|
Nevada |
5700 |
26-0478989 |
|
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S.
Employer
|
|
5 Victory Road |
|
Suffern NY 10901 |
|
(845) 548-0888 |
|
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) |
|
____________________________ |
|
Hardy, Lewis & Page, P.C. |
|
401 South Old Woodward Avenue, Suite 400, |
|
Birmingham, Michigan 48009 |
|
Phone: (248) 645-0800 |
|
Attn: Peter Sarkesian |
|
(Name, address, including zip code, and telephone number, including area code, of agent for service) |
|
(Names, addresses and telephone numbers of agents for service) |
____________________________
|
Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective. |
|
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. Θ |
|
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |
|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |
|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |
|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. |
|
Large accelerated filer |
Accelerated filer |
|
Non-accelerated filer (Do not check if a smaller reporting company) |
Smaller reporting company Θ |
CALCULATION OF REGISTRATION
FEE
|
Title of each class of securities to be registered |
Amount to be registered(1)(3) |
Proposed maximum offering price per unit (2) |
Proposed maximum aggregate offering price(2) |
Amount of registration fee |
|
Common stock, $0.001 par value |
1,750,000 |
$0.05 |
$87,500 |
$18 |
|
In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. |
|
|
Estimated pursuant to Rule 457 of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee, based on the price per share paid by the selling stockholders named herein in connection with their acquisition from the issuer of the securities being registered in the in the issuer’s recent private placement of common stock, which was consummated at a price per share of $0.02 in March 2010. |
|
|
(3) |
Represents shares of the Registrant’s common stock being registered for resale that have been issued to the selling stockholders named in this registration statement. |
|
|
|
PROSPECTUS |
|
Subject to completion, dated , 2010 |
|
AVENUE SOUTH LTD. |
|
1,750,000 Shares of Common Stock |
|
This prospectus relates to 1,750,000 shares of common stock of Avenue South Ltd. that may be sold from time to time by the selling stockholders named in this prospectus. |
|
We will not receive any proceeds from the sales by the selling stockholders. |
|
Our common stock is presently not traded on any market or securities exchange. The 1,750,000 shares of our common stock will be sold by the selling stockholders at a fixed price of $0.05 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with The Financial Industry Regulatory Authority, or FINRA, which operates the OTC Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling stockholders. |
|
Any participating broker-dealers and any selling stockholders who are affiliates of broker-dealers may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, or the Securities Act, and any commissions or discounts given to any such broker-dealer or affiliates of a broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The selling stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their common stock. |
|
Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 7 to read about factors you should consider before buying shares of our common stock. |
|
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. |
|
The date of this Prospectus is , 2010. |
|
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
|
|
|
TABLE OF CONTENTS |
|
SUMMARY |
1 |
|
RISK FACTORS |
6 |
|
USE OF PROCEEDS |
10 |
|
DETERMINATION OF OFFERING PRICE |
10 |
|
MARKET FOR COMMON EQUITY AND RELATED |
10 |
|
STOCKHOLDER MATTERS |
10 |
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
11 |
|
CORPORATE STRUCTURE AND HISTORY |
16 |
|
LEGAL PROCEEDINGS |
20 |
|
MANAGEMENT |
20 |
|
EXECUTIVE COMPENSATION |
21 |
|
SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
22 |
|
SELLING STOCKHOLDERS |
23 |
|
DESCRIPTION OF CAPITAL STOCK |
24 |
|
SHARES ELIGIBLE FOR FUTURE SALE |
26 |
|
PLAN OF DISTRIBUTION |
26 |
|
LEGAL MATTERS |
28 |
|
EXPERTS |
28 |
|
WHERE YOU CAN FIND MORE INFORMATION |
28 |
|
REPORTS OF INDEPENDENT REGISTERED PUBLIS ACCOUNTING FIRM |
F-12 - F13 |
|
You should only rely on the information contained in this prospectus. We have not, and the selling stockholders have not, authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is accurate only as of the date on the front cover, but the information may have changed since that date. |
|
|
|
The items in the following summary are described in more detail later in this prospectus. This summary provides an overview of selected information and does not contain all the information you should consider. Therefore, you should also read the more detailed information set out in this prospectus, including the financial statements, the notes thereto and matters set forth under “Risk Factors.” |
|
The Company |
|
We are a retailer of imported and domestic distinctive art reproductions, collectibles and home décor items. We sell through our website www.avenuesouth.com and through an informal relationship with a home furnishing distributor in Hong Kong. We do not plan to occupy any physical stores or outlets or hold any inventory. Upon receiving sales orders from our customers, our suppliers will drop-ship the products we buy from them, directly to our customers. We believe that the products we sell are relatively unique because they are not readily available at many retail outlets. We feel that we have a strong platform for selling our type of products on the internet and we believe there are significant opportunities for us to sell our products outside the United States. |
|
We acquire our product inventory from approximately 15 wholesale vendors. We do not manufacture any of our own products. We have not entered into any formal supply agreements with these vendors. We are required to pay in full for product inventory purchased from these vendors, prior to them drop-shipping their inventory to our customer. Our retail customers are required to pre-pay for their sales orders. |
|
We are a development stage company. For the year ended March 31, 2010 we sold $13,500 worth of our products, which constituted our entire inventory on hand at the time, to Crown Trend Trading Limited, our (“major customer”), a home furnishing distributor to various retail store outlets in Hong Kong, to whom we give 30 day payment terms. For the three months ended June 30, 2010 our revenues were $20,010 from the sale of our products to this major customer. Revenue for the month of July 2010 from our major customer will be approximately $10,000. We expect to see an increase in the demand for our products from our major customer in Hong Kong and potentially other customers. We will seek to broaden or further develop our relationship with our major customer by entering into a formal distribution agreement so that we may continue to distribute more of our products through them. We pre-pay all shipping and handling costs and we charge back all these shipping and handling costs to our customers. Our customers have a 30 day right of return on the products we sell to them. We will also seek to develop relationships with other home furnishing distributors in the United States and Hong Kong in order to increase our products sales and distribution base. |
|
Our Competitive Strengths |
|
We believe that we have the following competitive strengths: |
|
● Existing relationships with our wholesale suppliers; |
|
● Robust website that features streamlined navigation; |
|
● Distinct product inventory sourced by our President; |
|
● A continuing presence in Hong Kong where our Vice President of Sales is marketing our products to the Hong Kong market; |
|
● No storage costs; |
|
● Personalized customer support from our President and Vice President Sales; and |
|
● Low overhead costs. |
|
1 |
|
2 |
|
|
|
|
|
|
|
|
|
|
Any of the above risks could materially and adversely affect our business, financial position and results of operations. An investment in our common stock involves risks. You should read and consider the information set forth in “Risk Factors” and all other information set forth in this prospectus before investing in our common stock. |
|
Corporate Information |
|
We were incorporated on July 6, 2007 (“successor inception date or “inception”) in the State of Nevada for the sole purpose of acquiring Avenue South, Inc. Avenue South, Inc. was incorporated on February 15, 2005 (“predecessor inception date”) in the State of North Carolina for the purpose of engaging in the business of online sales of imported and domestic distinctive art reproductions, collectibles and home décor items. |
|
Our President, Irina Goldman, acquired Avenue South, Inc. on July 6, 2007, from David F. Ruppen, the former owner of Avenue South, Inc., for a cash purchase price of $10,000. Immediately thereafter, on the same day, July 6, 2007, Irina Goldman, our company and Avenue South, Inc. entered into a share exchange agreement, or Share Exchange Agreement, pursuant to which Ms. Goldman exchanged her one share of Avenue South, Inc. for 2,000,000 shares of our company. Upon the consummation of the transactions contemplated by the Share Exchange Agreement, Irina Goldman became our sole stockholder and Avenue South, Inc. became our wholly-owned subsidiary. |
|
Our principal office is located at 5 Victory Road, Suffern, NY. Our telephone number is (845) 548-0888. |
|
We maintain a website at http://www.avenuesouth.com . Information available on our website is not incorporated by reference in and is not deemed a part of this prospectus. |
|
Conventions Used in this Prospectus |
|
In this prospectus, unless indicated otherwise, references to: |
|
● “we,” “us,” “our” or the “Company” are to Avenue South Ltd. and our subsidiary, Avenue South, Inc., on a consolidated basis; |
|
● “Hong Kong” are to the Hong Kong Special Administrative Region of the People’s Republic of China; |
|
● “U.S. dollar,” “$” and “US$” are to the legal currency of the United States; |
|
● “SEC” are to the Securities and Exchange Commission; |
|
● “Securities Act” are to the Securities Act of 1933, as amended, and “Exchange Act” are to the Securities Exchange Act of 1934, as amended. |
|
3 |
|
The Offering |
|
1,750,000 shares. This number represents 42% of our current outstanding common stock (1) |
||
|
Common stock outstanding before the offering |
4,200,000 shares. |
|
|
Common stock outstanding after the offering |
4,200,000 shares. |
|
|
Initial Offering Price |
The selling stockholders will sell their shares at an initial offering price of $0.05 per share unless and until a market for our common stock develops on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. |
|
|
Proceeds to us |
We will not receive proceeds from the resale of shares by the Selling Stockholders. |
|
|
No Trading Symbol |
Our securities are not traded on any exchange or on the over-the-counter markets |
|
(1) Based on 4,200,000 shares of common stock outstanding as of July 1, 2010. |
|
4 |
|
Three Months Ended |
Three Months Ended |
Year Ended |
Year Ended |
|
|
June 30, 2010 |
June 30, 2009 |
March 31, 2010 |
March 31, 2009 |
|
|
Revenues |
20,010 |
0 |
13,500 |
417 |
|
Expenses |
17,063 |
697 |
12,292 |
8,190 |
|
Net Income (Loss) |
2,947 |
(697) |
1,208 |
(7,773) |
|
Net Loss per share |
(0.00) |
(0.00) |
(0.00) |
(0.00) |
|
Balance Sheet Data |
|
As of June 30, 2010 |
As of March 31, 2010 |
As of March 31, 2009 |
|
|
Working Capital |
49,157 |
11,210 |
10,002 |
|
Total Assets |
161,367 |
123,420 |
12,237 |
|
Total Current Liabilities |
112,210 |
112,210 |
2,235 |
|
5 |
|
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. |
|
RISKS RELATED TO OUR BUSINESS |
|
We do not have sufficient working capital to meet our cash requirements for the next 12 months and we are not certain that we will be able to secure the financing we need to meet those requirements. If we do not obtain the financing we need to satisfy our financial requirements, we may have to wind down our business and you may lose your entire investment. |
|
As of June 30, 2010 we had $49,157 of working capital. We intend to meet our ongoing cash requirements of approximately $160,000 for the next 12 months through a combination of equity and debt financing from our principal stockholder and other investors. However, there can be no assurance that we will be able to secure such financing and our principal stockholder has not committed to provide additional financing to us and she may require the repayment of her loan to us. If financing is available, it may involve issuing securities which could be dilutive to holders of our capital stock. If we do not raise additional capital from conventional sources, such as our existing or new investors or commercial banks, it is likely that our growth will be restricted and we may be forced to scale back or curtail implementing our business plan and our business may fail. This lack of working capital does not enable us to run our operations and incur operating expenses such as salaries, rent expense and marketing costs, which other retail sales and wholesale sales distributors incur in operating their businesses, which puts us at a competitive disadvantage. If we do not have sufficient capital to fund our operations, you may lose your entire investment. |
|
Because our auditors have issued a going concern opinion, there is substantial uncertainty we will continue operations in which case you could lose your investment. |
|
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment. |
|
