Description of Business
Lightcollar, Inc. is a Nevada corporation formed on March 22, 2011. The Company intends to develop its business of marketing and selling illuminated animal collar pendants for the United States (“U.S.”) and Canadian marketplace.
We are a developmental stage company. We have had no operating revenues and we have minimal assets. We have never declared bankruptcy, been in receivership, or involved in any legal action or proceedings. Since incorporating, we have not made any significant purchases or sales of assets, nor have we been involved in any mergers, acquisitions or consolidations. None of Lightcollar, its sole officer, sole director, or any affiliates thereof, has had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements or understandings with any representatives of the owners of any business or company regarding the possibility of an acquisition, merger or other business combination.
Lightcollar is building a business as a marketer and retailer of illuminated pet collar pendants. What we are referring to as a pendant will include a water-proof haul, battery, light source, illuminating lens, switch and latch.
We intend to build a working relationship with an already established computer numerical control (“CNC”) production machining company. CNC machining is the preferred method for manufacturing small precision devices. Although we have not identified a U.S. or Canadian manufacturer or supplier of these products, we have identified companies that already produce these products in China. To date our discussions have been limited to inquiring as to purchasing processes and requirements requesting a particular manufacturer in China to provide the Company with a preliminary design of a proposed pendant. We intend to work with our eventual manufacturer to jointly design the pendant(s) we intend to sell. Alternatively, if we cannot locate a manufacturer that can help us design our product(s) then we may
4
choose a manufacturer that has already designed pendants. The Company’s sole director is actively working on this project and expects to secure a producer/supplier, develop its website, create promotional materials, and introduce the Lightcollar brand as soon as possible.
At present, Lightcollar does not have an agreement with a manufacturer to supply its product nor has a design been finalized. However, Lightcollar intends to have the product machined and assembled at the same location: typically products machined and assembled at the same location require no final fittings. The Company intends to enter into formal discussions with a product supplier as soon as possible. If the Company ultimately chooses a supplier based in Asia we will have to monitor the manufacturing process from our office in Canada, arrange to have the pendants transferred from the manufacturing facility to a shipping port and then shipped to our location in Canada before we can fulfill orders from our customers.
Lightcollar will provide a website containing a catalogue, specifications and other information to inform potential customers, regarding our product(s). Customers will order pendants through our website. We will ship our pendants to our customers. The cost of shipping will be paid by the customers at the time they order and pay for the pendant(s) via our website.
Although Lightcollar intends to sell its product(s) primarily through its website, the Company also plans on attending tradeshows and marketing its product(s) to small retailers at such tradeshows. The Company intends to locate customers and market its website by advertising through various mediums including; newspapers, magazines, radio, television, and affiliate website promoting (i.e. banner advertising and member/group email promoting). We also intend to market the website (and our product(s)) through as many free sources as possible such-as; online classifieds, online pet-care forums, and pet related newsgroups.
Pet fashion/safety products are very much a niche product. Potential customers are typically individuals with a specialized preference or interest in the product.
Lightcollar intends to compete in the marketplace in the U.S. and Canada based on reputation, product quality, ease of shopping experience and price. Since we do not currently have a reputation, we intend to associate ourselves with a reputable product supplier. By associating with a reputable product supplier, Lightcollar will endeavor to provide quality products created by one or more firms with a proven record of producing quality products. In so far as price is concerned, Lightcollar plans to provide a product at a price that is competitive with any similar products sold and or produced domestically.
Competition
Our limited research on the internet did not result in the identification of any companies currently manufacturing and/or supplying an illuminated pendant for pets in North America. A search of the internet indicates there are such products manufactured and sold in Asia; however, no illuminated pendants companies appear to currently exist in North America.
According to the 2011-2012 (the most recent year for which such statistics are available) American Pet Products Association (“APPA”) National Pet Owners Survey; 62% of U.S. households own a pet, which equates to 72.9 million homes. Since 1994 the Total U.S. Pet Industry Expenditures has increased at an average rate of $2.6 billion per year and is estimated to be $50.84 billion in 2011. Although our products can be used on a variety of animals other than dogs; 78.2 million of the pets owned in the United States are dogs. Although statistics could not be found for pet safety/fashion; according to the 2011-2012 APPA National Pet Owners Survey, dog owners spend $186 annually on grooming, treats, and toys, which totals over $14 billion annually.
We have not obtained any empirical evidence detailing the competitive market in the U.S. and Canada for an illuminated pet pendant, and we cannot determine competitive factors with any degree of certainty. We plan on working with a supplier who already manufactures these and/or similar products. We do not at this time have any agreements or contracts with a supplier or company that provides such products.
While we do not have empirical evidence to support our contentions, our internet research has led us to believe that competitive conditions are favorable. We believe Lightcollar can be among the first companies to introduce such products into our target market areas. Although we have discovered that Americans do spend over $14 billion annually on toys, treats, and grooming; there is no guarantee that Lightcollar will be able to compete effectively with an unproven product and no clear and definite understanding of the competitive factors.
