Item 1. Business
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this current report and unless otherwise indicated, the terms “we”, “us” and “our” mean Science to Consumers, Inc., unless otherwise indicated.
General Overview
We were incorporated in the State of Nevada on April 15, 2013. Our company is planning to be a distributor of Argan oil and Argan oil products to stores, spas, massage therapy offices and individuals in Germany. We intend to bring the 100% pure and organic Argan oil and skin products made with Argan oil directly from the manufacturers in Morocco to Germany and in the future to the rest of Europe. In addition, we are also looking to market, sell, and distribute anti-aging products, as on December 29, 2015 our company signed a five-year exclusive licensing agreement with Biomatrix, Inc. for the People’s Republic of China and Europe. The agreement will allow Science to Consumers Inc., to market and sell at least six of the special formulated anti-aging products including the DermaLastyl line. The first products that our company plans to sell is DermLastyl skin care products. DermaLastyl is a trademarked anti-aging cream that aims to help to reduce wrinkles through the use of science. The key ingredient, Tropoelastin, is a patented formulation of elastin produced by genetic engineering that aims to promote healing and renewing of the skin. The DermaLastyl line are genetically engineered products on the market that aims to help restore elastin and elastic properties to the skin and around the eyes. We expect to generate revenues in China from sales of our products to individual customers and commercial customers such as spas, stores and massage therapy offices. In addition, an e-commerce strategy is being developed to market the Products online in China and an e-commerce website is being developed for the Chinese market and should be ready by the end of October 2016. Our corporate website has been updated and changed to reflect our name change to www.sciencetoconsumers.com.
At this stage, we have no revenues. The past operations had our company engaged in preparing our business plan and the development of our website and e-commerce shopping cart for China. Our potential client list consists of 4 companies ranging from beauty stores, spas massage therapy offices, and cosmetic distributors.
The majority of our business will be initially marketed in China, Hong Kong, and Germany but as our operations expand, we plan to expand to other European markets. We are also looking at opportunities to expand our operations and expand other product lines in the USA, European, and Asian markets.
Our company will focus on providing helpful customer service. We are currently selling six products that are available to be purchased through our website, and wholesale orders are also being accepted from June 1, 2016. Our company plans on engaging in an e-commerce strategy to be able to drive its online sales. In addition, our company is targeting cosmetic distribution companies in China and Hong Kong as part of its sales strategy. Our company is also looking at distributing its licensed products through some potential JV partnerships.
Our company is also working with the Licensee to re-design and re-package the product line to better reflect the Chinese market place.
On July 31, 2014, our company’s board of directors approved a resolution to effect a 7 new for 1 old forward split of our authorized and our issued and outstanding shares of common stock. A Certificate of Change for the stock split was filed and became effective with the Nevada Secretary of State on August 19, 2014. Consequently, our authorized share capital increased from 75,000,000 to 525,000,000 shares of common stock and our issued and outstanding common stock, at that time, increased from 4,250,000 to 29,900,000 shares, all with a par value of $0.001.
The forward stock split was approved by the Financial Industry Regulatory Authority (FINRA) with an effective date of August 19, 2014.
On November 25, 2014, our board of directors approved an agreement and plan of merger to merge with our wholly-owned subsidiary Science to Consumers, Inc., a Nevada corporation, to effect a name change from Argan Beauty Corp. to Science to Consumers, Inc. Science to Consumers, Inc. was formed solely for the change of name.
Articles of Merger to effect the merger and change of name were filed and became effective with the Nevada Secretary of State on December 23, 2014. The name change was reviewed by the FINRA and was approved for filing with an effective date of December 24, 2014. The name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on December 24, 2014 under the symbol "BEUT". Our CUSIP number is 808645105.
Effective August 18, 2015, Burt Ensley resigned as chief executive officer of our company. Mr. Ensley will remain as a company advisor. In connection with the resignation of Mr. Ensley, Edwon Lam was appointed as chief executive officer.
Mr. Ensley's resignation was not the result of any disagreement with our company regarding our operations, policies, practices or otherwise.
Our new principal executive office is located at Room 1618, American Bank Centre, 555 Ren Min Road, Guangzhou, China. . Our telephone number is +86 139 022 55701.
Our Current Business
On October 1, 2013, Science to Consumers Inc., a private Nevada corporation (the “Assignor”), entered into a License Agreement with Protein Genomics Inc., a Delaware corporation, pursuant to which the Assignor acquired the rights from Protein Genomics Inc. to sell certain products. The terms of the Assignment Agreement signed on October 1, 2013 have not been met and mutually both parties agreed to enter into a new agreement with similar terms and pricing were negotiated and entered into a new agreement on January 19, 2015.