From the inception of our operating subsidiary (July 6, 2007, date of inception of the successor operations)) until June 30, 2010, we only generated $34,220 in revenues and have incurred losses during that same period of $4,843. From the date of inception of our operating subsidiary (February 15, 2005, date of inception of our predecessor operations to July 5, 2007) we only generated $10,787 in revenues and have incurred losses during the same period of $37,912. We expect to continue to incur losses into the future. There is no assurance our future operations will result in any profit. If we cannot generate sufficient revenues to operate profitably, we will cease operations and you will lose your investment. If our business operations expand and our operating expenses increase, our profit margins may decrease and we may not be able to develop into a profitable business in the future. |
|
6 |
|
Based upon current plans, we expect to incur operating losses in future periods because we will continue to be in the development stage and will be incurring expenses and not generating significant revenues. We cannot guarantee that we will be successful in generating significant revenues in the future. Failure to generate revenues which are greater than our expenses will result in the loss of all or a portion of your investment. |
|
Changing consumer preferences will require periodic new product introduction. If we are unable to continually satisfy new consumer preferences, we may not generate any material level of revenues. |
|
As a result of changing consumer preferences, many Internet websites are successfully marketed for a limited period of time. Even if our products become popular, there can be no assurance that any of our products will continue to be popular for a sustained period of time. Our success will be dependent upon our ability to develop new and improved product lines. Our failure to introduce new product lines and to achieve and sustain market acceptance could result in us being unable to continually meet consumer preferences and generate any material level of revenues. |
|
We face intense competition now and if we are unable to successfully compete with our competitors we will not be able to achieve profitability. |
|
The Internet home furnishing industry is highly competitive. Most of our competitors have longer operating histories, greater brand recognition, broader product lines and greater financial resources and advertising budgets than we do. Many of our competitors offer similar products or alternatives to our products. We may not be able to develop a more appealing online website than our competitors and we may not be able to otherwise compete effectively against our competitors. |
|
Further, our competitors may be able to develop their markets more effectively, have significantly more products than us, may be able to sell their products on more favorable terms, and may be able to adopt more aggressive pricing than us. They may have longer operating histories, greater brand name recognition, larger customer bases and significantly greater financial, technical and marketing resources. In the event that we are unable to successfully compete with our competitors we will not be able to achieve profitability. |
|
We face a difficult current retail environment and changing economic conditions that may further adversely affect consumer demand and spending, and as a result, adversely affect our financial condition. |
|
Historically, the home furnishings industry has been subject to cyclical variations in the general economy and to uncertainty regarding future economic prospects. Such uncertainty, as well as other variations in global economic conditions such as consumer confidence, rising fuel costs and slowing housing starts, may continue to cause inconsistent and unpredictable consumer spending habits. Many industry analysts believe the current home furnishings environment is as difficult as the industry has ever experienced. Should consumer demand for home furnishings continue at these current low levels for an extended period of time or further deteriorate, it will be difficult to achieve our financial goals and plans. |
|
If we do not attract customers to our website on cost-effective terms, we will not make a profit, which ultimately will result in a cessation of operations. |
|
Our success depends on our ability to attract retail customers to our website on cost-effective terms. Our strategy to attract customers to our website, which has not been formalized or implemented, includes viral marketing, the practice of generating "buzz" among Internet users in our products through the developing and maintaining weblogs or "blogs", online journals that are updated frequently and available to the public, postings on online communities such as Facebook, MySpace, Yahoo!(R) Groups and amateur websites such as YouTube.com, and other methods of getting Internet users to refer others to our website by e-mail or word of mouth; search engine optimization, marketing our website via search engines by purchasing sponsored placement in search results; and entering into affiliate marketing relationships with website providers to increase our access to Internet consumers. We expect to rely on word of mouth marketing as the primary source of traffic to our website, with search engine optimization and affiliate marketing as secondary sources. Our marketing strategy may not be enough to attract sufficient traffic to our website. If we do not attract customers to our website on cost-effective terms, we will not make a profit, which ultimately will result in a cessation of operations. |
|
Our success depends on the continuing efforts of the members of our senior management and the loss of their services could result in a disruption of operations which could result in reduced revenues. |
|
We have no employees and our future success depends heavily upon the continuing services of the members of our senior management team, in particular, our President and principal shareholder Irina Goldman, and our Director, Vice President of Sales and Treasurer Fung Chun Ngai. If one or both of these people are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, and our business may be disrupted and our financial condition and results of operations may be materially and adversely affected. We do not currently maintain key person insurance on Ms. Goldman or Ms. Ngai. The loss of the services of either of them could result in a disruption of operations which could result in reduced revenues. |
|
7 |
|
Our President and director has never been associated with a larger and profitable home furnishing company, which could adversely affect our ability to becoming profitable in the future. |
|
Our President and director has never been associated with a larger profitable home furnishing company, and her lack of experience in operating a larger home furnishing company like ours could adversely affect our ability to successfully become profitable in the future. |
|
Because our President, Irina Goldman, owns more than 50% of our outstanding shares, she will retain control of us and be able to decide who will be directors and you may not be able to elect any directors which could decrease the price and marketability of the shares. |
|
Irina Goldman, our President and director, owns 2,450,000 shares of our common stock constituting approximately 58% of our outstanding common stock. As a result, Ms. Goldman will be able to elect all of our directors and control our operations. She will also be able to unilaterally decide major corporate actions such as mergers, acquisitions, future securities offerings, amendments to our charter and bylaws and other significant corporate events. Ms. Goldman’s unilateral control over us could decrease the price and marketability of our shares. |
|
Our business depends on the development and maintenance of the Internet infrastructure. Outages and delays could reduce the level of Internet usage generally as well as the level of usage of our services and reduce our revenues. |
|
The success of our services will depend largely on the development and maintenance of the Internet infrastructure. This includes maintenance of a reliable network backbone with the necessary speed, data capacity, and security, as well as timely development of complementary products, for providing reliable Internet access and services. The Internet has experienced, and is likely to continue to experience, significant growth in the numbers of users and amount of traffic. The Internet infrastructure may be unable to support such demands. In addition, increasing numbers of users, increasing bandwidth requirements, or problems caused by “viruses,” “worms,” and similar programs may harm the performance of the Internet. The backbone computers of the Internet have been the targets of such programs. The Internet has experienced a variety of outages and other delays as a result of damage to portions of its infrastructure, and it could face outages and delays in the future. These outages and delays could reduce the level of Internet usage generally as well as the level of usage of our services and reduce our revenues. |
|
Interruption or failure of our information technology and communications systems could impair our ability to effectively provide our products and services, which could damage our reputation and harm our operating results. |
|
Our ability to provide our products and services depends on the continuing operation of our information technology and communications systems. Any damage to or failure of our systems could interrupt our service. Service interruptions could reduce our revenues and profits, and damage our name if our system is perceived to be unreliable. Our systems are vulnerable to damage or interruption as a result of terrorist attacks, war, earthquakes, floods, fires, power loss, telecommunications failures, computer viruses, interruptions in access to our websites through the use of “denial of service” or similar attacks, hacking or other attempts to harm our systems, and similar events. Some of our systems are not fully redundant, and our disaster recovery planning does not account for all possible scenarios. The occurrence of a natural disaster or a closure of an internet data center by a third-party provider without adequate notice could result in lengthy service interruptions. Interruption or failure of our information technology and communications systems could impair our ability to effectively provide our products and services, which could damage our reputation and harm our operating results. |
|
If our website contains undetected errors, we could lose the confidence of users, resulting in loss of customers and a reduction of revenue. |
|
Our websites could contain undetected errors or “bugs” that could adversely affect the ability of our customers to order products through our website. The occurrence of errors may cause us to lose market share, damage our reputation and brand name, and reduce our revenues. |
|
If the security measures that we use to protect our user’s personal information such as credit card numbers, are ineffective, our customers may lose their confidence in our websites and stop visiting it. This may result in a reduction in revenues and increase our operating expenses, which would prevent us from achieving profitability. |
|
We use www.authorize.net for our website security. Any breach in our website security could expose us to a risk of loss or litigation and possible liability. We anticipate that we will rely on encryption and authentication technology licensed from third parties to provide secure transmission of confidential information. As a result of advances in computer capabilities, new discoveries in the field of cryptography or other developments, a compromise or breach of our security precautions may occur. A compromise in our proposed security could severely harm our business. A party who is able to circumvent our proposed security measures could misappropriate proprietary information, including customer credit card information, or cause interruptions in the operation of our website. We may be required to spend significant funds and other resources to protect against the threat of security breaches or to alleviate problems caused by these breaches. However, protection may not be available at a reasonable price, or at all. Concerns regarding the security of e-commerce and the privacy of users may also inhibit the growth of the Internet as a means of conducting commercial transactions. This may result in a reduction in revenues and increase our operating expenses, which would prevent us from achieving profitability. |
|
8 |
|
RISKS RELATED TO THE OWNERSHIP OF OUR STOCK |
|
Our stock has not been listed on any public exchange, and no prediction can be made as to when, if ever, a public market for our common stock would develop. |
|
To date, there has been no public market for our common stock. No prediction can be made as to when, if ever, a public market for our common stock will develop. There is no liquidity for shares distributed in this offering and investors may have difficulty in selling any shares acquired in the offering at prices they want. If a public market for the common stock does develop at a future time, sales of shares by stockholders of substantial amounts of our common stock in the public market could reduce the prevailing market price and could impair our future ability to raise capital through the sale of additional equity securities. The company is not listed on any public exchange and there are no market makers currently applying to handle the company’s stock. |
|
We will likely conduct offerings of our equity securities in the future, in which case your proportionate interest will be diluted. |
|
We completed a private placement offering of 1,750,000 shares of our common stock at a price of $0.02 per share to investors on March 28, 2010. Since our inception, we have relied on the proceeds of that private placement offering and stock sales to our principal stockholder and loans from our principal stockholder to fund our operations. We will likely be required to undertake additional equity offerings in the future to finance our current business. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. If we issue additional stock, your percentage interest in us will be diluted. |
