAL AND SELLING STOCKHOLDERS   45
PLAN OF DISTRIBUTION   49
DESCRIPTION OF SECURITIES   55
REPORTS TO SECURITIES HOLDERS   58
INTERESTS OF NAMED EXPERTS AND COUNSEL   59
PRINCIPAL ACCOUNTING FEES AND SERVICES   60
MANAGEMENT AND CORPORATE GOVERNANCE   61
EXECUTIVE COMPENSATION   65
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS   70
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS   71
WHERE YOU CAN FIND MORE INFORMATION   73
FINANCIAL STATEMENTS   F-1
     
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS    
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION   F-25
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS   F-25
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES   F-26
ITEM 16. EXHIBITS TO FINANCIAL STATEMENTS   F-26
ITEM 17. UNDERTAKINGS   F-27
SIGNATURES   F-29

 

You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission. We have not authorized anyone to provide you with additional information or information different from that contained in this prospectus filed with the Securities and Exchange Commission. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. If anyone provides you with different information, you should not rely on it. We are offering to sell, and seeking offers to buy, our common stock only in jurisdictions where offers and sales are permitted and we are not making an offer of our common stock in any jurisdiction where the offer is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

 

For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.

 

i
 

 

PROSPECTUS SUMMARY

 

This summary only highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire prospectus, including “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and the condensed financial statement, before making an investment decision. This prospectus contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

 

In this prospectus, “RSC,” the “Company,” the “Registrant,” “we,” “us,” and “our,” refer to Reign Sapphire Corporation, a Delaware corporation, 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.

 

“Reign”, “Reign Sapphires,” “Reign Red Carpet,” “Reign Day to Night,” our logo and our other trade names, trademarks and service marks appearing in this prospectus are our property. Other trade names, trademarks and service marks appearing in this prospectus are the property of their respective holders.

 

The Company

 

Overview

 

Reign Sapphire Corporation was established as a vertically integrated “mine- gate to retail ” model for sapphires-- rough sapphires to finished jewelry; a color gemstone brand; and a jewelry brand featuring Australian sapphires . We are not an exploration or mining company and are not engaged in exploration or mining activities. We purchase rough sapphires in bulk, directly from commercial miners in Australia, and we intend to oversee each step of the process as the stones go from the miners-gate to the consumer as Reign Sapphire jewelry .

 

The processing of our rough Australian sapphires is done at third party contract cutting factories in Asia and includes sorting rough parcels of sapphires and cutting and polishing rough stones. We use two freelance design specialists and two freelance CAD rendering specialists and our jewelry is manufactured in the US by a contract manufacturer. The Company’s two full time employees manage this vertically integrated process.

 

Reign Sapphires is our color gemstone brand and we intend to launch our inaugural jewelry collection via our website www.reignsapphires.com in the first quarter of 2016. The sample jewelry collection has been designed and manufactured and is ready for production.

 

Our core values are to offer consumers conflict free sapphires; sapphires that are mined from a verified source; sapphires that have been procured directly from miners, sapphires that are ethically processed and sapphires that are natural (not synthetic). In addition, we intend to feature exclusively Australian sapphires in our initial jewelry collections. The Company has sufficient inventory to launch the sample collection.

 

The design direction for the collection we intend to offer is reflective of old Hollywood glamour meeting turn of the century. The inaugural collections we intend to offer are Reign Day-to-Night; featuring classic & timeless pieces designed to complement versus take over and Reign Red-Carpet; featuring bold designs, made for the stars to hold a time and place in Hollywood’s history.

 

We intend to position Reign Sapphires as a premium brand in the price point and company of competitors such as Cartier; Harry Winston; Roberto Coin; Van Cleef & Arpels and Bvlgari. We believe that our competitors have certain existing advantages such as history and heritage; strong E-commerce and mobile presence; wholesale and flagship retail presence; strong social presence; a wide range of ancillary product offerings; strong public relations and marketing efforts; a balanced range of price points across the board; and consumer trust & recognition. However, we intend to set ourselves apart with strong brand identity and visuals, unique design and quality and brand awareness through traditional and social media.

 

The Company intends to focus its marketing initiatives on: (1) Business-to-Consumer (“B2C”) marketing to attract customers to the reignsapphires.com website, (2) Business-to-Business (“B2B”) marketing and sales efforts, to establish exclusive distribution partners, and eventually (3) building a strong retail presence to market the products directly to consumers on a retail level.

 

1
 

The Company intends to initially focus marketing efforts in the U.S. and upon encountering three years of year on year growth in the U.S. with online, wholesale, and retail sales, the Company intends to expand its retail marketing efforts internationally .

 

The Company’s intends to launch a collection that includes rings, bracelets, and necklaces ; using predominantly 1.5mm to 2.5mm diamond and princess cut sapphire melees. The Company intends to market the Red Carpet collection to households with annual income of $100,000 and greater and the Day-to-Night collection to households with income of $60,000 to $100,000.

 

Strategy

 

We intend to set itself apart from our competition by marketing three core offerings: (1) a vertically integrated “direct from the “mines-gate to retail” model for sapphires - rough sapphires to finished jewelry ; a color gemstone brand; and a jewelry brand featuring Australian sapphires.

 

We intend to promote Reign Sapphires as conflict free, ethically processed and natural. We also intend to make video footage and pictures of the process available to consumers via our website www.reignsapphires.com.

 

The Company intends to focus primarily on the conflict free, procured from a verified source element well as quality and design.

 

Products

 

The Company’s intends to launch two inaugural collections: Reign Day-to-Night; featuring classic & timeless pieces designed to complement versus take over and Reign Red-Carpet; featuring bold designs, made for the stars to hold a time and place in Hollywood’s history.

 

The company intends to include in these collections rings, bracelets, and necklaces ; using predominantly 1.5mm to 2.5mm diamond and princess cut sapphire melees. The Company intends to market the Red Carpet collection to households with annual income of $100,000 and greater and the Day-to-Night collection to households with income of $60,000 to $100,000.

 

Market Opportunities & Marketing Strategy

 

Due to the nature of the industry’s products, households with annual income of $60,000 to $100,000 account for the largest proportion of jewelry industry sales; hence, households with annual income of $60,000 and greater are regarded as the primary Reign Sapphires day-to-night collection target consumer profile.

 

Demand for the industry’s products is largely driven by the needs and preferences of consumers, along with variations in the level of disposable income allocated toward their purchases. The Company intends to eventually also capitalize on fashion market opportunities by having a lower pric e point silver jewelry collection .

 

The Company intends to focus its marketing initiatives on: (1) Business-to-Consumer (“B2C”) marketing to attract customers to the reignsapphires.com website, (2) Business-to-Business (“B2B”) marketing and sales efforts, to establish distribution partners such as high-end fashion retailers, and eventually (3) building a strong retail presence to market the products directly to consumers on a retail level. The Company intends to initially focus marketing efforts in the U.S. and upon encountering three years of year on year growth in the U.S. with online, wholesale, and retail sales, the Company intends to expand its marketing efforts internationally .

 

The company intends to attract retail customers to the reignsapphires.com website by spreading awareness of the company and its offerings by engaging the services of a digital marketing specialist and social media specialist. The company also intends to hire a publicist as well as a marketing and branding specialist to manage print advertising campaigns and seasonal promotional activities. The Company intends to identify ideal locations for retail flagship stores that contain a large volume of walk-by traffic in communities with upper income residents.

 

2
 

The Company intends to form limited wholesale partnerships with retailers to sell the products at their retail boutiques, the benefit to Reign Sapphires is the promotion of the Company brand at the consumer level until we are in a position to open our own flagship stores. Prior to launching the Company’s sales campaign, the Company intends to develop and use association strategy to identify appropriate and strategic partners for co-marketing opportunities.

 

Plan of Operations

 

As of the date of this prospectus, we have generated minimal revenue by selling loose gemstones to a number of wholesale customers. We currently have no operational retail website and no retail customers, our activities and operations have been limited to developing our business and financial plans as well as designing and sample manufacturing our inaugural collections which we intend to launch together with our retail website in the first quarter of 2016. We will not have the necessary capital to fully execute the first phase of our business plan until we are able to secure financing. There can be no assurance that such financing will be available on suitable terms. Even if we raise 100% of the offering described in this prospectus, we may not have sufficient capital to begin generating further revenues from operations. For further discussion of our plan of operations and future financing requirements, see “Use of Proceeds”.

 

We had no significant operating revenues through June 30, 2015. We expect to have operating revenues in the first half of 2016 as we launch our B2C marketing initiative. Revenues will be predominately the result of fine jewelry sales. At June 30, 2015 our cash balance was negligible. Our plan of operations consists of:

 

· Purchase rough sapphires from commercial miners in Australian and process the rough material into cut gemstones and finished jewelry.

 

· Launch of our B2B marketing and sales efforts through the use of distribution partners and a high-end fashion retailers.

 

· Launch of our B2C marketing and sales efforts through the use of Internet marketing, print advertising, promotions, and signage

 

· Raise capital to launch Reign Sapphires, fund administrative infrastructure and ongoing operations until our operations generate positive cash flow.

 

Risks Associated with Our Business

 

Our business is subject to the risks and uncertainties discussed more fully in the section entitled “Risk Factors” immediately following this summary. In particular:

 

·We will require additional funds in the future to achieve our current business strategy and our inability to obtain funding will cause our business to fail.

 

·We have a limited operating history that you can use to evaluate us, and the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays that we may encounter because we are a small developing company. As a result, we may not be profitable and we may not be able to generate sufficient revenue to develop as we have planned.

 

·We operate in a highly competitive environment, and if we are unable to compete with our competitors, our business, financial condition, results of operations, cash flows and prospects could be materially adversely affected.

 

·Because we are small and do not have much capital, our marketing campaign may not be enough to attract sufficient clients to operate profitably. If we do not make a profit, we will suspend or cease operations.

 

·Our future success is dependent, in part, on the performance and continued service of Joseph Segelman, our President and CEO. Without his continued service, we may be forced to interrupt or eventually cease our operations.

 

·Our business is subject to economic, political and social developments as well as political and currency risks and changes due to judicial, administrative and regulatory actions.

 

3
 
· We have virtually no financial resources and our independent public accountants’ report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.

 

· Our President and CEO, Joseph Segelman, beneficially owns approximately or has the right to vote as to more than 78.5% of our outstanding common stock in total. As a result, he will have the ability to control the operations of the company and substantially all matters submitted to our stockholders for approval.

 

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

 

· We may never have a public market for our common stock or may never trade on a recognized exchange. Therefore, you may be unable to liquidate your investment in our stock.

 

· We may in the future issue additional shares of our common stock, which may have a dilutive effect on our stockholders, and may issue shares of preferred stock that may adversely impact your rights as holders of our common stock.

 

· State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell shares of our common stock.

 

· The trading in our shares will be regulated by the Securities and Exchange Commission Rule 15G-9 which established the definition of a “Penny Stock.”

 

· Due to the lack of a trading market for our securities, you may have difficulty selling any shares you purchase in this offering.

 

Going Concern

 

We are an early stage company and have virtually no financial resources. Our independent registered public accountant included an explanatory paragraph in their opinion on our financial statements as of and for the period ended December 31, 2014 that states that Company losses from operations raise substantial doubt about its ability to continue as a going concern. We may seek additional financing beyond the amounts that may be received from this offering. The financing sought may be in the form of equity or debt financing from various sources as yet unidentified. Until we have completed our offering most if not all of our efforts will be spent on developing the Reign Sapphires brand and the development of our initial jewelry collections. No assurances can be given that we will generate sufficient revenue or obtain the necessary financing to continue as a going concern.

 

Corporate Information

 

The Company was incorporated in the State of Delaware on December 15, 2014. Our principal executive offices are located at 9465 Wilshire Boulevard Beverly Hills CA 90212, and our telephone number is (213 457 3772). Our website is www.reignsapphires.com. The information contained in, or that can be accessed through, our website is not a part of this prospectus.

 

Emerging Growth Company

 

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act which became law in April 2012, and thus will be subject to reduced public company reporting requirements. Please refer to “Summary of Consolidated Financial Data” for more information about our status as an “emerging growth company”.

 

4
 

The Offering

 

We have authorized capital stock consisting of 100,000,000 shares of common stock, $0.0001 par value per share (“Common Stock”) and 10,000,000 shares of preferred stock, $0.0001 par value per share (“Preferred Stock”). We have 31,823 ,000 shares of Common Stock issued and outstanding as of the date of this prospectus. Through this offering we will register a total of 13,923 ,000 shares. These shares represent 10,000,000 additional shares of common stock to be issued by us and 3,923 ,000 shares of common stock currently issued to our selling stockholders. We may endeavor to sell all 10,000,000 shares of common stock to be issued by us after the registration statement for such shares becomes effective. Upon effectiveness of such registration statement, the selling stockholders may also sell their own shares. The price at which we, the Company, will offer our shares will be at a fixed price of $0.50 per share for the duration of the offering. The selling stockholders will also sell shares at a fixed price of $0.50 for the duration of the offering however, if at such time our shares are quoted on the OTC Bulletin Board (“OTCBB”) operated by FINRA (Financial Industry Regulatory Authority) and/or OTCQB operated by the OTC Markets Group, Inc. the selling stockholders may sell their shares at prevailing market prices or at privately negotiated prices. There is no arrangement to address the possible effect of the offering on the price of the stock.

 

The primary offering on behalf of the Company is separate from the secondary offering of the selling stockholders in that the proceeds from the shares of stock sold by the selling stockholders will go directly to them, not the Company. The same idea applies if the company approaches or is approached by investors who then subsequently decide to invest with the Company. Those proceeds would then go to the Company. Whomever the investors decide to purchase the shares from will be the beneficiary of the proceeds. None of the proceeds from the sale of shares by the selling stockholders will be utilized or given to the Company.

 

Securities being offered by the Company   10,000,000 shares of common stock offered by us in a direct offering. There is no minimum number of shares that must be sold by us for the offering to close.
     
Securities being offered by the Selling Stockholders   3,923 ,000 shares of common stock offered by selling stockholders in a resale offering.
     
Offering price per share   We and the selling shareholders will sell the shares at a fixed price per share of $0.50 for the duration of this offering. The selling shareholders may, however, if at such time it occurs that our shares are quoted on the OTCBB and/or OTCQB, sell their shares at prevailing market prices or in privately negotiated transactions. The offering price of the common stock has been determined arbitrarily and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings, if any, or net worth.
     
Number of shares outstanding before offering of common stock  
31,823 ,000 common shares are currently issued and outstanding.
     
Number of shares outstanding after the offering of common shares  
41,823 ,000 common shares will be issued and outstanding if we sell all of the shares we are offering.
     
The minimum number of shares to be sold in this offering  
There is no minimum number of shares that must be sold by us for the offering to close, and we will retain the proceeds from the sale of any of the offered shares that are sold.
     
Market for the common shares; proposed trading symbol  
There is presently no public market for our common shares. While we plan to find a market maker to file an application to include our common stock on the OTCBB and/or OTCQB using the trading symbol “RSAP”, such efforts may not be successful and our shares may never be quoted and owners of our common stock may not have a market in which to sell the shares. Also, no estimate may be given as to the time that this application process will require. Furthermore, even if our common stock is quoted or granted listing, a market for the common shares may not develop.

 

5
 
Use of proceeds   We intend to use the net proceeds to us for working capital. The total costs of this offering, which are estimated to be $ 165 ,000, may exceed the proceeds we receive from the offering. See “Use of Proceeds”.
     
Termination of the offering   This offering will automatically terminate upon the earlier to occur of (i) 365 days after this registration statement becomes effective with the Securities and Exchange Commission, or (ii) the date on which all of the shares registered hereunder for offering by the Company have been sold. We may, at our discretion, extend the offering for an additional 90 days or terminate the offering at any time. We will notify investors by filing an information statement that will be available for public viewing on the SEC Edgar Database of any such extension of the offering.
     
“Best efforts” offering   The offering is being conducted on a self-underwritten, “best efforts” basis, which means our President and CEO, Joseph Segelman, will attempt to sell the shares himself without the participation of an underwriter to market, distribute or sell the shares offered under this prospectus. This prospectus will permit Mr. Segelman to sell the shares directly to the public, with no commission or other remuneration payable to him for any shares he may sell. Mr. Segelman will sell the shares himself and intends to offer them to friends, family members and business acquaintances and distribute the prospectus to potential investors at meetings. In offering the securities on our behalf, he will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934 (the “Exchange Act”). The intended methods of communication include, without limitation, telephone and personal contacts. We do not intend to use any mass-advertising methods such as the Internet or print media.
     
Subscriptions irrevocable   All subscription agreements and checks should be delivered to us at the address provided in the Subscription Agreement (see Exhibit 99.1a to the registration statement which includes this prospectus) and subscriptions once accepted by us are irrevocable (except as to any states that require a statutory cooling-off period or rescission right). There is no minimum number of shares that must be sold. Since there is no minimum amount of shares that must be sold by us, you may receive no proceeds or very minimal proceeds from the offering and potential investors may end up holding shares in a company that has not received enough proceeds from the offering to begin operations; and has no market for its shares.
     
Registration and offering costs   We estimate our total registration and offering costs to be approximately $ 165 ,000.
     
Risk factors   See “Risk Factors” and the other information in this prospectus for a discussion of the factors you should consider before deciding to invest in shares of our common stock.

 

6
 
     
Common stock control   Joseph Segelman, our President and CEO, currently owns or otherwise controls 78.5 % of the issued and outstanding common stock of the company, and will continue to own sufficient common shares to control the operations of the company after this offering, irrespective of its outcome.
     
Penny Stock regulation   The liquidity of our common stock is restricted as our common stock falls within the definition of a penny stock. These requirements may restrict the ability of broker/dealers to sell our common stock, and may affect your ability to resell common stock that you purchase in this offering.

 

7
 

Summary Financial Information

 

The following selected financial information is derived from the Company’s financial statements appearing elsewhere in this prospectus and should be read in conjunction with the Company’s financial statements, including the notes thereto, appearing elsewhere in this prospectus.

 

   Six Months
Ended
June 30,
2015
    Six Months
Ended
June 30,
2014
    Fiscal year
Ended
December 31,
201 4
    From Inception
(May 31, 2013)
through
December 31,
2013
 
Operating Statement Data:                    
Revenues  $ 29,207    $ 28,697    $ 43,153    $ 8,410  
Gross Profit    19,277      17,501      17,904      6,168  
Expenses    643,888      186,014      405,448      250,891  
                     
Profit (Loss) from Operations   ( 624,611 )   ( 168,513 )   ( 387,544 )   ( 244,723 )
                     
Net Loss   ( 624,611 )   ( 168,513 )   ( 387,544 )   ( 244,723 )
                     
Net Profit (Loss) Per Share   (0. 02 )   (0.01)   (0.01)   (0. 01 )
                     
Balance Sheet Data:                    
Total Assets  $ 875,350         $ 562,268    $ 156,168  
                     
Total Liabilities  $ 717,985         $ 462,835    $ 131,641  
                     
Common Shares                    
Issued and Outstanding    31,195 ,000          29,855 ,000     27,845,000  
                     
Shareholders’ Equity  $ 157,365         $ 99,433    $ 24,527  

 

Emerging Growth Company

 

The recently enacted Jumpstart Our Business Startups Act of 2012, or the JOBS Act, is intended to reduce the regulatory burden on emerging growth companies. The Company meets the definition of an emerging growth company and so long as it qualifies as an “emerging growth company,” it will, among other things:

 

·be temporarily exempted from the internal control audit requirements Section 404(b) of the Sarbanes-Oxley Act;

 

·be temporarily exempted from various existing and forthcoming executive compensation-related disclosures, for example: “say-on-pay”, “pay-for-performance”, and “CEO pay ratio”;

 

·be temporarily exempted from any rules that might be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or supplemental auditor discussion and analysis reporting;

 

·be temporarily exempted from having to solicit advisory say-on-pay, say-on-frequency and say-on-golden-parachute shareholder votes on executive compensation under Section 14A of the Securities Exchange Act of 1934, as amended;

 

·be permitted to comply with the SEC’s detailed executive compensation disclosure requirements on the same basis as a smaller reporting company; and,

 

·be permitted to adopt any new or revised accounting standards using the same timeframe as private companies (if the standard applies to private companies).

 

Although we are still evaluating our options under the JOBS Act, we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an “emerging growth company” and thus the level of information we provide may be different than that of other public companies. If we do take advantage of any of these exemptions, some investors may find our securities less attractive, which could result in a less active trading market for our common stock, and our stock price may be more volatile.

 

8
 

We are electing to not opt out of the JOBS Act extended accounting transition period. This may make our financial statements more difficult to compare to other companies. Pursuant to the JOBS Act, as an emerging growth company we can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the PCAOB or the SEC. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the standard for the private company. This may make it difficult or impossible to compare our financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has opted out of using the extended transition period as possible different or revised standards may be used.

 

We will continue to be an emerging growth company until the earliest of:

 

·the last day of the fiscal year during which we have annual total gross revenues of $1 billion or more;

 

·the last day of the fiscal year following the fifth anniversary of the first sale of our common equity securities in an offering registered under the Securities Act;

 

·the date on which we issue more than $1 billion in non-convertible debt securities during a previous three-year period; or

 

·the date on which we become a large accelerated filer, which generally is a company with a public float of at least $700 million (Exchange Act Rule 12b-2).