On January 19, 2015, our company, as assignee, entered into an Assignment Agreement with the Assignor, pursuant to which we have acquired the right, title and interest to the License Agreement and all obligations, benefits and advantages thereunder in relation to the territory under the License Agreement for consumer skin care products supplied by Protein Genomics. Under the terms of the Assignment Agreement, Burt Ensley, the current sole director and officer of the Assignor and a former chief executive officer of our company, shall be issued 2,000,000 shares of common stock of our company as consideration for the transfer of the License Agreement.
Under the License Agreement our company will provide direct to consumer sales, marketing and distribution of finished consumer skin care products provided by Protein Genomics via direct response advertisements and other worldwide marketing and distribution channels. Our company will create direct response advertisements for the products in consultation with Protein Genomics, which shall initially consist of direct response print advertisements and television commercials and other forms of direct response advertisements.
Our company shall manage all creative testing, media, buying, telemarketing fulfillment and credit card processing relating to the sale of the consumer skin care products through direct response advertisements and will work with Protein Genomics on appropriate publicity and home shopping opportunities for the products. We may also work together with respect to the packaging of the products.
Our company may also present buying opportunities online of the products as part of our overall web strategy including order acceptance, billing and collection.
Protein Genomics will provide our company with finished inventory, claims substantiation with respect to each product including any relevant clinical data and support for any such claims, assistance in securing testimonials and cooperation from experts and arranging for appearances by our former chief executive officer, Burt Ensley, to promote the products in our direct response advertising channels. Protein Genomics will also provide us with fully cleared content required by our company to create the direct response advertisements, ensure that any patents and intellectual property are in good standing and defend against any potential competition or infringement.
The terms of the Assignment Agreement signed on January 19, 2015 have not been met and a new agreement with similar terms and pricing were negotiated and entered into on December 29, 2015.
Effective December 29, 2015, we entered into an exclusive license agreement with Biomatrix Inc., a Delaware corporation, pursuant to which we obtained the exclusive rights to sell certain proprietary skincare products of Biomatrix by direct to consumer marketing and sales in the territories of China and Europe. In consideration for the marketing, sales and distribution services to be provided by our company, Biomatrix has agreed to supply product inventory at a rate not less favorable than that provided to any third party. Additionally, Biomatrix has agreed to transfer to our company 100% equity ownership of Biomatrix Inc., an Arizona corporation which holds all right and title to the product distribution rights acquired. In consideration of transfer of title and rights acquired, we agreed to issue to Biomatrix (Delaware) 2,000,000 restricted common shares in the capital stock of our company.
The initial term of the exclusive license agreement is for 5 years, subject to our company achieving minimum sales of $250,000 and $500,000 during the first and second years of the agreement, respectively. Thereafter, the term will automatically renew for successive 5 year periods provided that we achieve a minimum $500,000 in sales of the licensed products during each calendar year of the term, excluding the first year.
Closing of the transaction is subject to completion of due diligence and to the transfer of the Biomatrix, Arizona securities to our Company. Biomatrix Arizona will become our wholly owned subsidiary upon completion of the transaction.
Our Current Products
We are currently selling six products that are available to be purchased through our website, and wholesale orders are also being accepted from June 1, 2016. Our company plans on engaging in an e-commerce strategy to be able to drive its online sales. In addition, the company is targeting cosmetic distribution companies in China and Hong Kong as part of its sales strategy.
Our company is also working with our distributors to re-design and re-package the product line to better reflect the Chinese market place. In addition, patents and trademarks are also being applied for in China to better protect the brand being developed in China by our company’s distributors.
The products being sold by our company currently are Dermalastyl Facial Scrub, Dermalastyl Bx Pro, Dermalastyl Bx Elastropin, Dermalastyl-e Intensive Eye Serum, Dermalastyl-m Wrinkle Eye Radicator, Dermalastyl-m Anti- Wrinkle after shave for Men.
Customers
Until we are able to market and sell our products in spas, stores and massage therapy offices, our primary customers will be individual consumers purchasing online and by telephone. Our customers will consist of women and men of various ages.
Marketing and Distribution
Our main source of marketing will be digital media via Internet. We plan to promote our products at our website www.sciencetoconsumers.com. As well as through our Chinese e-commerce platform and website which is being developed and should be ready by the end of October 2016. Our website will list the benefits of using our products. We will print business cards and have our website listed on it. We will print out brochures with our product list for our potential clients. The client will also be able to submit order requests and/or contact us via email linked to our website or call our company directly. In addition, in order to market our products online we will try and market the products by using search engine optimization, social media mediums as Twitter and Facebook
Furthermore, we plan to attend different fairs and trade shows to further promote our business, hand out business cards, meet potential clients and referrals.