|
Penny stock regulations under U.S. federal securities laws may adversely affect the ability of investors to resell their shares. |
|
We anticipate that our common stock will be subject to the penny stock rules under the Securities Exchange Act of 1934. These rules regulate broker-dealer practices for transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00 per share. The penny stock rules require broker-dealers that derive more than five percent of their customer transaction revenues from transactions in penny stocks to deliver a standardized risk disclosure document that provides information about penny stocks, and the nature and level of risks in the penny stock market, to any non-institutional customer to whom the broker-dealer recommends a penny stock transaction. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction, the broker and/or dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The transaction costs associated with penny stocks are high, reducing the number of broker-dealers who may be willing to engage in the trading of our shares. These additional penny stock disclosure requirements are burdensome and may reduce all the trading activity in the market for our common stock. As long as the common stock is subject to the penny stock rules, holders of our common stock may find it more difficult to sell their shares. |
|
Reporting requirements under the Exchange Act and compliance with the Sarbanes-Oxley Act of 2002, including establishing and maintaining acceptable internal controls over financial reporting, are costly. |
|
We presently do not have a business that produces significant revenues, however, the rules and regulations pursuant to the Exchange Act require a public company to provide periodic reports which will require that we engage legal, accounting and auditing services. The engagement of such services can be costly and we are likely to incur losses which may adversely affect our ability to continue as a going concern. Additionally, the Sarbanes-Oxley Act of 2002 will require that our company establish and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act of 2002 and the limited time that management will devote to our company may make it difficult for us to establish and maintain adequate internal controls over financial reporting. In the event that we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or prevent fraud, which may harm our financial condition and result in loss of investor confidence and a decline in our share price. |
|
9 |
|
● our future business development, financial condition and results of operations; |
|
● our expectations regarding demand for our products; |
|
● our ability to diversify our product base; and |
|
● general economic and business conditions in the United States and Hong Kong. |
|
Also, forward-looking statements represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we reference in this prospectus, or that we filed as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. |
|
Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future. |
|
11 |
|
We are a web-based retailer of imported and domestic distinctive art reproductions, collectibles and home décor items. We sell our products through our website www.avenuesouth.com and through an informal relationship with our major customer, a home furnishing distributor in Hong Kong. We do not occupy any physical stores or outlets. We believe that the products we sell are relatively unique and will sell successfully through our website because they are not readily available at many retail outlets. |
|
Recent Developments |
|
On March 28, 2010, we completed a private placement in which we issued and sold to non U.S. persons under Regulation S of the Securities Act 1,750,000 shares of our common stock for an aggregate purchase price of $35,000, or $0.02 per share. As a result of this private placement, we raised approximately $35,000 in gross proceeds, which left us with approximately $35,000 in net proceeds as we did not incur any offering expenses. We have a contractual obligation, under a Registration Rights Agreement we entered into with the investors from the private placement on March 28, 2010, to register the shares of our common stock sold in this private placement. |
|
Principal Factors Affecting our Financial Performance |
|
Our operating results are primarily affected by the following factors: |
|
|
|
|
|
|
|
Based upon current plans, we expect to incur operating losses in future periods because we will continue to be in the development stage and will be incurring expenses and not generating significant revenues. |
|
● |
We are dependent upon our relationships with, Crown Trend Trading Ltd., our major customer and principal distributor at this time, to sell our product inventory. We do not have any formal relationship with them and they may in their sole discretion and without any penalty cease being our distributor at any time. If they cease the distribution of our products then our sole source of distribution will be through our website, which has not generated any significant revenue to date. |
|
● |
In addition to sales of our products through our major customer and any other distributor that may sell our products in the future, our sales are dependent on our ability to attract retail customers to our website on cost-effective terms. Our strategy to attract customers to our website, which has not been formalized or implemented, includes viral marketing, the practice of generating "buzz" among Internet users in our products through the developing and maintaining weblogs or "blogs", online journals that are updated frequently and available to the public, postings on online communities such as Facebook, MySpace, Yahoo!(R) Groups and amateur websites such as YouTube.com, and other methods of getting Internet users to refer others to our website by e-mail or word of mouth; search engine optimization, marketing our website via search engines by purchasing sponsored placement in search results; and entering into affiliate marketing relationships with website providers to increase our access to Internet consumers. We expect to rely on word of mouth marketing as the primary source of traffic to our website, with search engine optimization and affiliate marketing as secondary sources. |
|
● |
We acquire our product inventory from several wholesale vendors. We do not manufacture any of our own products. We have not entered into any formal supply agreements with these vendors. We are required to pay in full for product inventory purchased from these vendors upon delivery. If the prices charged by these vendors increase and we are not able to pass on the increased price to our customers, then our margins will be reduced and this will affect our potential for future profitability. |
|
12 |
|
Results of Operations for the three months ended June 30, 2010 and June 30, 2009 and from July 6, 2007 (inception) to June 30, 2010. |
|
Revenues |
|
We generated revenues of $34,220 during the period from our inception on July 6, 2007 to June 30, 2010. We generated revenues of $20,010 during the three months ended June 30, 2010 and $0 during the same period in 2009. This increase in revenue for the three months ended June 30, 2010 is due to our sales to our major customer, a Hong Kong based wholesale distributor of home furnishings of $20,010. We anticipate future increases in revenue from our major customer and perhaps obtain other new distributors and consumer sales through our website but at this time, our ability to generate significant revenues continues to be uncertain and we continue to be a development stage company. |
|
Cost of Sales |
|
Our cost of sales from our inception on July 6, 2007 to June 30, 2010 was $27,223. |
|
Our cost of sales was $16,948 for the three months ended June 30, 2010 compared to $0 for the three months ended June 30, 2009. The increase in the cost of sales for the three months ended June 30, 2010 was due to our increase in revenue for the three months ended June 30, 2010 as we were able to continue to sell our merchandise to our major customer this quarter, which generated $20,010 of revenue for the three months ended June 30, 2010. |
|
|
|
Gross Profit |
|
Our gross profit from our inception on July 6, 2007 to June 30, 2010 was $6,997. |
|
Our gross profit was $3,062 for the three months ended June 30, 2010 compared to $0 for the three months ended June 30, 2009. The increase in the gross profit for the three months ended June 30, 2010 was due to our increase in revenue for the three months ended June 30, 2010. Our gross profit margin decreased from approximately 26% for the year ended March 31, 2010 to 15% for the three months ended June 30, 2010. This decrease in gross margin is due to the renegotiation of our selling prices to our major customer in order for us to derive more sales volume from our major customer for future fiscal quarters and for the year ended March 31, 2011. We expect our future gross profit margins to continue to be in the range of 15% to 17% with our major customer and 15% to 25% from other customers as we continue to seek new business from wholesale distributors of home furnishing products and other retail consumers. |
|
|
|
Expenses |
|
From July 6, 2007 (inception) to June 30, 2010, our total expenses were $11,840. These total expenses since inception to June 30, 2010 were for general and administrative expenses which consisted of charges for website maintenance and credit card fees, bank charges, office maintenance, communication expenses, courier, postage, office supplies, and travel. Our expenses were $115 for the three months ended June 30, 2010 compared to $697 for the three months ended June 30, 2009. The decrease in the expenses for the three months ended June 30, 2010 was due to our decrease costs incurred for travel expenses, credit card fees and other general and administrative expenses for the three months ended June 30, 2010. We expect our general and administrative costs to increase sometime later in 2010 or 2011 if we can expand our sales in Hong Kong and other locations and increase our profits. We may also increase our general and administrative expenses if we are able to raise money through a combination of debt financing and equity financing by way of doing another private placement. |
|
Net Income (Loss) |
|
We have a net loss of $4,843 during the period from our inception on July 6, 2007 to June 30, 2010. We had net income of $2,947 during the three months ended June 30, 2010 and a net loss of $697 during the same period in 2009. This increase in net income for the three months ended June 30, 2010 is due to our sale to our distributor in Hong Kong. |
|
|
|
Results of Operations for the years ended March 31, 2010 and March 31, 2009, from July 6, 2007 (inception) to March 31, 2010 and Predecessor Results of Operations from February 15, 2005 (inception) to July 5, 2007. |
|
Revenues |
|
We generated revenues of $14,210 during the period from our inception on July 6, 2007 to March 31, 2010. We generated revenues of $13,500 during the year ended March 31, 2010 and $417 during the same period in 2009. This increase in revenue for the year ended March 31, 2010 is due to our first sale to our major customer, a Hong Kong based wholesale distributor of home furnishings of $13,500. We generated total revenue from our predecessor operations of $10,787 from February 15, 2005 (Inception) to July 5, 2007. At this time, our ability to generate significant revenues continues to be uncertain. The auditor’s report on our audited financial statements for the years ended March 31, 2010 and 2009 contains an additional explanatory paragraph which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustment that might result from the outcome of this uncertainty. |
|
13 |
|
14 |
|
Liquidity and Capital Resources as of March 31, 2010 and 2009 |
|
|
|
As of March 31, 2010, we had cash of $123,420, total assets of $123,420 and working capital of $11,210 compared to $2,237 in cash, $12,237 in assets and working capital of $10,002 as of March 31, 2009. As of March 31, 2010 we have an accumulated deficit of $7,790. |
|
|
|
During the year ended March 31, 2010 we had an increase in the net cash provided by financing activities of $103,975 as compared to the year ended March 31, 2009. We raised $109,975 of financing through non-interest bearing advances from our principal stockholder and director, compared to a repayment of advances from our principal stockholder of $3,000 for the year ended March 31, 2009, an increase in advances from our related parties of $112,975. This increase in advances from related parties was offset by a decrease in funds raised during the year ended March 31, 2010 from the issuance of our common shares, of $9,000. From our inception on July 6, 2007 to March 31, 2010, we have raised a total net amount of $141,210 in cash through financing activities. |
|
|
|
During the year ended March 31, 2010 we had net cash of $11,208 provided by our operating activities compared to $7,773 of cash used by our operating activities during the same period in 2009, an increase of $18,981. This is due to increase in our revenue and net income for the year ended March 31, 2010 of $8,981 and a decrease in our inventory of $10,000. From our inception on July 6, 2007 to March 31, 2010 to we used net cash of $17,790 from our operating activities. During the year ended March 31, 2011, our total cash requirements may exceed our cash balances. Currently, we do have sufficient cash in our bank accounts to cover our anticipated expenses for the next 12 months if we do not expand our future operations and our related parties do not demand repayment of their loans. We anticipate meeting our future cash requirements through a combination of equity and debt financing. |
|
It may take several years for us to fully realize our business plan. |
|
We estimate that our expenses over the next 12 months (beginning July 2010) will be approximately $160,000 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources. |
|
Description |
Target completion |
Estimated |
|
date or period |
expenses |
|
|
Legal and accounting fees |
12 months |
20,000 |
|
Further development of the website avenuesouth.com |
December 2010 |
10,000 |
|
Marketing and advertising |
12 months |
65,000 |
|
Salaries and consulting fees |
12 months |
55,000 |
|
General and administrative |
12 months |
10,000 |
|
Total |
|
160,000 |
|
We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. There is no assurance that any financing will be available or if available, on terms that will be acceptable to us. We may not raise sufficient funds to fully carry out any business plan. |
|
We will also incur certain legal and accounting costs associated with the public reporting obligations in conjunction with becoming a public reporting company. |
|
|
|
Off-Balance Sheet Arrangements |
|
As of the date of this Report, 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 our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders. |
|
Inflation |
|
The effect of inflation on our revenues and operating results has not been significant. |
|
15 |
|
Critical Accounting Policies |
|
Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete listing of these policies is included in Note 2 of the notes to our financial statements for the years ended March 31, 2010 and 2009 and from date of inception (July 6, 2007) to March 31, 2010 and for the three months ended June 30, 2010 and 2009. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management. |
|
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 of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. |
|
Recent Accounting Pronouncements |
|
In May 2009, the FASB issued new guidance of ASC 855 “Subsequent Events” on the treatment of subsequent events which is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, management of a reporting entity is required to evaluate subsequent events through the date that financial statements are issued and disclose the date through which subsequent events have been evaluated, as well as the date the financial statements were issued. This new guidance was effective for fiscal years and interim periods ended after June 15, 2009, and must be applied prospectively. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. |
|
In August 2009, the FASB issued an Accounting Standards Update (“ASU”) No.2009.05 regarding measuring liabilities at fair value. This ASU provides additional guidance clarifying the measurement of liabilities at fair value in circumstances in which a quoted price in an active market for the identical liability is not available; under those circumstances, a reporting entity is required to measure fair value using one or more of valuation techniques, as defined. This ASU is effective for the first reporting period, including interim periods, beginning after the issuance of this ASU. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. |
|
The Company does not expect that adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations or cash flows. |
|
Our Background and History |
|
We were incorporated on July 6, 2007 in the State of Nevada for the sole purpose of acquiring Avenue South, Inc. and becoming a holding company. We have no operations except for those of our sole subsidiary, Avenue South, Inc. Avenue South, Inc. was incorporated on February 15, 2005 in the State of North Carolina for the purpose of engaging in the business of online sales of imported and domestic distinctive art reproductions, collectibles and home décor items. |
|
Our President, Irina Goldman, acquired Avenue South, Inc. on July 6, 2007, from David F. Ruppen, the former owner of Avenue South, Inc., for a cash purchase price of $10,000. Immediately thereafter, on the same day, July 6, 2007, Irina Goldman, our company and Avenue South, Inc. entered into a share exchange agreement, or Share Exchange Agreement, pursuant to which Ms. Goldman exchanged her one share of Avenue South, Inc. for 2,000,000 shares of our company. Upon the consummation of the transactions contemplated by the Share Exchange Agreement, Irina Goldman became our sole stockholder and Avenue South, Inc. became our wholly-owned subsidiary. Our predecessor operations are for the period February 15, 2005 to July 5, 2007. Our successor operations are from July 6, 2007 to date. |
|
Private Placement |
|
On March 28, 2010, we completed a private placement in which we issued and sold to the selling stockholders and certain other investors an aggregate of 1,750,000 shares of our common stock, for an aggregate purchase price of $35,000, or $0.02 per share. As a result of this private placement, we raised approximately $35,000 in gross proceeds, which left us with approximately $35,000 in net proceeds after the deduction of offering expenses in the amount of $0. We have a contractual obligation, under a Registration Rights agreement we entered into with the investors from the private placement on March 28, 2010, to register the shares of our common stock sold in this private placement. |
|
16 |
|
Organizational Chart |
|
The following presents our current corporate structure: |
|
DESCRIPTION OF OUR BUSINESS |
|
Overview |
|
We are a web-based retailer of imported and domestic distinctive art reproductions, collectibles and home décor items. We sell our products through our website www.avenuesouth.com and through an informal relationship with a home furnishing distributor in Hong Kong. We do not have any stores or outlets. We believe that the products we sell are relatively unique because they are not readily available at retail outlets. |
|
We acquire our product inventory from several wholesale vendors. We do not manufacture any of our own products. We have not entered into any formal supply agreements with these vendors. We are required to pay in full for product inventory purchased from these vendors upon delivery. We also offer other vendors, or link partners, who would like to sell their products on our website the opportunity to send us their URL address to add to our website so that our existing customers can view their products and purchase their inventory through a weblink from our website. Any sales referred to our link partners from us, we would obtain a sales commission. We are currently marketing our link partner program to other vendors and have not yet generated any revenue from our link partner program to date. |
|
We are a development stage company. To date, we have only generated nominal revenues and have undertaken only limited operations. In March 2010, we sold $13,500 worth of our products, which constituted our entire inventory at the time, to our major customer, a home furnishing distributor in Hong Kong. We do not plan to hold any inventory in the future. We will seek to develop a relationship with our major customer so that we can continue to distribute the products that we sell through our major customer. We will also seek to develop relationships with other home furnishing distributors in the United States and Hong Kong in order to increase our products sales and distribution base. |
|
Our Industry |
|
|
|
We operate in the internet home furnishings industry. We face competition from many websites that provide products and services that are similar to ours. We believe that www.homedecorators.com, www.homefurnishingsoutlet.net and www.homegoods.com are some of our biggest competitors. Some industry references regarding the home decorative market are shown below: |
|
"The home market has been transformed from a largely functional to a fashion business, thus allowing consumers to dress and decorate their houses like they dress and accessorize themselves. Consumers are wanting products that reflect their tastes, values and sensibilities." Source: Unity Marketing, The Home Report 2001: The Market, The Competitors, The Trends |
|
"In the past two years consumers spent more money on home furnishings than they did on clothes. Consumers are not just striving to make their homes more ‘beautiful,’ rather they are seeking decorative items that can positively impact the mood and emotional climate of their home." Source: Unity Marketing, The Gifts and Decorative Accessories Report 2001: The Market, The Industry, The Trends |
|
We believe that these above industry factors will contribute to an increased need for home decorating accessories. |
|
17 |
|
Our Competitive Strengths |
|
We believe that we have the following competitive strengths: |
|
● |
Existing relationships with wholesale suppliers. We have been working with our suppliers since 2007. Although we have no formal contract with our suppliers, we believe that we have developed a good working relationship with them and that they are a reliable source of relatively unique home furnishing products. We believe that having identified reliable suppliers of products that are relatively unique to the home furnishing market sets us apart form our competitors. |
|
|
|
|
● |
Robust website that features streamlined navigation . Our website is modern and easy to use. We believe that its design enhances our customer’s shopping experience and makes it easy for our customer to find what they are looking for quickly. |
|
● |
Unique product inventory . Our product inventory includes home décor items that are different from other home furnishing stores and web retailers. For example, our Ancient Home Collection features reproductions of articles from Egyptian, pre-Columbian, Greek and Roman times. This collection also features several oriental and Hindu art pieces that can not be readily found in retail stores. We also sell reproductions of religious articles, including Celtic art and reproductions made of pewter. |
|
● |
Personalized customer support from our President. Our company is relatively small and our President, Irina Goldman, provides much of the service and support directly to our customers. We use this circumstance to our advantage. Our president is vested in our company and eager to see it succeed. As a result, we believe that her hands on approach to customer service is welcome to our customers and preferable to computer automated customer service or outsourced customer service which is frequently used by web retailers. |
|
● |
Low overhead costs. We do not have any stores and we use our president’s home as a base for our call center and warehouse. By doing so, we save on overhead costs and expenses. |
|
Our Growth Strategy |
|
We will implement the following strategic plans to take advantage of industry opportunities and our competitive strengths: |
|
● |
We plan to develop relationships with distributors in the U.S. and in Hong Kong that will help us increase our domestic and international sales. We have developed a relationship with our major customer, a Hong Kong distributor of home furnishing products. In March 2010 we sold $13,500 worth of our products, which constituted our entire inventory at the time, to this major customer. For the three months ended June 30, 2010 we sold approximately $20,000 worth of our products to our major customer. For the month of July 2010 we sold approximately $10,000 worth of our products to our major customer. We will seek to develop a more robust relationship with our major customer so that we can continue to distribute the products that we sell through our major customer. We will also seek to develop relationships with other home furnishing distributors in the United States and Hong Kong in order to increase our products sales and distribution base. |
|
● |
We plan to begin marketing our website and product inventory on the internet and through other marketing channels. Our strategy to attract customers to our website, which has not been formalized or implemented, includes viral marketing, the practice of generating "buzz" among Internet users in our products through the developing and maintaining weblogs or "blogs", online journals that are updated frequently and available to the public, postings on online communities such as Facebook, MySpace, Yahoo!(R) Groups and amateur websites such as YouTube.com, and other methods of getting Internet users to refer others to our website by e-mail or word of mouth; search engine optimization, marketing our website via search engines by purchasing sponsored placement in search results; and entering into affiliate marketing relationships with website providers to increase our access to Internet consumers. We expect to rely on word of mouth marketing as the primary source of traffic to our website, with search engine optimization and affiliate marketing as secondary sources. |
|
● |
We plan to diversify our product portfolio to satisfy a larger array of customer preferences. Our current product portfolio is relatively limited. We plan to significantly expand our product offerings by identifying new suppliers of unique home furnishing products. |
|
Products |
|
We sell, at retail, a variety of home furnishings décor, art reproductions, various hand-made ceramics, candles, lamps and similar accessory items. |
|
We maintain over 500 items in our supply chain and periodically review, add and drop products based upon the demand in the marketplace and product availability. |
|
Our products include clocks, penny rugs and runners, candles and candle lamps, Tin Woodsman pewter products, religious reproductions, including Celtic art, and ancient reproductions, including reproductions of art from Egyptian, pre-Columbian, and Greek times. |
|
18 |
|
19 |
|
Age |
Position |
|
|
Irina Goldman |
53 |
President, Secretary and Director |
|
Fung Chun Ngai |
44 |
Treasurer and Director |
|
Irina Goldman , President, Secretary, Principal Accounting Officer and Director |
|
Irina Goldman has been our President, Secretary, Principal Accounting Officer and Director since our inception on July 6, 2007. Ms. Goldman also holds the same positions with our subsidiary, Avenue South, Inc.since 2007. Although Ms. Goldman does not have any work experience prior to 2007, and lacks retail and internet sales work experience, she has worked with us since July 6, 2007 (approximately 3 years) developing our business model, sourcing new vendors, working with many of our current vendors and selling our products. She was responsible for overseeing the design and implementation of our website www.avenuesouth.com as well as sourcing many of our products and vendors. Ms. Goldman graduated from Columbia University in 1983 with a Masters Degree in Engineering. |
|
Fung Chun Ngai , Vice President of Sales, Treasurer and Director |
|
Ms. Ngai was appointed as Vice President Sales, Treasurer and Director on March 28, 2010. Before joining our Company, Ms. Ngai has more than 10 years experience with Maxfirm Industrial Ltd. in finance and marketing housewares and other products for households and its major customer was Li & Fung Ltd., a HK listed company, engaged in the retail business with global sales network. She is responsible for our marketing and promotion of our Art products for home décor and will focus on enhancing our distribution networks in Hong Kong. Ms.Ngai, who resides in Hong Kong full time, was able to introduce us to our major customer in Hong Kong and will continue marketing our products to our major customer and other Hong Kong distributors. |
|
There are no agreements or understandings for any of our executive officers or directors to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at the direction of any other person. |
|
Directors are elected until their successors are duly elected and qualified. |
|
Family Relationships |
|
There are no family relationships among our directors or officers. |
|
20 |
|
Involvement in Certain Legal Proceedings |
|
None of our directors or executive officers has, during the past ten years: |
|
● |
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); |
|
● |
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; |
|
● |
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; |
|
● |
been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
|
● |
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 |
|
● |
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. |
|
Except as set forth in our discussion below in “Transactions with Related Persons, Promoters and Control Persons; Director Independence,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. |
|
21 |
|
Summary Compensation Table - Fiscal Years Ended March 31, 2010 and 2009 |
|
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officers received total annual salary and bonus compensation in excess of $100,000. |
|
(1) |
We have omitted certain columns in the summary compensation table pursuant to Item 402(a)(5) of Regulation S-K as no compensation was awarded to, earned by, or paid to any of the executive officers or directors required to be reported in that table or column in any fiscal year covered by that table. |
|
(2) |
Irina Goldman was appointed as one of our directors on July 6, 2007 and as our President, Principal Accounting Officer and Secretary on July 6, 2007. |
|
(3) |
Fung Chun Ngai was appointed as our Treasurer, Vice President Sales and Director on March 28, 2010. |
|
Option Grants |
|
22 |
|
Title of Class |
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of
Class
|
|
Common |
Irina Goldman (1) |
||
|
Stock |
5 Victory Road, |
2,450,000 |
58.3 |
|
Suffern, NY 10901 |
|||
|
Common |
Fung Chun Ngai (2) |
||
|
Stock |
12/F, 99 Hennessy Road |
0 |
0 |
|
Wan Chai, Hong Kong |
|
(1) |
Irina Goldman is our President, Principal Accounting Officer, Secretary and a director |
|
(2) |
Fung Chun Ngai is our Treasurer, Vice President Sales and a director. |
|
23 |
|
The following table sets forth certain information regarding the selling stockholders and the shares offered by them in this prospectus. Beneficial ownership is determined in accordance with the rules of the SEC. Each selling stockholder’s percentage of ownership in the following table is based upon 4,200,000 shares of common stock outstanding as of July 1, 2010. |
|
All information with respect to share ownership has been furnished by the selling stockholders. The shares being offered are being registered to permit public secondary trading of the shares and each selling stockholder may offer all or part of the shares owned for resale from time to time. In addition, none of the selling stockholders has any family relationships with our officers, directors or controlling stockholders. Furthermore, no selling stockholder is a registered broker-dealer or an affiliate of a registered broker-dealer. |
|
For additional information, refer to “Security Ownership of Certain Beneficial Owners and Management” above. |
|
The term “selling stockholders” also includes any transferees, pledges, donees, or other successors in interest to the selling stockholders named in the table below. To our knowledge, subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite such person’s name. We will file a supplement to this prospectus (or a post-effective amendment hereto, if necessary) to name successors to any named selling stockholders who are able to use this prospectus to resell the securities registered hereby. |
|
Percentage |
|||||
|
Beneficial |
Owned |
||||
|
Shares Owned |
Maximum Numbers |
Ownership |
upon |
||
|
Prior |
of |
After |
Completion of |
||
|
Name of Selling |
to this |
Percent |
Shares Being |
Offering |
the Offering |
|
Security Holder |
Offering (#) |
(%) |
Offered(#) |
(1) (#) |
(2) (%) |
|
Sze Wai Chan |
200,000 |
4.8 |
200,000 |
- |
- |
|
Fuseta Limited |
200,000 |
4.8 |
200,000 |
- |
- |
|
Chor Ying Ngai |
200,000 |
4.8 |
200,000 |
- |
- |
|
All Good Foundation Limited |
200,000 |
4.8 |
200,000 |
- |
- |
|
Kwai Chun Ngai |
200,000 |
4.8 |
200,000 |
- |
- |
|
Kin Kwok Sham |
185,000 |
4.4 |
185,000 |
- |
- |
|
Fu Hoi Wong |
134,500 |
3.2 |
134,500 |
- |
- |
|
Yuen Fan Ng |
63,000 |
1.5 |
63,000 |
||
|
Shuk Ying Irene Lai |
38,000 |
* |
38,000 |
- |
- |
|
Kwok Kwong Ng |
38,000 |
* |
38,000 |
- |
- |
|
Chi Chun Ngai |
38,000 |
* |
38,000 |
- |
- |
|
Sze Wai Gary Yan |
38,000 |
* |
38,000 |
- |
- |
|
Kam Chiu Chung |
28,000 |
* |
28,000 |
- |
- |
|
Tsz Tat Ho |
15,000 |
* |
15,000 |
- |
- |
|
Suk Kwan Lai |
14,000 |
* |
14,000 |
- |
- |
|
Chi Kong Lai |
13,000 |
* |
13,000 |
- |
- |
|
Chuen Tsang |
13,000 |
* |
13,000 |
- |
- |
|
Kam Loi Lai |
12,500 |
* |
12,500 |
- |
- |
|
Lai King Tang |
12,500 |
* |
12,500 |
- |
- |
|
Hoi Yan Chan |
12,000 |
* |
12,000 |
- |
- |
|
Aplus & Partners Corporate Services Limited |
12,000 |
* |
12,000 |
- |
- |
|
King Yu Lee |
12,000 |
* |
12,000 |
- |
- |
|
Sik Cham Leung |
12,000 |
* |
12,000 |
- |
- |
|
Ngan Hou Lou |
12,000 |
* |
12,000 |
- |
- |
|
Pui Yue So |
12,000 |
* |
12,000 |
- |
- |
|
Yan Fung So |
12,000 |
* |
12,000 |
- |
- |
|
Ho Lam Yu |
12,000 |
* |
12,000 |
- |
- |
|
Ka Ki Fong |
11,500 |
* |
11,500 |
- |
- |
|
Total : |
1,750,000 |
1,750,000 |
- |
- |
|
* Less than 1% |
|
|
(1) |
Assumes that all securities offered are sold. |
|
(2) |
As of July 1, 2010, a total of 4,200,000 shares of our common stock are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each beneficial owner above, any options exercisable within 60 days have been included in the denominator. |
|
25 |
|
Common Stock |
|
We are authorized to issue up to 100,000,000 shares of common stock, par value $0.001 per share of which we have 4,200,000 shares outstanding. Each outstanding share of common stock entitles the holder thereof to one vote per share on all matters. Our bylaws provide that elections for directors shall be by a plurality of votes. Stockholders do not have preemptive rights to purchase shares in any future issuance of our common stock. Upon our liquidation, dissolution or winding up, and after payment of creditors, if any, our assets will be divided pro-rata on a share-for-share basis among the holders of the shares of common stock. |
|
The holders of shares of our common stock are entitled to dividends out of funds legally available when and as declared by our board of directors. Our board of directors has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future. Should we decide in the future to pay dividends, as a holding company, our ability to do so and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiary and other holdings and investments. In addition, our operating subsidiary, from time to time, may be subject to restrictions on its ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive, ratably, the net assets available to stockholders after payment of all creditors. |
|
All of the issued and outstanding shares of our common stock are duly authorized, validly issued, fully paid and non-assessable. To the extent that additional shares of our common stock are issued, the relative interests of existing stockholders will be diluted. |
|
Preferred Stock |
|
We are not authorized to issue any preferred stock. |
|
Anti-takeover Effects of Our Articles of Incorporation and Bylaws |
|
Our articles of incorporation and bylaws contain certain provisions that may have anti-takeover effects, making it more difficult for or preventing a third party from acquiring control of the Company or changing its board of directors and management. According to our bylaws and articles of incorporation, the holders of our common stock do not have cumulative voting rights in the election of our directors. The combination of the present ownership by a few stockholders of a significant portion of our issued and outstanding common stock and lack of cumulative voting makes it more difficult for other stockholders to replace our board of directors or for a third party to obtain control of the Company by replacing its board of directors. |
|
Anti-takeover Effects of Nevada Law |
|
Business Combinations |
|
The “business combination” provisions of Sections 78.411 to 78.444, inclusive, of the Nevada Revised Statutes, or NRS, prohibit a Nevada corporation with at least 200 stockholders from engaging in various “combination” transactions with any interested stockholder: for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the transaction is approved by the board of directors prior to the date the interested stockholder obtained such status; or after the expiration of the three-year period, unless: |
|
● |
the transaction is approved by the board of directors or a majority of the voting power held by disinterested stockholders, or |
|
● |
if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher. |
|
26 |
|
As of July 1, 2010, there were approximately 4,200,000 shares of our common stock outstanding. |
|
Shares Covered by this Prospectus |
|
All of the 1,750,000 shares being registered in this offering may be sold without restriction under the Securities Act of 1933 once the registration statement of which this prospectus is a part is declared effective. We have a contractual obligation under a Registration Rights Agreement to register the shares sold in the March 28, 2010 in the private placement. |
|
A person who has beneficially owned restricted shares of our common stock or warrants for at least six months would be entitled to sell their securities provided that (1) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale, (2) we are subject to the Exchange Act reporting requirements for at least 90 days before the sale and (3) if the sale occurs prior to satisfaction of a one-year holding period, we provide current information at the time of sale. |
|
Persons who have beneficially owned restricted shares of our common stock or warrants for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of: |
|
● |
1% of the total number of securities of the same class then outstanding, which will equal approximately 42,000 shares immediately after this offering; or |
|
● |
the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale. |
|
● |
ordinary brokerage transactions and transactions in which the broker-dealer solicits investors; |
|
● |
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
|
● |
purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
● |
an exchange distribution in accordance with the rules of the applicable exchange; |
|
● |
privately negotiated transactions; |
|
● |
to cover short sales made after the date that this registration statement is declared effective by the Commission; |
|
● |
broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; |
|
● |
a combination of any such methods of sale; and |
|
● |
any other method permitted pursuant to applicable law. |
|
27 |
|
28 |
|
29 |
.
|
AVENUE SOUTH LTD. |
|
(A Development Stage Company) |
|
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
|
|
Page |
|
|
Consolidated Balance Sheets - unaudited |
F2 |
|
Consolidated Statements of Operations - unaudited |
F3 |
|
Consolidated Statements of Changes in Stockholder’s Equity - unaudited |
F4 - F5 |
|
Consolidated Statements of Cash Flows - unaudited |
F6 |
|
Notes to Unaudited Consolidated Financial Statements |
F7 - F11 |
|
30 |
|
AVENUE SOUTH LTD. |
|
( A Development Stage Company) |
|
CONSOLIDATED BALANCE SHEETS |
|
June 30, 2010 |
March 31,2010 |
|||
|
Unaudited |
||||
|
ASSETS |
||||
|
Current Assets: |
||||
|
Cash and cash equivalents |
$ |
161,367 |
123,420 |
|
|
|
|
|||
|
Total Assets |
161,367 |
123,420 |
||
|
LIABILITIES AND STOCKHOLDER’S EQUITY |
||||
|
Current Liabilities |
||||
|
Due to a stockholder |
$ |
112,210 |
112,210 |
|
|
Total Liabilities |
112,210 |
112,210 |
||
|
Commitments and contingencies |
||||
|
Stockholder’s Equity: |
||||
|
Common stock , $0.001 par value; 100,000,000 shares authorized; |
||||
|
4,200,000 shares and 2,450,000 shares issued and outstanding at June 30, 2010 and March 31, 2010, respectively. |
4,200 |
2,450 |
||
|
Common stock subscribed, 1,750,000 shares |
- |
35,000 |
||
|
Additional paid-in capital |
49,800 |
16,550 |
||
|
Deficit accumulated during the development stage |
(4,843) |
(7,790) |
||
|
Stock subscription receivable |
- |
(35,000) |
||
|
Total Stockholder’s Equity |
49,157 |
11,210 |
||
|
Total Liabilities and Stockholder’s Equity |
$ |
161,367 |
123,420 |
|
See accompanying notes to unaudited consolidated financial statements |
|
F-2 |
|
Successor |
Successor |
Successor |
Predecessor |
||||||
|
For the period |
For the period from |
||||||||
|
For the three |
For the three |
July 6, 2007 |
February 15, 2005 |
||||||
|
months ended |
months ended |
(Date of Inception |
(Date of Inception) to |
||||||
|
June 30, 2010 |
June 30, 2009 |
to June 30, 2010 |
July 5, 2007 |
||||||
|
Revenue |
|||||||||
|
Sales |
$ |
20,010 |
$ |
- |
$ |
34,220 |
$ |
10,787 |
|
|
Cost of sales |
16,948 |
- |
27,223 |
8,675 |
|||||
|
Gross Margin |
3,062 |
- |
6,997 |
2,112 |
|||||
|
Operating Expenses |
|||||||||
|
Other selling, general and |
|||||||||
|
administrative expenses |
115 |
697 |
11,840 |
40,024 |
|||||
|
|
|
|
|
||||||
|
Total operating expenses |
115 |
697 |
11,840 |
40,024 |
|||||
|
Net operating income (loss) |
2,947 |
(697) |
(4,843) |
(37,912) |
|||||
|
Other Income (expenses) |
- |
- |
- |
- |
- |
- |
|||
|
Net income (loss) |
$ |
2,947 |
$ |
(697) |
$ |
(4,843) |
$ |
(37,912) |
|
|
Income (Loss) per common share: |
|||||||||
|
- Basic and fully diluted |
$ |
0.00 |
$ |
0.00 |
|||||
|
Weighted average number of shares |
|||||||||
|
- Basic and fully diluted |
2,469,444 |
2,450,000 |
|||||||
|
See accompanying notes to unaudited consolidated financial statements |
|
F-3 |
|
AVENUE SOUTH LTD. |
|
( A Development Stage Company) |
|
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY |
|
$0.02 per share |
1,750,000 |
1,750 |
(1,750,000) |
(35,000) |
33,250 |
- |
$ 35,000 |
35,000 |
||||||||
|
Net income for the period |
- |
- |
- |
- |
- |
2,947 |
- |
2,947 |
||||||||
|
Balance, June 30, 2010 - unaudited |
4,200,000 |
$ 4,200 |
$ - |
$ - |
$ 49,800 |
$ (4,843) |
$ - |
$ 49,157 |
||||||||
|
See accompanying notes to unaudited consolidated financial statements |
|
F-4 |
|
Successor |
Successor |
Successor |
Predecessor |
||||||
|
For the period |
For the period |
||||||||
|
July 6, 2007 |
from February 15, |
||||||||
|
For the three |
For the three |
(Date of |
2005 (Date of |
||||||
|
months ended |
months ended |
Inception) |
Inception to |
||||||
|
June 30, 2010 |
June 30, 2009 |
to June 30, 2010 |
July 5, 2007) |
||||||
|
Cash flows from operating activities |
|||||||||
|
Net income (loss) for the year/period |
$ |
2,947 |
$ |
(697) |
$ |
(4,843) |
$ |
(37,912) |
|
|
Amortization |
- |
- |
- |
6,735 |
|||||
|
Changes in operating assets and liabilities: |
|||||||||
|
Other current assets |
- |
- |
- |
(74) |
|||||
|
Inventories |
- |
- |
(10,000) |
(10,500) |
|||||
|
Net cash provided by (used in) operating activities |
2,947 |
(697) |
(14,843) |
(41,751) |
|||||
|
|
|
|
|
||||||
|
Cash flows from investing activities |
|||||||||
|
Acquisition of web site |
- |
- |
- |
(33,000) |
|||||
|
|
|
|
|
|
|||||
|
Net cash flows used in investing activities: |
- |
- |
- |
(33,000) |
|||||
|
Cash flows from financing activities |
|||||||||
|
Advance from (to) stockholder |
- |
- |
122,210 |
76,882 |
|||||
|
Proceeds from issuance of common stock |
35,000 |
- |
54,000 |
100 |
|||||
|
|
|
|
|
|
|||||
|
Net cash flows provided by financing activities |
35,000 |
- |
176,210 |
76,982 |
|||||
|
Net increase (decrease) in cash |
37,947 |
(697) |
161,367 |
2,231 |
|||||
|
Cash- beginning of year/period |
123,420 |
2,237 |
- |
- |
|||||
|
Cash- end of year/period |
$ |
161,367 |
$ |
1,540 |
$ |
161,367 |
$ |
2,231 |
|
|
Supplemental disclosure of non cash financing activities: |
|||||||||
|
Issuance of common stock subscribed |
$ |
35,000 |
$ |
- |
$ |
35,000 |
$ |
- |
|
|
Supplemental cash flow Information: |
|||||||||
|
Cash paid for interest |
- |
- |
- |
- |
|||||
|
Cash paid for income taxes |
- |
- |
- |
- |
|
See accompanying notes to unaudited consolidated financial statements |
|
F-6 |
|
AVENUE SOUTH LTD. |
|
(A Development Stage Company) |
|
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|
1. BASIS OF PRESENTATION |
|
The accompanying unaudited condensed consolidated financial statements of the Avenue South Ltd. and its subsidiary have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with our audited consolidated financial statements for the year ended March 31, 2010. |
|
In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month period have been made. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms "Company", "we", "us" or "our" mean Avenue South Ltd. and its subsidiary included in these consolidated financial statements. |
|
2. ORGANIZATION AND NATURE OF BUSINESS |
|
On July 6, 2007, our principal stockholder acquired 100% of the equity of Avenue South, Inc., a North Carolina corporation. On July 6, 2007, Avenue South Ltd., a Nevada corporation was formed by our principal stockholder and our principal stockholder entered into a share exchange agreement, pursuant to which all the common stock held by our principal stockholder in Avenue South, Inc. was acquired by Avenue South Ltd. by issuing 2 million common shares to our principal stockholder. Avenue South Ltd. then became the parent corporation owning 100% of Avenue South, Inc. |
|
Avenue South, Inc. was incorporated in the State of North Carolina on February 15, 2005 (date of inception) with the principal business objective of a “one-stop” web based supplier of imported and domestic art reproductions, collectibles and home décor items that are difficult to find in traditional home furnishing retail outlets. All items are sold through the Company’s website, www.avenuesouth.com . |
|
The Company’s success will depend in part on its ability to market and sell its products over the internet and through other marketing channels. There can be no assurance that these marketing efforts will be successful. The Company believes that it currently has sufficient cash and financing commitments to meet its funding requirements over the next year. In addition, the Company may wish to selectively pursue additional products complementary to those of the Company in the future in order to expand its presence in the marketplace and achieve operating efficiencies. The Company may expect to seek to obtain additional funding through debt or equity transactions. There can be no assurance as to the availability or terms upon which such financing and capital might be available. |
|
Principles of consolidation |
|
The accompanying consolidated financial statements include the accounts of the Avenue South Ltd. and its wholly-owned subsidiary Avenue South, Inc., after elimination of all material intercompany accounts, transactions, and profits. |
|
A summary of significant accounting policies of Avenue South Ltd. (A Development Stage Company) (the “Company” or “Successor”) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. The Company has not realized any significant revenues from its planned principal business purpose and is considered to be in a development stage in accordance with ASC 915, “Development Stage Entities.” |
|
F-7 |
|
AVENUE SOUTH LTD. |
|
(A Development Stage Company) |
|
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
Inventory |
|
Inventories consist of finished goods of home furnishing products. Cost is stated at the lower of cost or market on a first-in, first-out (FIFO) basis. The Company has not recorded an allowance for slow-moving or obsolete inventory. There was no inventory on hand at June 30, 2010. |
|
Income Taxes |
|
The Company uses the liability approach to financial accounting and reporting for income taxes. The differences between the financial statement and tax bases of assets and liabilities are determined annually. Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the period in which they are expected to affect taxable income. Valuation allowances are established, if necessary, to reduce deferred tax asset accounts to the amounts that will more likely than not be realized. Income tax expense is the current tax payable or refundable for the period, plus or minus the net change in the deferred tax asset and liability accounts. |
|
Revenue Recognition |
|
The Company recognizes revenue in accordance with accounting standards issued by the FASB, which specifies that revenue is realized or realizable and earned when four criteria are met: |
|
● |
Persuasive evidence of an arrangement exists; |
|
● |
Delivery has occurred or services have been rendered; |
|
|
|
|
● |
The seller’s price to the buyer is fixed or determinable; and |
|
|
|
|
● |
Collectability of payment is reasonably assured. |
|
The Company recognizes revenue when the goods are accepted by the customer and title has passed. The Company sells its goods via shipment from its suppliers directly to its customers. Shipping and handling costs were not significant. Customers do not have a general right of return on products delivered. |
|
Basic Income/Loss Per Common Share |
|
The computation of income / loss per share is based on the weighted average number of shares outstanding during the period presented in accordance with ASC 260, “Earnings Per Share”. At June 30, 2010 and March 31, 2010, the Company did not have any stock equivalents. |
|
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 of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
|
F-8 |
|
AVENUE SOUTH LTD. |
|
(A Development Stage Company) |
|
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|
4. RECENT CHANGES IN ACCOUNTING STANDARDS |
|
Recent Accounting Pronouncements |
|
In May 2009, the FASB issued new guidance of ASC 855 “Subsequent Events” on the treatment of subsequent events which is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, management of a reporting entity is required to evaluate subsequent events through the date that financial statements are issued and disclose the date through which subsequent events have been evaluated, as well as the date the financial statements were issued. This new guidance was effective for fiscal years and interim periods ended after June 15, 2009, and must be applied prospectively. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. |
|
In August 2009, the FASB issued an Accounting Standards Update (“ASU”) No.2009.05 regarding measuring liabilities at fair value. This ASU provides additional guidance clarifying the measurement of liabilities at fair value in circumstances in which a quoted price in an active market for the identical liability is not available; under those circumstances, a reporting entity is required to measure fair value using one or more of valuation techniques, as defined. This ASU is effective for the first reporting period, including interim periods, beginning after the issuance of this ASU. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. |
|
The Company does not expect that adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations or cash flows. |
|
5. DUE TO A STOCKHOLDER |
|
The major stockholder advanced $112,210 to the Company for future operations in the US and China. This non-interest bearing advance is due on demand and the balance was $112,210 at June 30, 2010 and March 31, 2009. |
|
6. INCOME TAXES |
|
The Company accounts for income taxes using the liability method; under which deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment. |
|
At June 30, 2010, the Company had accumulated deficit during the development stage of $4,843 to offset future taxable income. The Company has established a valuation allowance equal to the full amount of this deferred tax asset due to the uncertainty of the utilization of the operating losses in future periods. |
|
The Company adopted the provisions of ASC 740, “Accounting for Uncertainty in Income Taxes,” at inception. As a result of the implementation of ASC 740, the Company recognized no increase in the liability for unrecognized tax benefits. |
|
The Company has no uncertain tax positions at June 30, 2010 and 2009 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. |
|
F-9 |
|
AVENUE SOUTH LTD. |
|
(A Development Stage Company) |
|
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|
7. STOCKHOLDER’S’ EQUITY |
|
|
|
The Company’s Articles of Incorporation authorize 100,000,000 shares of $0.001 par value common stock. On December 17, 2008, the Company issued 450,000 shares of its Common Stock to the Company’s sole stockholder, at $0.02 per share, for total proceeds of $9,000. |
|
On March 28, 2010 the Company had received stock subscriptions to issue 1,750,000 shares of its common stock to 28 non-US investors at $0.02 per share. The Company completed the private placement offering for gross proceeds of $35,000 to non-US persons in reliance of Regulation S promulgated under the Securities Act of 1933 in June 2010. The total amount of common stock subscribed at March 31, 2010 was $35,000. The Company also entered into a Registration Rights Agreement on March 28, 2010 with each investor whereby as soon as possible but in any event not later than the 120th day after March 28, 2010, the Company agreed to file a registration statement on Form S-1. The Company shall issue additional shares of its common stock (valued at $0.02 per share) to the Subscriber as liquidated damages and not as a penalty, equal to five percent of the Subscription Price paid by the Subscriber and on each monthly anniversary of such Event Date (the Event Date being the 180th day following March 28, 2010. Liquidated damages that have accrued shall not exceed twenty five percent of the Subscription Price paid by the Subscriber. The liquidated damages pursuant to the terms hereof shall apply on a pro rata basis for any portion of a month after the 180 th day following March 28, 2010 or September 27, 2010. |
