As Filed With the Securities and Exchange Commission on October 23, 2007
Registration No. 333-144509
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT #3 TO
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BOSCO FLOORING, INC.
(Exact name of Registrant as specified in its charter)
NEVADA 5023-13 98-0534794
(State or Other Jurisdiction of (Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification) Identification Number)
Alexander Dannikov, President
26 Utkina Street, apt 10
Irkutsk, Russia 664007
Telephone: 7-3952-681-878
Fax: 775-561-8051
Fax(Russia): 7-3952-701-821
(Name and address of principal executive offices)
Nevada's Best Incorporators
Attention: Robert C. Harris
564 Wedge Ln.
Fernley, Nevada, 89408
Telephone: 775-575-5556
Facsimile: 775-575-1261
(Name, address and telephone number of agent for service)
Approximate date of commencement of Proposed sale to the public: as soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective 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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,check
the following. [ ]
CALCULATION OF REGISTRATION FEE
================================================================================
Title of Each Proposed Proposed
Class of Maximum Maximum
Securities Offering Aggregate Amount of
to be Amount to be Price Per Offering Registration
Registered Registered Share(1) Price(2) Fee(2)
- --------------------------------------------------------------------------------
Common Stock 2,240,000 $0.01 $22,400 $2.40
================================================================================
(1) Based on the last sales price on March 28, 2007
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
================================================================================
SUBJECT TO COMPLETION, DATED OCTOBER 22, 2007
PROSPECTUS
BOSCO FLOORING INC.
2,240,000 SHARES OF COMMON STOCK
The selling shareholders named in this prospectus are offering all of the shares
of common stock offered through this prospectus.
Our common stock is presently not traded on any market or securities exchange.
The purchase of the securities offered through this prospectus involves a high
degree of risk. see section entitled "Risk Factors" on pages 5-9.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The selling shareholders will sell our shares at $0.01 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price based
upon the price of the last sale of our common stock to investors.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
THE DATE OF THIS PROSPECTUS IS: OCTOBER 22, 2007
TABLE OF CONTENTS
Page
----
SUMMARY ................................................................... 4
RISK FACTORS .............................................................. 5
- If we do not obtain additional financing, our business may
fail ............................................................ 5
- Because we have not yet commenced business operations, we
face a high risk of business failure ............................ 5
- Any additional funding we arrange through the sale of our
common stock will result in dilution to existing
shareholders..................................................... 6
- If we are unable to retain key personnel, then we may not be
able to implement our business plan ............................. 6
- Because our director and officer owns 57.25% of our
outstanding common stock, he will make and control corporate
decisions that may be disadvantageous to minority
shareholders..................................................... 6
- U.S. investors may experience difficulties in attempting to
effect service of process and to enforce judgments based
upon U.S. federal securities laws against the company and
its sole non-U.S. resident officer and director.................. 6
- Because our sole director has an interest in a company
involved in the same industry, there is a potential conflict
of interest, including the amount of time he is able to
dedicate to Bosco and its business............................... 7
- Because our director has other business interests, he may
not be able or willing to devote a sufficient amount of time
to our business operations, causing our business to
fail............................................................. 7
- Our sales and profitability depend significantly on new
residential construction and home improvement activity ......... 7
- The industry in which we compete is highly cyclical, and any
downturn resulting in lower demand or increased supply could
have a materially adverse impact on our financial result..... 7
- The building materials distribution industry is extremely
fragmented and competitive and we may not be able to compete
successfully with our existing competitors or new entrants
into the markets we serve........................................ 8
- All of our product purchases will be made from one supplier.
If this supplier decreased or terminated its relationship
with us our business would likely fail if we are unable to
find a substitute for that company .............................. 8
- If a market for our common stock does not develop,
shareholders may be unable to sell their shares.................. 9
- A purchaser is purchasing penny stock which limits his or
her ability to sell the stock.................................... 9
USE OF PROCEEDS ........................................................... 9
DETERMINATION OF OFFERING PRICE ........................................... 9
DILUTION .................................................................. 10
SELLING SHAREHOLDERS ...................................................... 10
PLAN OF DISTRIBUTION ...................................................... 13
LEGAL PROCEEDINGS ......................................................... 15
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS............... 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 16
DESCRIPTION OF SECURITIES ................................................. 17
INTEREST OF NAMED EXPERTS AND COUNSEL ..................................... 18
2
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES ............................................... 18
ORGANIZATION WITHIN LAST FIVE YEARS ....................................... 18
DESCRIPTION OF BUSINESS ................................................... 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS................. 22
DESCRIPTION OF PROPERTY ................................................... 25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ............................ 25
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS .................. 26
EXECUTIVE COMPENSATION .................................................... 27
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ............................. 28
AVAILABLE INFORMATION ..................................................... 28
FINANCIAL STATEMENTS ...................................................... F-1
3
SUMMARY
PROSPECTIVE INVESTORS ARE URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY.
We intend to commence business operations by distributing laminate flooring in
both the mass wholesale and retail market throughout North America. To date, we
have not had any business operations other than our execution of a marketing and
sales distribution agreement with our supplier, Bossco-Laminate Co., Ltd., a
private Russian company. We cannot state with certainty whether we will achieve
profitability.
We were incorporated on December 13, 2006 under the laws of the state of Nevada.
Our principal offices are located at Utkina Street 26-10, Irkutsk, Russia
664007. Our telephone is 7-3952-681-878
THE OFFERING:
SECURITIES BEING OFFERED Up to 2,240,000 shares of common stock.
OFFERING PRICE The selling shareholders will sell our shares at
$0.01 per share until our shares are quoted on the
OTC Bulletin Board, and thereafter at prevailing
market prices or privately negotiated prices. We
determined this offering price based upon the
price of the last sale of our common stock to
investors.
TERMS OF THE OFFERING The selling shareholders will determine when and
how they will sell the common stock offered in
this prospectus.
TERMINATION OF THE OFFERING The offering will conclude when all of the
2,240,000 shares of common stock have been sold or
we, in our sole discretion, decide to terminate
the registration of the shares. We may decide to
terminate the registration if it is no longer
necessary due to the operation of the resale
provisions of Rule 144. We may also terminate the
offering for no given reason whatsoever.In any
event, the offering shall be terminated withing
two years from the effective date of this
registration statement.
SECURITIES ISSUED
AND TO BE ISSUED 5,240,000 shares of our common stock are issued
and outstanding as of the date of this prospectus.
All of the common stock to be sold under this
prospectus will be sold by existing shareholders.
USE OF PROCEEDS We will not receive any proceeds from the sale of
the common stock by the selling shareholders.
4
SUMMARY FINANCIAL INFORMATION
Balance Sheet June 30, 2007
- ------------- -------------
Cash $17,137
Total Assets $17,137
Liabilities $ 492
Total Stockholders' Equity $16,645
Statement of Loss and Deficit
From incorporation on
December 13, 2006 to
June 30, 2007
-------------
Revenue $ 0
Net Loss $ 8,755
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock could decline due to any
of these risks, and you may lose all or part of your investment.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS MAY FAIL.
Our business plan calls for ongoing expenses in connection with the marketing
and sales of laminate flooring. We have not generated any revenue from
operations to date.
While at June 30, 2007, we had cash on hand of $17,137, we had accumulated a
deficit of $8,755 in administrative expenses. We expect that we will only be
able to continue operations for seven months without additional funding. We
anticipate that additional funding will be needed for general administrative
expenses and marketing costs.
In order to expand our business operations, we anticipate that we will have to
raise additional funding. If we are not able to raise the capital necessary to
fund our business expansion objectives, we may have to delay the implementation
of our business plan.
We do not currently have any arrangements for financing. Obtaining additional
funding will be subject to a number of factors, including general market
conditions, investor acceptance of our business plan and initial results from
our business operations. These factors may impact the timing, amount, terms or
conditions of additional financing available to us. The most likely source of
future funds recently available to us is through the sale of additional shares
of common stock or advances from our sole director.
BECAUSE WE HAVE NOT YET COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE.
We were incorporated on December 13, 2006 and to date have been involved
primarily in organizational activities. We have not earned revenues as of the
5
date of this prospectus and have incurred total losses of $8,755 from our
incorporation on December 13, 2006 to June 30, 2007.
Accordingly, you cannot evaluate our business, and therefore our future
prospects, due to a lack of operating history. To date, our business development
activities have consisted solely of negotiating and executing a marketing and
sales distribution agreement with Bossco-Laminate Co., Ltd., a private Russian
company that manufactures laminate flooring products, and initial marketing of
laminate floor products. Bossco-Laminate Co., Ltd is not an affiliate of Bosco
Flooring, Inc. Potential investors should be aware of the difficulties normally
encountered by development stage companies and the high rate of failure of such
enterprises. In addition, there is no guarantee that we will be able to expand
our business operations. Even if we expand our operations, at present, we do not
know precisely when this will occur.
ANY ADDITIONAL FUNDING WE ARRANGE THROUGH THE SALE OF OUR COMMON STOCK WILL
RESULT IN DILUTION TO EXISTING SHAREHOLDERS.
We must raise additional capital in order for our business plan to succeed. Our
most likely source of additional capital will be through the sale of additional
shares of common stock. Such stock issuances will cause stockholders' interests
in our company to be diluted. Such dilution will negatively affect the value of
an investor's shares.
IF WE ARE UNABLE TO RETAIN KEY PERSONNEL, THEN WE MAY NOT BE ABLE TO IMPLEMENT
OUR BUSINESS PLAN
We depend on the services of our sole director, Alexander Dannikov, for the
future success of our business due to his experience in the building materials
sector. The loss of the services of Mr. Dannikov could have an adverse effect on
our business, financial condition and results of operations. We do not carry any
key personnel life insurance policies on Mr. Dannikov and we do not have a
contract for his services.
BECAUSE OUR DIRECTOR AND OFFICER OWNS 57.25% OF OUR OUTSTANDING COMMON STOCK, HE
WILL MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO
MINORITY SHAREHOLDERS.
Mr. Dannikov, our director and officer, owns approximately 57.25% of the
outstanding shares of our common stock. Accordingly, he will have significant
influence in determining the outcome of all corporate transactions or other
matters, including the election of directors, mergers, consolidations and the
sale of all or substantially all of our assets, and also the power to prevent or
cause a change in control. The interests of Mr. Dannikov may differ from the
interests of the other stockholders and may result in corporate decisions that
are disadvantageous to other shareholders.
U.S. INVESTORS MAY EXPERIENCE DIFFICULTIES IN ATTEMPTING TO EFFECT SERVICE OF
PROCESS AND TO ENFORCE JUDGEMENTS BASED UPON U.S. FEDERAL SECURITIES LAWS
AGAINST THE COMPANY AND ITS SOLE NON-U.S. RESIDENT OFFICER AND DIRECTOR.
Our sole director and officer, Alexander Dannikov is not a resident of the
United States. Consequently, it may be difficult for investors to effect service
of process on Mr. Dannikov in the United States and to enforce in the United
States judgments obtained in United States courts against Mr. Dannikov based on
the civil liability provisions of the United States securities laws.
6
Since all our assets are located in Russia it may be difficult or impossible for
US investors to effect service of process on Bosco. As well, any judgment
obtained in the United States against us may not be enforceable in the United
States.
BECAUSE OUR SOLE DIRECTOR HAS AN INTEREST IN A COMPANY INVOLVED IN THE SAME
INDUSTRY, THERE IS A POTENTIAL CONFLICT OF INTEREST, INCLUDING THE AMOUNT OF
TIME HE IS ABLE TO DEDICATE TO BOSCO AND ITS BUSINESS
Our sole director is associated with another company that is engaged in business
activities similar to those to be conducted by us. Mr. Alexander Dannikov is a
General Manager of Irkut Corporation, a private company that sells building
materials in Russia and abroad. Irkut Corporation is not an affiliate of Bosco
Flooring, Inc. Potential conflicts of interest may arise in future that may
cause our business to fail, including the amount of time he is able to dedicate
to our business as well as additional conflict of interests over opportunities
presented to our sole director during the performance of his duties. Bosco does
not currently have a right of first refusal pertaining to opportunities that
come to management's attention where the opportunity may relate to Bosco's
proposed business operations
BECAUSE OUR DIRECTOR HAS OTHER BUSINESS INTERESTS, HE MAY NOT BE ABLE OR WILLING
TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS, CAUSING OUR
BUSINESS TO FAIL.
Our president, Alexander Dannikov, intend to devote 30% of his business time to
our affairs. It is possible that the demands on Alexander Dannikov from his
other obligations could increase with the result that he would no longer be able
to devote sufficient time to the management of our business. In addition,
Alexander Dannikov may not possess sufficient time for our business if the
demands of managing our business increased substantially beyond current levels.
OUR SALES AND PROFITABILITY DEPEND SIGNIFICANTLY ON NEW RESIDENTIAL CONSTRUCTION
AND HOME IMPROVEMENT ACTIVITY.
Our sales depend heavily on the strength of national and local new residential
construction and home improvement and remodeling markets. The strength of these
markets depends on new housing starts and residential renovation projects, which
are a function of many factors beyond our control. Some of these factors include
employment levels, job and household formation, interest rates, housing prices,
tax policy, availability of mortgage financing, prices of commodity wood
products, regional demographics and consumer confidence. Future downturns in the
markets that we serve or in the economy generally could have a material adverse
effect on our operating results and financial condition. Reduced levels of
construction activity may result in intense price competition among building
materials suppliers, which may adversely affect our gross margins.
THE INDUSTRY IN WHICH WE COMPETE IS HIGHLY CYCLICAL, AND ANY DOWNTURN RESULTING
IN LOWER DEMAND OR INCREASED SUPPLY COULD HAVE A MATERIALLY ADVERSE IMPACT ON
OUR FINANCIAL RESULTS.
The building products distribution industry is subject to cyclical market
pressures caused by a number of factors that are out of our control, such as
general economic and political conditions, levels of new construction, home
improvement and remodeling activity, interest rates, weather and population
growth. We are most impacted by changes in the demand for new homes and in
7
general economic conditions that impact the level of home improvements. Changes
in market demand for new homes and for home improvements occur periodically and
vary in severity. We believe that we would be impacted disproportionately by
market downturns because we tend not to be a major supplier. Secondary suppliers
tend to have orders reduced or eliminated before major suppliers do. There is no
reasonable way to predict with accuracy the timing or impact of market
downturns. The extent that cyclical market factors adversely impact overall
demand for building products or the prices that we can charge for our products,
our net sales and margins would likely decline. In addition, the unpredictable
nature of the cyclical market factors that impact our industry make it difficult
to forecast our operating results.
THE BUILDING PRODUCTS DISTRIBUTION INDUSTRY IS EXTREMELY FRAGMENTED AND
COMPETITIVE AND WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH OUR EXISTING
COMPETITORS OR NEW ENTRANTS INTO THE MARKETS WE SERVE.
The building products distribution industry is extremely fragmented and
competitive. Our competition varies by product line, customer classification and
geographic market. The principal competitive factors in our industry are pricing
and availability of product, service and delivery capabilities, ability to
assist with problem-solving, customer relationships, geographic coverage and
breadth of product offerings. We compete with many local, regional and national
building materials distributors and dealers. In addition, some product
manufacturers sell and distribute their products directly to our customers, and
the volume of such direct sales could increase in the future. Additionally,
manufacturers of products similar to those distributed by us may elect to sell
and distribute to our customers in the future or enter into exclusive supplier
arrangements with other distributors. Most of our competitors have greater
financial resources and may be able to withstand sales or price decreases better
than we can. We also expect to continue to face competition from new market
entrants. We may be unable to continue to compete effectively with these
existing or new competitors, which could have a material adverse effect on our
financial condition and results of operations.
ALL OF OUR PRODUCT PURCHASES WILL BE MADE FROM ONE SUPPLIER. IF THAT SUPPLIER
DECREASED OR TERMINATED ITS RELATIONSHIP WITH US OUR BUSINESS WOULD LIKELY FAIL
IF WE ARE UNABLE TO FIND A SUBSTITUTE FOR THAT COMPANY.
As a result of being totally dependent on a single wholesale supplier located in
Russia, we may be subject to certain risks, including changes in regulatory
requirements, tariffs and other barriers, increased pressure, timing and
availability of export licenses, foreign currency exchange fluctuations, the
burden of complying with a variety of foreign laws and treaties, and
uncertainties relative to regional, political and economic circumstances. We
purchase substantially all of our products from Bossco-Laminate Co. Ltd, a
private Russian company. Our agreement with this company does not prevent it
from supplying its laminate flooring products to our competitors or directly to
consumers. If this company decreased, modified or terminated its association
with us for any other reason, we would suffer an interruption in our business
unless and until we found a substitute for that supplier. If we were unable to
find a substitute for that supplier, our business would likely fail. We cannot
predict what the likelihood would be of finding an acceptable substitute
supplier.
8
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.
There is currently no market for our common stock and a market may not develop.
We plan to apply for quotation of our common stock on the OTC Bulletin Board
upon the effectiveness of our registration statement, of which this prospectus
forms a part. However, there is no assurance that our shares will be traded on
the bulletin board or, if traded, that a public market will materialize. If no
market is ever developed for our shares, it will be difficult for share- holders
to sell their stock. In such a case, shareholders may find that they are unable
to achieve benefits from their investment.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS THE ABILITY TO SELL THE
STOCK.
The shares offered by this prospectus constitute penny stock under the Exchange
Act. The shares will remain penny stock for the foreseeable future. "Penny
stock" rules impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited
investors, that is, generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with a spouse. For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our shares of
common stock. The market price of our shares would likely suffer as a result.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are most likely to differ materially from those anticipated in
these forward-looking statements for many reasons, including the risks faced by
us described in the "Risk Factors" section and elsewhere in this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
DETERMINATION OF OFFERING PRICE
The selling shareholders will sell our shares at $0.01 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price based
upon the price of the last sale of our common stock to investors.
9
DILUTION
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders.
SELLING SHAREHOLDERS
The selling shareholders named in this prospectus are offering all of the
2,240,000 shares of common stock offered through this prospectus. These shares
were acquired from us in a private placement at $0.01 per share of common stock
that was exempt from registration under Regulation S of the Securities Act of
1933. The shares were all acquired by the selling shareholders from us in an
offering that was completed on March 27, 2007. The term Selling Shareholders
includes the selling shareholders and their transferees, pledges, donees, or
their successors.
We will file a prospectus supplement to name successors to any named selling
shareholders who are able to sue prospectus to resell the securities.
The following table provides as of the date of this prospectus, information
regarding the beneficial ownership of our common stock held by each of the
selling shareholders, including:
1. The number of shares owned by each prior to this offering;
2. The total number of shares that are to be offered for each;
3. The total number of shares that will be owned by each upon completion
of the offering; and
4. The percentage owned by each upon completion of the offering.
Total Number
Of Shares To Total Shares Percent
Be Offered For Owned Upon Owned Upon
Shares Owned Selling Completion Completion
Name of Selling Prior To This Shareholder Of This Of This
Stockholder Offering Account Offering Offering
----------- -------- ------- -------- --------
Vitaliy Vasyuk 80,000 80,000 Nil Nil
Baikalskaya St, 204-55
Irkutsk, Russia 664075
Pavel Petrzhikovskiy 80,000 80,000 Nil Nil
Sovetskaya St, 74-36
Irkutsk, Russia 664047
Yelena Lyakutina 80,000 80,000 Nil Nil
Baikalskaya St, 242A-121
Irkutsk, Russia 664075
Yevgeniy Kubyshev 80,000 80,000 Nil Nil
K-Libkhnehta St, 249-7
Irkutsk, Russia 664031
Vladislav Prikhodko 80,000 80,000 Nil Nil
Lysina St, 20A-50
Irkutsk, Russia 664009
10
Total Number
Of Shares To Total Shares Percent
Be Offered For Owned Upon Owned Upon
Shares Owned Selling Completion Completion
Name of Selling Prior To This Shareholder Of This Of This
Stockholder Offering Account Offering Offering
----------- -------- ------- -------- --------
Andrey Kryukov 80,000 80,000 Nil Nil
Baikalskaya St, 310A-91
Irkutsk, Russia 664050
Natalia Kryukova 80,000 80,000 Nil Nil
Baikalskaya St, 310A-91
Irkutsk, Russia 664050
Nikolay Padalets 80,000 80,000 Nil Nil
Baikalskaya St, 266-15
Irkutsk, Russia 664050
Elizaveta Padalets 80,000 80,000 Nil Nil
Baikalskaya St, 268-36
Irkutsk, Russia 664050
Oleg Lyakutin 80,000 80,000 Nil Nil
Baikalskaya St, 242A-121
Irkutsk, Russia 664075
Dmitry Perfilyev 80,000 80,000 Nil Nil
Donskaya St, 12A-43
Irkutsk, Russia 664000
Alexey Didenko 80,000 80,000 Nil Nil
Baikalskaya St, 312-48
Irkutsk, Russia 664050
Irina Vysochina 80,000 80,000 Nil Nil
Norilskaya St, 9-30
Irkutsk, Russia 664013
Vladimir Vysochin 80,000 80,000 Nil Nil
Norilskaya St, 9-30
Irkutsk, Russia 664013
Pavel Blinnikov 80,000 80,000 Nil Nil
Lermontova St, 333V-65
Irkutsk, Russia 664033
Artem Andreyev 80,000 80,000 Nil Nil
Naberegnaya St, 38 Erbogachyon
Irkutskaya obl, Russia 666610
Roman Chernetskiy 80,000 80,000 Nil Nil
Yadrinceva St, 14-55
Irkutsk, Russia 664009
11
Total Number
Of Shares To Total Shares Percent
Be Offered For Owned Upon Owned Upon
Shares Owned Selling Completion Completion
Name of Selling Prior To This Shareholder Of This Of This
Stockholder Offering Account Offering Offering
----------- -------- ------- -------- --------
Chandkiran Sharma 80,000 80,000 Nil Nil
Koniva St, 50-35
Irkutsk, Russia 664043
Elena Syrovatskaya 80,000 80,000 Nil Nil
Pervomaysky m/on, 18A-39
Irkutsk, Russia 664058
Anastasia Kulebyakina 80,000 80,000 Nil Nil
4th Zheleznodorozhnaya, 23A-4
Irkutsk, Russia 664003
Irina Samigullina 80,000 80,000 Nil Nil
Pervomaysky m/on, 21-11
Irkutsk, Russia 664058
Olga Deshina 80,000 80,000 Nil Nil
Zhukova St, 112-9
Irkutsk, Russia 664057
Maisa Magerramova 80,000 80,000 Nil Nil
Krasnyh-Madyaz St, 105-22
Irkutsk, Russia 664047
Igor Lyakutin 80,000 80,000 Nil Nil
Baikalskaya St, 310A-92
Irkutsk, Russia 664050
Alexander Gilev 80,000 80,000 Nil Nil
Lisina St, 44-26
Irkutsk, Russia 664009
Liudmila Loginova 80,000 80,000 Nil Nil
Deputatskaya St, 15-79
Irkutsk, Russia 664047
Ivan Krikun 80,000 80,000 Nil Nil
Krasnokazachya St, 10B-79
Irkutsk, Russia 664007
Olga Emelyanova 80,000 80,000 Nil Nil
Akademicheskaya St, 24-78
Irkutsk, Russia 664054
The named party beneficially owns and has sole voting and investment power over
all shares or rights to these shares. The numbers in this table assume that none
of the selling shareholders sell shares of common stock not being offered in
12
this prospectus or purchase additional shares of common stock, and assume that
all shares offered are sold. The percentages are based on 5,240,000 shares of
common stock outstanding on the date of this prospectus.
None of the selling shareholders:
(1) has had a material relationship with us other than as a shareholder at
any time within the past three years; or
(2) has ever been one of our officers or directors.
(3) is a broker-dealer; or Broker-dealer's affiliate.
PLAN OF DISTRIBUTION
Following the effective date of this registration statement, we plan to apply to
have our shares quoted for trading on the OTC Bulletin Board. In order to
accomplish this, we will need to retain a market maker to file an application on
our behalf. We have not engaged a market maker and there is no assurance that we
will be able to do so. There is no assurance that our stock will be quoted on
the OTC Bulletin Board or that a market maker will file an application for a
quotation on our behalf in order to make a market for our common stock.
The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions.
The selling shareholders will sell our shares at $0.01 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price
arbitrarily based upon the price of the last sale of our common stock to
investors.
The shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144.
The selling shareholders may also sell their shares directly to market makers
acting as principals or brokers or dealers, who may act as agent or acquire the
common stock as a principal. Any broker or dealer participating in such
transactions as agent may receive a commission from the selling shareholders,
or, if they act as agent for the purchaser of such common stock, from such
purchaser. The selling shareholders will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers may agree with the selling
shareholders to sell a specified number of shares at a stipulated price per
share and, to the extent such broker or dealer is unable to do so acting as
agent for the selling shareholders, to purchase,as principal, any unsold shares
at the price required to fulfill the respective broker's or dealer's commitment
to the selling shareholders.Brokers or dealers who acquire shares as principals
may thereafter resell such shares from time to time in transactions in a market
or on an exchange, in negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices, and in connection with
such re-sales may pay or receive commissions to or from the purchasers of such
shares. These transactions may involve cross and block transactions that may
involve sales to and through other brokers or dealers. If applicable, the
selling shareholders may distribute shares to one or more of their partners who
are unaffiliated with us. Such partners may, in turn, distribute such shares as
described above. We can provide no assurance that all or any of the common stock
offered will be sold by the selling shareholders.
13
We are bearing all costs relating to the registration of the common stock. The
selling shareholders,however, will pay any commissions or other fees payable to
brokers or dealers in connection with any sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act
and the Securities Exchange Act in the offer and sale of the common stock. In
particular, during such times as the selling shareholders may be deemed to be
engaged in a distribution of the common stock, and therefore be considered to be
an underwriter, they must comply with applicable law and may, among other
things:
1. Not engage in any stabilization activities in connection with our
common stock;
2. Furnish each broker or dealer through which common stock may be
offered, such copies of this prospectus, as amended from time to time,
as may be required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under
the Securities Exchange Act.
The Securities Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Commission, which:
* contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
* contains a description of the broker's or dealer's duties to the
customer and the rights and remedies available to the customer with
respect to a violation of such duties
* contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the significance
of the spread between the bid and ask price;
* contains a toll-free telephone number for inquiries on disciplinary
actions
* defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
* contains such other information and is in such form (including
language, type, size, and format) as the Commission shall require by
rule or regulation;
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, the customer:
14
* with bid and offer quotations for the penny stock;
* the compensation of the broker-dealer and its salesperson in the
transaction;
* the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
* monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
those securities.
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings. Our address for service
of process in Nevada is 564 Wedge Lane, Fernley, Nevada, 89408.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our executive officers and directors and their respective ages as of the date of
this prospectus are as follows:
DIRECTORS:
Name of Director Age
- ---------------- ---
Alexander Dannikov 27
EXECUTIVE OFFICERS:
Name of Officer Age Offices
- --------------- --- -------
Alexander Dannikov 27 President, Chief Executive Officer,
Secretary, Treasurer, and Director
BIOGRAPHICAL INFORMATION
Set forth below is a brief description of the background and business experience
of our executive officer and director for the past five years:
Mr. Dannikov has acted as our sole director and officer since our incorporation
on December 13, 2006. Since November 2006, Mr. Dannikov has worked as General
Manager of Irkut Corporation, a private company that sells building materials in
Russia and abroad. From January 2005 to November 2006, Mr.Dannikov has worked
for Avalon Video company as Assistant Director where he was involved in
marketing, recruiting, staff training, performing supervisory functions,
15
monitoring service quality and employee performance. Since August 2001, Mr.
Dannikov was initially employed as a manager for Hoztorg, a wholesale company
involved in distributing household goods in the Irkutsk region where he was
responsible for organizing cargo transportation, wholesale and retail trade. He
became a director of the company in June 2003. From June 2003 to January 2005,
when Mr. Dannikov acted as a director of Hoztorg, his responsibilities were
business administration, staff management, and customer relations and marketing.
Mr. Dannikov, graduated with a Bachelor of Social Sciences Degree in regional
studies from Irkutsk State University in June 2003. His degree specialization
was "Administration of Territories (Siberian region)".
Mr. Dannikov devotes 30% of his business time to our affairs. He is responsible
for managing our business operations and overseeing day-to-day affairs,
including all administrative aspects.
TERM OF OFFICE
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
EMPLOYEES
We have no employees other than the officers and directors described above.
CONFLICTS OF INTEREST
We do not have any procedures in place to address conflicts of interest that may
arise in our directors between our business and their other business activities.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of the date of this
prospectus, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Amount of
Title of Name and Address Beneficial Percent
Class of Beneficial Owner Ownership of Class
----- ------------------- --------- --------
COMMON Alexander Dannikov 3,000,000 57.25%
STOCK President, Chief Executive
Officer, Treasurer, Secretary
and Director
Utkina Street, 26-10
Irkutsk, Russia 664007
COMMON All officers and directors 3,000,000 57.25%
STOCK as a group that consists of
one person
The percent of class is based on 5,240,000 shares of common stock issued and
outstanding as of the date of this prospectus.
16
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 75,000,000 shares of common stock at a
par value of $0.001 per share.
COMMON STOCK
As of October 22, 2007, there were 5,240,000 shares of our common stock issued
and outstanding that are held by 29 stockholders of record.
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Holders of our common stock representing a majority of the voting
power of our capital stock issued,outstanding and entitled to vote, represented
in person or by proxy, are necessary to constitute a quorum at any meeting of
our stockholders. A vote by the holders of a majority of our outstanding shares
is required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to our articles of incorporation.
Holders of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock. Holders of our common stock have no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.
PREFERRED STOCK
We do not have an authorized class of preferred stock.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
SHARE PURCHASE WARRANTS
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
OPTIONS
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
CONVERTIBLE SECURITIES
We have not issued and do not have outstanding any securities convertible into
shares of our common stock or any rights convertible or exchangeable into shares
of our common stock.
17
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis,or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents or subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
Daniel C. Masters, our legal counsel, 4490 Philbrook Square, San Diego, CA
92130, has provided an opinion on the validity of our common stock. We retained
him solely for the purpose of providing this opinion and have not received any
other legal services from him.
The financial statements included in this prospectus and the registration
statement have been audited by RBSM , LLP, 5 West 37th Street, 9th Floor, New
York, NY 10018 our independent registered public accounting firm, to the extent
and for the periods set forth in their report appearing elsewhere in this
document and in the registration statement filed with the SEC, and are included
in reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes and our Bylaws. We have been advised that in the opinion of the
Securities and Exchange Commission indemnification for liabilities arising under
the Securities Act 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 is asserted by one of our directors, officers, or
controlling persons in connection with the securities being registered, we will,
unless in the opinion of our legal counsel the matter such indemnification is
against public policy to court of appropriate jurisdiction. We will then be
governed by the court's decision.
ORGANIZATION WITHIN LAST FIVE YEARS
We were incorporated on December 13, 2006 under the laws of the state of Nevada
On that date, Alexander Dannikov was appointed as our director. As well, Mr.
Dannikov was appointed as our president, chief executive officer, treasurer and
secretary.
18
DESCRIPTION OF BUSINESS
LAMINATE FLOORING PRODUCTS
Laminate flooring is a relatively new building material product invented in
Sweden in the early 1980's. Laminate flooring now controls approximately a 10%
market share of the flooring product market, which is expanding due to the
product's durability and ecological compatibility.
Laminate flooring is versatile,durable, attractive flooring with the appearance
of a hardwood floor. Although laminate flooring looks like wood flooring, there
is actually no solid wood used in its construction. Laminate floors are made up
of several materials bonded together under high pressure. Most laminate flooring
consists of a moisture resistant layer under a layer of HDF (high density
fiberboard). This is covered with a high-resolution photographic image of
natural wood flooring. It is then finished with an extremely hard, clear coating
made from special resin-coated cellulose to protect the laminate flooring.
Laminate flooring is perfect for anyone wanting a durable floor for a fraction
of the price and installation time of a hardwood floor, but with the
attractiveness of real hardwood. Its construction also makes laminate flooring
more environmentally friendly as it uses less wood in its production and makes
more efficient use of wood fiber.
Both laminate flooring and hardwood flooring can beautify a home. While hardwood
is often thought to be a superior choice, there are several advantages to
laminate flooring. Distinct differences between the two types of flooring often
make laminate flooring a more attractive alternative. Solid hardwood of any
thickness (most is 3/8" to 3/4") should be installed only above grade. Laminate
flooring can be installed above or below grade. Some hardwood flooring is
engineered, meaning that instead of solid hardwood, it is made of several wood
layers with a hardwood veneer. Laminate flooring, usually 7mm to 8mm (5/16" to
3/8") thick, is also made of several layers. These are laminated together for
stability and strength. The top surface of laminate flooring is a "photograph"
of hardwood. High quality "photographs" faithfully reproduce the grain and color
of natural hardwood and the surfaces on quality laminate flooring closely
resemble real wood. Although many people insist on hardwood flooring, laminates
are long lasting, durable, and affordable and`quickly becoming one of the most
popular types of flooring.
One obvious advantage is price; laminate flooring is typically half the cost of
traditional hardwood flooring. Sometimes the savings are even greater, depending
on the types of flooring in question. Additionally, laminate flooring is
designed to be easy to install and is generally a good choice for the "do-
it-yourselve" market, where solid hardwood installation requires a higher level
of expertise. Installing laminate does not involve nails. More recently the use
of glue has been eliminated from the installation process in many cases. As a
result laminate flooring can be installed fairly quickly and inexpensively.
Laminate flooring is generally designed to be scratch-resistant and fade
resistant, two areas where solid hardwood flooring is known to be more vulner-
able.
19
The Association of European Producers of Laminate Flooring has adopted
standardized measures of hardness known as AC Hardness ratings. The AC measure
scale rates laminate flooring based on factors including abrasion resistance,
impact resistance, resistance to staining and cigarette burns, and thickness
swelling along edges. If laminate flooring cannot meet the requirements for each
of these ratings, approval for a given AC rating will be denied. We plan to
market and distribute laminate flooring with an A5 hardness rating. This is the
highest rate of hardness and can withstand the traffic of heavy commercial areas
such as department stores and public buildings.
We intend to commence business operations by marketing and distributing laminate
flooring throughout North America. We were formed as a corporation pursuant to
the laws of Nevada on December 13, 2006. To date, we have primarily been
involved in organizational activities, the execution of a distribution agreement
with our product supplier and initial marketing of laminate flooring.
AGREEMENT WITH OUR SUPPLIER
Our sole supplier, Bossco-Laminate Co., Ltd. ("Bossco") is a manufacturer and
distributor of certain wood flooring products in Russia. We are in the business
of marketing and distributing items to distributors, retail stores in the
building products industry, contractors and homebuilders.
By a Marketing and Sales Distribution Agreement dated March 9, 2007, Bossco has
agreed to manufacture certain types of laminate flooring products and fulfill
our written purchase orders for these products in a timely manner. Bossco has
agreed to manufacture and supply polish and relief surface laminate flooring
with the dimensions of 1200 x 300 x 8 millimeters. We will pay Bossco $12 per
each square meter of polish surface laminate and $12.5 per each square meter of
relief surface laminate.
The agreement with Bossco contains the following additional material terms:
1. We and our assigns may use the marketing information that Bossco
provides us in all of our marketing and distribution efforts to sell
the laminate flooring products. We agree not to make any marketing
claim in regard to the products that are not supported by the
information supplied by Bossco.
2. From time to time, Bossco can make reasonable adjustment to the price
of the laminate flooring products by giving us written notification of
such product price amendments.
3. Although Bossco's price list acts as a guide for purchases made by us,
both parties may negotiate discounts on any singular product purchase
order provided to Bossco, including the purchase of laminate flooring
from a manufacturing overrun situation.
4. We agree to pay the price of product purchases by letter of credit or
wire transfer prior to product shipment. We are also responsible for
all related shipping costs, unless other arrangements have been
expressly made.
5. The agreement can be terminated upon 60 days' written notice by either
party. Notwithstanding this provision, we or our assigns will be
permitted to sell, market, and distribute all laminate flooring
products that have been ordered from Bossco, or are in our or our
assigns' possession at termination.
20
6. There are no set minimum quota requirements for product sales under
the agreement in the first year. Bossco will be obligated to assist in
the completion of each sales order on a case-by-base basis, regardless
of quantity. Following the first year of the agreement, both parties
will review sales activities during the prior year and review this
provision of the agreement.
SALES AND MARKETING STRATEGY
We intend to rely on sales representatives to market our laminate flooring
products. Initially, our director, Alexander Dannikov will market our product.
We intend to focus on direct marketing efforts whereby our representative will
directly contact:
* distributors that are responsible for marketing and selling flooring
to flooring stores;
* retail outlets such as department and home restoration stores; and
* contractors and homebuilders.
These distributors, stores, contractors and homebuilders will be asked to sell
our products to consumers. We will provide them with flooring inventory at
wholesale prices. They will then sell them to consumers at retail prices, which
are typically 20% higher.
We intend to contact as many contractors, homebuilders, retail chains and
flooring stores as we can in order to market our laminate flooring. We initially
intend to focus our marketing efforts on larger home restoration stores that
have a high volume of customer traffic.
SHARE OF MARKET
Our expected share of the flooring market is difficult to determine given that
most flooring distributors are private businesses that have no duty to publicly
disclose their revenue, and flooring market is highly competitive. However, we
believe that due to the vast size of this market in North America, our market
share will likely be less than one percent.
COMPLIANCE WITH GOVERNMENT REGULATION
We do not believe that government regulation will have a material impact on the
way we conduct our business.
EMPLOYEES
We have no employees as of the date of this prospectus other than our sole
director.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any other research or development expenditures since our
incorporation.
SUBSIDIARIES
We do not have any subsidiaries.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patents or trademarks.
21
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The information in this report contains forward-looking statements. All
statements other than statements of historical fact made in this report are
forward looking. In particular, the statements herein regarding industry
prospects and future results of operations or financial position are forward-
looking statements. These forward-looking statements can be identified by the
use of words such as "believes," "estimates," "could," "possibly," "probably,"
anticipates," "projects," "expects," "may," "will," or "should" or other
variations or similar words. No assurances can be given that the future results
anticipated by the forward-looking statements will be achieved. Forward-looking
statements reflect management's current expectations and are inherently
uncertain. Our actual results may differ significantly from management's
expectations.
The following discussion and analysis should be read in conjunction with our
financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the
future, or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best
present assessment of our management.
OVERVIEW
Since inception on December 13, 2006 through June 30, 2007, we have sustained
cumulative net losses of $8,755. Our losses have resulted from general and
administrative expenses. From inception through June 30, 2007 , we have not
generated any revenue from operations. We expect to incur additional losses in
developing our plan of operations. We have no liabilities and has sufficient
cash to operate for more than one year at the current expenditure rate.
We are in the development stage of our business. As a development stage company,
we have yet to earn revenue from operations. We may experience fluctuations in
operating results in future periods due to a variety of factors, including our
ability to obtain additional funding in a timely manner and on terms favorable
to us, our ability to successfully develop our business model, the amount and
timing of operating costs and capital expenditures relating to the expansion of
our business, operations and infrastructure and the implementation of marketing
programs, key agreements, and strategic alliances,and general economic
conditions specific to our industry.
We will rely upon the stability of the North American retail sales market for
the success of our business plan. Future downturns in new residential
construction and home improvement activity may result in intense price
competition among building materials suppliers, which may adversely affect our
intended business.
Our products are used principally in new residential construction and in home
improvement, remodeling and repair work. The residential building materials
22
distribution industry is characterized by its substantial size, its highly
fragmented ownership structure and an increasingly competitive environment. The
industry can be broken into two categories: (1) new construction and (2) home
repair and remodeling. We intend to sell to customers in both categories.
Residential construction activity for both new construction and repair and
remodeling is closely linked to a variety of factors affected by general
economic conditions, including employment levels, job and household formation,
interest rates, housing prices, tax policy, availability of mortgage financing,
prices of commodity wood products, regional demographics and consumer
confidence.
The residential building materials distribution industry has undergone
significant changes over the last three decades. Prior to the 1970s,residential
building products were distributed almost exclusively by local dealers, such as
lumberyards and hardware stores. These channels served both the retail consumer
and the professional builder. These dealers generally purchased their products
from wholesale distributors and sold building products directly to homeowners,
contractors and homebuilders. In the late 1970's and 1980's, substantial changes
began to occur in the retail distribution of building products. The introduction
of the mass retail, big box format by The Home Depot began to alter this
distribution channel, particularly in metropolitan markets. They began to alter
this distribution channel by selling a broad range of competitively priced
building materials to the homeowner and small home improvement contractor.
Our plan of operation for the twelve months following the date of this
prospectus is to enter into sub-distribution agreements with flooring distrib-
utors, retail stores, contractors and homebuilders, providing for the sale of
our laminate flooring.
We intend to develop our retail network by initially focusing our marketing
efforts on larger chain stores that sell various types of flooring, such as Home
Depot. These businesses sell more flooring, have a greater budget for in- stock
inventory and tend to purchase a more diverse assortment of flooring. By late
2007 and 2008, we intend to start negotiation with contractors and homebuilders
and anticipate expanding our retail network to include small to medium size
retail businesses whose businesses focus is limited to the sale of flooring. Any
relationship we arrange with retailers for the wholesale distribution of our
flooring will be non-exclusive. Accordingly, we will compete with other flooring
vendors for positioning of our products in retail space.
Even if we are able to receive an order commitment, some larger chains will only
pay cash on delivery and will not advance deposits against orders. Such a policy
may place a financial burden on us and, as a result, we may not be able to
deliver the order. Other retailers may only pay us 30 or 60 days after delivery,
creating an additional financial burden.
We intend to retain one full-time sales person in the next six months, as well
as an additional full-time sales person in the six months thereafter. These
individuals will be independent contractors compensated solely in the form of
commission based upon laminate flooring sales they arrange. We expect to pay
each sales person 10% to 15% of the net profit we realize from such sales.
23
We therefore expect to incur the following costs in the next 12 months in
connection with our business operations:
Marketing costs: $20,000
General administrative costs: $10,000
-------
Total: $30,000
=======
In addition, we anticipate spending an additional $10,000 on professional fees,
including fees payable in connection with the filing of this registration
statement and complying with reporting obligations.
Total expenditures over the next 12 months are therefore expected to be $40,000.
PRODUCT RESEARCH AND DEVELOPMENT
We do not anticipate incurring any material costs in connection with product
research and development activities during the next twelve months.
ACQUISITION OF PLANT AND EQUIPMENT AND OTHER ASSETS
We do not anticipate the sale of any material property, plant or equipment
during the next 12 months. We do not anticipate the acquisition of any material
property, plant or equipment during the next 12 months.
NUMBER OF EMPLOYEES
From our inception through the period ended June 30, 2007, we have principally
relied on the services of our sole Director, Alexander Dannikov. We currently
have no full time or part-time employees. In order for us to attract and retain
quality personnel, we anticipate we will have to offer competitive salaries to
future employees. We anticipate that it may become desirable to add full and or
part time employees to discharge certain critical functions during the next 12
months. This projected increase in personnel is dependent upon our ability to
generate revenues and obtain sources of financing. There is no guarantee that we
will be successful in raising the funds required or generating revenues
sufficient to fund the projected increase in the number of employees. Should we
expand, we will incur additional cost for personnel.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2007, the Company had working capital of $16,645. From our
inception on December 13, 2006 to June 30, 2007, we used operating cash flow of
$8,263. The Company has been financed through the private placement of our
common stock of $ 25,400. As of June 30, 2007, the Company has no debt and $492
in recurring normal accounts payable.
While we have sufficient funds on hand to commence business operations,our cash
reserves are not sufficient to meet our obligations for the next twelve-month
period.As a result, we will need to seek additional funding in the near future.
We currently do not have a specific plan of how we will obtain such funding;
however, we anticipate that additional funding will be in the form of equity
financing from the sale of our common stock.
We may also seek to obtain short-term loans from our sole director, although no
such arrangement has been made. At this time, we cannot provide investors with
any assurance that we will be able to raise sufficient funding from the sale of
24
our common stock or through a loan from our directors to meet our obligations
over the next twelve months. We do not have any arrangements in place for any
future equity financing.
If we are unable to raise the required financing, we will be delayed in
conducting our business plan.
Our ability to generate sufficient cash to support our operations will be based
upon our sales staff's ability to generate laminate flooring sales. We expect to
accomplish this by securing a significant number of agreements with contractors,
homebuilders, large and small retailers, and by retaining suitable salespersons
with experience in the retail sales sector.
RESULTS OF OPERATIONS FOR PERIOD ENDING JUNE 30, 2007
We did not earn any revenue during the period from our inception on December 13,
2006 to June 30, 2007. We do not anticipate earning significant revenues until
such time as we have entered into regular product selling to distributors,
stores, contractors and homebuilders.
We incurred operating expenses in the amount of $8,755 for the period from our
inception on December 13, 2006 to June 30, 2007. These operating expenses were
comprised of bank charges of $460 and professional fees of $8,295.
We have not attained profitable operations and are dependent upon obtaining
financing to complete our proposed business plan.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
INFLATION
It is our opinion that inflation has not had a material effect on our
operations.
DESCRIPTION OF PROPERTY
We do not have ownership or leasehold interest in any property. Our president,
Mr. Alexander Dannikov, provides us with office space and related office
services free of charge.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of the following parties has, since our date of incorporation, had any
material interest, direct or indirect, in any transaction with us or in any
presently proposed transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
* Our promoter, Alexander Dannikov; and
* Any relative or spouse of any of the foregoing persons who has the
same house as such person.
25
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
NO PUBLIC MARKET FOR COMMON STOCK
There is presently no public market for our common stock. We anticipate applying
for trading of our common stock on the over the counter bulletin board
upon theeffectiveness of the registration statement of which this prospectus
forms a part.However, we can provide no assurance that our shares will be quoted
on the bulletin board or, if quoted, that a liquid public market will
materialize.
STOCKHOLDERS OF OUR COMMON SHARES
As of the date of this registration statement, we have 29 registered
shareholders.
RULE 144 SHARES
A total of 3,000,000 shares of our common stock are available for resale to the
public after March 7,2008 in accordance with the volume and trading limitations
of Rule 144 of the Act. In general, under Rule 144 as currently in effect, a
person who has beneficially owned shares of a company's common stock for at
least one year is entitled to sell within any three month period a number of
shares that does not exceed the greater of:
1. 1% of the number of shares of the company's common stock then
outstanding which, in our case, will equal 52,400, shares as of the
date of this prospectus; or
2. the average weekly trading volume of the company's common stock during
the four calendar weeks preceding the filing of a notice on Form 144
with respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
Under Rule 144(k), a person who is not one of the company's affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates hold all of
the 3,000,000 shares that may be sold pursuant to Rule 144.
STOCK OPTION GRANTS
To date, we have not granted any stock options.
REGISTRATION RIGHTS
We have not granted registration rights to the selling shareholders or to any
other persons.
26
DIVIDENDS
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities
plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving
the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us from our inception on December 13, 2006 to the date of this registration
statement.
ANNUAL COMPENSATION
Other
Name & Annual Restricted All Other
Principal Compen- Stock Options LTIP Compen-
Position Year Salary($) Bonus($) sation($) Award(s)($) SARs(#) Payouts($) sation($)
- -------- ---- --------- -------- --------- ----------- ------- ---------- ---------
Alexander 2006 0 0 0 0 0 0 0
Dannikov
Pres, CEO
Sec & Dir
STOCK OPTION GRANTS
We have not granted any stock options to the executive officers since our
inception.
CONSULTING AGREEMENTS
We do not have any employment or consulting agreement with Mr. Dannikov. We do
not pay him any amount for acting as the president and a director.
27
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no changes in or disagreements with our accountants.
AVAILABLE INFORMATION
We have filed a registration statement on form SB-2 under the Securities Act of
1933 with the Securities and Exchange Commission with respect to the shares of
our common stock offered through this prospectus. This prospectus is filed as a
part of that registration statement, but does not contain all of the information
contained in the registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of the referenced
contracts, agreements or documents of the company. We refer you to our
registration statement and each exhibit attached to it for a more detailed
description of matters involving the company. You may inspect the registration
statement, exhibits and schedules filed with the Securities and Exchange
Commission at the Commission's principal office in Washington, D.C. Copies of
all or any part of the registration statement may be obtained from the Public
Reference Section of the Securities and Exchange Commission, 100 F Street, N.E.,
Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. The Securities and
Exchange Commission also maintains a web site at http://www.sec.gov that
contains reports, proxy statements and information regarding registrants that
file electronically with the Commission. Our registration statement and the
referenced exhibits can also be found on this site.
28
BOSCO FLOORING, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 2007
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Registered Public Accounting Firm F-2
Condensed (Unaudited) Balance Sheet as of June 30, 2007 and
March 31, 2007 F-3
Condensed (Unaudited) Statement of Losses for the Three Months Ended
June 30, 2007 and for the Period From December 13, 2006 (Date of
Inception) to June 30, 2007 F-4
Statement of Stocholders' Equity (Unaudited) for the Three Months
Ended June 30, 2007 and for the Period From December 13, 2006 (Date
of Inception) to June 30, 2007 F-5
Statement of Cash Flows (Unaudited) for the Three Month Ended June
30, 2007 and for the Period From December 13, 2006 (Date of Inception)
to June 30, 2007 F-6
Notes to the Condensed Financial Statements (Unaudited) F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Bosco Flooring, Inc.
Nevada
We have audited the accompanying balance sheet of BOSCO FLOORING, INC. as of
March 31, 2007, and the related statement of losses, stockholder's equity and
cash flows for period December 13, 2006 (date of inception) through March 31,
2007. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We have conducted our audit in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States of America). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financialstatement presentation. We believe 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 Bosco Flooring, Inc. (a
development stage company) at March 31, 2007 and the results of its operations
and its cash flows for the period December 13, 2006 (date of inception) through
March 31, 2007 in conformity with accounting principles generally accepted in
the United States of America.
/s/ RBSM LLP
----------------------------
New York, New York
May 25, 2007
BOSCO FLOORING, INC.
(A Development Stage Company)
BALANCE SHEET
June 30, March 31,
2007 2007
-------- --------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 17,137 $ 25,502
-------- --------
TOTAL ASSETS $ 17,137 $ 25,502
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 492 $ 492
-------- --------
TOTAL CURRENT LIABILITIES $ 492 492
STOCKHOLDERS' EQUITY
Capital stock
Common stock, $0.001 par value, 75,000,000 shares
authorized; 5,240,000 shares issued and outstanding $ 5,240 $ 5,240
Additional paid-in-capital 20,160 20,160
Deficit accumulated during the development stage (8,755) (390)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 16,645 25,010
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,137 $ 25,502
======== ========
See accompanying notes an integral part of these financial statements
F-2
BOSCO FLOORING, INC.
(A Development Stage Company)
CONDENSED STATEMENT OF LOSSES
(UNAUDITED)
Cumulative from
Three Months December 13, 2006
Ended (Inception to
June 30, 2007 June 30, 2007
------------- -------------
Bank charges and interest $ 70 $ 460
Professional fees 8,295 8,295
----------- -----------
Net loss $ (8,365) $ (8,755)
=========== ===========
LOSS PER SHARE - BASIC AND DILUTED $ (0.00)
===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,240,000
===========
See accompanying notes an integral part of these financial statements
F-3
BOSCO FLOORING, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD DECEMBER 13, 2006 (DATE OF INCEPTION) TO JUNE 30, 2007
(UNDAUDITED)
Deficit
Accumulated
Number of Additional During
Common Paid-in Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
March 31, 2007
Subscribed for cash at $0.001 3,000,000 $ 3,000 $ -- $ -- $ 3,000
March 31, 2007
Subscribed for cash at $0.001 2,240,000 2,240 20,160 -- 22,400
Net loss -- -- -- (390) (390)
--------- --------- --------- --------- ---------
Balance as of March 31, 2007 5,240,000 5,240 20,160 (390) 25,010
========= ========= ========= ========= =========
Balance as of June 30, 2007 5,240,000 $ 5,240 $ 20,160 $ (8,755) $ 16,645
========= ========= ========= ========= =========
See accompanying notes an integral part of these financial statements
F-4
BOSCO FLOORING, INC.
(A Development Stage Company)
CONDENSED STATEMENT OF CASH FLOWS
(UNDAUDITED)
Cumulative From
Three Months December 13, 2006
Ended (Inception) to
June 30, 2007 June 30, 2007
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8,365) $ (390)
Adjustments to reconcile net loss to net cash
Accounts payable and accrued liabilities -- 492
-------- --------
Net cash used by operating activities (8,365) (8,263)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock -- 25,400
-------- --------
Net cash provided by financing activities -- 25,400
-------- --------
Net (decreas) in cash and equivalents (8,365) 25,502
Cash and equivalents at beginning of the period 25,502 --
-------- --------
Cash and equivalents at end of the period $ 17,137 $ 17,137
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest $ -- $ --
======== ========
Taxes $ -- $ --
======== ========
See accompanying notes an integral part of these financial statements
F-5
BOSCO FLOORING, INC.
(A Development Stage Company)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2007
(UNAUDITED)
1. NATURE AND CONTINUANCE OF OPERATIONS
Bosco Flooring, Inc. ("the Company") was incorporated under the laws of the
State of Nevada, U.S. on December 13, 2006. The Company is in the development
stage as defined under Statement on Financial Accounting Standards No. 7,
Development Stage Enterprises ("SFAS No.7") and its efforts are primarily
devoted marketing and distributing laminate flooring to the wholesale and retail
markets throughout North America. The Company has not generated any revenue to
date and consequently its operations are subject to all risks inherent in the
establishment of a new business enterprise. For the period from inception,
December 13, 2006 through June 30, 2007 the Company has accumulated losses of
$8,755. The unaudited condensed financial statements have been prepared on a
going concern basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for the
foreseeable future. The Company has incurred losses since inception resulting in
an accumulated deficit of $8,755 as at June 30,2007 and further losses are
anticipated in the development of its business raising substantial doubt about
the Company's ability to continue as a going concern. The ability to continue as
a going concern is dependent upon the Company generating profitable operations
in the future and/or to obtain the necessary financing to meet its obligations
and repay its liabilities arising from normal business operations when they come
due. Management intends to finance operating costs over the next twelve months
with existing cash on hand and loans from directors and or private placement of
common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The unaudited condensed financial statements of the Company have been prepared
in accordance with generally accepted accounting principles in the United States
of America and are presented in US dollars.
For purposes of Statement of Cash Flows the Company considers all highly liquid
debt instruments purchased with a maturity date of three months or less to be
cash equivalent.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of unaudited condensed 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-6
BOSCO FLOORING, INC.
(A Development Stage Company)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2007
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSLATION
The financial statements are presented in United States dollars. In accordance
with Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation", foreign denominated monetary assets and liabilities are translated
into their United States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Non monetary assets and liabilities are
translated at the exchange rates prevailing on the transaction date. Revenue and
expenses are translated at average rates of exchange during the year. Gains or
losses resulting from foreign currency transactions are included in results of
operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash and accounts payable and accrued liabilities
approximates their fair value because of the
short maturity of these instruments. Unless otherwise noted,it is management's
opinion the Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments.
INCOME TAXES
The Company follows the liability method of accounting for income taxes. Under
this method, deferred income tax assets and liabilities are recognized for the
estimated tax consequences attributable to differences between the financial
statement carrying values and their respective income tax basis (temporary
differences). The effect on deferred income tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. At June 30, 2007 a full deferred tax asset valuation allowance
has been provided and no deferred tax asset has been recorded.
BASIC AND DILUTED LOSS PER SHARE
The Company computes loss per share in accordance with SFAS No. 128, "Earnings
per Share" which requires presentation of both basic and diluted earnings per
share on the face of the statement of operations. Basic loss per share is
computed by dividing net loss available to common shareholders by the weighted
average number of outstanding common shares during the period. Diluted loss per
share gives effect to all dilutive potential common shares outstanding during
the period. Dilutive loss per share excludes all potential common shares if
their effect is anti-dilutive. The Company has no potential dilutive instruments
and accordingly basic loss and diluted loss per share are equal.
F-7
BOSCO FLOORING, INC.
(A Development Stage Company)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2007
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.
LONG-LIVED ASSETS
The Company has adopted Statement of Financial Accounting Standards No. 144
("SFAS 144"). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Events relating to recoverability may include
significant unfavorable changes in business conditions, recurring losses, or a
forecasted inability to achieve break-even operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based upon
forecasted undiscounted cash flows. Should impairment in value be indicated, the
carrying value of intangible assets will be adjusted, based on estimates of
future discounted cash flows resulting from the use and ultimate disposition of
the asset. SFAS No. 144 also requires assets to be disposed of be reported at
the lower of the carrying amount or the fair value less costs to sell.
RESEARCH AND DEVELOPMENT
The Company accounts for research and development costs in accordance with the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 2 ("SFAS 2"), "Accounting for Research and Development Costs".
Under SFAS 2, all research and development costs must be charged to expense as
incurred. Accordingly, internal research and development costs are expensed as
incurred. Third-party research and developments costs are expensed when the
contracted work has been performed or as milestone results have been achieved.
Company-sponsored research and development costs related to both present
and future products are expensed in the period incurred. The Company incurred
expenditures $0 the period from December 13, 2006 (date of inception) to June
30, 2007.
CONCENTRATIONS OF CREDIT RISK
Financial instruments and related items, which potentially subject the Company
to concentrations of credit risk, consist primarily of cash, cash equivalents
and related party receivables. The Company places its cash and temporary cash
investments with credit quality institutions. At times, such investments may be
in excess of the FDIC insurance limit. The Company periodically reviews its
trade receivables in determining its allowance for doubtful accounts. The
Company does not have accounts receivable and allowance for doubtful accounts at
June 30, 2007.
F-8
BOSCO FLOORING, INC.
(A Development Stage Company)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2007
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Company will recognize revenue in accordance with Staff Accounting Bulletin
No. 104, REVENUE RECOGNITION ("SAB104"), which superseded Staff Accounting
Bulletin No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS ("SAB101"). SAB
101 requires that four basic criteria must be met before revenue can be
recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred; (3) the selling price is fixed and determinable; and (4)
collectibility is reasonably assured. Determination of criteria (3) and (4) are
based on management's judgments regarding the fixed nature of the selling prices
of the products delivered and the collectibility of those amounts. Provisions
for discounts and rebates to customers, estimated returns and allowances, and
other adjustments are provided for in the same period the related sales are
recorded. The Company will defer any revenue for which the product has not been
delivered or is subject to refund until such time that the Company and the
customer jointly determine that the product has been delivered or no refund will
be required.
SAB 104 incorporates Emerging Issues Task Force 00-21 ("EITF 00-21"), MULTIPLE-
DELIVERABLE REVENUE ARRANGEMENTS. EITF 00-21 addresses accounting for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The effect of implementing EITF 00-21 on
the Company's consolidated financial position and results of operations was not
significant.
From the date of inception through June 30, 2007, the Company has not generated
any revenue to date.
ADVERTISING
The Company follows the policy of charging the costs of advertising to expenses
incurred. The Company incurred $0 in advertising costs during the period ended
June 30, 2007.
LIQUIDITY
As shown in the accompanying financial statements, the Company has incurred a
net loss of $8,365 for the three months ended June 30, 2007. As of June 30,
2007, the Company's has excess of current assets over its current liabilities by
$16,645, with cash and cash equivalents representing $17,137.
STOCK-BASED COMPENSATION
In December 2004, the FASB issued SFAS No. 123R, "SHARE-BASED PAYMENT", which
replaced SFAS No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION" and superseded
APB Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES". In January 2005,
the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin
("SAB") No. 107, "SHARE-BASED PAYMENT", which provides supplemental
F-9
BOSCO FLOORING, INC.
(A Development Stage Company)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2007
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
implementation guidance for SFAS No. 123R. SFAS No. 123R requires all
share-based payments to employees, including grants of employee stock options,
to be recognized in the financial statements based on the grant date fair value
of the award. SFAS No. 123R was to be effective for interim or annual reporting
periods beginning on or after June 15, 2005, but in April 2005 the SEC issued a
rule that will permit most registrants to implement SFAS No. 123R at the
beginning of their next fiscal year, instead of the next reporting period as
required by SFAS No. 123R. The pro-forma disclosures previously permitted under
SFAS No. 123 no longer will be an alternative to financial statement
recognition. Under SFAS No. 123R, the Company must determine the appropriate
fair value model to be used for valuing share-based payments, the amortization
method for compensation cost and the transition method to be used at date of
adoption. The transition methods include prospective and retroactive adoption
options. Under the retroactive options, prior periods may be restated either as
of the beginning of the year of adoption or for all periods presented. The
prospective method requires that compensation expense be recorded for all
unvested stock options and restricted stock at the beginning of the first
quarter of adoption of SFAS No. 123R, while the retroactive methods would record
compensation expense for all unvested stock options and restricted stock
beginning with the first period restated. The Company adopted the modified
prospective approach of SFAS No. 123R for the period beginning December 13,
2006. The Company did not record any compensation expense in the period of 2007
because there were no stock options outstanding prior to the adoption or at June
30, 2007.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2006, the FASB issued FSP EITF 00-19-2, "ACCOUNTING FOR REGISTRATION
PAYMENT ARRANGEMENTS" ("FSP 00-19-2") which addresses accounting for
registration payment arrangements. FSP 00-19-2 specifies that the contingent
obligation to make future payments or otherwise transfer consideration under a
registration payment arrangement, whether issued as a separate agreement or
included as a provision of a financial instrument or other agreement, should be
separately recognized and measured in accordance with FASB Statement No. 5,
"ACCOUNTING FOR CONTINGENCIES". FSP 00-19-2 further clarifies that a financial
instrument subject to a registration payment arrangement should be accounted for
in accordance with other applicable generally accepted accounting principles
without regard to the contingent obligation to transfer consideration pursuant
to the registration payment arrangement. For registration payment arrangements
and financial instruments subject to those arrangements that were entered into
prior to the issuance of EITF 00-19-2, this guidance is effective for financial
statements issued for fiscal years beginning after December 15, 2006 and interim
periods within those fiscal years. The Company has not yet determined the impact
that the adoption of FSP 00-19-2 will have on its financial statements.
In February 2007, the FASB issued SFAS No. 159, "THE FAIR VALUE OPTION FOR
FINANCIAL ASSETS AND FINANCIAL LIABILITIES." SFAS 159 permits entities to choose
to measure many financial instruments, and certain other items, at fair value.
SFAS 159 applies to reporting periods beginning after November 15, 2007. The
adoption of SFAS 159 is not expected to have a material impact on the Company's
financial condition or results of operations.
F-10
BOSCO FLOORING, INC.
(A Development Stage Company)
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2007
(UNAUDITED)
3. COMMON STOCK
The total number of common shares authorized that may be issued by the Company
is 75,000,000 shares with a par value of one tenth of one cent ($0.001) per
share and no other class of shares is authorized. During the year March 31,
2007, the Company issued 5,240,000 shares of common stock for total cash
proceeds of $25,400. At June 30, 2007 there were no outstanding stock options or
warrants.
4. INCOME TAXES
As of June 30, 2007, the Company had net operating loss carry forwards of
approximately $8,755 that may be available to reduce future years' taxable
income through 2028. Future tax benefits which may arise as a result of these
losses have not been recognized in these financial statements, as their
realization is determined not likely to occur and accordingly, the Company has
recorded a valuation allowance for the deferred tax asset relating to these tax
loss carry-forwards.
5. MARKETING AND SALES DISTRIBUTION AGREEMENT
The Company entered into a Marketing and Sales Distribution Agreement with
Bossco-Laminate Co., Ltd. to market and distribute the laminate flooring
products in North America.
F-11
UNTIL ____, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified s provided by the Nevada Revised
Statutes and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is
specifically limited by a company's articles of incorporation that is not the
case with our articles of incorporation. Excepted from that immunity are:
(1) a willful failure to deal fairly with the company or its shareholders
in connection with a matter in which the director has a material
conflict of interest;
(2) a violation of criminal law (unless the director had reasonable cause
to believe that his or her conduct was lawful or no reasonable cause
to believe that his or her conduct was unlawful);
(3) a transaction from which the director derived an Improper personal
profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in onnection with any proceeding (or part
thereof) initiated by such person unless:
(1) such indemnification is expressly required to be made by law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole discretion,
pursuant to the powers vested us under Nevada law; or
(4) such indemnification is required to be made pursuant to the bylaws.
Our bylaws provide that we will advance all expenses ncurred to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was our director or
officer, or is or was serving at our request as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following request. This
advance of expenses is to be made upon receipt of an undertaking by or on behalf
of such person to repay said amounts should it be ultimately determined that the
person was not entitled to be indemnified under our bylaws or otherwise.
II-1
Our bylaws also provide that no advance shall be made by us to any officer in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made: (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding; or (b) if such quorum is not obtainable,or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision- making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee $ 2.40
Transfer Agent Fees $ 3,000.00
Accounting fees and expenses $ 7,000.00
Legal fees and expenses $ 4,000.00
Edgar filing fees $ 1,000.00
----------
Total $15,002.40
==========
All amounts are estimates other than the Commission's registration fee.
We are paying all expenses of the offering listed above. No portion of these
expenses will be borne by the selling shareholders. The selling shareholders,
however, will pay any other expenses incurred in selling their common stock,
including any brokerage commissions or costs of sale.
RECENT SALES OF UNREGISTERED SECURITIES
We completed an offering of 3,000,000 shares of our common stock at a price of
$0.001 per share on March 7, 2007. The total amount received from this offering
was $3,000. We completed this offering pursuant to Regulation S of the
Securities Act. These 3,000,000 shares were issued Alexander Dannikov, our
president, chief executive officer, treasurer, secretary and sole director.
We completed an offering of 2,240,000 shares of our common stock at a price of
$0.01 per share to a total of 28 purchasers on March 28, 2007. The total amount
received from this offering was $22,400. We completed this offering pursuant to
Regulation S of the Securities Act. The purchasers were as follows:
Name of Subscriber Number of Shares
------------------ ----------------
Vitaliy Vasyuk 80,000
Pavel Petrzhikovskiy 80,000
Yelena Lyakutina 80,000
Yevgeniy Kubyshev 80,000
Vladislav Prikhodko 80,000
Andrey Kryukov 80,000
Natalia Kryukova 80,000
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Nikolay Padalets 80,000
Elizaveta Padalets 80,000
Oleg Lyakutin 80,000
Dmitry Perfilyev 80,000
Alexey Didenko 80,000
Irina Vysochina 80,000
Vladimir Vysochin 80,000
Pavel Blinnikov 80,000
Artem Andreyev 80,000
Roman Chernetskiy 80,000
Chandkiran Sharma 80,000
Elena Syrovatskaya 80,000
Anastasia Kulebyakina 80,000
Irina Samigullina 80,000
Olga Deshina 80,000
Maisa Magerramova 80,000
Igor Lyakutin 80,000
Alexander Gilev 80,000
Liudmila Loginova 80,000
Ivan Krikun 80,000
Olga Emelyanova 80,000
REGULATION S COMPLIANCE
Each offer or sale was made in an offshore transaction;
Neither we, a distributor, any respective affiliates nor any person on behalf of
any of the foregoing made any directed selling efforts in the United States;
Offering restrictions were, and are, implemented;
No offer or sale was made to a U.S. person or for the account or benefit of a
U.S. person;
Each purchaser of the securities certifies that it was not a U.S. person and
was not acquiring the securities for the account or benefit of any U.S. person;
Each purchaser of the securities agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and agreed not
to engage in hedging transactions with regard to such securities unless in
compliance with the Act;
The securities contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are required, either by contract or a provision in its bylaws, articles,
charter or comparable document, to refuse to register any transfer of the
securities not made in accordance with the provisions of Regulation S pursuant
to registration under the Act, or pursuant to an available exemption from
registration; provided, however, that if any law of any Canadian province
prevents us from refusing to register securities transfers, other reasonable
procedures, such as a legend described in paragraph (b)(3)(iii)(B)(3) of
Regulation S have been implemented to prevent any transfer of the securities not
made in accordance with the provisions of Regulation S.
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EXHIBITS
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation
3.2 Bylaws
5.1 Legal opinion of Daniel C. Masters, with Consent to Use
10.1 Distribution Agreement
23.1 Consent of RBSM, LLP
23.2 Consent to use the name of Legal Counsel in SB-2
The undersigned registrant hereby undertakes:
1. 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 of 1933;
(b) reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth
in this registration statement; and notwithstanding the forgoing, 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) if,in the
aggregate, the changes in the 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.
2. That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment any of the
securities being registered hereby which remain unsold at the termination of the
offering.
4. That, for determining our liability under the Securities Act to any purchaser
in the initial distribution of the securities, we undertake that in a primary
offering of our securities pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
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following communications, we will be a seller to the purchaser and will be
considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus that we file relating to the
offering required to be filed pursuant to Rule 424 (Section 230.424 of
this chapter);
(ii) any free writing prospectus relating to the offering prepared by or on
our behalf or used or referred to by us;
(iii)the portion of any other free writing prospectus relating to the
offering containing material information about us or our securities
provided by or on behalf of us; and
(iv) any other communication that is an offer in the offering made by us to
the purchaser.
Each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no statement made
in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such date of first use.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
person in connection with the securities being registered, we 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 is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Irkutsk,
Irkutsk Region, Russia, October 22, 2007.
Bosco Flooring, Inc.
By: /s/ Alexander Dannikov
------------------------------------------
Alexander Dannikov, President,
Chief Executive Officer, Treasurer,
Secretary, Principal Accounting Officer,
Principal Financial Officer and Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Signature Capacity in Which Signed Date
--------- ------------------------ ----
/s/ Alexander Dannikov President, Chief Executive October 22, 2007
- --------------------------- Officer, Secretary, Treasury,
Alexander Dannikov Principal Financial Officer
Principal Accounting Officer
and Director
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INDEX TO EXHIBITS
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation
3.2 Bylaws
5.1 Legal opinion of Daniel C. Masters, with Consent to Use
10.1 Distribution Agreement
23.1 Consent of RBSM, LLP
23.2 Consent to use the name of Legal Counsel in SB-2