 

 

9
 

 

RISK FACTORS

 

This offering and any investment in our common stock involves a high degree of risk. You should carefully consider the risk factors described below and all of the information contained in this prospectus relating to our business before deciding whether to purchase our common stock. These are the risks and uncertainties we believe are most important for you to consider. If any of the following risks actually occur, our business, prospects, financial condition and results of operations could be negatively affected to a significant extent. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment in our common stock. Please also see “Disclosure Regarding Forward-Looking Statements.”

 

Risks Relating to Our Company and Our Industry

 

We have virtually no financial resources and our independent public accountants’ report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.

 

We are an early stage company and have virtually no financial resources. Our independent registered public accounting firm included an explanatory paragraph in their opinion on our financial statements as of and for the period ended December 31, 2014 that states that Company losses from operations raise substantial doubt about its ability to continue as a going concern. We may seek additional financing beyond the amounts that may be received from this offering. The financing sought may be in the form of equity or debt financing from various sources as yet unidentified. Until we have completed our offering most if not all of our efforts will be spent on developing the Reign Sapphires brand and the development of our initial jewelry collections. No assurances can be given that we will generate sufficient revenue or obtain the necessary financing to continue as a going concern.

 

We will require additional funds in the future to achieve our current business strategy and our inability to obtain funding will cause our business to fail.

 

We will need to raise a minimum of $2,500,000 to execute our business plan through public or private debt or equity sales in order to fund our future operations . These financings may not be available when needed and we do not know when we expect to raise the required funds . Even if these financings are available, it may be on terms that we deem unacceptable or are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, covenants, or other terms. Our inability to obtain financing would have an adverse effect on our ability to implement our current business plan and develop our products, and as a result, could require us to diminish or suspend our operations and possibly cease our existence.

 

Even if we are successful in raising capital in the future, we will likely need to raise additional capital to continue and/or expand our operations. If we do not raise the additional capital, the value of any investment in our company may become worthless. In the event we do not raise additional capital from conventional sources, it is likely that we may need to scale back or curtail implementing our business plan.

 

The Company, being a start-up company has generated minimal revenue since our inception in December 2014.

 

We are a start-up company. Our ability to continue as a going concern is dependent upon our ability to commence a commercially viable operation and to achieve profitability. Since our inception in December 2014, we have generated minimal revenue, and currently have only limited operations. These factors raise substantial doubt about our ability to continue as a going concern. We may not be able to generate revenues in the future and as a result the value of our common stock may become worthless. There are no assurances that we will be successful in raising additional capital or successfully developing and commercializing our products and become profitable.

 

We have a limited operating history that you can use to evaluate us, and the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays that we may encounter because we are a small developing company. As a result, we may not be profitable and we may not be able to generate sufficient revenue to develop as we have planned.

 

We have no significant assets or financial resources. The likelihood of our success must be considered in light of the expenses and difficulties in development of worldwide clients, customers, recruiting and keeping clients and/ or customers and obtaining financing to meet the needs of our plan of operations. Since we have a limited operating history we may not be profitable and we may not be able to generate sufficient revenues to meet our expenses and support our anticipated activities.

 

10
 

 

Although members of our management team have significant experience in investment, no investments have yet been made by the Company and the Company does not have an established trading record. As a result, prospective investors will have limited historical information available to them with which to evaluate our business, making it more difficult to identify its long-term trends and developments. In evaluating our future performance and prospects, investors should consider the risks, expenses, uncertainties and obstacles that we may face in implementing our strategy and in conducting our current and planned business activities.

 

We operate in a highly competitive environment, and if we are unable to compete with our competitors, our business, financial condition, results of operations, cash flows and prospects could be materially adversely affected.

 

We operate in a highly competitive environment . Some of our competitors will have greater financial and operational resources than us. New competitors and changes in the competitive environment may increase competitive pressures or reduce market prices for our products and services and the investment opportunities in them. A highly competitive environment could materially adversely affect our business, financial condition, results of operations, cash flows and prospects.

 

Because we are small and do not have much capital, our marketing campaign may not be enough to attract sufficient clients to operate profitably. If we do not make a profit, we will suspend or cease operations.

 

Due to the fact we are small and do not have much capital, we must limit our marketing activities and may not be able to make our product known to potential customers. Because we will be limiting our marketing activities, we may not be able to attract enough customers to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations.

 

We expect our quarterly financial results to fluctuate.

 

We expect our net sales and operating results to vary significantly from quarter to quarter due to a number of factors, including changes in demand for our products based on season ; our ability to retain existing customers or encourage repeat purchases; our ability to manage our product inventory; general economic conditions; advertising and other marketing costs; costs of expanding to other products. As a result of the variability of these and other factors, our operating results in future quarters may be below the expectations of public market analysts and investors.

 

Our future success is dependent, in part, on the performance and continued service of Joseph Segelman, our President and CEO. Without his continued service, we may be forced to interrupt or eventually cease our operations.

 

We are presently dependent to a great extent upon the experience, abilities and continued services of Joseph Segelman, our President and CEO. If he should resign or die we will not have a President or CEO. If that should occur, until we find another person to serve in those capacities our operations could be suspended. In that event it is possible you could lose most if not all of your entire investment.

 

Our future success is dependent on our implementation of our business plan. We have many significant steps still to take.

 

Our success will depend in large part in our success in achieving several important steps in the implementation of our business plan, including the following: development of customers , implementing order processing and customer service capabilities, and management of business process. If we are not successful, we will not be able to fully implement or expand our business plan.

 

Our success depends upon our ability to attract and hire key personnel and the pool of potential employees may be small and in high demand by our competitors. Our inability to hire qualified individuals will negatively affect our business, and we will not be able to implement or expand our business plan.

 

Our business is greatly dependent on our ability to attract key personnel. We will need to attract, develop, motivate and retain highly skilled technical employees. Competition for qualified personnel is intense and we may not be able to hire or retain qualified personnel. Our management has limited experience in recruiting key personnel which may hurt our ability to recruit qualified individuals. If we are unable to retain such employees, we will not be able to implement or expand our business plan.

 

11
 

 

If we cannot effectively increase and enhance our sales and marketing capabilities, we may not be able to increase our revenues.

 

We need to further develop our sales and marketing capabilities to support our commercialization efforts. If we fail to increase and enhance our marketing and sales force, we may not be able to enter new or existing markets. Failure to recruit, train and retain new sales personnel, or the inability of our new sales personnel to effectively market and sell our products, could impair our ability to gain market acceptance of our products.

 

Our President and CEO, Joseph Segelman, beneficially owns approximately or has the right to vote as to more than 78.5 % of our outstanding common stock in total. As a result, he will have the ability to control the operations of the Company and substantially all matters submitted to our stockholders for approval including:

 

·Election of our board of directors;

 

·Removal of any of our directors;

 

·Amendment of our Certificate of Incorporation or bylaws;

 

·Adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

 

As a result of his ownership and position, he is able to influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, the future prospect of sales of significant amounts of shares held by him could affect the market price of our common stock if the marketplace does not orderly adjust to the increase in shares in the market and the value of your investment in our company may decrease. Mr. Segelman’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.

 

Our growth will place significant strains on our resources.

 

The Company is currently in its development stage, with only limited operations, and has generated minimal revenue since inception. The Company’s growth, if any, is expected to place a significant strain on the Company’s managerial, operational and financial resources. Moving forward, the Company’s systems, procedures or controls may not be adequate to support the Company’s operations and/or the Company may be unable to achieve the rapid execution necessary to successfully implement its business plan. The Company’s future operating results, if any, will also depend on its ability to add additional personnel commensurate with the growth of its operations, if any. If the Company is unable to manage growth effectively, the Company’s business, results of operations and financial condition will be adversely affected.

 

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

 

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

 

12
 

 

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

 

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

 

We are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time are we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, being required to provide only two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze the Company’s results of operations and financial prospects.

 

As we are a publicly reporting company, we will continue to incur significant costs in staying current with reporting requirements. Our management will be required to devote substantial time to compliance initiatives. Additionally, the lack of an internal audit group may result in material misstatements to our financial statements and ability to provide accurate financial information to our shareholders.

 

Our management and other personnel will need to devote a substantial amount of time to compliance initiatives to maintain reporting status. Moreover, these rules and regulations, that are necessary to remain as an SEC reporting Company, will be costly as an external third party consultant(s), attorney, or firm, may have to assist in some regard to following the applicable rules and regulations for each filing on behalf of the company.

 

We currently do not have an internal audit group, and we will eventually need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to have effective internal controls for financial reporting.

 

Moreover, if we are not able to comply with the requirements or regulations as an SEC reporting company, in any regard, we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

 

Our business is subject to economic, political and social developments as well as political and currency risks and changes due to judicial, administrative and regulatory actions.

 

Various laws, regulations and taxes may affect our ability to conduct business in our chosen sphere of operation. New or amended laws, rules, regulations or ordinances could require significant unanticipated expenditures or impose restrictions on the development of our business. Such laws, rules, regulations or ordinances may also adversely affect our ability to operate our business. The Company’s business and prospects are subject to economic, political and social developments in its main countries of operation, specifically Australia and the United States of America. In particular, our business may be adversely affected by changes in those countries’ political, economic and social conditions; changes in policies of the government or changes in laws and regulations or the interpretation of laws and regulations; changes in foreign exchange regulations; measures that may be introduced to control inflation, such as interest rate increases; and changes in the rate or method of taxation.

 

13
 

 

Existing political conditions are subject to the introduction of new legislation, amendments to existing legislation by governments or the interpretation of those laws by governments which could impact adversely on the assets, operations and ultimate financial performance of the Company and its investments. Lack of political stability, changes in political attitudes and changes to government regulations relating to foreign investment and mining are beyond the control of the Company and may adversely affect its business and its investments. Operations may be affected to varying degrees by government regulation with respect to restrictions on various areas, including production, employment costs, price controls, income taxation, expropriation of property and environmental legislation.

 

Risks Relating to the Company’s Securities

 

We may never have a public market for our common stock or may never trade on a recognized exchange. Therefore, you may be unable to liquidate your investment in our stock.

 

There is no established public trading market for our securities. Our shares are not and have not been listed or quoted on any exchange or quotation system.

 

In order for our shares to be quoted, a market maker must agree to file the necessary documents with the National Association of Securities Dealers, which operates the OTCBB and OTCQB. In addition, it is possible that such application for quotation may not be approved and even if approved it is possible that a regular trading market will not develop or that if it did develop, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment.

 

Even if there is a public trading market for our common stock you may have difficulty realizing the value of your investment in our stock.

 

Prospective investors should be aware that the value of any investment in our company may go down as well as up. Investors may therefore reali z e less than their original investment and could lose their entire investment. The market value of an investment in our company may not necessarily accurately reflect its underlying value. Although the common shares are proposed to be quoted on the on the OTCBB and or OTCQB, this should not be taken as implying that there will be a liquid market in these securities. An investment in these securities may thus be difficult to realize and you may sustain a total loss of your investment. The market for shares in smaller companies is less liquid than for larger companies. Our common shares may not be suitable as a short-term investment. Consequently, our common shares may be difficult to buy and sell and the price may be subject to greater fluctuations than shares of larger companies. There can be no guarantee that we will achieve our investment objectives or that our investments will achieve returns to justify the initial valuation, or that our common shares will be able to achieve a higher valuation in the future, or if achieved, that such valuation will be maintained.

 

We may in the future issue additional shares of our common stock, which may have a dilutive effect on our stockholders.

 

It is possible that we will need to raise further funds in the future. There is no guarantee that the then prevailing market conditions will allow for such fundraising or that new investors will be prepared to subscribe for common shares. Our Certificate of Incorporation authorizes the issuance of 100,000,000 shares of common stock, of which 31,823 ,000 shares are issued and outstanding as of the date of this prospectus . The future issuance of our common shares may result in substantial dilution in the percentage of our common shares held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

 

We may issue shares of preferred stock in the future that may adversely impact your rights as holders of our common stock.

 

As discussed above, we may need to raise further funds in the future and there is no guarantee that new investors will be prepared to subscribe for common shares and may require that we issue them securities whose rights, preferences and privileges are senior to the holders of common shares. Our Certificate of Incorporation authorizes us to issue up to 10,000,000 shares of preferred stock. Accordingly, our board of directors will have the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further stockholder approval. Our board of directors could authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that we do issue such additional shares of preferred stock, your rights as holders of common stock could be impaired thereby, including, without limitation, dilution of your ownership interests in us. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may not be in your interest as holders of common stock.

 

14
 

 

We do not currently intend to pay dividends on our common stock and consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

 

We have never declared or paid any cash dividends on our common stock and do not currently intend to do so for the foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth. Therefore, you are not likely to receive any dividends on your common stock for the foreseeable future and the success of an investment in shares of our common stock will depend upon any future appreciation in its value. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.

 

We may be exposed to potential risks resulting from requirements under Section 404 of the Sarbanes-Oxley Act of 2002.

 

As a reporting company we are required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, to include in our annual report our assessment of the effectiveness of our internal control over financial reporting. We 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.

 

We do not currently have independent audit or compensation committees. As a result, our directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.

 

The costs to meet our reporting and other requirements as a public company subject to the Exchange Act of 1934 is and will be substantial and may result in us having insufficient funds to expand our business or even to meet routine business obligations.

 

As a public entity, subject to the reporting requirements of the Exchange Act of 1934, we will continue to incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these costs will range up to $75,000 per year for the next few years and will be higher if our business volume and activity increases. As a result, we may not have sufficient funds to grow our operations.

 

State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell shares of our common stock.

 

Secondary trading in our common stock may not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock cannot 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 liquidity for the common stock could be significantly impacted.

 

Risks Relating to this Offering

 

Investors cannot withdraw funds once invested and will not receive a refund.

 

Investors do not have the right to withdraw invested funds. Subscription payments will be paid to Reign Sapphire Corporation and held in our corporate bank account if the Subscription Agreements are in good order and the Company accepts the investor’s investment. Therefore, once an investment is made, investors will not have the use or right to return of such funds.

 

15
 

 

The trading in our shares will be regulated by the Securities and Exchange Commission Rule 15G-9 which established the definition of a “Penny Stock.”

 

The shares being offered are defined as a penny stock under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $4,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 ($300,000 jointly with spouse), or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and must deliver certain disclosures required by the Commission. Consequently, the penny stock rules may make it difficult for you to resell any shares you may purchase.

 

We are selling the shares of this offering without an underwriter and may be unable to sell any shares.

 

This offering is self-underwritten, that is, we are not going to engage the services of an underwriter to market, distribute or sell the shares; we intend to sell our shares through our President, who will receive no commissions. There is no guarantee that he will be able to sell any of the shares. Unless he is successful in selling all of the shares of our offering we may have to seek alternative financing to implement our business plan.

 

Due to the lack of a trading market for our securities, you may have difficulty selling any shares you purchase in this offering.

 

We are not registered on any market or public stock exchange. There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the completion of the offering and apply to have the shares quoted on the OTCBB and or OTCQB. The OTCBB and OTCQB are regulated quotation services that display real-time quotes, last sale prices and volume information in over-the-counter securities. The OTCBB or OTCQB are not issuer listing services, market or exchange. Although the OTCBB or OTCQB do not have any listing requirements per se, to be eligible for quotation on the OTCBB and OTCQB, issuers must remain current in their filings with the SEC or applicable regulatory authority. If we are not able to pay the expenses associated with our reporting obligations we will not be able to apply for quotation on the OTCBB or OTCQB. Market makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB or OTCQB that become delinquent in their required filings will be removed following a 30 to 60 day grace period if they do not make their required filing during that time. We cannot guarantee that our application will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between the Company and anyone acting on our behalf, with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment.

 

We will incur ongoing costs and expenses for SEC reporting and compliance. Without revenue we may not be able to remain in compliance, making it difficult for investors to sell their shares, if at all.

 

The estimated cost of this registration statement is $ 165 ,000. We will have to utilize funds from Joseph Segelman. 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. We plan to contact a market maker immediately following the close of the offering and apply to have the shares quoted on the OTCBB and or OTCQB. To be eligible for quotation, issuers must remain current in their filings with the SEC. In order for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. The costs associated with being a publicly traded company in the next 12 month will be approximately $75,000.00 . If we are unable to generate sufficient revenues to remain in compliance it may be difficult for you to resell any shares you may purchase, if at all. Also, if we are not able to pay the expenses associated with our reporting obligations we will not be able to apply for quotation on the OTCBB or OTCQB.

 

16
 

 

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus, and any supplement to this prospectus, includes “forward-looking statements” that involve risk and uncertainties. To the extent that the information presented in this prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as “intends,” “believes,” “anticipates,” “expects,” “estimates,” “may,” “will,” “might,” “outlook,” “could,” “would,” “pursue,” “target,” “project,” “plan,” “seek,” “should,” “assume,” or similar terms or the negatives thereof. Investors should be aware that all forward-looking statements contained within this filing are good faith estimates of management as of the date of this filing. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. These include, among others, the cautionary statements in the “Risk Factors” section and the “Management’s Discussion and Analysis of Financial Position and Results of Operations” section in this prospectus. Such statements speak only as of the date of such statement and, except as may be required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements herein to conform such statements to our actual results. Potential investors are urged to carefully consider such factors. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

 

Market, Industry and Other Data

 

This prospectus contains estimates, projections and other information concerning our industry, our business and the markets for our products and services, including data regarding the estimated size of those markets, their projected growth rates and the perceptions and preferences of customers, as well as data regarding market research, estimates and forecasts prepared by our management. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry and general publications, government data and similar sources that we believe are reliable. We have not commissioned any of the third-party data presented in this prospectus. In some cases, we do not expressly refer to the sources from which this data are derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph are derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

 

17
 

 

USE OF PROCEEDS

 

Our offering is being made on a self-underwritten, “best efforts” basis, which means that the offering will be made directly by the Company without the participation of an underwriter to market, distribute or sell the shares offered under this prospectus. No minimum number of shares must be sold in order for the offering to proceed. See “Plan of Distribution”.

 

The offering price per share is $0.50. The following table sets forth the uses of proceeds assuming the sale of 100% of the securities offered for sale by the Company. There is no assurance that we will raise the full $ 5 ,000,000 as anticipated.

 

If 10,000,000 shares (100%) are sold:
Next 12 months

 

Planned Actions  Estimated Cost
to Complete
 
Marketing and Product Development  $1,500,000 
Purchase and process inventory  $500,000 
Working capital (salaries, legal, accounting, audit expenses, insurance and rent)   $1,000,000 
Perform financial strategies (including offering expenses)  $175,000 
TOTAL  $3,175,000 

 

Next 13-24 months

 

Planned Actions   Estimated Cost
to Complete
 
Marketing and Product Development   $ 1,200,000  
Working capital (salaries, legal, accounting, audit expenses, insurance and rent)   $ 625,000  
TOTAL   $ 1,825,000  

 

If 7,500,000 shares (75%) are sold:
Next 12 months

 

Planned Actions   Estimated Cost
to Complete
 
Marketing and Product Development   $ 1,125,000  
Purchase and process inventory   $ 35 0 ,000  
Working capital (salaries, legal, accounting, audit expenses, insurance and rent)   $ 750,000  
Perform financial strategies (including offering expenses).   $ 1 7 5,000  
TOTAL   $ 2,400,000  

 

Next 13-24 months

 

Planned Actions   Estimated Cost
to Complete
 
Marketing and Product Development   $ 750,000  
Working capital (salaries, legal, accounting, audit expenses, insurance and rent)   $ 600,000  
TOTAL   $ 1,350,000  

 

If 5,000,000 shares (50%) are sold:
Next 12 months

 

Planned Actions   Estimated Cost
to Complete
 
Marketing and Product Development   $ 750,000  
Purchase and process inventory   $ 2 2 5,000  
Working capital (salaries, legal, accounting, audit expenses, insurance and rent)   $ 500,000  
Perform financial strategies (including offering expenses)   $ 1 7 5,000  
TOTAL   $ 1,650,000  

 

18
 

 

Next 13-24 months

 

Planned Actions   Estimated Cost
to Complete
 
Marketing and Product Development   $ 400,000  
Working capital (salaries, legal, accounting, audit expenses, insurance and rent)   $ 450,000  
TOTAL     850,000  

 

If 2,500 ,000 shares (25%) are sold:
Next 12 months

 

Planned Actions   Estimated Cost
to Complete
 
Marketing and Product Development   $ 400,000  
Purchase and process inventory   $ 175 ,000  
Working capital (salaries, legal, accounting, audit expenses, insurance and rent)   $ 500,000  
Perform financial strategies (including offering expenses)   $ 175 ,000  
TOTAL   $ 1,250,000  

 

The above figures represent only estimated costs for the next 24 months. If necessary, Joseph Segelman, our President and CEO, has verbally agreed to loan the C ompany funds to complete the registration process. Also, these loans would be necessary if the proceeds from this offering will not be sufficient to implement our business plan and maintain reporting status and quotation on the OTCBB and OTCQB when/if our common stocks become eligible for trading on the OTCBB and OTCQB.