|
On June 16, 2010 the Company collected all stock subscriptions receivable totaling $35,000 and issued the 1,750,000 shares that were subscribed in the offering. |
|
8. SUBSEQUENT EVENTS |
|
The Company evaluated subsequent events through the time of issuance of the financial statements. Pursuant to the requirements of FASB ASC Topic 855, there were no events or transactions occurring during this subsequent event reporting period that require recognition or disclosure in the financial statements. |
|
F-10 |
|
AVENUE SOUTH LTD. |
|
(A Development Stage Company) |
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |
|
March 31, 2010 |
|
Page |
|
|
Reports of Independent Registered Public Accounting Firm |
F12 |
|
Consolidated Balance Sheets |
F13 |
|
Consolidated Statements of Operations |
F14 |
|
Consolidated Statements of Changes in Stockholder’s Equity |
F15 |
|
Consolidated Statements of Cash Flows |
F16 |
|
Notes to Consolidated Financial Statements |
F17-F20 |
|
F-11 |
|
To the Board of Directors and |
|
Stockholders of Avenue South Ltd |
|
We have audited the accompanying consolidated balance sheets of Avenue South Ltd as of March 31, 2010 and 2009, and the related consolidated statements of operations, changes in stockholder’s equity, and cash flows for each of the years in the two-year period ended March 31, 2010 and for the period since inception, July 6, 2007, through March 31, 2010. Avenue South Ltd’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. |
|
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 audit provides a reasonable basis for our opinion. |
|
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Avenue South Ltd as of March 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2010 and for the period since inception, July 6, 2007, through March 31, 2010 in conformity with accounting principles generally accepted in the United States of America. |
|
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments relating 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/ EFP Rotenberg, LLP |
|
EFP Rotenberg, LLP |
|
Rochester, New York |
|
July 26, 2010 |
|
F-12 |
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
|
To the Board of Directors and |
|
Stockholders of Avenue South Inc. |
|
We have audited the accompanying statements of operations, changes in stockholder’s equity, and cash flows for the period since inception, February 15, 2005, through July 5, 2007. Avenue South 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 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 audit provides a reasonable basis for our opinion. |
|
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Avenue South Inc. for the period since inception, February 15, 2005, through July 5, 2007 in conformity with accounting principles generally accepted in the United States of America. |
|
/s/ EFP Rotenberg, LLP |
|
EFP Rotenberg, LLP |
|
Rochester, New York |
|
July 26, 2010 |
|
F-13 |
|
AVENUE SOUTH LTD. |
|
( A Development Stage Company) |
|
CONSOLIDATED BALANCE SHEETS |
|
March 31,2010 |
March 31,2009 |
|||
|
ASSETS |
||||
|
Current Assets: |
||||
|
Cash and cash equivalents |
$ |
123,420 |
$ |
2,237 |
|
Inventory |
- |
10,000 |
||
|
|
|
|||
|
Total Assets |
123,420 |
12,237 |
||
|
LIABILITIES AND STOCKHOLDER’S EQUITY |
||||
|
Current Liabilities |
||||
|
Due to a stockholder |
$ |
112,210 |
$ |
2,235 |
|
Total Liabilities |
112,210 |
2,235 |
||
|
Commitments and contingencies |
||||
|
Stockholder’s Equity: |
||||
|
Common stock , $0.001 par value; 100,000,000 shares authorized; |
||||
|
2,450,000 shares and 2,450,000 shares issued and outstanding at March 31, 2010 and 2009, respectively. |
2,450 |
2,450 |
||
|
Common stock subscribed, 1,750,000 shares |
35,000 |
- |
||
|
Additional paid-in capital |
16,550 |
16,550 |
||
|
Deficit accumulated during the development stage |
(7,790) |
(8,998) |
||
|
Stock subscription receivable |
(35,000) |
- |
||
|
Total Stockholder’s Equity |
11,210 |
10,002 |
||
|
Total Liabilities and Stockholder’s Equity |
$ |
123,420 |
$ |
12,237 |
|
See accompanying notes to consolidated financial statements |
|
F-14 |
|
AVENUE SOUTH LTD. |
|
( A Development Stage Company) |
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
Successor |
Successor |
Successor |
Predecessor |
||||||
|
For the period |
For the period from |
||||||||
|
July 6, 2007 |
February 15, 2005 |
||||||||
|
For the year ended |
For the year ended |
(Date of Inception) |
(Date of Inception) to |
||||||
|
March 31, 2010 |
March 31, 2009 |
to March 31, 2010 |
July 5, 2007 |
||||||
|
Revenue |
|||||||||
|
Sales |
$ |
13,500 |
$ |
417 |
$ |
14,210 |
$ |
10,787 |
|
|
Cost of sales |
10,000 |
276 |
10,276 |
8,675 |
|||||
|
Gross Margin |
3,500 |
141 |
3,934 |
2,112 |
|||||
|
Operating Expenses |
|||||||||
|
Other selling, general and administrative expenses |
2,292 |
7,914 |
11,724 |
40,024 |
|||||
|
|
|
|
|
||||||
|
Total operating expenses |
2,292 |
7,914 |
11,724 |
40,024 |
|||||
|
Net operating income (loss) |
1,208 |
(7,773) |
(7,790) |
(37,912) |
|||||
|
Other Income (expenses) |
- |
- |
- |
- |
- |
- |
|||
|
Net income (loss) |
$ |
1,208 |
$ |
(7,773) |
$ |
(7,790) |
$ |
(37,912) |
|
|
Income (Loss) per common share: |
|||||||||
|
- Basic and fully diluted |
$ |
0.00 |
$ |
0.00 |
|||||
|
Weighted average number of shares |
|||||||||
|
- Basic and fully diluted |
2,450,000 |
2,129,452 |
|
See accompanying notes to Consolidated financial statements |
|
F-15 |
|
AVENUE SOUTH LTD. |
|
(A Development Stage Company) |
|
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY |
|
Additional |
Deficit Accumulated |
Stock |
Total |
||||||||||||
|
Common Stock |
Capital Stock Subscribed |
Paid |
During the |
Subscription |
Stockholder’s |
||||||||||
|
Predecessor Entity |
Shares |
|
Amount |
Shares |
|
Amount |
In capital |
|
Development Stage |
|
Receivable |
|
Equity |
||
|
Balance, February 15, 2005
|
- |
$ - |
- |
$ - |
$ - |
$ - |
$ - |
$ - |
|||||||
|
Share issued in inception |
1 |
100 |
- |
- |
- |
- |
- |
100 |
|||||||
|
Net loss for the period |
- |
- |
- |
- |
- |
(2,167) |
- |
(2,167) |
|||||||
|
Balance, March 31, 2005 |
1 |
100 |
- |
- |
- |
(2,167) |
- |
(2,067) |
|||||||
|
Net loss for the year |
- |
- |
- |
- |
- |
(15,439) |
|
- |
(15,439) |
||||||
|
Balance, March 31, 2006 |
1 |
100 |
- |
- |
- |
(17,606) |
- |
(17,506) |
|||||||
|
Net loss for the year |
- |
- |
- |
- |
- |
(275) |
- |
(275) |
|||||||
|
Balance, March 31, 2007 |
1 |
100 |
- |
- |
- |
(17,881) |
- |
(17,781) |
|||||||
|
Net loss for the year |
- |
- |
- |
- |
- |
(20,031) |
- |
(20,031) |
|||||||
|
Balance, July 5, 2007 |
1 |
$ 100 |
- |
$ - |
$ - |
(37,912) |
$ - |
(37,812) |
|||||||
|
Successor Entity |
|||||||||||||||
|
Balance, July 6, 2007
|
- |
|
$ - |
- |
$ - |
|
$ - |
$ - |
$ - |
$ - |
|||||
|
Issuance of Common Stock |
2,000,000 |
2,000 |
- |
- |
8,000 |
- |
- |
10,000 |
|||||||
|
Net loss for the period |
- |
- |
- |
- |
- |
(1,225) |
- |
(1,225) |
|||||||
|
Balance, March 31, 2008 |
2,000,000 |
2,000 |
- |
- |
$ 8,000 |
(1,225) |
- |
8,775 |
|||||||
|
Share issued in private placement at $0.02 per share |
450,000 |
450 |
- |
- |
8,550 |
- |
- |
9,000 |
|||||||
|
Net loss for the year |
- |
- |
- |
- |
- |
(7,773) |
- |
(7,773) |
|||||||
|
Balance, at March 31, 2009 |
2,450,000 |
2,450 |
- |
- |
16,550 |
(8,998) |
- |
10,002 |
|||||||
|
Common stock subscribed in private placement
at
|
- |
- |
1,750,000 |
35,000 |
- |
- |
- |
35,000 |
|||||||
|
Shares subscription receivable |
- |
- |
- |
- |
- |
- |
(35,000) |
(35,000) |
|||||||
|
Net income for the year |
- |
- |
- |
- |
- |
1,208 |
- |
1,208 |
|||||||
|
Balance, March 31, 2010 |
2,450,000 |
$ 2,450 |
1,750,000 |
$ 35,000 |
$ 16,550 |
$ (7,790) |
$ (35,000) |
$ 11,210 |
|||||||
|
See accompanying notes to consolidated financial statements |
|
F-16 |
AVENUE SOUTH LTD.
( A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Successor |
Successor |
Successor |
Predecessor |
||||||
|
For the period |
|||||||||
|
July 6, 2007 |
For the period |
||||||||
|
For the year |
For the year |
(Date of |
from February 15, |
||||||
|
ended |
ended |
Inception) |
2005 (Date of |
||||||
|
March 31, |
March 31, |
to March 31, |
Inception) to |
||||||
|
2010 |
2009 |
2010 |
July 5, 2007 |
||||||
|
Cash flows from operating activities |
|||||||||
|
Net income (loss) for the year/period |
$ |
1,208 |
$ |
(7,773) |
$ |
(7,790) |
$ |
(37,912) |
|
|
Amortization |
- |
- |
- |
6,735 |
|||||
|
Changes in operating assets and liabilities: |
|||||||||
|
Other current assets |
- |
- |
- |
(74) |
|||||
|
Inventories |
10,000 |
- |
(10,000) |
(10,500) |
|||||
|
Net cash provided by (used in) operating activities |
11,208 |
(7,773) |
(17,790) |
(41,751) |
|||||
|
|
|
|
|
||||||
|
Cash flows from investing activities |
|||||||||
|
Acquisition of web site |
- |
- |
- |
(33,000) |
|||||
|
|
|
|
|
|
|||||
|
Net cash flows used in investing activities: |
- |
- |
- |
(33,000) |
|||||
|
Cash flows from financing activities |
|||||||||
|
Advance from (to) stockholder |
109,975 |
(3,000) |
122,210 |
76,882 |
|||||
|
Proceeds from issuance of common stock |
- |
9,000 |
19,000 |
100 |
|||||
|
|
|
|
|
|
|||||
|
Net cash flows provided by financing activities |
109,975 |
6,000 |
141,210 |
76,982 |
|||||
|
Net increase (decrease) in cash |
121,183 |
(1,773) |
123,420 |
2,231 |
|||||
|
Cash- beginning of year/period |
2,237 |
4,010 |
- |
- |
|||||
|
Cash- end of year/period |
$ |
123,420 |
$ |
2,237 |
$ |
123,420 |
$ |
2,231 |
|
|
Supplemental disclosure of non cash financing activities: |
|||||||||
|
Stock subscription receivable |
$ |
35,000 |
$ |
- |
$ |
35,000 |
$ |
- |
|
|
Supplemental cash flow Information: |
|||||||||
|
Cash paid for interest |
- |
- |
- |
- |
|||||
|
Cash paid for income taxes |
- |
- |
- |
- |
|
See accompanying notes to consolidated financial statements |
|
F-17 |
|
AVENUE SOUTH LTD. |
|
( A Development Stage Company) |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
1. ORGANIZATION AND NATURE OF BUSINESS |
|
On July 6, 2007, our principal stockholder acquired 100% of the equity of Avenue South, Inc., a North Carolina corporation. On July 6, 2007, Avenue South Ltd., a Nevada corporation was formed by our principal stockholder and our principal stockholder entered into a share exchange agreement, pursuant to which all the common stock held by our principal stockholder in Avenue South, Inc. was acquired by Avenue South Ltd. by issuing 2 million common shares to our principal stockholder. Avenue South Ltd. then became the parent corporation owning 100% of Avenue South, Inc. |
|
Avenue South, Inc. was incorporated in the State of North Carolina on February 15, 2005 (date of inception) with the principal business objective of a “one-stop” web based supplier of imported and domestic art reproductions, collectibles and home décor items that are difficult to find in traditional home furnishing retail outlets. All items are sold through the Company’s website, www.avenuesouth.com . |
|
The Company’s success will depend in part on its ability to market and sell its products over the internet and through other marketing channels. There can be no assurance that these marketing efforts will be successful. The Company believes that it currently has sufficient cash and financing commitments to meet its funding requirements over the next year. In addition, the Company may wish to selectively pursue additional products complementary to those of the Company in the future in order to expand its presence in the marketplace and achieve operating efficiencies. The Company may expect to seek to obtain additional funding through debt or equity transactions. There can be no assurance as to the availability or terms upon which such financing and capital might be available. |
|
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
Principles of consolidation |
|
The accompanying consolidated financial statements include the accounts of the Avenue South Ltd. and its wholly-owned subsidiary Avenue South, Inc., after elimination of all material intercompany accounts, transactions, and profits. |
|
A summary of significant accounting policies of Avenue South Ltd. (A Development Stage Company) (the “Company” or “Successor”) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. The Company has not realized any significant revenues from its planned principal business purpose and is considered to be in a development stage in accordance with ASC 915, “Development Stage Entities.” |
|
Inventory |
|
Inventories consist of finished goods of home furnishing products. Cost is stated at the lower of cost or market on a first-in, first-out (FIFO) basis. The Company has not recorded an allowance for slow-moving or obsolete inventory. There was no inventory on hand at March 31, 2010 and no obsolete inventory at March 31, 2009. The Company sold its entire inventory during the year ended March 31, 2010. |
|
Income Taxes |
|
The Company uses the liability approach to financial accounting and reporting for income taxes. The differences between the financial statement and tax bases of assets and liabilities are determined annually. Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the period in which they are expected to affect taxable income. Valuation allowances are established, if necessary, to reduce deferred tax asset accounts to the amounts that will more likely than not be realized. Income tax expense is the current tax payable or refundable for the period, plus or minus the net change in the deferred tax asset and liability accounts. |
|
F-18 |
|
AVENUE SOUTH LTD. |
|
( A Development Stage Company) |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED |
|
Revenue Recognition |
|
The Company recognizes revenue in accordance with accounting standards issued by the FASB, which specifies that revenue is realized or realizable and earned when four criteria are met: |
|
|
● |
Persuasive evidence of an arrangement exists; |
|
|
● |
Delivery has occurred or services have been rendered; |
|
|
● |
The seller’s price to the buyer is fixed or determinable; and |
|
|
● |
Collectability of payment is reasonably assured. |
|
The Company recognizes revenue when the goods are accepted by the customer and title has passed. The Company sells its goods via shipment from its suppliers directly to its customers. Shipping and handling costs were not significant. Customers do not have a general right of return on products delivered. |
|
Basic Income/Loss Per Common Share |
|
The computation of income / loss per share is based on the weighted average number of shares outstanding during the period presented in accordance with ASC 260, “Earnings Per Share”. At March 31, 2010 and 2009, the Company did not have any stock equivalents. |
|
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 of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. |
|
3. RECENT CHANGES IN ACCOUNTING STANDARDS |
|
Recent Accounting Pronouncements |
|
In May 2009, the FASB issued new guidance of ASC 855 “Subsequent Events” on the treatment of subsequent events which is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, management of a reporting entity is required to evaluate subsequent events through the date that financial statements are issued and disclose the date through which subsequent events have been evaluated, as well as the date the financial statements were issued. This new guidance was effective for fiscal years and interim periods ended after June 15, 2009, and must be applied prospectively. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. |
|
In August 2009, the FASB issued an Accounting Standards Update (“ASU”) No.2009.05 regarding measuring liabilities at fair value. This ASU provides additional guidance clarifying the measurement of liabilities at fair value in circumstances in which a quoted price in an active market for the identical liability is not available; under those circumstances, a reporting entity is required to measure fair value using one or more of valuation techniques, as defined. This ASU is effective for the first reporting period, including interim periods, beginning after the issuance of this ASU. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. |
|
The Company does not expect that adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations or cash flows. |
|
F-19 |
|
4. REORGANIZATION OF AVENUE SOUTH, INC. |
|
On July 6, 2007, Avenue South Ltd. (the Successor) acquired all of the assets but contractually was not required to assume the liabilities of the Avenue South, Inc. (Predecessor). |
|
On July 5, 2007 before the date of reorganization, the assets and liabilities of the Predecessor are as follow: |
|
Assets not acquired - Cash and Cash equivalents |
$ |
2,231 |
|
Inventory |
10,500 |
|
|
Assets not acquired - Other current assets |
74 |
|
|
Web site, net |
26,265 |
|
|
Liabilities not assumed - Due to stockholder |
(76,882) |
|
|
|
||
|
Net liabilities of the Predecessor |
$ |
(37,812) |
|
The assets acquired from the Predecessor were recorded based on their fair values and were allocated in accordance with the purchase method accounting, to tangible assets acquired to the extent of the bargain purchase consideration paid by the Successor to the owner of the Predecessor for $10,000, as follows: |
|
Inventory |
$ |
10,000 |
|
Web site, net |
- |
|
|
Net assets recorded by the Company from the Predecessor |
$ |
10,000 |
|
The following financial information presents the results of the Predecessors before the reorganization: |
|
For the period from |
||||||
|
April 1, 2007 to |
For the year ended |
For the year ended |
||||
|
July 5, 2007 |
March 31, 2007 |
March 31, 2006 |
||||
|
Sales |
$ |
- |
- |
10,613 |
||
|
Cost of sales |
- |
- |
8,675 |
|||
|
Gross margin |
- |
- |
1,938 |
|||
|
Other Selling, general and administrative expenses |
20,031 |
275 |
17,377 |
|||
|
Net loss |
$ |
(20,031) |
(275) |
(15,439) |
|
5. DUE TO A STOCKHOLDER |
|
The major stockholder advanced $112,210 to the Company for future operations in the US and China. This non-interest bearing advance is due on demand and the balance was $112,210 and $2,235 at March 31, 2010 and 2009, respectively. |
|
F-20 |
|
6. INCOME TAXES |
|
The Company accounts for income taxes using the liability method; under which deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment. |
|
At March 31, 2010, the Company had accumulated deficit during the development stage of $7,790 to offset future taxable income. The Company has established a valuation allowance equal to the full amount of this deferred tax asset due to the uncertainty of the utilization of the operating losses in future periods. |
|
The Company adopted the provisions of ASC 740, “Accounting for Uncertainty in Income Taxes,” at inception. As a result of the implementation of ASC 740, the Company recognized no increase in the liability for unrecognized tax benefits. |
|
The Company has no uncertain tax positions at March 31, 2010 and 2009 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. |
|
7. STOCKHOLDER’S’ EQUITY |
|
|
|
The Company’s Articles of Incorporation authorize 100,000,000 shares of $0.001 par value common stock. On December 17, 2008, the Company issued 450,000 shares of its Common Stock to the Company’s sole stockholder, at $0.02 per share, for total proceeds of $9,000. |
|
On March 28, 2010 the Company had received stock subscriptions to issue 1,750,000 shares of its common stock to 28 non-US investors at $0.02 per share. The Company completed the private placement offering for gross proceeds of $35,000 to non-US persons in reliance of Regulation S promulgated under the Securities Act of 1933 in June 2010. The total amount of common stock subscribed at March 31, 2010 was $35,000. |
|
The Company also entered into a Registration Rights Agreement on March 28, 2010 with each investor whereby as soon as possible but in any event not later than the 120th day after March 28, 2010, the Company agreed to file a registration statement on Form S-1. The Company shall issue additional shares of its common stock (valued at $0.02 per share) to the Subscriber as liquidated damages and not as a penalty, equal to five percent of the Subscription Price paid by the Subscriber and on each monthly anniversary of such Event Date (the Event Date being the 180th day following March 28, 2010. Liquidated damages that have accrued shall not exceed twenty five percent of the Subscription Price paid by the Subscriber. The liquidated damages pursuant to the terms hereof shall apply on a pro rata basis for any portion of a month after the 180 th day following March 28, 2010 or September 27, 2010. |
|
8. SUBSEQUENT EVENTS |
|
The Company evaluated subsequent events through the time of issuance of the financial statements. Pursuant to the requirements of FASB ASC Topic 855, there were no events or transactions occurring during this subsequent event reporting period that require recognition or disclosure in the financial statements. |
|
F-21 |
|
1,750,000 Shares |
|
AVENUE SOUTH LTD. |
|
Common Stock |
|
PROSPECTUS |
|
|
|
, 2010 |
|
|
|
Commission filing fee |
|
$ |
300 |
|
|
Legal fees and expenses |
|
|
10,000 |
|
|
Accounting fees and expenses |
|
|
2,000 |
|
|
Printing and marketing expenses |
|
|
500 |
|
|
Miscellaneous |
|
|
200 |
|
|
Total |
|
$ |
13,000 |
|
|
II-1 |
|
On December 17, 2008, we issued 450,000 shares of our common stock at a price of $0.02 per share to Irina Goldman for cash proceeds of $9,000. These securities were issued without a prospectus pursuant to Section 4(2) of the Securities Act. |
|
We relied on Section 4(2) of the Securities Act in connection with the above issuances of securities based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offeree and us. |
|
On March 28, 2010, we completed a private placement in which we issued and sold to the selling stockholders an aggregate of 1,750,000 shares of our common stock, for an aggregate purchase price of $35,000, or $0.02 per share. As a result of this private placement, we raised approximately $35,000 in gross proceeds, which left us with approximately $35,000 in net proceeds after the deduction of offering expenses in the amount of $0. The foregoing issuance was made in reliance upon exemptions provided by Rule 903 of Regulation S of the Securities Act. We were able to rely on Rule 903 because (a) the subscriber was neither a U.S. person nor acquiring the shares for the account or benefit of any U.S. person, (b) the subscriber agreed not to offer or sell the shares (including any pre-arrangement for a purchase by a U.S. person or other person in the U.S.) directly or indirectly, in the United States or to any natural person who is a resident of the United States or to any other U.S. person as defined in Regulation S unless registered under the Securities Act and all applicable state laws or an exemption from the registration requirements of the Securities Act and similar state laws is available, (c) the subscriber made his, her or its subscription from the subscriber’s residence or offices at an address outside of the U.S. and (d) the subscriber or the subscriber’s advisor has such knowledge and experience in financial and business matters that the subscriber is capable of evaluating the merits and risks of, and protecting his interests in connection with an investment in our company. |
|
Item 16. Exhibits. |
|
Exhibit No. |
|
Description |
|---|---|---|
|
3.1 |
Articles of Incorporation of the Company, as amended to date* |
|
|
3.2 |
Bylaws of the Company, as amended to date* |
|
|
4.5 |
Registration Rights Agreement* |
|
|
5 |
Opinion of Law Offices of Gary R. Henrie as to the legality of the shares* |
|
|
10.1 |
Form of Subscription Agreement, dated March 28, 2010* |
|
|
10.2 |
Stock Purchase Agreement, dated July 6, 2007, among David F. Ruppen and Mary Carol Ruppen and Irina Goldman.* |
|
|
10.3 |
Share Exchange Agreement among Irina Goldman, the Company and Avenue South, Inc.* |
|
|
21 |
Subsidiaries of the Company* |
|
|
23.1 |
Consent of EFP Rotenberg LLP * |
|
|
23.2 |
Consent of Law Offices of Gary R. Henrie included in Exhibit 5* |
|
|
|
Power of Attorney (included on the signature page of this registration statement)* |
|
*Filed herewith. |
|
II-2 |
|
Item 17. Undertakings |
|
The undersigned registrant hereby undertakes to: |
|
File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: |
|
(a) Include any prospectus required by Section 10(a)(3) of the Securities Act, and |
|
(b) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement, and |
|
(c) Include any additional or changed material information on the plan of distribution. |
|
For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. |
|
File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. |
|
For determining liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective. |
|
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
|
II-3 |
|
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Suffern, NY on the 27th day of July, 2010. |
|
|
AVENUE SOUTH LTD. |
|
|
|
By: |
/s/ IRINA GOLDMAN |
|
|
|
Irina Goldman |
|
President and Principal Accounting Officer |
||
|
POWER OF ATTORNEY |
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below constitutes and appoints Irina Goldman and Fung Chun Ngai, and each of them individually, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. |
|
Signature |
Title |
|
|
|
|
|
|
/s/ IRINA GOLDMAN |
|
President, Principal Accounting Officer and Secretary (Principal Executive Officer and Principal Accounting Officer) and Director |
|
Irina Goldman |
||
|
|
||
|
/s/ FUNG CHUN NGAI |
Treasurer, Vice President Sales and Director |
|
|
Fung Chun Ngai |
||
|
|
||
|
|
|
EXHIBIT INDEX |
|
Exhibit No. |
|
Description |
|---|---|---|
|
3.1 |
Articles of Incorporation of the Company, as amended to date* |
|
|
3.2 |
Bylaws of the Company, as amended to date* |
|
|
4.5 |
Registration Rights Agreement* |
|
|
5 |
Opinion of Law Offices of Gary R. Henrie as to the legality of the shares* |
|
|
10.1 |
Form of Subscription Agreement, dated March 28, 2010* |
|
|
10.2 |
Stock Purchase Agreement, dated July 6, 2007, among David F. Ruppen and Mary Carol Ruppen and Irina Goldman.* |
|
|
10.3 |
Share Exchange Agreement among Irina Goldman, the Company and Avenue South, Inc.* |
|
|
21 |
Subsidiaries of the Company* |
|
|
23.1 |
Consent of EFP Rotenberg LLP * |
|
|
23.2 |
Consent of Law Offices of Gary R. Henrie included in Exhibit 5* |
|
|
Power of Attorney (included on the signature page of this registration statement)* |
|
*Filed herewith |
|
|
|
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
|
Avenue South Ltd. |
|
We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Form S-1 of our report dated July 26, 2010, relating to the consolidated financial statements of Avenue South Ltd., which is contained in that Form S-1. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern. We also consent to the reference to us under the caption Experts in the Registration Statement. |
|
/s/ EFP Rotenberg, LLP |
|
EFP Rotenberg, LLP |
|
Rochester, New York |
|
July 26, 2010 |
|
|
|
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
|
Avenue South Inc. |
|
We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Form S-1 of our report dated July 26, 2010, relating to the financial statements of Avenue South Ltd., which is contained in that Form S-1. We also consent to the reference to us under the caption Experts in the Registration Statement. |
|
/s/ EFP Rotenberg, LLP |
|
EFP Rotenberg, LLP |
|
Rochester, New York |
|
July 26, 2010 |
|
|