At last, the best marketing of our business will be our pricing. We will focus on sourcing our product from suppliers with high quality product and competitive pricing. Involving no commission based agents we plan to take the product straight from the factory to the buyer, keeping the prices competitive.
Currently, our company is focused on marketing its products in China and our activities can be broken down into two segments as follows:
CHINA ACTIVITIES:
1. On September 1, 2016 our company signed an Exclusive Distributor Agreement signed with SHI TU KANG TRADING CO LTD., (STK ) with office located in Nan Sha district, Guangzhou China. STK is a privately owned cosmetics, health & beauty, fragrance, and personal care trading a distribution company. In order to leverage the infrastructure in place with STK as our company will rely on STK’s support on sharing resources, office space and depending on their full assistance to customize packaging, boxes design, private label with Chinese brand name patent ( ) for the Chinese market. The agreement states that STK will commit to provide the full turnkey services to simply importing products with valid import license from Hong Kong via Hai Tao Base official platform to marketing S2C products to their existing sales channels such as beauty parlours, drugstores, WeChat shops, beauty chain stores and as well some of their existing online shops.
2. S2C and STK have jointly agreed to develop a website for the China market. The website is still under development and is expected to be ready by end of October.
3. As part of the STK Agreement, STK with one of its key wholesalers has agreed to import products and display S2C products in three of the most busiest and eyes catching locations where there are guaranteed large volumes of visitors in Guangzhou city.
HONG KONG ACTIVITIES:
1. Our company is working on establishing a partnership agreement with a very large and leading cosmetics retailing group in Asia with over 280 retail stores and sales counters in Asia selling over 700 brands of skincare, fragrance, make up, hair care and body care products, health and beauty supplements including own brands and exclusive products. The potential partnership being negotiated will have the potential partner agreeing to buy S2C products but requirements of the order size are yet to be confirmed including but not limited to packaging revision, promoters at retail stores recruitment and renting a light box area
2. S2C will engage social media strategy to connect customers and use platforms like Facebook, Twitter and Instagram to spread more products awareness and create brand loyalty among customers, thus reinforcing what make S2C products unique. We have been doing some research on some Hong Kong cost effective social media companies such as: OKI Media ( http://okimedia.com.hk ); Finger Shopping (http://www.fingershopping.com); HK TV Mall ( http://www.hktvmall.com ); Groupon (http://www.groupon.hk);Yahoo HK (https://hk.deals.yahoo.com/hong-kong)
Competition
Our competition will include other distribution companies, importers, and agents with the same or similar product list. However, there is an increase in public interest in natural products and cosmetics and the field grows rapidly and there is a constant need for new pure and organic products. We expect competition to continue to intensify in the future. Competitors include companies with more substantial customer bases. There can be no assurance that we can maintain a competitive position against current or future competitors, particularly those with greater financial, marketing, service, and support, technical and other resources. Our failure to maintain a competitive position within the market could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that we will be able to compete successfully against current and future competitors, and competitive pressures faced by us may have a material adverse effect on our business, financial condition and results of operations.
Compliance with Government Regulation
We do not believe that government regulation will have a material impact on the way we conduct our business. However, our company will require to have in place the necessary import permits and licenses in order to import the products into China.
Insurance
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us, which could cause us to cease operations.
Research and Development
We have incurred $Nil in research and development expenditures over the last two fiscal years. We rely on our Licensor to conduct all research and development activities
Intellectual Property
We do not currently have any intellectual property, other than our domain name and website, www.sciencetoconsumers.com.
Employees
We are a development stage company and currently have no employees other than our president, chief financial officer, treasurer and sole director, Vitaliy Gorelik, our chief executive officer, Edwon Lam and Caroline Bastidas, our secretary.
Subsidiaries
We do not have any subsidiaries.
Item 1A.
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 1B.
Item 1B. Unresolved Staff Comments
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2.
Item 2. Properties
Our office is currently located at Room 1618, American Bank Centre, 555 Ren Min Road, Guangzhou, China. Our telephone number is +86 139 022 55701 . The office and storage space is provided by our director free of charge. We do not pay any rent to Mr. Lam and there is no agreement to pay any rent in the future.
We intend to rent an office (approx. 500 sq. feet) in Hong Kong. As of the date of this annual report, we have not sought or selected a new office sight and have no arrangement or lease agreement for the bigger storage.
Item 3.
Item 3. Legal Proceedings
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is currently quoted on the OTC Markets. Our common stock was quoted on the OTC Markets effective March 8, 2014 under the symbol “ABXX”. Effective December 24, 2014 our symbol changed to BEUT. Our first trade did not occur until July 21, 2014.
The high and low bid prices of our common stock for the periods indicated below are as follows:
(1)
Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.
(2)
No Trades during this period.
OTC Market securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Market securities transactions are conducted through a telephone and computer network connecting dealers. OTC Market issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.
Our shares are issued in registered form. Island Stock Transfer, 15500 Roosevelt Boulevard, Suite 301, Clearwater, FL 33760 (Telephone: (727) 289-0010; Facsimile: (727) 289-0069 is the registrar and transfer agent for our common shares.
Holders
As of September 12, 2016, there were approximately 9 holders of record of our common stock. As of such date, 31,920,000 common shares were issued and outstanding.
Dividend Policy
We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.
Equity Compensation Plan Information
We do not have a stock option plan in favor of any director, officer, consultant or employee of our company.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
We did not sell any equity securities which were not registered under the Securities Act during the year ended May 31, 2016 that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended May 31, 2016.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended May 31, 2016.
Item 6.
Item 6. Selected Financial Data
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled “Risk Factors” beginning on page 6 of this annual report.
Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Plan of Operations and Cash Requirements
Cash Requirements
We estimate our operating expenses and working capital requirements for the twelve month period to be as follows:
We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed.
The continuation of our business is dependent upon obtaining further financing, successful sales of our products, and finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.
Results of Operations for the Years Ended May 31, 2016 and 2015
The following summary of our results of operations should be read in conjunction with our audited financial statements for the years ended May 31, 2016 and 2015.
Our operating results for the years ended May 31, 2016 and 2015 are summarized as follows:
Our net loss for the year ended May 31, 2016 was $58,705. Our net loss for year ended May 31, 2015 was $49,096. During the years ended May 31, 2016 and May 31, 2015 we did not generate any revenue.
The increase in our net loss during the year ended May 31, 2016 was primarily due to an increase in advertising and promotion, in connection with the development of our website and increased general and administrative fees.
Liquidity and Financial Condition
Working Capital
Cash Flows
As at May 31, 2016, our total assets were $11,726 compared to $1,749 in total assets at May 31, 2015. Total assets were comprised of $3,306 in cash and cash equivalents and $8,420 in website development cost. As at May 31, 2016, our current liabilities were $64,423 compared to $8,891 in current liabilities as at May 31, 2015. Stockholders’ deficit was $52,697 as of May 31, 2016 compared to stockholders' deficit of $7,142 as of May 31, 2015.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the year ended May 31, 2016, net cash flows used in operating activities was $47,693 compared to $49,096 for the year ended May 31, 2015.
Cash Flows from Investing Activities
For the years ended May 31, 2016 and 2015 we did not have any net cash flows used in investing activities.
Cash Flows from Financing Activities
We have financed our operations primarily from either advancements or the issuance of equity. For the year ended May 31, 2016, cash flow provided by financing activities was $49,250 compared to $45,674 for the year ended May 31, 2015.
Contractual Obligations
As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.
Going Concern
We have suffered recurring losses from operations and are dependent on our ability to raise capital from stockholders or other sources to meet our obligations and repay our liabilities arising from normal business operations when they become due. In their report on our audited financial statements for the year ended May 31, 2016, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosure describing the circumstances that lead to this disclosure by our independent auditors.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
Basis of Presentation
The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.
Accounting Basis
Our company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). Our company has adopted a May 31 fiscal year end.
Cash and Cash Equivalents
Our company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. Our company had $3,306 of cash as of May 31, 2016 and $1,749 as of May 31, 2015.
Fair Value of Financial Instruments
Our company’s financial instruments consist of cash and cash equivalents and amounts due to shareholder. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Website Development Costs
Website development costs consist of costs incurred to develop internet websites to promote, advertise, and earn revenue with respect to our company’s business operations. Costs are amortized on a straight line basis over 3 years from when the internet web site has been completed.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Our company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, our company has not adopted a stock option plan and has not granted any stock options.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing our company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing our company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of May 31, 2016 and 2015.
Comprehensive Income
Our company has which established standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, our company would disclose this information on its Statement of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. Our company has not had any significant transactions that are required to be reported in other comprehensive income.
Reclassifications
Certain amounts in the fiscal 2015 financial statements have been reclassified to conform to the fiscal 2016 presentation, specifically classifications between bank service charges, general and administrative expenses and professional fees.
Recent Accounting Pronouncements
Our company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 8.
Item 8. Financial Statements and Supplementary Data
SCIENCE TO CONSUMERS, INC.
FINANCIAL STATEMENTS
MAY 31, 2016
SCIENCE TO CONSUMERS, INC.