 

19
 

 

DILUTION

 

If you purchase any of the shares offered by this prospectus, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. Dilution results from the fact that the initial public offering price per share is substantially in excess of the book value per share attributable to the existing stockholder for the presently outstanding stock. As of June 30, 2015, our net tangible book value was $7,365 or $ 0.00 02 per share of common stock. Net tangible book value per share represents the amount of our total tangible assets (excluding deferred offering costs) less total liabilities, divided by 31,195 ,000, the number of shares of common stock outstanding at June 30 , 2015.

 

The following table sets forth as of the date of this prospectus , the number of shares of common stock purchased from us and the total consideration paid by our existing stockholders and by new investors in this offering if new investors purchase 25%, 50%, 75% or 100% of the offering, after deduction of offering expenses, assuming a purchase price in this offering of $0.50 per share of common stock.

 

   25% of
Offering Sold
   50% of
Offering Sold
   75% of
Offering Sold
   100% of
Offering Sold
 
Offering Price Per share  $0.50   $0.50   $0.50   $0.50 
Post Offering Net Tangible Book Value  $1, 257,365    $2, 507,365    $3, 757,365    $ 5,007,365  
Post Offering Net Tangible Book Value Per Share  $0.03 73    $0.06 93    $0.09 71    $0.121 6  
Pre-Offering Net Tangible Book Value Per Share  $0.00 02    $0.00 02    $0.00 02    $0.00 02  
Increase (Decrease) Net Tangible Book Value Per Share After Offering for Original Shareholder  $0.03 71    $0.06 91    $0. 0969    $0.12 1 4 
                     
Dilution Per Share for New Shareholders  $0.46 27    $0.43 07    $0.40 29    $0.37 84  
Percentage Dilution Per Share for New Shareholders    92.5 %   86. 41 %   80. 6 %   75. 7 %
Capital Contribution by Purchasers of Shares  $1,250,000   $2,500,000   $3,750,000   $5,000,000 
Capital Contribution by Existing Shares  $ 1,414,243    $ 1,414,243    $ 1,414,243    $ 1,414,243  
% Contribution by Purchasers of Shares    46.9 %    63.9 %    72.6 %    78 .0%
% Contribution by Existing Shareholder    53.1 %    36.1 %   27.4 %    22 .0%
Gross Offering Proceeds  $1,250,000   $2,500,000   $3,750,000   $5,000,000 
Anticipated Net Offering Proceeds  $1, 085 ,000   $2, 335 ,000   $3, 585 ,000   $4, 835 ,000 
# of Shares After Offering Held by Existing Shareholders                     
# of Shares After Offering Held by Public Investors
   2,500,000    5,000,000    7,500,000    10,000,000 
Total Shares Issued and Outstanding    33 ,695,000     36 ,195,000     38 ,695,000     41 ,195,000 
% of Shares – Purchasers After Offering   7. 4 %    13.8 %   19. 4 %   24. 3 %
% of Shares – Existing Shareholder s After Offering   92. 6 %    86.2 %  80. 6 %   75. 7 %

 

20
 

 

SELECTED FINANCIAL DATA

 

The following table summarizes our selected financial data for the periods and as of the dates indicated. Our selected statements of operations data for the year ended December 31, 2014 and for the period from May 31, 2013 (inception) to December 31, 2013, and our selected balance sheet data as of December 31, 2014 and 2013, have been derived from our audited financial statements included elsewhere in this filing. Our selected statements of operations data for the six months ended June 30 , 2015 and 2014, and our selected balance sheet data as of June 30 , 2015, have been derived from our unaudited interim condensed financial statements included elsewhere in this filing. The unaudited interim condensed financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. Our financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States. Our historical results are not necessarily indicative of the results to be expected for any future periods. Our selected financial data should be read together with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with our financial statements and their related notes, which are included elsewhere in this prospectus.

                           
                From Inception  
            For the Year   (May 31, 2013)  
    For the Six Months Ended   Ended   through  
    June 30,   December 31,   December 31,  
    2015   2014   2014   2013  
    (unaudited)   (unaudited)          
Revenues   $ 29,207   $ 28,697   $ 43,153   $ 8,410  
                           
Cost of Sales     9,930     11,196     25,249     2,242  
                           
Gross Profit     19,277     17,501     17,904     6,168  
                           
Operating expenses:                          
Marketing expenses     12,500     5,567     5,567      
Stock based compensation     347,543              
General and administrative     283,845     180,447     399,881     250,891  
Total operating expenses     643,888     186,014     405,448     250,891  
Loss from operations     (624,611 )   (168,513 )   (387,544 )   (244,723 )
                           
Loss before income taxes     (624,611 )   (168,513 )   (387,544 )   (244,723 )
Income taxes                  
                           
Net loss   $ (624,611 ) $ (168,513 ) $ (387,544 ) $ (244,723 )
                           
Net loss per share, basic and diluted   $ (0.02 ) $ (0.01 ) $ (0.01 ) $ (0.01 )
                           
Weighted average number of shares outstanding                          
Basic and diluted     30,090,000     27,845,000     27,951,849     18,086,995  

 

21
 

 

                     
    June 30,
2015
  December 31,
2014
  December 31,
2013
 
    (unaudited)          
ASSETS                    
Current assets:                    
Cash   $ 45   $ 95   $  
Accounts receivable     1,075     9,431     8,410  
Inventory     443,508     422,509     147,758  
Prepaid expenses     17,834     51,768      
Total current assets     462,462     483,803     156,168  
                     
Computer equipment, net     2,888     3,465      
Intangible assets     260,000          
Deferred offering costs     150,000     75,000      
Total assets   $ 875,350   $ 562,268   $ 156,168  
                     
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Current liabilities:                    
Accounts payable   $ 15,000   $   $  
Accounts payable - related party     270,906     103,194      
Accrued compensation - related party     386,000     276,000     96,000  
Advance from shareholder     46,079     83,641     35,641  
Total current liabilities     717,985     462,835     131,641  
Total liabilities     717,985     462,835     131,641  
                     
Commitments and contingencies                    
                     
Stockholders’ equity                    
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding at June 30, 2015, December 31, 2014 and 2013, respectively              
Common stock, $0.0001 par value, 100,000,000 shares authorized; 31,195,000, 29,855,000 and 27,845,000 shares issued and outstanding at June 30, 2015, December 31, 2014 and 2013, respectively     3,119     2,985     2,785  
Additional paid-in-capital     1,411,124     728,715     266,465  
Accumulated deficit     (1,256,878 )   (632,267 )   (244,723 )
Total stockholders’ equity     157,365     99,433     24,527  
Total liabilities and stockholders’ equity   $ 875,350   $ 562,268   $ 156,168  

 

22
 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

 

You should read the following discussion and analysis of our financial condition and results of operations together with the portion of this prospectus entitled “Selected Financial Data” and our financial statements and related notes included elsewhere in this prospectus. This discussion and other parts of this prospectus contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, intentions, and beliefs. Our actual results may differ materially from those discussed in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and in other parts of this prospectus, and you should not place undue certain on these forward-looking statements, which apply only as of the date of this prospectus. See “Disclosure Regarding Forward-Looking Statements”.

 

We are an emerging growth company as defined in Section 2(a) (19) of the Securities Act. Pursuant to Section 107 of the Jumpstart Our Business Startups Act, we may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, meaning that we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen to take advantage of the extended transition period for complying with new or revised accounting standards applicable to public companies to delay adoption of such standards until such standards are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

 

Historical Development

 

Reign Sapphire Corporation was established on December 15, 2014 in the State of Delaware as a vertically integrated “mines- gate to retail ” model for sapphires – rough sapphires to finished jewelry; a color gemstone brand; and a jewelry brand featuring Australian sapphires .

 

We have developed relationships with a number of commercial miners in Australia and purchase rough sapphires in bulk, directly from these commercial miners. We outsource the processing of the rough material to facilities in Asia that meet our quality and ethical criteria and standards, We engage the services of a quality control specialist based in Asia to assist in this process. The outsourced processing includes sorting rough parcels of sapphires and cutting and polishing rough stones. We believe that consumers will appreciate that our sapphires come from a verified source and are processed under our oversight and supervision.

 

We started as UWI Holdings Corporation (previously known as Australian Sapphire Corporation) (“UWI”) and was established on May 31, 2013 in the Province of New Brunswick, Canada and listed on the GXG Markets in the UK.

 

On December 31, 2014, UWI entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations with us, pursuant to which UWI transferred all of its net assets to us. The sole shareholder of UWI along with his spouse retained 100% ownership of Reign and were issued 27,845,000 of Reign common shares in exchange for the 16,000,250 outstanding shares of UWI. There was no significant tax consequence to this exchange. As a result, we are considered to be the continuation of the predecessor UWI. All historical financial information prior to the reorganization is that of UWI.

 

Prior to and at the time of the reorganization, we were authorized to issue 50,000,000 shares of common stock and 5,000,000 shares of preferred stock. On May 8, 2015, our Certificate of Incorporation was amended to increase the authorized number common shares to 100,000,000 and authorized number of preferred shares to 10,000,000.

 

For share and earnings per share information, we have retroactively restated per share and the outstanding shares for weighted average shares used in the basic and diluted earnings per share calculations for all periods presented, as a result of the reorganizations.

 

We began our planned principal operations, and accordingly, we have prepared our financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

 

23
 

 

Recent Developments

 

Financing Transactions

 

We started as UWI (previously known as Australian Sapphire Corporation) and was established on May 31, 2013 in the Province of New Brunswick, Canada. On December 31, 2014, UWI entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations with Reign, pursuant to which UWI transferred all of its net assets to Reign. The sole shareholder of UWI along with his spouse retained 100% ownership of Reign and were issued 27,845,000 of Reign common shares in exchange for the 16,000,250 outstanding shares of UWI. There was no significant tax consequence to this exchange . As a result, Reign is considered to be the continuation of the predecessor UWI. All historical financial information prior to the reorganization is that of UWI .

 

Prior to and at the time of the reorganization, our Certificate of Incorporation authorized the issuance of 50,000,000 shares of common stock, each having a par value of $0.0001, with each share of common stock entitled to one vote for all matters on which a shareholder vote is required or requested. We were also authorized to issue 5,000,000 shares of preferred stock , each having a par value of $0.0001. On May 8, 2015, our Certificate of Incorporation was amended to increase the authorized number of common shares to 100,000,000 and the authorized number of preferred shares to 10,000,000.

 

For share and earnings per share information, we have retroactively restated per share and the outstanding shares for weighted average shares used in the basic and diluted earnings per share calculations for all periods presented, as a result of the reorganizations.

 

Our Board of Directors are authorized to provide for the issue of any and all of the unissued and undesignated shares of the Preferred Stock in one or more series, and to fix the number of shares and to determine or alter for each series, such voting powers, full or limited, or no voting powers, and such designation, preferences, and relative, participating, optional, or other rights and qualifications, limitations, or restrictions thereof, as shall be stated an expressed in the resolution adopted by the Board of Directors providing for the issuance of such shares and as may be permitted by the Delaware General Corporation Law.

 

On July 15, 2015, we issued a total of 628,000 restricted common shares, valued at $157,000 (based on the estimated fair value of the stock on the date of grant) for marketing, investor relations, and outside consulting services.

 

On June 30, 2015, the Company issued an aggregate of 1,000,000 shares of restricted common stock to an unrelated third party, valued at $250,000 (based on the estimated fair value of the stock on the date of grant) plus $10,000 accrued in accounts payable for the purchase of two trademarks. The Company has recorded a total of $260,000 as intangible assets in the accompanying Balance Sheet at June 30, 2015.

 

In February and March 2015, we issued an aggregate of 300,000 shares of restricted common stock, valued at $75,000 (based on the estimated fair value of the stock on the date of grant) for legal services associated with our initial public offering.

 

In February 2015, we issued 40,000 shares of restricted common stock, valued at $10,000 (based on the estimated fair value of the stock on the date of grant) to outside consultants for services rendered.

 

On December 30, 2014, we issued 1,200,000 restricted common shares to an unrelated third party for the purchase of inventory with an estimated fair market value of $300,000. We valued the shares based on the estimated fair market value of the inventory, which was more readily determinable than the fair value of the stock.

 

In fiscal year 2014, we issued 110,000 shares of restricted common stock, valued at $23,050 (based on the estimated fair value of the stock on the date of grant) to outside consultants for services rendered.

 

In fiscal year 2014, we issued 400,000 shares of restricted common stock, valued at $64,400 (based on the estimated fair value of the stock on the date of grant) to outside consultants for services to be rendered, recorded.

 

On December 31, 2014, we issued 300,000 shares of restricted common stock, valued at $75,000 (based on the estimated fair value of the stock on the date of grant) for legal services associated with our initial public offering.

 

24
 

 

On August 15, 2013, we issued 15,000,000 restricted common shares for Director’s capital contribution at historical cost of inventory of $150,000. We valued the shares based on the estimated fair market value of the inventory, which was more readily determinable than the fair value of the stock.

 

On August 15, 2013, we issued 11,844,750 restricted common shares to founder’s, valued at $1,185 (based on the par value on the date of grant). The issuance was an isolated transaction not involving a public offering pursuant to Section 4(2) of the Securities Act of 1933.

 

On July 18, 2013, we entered into a stock purchase agreement with the Director, under which we issued him 1,000,000 shares of restricted common stock, in exchange for $119,000. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

On July18, 2013, we issued 250 shares of restricted common stock, valued at $250 (estimated by us to be $1.00 per share based on the value of the services) to an outside consultant for services rendered.

 

Stock Based Compensation

 

On May 1, 2015 (“Grant Date”), the Company issued to its Chief Executive Officer and director (“CEO”), options to purchase 10,000,000 shares of our common stock under the Company’s 2015 Equity Incentive Plan (the “2015 Plan”), valued at $2,500,000 (based on the Black Scholes valuation model on the Grant Date). We recognized expense of $347,543 and $0 for the six months ended June 30, 2015 and for the year ended December 31, 2014, respectively, within stock based compensation in the accompanying Statement of Operations.

 

Limited Operating History; Need for Additional Capital

 

There is limited historical financial information about us on which to base an evaluation of our performance. To date, we have not generated significant revenues from operations. 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 increases in the cost of services. To become profitable and competitive, we must receive additional capital. We have no assurance that future financing will materialize. If that financing is not available we may be unable to continue operations.

 

Overview of Presentation

 

The following Management’s Discussion and Analysis (“MD&A”) or Plan of Operations includes the following sections:

 

  · Plan of Operations

 

  · Results of Operations

 

  · Liquidity and Capital Resources

 

  · Capital Expenditures

 

  · Going Concern

 

  · Critical Accounting Policies

 

  · Off-Balance Sheet Arrangements

 

Plan of Operations 

 

Reign Sapphire Corporation was established as a vertically integrated “miners-gate to retail” model for sapphires--rough sapphires to finished jewelry; a color gemstone brand; and a jewelry brand featuring Australian sapphires. We are not an exploration or mining company and are not engaged in exploration or mining activities. We purchase rough sapphires in bulk, directly from commercial miners in Australia, and we intend to oversee each step of the process as the stones go from the miners-gate to the consumer as Reign Sapphire jewelry.

 

25
 

 

The processing of our rough Australian sapphires is done at our contract cutting factories in Asia and includes sorting rough parcels of sapphires and cutting and polishing rough stones. The processing and manufacturing costs are part of inventory costs in the use of proceeds section of this document.

 

Reign Sapphires is our color gemstone brand and we intend to launch our inaugural jewelry collection via our website www.reignsapphires.com in the first quarter of 2016. The sample jewelry collection has been designed and manufactured and is ready for production.

 

Our core values are to offer consumers conflict free sapphires; sapphires that are mined from a verified source; sapphires that have been procured directly from miners, sapphires that are ethically processed and sapphires that are natural (not synthetic). In addition, we intend to feature exclusively Australian sapphires in our initial jewelry collections. The Company has sufficient inventory to launch the sample collection.

 

The design direction for the collection we intend to offer is reflective of old Hollywood glamour meeting turn of the century. The inaugural collections we intend to offer are Reign Day-to-Night; featuring classic & timeless pieces designed to complement versus take over and Reign Red-Carpet; featuring bold designs, made for the stars to hold a time and place in Hollywood’s history.

 

We intend to position Reign Sapphires as a premium brand in the price point and company of competitors such as Cartier; Harry Winston; Roberto Coin; Van Cleef & Arpels and Bvlgari. We believe that our competitors have certain existing advantages such as history and heritage; strong E-commerce and mobile presence; wholesale and flagship retail presence; strong social presence; a wide range of ancillary product offerings; strong public relations and marketing efforts; a balanced range of price points across the board; and consumer trust & recognition. However, we intend to set ourselves apart with strong brand identity and visuals, unique design and quality and brand awareness through traditional and social media.

 

The Company intends to focus its marketing initiatives on: (1) Business-to-Consumer (“B2C”) marketing to attract customers to the reignsapphires.com website, (2) Business-to-Business (“B2B”) marketing and sales efforts, to establish exclusive distribution partners, and eventually (3) building a strong retail presence to market the products directly to consumers on a retail level.

 

The Company’s intends to launch a collection that includes rings, bracelets, and necklaces; featuring predominantly 1.5mm to 2.5mm diamond and princess cut sapphire melees. The Company intends to market the Red Carpet collection to households with annual income of $100,000 and greater and the Day-to-Night collection to households with income of $60,000 to $100,000.

 

The Company intends to initially focus marketing efforts in the U.S. and upon encountering three years of year on year growth in the U.S. with online, wholesale, and retail sales, the Company intends to expand its retail marketing efforts internationally.

 

We believe that the cutting factories have sufficient capabilities to process the rough material required to supply the jewelry manufacturer with orders for our inaugural collection. We have prepared the CAD renderings, castings and molds required to mass-produce our jewelry. We have completed our market research and have retained the services of a publicist and marketing specialist to launch and promote Reign Sapphires, we have also identified the approximate location of our initial flagship location.

 

We will require a minimum of $2,500,000 to implement the business plan and intend to raise the additional funds needed to implement this plan but have no agreement in place or plans in place to raise such funds.

 

Strategy

 

Reign Sapphire Corporation intends to set itself apart from its competition by marketing three core offerings: a vertically integrated direct from the miners-gate to retail model for sapphires - rough sapphires to finished jewelry; a color gemstone brand; and a jewelry brand featuring Australian sapphires.

 

We intend to promote Reign Sapphires as conflict free, ethically processed and natural. We also intend to make video footage and pictures of the process available to consumers via our website www.reignsapphires.com.

 

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The Company intends to focus primarily on the conflict free, procured from a verified source element well as quality and design.

 

Products

 

The Company’s intends to launch two inaugural collections: Reign Day-to-Night; featuring classic & timeless pieces designed to complement versus take over and Reign Red-Carpet; featuring bold designs, made for the stars to hold a time and place in Hollywood’s history.

 

The company intends to include in these collections rings, bracelets, and necklaces; using predominantly 1.5mm to 2.5mm diamond and princess cut sapphire melees. The Company intends to market the Red Carpet collection to households with annual income of $100,000 and greater and the Day-to-Night collection to households with income of $60,000 to $100,000.

 

Market Opportunities & Marketing Strategy

 

Due to the nature of the industry’s products, households with annual income of $60,000 to $100,000 account for the largest proportion of jewelry industry sales; hence, households with annual income of $60,000 and greater are regarded as the primary Reign Sapphires day-to-night collection target consumer profile.

 

Demand for the industry’s products is largely driven by the needs and preferences of consumers, along with variations in the level of disposable income allocated toward their purchases. The Company intents to eventually also capitalize on fashion market opportunities by having a lower price point silver jewelry collection.

 

The Company intends to focus its marketing initiatives on: (1) Business-to-Consumer (“B2C”) marketing to attract customers to the reignsapphires.com website, (2) Business-to-Business (“B2B”) marketing and sales efforts, to establish distribution partners such as high-end fashion retailers, and eventually (3) building a strong retail presence to market the products directly to consumers on a retail level. The Company intends to initially focus marketing efforts in the U.S. and upon encountering three years of year on year growth in the U.S. with online, wholesale, and retail sales, the Company intends to expand its marketing efforts internationally.

 

The Company intends to attract retail customers to the reignsapphires.com website by spreading awareness of the company and its offerings by engaging the services of a digital marketing specialist and social media specialist. The company also intends to hire a publicist as well as a marketing and branding specialist to manage print advertising campaigns and seasonal promotional activities. The Company intends to identify ideal locations for retail flagship stores that contain a large volume of walk-by traffic in communities with upper income residents.

 

The Company intends to form limited wholesale partnerships with retailers to sell the products at their retail boutiques, the benefit to Reign Sapphires is the promotion of the Company brand at the consumer level until we are in a position to open our own flagship stores. Prior to launching the Company’s sales campaign, the Company intends to develop and use association strategy to identify appropriate and strategic partners for co-marketing opportunities.

 

Plan of Operations

 

As of the date of this prospectus, we have generated minimal revenue by selling loose gemstones to a number of wholesale customers. We currently have no operational retail website and no retail customers, our activities and operations have been limited to developing our business and financial plans as well as designing and sample manufacturing our inaugural collection which we intend to launch together with our retail website in the first quarter of 2016. We will not have the necessary capital to fully execute the first phase of our business plan until we are able to secure financing. There can be no assurance that such financing will be available on suitable terms. Even if we raise 100% of the offering described in this prospectus, we may not have sufficient capital to begin generating further revenues from operations. For further discussion of our plan of operations and future financing requirements, see “Use of Proceeds”.

 

We had no significant operating revenues through June 30 , 2015. We expect to have operating revenues in the first half of 2016 as we launch our B2C marketing initiative. Revenues will be predominately the result of fine jewelry sales. At June 30 , 2015 our cash balance was negligible.

 

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Our plan of operations consists of:

 

· Purchase rough sapphires from commercial miners in Australian and process the rough material into cut gemstones and finished jewelry.

 

· Launch of our B2B marketing and sales efforts through the use of distribution partners and a high-end fashion retailers.

 

· Launch of our B2C marketing and sales efforts through the use of I nternet marketing, print advertising, promotions, and signage

 

· Raise capital to launch Reign Sapphires, fund administrative infrastructure and ongoing operations until our operations generate positive cash flow.

 

How We Generate Revenue

 

We recognize revenue at the time of sale. Revenues are presented net of refunds and known credits.

 

We currently have no retail sales or operational retail website. Revenue generated to date has been as a result of wholesale sales of loose gemstones; we intend to continue with wholesale sales of loose gemstones to a number of customers with one major customer contributing the bulk of our revenue until we are ready to launch our jewelry collection direct to consumers in early 2016.

 

General and administrative expenses consist of the cost of customer service, billing, cost of information systems and personnel required to support our operations and growth.

 

Depending on the extent of our future growth, we may experience significant strain on our management, personnel, and information systems. We will need to implement and improve operational, financial, and management information systems. In addition, we are implementing new information systems that will provide better record-keeping, customer service and billing. However, there can be no assurance that our management resources or information systems will be sufficient to manage any future growth in our business, and the failure to do so could have a material adverse effect on our business, results of operations and financial condition. 

 

Results of Operations

 

Six Months Ended June 30 , 2015 Compared to the Six Months Ended June 30 , 2014

 

Revenue 

 

Revenue increased by $ 510 , or 1.8 %, to $ 29,207 for the six months ended June 30 , 2015 from $ 28,697 for the six months ended June 30 , 2014 primarily due to increases in sales volume of our products offset by sales price reductions.

 

Cost of Sales

 

Cost of sales de creased by $ 1,266 , or 11.3 %, to $ 9,930 for the six months ended June 30 , 2015 from $ 11,196 for the six months ended June 30 , 2014 primarily due to sales of our lower cost products.

 

Operating expenses 

 

Operating expenses increased by $ 457,874 , or 246.2 %, to $ 643,888 for the six months ended June 30 , 2015 from $ 186,014 for the six months ended June 30 , 2014 primarily due to increases in stock based compensation of $347,543, consulting services costs of $48,652 , rent of $2,335 , travel costs of $2,232 , professional fees of $42,570 , marketing costs of $6,933 , and general and administration costs of $7,609 as a result of the increase in marketing and travel costs associated with the increased sales volume, and expenses associated with adding administrative infrastructure, primarily consulting, for our current and anticipated sales growth . 

 

For the six months ended June 30 , 2015, we had stock based compensation of $347,543, marketing expenses of $12,500, and general and administrative expenses of $ 283,845 primarily due to consulting costs of $ 143,550 , travel expenses of $ 38,446 , rent of $ 18,407 , professional fees of $ 60,681 , and general and administration costs of $ 22,761.

 

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For the six months ended June 30 , 2014, we had marketing expenses of $5,567, general and administrative expenses of $ 180,447 primarily due to consulting costs of $ 94 ,898, travel expenses of $ 36,214 , rent of $ 16,072 , professional fees of $ 18,111 , and general and administration costs of $ 15,152.

 

Net loss before income taxes 

 

Net loss before income taxes for the six months ended June 30 , 2015 totaled $ 624,611 and $ 168,513 for the six months ended June 30 , 2014 primarily due to stock based compensation, consulting services costs, rent, travel costs, professional fees, marketing costs, and general and administration costs.

 

Assets and Liabilities 

 

Assets were $ 875,350 as of June 30 , 2015.   Assets consisted primarily of cash of $ 45 , accounts receivable of $ 1,075, inventory of $ 443 ,508 which includes samples inventory of $51,302 , prepaid expenses of $ 17,834 , computer equipment of $ 2,888, intangible assets of $260,000 , and deferred offering costs of $150,000.   Liabilities were $ 717,985 as of June 30 , 2015.   Liabilities consisted primarily of accrued compensation-related party of $ 386 ,000, accounts payable – related party of $ 270,906 , accounts payable of $ 15 ,000, and advance from shareholder of $ 46,079.

 

Stockholders’ Equity 

 

Stockholders’ equity was $ 157,365 as of June 30 , 2015.   Stockholder’s equity consisted primarily of shares issued to founders for cash of $ 119,000, shares issued to founders for inventory of $150,000, shares issued to founders for services of $ 250, stock issued for services of $97 ,450, stock issued for inventory of $300,000, stock issued for intangible assets of $250,000, stock issued for deferred offering costs of $150,000, and stock based compensation of $347,543, offset primarily by the accumulated deficit at June 30 , 2015 of $ 1,256,878 .

 

Year Ended December 31, 2014 Compared to Inception (May 31, 2013) through December 31, 2013 

 

Revenue 

 

Revenue increased by $34,743, or 413.1%, to $43,153 in the year ended December 31, 2014 from $8,410 in the period of inception (May 31, 2013) through December 31, 2013 primarily due to increases in sales volume of our products offset by sales price reductions. 

 

Cost of Sales 

 

Cost of sales increased by $23,007, or 1,026.2%, to $25,249 in the year ended December 31, 2014 from $2,242 in the period of inception (May 31, 2013) through December 31, 2013 primarily due to increases in sales volumes of our products.

 

Operating expenses 

 

Operating expenses increased by $154,557, or 61.6%, to $405,448 in the year ended December 31, 2014 from $250,891 in the period of inception (May 31, 2013) through December 31, 2013 primarily due to increases in consulting services costs of $106,228 , rent of $7,341 , travel costs of $37,805 , and general and administration costs of $3,183 as a result of the increase in travel costs associated with the increased sales volume, and expenses associated with adding administrative infrastructure, primarily consulting, for our current and anticipated sales growth .

 

For the year ended December 31, 2014, we had marketing expenses of $5,567, general and administrative expenses of $399,881 primarily due to consulting costs of $207,778, travel expenses of $78,226, rent of $32,604, professional fees of $52,233, and general and administration costs of $29,040.

 

For the period of inception (May 31, 2013) through December 31, 2013, we had general and administrative expenses of $250,891 primarily due to consulting costs of $101,550, travel expenses of $40,421, rent of $25,263, professional fees of $61,368, and general and administration costs of $22,289.

 

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Net loss before income taxes 

 

Net loss before income taxes for the year ended December 31, 2014 totaled $387,544 and $244,723 for the period of inception (May 31, 2013) through December 31, 2013 primarily due to consulting services costs, rent, travel costs, professional fees, and general and administration costs.

 

Liquidity and Capital Resources  

 

General – Overall, we had an increase in cash flows from May 31, 2013 (date of inception) to June 30 , 2015 of $ 45 resulting from cash provided by financing activities of $202,641, offset partially by cash used in operating activities of $199, 131 , and cash used in investing activities of $3,465. 

 

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods indicated:

                           
            For the Year   Date of Inception  
    For the Six Months Ended   Ended   through  
    June 30,   December 31,   December 31,  
    2015   2014   2014   2013  
    (unaudited)   (unaudited)          
Net cash provided by (used in):                          
Operating activities   $ (50 ) $ (42,692 ) $ (44,440 ) $ (154,641 )
Investing activities             (3,465 )    
Financing acitivities         48,000     48,000     154,641  
Net increase in cash and cash equivalents   $ (50 ) $ 5,308   $ 95   $  

 

From May 31, 2013 (date of inception) to June 30, 2015 

 

Cash Flows from Operating Activities – From May 31, 2013 (date of inception) to June 30 , 2015, net cash used in operations was $199, 131. Net cash used in operations was primarily due to a cumulative net loss from inception of $( 1,256,878 ), offset primarily by stock based compensation of $347,543, the estimated fair market value of stock issued for services of $33,300, the amortization of stock issued for future services of $ 48,300 , depreciation expense of $ 577 , and the changes in operating assets and liabilities of $ 628,027 , primarily due to the increase in accrued compensation - related party of $ 386 ,000, accounts payable – related party of $ 239,977 , inventory of $ 37,421, accounts payable of $5,000, offset primarily by accounts receivable of $ 38,637 and prepaid expenses of $1,734.

 

Cash Flows from Investing Activities – Net cash flows used in investing activities from May 31, 2013 (date of inception) to June 30 , 2015 was $3,465. The increase in net cash used in investing activities was mainly due to purchases of computer equipment of $3,465.

 

Cash Flows from Financing Activities – Net cash flows provided by financing activities from May 31, 2013 (date of inception) to June 30 , 2015 was $202,641. The net cash provided by financing activities in 2014 was mainly due to shares sold for cash of $119,000 and cumulative advances from shareholder of $83,641.

 

Six Months Ended June 30, 2015 Compared to the Six Months Ended June 30, 2014 

 

Cash Flows from Operating Activities – For the six months ending June 30, 2015, net cash used in operations was $50 compared to net cash used in operations of $42,692 for the six months ending June 30, 2014. Net cash used in operations was primarily due to a net loss of $624,611 for the six months ended June 30, 2015, offset primarily by stock based compensation of $347,543, the estimated fair market value of stock issued for services of $10,000, the amortization of stock issued for future services of $32,200, depreciation expense of $577 and the changes in operating assets and liabilities of $234,241, primarily due to the increase in accrued compensation - related party of $110,000, accounts payable –related party of $136,783, inventory of $9,930, prepaid expenses of $1,734, and accounts payable of $5,000, offset primarily by accounts receivable of $29,206. 

 

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Year Ended December 31, 2014 Compared to Inception (May 31, 2013) through December 31, 2013 

 

Cash Flows from Operating Activities – For the year ending December 31, 2014, net cash used in operations was $44,440 compared to net cash used in operations of $154,641 for the period May 31, 2013 (inception) through December 31, 2013. Net cash used in operations was primarily due to a net loss of $387,544 for the year ended December 31, 2014, offset primarily by the estimated fair market value of stock issued for services of $23,050, the amortization of stock issued for future services of $16,100, and the changes in operating assets and liabilities of $303,954, primarily due to the increase in accrued compensation - related party of $180,000, accounts payable –related party of $103,194, and inventory of $25,249, offset primarily by accounts receivable of $1,021, and prepaid expenses of $3,468.

 

Cash Flows from Investing Activities – For the year ending December 31, 2014, net cash used in investing was $3,465 compared to net cash used in operations of $0 for the period May 31, 2013 (inception) through December 31, 2013. The increase in net cash used in investing activities was mainly due to purchases of computer equipment of $3,465.

 

Cash Flows from Financing Activities – For the year ending December 31, 2014, net cash provided by financing was $48,000 compared to net cash provided by operations of $154,641 for the period May 31, 2013 (inception) through December 31, 2013. The net cash provided by financing activities in 2014 was mainly due to cumulative advances from shareholder of $48,000.

 

Financing – We expect that our current working capital position, together with our expected future cash flows from operations will be insufficient to fund our operations in the ordinary course of business, anticipated capital expenditures, debt payment requirements and other contractual obligations for at least the next twelve months. However, this belief is based upon many assumptions and is subject to numerous risks (see “Risk Factors”), and there can be no assurance that we will not require additional funding in the future.

 

We have no present agreements or commitments with respect to any material acquisitions of other businesses, products, product rights or technologies or any other material capital expenditures. However, we will continue to evaluate acquisitions of and/or investments in products, technologies, capital equipment or improvements or companies that complement our business and may make such acquisitions and/or investments in the future. Accordingly, we may need to obtain additional sources of capital in the future to finance any such acquisitions and/or investments. We may not be able to obtain such financing on commercially reasonable terms, if at all. Due to the ongoing global economic crisis, we believe it may be difficult to obtain additional financing if needed. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.

 

Short-Term Financing

 

Advance from Shareholder 

 

We borrow funds from our CEO/Director for working capital purposes from time to time. As of June 30 , 2015, we have recorded the principal balance due of $ 46,079 in Advance From Shareholder. We received advances of $0, $0, $48,000 and $35,641, and no repayments for the six months ended June 30, 2014, for the year ended December 31, 2014, and for the period May 31, 2013 (date of inception) through December 31, 2013. During the six months ended June 30, 2015, the CEO received $37,562 of our cash receipts on accounts receivable directly from a customer. These amounts reduced advance from shareholder. Advances are non-interest bearing and due on demand.

 

Stock Transactions 

 

On July 15, 2015, we issued a total of 618,000 restricted common shares, valued at $154,500 (based on the estimated fair value of the stock on the date of grant) for marketing, investor relations, and outside consulting services.

 

On July 15, 2015, we issued 10,000 restricted common shares, valued at $2,500 (based on the estimated fair value of the stock on the date of grant) to a Brother-in-law of our CEO for marketing services.

 

On June 30, 2015, we issued an aggregate of 1,000,000 shares of restricted common stock to an unrelated third party, valued at $250,000 (based on the estimated fair value of the stock on the date of grant) plus $10,000 accrued in accounts payable for the purchase of two trademarks. We have recorded a total of $260,000 as intangible assets in the accompanying Balance Sheet at June 30, 2015.

 

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In February and March 2015, we issued 300,000 shares of restricted common stock, valued at $75,000 (based on the estimated fair value of the stock on the date of grant) for legal services associated with our initial public offering.

 

In February 2015, we issued 40,000 shares of restricted common stock, valued at $10,000 (based on the estimated fair value of the stock on the date of grant) to outside consultants for services rendered.

 

On December 30, 2014, we issued 1,200,000 restricted common shares to an unrelated third party for the purchase of inventory with an estimated fair market value of $300,000. We valued the shares based on the estimated fair market value of the inventory, which was more readily determinable than the fair value of the stock.

 

In fiscal year 2014, we issued 85,000 shares of restricted common stock, valued at $16,800 (based on the estimated fair value of the stock on the date of grant) to outside consultants for services rendered. 

 

In fiscal year 2014, we issued 400,000 shares of restricted common stock, valued at $64,400 (based on the estimated fair value of the stock on the date of grant) to outside consultants for services rendered or to be rendered.

 

On December 31, 2014, the Company issued 25,000 shares of restricted common stock, valued at $6,250 (based on the estimated fair value of the stock on the date of grant) to a Brother-in-law of the Company’s CEO for services rendered.  

 

On December 31, 2014, we issued 300,000 shares of restricted common stock, valued at $75,000 (based on the estimated fair value of the stock on the date of grant) for legal services associated with our initial public offering.

 

On August 15, 2013, we issued 15,000,000 restricted common shares for Director’s capital contribution at historical cost to inventory of $150,000. We valued the shares based on the estimated fair market value of the inventory, which was more readily determinable than the fair value of the stock.

 

On August 15, 2013, we issued 11,844,750 restricted common shares to founder’s, valued at $1,185 (based on the par value on the date of grant). The issuance was an isolated transaction not involving a public offering pursuant to Section 4(2) of the Securities Act of 1933.

 

On July 18, 2013, we entered into a stock purchase agreement with the Director, under which we issued him 1,000,000 shares of restricted common stock, in exchange for $119,000. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

 

On July 18, 2013, we issued 250 shares of restricted common stock, valued at $250 (estimated by us to be $1.00 per share based on the value of the services) to an outside consultant for services rendered.

 

Stock Based Compensation 

 

On May 1, 2015 our board of directors and stockholders authorized the adoption and implementation of the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). The principal purpose of the 2015 Plan is to attract, retain and motivate employees, officers, directors, consultants, agents, advisors and independent contractors to us and our related companies by providing them the opportunity to acquire a proprietary interest in us and to link their interests and efforts to the long-term interests of our stockholders. The material terms of the 2015 Plan are summarized in “Executive Compensation Plans and Other Benefit Plans” in this prospectus. Under the 2015 Plan, 10,000,000 shares of our common stock have initially been reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and other stock and cash-based awards.

 

On July 1, 2015 (“Grant Date”), we issued our CEO, options for 10,000,000 shares of our common stock under the 2015 Plan, valued at $2,500,000 (based on the Black Scholes valuation model on the Grant Date). The options will vest 50% on the first anniversary of the Grant Date (“First Year Vest”) and the remaining 50% of the shares shall vest in twelve (12) equal installments on the first day of each calendar month following the first anniversary of the Grant Date beginning on June 1, 2016 and ending on June 1, 2017 (“Second Year Vest”), provided that CEO is continuously employed by the Company from the Grant Date through such applicable vesting date. Notwithstanding the foregoing, 100% of the shares of the Company’s common stock subject to the Option shall fully vest if the Company shall successfully sell all of the shares of its common stock included in the primary offering of such common stock by the Company pursuant to the registration statement on Form S-1 to be filed with the Securities and Exchange Commission within ninety (90) days of the Grant Date. The First Year Vest options will amortize to expense over a 12 month period beginning May 2015 through April 2016 and the Second Year Vest options will amortize to expense over a 24 month period beginning May 2015 through April 2017. We recognized expense of $347,543 for the six months ended June 30, 2015 within stock based compensation in the accompanying Statement of Operations. 

 

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Management used the Black-Scholes valuation model to value the options with known inputs for option term exercise price and stock price and assumptions for expected volatility rate; dividend rate; and risk free interest rate. The table summarizes the Black-Scholes assumptions used in the valuation of the options issued:

         
    Six Months Ended
June 30, 2015
 
Expected dividend yield     0.00 %
Expected stock-price volatility     35.6 %
Risk-free interest rate     1.87 %
Expected term of options (years)     6  
Stock price   $ 0.25  
Exercise price   $ 0.005  

  

Expected dividend yield . We base the expected dividend yield assumption on the fact that we have never paid cash dividends and has no present intention to pay cash dividends on our common stock.

 

Expected stock-price volatility . As our common stock has never been publicly traded, the expected volatility is derived from the average historical volatilities of publicly traded companies within our industry that we consider to be comparable to our business over a period approximately equal to the expected term.

 

Risk-free interest rate . We base the risk-free interest rate assumption on observed interest rates appropriate for the expected term of the stock option grants. 

 

Expected term of options . The expected term of options represents the period of time that options are expected to be outstanding. Because the Company does not have historic exercise behavior, the Company determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period.

 

Stock price . Determined from third party transactions through the purchase of inventory or services provided to us by outside consultants.

 

Capital Expenditures 

 

Other Capital Expenditures

 

We expect to purchase approximately $30,000 of equipment in connection with the expansion of our business.

 

Fiscal year end 

 

Our fiscal year end is December 31.

 

Going Concern 

 

Our independent registered accounting firm has added an explanatory paragraph to their audit opinion issued in connection with our financial statements. We had an accumulated deficit of approximately $ 1,257 ,000, $632,000 and $245,000 at June 30 , 2015, December 31, 2014 and 2013, respectively, had a net loss of approximately $ 625 ,000, $ 168 ,000, $388,000 and $245,000 for the six months ended June 30 , 2015 and 2014, for the year ended December 31, 2014, and for the period May 31, 2013 (date of inception) through December 31, 2013, respectively, and net cash ( used in ) operating activities of approximately $0, ($43,000), ($ 44,000 ) and ($ 155,000 ), respectively, for the six months ended June 30 , 2015 and 2014, for the year ended December 31, 2014, and for the period May 31, 2013 (date of inception) through December 31, 2013, respectively, with limited revenue earned since inception.

 

While we are attempting to expand operations and increase revenues, our cash position may not be significant enough to support our daily operations. We intend to raise additional funds by way of a public or private offering. We believe that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for us to continue as a going concern. While we believe in the viability of our strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to further implement our business plan and generate revenues.

 

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The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

 

Critical Accounting Policies

 

The Commission has defined a company’s critical accounting policies as the ones that are most important to the portrayal of our financial condition and results of operations and which require us to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies that are significant to understanding our results. For additional information, see Note 3 - Summary of Significant Accounting Policies on page F-9. 

 

The following are deemed to be the most significant accounting policies affecting us.

 

Use of Estimates 

 

The preparation of these financial statements in accordance 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 disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the financial statements. The more significant estimates and assumptions by management include among others: inventory valuation, and common stock and option valuation. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.

 

Revenue Recognition  

 

We recognize revenues in accordance with FASB ASC Topic 605, “Revenue Recognition”, and with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”. 

 

Under SAB 104, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable, and (iv) collection is reasonably assured.

 

We recognize revenue from product sales when the product is received and accepted by the customer , provided that collection of the resulting receivable is reasonably assured. While the products are being transported and delivered to the customer and until the products are accepted by the customer, the suppliers bear the risk of loss. Credit is granted generally for terms of 7 to 90 days, based on credit evaluations. 

 

We currently have no return policy. We are currently evaluating our return policy to be more in line with industry standards.

 

Accounts Receivable 

 

We record trade receivables when revenue is recognized. When appropriate, we will record an allowance for doubtful accounts, which is primarily determined by review of specific trade receivables. Those accounts that are doubtful of collection are included in the allowance. These provisions are reviewed to determine the adequacy of the allowance for doubtful accounts. Trade receivables are charged off when there is certainty as to their being uncollectible. Trade receivables are considered delinquent when payment has not been made within contract terms. At June 30 , 2015, December 31, 2014 and 2013, we had no allowance for doubtful accounts. For the six months ended June 30 , 2015 and 2014, for the year ended December 31, 2014 and the period May 31, 2013 (date of inception) through December 31, 2013, there were no accounts written-off.

 

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Inventories 

 

Inventories are stated at the lower of cost or market on a lot basis. A lot is determined by the cut, clarity, size, and weight of the sapphires. Our inventory consists of loose sapphire jewels that meet rigorous grading criteria and are of cuts and sizes most commonly used in the jewelry industry. As of June 30 , 2015, December 31, 2014 and 2013, inventory consists of loose sapphire jewels and loose sapphire jewels held as samples. Samples are used to show potential customers what the jewelry would look like. Promotional items given to customers that are not expected to be returned will be removed from inventory and expensed. We appraise our inventory on an annual basis or if circumstances dictate sooner to determine if the estimated fair value is greater or less than cost. Our loose sapphire jewels do not degrade in quality over time and are not subject to fashion trends. In view of the foregoing factors, we have concluded that no excess or obsolete loose jewel inventory reserve requirements existed as of June 30 , 2015, December 31, 2014 and 2013, respectively.

 

Income Taxes 

 

We account for income taxes under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which would be recorded on our balance sheets in accordance with ASC 740, which established financial accounting and reporting standards for the effect of income taxes. We must assess the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we must establish a valuation allowance. Changes in our valuation allowance in a period are recorded through the income tax provision on the statements of operations. 

 

From the date of our inception we adopted ASC 740-10-30. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of ASC 740-10, we recognized no material adjustment in the liability for unrecognized income tax benefits. 

 

Stock Based Compensation

 

Issuances of our common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. However, situations may arise in which counter performance may be required over a period of time but the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist as the instruments fully vested on the date of agreement, we determine such date to be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying statement of operations over the contract period. When it is appropriate for us to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates. 

 

For purposes of determining the variables used in the calculation of stock compensation expense under the provisions of FASB ASC Topic 505, “Equity” and FASB ASC Topic 718, “Compensation — Stock Compensation,” we perform an analysis of current market data and historical Company data to calculate an estimate of implied volatility, the expected term of the option and the expected forfeiture rate. With the exception of the expected forfeiture rate, which is not an input, we use these estimates as variables in the Black-Scholes option pricing model. Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in our statements of operations and comprehensive income. In addition, any differences between estimated forfeitures and actual forfeitures could also have a material impact on our financial statements. 

 

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Non-Cash Equity Transactions  

 

Shares of equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received based on the market value of services to be rendered, or at the value of the stock given, considered in reference to contemporaneous cash sale of stock.

 

Fair Value of Financial Instruments 

 

We apply the provisions of accounting guidance, FASB Topic ASC 825 that requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of June 30 , 2015, December 31, 2014 and 2013, the fair value of inventory, accrued compensation - related party, and advance from shareholder approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates. 

 

Recent Accounting Pronouncements 

 

In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance regarding management’s responsibility to assess whether substantial doubt exists regarding the ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements for each annual and interim reporting period, management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). This ASU is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. We do not expect that the adoption of this ASU to have a material effect on our financial position, operations, or cash flows. 

 

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation .” This ASU removes the definition of a development stage entity from the ASC, thereby removing the financial reporting distinction between development stage entities and other reporting entities from GAAP. In addition, the ASU eliminates the requirements for development stage entities to (1) present inception-to-date information in the statements of operations, cash flows, and stockholders’ equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. In addition, ASU 2014-10 requires an entity that has not commenced principal operations to provide disclosures about the risks and uncertainties related to the activities in which the entity is currently engaged and an understanding of what those activities are being directed toward. This ASU is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. We have elected to adopt this ASU and its adoption resulted in the removal of previously required development stage disclosures. Adoption of this ASU did not impact our financial position, operations or cash flows.

 

In May 2014, the Financial Accounting Standards Board issued ASU 2014-09, which will update Codification topic: Revenue from Contracts with Customers. The principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein. Management is currently evaluating the impact ASU 2014-09 will have on our financial position, results of operations and cash flows. 

 

In April 2015, the FASB issued ASU 2015-03, “ Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ”. This standard update requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.  Adoption of this ASU is not expected to have a material effect on our financial position, operations or cash flows.

 

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Future Contractual Obligations and Commitment s

 

As of June 30, 2015, we had no future contractual obligations and commitments. Future contractual obligations and commitments are based on the terms of the relevant agreements and appropriate classification of items under U.S. GAAP as currently in effect. Future events could cause actual payments to differ from these amounts.

 

We incur contractual obligations and financial commitments in the normal course of our operations and financing activities. Contractual obligations include future cash payments required under existing contracts, such as debt and lease agreements. These obligations may result from both general financing activities and from commercial arrangements that are directly supported by related operating activities. Details on these obligations are set forth below.

 

Consulting Agreements

 

We previously had a consulting agreement with our CEO under which he was compensated $120,000 per annum. Beginning June 20, 2013, this contract was to continue unless and until terminated at any time by either us or CEO giving two month notice in writing. Such consulting agreement was terminated by mutual agreement as of May 1, 2015 and superseded by the employment agreement described in “Executive Compensation—Agreements with Executive Officers” elsewhere in this prospectus. Deferred compensation totaling $259,000, $184,000 and $64,000 as of June 30, 2015, December 31, 2014 and 2013, respectively, is included in Accrued Compensation-Related Party . 

 

We previously had a consulting agreement with our secretary and director (“Secretary”) under which she was compensated $60,000 per annum. Beginning June 20, 2013, this contract was to continue unless and until terminated at any time by either us or Secretary giving two month notice in writing. Such consulting agreement was terminated by mutual agreement as of May 1, 2015 and superseded by the employment agreement described in “Executive Compensation—Agreements with Executive Officers” elsewhere in this prospectus. Deferred compensation totaling $ 127,000 , $92,000 and $32,000 as of June 30 , 2015, December 31, 2014 and 2013, respectively, is included in Accrued Compensation-Related Party.

 

Off-Balance Sheet Arrangements 

 

As of June 30 , 2015, we have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated under which it has: 

 

  · a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit;

 

  · liquidity or market risk support to such entity for such assets;

 

  · an obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or

 

  · an obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to us, where such entity provides financing, liquidity, market risk or credit risk support to or engages in leasing, hedging, or research and development services with us.

 

Inflation 

 

We do not believe that inflation has had a material effect on our results of operations. 

 

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DESCRIPTION OF BUSINESS  

 

Reign Sapphire Corporation was established as a vertically integrated “mine- gate to retail ” model for sapphires-- rough sapphires to finished jewelry ; a color gemstone brand; and a jewelry brand featuring Australian sapphires. We are not an exploration or mining company and are not engaged in exploration or mining activities. We purchase rough sapphires in bulk, directly from commercial miners in Australia, and we intend to oversee each step of the process as the stones go from the miners-gate to the consumer as Reign Sapphire jewelry.

 

The term mine-gate to retail refers to sapphires and sapphire jewelry offered from the miner’s gate to consumers without any middlemen. We are not an exploration or mining company and we oversee the processing of material procured directly from commercial miners in Australia. The vertical integration process includes processing bulk quantities (1kg bags) of rough Australian sapphires, sizing and sorting the rough (uncut) parcels of sapphires and overseeing the cutting and polishing of the rough stones in contract cutting factories in Asia. This is followed by an in house design process and outsourced manufacturing process in the USA. 

 

Reign Sapphires is our color gemstone brand and we intend to launch our inaugural jewelry collection via our website www.reignsapphires.com in the first quarter of 2016. The sample jewelry collection has been designed and manufactured and is ready for production. 

 

Our core values are to offer consumers conflict free sapphires; sapphires that are mined from a verified source; sapphires that have been procured directly from miners, sapphires that are ethically processed and sapphires that are natural (not synthetic). In addition, we intend to feature exclusively Australian sapphires in our initial jewelry collections. The Company has sufficient inventory to launch the sample collection. 

 

The design direction for the collection we intend to offer is reflective of old Hollywood glamour meeting turn of the century. The inaugural collections we intend to offer are Reign Day-to-Night; featuring classic & timeless pieces designed to complement versus take over and Reign Red-Carpet; featuring bold designs, made for the stars to hold a time and place in Hollywood’s history. 

 

We intend to position Reign Sapphires as a premium brand in the price point and company of competitors such as Cartier; Harry Winston; Roberto Coin; Van Cleef & Arpels and Bvlgari. We believe that our competitors have certain existing advantages such as history and heritage; strong E-commerce and mobile presence; wholesale and flagship retail presence; strong social presence; a wide range of ancillary product offerings; strong public relations and marketing efforts; a balanced range of price points across the board; and consumer trust & recognition. However, we intend to set ourselves apart with strong brand identity and visuals, unique design and quality and brand awareness through traditional and social media.

 

The Company intends to focus its marketing initiatives on: (1) Business-to-Consumer (“B2C”) marketing to attract customers to the reignsapphires.com website, (2) Business-to-Business (“B2B”) marketing and sales efforts, to establish distribution partners such as high-end fashion retailers, and eventually (3) building a strong retail presence to market the products directly to consumers on a retail level. The Company intends to initially focus marketing efforts in the U.S. and upon encountering significant success in the U.S. with online, wholesale, and retail sales, the Company intends to expand its marketing efforts internationally .

 

The Company’s intends to launch collections , which include rings, bracelets, and necklaces ; featuring predominantly 1.5mm to 2.5mm diamond and princess cut sapphire melees. The Company intends to market the Red Carpet collection to households with annual income of $100,000 and greater and the Day-to-Night collection to households with income of $60,000 to $100,000.

 

Development of Our Business

 

Reign Sapphire Corporation is incorporated in the State of Delaware as a fine jewelry company. RSC intends to offer a vertically integrate model for sapphires direct from the mine’s gate to the retail supply chain including processing rough sapphires and gem cutting and designing and manufacturing fine jewelry .

 

Strategy

 

Reign Sapphire Corporation intends to set itself apart from its competition by actively promoting our three core offerings: a vertically integrated “mine-gate to retail” model for sapphires - rough sapphires to finished jewelry ; a color gemstone brand; and a jewelry brand featuring Australian sapphires.

 

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We intend to promote Reign Sapphires as conflict free, ethically processed and natural. We also intend to make video footage and pictures of the process available to consumers via our website www.reignsapphires.com

 

The Company intends to focus primarily on quality and design and secondly on strategic pricing methods in order to compete in the U.S. market.

 

While all of our competitors have established themselves uniquely within sectors of the market, none have marketed themselves as mine-gate to consumers with a vertical integration of proc ess in g , cutting and shaping, manufacturing, and sales of sapphires . We believe there is a strong market opportunity for the Company’s products as there is currently growth in U.S. and global jewelry sales. We believe that we have the knowledge and expertise to capitalize on this opportunity and to capitalize upon the uniquely powerful internationally recognized Australian brand image and appeal and become the leading player in this fragmented cottage industry.

 

Products

 

The Company’s initial product line , consist of rings, bracelets, necklaces . The Company intends to eventually manufacture pendants and watches. The sapphires used are predominantly 1.5mm to 2.5mm diamond and princess cut melees.

 

Aspects of processing , manufacturing and sales of the Company: 

 

·Gem Shaping, Cutting, & Processing: The Company’s contract gem design team cut, shape, and process rough sapphire material into gem stones.

 

·Jewelry Manufacturing: The Company’s has outsourced the manufacturing to a quality U.S. provider

 

· Sales: The Company intends to launch its ecommerce site www.reignsapphires.com in early 2016 .

 

·Packaging: Each jewelry item will be accompanied by a high quality, durable jewelry box, gift bag, certificate of authenticity and warranty.

 

· The Company’s products feature sapphires that have been procured in the rough from commercial miners in New South Wales, Australia and processed by the company. The company does not have an exclusive supplier rather a number of commercial miners in the region that have been supplying the company with run-of-mine material for a number of years.

 

· The company intends to eventually after a number of years of retail operation to acquire its own mining assets to ensure long-term supply.

 

Market Overview

 

Opportunities

 

Due to the nature of the industry’s products, households with annual income of $60,000 to $100,000 account for the largest proportion of jewelry industry sales; hence, households with annual income of $60,000 and greater are regarded as the primary target consumer profile. Demand for the industry’s products is largely driven by the needs and preferences of consumers, along with variations in the level of disposable income allocated toward their purchases. The Company intends to launch a high-end his and hers’ jewelry line that uses fine blue pave sapphires, as well as an extremely high-end couture brand that uses the finest sapphires available from the Company’s Australian miners, cut by expert cutters, and set in fine custom jewelry.

 

The primary audience for the brand is women — they are the market, in general. However, while women may make the choices, men often oversee the purchase. Speaking to both women and men will be an important aspect of any program. There are 3 main stages of life where a jewelry purchase will come into play:

 

·Single “The Self Purchaser” (I Love Being Me)

 

·Married (Engagement/Wedding/Children — Push Present)

 

·Retired (Gift Giver)

 

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More specific age segmentation within these life stages includes:

 

·18-25 coming of age/first job

 

·25-35 career development/children

 

·35-45 family/career advancement (self-purchaser)

 

·45-55 self-actualization/empty nest (gift giver to self and others)

 

An example of women’s networks and influencers include:

 

·Friends (word-of-mouth)

 

·Celebrities (aspirational)

 

·Bloggers/online platforms (trusted network)

 

·Media (3rd party endorsement)

 

·Peers in business

 

Understanding how the various targets receive information and are influenced in making jewelry purchases helps direct various streams of communication.

 

Because of the flexibility inherent in its model, RSC can adjust its brand voice specifically to reach a variety of women and men desiring a sapphire option in fine jewelry. The ability to promote the mine-gate to retail model should separate the brand from its competitors.

 

Marketing and Sales

 

Marketing Overview & Strategy

 

The Company intends to focus its marketing initiatives on: (1) Business-to-Consumer (“B2C”) marketing to attract customers to the reignsapphires.com website, (2) Business-to-Business (“B2B”) marketing and sales efforts, to establish distribution partners such as high-end fashion retailers, and eventually (3) building a strong retail presence to market the products directly to consumers on a retail level. The Company intends to initially focus marketing efforts in the U.S. and upon encountering significant success in the U.S. with online, wholesale, and retail sales, the Company intends to expand its marketing internationally .

 

On a B2C basis, the Company intends to use an array of marketing methods to spread awareness of the Company’s jewelry products, we intend to include internet marketing, print advertising, promotions, and eventually signage. The Company intends to identify ideal locations that will contain a lot of walk-by traffic in communities with middle to upper income residents.

 

Branding Strategy

 

Branding will play a critical role in the success of the Company. The Company has performed a capabilities audit and has developed and designed the products .

 

The Company has also performed marketing and capabilities landscape assessment s based upon consumer immersion and research and designed to understand consumer purchase behaviors and values, assess short and long term socio-cultural and market trends, and analyze the marketplace and competitive landscape. The Company has collaborated with an assembled team of experts in the naming and development of the brand using expert level product design and marketing strategy. The Company has designed the look and feel of the logo using a palette, style guide, inspiration boards, design renderings, and production images.

 

The Company has developed a comprehensive, consumer-oriented toolkit using consistent language and tone for printed and online media and to target retailers on a sell-in, exclusive basis.

 

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The Company intends to develop its website and advertisements for print and online media, and sales materials for retail strategic partners. The Company intends to maintain a graphics library to be used on all touch points.

 

The Company’s goal is to evolve the brand voice to embody quality, variety, and a strong market position. The Company is in an enviable position in this ‘space’ whereby it can position itself and develop its identity as a new (mine-gate to retail) gemstone company that provides a direct bridge between commercial miners and the finished products.

 

With the flexibility and leverage that comes from being vertically integrated, the Company intends to forge its own path with the creation of product segmented by the consumer and eventually the development of multiple, non-competitive streams of distribution.

 

Internet Marketing

 

The Company intends to establish a presence on Google, Yelp, Bing, Yahoo and all other online search engines that are used to search for jewelry and sapphires. The Company intends to engage in significant SEO marketing efforts to ensure that the Company has strong results upon natural searches related to jewelry and sapphires. The Company intends to utilize PPC advertising, display advertising, and article marketing. The Company’s website will display a full catalogue of its products, background information regarding the mining of the products, information about the Company and management team, and contact information. The Company will also maintain a social media presence on Facebook, Twitter, and other social media websites to have an interactive presence.

 

Strategic Partnerships with Retailers

 

The Company intends to form limited strategic partnerships with retailers to sell the products at their retail boutiques . The benefit to us is the promotion of the Company brand at the consumer level until we are in a position to open our own flagship stores. Prior to launching the Company’s sales campaign, the Company intends to develop and use association strategy to identify appropriate and strategic partners for co-marketing opportunities.

 

The Company intends to develop a retail channel strategy to bolster the retail/direct to consumer sales approach while maintain a point of differentiation within the competitive landscape. Furthermore, the Company intends to develop retail adaptation strategies using in-store promotional and retail tactics using the Company’s branding strategy.

 

Print Advertising

 

The Company intends to advertise in lifestyle and fashion magazines that cater to middle to upper income individuals, such as Vogue, Cosmopolitan, and Vanity Fair.

 

Public Relations

 

The Company intends to gain public awareness and gain credibility through a public relations (PR) campaign to establish relationships with the local market. The Company intends to consistently attend editor events and engage in strategic media outreach planning and become a valued member of the community through community service offerings and support. The Company has engaged a PR firm to work to obtain interviews, print articles, and featured spots in leading fashion, luxury, and bridal magazines, industry publications, television news, radio programming, periodicals, and online websites and publications. The Company intends to develop short-lead and long-lead editorials and long lead editorials. The purpose of the PR campaign is to highlight the strength and innovation of the Company’s products.

 

Sponsorships

 

The Company intends to sponsor social events that are appropriate to promote jewelry on a consumer level. Examples of such events could be parties, art or photo shows, and charity events.

 

Celebrity Endorsement

 

The Company intends to identify multiple celebrities to bolster the brand image, and spread awareness of the Company’s brand and products.

 

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Promotions

 

The Company intends to develop promotional platforms to include sales during and after holidays, discounted prices on particular products, and discounts for repeat customers.

 

Competition

 

Competitive Analysis and Strategy

 

The industry in which we compete is highly competitive. We believe that the most important competitive factors in our industry include the ability to control as much as possible of the supply chain.

 

We intend to position Reign Sapphires as a premium brand in the price point and company of competitors such as Cartier; Harry Winston; Roberto Coin; Van Cleef & Arpels and Bvlgari. We believe that our competitors have certain existing advantages such as history and heritage; strong E-commerce and mobile presence; wholesale and flagship retail presence; strong social presence; a wide range of ancillary product offerings; strong public relations and marketing efforts; a balanced range of price points across the board; and consumer trust & recognition. However, we intend to set ourselves apart with strong brand identity and visuals, unique design and quality and brand awareness through traditional and social media. 

 

Because we are a small company with a limited operating history, we are at a competitive disadvantage against larger and well-capitalized companies which have a track record of success and operations. Therefore, our primary method of competition involves promoting our direct to consumer offering .

 

Generally Australian miners sell their rough color gemstone material to trader who process the material and then sell the loose gemstones to the wholesale color gemstone market and then further down the supply chain to manufacturers and to retailers. Processors or traders generally don’t mine the material themselves and also don’t offer their product directly to manufacturers or retailers. Wholesale jewelers generally do not mine or process material they usually buy in bulk specific pieces of finished jewelry or manufacture the jewelry themselves using fine gemstones purchased from traders.

 

We do not intend to sell rough sapphires neither do we intend to sell the cut stones that we process; we intend to use the material exclusively for our manufacturing purposes.

 

In addition, although we will endeavor to secure wholesale partners, we intend to only offer a limited collection and inventory to our wholesale partners and intend to retain as much inventory as possible for own ecommerce site and flagship store.

 

Intellectual Property

 

The Company owns trademarks in the jewelry and gemstone class including “Reign” and “Reign Opulence” and the Company also owns a number of domain names.

 

Governmental Approvals and Regulation

 

We do not require any government approval in order to operate our business. In the event any of our operations or products requires government approval, we will comply with any and all local, state and federal requirements.

 

Other than federal and state securities laws and common business and tax rules and regulations, we are not subject to any material government regulation. However, there is a risk that we could be adversely affected by current laws, regulations or interpretations or that more restrictive laws, regulations or interpretations will be adopted in the future that could make compliance more difficult or expensive. There is also a risk that a change in current laws could adversely affect our business.

 

In addition, regulatory authorities have relatively broad discretion to grant, renew and revoke licenses and approvals and to implement regulations. Accordingly, such regulatory authorities could prevent or temporarily suspend us from carrying on some or all of our activities or otherwise penalize us if our practices were found not to comply with the then current regulatory or licensing requirements or any interpretation of such requirements by the regulatory authority. Our failure to comply with any of these requirements or interpretations could have a material adverse effect on our operations.

 

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Procurement and Manufacturing

 

Our Sapphires are from Australia and processed in, Asia, Australia and the U.S, at the present time all of our manufacturing is conducted in the U.S

 

Research and Development

 

Other than time spent researching our business and proposed markets and segmentation, the Company has not spent any funds on research and development activities to date. In the event opportunities arise from our operations, the Company may elect to initiate research and development activities, but the Company has no plans for any activities to date.

 

Environmental Laws and Regulations

 

Our operations are not subject to any environmental laws or regulations.

 

Employees

 

The Company had 2 full-time employees and 0 part-time employees as of the date of this prospectus.

 

We do not presently have pension, health, annuity, insurance, profit sharing, or similar benefit plans; however, we may adopt plans in the future.

 

Properties and Facilities

 

Our principal executive offices are located at 9465 Wilshire Blvd, Beverly Hills, California. The office space is currently being leased. We believe that our existing facilities are adequate for our current needs and that we will be able to lease suitable additional or alternative space on commercially reasonable terms if and when we need it. If we are able to raise sufficient capital through this offering, we will seek to lease a larger, dedicated space at no more than $5,000 per month.

 

Legal Proceedings

 

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future. To the best our knowledge, none of our directors, officers or affiliates is involved in a legal proceeding adverse to our business or has a material interest adverse to our business.

 

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DETERMINATION OF OFFERING PRICE

 

Since our shares are not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was arbitrarily determined. The offering price was determined by us and is based on our own assessment of our financial condition and prospects, limited offering history, and the general condition of the securities market. It does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the OTCBB and or OTCQB concurrently with the filing of this prospectus. In order to be quoted on the OTCBB or OTCQB, a market maker must file an application on our behalf in order to make a market for our common stock.

 

The selling shareholders initially will sell shares of common stock at a price of $0.50 per share until they are quoted on the OTCBB or OTCQB, and thereafter may sell some or all of their shares from time to time at prevailing market prices, once they are quoted on the OTCBB or OTCQB, or at privately negotiated prices, and may sell either directly or through a broker-dealer in transactions between selling shareholders and purchasers, or otherwise.

 

We intend to file a registration statement under the Exchange Act concurrently with the effectiveness of the registration statement of which this prospectus is a part. If our common shares become quoted on the OTCBB or OTCQB and a market for the shares develops, the actual price of shares will be determined by prevailing market prices at the time of sale or by private transactions. The offering price would thus be determined by market factors.

 

There is no assurance that our common stock will trade at market prices in excess of the initial public offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for the common stock, investor perception of us and general economic and market conditions. See “Risk Factors”.

  

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SECURITY OWNERSHIP OF PRINCIPAL AND SELLING STOCKHOLDERS

 

The following table contains information about the beneficial ownership of our common stock as of the date of this prospectus by:

 

·      each person who is known by us to beneficially own more than 5% of the outstanding shares of common stock;

 

·      each of our directors;

 

·      each of our named executive officers;

 

·      all of our directors and executive officers as a group; and

 

·      each of the selling stockholders.

 

The information in the table below is based upon information derived from our stock records. Except as set forth below, percentages of common stock owned are based on 31,823 ,000 shares outstanding as of the date of this prospectus. There are not any pending or anticipated arrangements that may cause a change in control.

 

Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Common stock subject to options, warrants or other convertible securities that are currently exercisable or exercisable within 60 days of the date of this prospectus are deemed to be outstanding and beneficially owned by the person holding the options. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person by reason of any of the acquisition rights described above. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe to the best of our knowledge that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder. The indication in the table that shares are beneficially owned is not an admission on the part of the stockholder that he, she or it is a direct or indirect beneficial owner of those shares. Unless otherwise indicated, the business address of each of the entities and individuals named in the table below is c/o Reign Sapphire Corporation, 9190 W Olympic Blvd # 263 Beverly Hills CA 90212.

 

The following table also sets forth the number of common shares being offered by the selling stockholders and the number of shares that would be beneficially owned after the offering if a selling stockholder sold all of the shares offered under this prospectus. The shares being offered by the selling stockholders were offered and sold to them in private placement transactions pursuant to an exemption from the registration requirements under Regulation D and/or Section 4(a)(2) of the Securities Act since, among other things, the transactions did not involve a public offering and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution thereof. The sales of the securities were made without any form of general solicitation or advertising and all of the foregoing securities are deemed restricted securities for purposes of the Securities Act. Each of the recipients of securities represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the stock certificates. The shares being offered hereby by the selling stockholders are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. Because the selling stockholders are not obligated to sell all or any portion of the shares of our common stock shown as offered by them, we cannot estimate the actual number of shares (or actual percentage of the class) of our common stock that will be held by any selling stockholder upon completion of this resale offering. However, for purposes of this table, we have assumed that, after completion of the offering, none of the shares covered by this prospectus will be held by the applicable selling stockholder. All information with respect to share ownership has been furnished by the selling stockholders. None of the selling stockholders is an affiliate of the Company.

 

45
 

 

The percentage of shares beneficially owned after completion of the offering is based on the number of common shares outstanding as of the date of this prospectus. If all of the 10,000,000 common shares being offered by the Company pursuant to this prospectus are sold and no other shares are issued by the Company prior to the completion of the offering, Mr. Joseph Segelman, our President and CEO, will own or otherwise control approximately 59.8 % of the then-outstanding common shares. However, if only 75% of the offered shares, 50% of the offered shares or 25% of the offered shares are sold, he will own 63.6%, 67.9 % or 72.8 %, respectively.

  

Certain of the persons identified in the table below are related to one another, as follows: (1) Mr. Joseph Segelman and Mrs. Chaya Segelman are married to one another; however they each disclaim beneficial ownership and/or voting power to shares owned by one another; (2) Mr. Joseph Segelman and Mr. Menachem Dadon are brother in laws ; and (3) Mr. Joseph Segelman and Mr. Levi Lieder are brother in laws. Mr. Joseph Segelman and Mrs Chaya Segelman are founding stockholders of the Company and acquired all of their common shares at the founding of the Company at a price of $0.0001.

 

To our knowledge, none of the selling stockholders are broker-dealers and none of the entities included among the selling stockholders are affiliates of broker-dealers.

 

During the three years prior to the filing of this registration statement, no selling stockholder held any positions or offices or had any other material relationships with the Company or any of its predecessors or affiliate except for Mr Joseph Segelman and Mrs. Chaya Segelman, each of whom currently serve as an executive officer and director of the Company.

  

   

Shares

Beneficially

Owned Prior

to this Offering

   

Maximum

Number of
Shares Offered

For Sale in this
Offering 

   

Shares Beneficially

Owned After

Completion of this Offering

Assuming All Offered

Shares are Sold

 
Name and Address   Number     Percentage           Number     Percentage  
Five Percent Stockholders:                              
Australian Sapphire Corporation(1)     5,000,000       15.7 %           5,000 ,000       12.0 %
                                         
Named Executive Officers and Directors:                                        
Joseph Segelman(1)(2)     20,000,000       62.8 %           20,000,000       47 .8 %
Chaya Segelman     2,500,000       7.9 %           2,500,000       6. 0 %
                                         
All Current Directors and Executive Officers as a Group (2 persons)     22,500,000 (3)     70.7 %           22,500,000 (3)     53.8 %
                                         
Other Selling Stockholders:                                        
Sima L. Slavin     1,200,000       3.8 %     1,200,000              
Canary Red LLC(4)     1,000,000       3.1 %     1,000,000              
Willa Qian     450,000       1. 4 %     450,000              
Alan S. Gutterman     450,000       1. 4 %     450,000              
Corprominance LLC(5)     400,000       1.3 %           400,000       *  
Eiden, Inc. (6)     250,000       *       250,000              
OBK Ltd.( 7)     100,000       *       100,000              
Haytarr LLC (8)     100,000       *       100,000              
Margo Siegel     75,000       *       75,000              
Dalman Enterprises, Inc. (9)     50,000       *       50,000              
Menachem Dadon     25,000       *       25,000              
Mimi Jakobson     25,000       *       25,000              
Tana Consulting (10)     25,000       *       25,000              
Joshua Moorvich(6)     25,000       *       25,000              
Firerock Capital, Inc .(11)     20,000       *       20,000              
City One Securities Limited (12)     10,000       *       10,000              

 

46
 

  

   

Shares

Beneficially

Owned Prior

to this Offering

   

Maximum

Number of
Shares Offered

For Sale in this
Offering 

   

Shares Beneficially

Owned After

Completion of this Offering

Assuming All Offered

Shares are Sold

 
Name and Address   Number     Percentage           Number     Percentage  
Gerald Deciccio (10)     10,000       *       10,000              
Michael Gonzalez     10,000       *       10,000              
Richard Andrews     10,000       *       10,000              
Arto Rolf Juhani Saari     10,000       *       10,000              
Jeremy Avitan     10,000       *       10,000              
Levi Lieder     10,000       *       10,000              
Jaklynn Abesera     5,000       *       5,000              
Michael Ashikian     5,000       *       5,000              
Dalia Shoshanah Fishman     5,000       *       5,000              
Yehudis Lipskier     5,000       *       5,000              
Rise Entertainment(13)     5,000       *       5,000              
Jacob Shallman     5,000       *       5,000              
Axis Marketing(14)     5,000       *       5,000              
Mikael Mekardjian     5,000       *       5,000              
Michael Pellegrino     5,000       *       5,000              
Leo Kertzman     4,000       *       4,000              
Bureau 9(15)     4,000       *       4,000              
Tim Nguyen     2,000       *       2,000              
Eliyahu Rice     1,000       *       1,000              
Kimberly Estrada     1,000       *       1,000              
Paul Lubicz     1,000       *       1,000              

  

 
*Represents beneficial ownership of less than one percent of our outstanding common stock.
(1)Mr. Joseph Segelman is the owner of all of the outstanding shares of Australian Sapphire Corporation and thus has beneficial ownership and voting and dispositive power over all of the common shares of the Company owned of record by Australian Sapphire Corporation , which shares are not included in the number of shares identified as being beneficially owned by Mr. Segelman in his individual capacity elsewhere in the table.
(2)Does not include 10,000,000 shares of authorized but unissued common stock that Mr. Segelman has the right to acquire upon exercise of options granted under the Company’s 2015 Equity Incentive Plan as described in “Executive Compensation — Agreements with Executive Officers” elsewhere in this prospectus. The shares subject to such options have not been included since the options are not currently exercisable or exercisable within 60 days of the date of this prospectus and thus are not deemed to be currently outstanding and beneficially owned by Mr. Segelman as the holder of the options.
(3) Does not include 5,000,000 shares owned of record by Australian Sapphire Corporation, which are owned beneficially and of record by Mr. Joseph Segelman and as to which Mr. Segelman exercises sole voting and dispositive power. See Note 1 above. Also does not include 10,000,000 shares of authorized but unissued common stock that Mr. Segelman has the right to acquire in the future as described in Note 2 above.
(4) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by Daymond Jon, whose business address is 350 Fifth Avenue Suite 6617 New York, NY 10118.
(5) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by Scott Gordon, whose business address is 377 Oak Street, Lower level, Garden City, NY 11530.
(6) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by Eiden, Inc. is held by Joshua Moorvich, which shares are in addition to the 25,000 common shares owned of record by Mr. Moorvich in his individual capacity. Mr. Moorvich’s business address is 11111 Santa Monica Boulevard Suite 1840 Los Angeles CA 90025.
47
 
(7) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by Richard Andrews, whose business address is 17a Vaucluse Road, Sydney NSW 2030. Mr. Joseph Segelman is a member of the advisory board of the stockholder and a director of one of the portfolio companies owned and managed by the stockholder; however, Mr. Segelman disclaims any beneficial ownership and/or voting power with respect to the common shares of the Company owned of record by the stockholder.
(8) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by Seth Farbmann, whose business address is 354 Eastwood Road Woodmere NY 11598.
(9) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by Daniel Fishman, whose business address is 1530 S Point View Street Los Angeles CA 90035.
(10) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by Tana Consulting is held by Gerald Deciccio, which shares are in addition to the 10,000 common shares owned of record by Mr. Deciccio in his individual capacity. Mr. Deciccio’s business address is 9465 Wilshire Blvd, Beverly Hills, CA 90212.
(11) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by Seth Fireman, whose business address is 1040 First Ave. Suite 190 New York NY 10022.
(12) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by John Nulands, whose business address is One Royal Exchange Avenue London EC3V 3LT United Kingdom.
(13) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by Jeff Burrows, whose business address is 1720 1/2 Whitley Avenue Los Angeles CA 90036.
(14) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by Dov Blauner, whose business address is 1243 S Point View Street Los Angeles CA 90035.
(15) Beneficial ownership and voting and dispositive power of all of the common shares of the Company owned of record by the stockholder is held by Michael Gonzalez, whose business address is 7257 Beverly Blvd. Suite 205 Los Angeles, CA 90036.

   

48
 

 

PLAN OF DISTRIBUTION

 

The Company has 31,823 ,000 shares of common stock issued and outstanding as of the date of this prospectus. The Company is registering an additional of 10,000,000 shares of its common stock for sale at the price of $0.50 per share. The Company will receive all proceeds from the sale of the 10,000,000 shares being offered on behalf of the company itself. The price per share is fixed at $0.50 for the duration of this offering or until our shares are quoted on the OTC Bulletin Board (“OTCBB”) operated by FINRA (Financial Industry Regulatory Authority) and/or OTCQB operated by the OTC Markets Group, Inc., at which time selling stockholders may sell shares at market prices or at privately negotiated prices. The proceeds from the remaining 3,923 ,000 shares held by selling shareholders, if sold, will not go to the Company, but will go to the selling shareholders directly.

 

There is no arrangement to address the possible effect of the offering on the price of the stock.

 

This is a self-underwritten offering, which means that we will sell the common shares ourselves from time to time directly to purchasers at our discretion and do not plan to use underwriters or pay any commissions. We will be selling our common shares using our best efforts and no one has agreed to buy any of our common shares. This prospectus permits our officers and directors to sell the common shares directly to the public, with no commission or other remuneration payable to them for any common shares they may sell. There is no plan or arrangement to enter into any contracts or agreements to sell the common shares with a broker or dealer and there are no finders. If we elect to retain licensed broker/dealers to assist us in selling our shares, we will file a post-effective amendment to the registration statement of which this prospectus is a part to identify the broker/dealers.

 

Our common shares are being offered by Joseph Segelman, the Company’s President and CEO, and as a result he is deemed to be an underwriter of this offering within the meaning of that term as defined in Section 2(11) of the Securities Act. In connection with his selling efforts in the offering, Mr. Segelman will not register as a broker-dealer pursuant to Section 15 of the Exchange Act, but rather will rely upon the “safe harbor” provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer’s securities. Mr. Segelman is not subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. Mr. Segelman will not be compensated in connection with his participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. Mr. Segelman has not been a broker or dealer or an associated person of a broker or dealer within the preceding 12 months and he has not participated in selling an offering of securities for any issuer more than once every 12 months other than in reliance on paragraph (a)4(i) or (a)4(iii) of Rule 3a4-1 of the Securities Exchange Act of 1934.

 

The offering will commence on the effective date of this prospectus and will terminate upon the earlier to occur of (i) 365 days after this registration statement becomes effective with the Securities and Exchange Commission, or (ii) the date on which all of the shares registered hereunder for offering by the Company have been sold. There is no minimum amount of common shares we must sell so no money raised from the sale of our common shares will go into escrow, trust or another similar arrangement.

 

All expenses incidental to the registration of the shares (including registration pursuant to the securities laws of certain states), are being paid for by Joseph Segelman, our President and CEO, and we expect that such expense will be no more than $ 165 ,000.

 

OTCBB and OTCQB Considerations

 

Although our common stock is not listed on a public exchange or quoted over-the counter, we intend to seek to have our shares of common stock quoted on the OTC Bulletin Board (“OTCBB”) operated by FINRA (Financial Industry Regulatory Authority) and/or OTCQB operated by the OTC Markets Group, Inc. In order to be quoted on the OTCBB or OTCQB, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such an application for quotation will be approved. There is therefore no guarantee that our stock will ever be quoted on the OTCBB or OTCQB.

 

49
 

 

Although we anticipate listing on the OTCBB or OTCQB will increase liquidity for our stock, investors may have greater difficulty in getting orders filled because it is anticipated that if our stock trades on a public market, it initially will trade on the OTCBB or OTCQB rather than on NASDAQ. Investors’ orders may be filled at a price much different than expected when an order is placed. Trading activity in general is not conducted as efficiently and effectively as with NASDAQ-listed securities.

 

Investors must contact a broker-dealer to trade OTCBB or OTCQB securities. Investors do not have direct access to the bulletin board service. For bulletin board securities, there only has to be one market maker. Bulletin board transactions are conducted almost entirely manually. Because there are no automated systems for negotiating trades on the bulletin board, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. Therefore, when investors place market orders - an order to buy or sell a specific number of shares at the current market price - it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and getting execution. Because bulletin board stocks are usually not followed by analysts, there may be lower trading volume than for NASDAQ-listed securities.

 

Section 15(g) of the Exchange Act/Penny Stock Rules

 

Our common shares will be covered by Section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 promulgated thereunder. They 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 excluding revenue or annual income exceeding $200,000 or $300,000 jointly with their spouses).

 

·Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules (but is not applicable to us).
 
·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 3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

50
 

  

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth the basis on which the broker or dealer made the suitability determination and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If the Company remains subject to the penny stock rules for any significant period, which is likely, it could have an adverse effect on the market, if any, for the Company’s securities. If the Company’s securities are subject to the penny stock rules, investors will find it difficult to dispose of the Company’s securities.

 

Blue Sky Law Considerations

 

There is no established public market for our common stock, and there can be no assurance that any market will develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue-sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.

 

Thirty-three states have what is commonly referred to as a “manual exemption” for secondary trading of securities such as those to be resold by selling stockholders under this registration statement. In these states, so long as we obtain and maintain a listing in Mergent, Inc., a leading provider of business and financial information on publicly listed companies, or Standard and Poor’s Corporate Manual, secondary trading of our common stock can occur without any filing, review or approval by state regulatory authorities in these states. These states are: Alaska, Arizona, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Texas, Utah, Washington, West Virginia and Wyoming. We cannot secure this listing, and thus this qualification, until after our registration statement is declared effective. Once we secure this listing, secondary trading can occur in these states without further action. However, we may not be accepted for listing in Mergent or similar services designed to obtain manual exemptions if we are considered to be a “shell company” at the time of application.

 

Upon effectiveness of this prospectus, the Company intends to consider (but may not) becoming a “reporting issuer” under Section 12(g) of the Exchange Act, as amended, by way of filing a Form 8-A with the SEC. A Form 8-A is a “short form” of registration whereby information about the Company will be incorporated by reference to the registration statement on Form S-1, of which this prospectus is a part. Upon filing of the Form 8-A, if done, the Company’s shares of common stock will become “covered securities,” or “federally covered securities” as described in some states’ laws, which means that unless you are an “underwriter” or “dealer,” you will have a “secondary trading” exemption under the laws of most states (and the District of Columbia, Guam, the Virgin Islands and Puerto Rico) to resell the shares of common stock you purchase in this offering. However, four states do impose filing requirements on the Company: Michigan, New Hampshire, Texas and Vermont. The Company may, at its own cost, make the required notice filings in Michigan, New Hampshire, Texas and Vermont immediately after filing its Form 8-A with the SEC.

 

We currently do not intend to and may not be able to qualify securities for resale in other states which require shares to be qualified before they can be resold by our shareholders.

 

51
 

 

Procedures for Subscribing

 

If you decide to subscribe for any shares in this offering, you must execute and deliver a subscription agreement, a copy of which is filed as Exhibit 99.1a to the registration statement of which this prospectus is a part; and deliver a check or certified funds in U.S. currency to us for acceptance or rejection. All checks for subscriptions must be made payable to “Reign Sapphire Corporation”. All subscription agreements and checks are irrevocable (except as to any states that require a statutory cooling-off period or rescission right) and should be delivered to the Company at the address provided on the subscription agreement.

 

We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. Any subscription rejected will be returned to the subscriber within five business days of the rejection date, without interest or deductions. Furthermore, once a subscription agreement is accepted, it will be executed without reconfirmation to or from the subscriber. Once we accept a subscription, the subscriber cannot withdraw it.

 

All subscribed funds will be held in a noninterest-bearing account until the subscription agreements are accepted by the Company. Any subscribed funds may be immediately utilized by the Company prior to the completion of the offering. The offering will be completed 360 days from the effective date of this prospectus (or such earlier date when all 10,000,000 of the shares being offered by the Company are sold), unless extended by our board of directors for an additional 180 days.

 

The Company will deliver stock certificates attributable to shares of common stock purchased directly by the purchasers within 30 days of the close of this offering or as soon thereafter as practicable.

 

Distribution of Shares by Selling Shareholders

 

This prospectus covers the resale by selling shareholders of shares of our Common Stock that they have already acquired from us. The selling shareholders initially will sell shares of common stock at a price of $0.50 per share until they are quoted on the OTCBB or OTCQB, and thereafter may sell some or all of their shares from time to time at prevailing market prices, once they are quoted on the OTCBB or OTCQB, or at privately negotiated prices, and may sell either directly or through a broker-dealer in transactions between selling shareholders and purchasers, or otherwise.

 

The selling shareholders may use any one or more of the following methods when selling shares:

 

·ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
  
·block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
  
·purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
  
·privately negotiated transactions;
  
·short sales;
  
·agreements with broker-dealers to sell a specified number of such shares at a stipulated price per share;
  
·a combination of any such methods of sale; and
  
·any other method permitted pursuant to applicable law.

 

The selling shareholders may enter into hedging transactions with third parties, which may in turn engage in short sales of the common stock in the course of hedging the position they assume. The selling shareholders may also enter into short positions or other derivative transactions relating to the common stock, or interests in the common stock, and deliver the common stock, or interests in the common stock, to close out their short or other positions or otherwise settle short sales or other transactions, or loan or pledge the common stock, or interests in the common stock, to third parties that in turn may dispose of these securities.

 

52
 

 

Our obligation to register, or maintain, a registration statement governing the shares registered for resale hereunder will terminate:

 

·if all the shares have been registered and sold pursuant to this registration effected or pursuant to exempt transactions; or
  
·at such time as all shares held by the selling shareholders may be sold within a three-month period under Rule 144, either because each selling stockholder holds 1% or less of our then-outstanding common stock or because each selling stockholder can sell all of its shares under Rule 144(k) without volume or time limitations.

 

The selling shareholders may also sell their shares directly to market makers acting as principals or brokers or dealers, who may act as agent or acquire the common stock as a principal. Any broker or dealer who participates in such transactions as an agent may receive a commission from the selling shareholders, or, if it acts as agent for the purchaser of such common stock, from such purchaser. The selling shareholders will likely pay the usual and customary brokerage fees for such services. Brokers or dealers may agree with the selling shareholders to sell a specified number of shares at a stipulated price per share and, to the extent such broker or dealer is unable to do so acting as agent for the selling shareholders, to purchase, as principal, any unsold shares at the price required to fulfill the respective broker’s or dealer’s commitment to the selling shareholders. Brokers or dealers who acquire shares as principals may thereafter resell such shares from time to time in transactions in a market or on an exchange, in negotiated transactions or otherwise, at market prices prevailing at the time of sale or at negotiated prices, and in connection with such re-sales may pay or receive commissions to or from the purchasers of such shares. These transactions may involve cross and block transactions that may involve sales to and through other brokers or dealers. If applicable, the selling shareholders may distribute shares to one or more of their partners who are unaffiliated with us. Such partners may, in turn, distribute such shares as described above. The selling shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. We can provide no assurance that all or any of the common stock offered will be sold by the selling shareholders.

 

We are bearing all costs relating to the registration of the common stock. The selling shareholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock. The selling shareholders must comply with the requirements of the Securities Act and the Exchange Act in the offer and sale of the common stock. In particular, during such times as the selling shareholders may be deemed to be engaged in a distribution of the common stock, and therefore be considered to be underwriters, they must comply with applicable law and, among other things, must:

 

1.Not engage in any stabilization activities in connection with our common stock;
  
2.Furnish each broker or dealer through which common stock may be offered such copies of this prospectus, as amended from time to time, as may be required by such broker or dealer; and
  
3.Not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Exchange Act.

 

Under the Exchange Act and the regulations thereunder, any person engaged in a distribution of the shares of our common stock offered by this prospectus may not simultaneously engage in market making activities with respect to our common stock during the applicable “cooling off” periods prior to the commencement of such distribution. Also, the selling shareholders are subject to applicable provisions that limit the timing of purchases and sales of our common stock by the selling security holders.

 

We have informed the selling shareholders that, during such time as they may be engaged in a distribution of any of the shares we are registering by this registration statement, they are required to comply with Regulation M. In general, Regulation M precludes any selling stockholder, any affiliated purchasers and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, and any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a “distribution” as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a “distribution participant” as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution.

 

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No stockholder may offer or sell shares of our common stock under this prospectus unless such stockholder has notified us of his or her intention to sell shares of our common stock and the registration statement of which this prospectus is a part has been declared effective by the SEC, and remains effective at the time such selling stockholder offers or sells such shares. We are required to amend the registration statement of which this prospectus is a part to reflect material developments in our business and current financial information. Each time we file a post-effective amendment to our registration statement with the SEC, it must first become effective prior to the offer or sale of shares of our common stock by the selling shareholders.

 

Offer Restrictions Outside the United States

 

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

 

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DESCRIPTION OF SECURITIES

 

General

 

We have authorized capital stock consisting of 100,000,000 shares of common stock, $0.0001 par value per share (“Common Stock”) and 10,000,000 shares of preferred stock, $0.0001 par value per share (“Preferred Stock”). As of the date of this prospectus, we have 31,823 ,000 shares of Common Stock issued and outstanding.

 

This summary does not purport to be complete and is qualified in its entirety by the provisions of our amended and restated certificate of incorporation and amended and restated by-laws, copies of which have been or will be filed with the SEC as exhibits to the registration statement of which this prospectus is a part. References in this section to the “Company,” “we,” “us” and “our” refer to Reign Sapphire Corporation and not to any of its subsidiaries.

 

Common Stock

 

The holders of outstanding shares of Common Stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends of such times and in such amounts as the board from time to time may determine. Holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders. There is no cumulative voting of the election of directors then standing for election. The Common Stock is not entitled to pre-emptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding up of our company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the Common Stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors.

 

Preferred Stock

 

Shares of Preferred Stock may be issued from time to time in one or more series, each of which shall have such distinctive designation or title as shall be determined by our Board of Directors (“Board of Directors”) prior to the issuance of any shares thereof. Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class or series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all the then outstanding shares of our capital stock entitled to vote generally in the election of the directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation. Accordingly, the Company’s Board of Directors is empowered, without stockholder approval, to issue Preferred Stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the Common Stock. In the event of issuance, the Preferred Stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Although we have no present intention to issue any shares of our authorized Preferred Stock, and no shares of our authorized Preferred Stock are issued and outstanding as of the date of this prospectus, there can be no assurance that we will not do so in the future.

 

Options, Warrants and Other Convertible Securities

 

Except for options to purchase 10,000,000 shares of our common stock issued to Joseph Segelman, the Company’s President and CEO, under our 2015 Equity Incentive Plan, there are no outstanding options or warrants to purchase, or securities convertible into, shares of our common stock as of the date of this prospectus. For information on the Company’s 2015 Equity Incentive Plan, see “Executive Compensation — Equity Compensation Plans and Other Benefit Plans” below. For information on the Company’s stock option agreement with Mr. Segelman, see “Executive Compensation — Agreements with Executive Officers” below.

 

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Registration Rights

 

There are no outstanding registration rights relating to our securities.

 

Dividend Policy

 

We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

 

Anti-Takeover Effects or Provisions of Our Certificate of Incorporation, our Bylaws and Delaware Law

 

Some provisions of Delaware law and our certificate of incorporation and our bylaws contain provisions that could make the following transactions more difficult: acquisition of us by means of a tender offer; acquisition of us by means of a proxy contest or otherwise; or removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares.

 

These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.

 

Delaware Anti-Takeover Statute

 

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits persons deemed “interested stockholders” from engaging in a “business combination” with a publicly held Delaware corporation for three years following the date these persons become interested stockholders unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, such as discouraging takeover attempts that might result in a premium over the market price of our common stock.

 

Undesignated Preferred Stock

 

The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of our Company.

 

Special Stockholder Meetings

 

Our bylaws provide that a special meeting of stockholders may be called only by the secretary of the company pursuant to a resolution adopted by a majority of our board of directors.

 

Requirements for Advance Notification of Stockholder Nominations and Proposals

 

Our bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.

 

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Elimination of Stockholder Action by Written Consent

 

Our certificate of incorporation eliminates the right of stockholders to act by written consent without a meeting.

 

Choice of Forum

 

Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, or any action asserting a claim against us that is governed by the internal affairs doctrine.

 

Amendment of Charter Provisions

 

The amendment of any of the above provisions, except for the provision making it possible for our board of directors to issue preferred stock, would require approval by holders of at least 66 2/3% of the voting power of our then outstanding voting stock.

 

The provisions of the Delaware General Corporation Law, our certificate of incorporation and our bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

 

Limitations of Liability and Indemnification Matters

 

For a discussion of liability and indemnification, please see “Management-Limitation on Liability and Indemnification Matters.”

 

Listing

 

We will apply to list our common stock on the OTCQB under the symbol “RSAP”.

 

Holders of Our Common Stock

 

As of the date of this p rospectus, the Company has 40 stockholders of record and there are 31,823 ,000 shares of the Company’s common stock outstanding.

 

Transfer Agent

 

Our stock transfer agent is VStock Transfer Agents. Their mailing address is 18 Lafayette Place, Woodmere, New York, 11598. Our stock transfer agent can be reached by phone at (212) 828 8436.

 

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 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. See “Plan of Distribution”.

 

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REPORTS TO SECURITIES HOLDERS

 

Through the filing of Form 8-A under the Exchange Act within 30-60 days following the effective date of the registration statement of which this prospectus is a part, we intend to become a fully reporting company under the requirements of the Exchange Act, and will file the necessary quarterly and other reports with the Securities and Exchange Commission. Although we will not be required to deliver our annual or quarterly reports to security holders, we intend to forward this information to security holders upon receiving a written request to receive such information. The reports and other information filed by us will be available for inspection and copying at the public reference facilities of the Securities and Exchange Commission located at 100 F Street N.E., Washington, D.C. 20549.

 

Copies of such material may be obtained by mail from the Public Reference Section of the Securities and Exchange Commission at 100 F. Street N.E., Washington, D.C. 20549, at prescribed rates. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission maintains a World Wide Website on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission.

 

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INTERESTS OF NAMED EXPERTS AND COUNSEL

 

Except as described below, 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 our common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the Company or any of its subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

 

The validity of the shares of common stock offered hereby will be passed upon for us by Qian & Company, A California Professional Law Corporation. Willa Qian, the sole shareholder of Qian & Company, is the owner of 450,000 shares of our common stock, all of which are being offered for resale pursuant to this prospectus, and Alan S. Gutterman, Of Counsel to Qian & Company, is the owner of 450,000 shares of our common stock, all of which are being offered for resale pursuant to this prospectus.

 

The financial statements included in this prospectus and the registration statement have been audited by Hartley Moore Accountancy Corporation, certified public accountants, to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

 

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PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Below is the aggregate amount of fees billed for professional services rendered by Hartley Moore Accountancy Corporation, our principal accountants, with respect to our last two fiscal years.

 

   2013   2014 
Audit fees  $3,500   $10,000 
Audit related fees  $5,000      
Tax fees          
All other fees          
Total  $8,500   $10,000 

 

All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors.

 

There have been no changes in, or disagreements regarding accounting or financial disclosures with, our accountants during the last two fiscal years.

  

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MANAGEMENT AND CORPORATE GOVERNANCE

 

Executive Officers and Directors

 

The following table sets forth information, as of the date of this prospectus, regarding our executive officers and directors:

 

Name   Age   Title
Joseph Segelman   39   President, Chief Executive Officer and Director
Chaya Segelman   36   Secretary and Director

 

Joseph Segelman has served as our President and Chief Executive Officer and a member of our board of directors since December 2014. During the five year period prior to December 2014, Mr. Segelman served as the Chief Executive Officer and Managing Director of UWI Holdings Corporation (previously known as Australian Sapphire Corporation), Shefa Mining Corporation and Spencer Lloyd & Associates. He is an experienced marketing and operations professional with over 17 years of experience in logistics and marketing and extensive experience in the Australian mining and gem industry. He is currently Director of Australian Sapphire Corporation and Spencer Lloyd & Associates. He is also a Director & Board Member of OBK (a Sydney based charity), and a Captain (Chaplain) in the Australian Army reserves. Mr. Segelman is the author of “Take Action: Successful Australians Share their Secrets”, (Lothian Books, 2004).

 

Chaya Segelman has served as our Secretary and a member of our board of directors since December 2014. During the five year period prior to December 2014, Mrs. Segelman served as the secretary and head of operations and a member of the board of directors of UWI Holdings Corporation (previously known as Australian Sapphire Corporation), Shefa Mining Corporation and Spencer Lloyd & Associates. She has over 15 years of company administration experience.

 

Our sole directors, Joseph and Chaya Segelman, are married to one another.

 

Corporate Governance

 

The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission (the “SEC”) and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations.

 

Board Composition

 

Our business and affairs are managed under the direction of our board of directors, which upon the consummation of this offering will consist of two members. Directors serve for a term of one year and until their successors have been duly elected and qualified.

 

Committees of the Board

 

Our Company currently does not have nominating, compensation, or audit committees or committees performing similar functions nor does our Company have a written nominating, compensation or audit committee charter. Our directors believe that it is not necessary to have such committees, at this time, because the directors can adequately perform the functions of such committees.

 

In lieu of an audit committee, the Company’s Board of Directors is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company’s financial statements and other services provided by the Company’s independent public accountants. The Board of Directors, the Chief Executive Officer and the Chief Financial Officer of the Company review the Company’s internal accounting controls, practices and policies.

 

Audit Committee Financial Expert

 

Our Board of Directors has determined that we do not have a board member that qualifies as an “audit committee financial expert” as defined in Item 407(D)(5) of Regulation S-K, nor do we have a Board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the FINRA Rules.

 

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We believe that our directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The directors of our Company do not believe that it is necessary to have an audit committee because management believes that the Board of Directors can adequately perform the functions of an audit committee. In addition, we believe that retaining an independent Director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the stage of our development and the fact that we have not generated any positive cash flows from operations to date.

 

Involvement in Certain Legal Proceedings

 

Our directors and our executive officers have not been involved in or a party in any of the following events or actions during the past ten years:

 

1.any bankruptcy petition filed by or against any business of which such person 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 (excluding traffic violations and other minor offenses);
 
3.being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
 
4.being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
 
5.Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
 
6.Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
 
7.Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:(i) Any Federal or State securities or commodities law or regulation; or(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
 
8.Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Director Independence

 

We are not required to have independent members of our Board of Directors, and do not anticipate having independent Directors until such time as we are required to do so.

 

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Code of Ethics

 

The Company has not formally adopted a written Code of Ethics that governs the Company’s employees, officers and Directors as the Company is not required to do so. The Board of Directors evaluated the business of the Company and the number of employees and determined that since the business is operated by a small number of persons, general rules of fiduciary duty and federal and state criminal, business conduct and securities laws are adequate ethical guidelines. In the event our operations, employees and/or Directors expand in the future, we may take actions to adopt a formal Code of Ethics.

 

Compensation Committee Interlocks and Insider Participation

 

As a smaller reporting company, the Company is not required to provide this disclosure.

 

Role of Board of Directors in Risk Oversight

 

Our board of directors oversees an enterprise-wide approach to risk management, designed to support the achievement of business objectives, including organizational and strategic objectives, to improve long-term organizational performance and enhance stockholder value. The involvement of our board of directors in setting our business strategy is a key part of its assessment of management’s plans for risk management and its determination of what constitutes an appropriate level of risk for our company. The participation of our board of directors in our risk oversight process includes receiving regular reports from members of senior management on areas of material risk to our company, including operational, financial, legal and regulatory, and strategic and reputational risks.

 

While our board of directors has the ultimate responsibility for the risk management process, senior management and various committees of our board of directors, when formed, will also have responsibility for certain areas of risk management. Our senior management team is responsible for day-to-day risk management and regularly reports on risks to our full board of directors or a relevant committee. Our finance and regulatory personnel serve as the primary monitoring and evaluation function for company-wide policies and procedures, and manage the day-to-day oversight of the risk management strategy for our ongoing business. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial, operational, compliance and reporting levels.

 

Director Compensation

 

All of the Company’s directors are employees of the Company and such persons have not been separately compensated for their services to the Company as a director.

 

Limitation on Liability and Indemnification Matters

 

Our certificate of incorporation and bylaws provide that we will indemnify our directors and officers, and may indemnify our employees and other agents, to the fullest extent permitted by the Delaware General Corporation Law, which prohibits our certificate of incorporation from limiting the liability of our directors for the following:

 

·      any breach of the director’s duty of loyalty to the corporation or its stockholders;

 

·      any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

 

·      unlawful payments of dividends or unlawful stock repurchases or redemptions; or

 

·      any transaction from which the director derived an improper personal benefit.

 

If Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. Our certificate of incorporation does not eliminate a director’s duty of care and in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, remain available under Delaware law. This provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws or other state or federal laws. Under our bylaws, we will also be empowered to purchase insurance on behalf of any person whom we are required or permitted to indemnify.

 

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In addition to the indemnification required in our certificate of incorporation and bylaws, we have entered or will enter into indemnification agreements with each of our directors and officers. These agreements provide indemnification for certain expenses and liabilities incurred in connection with any action, suit, proceeding, or alternative dispute resolution mechanism, or hearing, inquiry, or investigation that may lead to the foregoing, to which they are a party, or are threatened to be made a party, by reason of the fact that they are or were a director, officer, employee, agent, or fiduciary of our company, or any of our subsidiaries, by reason of any action or inaction by them while serving as an officer, director, agent, or fiduciary, or by reason of the fact that they were serving at our request as a director, officer, employee, agent, or fiduciary of another entity. In the case of an action or proceeding by, or in the right of, our company or any of our subsidiaries, no indemnification will be provided for any claim where a court determines that the indemnified party is prohibited from receiving indemnification. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

 

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as we may provide indemnification for liabilities arising under the Securities Act to our directors, officers, and controlling persons pursuant to the foregoing provisions, 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. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

 

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EXECUTIVE COMPENSATION

 

The following is a discussion and analysis of compensation arrangements of our named executive officers, or NEOs. This discussion contains forward looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from currently planned programs as summarized in this discussion. As an “emerging growth company” as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.

 

Summary Compensation Table

 

The particulars of the compensation paid to the following persons: (1) our principal executive officer; and (2) each of our two most highly compensated executive officers who were serving as executive officers at the end of the fiscal year ended December 31, 2014, who we will collectively refer to as the “named executive officers” of the Company, are set out in the following summary compensation table:

 

SUMMARY COMPENSATION TABLE 
Name and Principal Position   Year   Salary
($)
   Bonus
($)
   Stock
Awards
($)
   Option
Awards
($)
   Non-Equity
Incentive Plan
Compensation
($)
   Change in
Pension
Value and
Nonqualified
Deferred
Compensation Earnings
($)
   All Other
Compensation
($) (i)
   Total
($) (i)
 
Joseph Segelman,   2014    120,000    0    0    0    0    0   $0   $120,000 
CEO    2013     96 ,000    0    0    0    0    0   $0   $ 96 ,000 
                                              
Chaya Segelman,   2014    60,000    0    0    0    0    0   $0   $60,000 
Operations   2013    60,000    0    0    0    0    0   $0   $60,000 

 

Other than as disclosed below, there are no compensatory plans or arrangements with respect to our executive officers resulting from their resignation, retirement or other termination of employment or from a change of control.

 

Grants of Plan-Based Awards Table

 

None of our named executive officers received any grants of stock, option awards or other plan-based awards during the period ended December 31, 2014.

 

Options Exercised and Stock Vested Table

 

None of our named executive officers held any stock options or restricted stock units during the period ended December 31, 2014.

 

Outstanding Equity Awards at 2014 Year End

 

None of our named executive officers had any outstanding stock or option awards as of December 31, 2014 that would be compensatory to the officer. Except as described below in “Agreements with Executive Officers”, the Company has not issued any awards to its named executive officers. The Company and its Board of Directors may grant awards as it sees fit to its employees as well as key consultants. See the discussion of “Equity Compensation Plans and Other Benefit Plans” below.

 

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Agreements with Executive Officers

 

We do not have any employment or consulting agreements with any executive officers or directors except as follows:

 

Joseph Segelman

 

Effective as of April 1, 2015, we entered into an employment agreement with Joseph Segelman, our President and Chief Executive Officer. The initial term of Mr. Segelman’s employment agreement expires on December 31, 2018, unless earlier terminated by us or Mr. Segelman. The agreement provides for automatic one-year renewals, unless either we or Mr. Segelman give notice of our or his intention not to extend at least 90 days prior to the expiration of any term. Under his employment agreement, Mr. Segelman receives a minimum annual base salary of $180,000. Mr. Segelman is eligible to receive an annual performance bonus each year, if performance goals established by our board of directors are met, and is entitled to participate in customary benefit plans.

 

If we terminate Mr. Segelman’s employment without cause, he will be entitled to the following: (i) payment of (x) accrued compensation and unpaid base salary through the date of such termination, (y) any amounts previously deferred by Mr. Segelman and (z) the payment or reimbursement for expenses incurred prior to the date of such termination; (ii) an amount equal to 200% of the base salary and (iii) continued participation, at our expense, in our health and welfare programs for a period of two years after the date of termination.

 

For purposes of Mr. Segelman’s employment agreement with us, a termination for cause will be deemed to have occurred upon the happening of the following, subject to a cure right: (i) his misappropriation or theft of our or any of our subsidiary’s funds or property; (ii) his conviction or entering of a plea of nolo contendere of any fraud, misappropriation, embezzlement or similar act, felony or crime involving dishonesty or moral turpitude; (iii) his engagement in any conduct that is materially injurious to us; (iv) his material breach of his employment agreement or material failure to perform any of his duties owed to us; (v) his commission of any act involving willful malfeasance or gross negligence or his failure to act involving material nonfeasance; or (vi) his material violation of the code of conduct of the Company or its subsidiaries or of any statutory or common law duty of loyalty to the Company or its subsidiaries.

 

In connection with his employment agreement, Mr. Segelman was granted options to purchase 10,000,000 shares of our common stock in accordance with a share option agreement pursuant to the Company’s 2015 Incentive Equity Plan, which is described below. The share option agreement provides, among other things, that Mr. Segelman’s options shall vest monthly over a two year period commencing on April 1, 2015. This award is also subject to accelerated vesting in certain circumstances, including in connection with certain terminations or the achievement of specified performance milestones including the successful offer and sale of all of the shares of common stock being offered by the Company pursuant to this prospectus.

 

The foregoing description of Mr. Segelman’s employment and stock option agreements does not purport to be complete and is qualified in its entirety by the text of each of those agreements, copies of which will be filed as exhibits to this registration statement and incorporated by reference herein.

 

Chaya Segelman

 

Effective as of April 1, 2015, we entered into an employment agreement with Chaya Segelman, our Secretary and Head of Operations. The initial term of Mrs. Segelman’s employment agreement expires on December 31, 2018, unless earlier terminated by us or Mrs. Segelman. The agreement provides for automatic one-year renewals, unless either we or Mrs. Segelman give notice of our or her intention not to extend at least 90 days prior to the expiration of any term. Under her employment agreement, Mrs. Segelman receives a minimum annual base salary of $80,000.

 

If we terminate Mrs. Segelman’s employment without cause, she will be entitled to the following: (i) payment of (x) accrued compensation and unpaid base salary through the date of such termination, (y) any amounts previously deferred by Mrs. Segelman and (z) the payment or reimbursement for expenses incurred prior to the date of such termination; (ii) an amount equal to 50% of the base salary and (iii) continued participation, at our expense, in our health and welfare programs for a period of two years after the date of termination. The definition of cause under Mrs. Segelman’s employment agreement is the same as that in Mr. Segelman’s employment agreement.

 

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The foregoing description of Mrs. Segelman’s employment agreement does not purport to be complete and is qualified in its entirety by the text of the agreement, a copy of which will be filed as an exhibit to this registration statement and incorporated by reference herein.

 

Equity Compensation Plans and Other Benefit Plans

 

Other than as described below, the Company does not currently have any equity compensation plans and there are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.

 

2015 Equity Incentive Plan

 

On May 1, 2015 the board of directors and stockholders of the Company authorized the adoption and implementation of the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). The principal purpose of the 2015 Plan is to attract, retain and motivate employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its related companies by providing them the opportunity to acquire a proprietary interest in the Company and to link their interests and efforts to the long-term interests of the Company’s stockholders. The material terms of the 2015 Plan are summarized below.

 

Share Reserve. Under the 2015 Plan, 10,000,000 shares of our common stock have initially been reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and other stock and cash-based awards. To the extent that an award terminates, expires or lapses for any reason or an award is settled in cash without the delivery of shares, any shares subject to the award at such time will be available for future grants under the 2015 Plan. As of the date of this prospectus, options to issue 10,000,000 shares of our common stock (all of the share reserved for issuance under the 2015 Plan) have been issued under the 2015 Plan. For information on the terms of such issued options, all of which have been issued to Joseph Segelman, our President and CEO, see “Executive Compensation — Agreements with Executive Officers” in this prospectus.

 

Administration. The 2015 Plan will be administered by the Company’s board of directors as the “administrator”. Except for the terms and conditions explicitly set forth in the 2015 Plan, the administrator shall have full power and exclusive authority, to the extent permitted by applicable law and subject to such orders or resolutions not inconsistent with the provisions of the 2015 Plan as may from time to time be adopted by the Board to (i) select the eligible persons to whom awards may from time to time be granted under the 2015 Plan; (ii) determine the type or types of award to be granted to each participant under the 2015 Plan; (iii) determine the number of shares of common stock to be covered by each award granted under the 2015 Plan; (iv) determine the terms and conditions of any award granted under the 2015 Plan; (v) approve the forms of notice or agreement for use under the 2015 Plan; (vi) determine whether, to what extent and under what circumstances awards may be settled in cash, shares of Common Stock or other property or canceled or suspended; (vii) determine whether, to what extent and under what circumstances cash, shares of common stock, other property and other amounts payable with respect to an award shall be deferred either automatically or at the election of the participant; (viii) interpret and administer the 2015 Plan and any instrument evidencing an award or notice or agreement entered into under the 2015 Plan; (ix) establish such rules and regulations as it shall deem appropriate for the proper administration of the 2015 Plan; (x) delegate ministerial duties to such of the Company’s employees as it so determines; and (xi) make any other determination and take any other action that the administrator deems necessary or desirable for administration of the 2015 Plan.

 

Eligibility. An award may be granted under the 2015 Plan to any employee, officer or director of the Company or a related company whom the administrator from time to time selects. An award may also be granted to any consultant, agent, advisor or independent contractor for bona fide services rendered to the Company or any related company that (a) are not in connection with the offer and sale of the Company’s securities in a capital-raising transaction and (b) do not directly or indirectly promote or maintain a market for the Company’s securities.

 

Awards. The 2015 Plan provides that the administrator may grant or issue stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and other stock and cash-based awards. Each award will be set forth in a separate agreement with the person receiving the award and will indicate the type, terms and conditions of the award.

 

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Nonstatutory Stock Option, or NSOs, will provide for the right to purchase shares of our common stock at a specified price which may not be less than fair market value on the date of grant, and usually will become exercisable (at the discretion of the administrator) in one or more installments after the grant date, subject to the participant’s continued employment or service with us and/or subject to the satisfaction of corporate performance targets and individual performance targets established by the administrator. NSOs may be granted for any term specified by the administrator that does not exceed ten years.

 

Incentive Stock Options, or ISOs, will be designed in a manner intended to comply with the provisions of Section 422 of the Code and will be subject to specified restrictions contained in the Code. Among such restrictions, ISOs must have an exercise price of not less than the fair market value of a share of common stock on the date of grant, may only be granted to employees, and must not be exercisable after a period of ten years measured from the date of grant. In the case of an ISO granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our capital stock, the 2015 Plan provides that the exercise price must be at least 110% of the fair market value of a share of common stock on the date of grant and the ISO must not be exercisable after a period of five years measured from the date of grant.

 

Restricted Stock may be granted to any eligible individual and made subject to such restrictions as may be determined by the administrator. Restricted stock, typically, may be forfeited for no consideration or repurchased by us at the original purchase price if the conditions or restrictions on vesting are not met. In general, restricted stock may not be sold or otherwise transferred until restrictions are removed or expire. Purchasers of restricted stock, unlike recipients of options, will have voting rights and the right to receive dividends, if any, prior to the time when the restrictions lapse; however, extraordinary dividends will generally be placed in escrow, and will not be released until restrictions are removed or expire.

 

Restricted Stock Units may be awarded to any eligible individual, typically without payment of consideration, but subject to vesting conditions based on continued employment or service or on performance criteria established by the administrator. Like restricted stock, restricted stock units may not be sold or otherwise transferred or hypothocated until vesting conditions are removed or expire. Unlike restricted stock, stock underlying restricted stock units will not be issued until the restricted stock units have vested, and recipients of restricted stock units generally will have no voting or dividend rights prior to the time when vesting conditions are satisfied.

 

Stock Appreciation Rights, or SARs, may be granted in connection with stock options or other awards, or separately. SARs granted in connection with stock options or other awards typically will provide for payments to the holder based upon increases in the price of our common stock over a set exercise price. The exercise price of any SAR granted under the 2015 Plan must be at least 100% of the fair market value of a share of our common stock on the date of grant. Except as required by Section 162(m) of the Code with respect to a SAR intended to qualify as performance-based compensation as described in Section 162(m) of the Code, there are no restrictions specified in the 2015 Plan on the exercise of SARs or the amount of gain realizable therefrom, although restrictions may be imposed by the administrator in the SAR agreements. SARs under the 2015 Plan will be settled in cash or shares of our common stock, or in a combination of both, at the election of the administrator.

 

Dividend Equivalents represent the value of the dividends, if any, per share paid by us, calculated with reference to the number of shares covered by the award. Dividend equivalents may be settled in cash or shares and at such times as determined by the compensation committee or board of directors, as applicable.

 

Qualified Performance-Based Awards. The administrator has the ability to grant restricted stock or restricted stock units as qualified performance-based awards under Section 162(m)(4)(C) of the Internal Revenue Code.

 

Change in Control. In the event of a change of control, as defined in the 2015 Plan, the administrator may, in its discretion and without limitation, (i) cancel outstanding awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such awards, (ii) substitute other property (including cash or other securities) for shares of common stock subject to outstanding awards, (iii) arrange for the assumption of awards, or replacement of awards with new awards based on other property or securities, and (iv) after giving participants an opportunity to exercise any outstanding stock options and SARs, terminate any or all unexercised options and SARs.

 

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Adjustments of Awards. In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization, distribution of our assets to stockholders (other than normal cash dividends) or any other corporate event affecting the number of outstanding shares of our common stock or the share price of our common stock that would require adjustments to the 2015 Plan or any awards under the 2015 Plan in order to prevent the dilution or enlargement of the potential benefits intended to be made available thereunder, the administrator will make appropriate, proportionate adjustments to the aggregate number and type of shares subject to the 2015 Plan, the number and kind of shares subject to outstanding awards and terms and conditions of outstanding awards (including, without limitation, any applicable performance targets or criteria with respect to such awards), and the grant or exercise price per share of any outstanding awards under the 2015 Plan.

 

Amendment and Termination. Our board of directors may amend or modify the 2015 Plan at any time and from time to time. However, we must generally obtain stockholder approval to increase the number of shares available under the 2015 Plan (other than in connection with certain corporate events, as described above) and to the extent required by applicable law, rule or regulation (including any applicable stock exchange rule).

 

Termination. The board of directors may terminate the 2015 Plan at any time. No awards may be granted under the 2015 Plan after the tenth anniversary of the effective date of the 2015 Plan.

 

Indebtedness of Directors, Senior Officers, Executive Officers and Other Management

 

None of our directors or executive officers or any associate or affiliate of the Company during the last two fiscal years, is or has been indebted to the Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Other than compensation arrangements, we describe below transactions and series of similar transactions, since January 1, 2013 (i.e., the last two completed fiscal years), to which we were a party or will be a party, in which the amounts involved exceeded or will exceed the lesser of $120,000 or 1% of the average of our total assets at year end for the last two completed fiscal years; and any of our directors, executive officers, or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest. Compensation arrangements, including employment agreements, for our directors and named executive officers are described elsewhere in “Executive Compensation — Agreements with Executive Officers”

 

Consulting Agreements

 

The Company had a consulting agreement beginning on June 20, 2013 with Joseph Segelman, its President and CEO and a director of the Company, under which he was to be compensated at $120,000 per annum and the agreement was to continue unless and until terminated at any time by either the Company or Mr. Segelman giving two month notice in writing. The Company accrued deferred compensation totaling $ 184,000 and $64,000 as of December 31, 2014 and 2013, respectively, with respect to this agreement. Such consulting agreement was terminated by mutual agreement of the parties as of March 31, 2015 and superseded by the employment agreement described in “Executive Compensation — Agreements with Executive Officers”.

 

The Company had a consulting agreement beginning June 20, 2013 with Chaya Segelman, its Secretary and a director of the Company, under which she was to be compensated at $60,000 per annum and agreement was to continue unless and until terminated at any time by either the Company or Mrs. Segelman giving two month notice in writing. The Company accrued deferred compensation totaling $92,000 and $32,000 as of December 31, 2014 and 2013, respectively, with respect to this agreement. Such consulting agreement was terminated by mutual agreement of the parties as of March 31, 2015 and superseded by the employment agreement described in “Executive Compensation — Agreements with Executive Officers”.

 

Joseph and Chaya Segelman are married to one another.

 

Loan Agreement

 

The Company has borrowed funds from Josesph Segelman, its President and CEO and a director of the Company, for working capital purposes from time to time. The Company has recorded the principal balance due of $83,641 and $35,641 under Advance From Shareholder in the Balance Sheets included in this registration statement at December 31, 2014 and 2013, respectively. The Company received advances of $48,000 and $35,641 and made no repayments for the year ended December 31, 2014 and for the period May 31, 2013 (date of inception) through December 31, 2013. During the six months ended June 30, 2015, the CEO received $37,562 of the Company’s accounts receivable directly from a customer. These amounts reduced advance from shareholder. Advances are non-interest bearing and due on demand. 

 

Indemnification Agreements

 

We have entered or intend to enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, will require us to indemnify each individual to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the individual in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director, officer or other employee.

 

Policies and Procedures for Related Party Transactions

 

Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions with our executive officer(s), Director(s) and significant stockholders. We rely on our board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our board reviews a transaction in light of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family. Transactions are presented to our board for approval before they are entered into or, if this is not possible, for ratification after the transaction has occurred. If our board finds that a conflict of interest exists, then it will determine the appropriate remedial action, if any. Our board approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company. We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional Directors, so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof.

 

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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

No Established Public Market for Our Common Stock

 

There is no established public market for our common stock, and a public market may never develop. While we plan to find a market maker to file an application to include our common stock on the OTC Bulletin Board (“OTCBB”) operated by FINRA (Financial Industry Regulatory Authority) and/or OTCQB operated by the OTC Markets Group, Inc. using the trading symbol “RSAP”, such efforts may not be successful and our shares may never be quoted and owners of our common stock may not have a market in which to sell the shares. Also, no estimate may be given as to the time that this application process will require. Even if our common stock were quoted in a market, there may never be substantial activity in such market. If there is substantial activity, such activity may not be maintained, and no prediction can be made as to what prices may prevail in such market.

 

If we become able to have our shares of common stock quoted on the OTCQB and/or OTCBB, we will then try, through a broker-dealer and its’ clearing firm, to become eligible with the DTC to permit our shares to be traded electronically. If an issuer is not “DTC-eligible,” its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCQB and OTCBB), means that shares of an issuer will not be able to be traded (technically the shares can be traded manually between accounts, but this may take days and is not a realistic option for issuers relying on broker-dealers for stock transactions - like all the companies on the OTCQB and OTCBB). What this boils down to is that while DTC-eligibility is not a requirement to trade on the OTCBB, it is however a necessity to efficiently process trades on the OTCQB or OTCBB if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it may take.

 

The Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in any “penny stock”. Rule 3a51-1 of the Exchange Act establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. Classification of our shares as a penny stock makes it more difficult for a broker or dealer to sell the stock into a secondary market, which will make it more difficult for you to sell your shares and liquidate your investment. See “Plan of Distribution — Section 15(g) of the Exchange Act/Penny Stock Rules”.

 

Rule 144

 

Based on the number of shares outstanding as of the date of this prospectus, upon the closing of this offering, 41,823 ,000 shares of our common stock will be outstanding, assuming the sale of the maximum number of shares being offered by us pursuant to this prospectus. Of the outstanding shares, all of the shares offered by us and the selling stockholders pursuant to this prospectus will be freely tradable, except that any shares held by our affiliates, as that term is defined in Rule 144 under the Securities Act, may only be sold in compliance with the limitations that are described below. The remaining outstanding shares of our common stock will be deemed “restricted securities” as defined in Rule 144. Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rule 144 under the Securities Act, which rules are summarized below.

 

In general, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell their securities under Rule 144 provided that: (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding a sale; and (ii) we are subject to the periodic reporting requirements of the Exchange Act, for at least 90 days before the sale. Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

 

·l% of the number of shares of our common stock outstanding after this offering, which will equal approximately 418,230 shares immediately after the closing of this offering, based on the number of common stock outstanding as of the date of this prospectus and assuming the sale of all 10,000,000 shares being offered by the Company pursuant to this pros p ectus; or

  

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·the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale (this condition is not currently available to the Company because its securities do not trade on a recognized exchange);

 

provided, in each case, that we are subject to the periodic reporting requirements the Exchange Act for at least 90 days before the sale. Such sales both by affiliates and by non-affiliates must also comply with the manner of sale, availability of current public information, and notice provisions of Rule 144.

 

Effect of Future Sales of Shares on Prevailing Market Price

 

No prediction can be made as to the effect, if any, that future sales of shares or the availability of shares for future sale will have on the market price prevailing from time to time. Sales of substantial amounts of our common shares, or the perception that such sales could occur, may adversely affect prevailing market prices of the common shares.

 

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WHERE YOU CAN FIND MORE INFORMATION

 

We have filed a registration statement on Form S-1, together with all amendments and exhibits, with the SEC. This Prospectus, which forms a part of that registration statement, does not contain all information included in the registration statement. Certain information is omitted and you should refer to the registration statement and its exhibits. With respect to references made in this prospectus to any of our contracts or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contracts or documents. You may read and copy any document that we file at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our filings and the registration statement can also be reviewed by accessing the SEC’s website at http://www.sec.gov.

 

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Reign Sapphire Corporation

 

Financial Statements

 

As of and for the Six Months Ended June 30 , 2015 and 2014 (unaudited), for the Year Ended December 31, 2014 and for the Period May 31, 2013 (Inception) Through December 31, 2013

 

F-1
 

 

Reign Sapphire Corporation  

 

Index to Financial Statements

 

CONTENTS

 

    Page
     
Report of Independent Registered Public Accounting Firm   F-3
     
Balance Sheets as of June 30 , 2015 (unaudited), December 31, 2014 and 2013   F-4
     
Statements of Operations for the six months ended June 30 , 2015 and 2014 (unaudited), for the year ended December 31, 2014 and for the period from May 31, 2013 (inception) to December 31, 2013   F-5
     
Statements of Changes in Stockholders’ Equity for the year ended December 31, 2014 and for the period from May 31, 2013 (inception) to December 31, 2013   F-6
     
Statements of Cash Flows for the six months ended June 30 , 2015 and 2014 (unaudited), for the year ended December 31, 2014 and for the period from May 31, 2013 (inception) to December 31, 2013   F-7
     
Notes to Financial Statements   F-8

 

F-2
 

   

Report of Independent Registered Public Accounting Firm 

 

 

Board of Directors and Stockholders
Reign Sapphire Corporation

We have audited the accompanying balance sheets of Reign Sapphire Corporation as of December 31, 2014 and 2013, and the related statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2014 and the period May 31, 2013 (Inception) through December 31, 2013. These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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. An audit includes consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for 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 audits 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 Reign Sapphire Corporation as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the year ended December 31, 2014 and the period May 31, 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 entity will continue as a going concern. As discussed in Note 2 to the financial statements, the entity had an accumulated deficit, net losses, no significant revenue earned since inception, and a lack of operational history that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Hartley Moore Accountancy Corporation

Hartley Moore Accountancy Corporation

Irvine, California

August 18, 2015

 

F-3
 

 

REIGN SAPPHIRE CORPORATION
BALANCE SHEETS

             
   June 30,    December 31,    December 31,  
   2015    2014    2013  
   (unaudited)          
ASSETS                
Current assets:                
Cash   $ 45    $ 95    $  
Accounts receivable     1,075      9,431      8,410  
Inventory     443,508      422,509      147,758  
Prepaid expenses     17,834      51,768      
Total current assets     462,462      483,803      156,168  
                
Computer equipment, net     2,888      3,465      
Intangible assets     260,000          
Deferred offering costs     150,000      75,000      
Total assets   $ 875,350    $ 562,268    $ 156,168  
                
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 15,000    $    $  
Accounts payable - related party     270,906      103,194      
Accrued compensation - related party     386,000      276,000      96,000  
Advance from shareholder     46,079      83,641      35,641  
Total current liabilities     717,985      462,835      131,641  
Total liabilities     717,985      462,835      131,641  
                
Commitments and contingencies                
                
Stockholders’ equity                
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding at June 30, 2015, December 31, 2014 and 2013, respectively             
Common stock, $0.0001 par value, 100,000,000 shares authorized; 31,195,000, 29,855,000 and 27,845,000 shares issued and outstanding at June 30, 2015, December 31, 2014 and 2013, respectively     3,119      2,985      2,785  
Additional paid-in-capital     1,411,124      728,715      266,465  
Accumulated deficit     (1,256,878 )     (632,267 )     (244,723 )
Total stockholders’ equity     157,365      99,433      24,527  
Total liabilities and stockholders’ equity   $ 875,350    $ 562,268    $ 156,168  

  

See accompanying notes to financial statements

 

F-4
 

 

REIGN SAPPHIRE CORPORATION
STATEMENTS OF OPERATIONS 

                 
               From Inception  
           For the Year    (May 31, 2013)  
      Ended    through  
   For the Six Months Ended June 30,    December 31,    December 31,  
   2015