There are no immediate or imminent threats to the supply or prices of related materials due to shortages or other factors that we are aware of at this time. To our knowledge, at this time there are no government regulations, in the United States or Canada, that would prohibit or negatively affect Lightcollar from importing or exporting our product(s) into or out of those countries. To our knowledge, at this time there are no import/export regulations or controls imposed by any of the potential countries, from which our product(s) could originate, that would prevent us from obtaining our product(s) or shipping our products to the U.S. or Canada.
The Company currently has no employees and has no plans to hire any employees during its first year of operation. Lightcollar intends to use contracted services to conduct all aspects of its business.
Research and Development
As we build out our organization, we intend to incorporate a business development component that will be responsible for researching opportunities for growth; such as marketing our product abroad and expanding our shipping and distribution to Europe, and other parts of the world. Our intended market for at least the first 12 months of active operations is the U.S. and Canada.
Reports to Security Holders
The Company files reports, including quarterly and annual reports, with the Commission pursuant to Section 12(b) or (g) of the Exchange Act. These reports and any other materials filed with the SEC may be read and copied at the SEC's Public Reference Room at 100 F Street NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The Company files its reports electronically with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is http://www.sec.gov.
ITEM 1A. RISK FACTORS.
Not Applicable.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
ITEM 2.
PROPERTIES.
We do not own or lease any real property. Our personal property is limited to cash, our business plan and our domain name “lightcollar.com”. We conduct our administrative affairs from our President’s office located at 3rd Avenue West, Unity, Saskatchewan, S0K 4L0, at no cost to the Company
ITEM 3.
LEGAL PROCEEDINGS.
Legal Proceedings
In the ordinary course of our business, we may from time to time become subject to routine litigation or administrative proceedings that are incidental to our business. We are not a party to nor are we aware of any existing, pending or threatened lawsuits or other legal actions involving us.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock is not currently listed no trading market has developed.
As of July 6, 2012, we had 23 stockholders of record of our common stock.
Dividends
We have never declared any cash dividends with respect to our common stock. Future payment of dividends is within the discretion of our board of directors and will depend on our earnings, capital requirements, financial condition and other relevant factors. Although there are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our common stock, we presently intend to retain future earnings, if any, for use in our business and have no present intention to pay cash dividends on our common stock.
Recent Sales of Unregistered Securities
During the fiscal year ended March 31, 2012, we did not issue any securities without registration under the Securities Act of 1933.
ITEM 6.
SELECTED FINANCIAL DATA.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Results of Operations
We have limited active operations and have generated no operating revenues to date. We incurred operating expenses of $47,596 for the period from inception (March 22, 2011) to March 31, 2012. These expenses consisted of general operating and selling expenses in connection with the day to day operation of our business and professional fees for preparation and filing of our S-1 Registration Statement and preparation of our periodic filings with the Commission.
Our net loss from inception (March 22, 2011) through March 31, 2012 was $47,746.
Cash provided by financing activities for the period from inception (March 22, 2011) through March 31, 2012, was $43,248. We received our initial funding of $20,000 through the sale of common stock to our sole officer and director, Collin Mills. Mr. Mills purchased 2,000,000 shares of our common stock at $0.01 per share on March 25, 2011, for $20,000. We have received $18,000 through the sale of our common stock under our Prospectus, dated September 15, 2011, and filed as part of our S-1 Registration Statement.
Capital and Liquidity
We had cash assets of $25 at March 31, 2012. We have only common stock as our capital resource. We will be reliant upon shareholder loans or private placements of equity to fund any kind of operations. We have secured no sources of loans.
We are subject to the reporting requirements of the Securities Exchange Act of 1934 and we will 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 accounting, legal and other professional costs could range $15,000 or more per year, and will be higher if our business volume and activity increases, but lower during the first years of being public because our overall business volume will be lower.
Long-Term Debt
At March 31, 2012, the Company had no long-term debt. We may borrow money in the future to finance our future operations. Any such borrowing will increase the risk of loss to the investor in the event we are unsuccessful in repaying such loans.
We may issue shares of our common stock, in addition to those previously registered via Form S-1, to finance our future operations, although the Company does not currently contemplate doing so. Any such future issuances will reduce the control of previous investors and may result in substantial additional dilution to investors.
Plan of Operation
We are a development stage enterprise with limited active operations. We have had no operating revenues since inception, and have limited financial backing and assets.
Our plan of operation is to market and sell, as an online retailer, an illuminated pet collar pendant in the U.S. and Canadian market. We estimate that we need at least twenty five thousand dollars ($25,000) in capital for the next twelve months of operations. This amount of capital will only allow us to put into operation a minimal amount of our business plan.