MAY 31, 2016
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Science to Consumers, Inc.
We have audited the accompanying balance sheet of Science to Consumers, Inc. as of May 31, 2016, and the related statement of operations, stockholders’ deficit, and cash flows for the year ended May 31, 2016. Science to Consumers, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the 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. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Science to Consumers, Inc. as of May 31, 2016, and the results of operations and cash flows for the year ended May 31, 2016 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has not earned significant revenue and has accumulated deficit and working capital deficit as of May 31, 2016. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning this matter are also described in Note 3. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Yichien Yeh, CPA
Oakland Gardens, New York
October 18, 2016
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Science to Consumers, Inc.
We have audited the accompanying balance sheets of Science To Consumers, Inc. as of May 31, 2015 , and the related statements of operation, stockholders’ equity, and cash flows for the year ended May 31, 2015. Science To Consumers, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Science to Consumers, Inc. as of May 31, 2015, and the results of its operations and its cash flows for the year ended May 31, 2015 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, The Company has not earned significant revenue, has suffered net losses and has had negative cash flows from operating activities for the year ended May 31, 2015. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
/s/ KLJ & Associates, LLP
KLJ & Associates, LLP
Edina, Minnesota
September 30, 2015
5201 Eden Avenue
Suite 300
Edina, Minnesota 55436
630.277.2330
SCIENCE TO CONSUMERS, INC.
BALANCE SHEETS
See accompanying notes to financial statements.
SCIENCE TO CONSUMERS, INC.
STATEMENTS OF OPERATIONS
See accompanying notes to financial statements.
SCIENCE TO CONSUMERS, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIT
See accompanying notes to financial statements.
SCIENCE TO CONSUMERS, INC.
STATEMENTS OF CASH FLOWS
See accompanying notes to financial statements.
SCIENCE TO CONSUMERS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2016
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
Science to Consumers, Inc. (the “Company”) is a development stage company registered in the State of Nevada on April 15, 2013 formed to distribute Argan Oil products. In addition, the Company is looking to market, sell, and distribute anti-aging products, as on December 29, 2015 the Company signed a five-year exclusive licensing agreement with Biomatrix, Inc. for the People’s Republic of China and Europe. The agreement will allow Science to Consumers Inc., to market and sell at least six of its special formulated anti-aging products including the DermaLastyl line. The Company will position itself to take full advantage of the distributing its products from their manufacturers to their customers.
NOTE 2 - SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a May 31 fiscal year end.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had $3,306 of cash as of May 31, 2016 and $1,749 of cash as of May 31, 2015.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts payable, amounts due to a related party, a loan from a director and a loan payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Website Development Costs
Website development costs consist of costs incurred to develop internet websites to promote, advertise, and earn revenue with respect to the Company’s business operations. Costs are amortized on a straight line basis over 3 years from when the internet web site has been completed.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
SCIENCE TO CONSUMERS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2016
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of May 31, 2016 and 2015.
Comprehensive Income
The Company has which established standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement of Stockholders’ Deficit. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has not had any significant transactions that are required to be reported in other comprehensive income.
Reclassifications
Certain amounts in the fiscal 2015 financial statements have been reclassified to conform to the fiscal 2016 presentation, specifically classifications between bank service charges, general and administrative expenses and professional fees.
NOTE 3 - GOING CONCERN
The Company had no revenues as of May 31, 2016. The Company currently has accumulated deficit and working capital deficit, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
The accompanying financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
NOTE 4 - LICENSE AGREEMENT
On December 29, 2015, the Company entered into an exclusive license agreement with Biomatrix Inc. (“Biomatrix”), a Delaware corporation, pursuant to which the Company obtained the exclusive rights to sell certain proprietary skincare products of Biomatrix by direct to consumer marketing and sales in the territories of China and Europe. In consideration for the marketing, sales and distribution services to be provided by the Company, Biomatrix has agreed to supply product inventory at a rate not less favorable than that provided to any third party. Additionally, Biomatrix has agreed to transfer to the Company 100% equity ownership of Biomatrix Inc. (“Biomatrix Arizona”), an Arizona corporation, which holds all right and title to the product distribution rights acquired. In consideration of transfer of title and rights acquired, the Company issued 2,000,000 restricted shares of common stock to Biomatrix. Upon closing of the transaction, Biomatrix Arizona will become a wholly owned subsidiary of the Company. As of May 31, 2016, the transaction had not closed and the Company has not received ownership of the Biomatrix Arizona equity.
The initial term of the exclusive license agreement is 5 years, subject to the Company achieving minimum sales of $250,000 and $500,000 during the first and second years of the agreement, respectively. Thereafter, the term will automatically renew for successive 5 year periods provided that the Company achieve a minimum $500,000 in sales of the licensed products during each calendar year of the term, excluding the first year.
On December 16, 2015, the Company issued Biomatrix 2,000,000 shares of the Company’s common stock pursuant to the license agreement. As of May 31, 2016, the shares of Biomatrix Arizona were not received by the Company and the transaction had not closed. Due to the value of Biomatrix Arizona and the Company’s uncertain future revenues generated by the license, the fair value of the 2,000,000 shares issued has been recorded as $nil.
SCIENCE TO CONSUMERS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2016
NOTE 5 - DUE TO RELATED PARTY
As of May 31, 2016, the Company was indebted to the Chief Executive Officer of the Company for $7,675 (2015 - $nil), for expenses paid on behalf of the Company. The amount is unsecured, non-interest bearing and due on demand.
NOTE 6 - LOAN FROM DIRECTOR
As of May 31, 2016, the Company owed a director of the Company $8,891 (2015 - $8,891) related to a loan to the Company for business operations. The loan is unsecured, non-interest bearing and due on demand.
NOTE 7 - LOAN PAYABLE
On May 1, 2016, the Company entered into a loan agreement in which the note holder agreed to provide a loan to the Company in the principal amount of up to $50,000. The loan is unsecured, bears interest at 8.5% per annum and payable on May 1, 2017. As at May 31, 2016, the note holder has provided $31,000 to the Company pursuant to the loan agreement. As at May 31, 2016, the Company recorded $188 of interest payable.
NOTE 8 - COMMON STOCK
The Company has 525,000,000, $0.001 par value shares of common stock authorized.
On July 31, 2014, our company’s board of directors approved a resolution to effect a 7 new for 1 old forward split of our authorized and outstanding shares of common stock. A Certificate for the stock split was filed and became effective with the Nevada Secretary of State on August 19, 2014. Consequently, our authorized share capital increased from 4,250,000 to 29,750,000 shares, all with a par value of $0.001.
On September 17, 2014, the Company issued 50,000 units for cash proceeds of $15,000 at $0.30 per unit. Each unit consisted of one share of common stock and one warrant. Each warrant entitles the holder to purchase one share of common stock at $0.50 per share on or before September 17, 2017. The grant date fair value of the warrants, determined using the Black-Scholes option pricing model, was $0.50 per share.
On September 18, 2014, the Company issued 100,000 units for cash proceeds of $30,000 at $0.30 per unit. Each unit consisted of one share of common stock and one warrant. Each warrant entitles the holder to purchase one share of common stock at $0.50 per share on or before September 18, 2017. The grant date fair value of the warrants, determined using the Black-Scholes option pricing model, was $0.50 per share.
On September 11, 2015, the Company received cash proceeds of $6,000 for 20,000 shares of common stock subscribed at $0.30 per share.
On December 16, 2015, the Company issued 2,000,000 restricted shares to Biomatrix, Inc. with a fair value of $nil pursuant to the license agreement referred to Note 4.
On December 16, 2015, the Company received cash proceeds of $4,650 for 15,500 shares of common stock subscribed at $0.30 per share.
On January 20, 2016, the Company received cash proceeds of $2,500 for 8,333 shares of common stock subscribed at $0.30 per share.
There were 31,943,833 shares of common stock issued and outstanding as of May 31, 2016.
SCIENCE TO CONSUMERS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2016
NOTE 9 - WARRANTS
The following table summarizes the continuity of share purchase warrants:
As at May 31, 2016, the following share purchase warrants were outstanding:
NOTE 10 - COMMITMENTS AND CONTINGENCIES
The Company neither owns nor leases any real or personal property. An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
NOTE 11 - INCOME TAXES
As of May 31, 2016, the Company had net operating loss carry forwards of approximately $138,847 that may be available to reduce future years’ taxable income in varying amounts and begin expiring in 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
SCIENCE TO CONSUMERS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2016
The provision for Federal income tax benefit attributable to:
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $148,791 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.
NOTE 12 - SUBSEQUENT EVENTS
On September 1, 2016 the company signed an Exclusive Distributor Agreement signed with SHI TU KANG TRADING CO LTD., (STK ) with office located in Nan Sha district, Guangzhou China. STK is a privately owned cosmetics, health & beauty, fragrance, and personal care trading a distribution company. In order to leverage the infrastructure in place with STK as the company will rely on STK’s support on sharing resources, office space and depending on their full assistance to customize packaging, boxes design, private label with Chinese brand name patent ( ) for the Chinese market. The agreement states that STK will commit to provide the full turnkey services to simply importing products with valid import license from Hong Kong via Hai Tao Base official platform to marketing S2C products to their existing sales channels such as beauty parlours, drugstores, WeChat shops, beauty chain stores and as well some of their existing online shops.
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations subsequent to May 31, 2016 to the date these financial statements were issued.
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
As disclosed on our Current Report on Form 8-K filed on April 7, 2016, on April 7, 2016, KLJ & Associates, LLP resigned as our independent registered public accounting firm.
The reports of KLJ & Associates, LLP on our financial statements as of and for the fiscal years ended May 31, 2015 and 2014 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about our ability to continue as a going concern.
Our Board of Directors participated in and approved the decision to change independent registered public accounting firms.
During the fiscal years ended May 31, 2015 and 2014, there were no disagreements with KLJ & Associates, LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction KLJ & Associates, LLP would have caused them to make reference thereto in connection with their report on the financial statements for such years.
On April 25, 2016, our company engaged Yichien Yeh, CPA as its new independent registered public accounting firm. During the two most recent fiscal years, our company had not consulted with Yichien Yeh, CPA regarding any of the following:
(i)the application of accounting principles to a specific transaction, either completed or proposed;
(ii)the type of audit opinion that might be rendered on our financial statements, and none of the following was provided to our company: (a) a written report, or (b) oral advice that Yichien Yeh, CPA concluded was an important factor considered by us in reaching a decision as to accounting, auditing or financial reporting issue; or
(iii)Any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K.
There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods.
Item 9A.
Item 9A. Controls and Procedures
Management’s Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that the information disclosed in the reports we file with the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), as appropriate, to allow timely decisions regarding required disclosure.
Management, including our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures, as of May 31, 2016, in accordance with Rules 13a-15(b) and 15d-15(b) of the Securities and Exchange Act of 1934, as amended and concluded that our disclosure controls and procedures are not effective to ensure the information required to be disclosed by us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended is recorded, processed, summarized and reported within the time period specified in SEC rules and forms.
Our management, including our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), do not expect that our disclosure controls, and procedures or internal controls will prevent all possible error and fraud. Our disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) have concluded that our financial controls and procedures are not effective at that reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of financial statements in conformity with accounting principles generally accepted in the United States. Our management assessed the effectiveness of our internal control over financial reporting as of May 31, 2016. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Our management has concluded that, as of May 31, 2016, our internal control over financial reporting was not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US generally accepted accounting principles. Our management reviewed the results of their assessment with our board of directors.
This annual report does not include an attestation report of our company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit our company to provide only management’s report in this annual report.
Inherent limitations on effectiveness of controls
Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the year ended May 31, 2016 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 9B.
Item 9B. Other Information
None.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
Business Experience
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Vitaliy Gorelik - President, Chief Financial Officer, Treasurer and Director
Vitaliy Gorelik was appointed as our president, chief executive officer, chief financial officer, treasurer and director on April 15, 2013. Mr. Gorelik resigned as our chief executive officer on July 22, 2014. From 2003 to 2007 Mr. Gorelik worked as a sous chef at Bürgerhaus in Delitzsch, Germany. From 2008 until 2010 he became a full-time manager at Kurhaus, his family owned restaurant. From 2010 to present Mr. Gorelik still works part-time at Kurhaus and part-time devoting his attention to our company.
Our company believes that Mr. Gorelik’s professional background experience gives him the qualifications and skills necessary to serve as a director and officer of our company.
Edwon Lam - Chief Executive Officer
Mr. Lam has twenty years of marketing management experience in the consumer packaged goods industry consistently increasing revenue, market share and profitability combined with 2 years experience in marketing research consultancy. Mr. Lam defined, launched and marketed over 10 successful, profitable products for US cosmetic products in China and has expertise in e-commerce management in consumer goods.
Our company believes that Mr. Lam’s professional background experience gives him the qualifications and skills necessary to serve as an officer of our company.
Caroline Bastidas - Secretary
Caroline Bastidas was appointed as secretary of our company on April 15, 2013. Ms. Bastidas studied at University of Chile where she majored in commerce from 2001 till 2005. From 2006- 2009 Ms. Bastidas worked as a Sales Representative at Seguros Chile, an Insurance company. From 2009-2013 Ms. Bastidas worked as a Cash Operations Specialist in Banco de Chile, the Bank of Chile. Presently, Ms. Bastidas devotes 30 hours a week to our company.
Our company believes that Ms. Bastidas’ professional background experience gives her the qualifications and skills necessary to serve as an officer of our company.
Our board of directors consists solely of Vitaliy Gorelik.
Significant Employees
There are no individuals other than our executive officers who make a significant contribution to our company.
Employment Agreements
We have no formal employment agreements with any of our directors or officers.
Family Relationships
There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
1.been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
2.had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
3.been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
4.been found by a court of competent jurisdiction in a civil action or by the SEC 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.been 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 (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, 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 any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
6.been 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.
Compliance with Section 16(A) of the Securities Exchange Act of 1934
Our common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, our officers, directors, and principal stockholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.
Code of Ethics
We have not yet adopted a code of ethics that applies to our sole officer and director, or persons performing similar functions because we are in the start-up phase and are in the process of establishing our operations. We plan to adopt a code of ethics as and when our company grows to a sufficient size to warrant such adoption.
Audit Committee
As we have only a sole director, we have not established an audit committee as at the date of this registration statement, nor do we have plans to establish an audit committee until such time as we have established our full operations, and retained sufficient independent directors as members of our board of directors willing to be appointed to the audit committee and carry out the customary functions of an audit committee.
Director Nominees
We do not have a nominating committee. Our sole director will in the future select individuals to stand for election as members of our board of directors. The company does not have a policy with regards to the consideration of any director candidates recommended by our security holders. Our board has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate when it considers a nominee for a position on our board. If security holders wish to recommend candidates directly to our board, they may do so by communicating directly with our sole officer and director at the address specified on the cover of this registration statement.
Audit Committee and Audit Committee Financial Expert
We do not currently have an audit committee or a committee performing similar functions. The board of directors as a whole participates in the review of financial statements and disclosure.
Our board of directors has determined that it does not have a member of its audit committee that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, and is “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
We believe that the sole member of our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. 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 early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our sole director does not believe that it is necessary to have such committees because believes the functions of such committees can be adequately performed by the sole member of our board of directors
Item 11.
Item 11. Executive Compensation
The particulars of the compensation paid to the following persons:
(a)our principal executive officer;
(b)each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended May 31, 2016 and 2015; and
(c)up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended May 31, 2016 and 2015, who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:
_________________
(1)
Mr. Gorelik was appointed as president, chief financial officer, chief executive officer, treasurer, and director of our company on April 15, 2013 and resigned as chief executive officer on July 22, 2014.
(2)
Mr. Ensley was appointed as chief executive officer of our company on July 22, 2014 and resigned on August 18, 2015.
(3)
Mr. Lam was appointed as chief executive officer of our company on August 18, 2015
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options at the discretion of our board of directors in the future. We do not have any 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, except that share options may be granted at the discretion of our board of directors.
Grants of Plan-Based Awards
We have not granted any options or stock appreciation rights to our named executive officers or directors since inception. We do not have any stock option plans.
Compensation of Directors
We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.
We have determined that none of our directors are independent directors, as that 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)(15) of the NASDAQ Marketplace Rules.
Pension, Retirement or Similar Benefit Plans
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, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
Compensation Committee
We do not currently have a compensation committee of the board of directors or a committee performing similar functions. The board of directors as a whole participates in the consideration of executive officer and director compensation.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of September 12, 2016, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
_________________
(1)
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on September 12, 2016. As of September 12, 2016, there were 31,920,000 shares of our company’s common stock issued and outstanding.
(2)
Vitaliy Gorelik is our president, chief financial officer, treasurer and director.
(3)
Edwon Lam is our chief executive officer.
(4)
Caroline Bastidas is our secretary.
Changes in Control
We are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended May 31, 2016, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.
Director Independence
We currently act with one director consisting of Vitaliy Gorelik. We have determined that our sole director is not an “independent director” as defined in NASDAQ Marketplace Rule 4200(a)(15).
We do not have a standing audit, compensation or nominating committee, but our entire board of directors acts in such capacities. We believe that our members of our board of directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company does not believe that it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the board of directors. 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 early stages of our development.
Item 14.
Item 14. Principal Accounting Fees and Services
The aggregate fees billed for the most recently completed fiscal year ended May 31, 2016 and for fiscal year ended May 31, 2015 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules
(a)Financial Statements
(1)Financial statements for our company are listed in the index under Item 8 of this document.
(2)All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.
(b)Exhibits
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*
Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
SCIENCE TO CONSUMERS, INC.
(Registrant)
Dated: October 18, 2016
/s/ Vitaliy Gorelik
Vitaliy Gorelik
President, Chief Financial Officer, Treasurer, and Director
(Principal Financial Officer and Principal Accounting Officer)
Dated: October 18, 2016
/s/ Edwon Lam
Edwon Lam
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Dated: October 18, 2016
/s/ Vitaliy Gorelik
Vitaliy Gorelik
President, Chief Financial Officer, Treasurer, and Director
(Principal Financial Officer and Principal Accounting Officer)