The Company will not commence sales of any pendants prior to: locating and securing a manufacturer; finalizing a product design; and developing a functional website capable of processing customer orders Although we have not identified a U.S. or Canadian manufacturer or supplier of these products, we have identified companies that already produce these products in China. To date, our discussions have been limited to inquiring as to order processes and requirements and requesting a particular manufacturer in China to provide the Company with a preliminary design of a proposed pendant. We intend to work with our eventual manufacturer to jointly design the pendant(s) we intend to sell. Alternatively, if we cannot locate a manufacturer that can help us design our product(s) then we may choose a manufacturer that has already designed pendants. The Company’s President is actively working toward and by the end of calendar year 2012 intends to secure, a producer/supplier; complete (or choose) product design(s); and procure our initial inventory of product. . With the exception of unit cost, shipping, brokerage and quantity purchasing, our discussions with manufacturers have not uncovered any additional financial consideration to acquire product. The Company expects to commit to an initial level of inventory cost of approximately $2,500 (inclusive of unit cost, shipping, brokerage and quantity purchasing).
Once we have secured a producer/supplier, and upon the receipt of our initial supply of inventory, we can start preparing our website and promotional materials. Photographing the pendants for promotional use will not be a cost to the company. The Company’s President has the photography equipment and software necessary for the creation of digital images and as such photographing the products for inclusion on our website and in our other promotional materials will not result in a cost to the Company. The
Company’s President will design the layout of our promotional materials at no cost to the Company. Lightcollar intends to initially keep the paper printing of its promotional literature to a minimum. Depending on our success in raising capital through our initial public Offering and also our success in marketing and selling our product(s) we will increase our marketing budget as necessary and as we are able to going forward.
The Company’s President originally registered the domain name “lightcollar.com” but that domain name has been transferred to the Company. We intend to develop a website with a catalogue, specifications and other information to inform potential customers of the benefits and particulars of the product and to allow customers to purchase pendants from us.
The Company’s President will design the website at no cost to the Company; however, we expect basic web-hosting services to cost approximately $40 per month and advanced web-hosting services to cost approximately $400 per month. Basic web-hosting services will not offer any email marketing tools, additional search engine visibility, or enhanced code encryption. An advanced web-hosting service will allow the company to see precisely what locations our customers are in, as well as provide our customers with the highest level of encryption, premium search-engine visibility, as well as ad space, and spam-free email campaigning
Lightcollar intends to have a functional website, and to begin actively selling its product(s), by the end of calendar year 2012. The Company initially expects to maintain its own basic website at a cost of approximately $40 per month and then to secure advanced hosting services at a cost of approximately $400 per month going forward.
Once the website has been developed and is operational, we intend to market the website utilizing all of the free online marketing that we are able to source as well as paid advertising. During calendar year 2012, we expect to spend between $1,000 and $20,000 on advertising our website and product(s).
Further development of the type, style and content of promotional materials will be undertaken after the initial roll out of our website. After undertaking the development of our promotional materials the Company will further formulate its marketing plan by, in part, identifying potential trade shows to attend and promotional materials to display at such trade shows. For the foreseeable future our President will undertake all marketing efforts on behalf of the Company.
Initially we intend to market our product(s) throughout the U.S. and Canada and conduct sales primarily via the internet. We also intend to expand our revenues by selling to other retailers, taking orders at trade shows and generating interest through word of mouth. We intend to grow the business throughout Canada and the United States as demand warrants. We have no plans to expand the region of operation until such time as we have developed the North American business and built a strong and effective organization. We do not intend to market our business outside of the U.S. and Canada for the next 12 months. As we build out our organization, we intend to incorporate a business development component that will be responsible for researching opportunities for growth; such as, marketing our product abroad and expanding our shipping and distribution to Europe, and other parts of the world.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have not formed any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
LIGHTCOLLAR, INC.
(A DEVELOPMENT STAGE COMPANY)
MARCH 31, 2012
INDEX TO FINANCIAL STATEMENTS
Page(s)
Report of Independent Registered Public Accounting Firm
1
Balance Sheets as of March 31, 2012 and 2011
2
Statements of Operations and Comprehensive Loss for the Year Ended
March 31, 2012, the Period from March 22, 2011 (Inception) to
March 31, 2011 and the Period from March 22, 2011 (Inception) to
March 31, 2012
3
Statement of Changes in Stockholders’ Equity (Deficit) from March 22,
2011 (Inception) to March 31, 2012
4
Statements of Cash Flows for the Year Ended March 31, 2012, the
Period from March 22, 2011 (Inception) to March 31, 2011 and the
Period from March 22, 2011 (Inception) to March 31, 2012
5
Notes to Financial Statements
6-11
Report of Independent Registered Public Accounting Firm
Board of Directors
We have audited the accompanying balance sheets of Lightcollar, Inc. (A Development Stage Company) (“the Company”) as of March 31, 2012 and 2011, and the related statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the year ended March 31, 2012, the period from March 22, 2011 (inception) to March 31, 2011 and the period from March 22, 2011 (inception) to March 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the financial position of Lightcollar, Inc. as of March 31, 2012 and 2011, and the results of its operations and its cash flows for the year ended March 31, 2012, the period from March 22, 2011 (inception) to March 31, 2011 and the period from March 22, 2011 (inception) to March 31, 2012, 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 8 to the financial statements, the Company has no revenue and an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
DeCoria, Maichel & Teague, PS
Spokane, Washington
June 29, 2012
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS