SUMMARY INFORMATION
You should carefully read all information in the prospectus, including the financial statements and their explanatory notes, under the Financial Statements prior to making an investment decision.
Organization
NSJ-US. Co., Ltd., or the “Company,” is a Nevada corporation formed on March 21, 2011.
Our principal executive office is located at Yotsubashi-Nissei Bldg., 2F, 1-1-7, Kitahorie, Nishi-ku, Osaka, Japan. Tel: +81-6-4391-0370. Our U.S. sales representative maintains a sales office in the U.S. at 1801 Avenue of the Stars, Suite 1203, Los Angeles, California 90067.
Business
Our business is the sale of security systems and related software, including a personal emergency security system known as Robot Locator, in all areas of the world except Japan. The Company has no current intention to merge with a non-public operating company.
We have been engaged in significant and continuous operational activities in furtherance of our business plan since inception. Initially these activities consisted of the following types of actions:
a.
|
Incorporate company in state of Nevada
|
b.
|
Set up main executive office in Japan
|
c.
|
Open up bank account for the company
|
●
|
Developed our Business Plan and Marketing Plan
|
●
|
Secured Distribution Agreement with NSJ Japan
|
●
|
Commenced sales activities with two primary potential customers:
|
a.
|
Takeda-Taban Environmental Global Solutions, Inc.
|
b.
|
Representative of a Court system in California
|
●
|
Commenced actions to become a Public Company in the U.S. to increase our presence and profile in the U.S. and elsewhere in the world by being a U.S. public company, an essential part of our business plan, and in that connection we:
|
b.
|
Travelled to the U.S. to meet U.S. counsel and begin process of drafting registration statement
|
c.
|
Located both accountants and auditors for the company
|
d.
|
Secured audited financial statements necessary for the filing of the registration statement
|
As significant sales do not occur without significant initial organization efforts as described above, these initial organizational activities ultimately resulted in our generating sales as of December 13, 2011 of $105,400, for which final payment from the customer Takeda-Taban Environmental Global Solutions, Inc., an unaffiliated third-party, in the Philippines was received in December 2011. Mr. Joko had met the director of Takeda-Taban Environmental Global Solutions through a mutual acquaintance.
We paid NSJ. Co., Ltd., our supplier, $88,810 for this equipment that we sold. The contract included various costs of installation, paid by us to NSJ. Co., Ltd., our supplier, as follows:
o
|
Installation of receivers and monitoring cameras = $15,000
|
o
|
Wiring work for electrical power and internet=$8,000
|
o
|
Set up the network connecting=$6,000
|
o
|
Adjustment of the receivers and monitoring cameras=$1,000
|
o
|
The validation of equipment=$700
|
o
|
Travel expenses of 4 people=$12,000.
|
o
|
Cost of wires and the other materials=$5,300
|
The installation price we have to pay NSJ Japan determined by NSJ Japan’s estimate of actual cost.
The foundation laid by these initial operational activities also resulted in new agreements to market non-affiliated services For Net Creation Co., L td. We will market Search Engine Optimization and Internet Marketing services of Net Creations to businesses in the U.S. that want to have an internet presence through advertising Google and Yahoo and Search Engine Optimization in Japan. We continued development of our business plan by raising additional working capital and broadening our shareholder base in Japan through a Regulation S offering in November 2011. We also enhanced our management and marketing capability as well as our corporate governance structure by adding an independent director. In February 2012, further continuing to develop our business plan, we enhanced our marketing ability by hiring a new, English-speaking Vice President – Marketing.
Most recently in furtherance of our business plan, in order to enhance our presence in the U.S. and secure sales, marketing and backoffice support services in the U.S., in February 2012 we entered into a Sales, Marketing and Backoffice Support Services Agreement with
CSI Co., Ltd., a Japanese company with offices in the U.S. Pursuant to the Agreement, for a term of at least three years, CSI
will undertake certain sales and other marketing support activities on behalf of NSJ, as well as provide and make available to NSJ backoffice services for NSJ’s U.S. office.
We established a separate distribution company incorporated in the U.S. and not Japan to distribute products worldwide because we wanted a company solely involved in distribution and not manufacturing operations to sell our products as we believed being a U.S. public company would facilitate our ability to make sales worldwide but in particular in the U.S. where being a public company will enhance our visibility and credibility. We also believed that it would facilitate our ability to sign agreements to distribute other products outside of Japan, which has in fact occurred with the signing of the agreements with Net Creations as described above. With our enhanced internal and external sales capabilities and our new sales representative located the U.S., we are confident we can continue to successfully implement our business plan.
The Robot Locator security systems and related software products we have sold and will continue to sell are manufactured in Japan by NSJ. Co., Ltd. (“NSJ-Japan” or “Supplier”). It was established in 2006 specializing in the development and marketing in Japan of security systems and related software including the Robot Locator,, and is located in Yotsubashi-Nissei Bldg., 2F, 1-1-7, Kitahorie, Nishi-ku , Osaka, Japan. On March 21, 2011, we signed a ten year distribution agreement with NSJ-Japan. NSJ-Japan is a Japanese security systems and related software products development and manufacturing company owned 50.84% by Mr. Joko Toshikazu, our chairman. NSJ-Japan is currently the primary supplier of the products we sell. Under the distribution agreement, we are not prohibited from distributing products manufactured or supplied by entities other than the Supplier. We issued 24,755,000 shares of common stock to NSJ-Japan as consideration for granting us the rights under the Distribution Agreement. On September 27, 2011, we amended our Distribution agreement adding an additional five years to the term in exchange for the issuance of 14,000,000 shares of our common stock. The Distribution Agreement was further amended on December 31, 2011 with respect to certain provisions such as purchase price of Products, purchase orders, termination and rights to sell Products in Japan under certain conditions.
The Distribution Agreement, as amended, provides that the prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be no more than 30% in excess of the actual cost of Supplier in making the Products. Supplier has no right to put products to Distributor outside of the purchase order process contemplated in the Agreement. Further, there is no minimum purchase requirement in order for Distributor to maintain all its rights under this Agreement. All purchase orders from us are subject to acceptance in writing by Supplier; provided, however, that Supplier may not refuse to accept any Purchase Order if we indicate we have a certainty or reasonable expectation of selling the Products ordered within six months of the date of the Purchase Order. To avoid any conflict of interest, the Agreement may not be terminated for any reason if our Independent Director does not agree to the termination. In the absence of an Independent Director, a majority vote of our non-affiliated shareholders must vote to agree to such a termination. In the event a dispute between the parties arises as a result, it shall be resolved by Arbitration as set forth in this Agreement, with counsel for us selected by the our Independent Director, or in the absence of an Independent Director, a majority vote of our non-affiliated shareholders.
The Offering
As of the date of this prospectus, we had
39,298,775
shares of common stock outstanding.
Selling shareholders are offering up to 350,000 shares of common stock. The selling shareholders will offer their shares at $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. We will pay all expenses of registering the securities, estimated at approximately $60,000. We will not receive any proceeds of the sale of these securities.
To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. The current absence of a public market for our common stock may make it more difficult for you to sell shares of our common stock that you own.
Financial Summary
Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this prospectus, including the financial statements and their explanatory notes before making an investment decision. The following table summarizes our financial position as of January 31 , 2011 and July 31, 2011, and the results of our operations for the three months ended January 31 , 2011, the period from March 21, 2011 (date of inception) to July 31, 2011, and the period from March 21, 2011 (date of inception) to January 31 , 2011, which were derived from our audited and unaudited financial statements.
Balance Sheets
|
|
January 31,
|
|
|
July 31,
|
|
|
|
2011
|
|
|
2011
|
|
Cash
|
|
$
|
5,654
|
|
|
$
|
-
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
15,000
|
|
Total assets
|
|
|
5,654
|
|
|
|
15,000
|
|
Due to related party
|
|
|
12,784
|
|
|
|
30,000
|
|
Total liabilities
|
|
|
22,584
|
|
|
|
31,100
|
|
Total stockholders' deficit
|
|
$
|
16,930
|
|
|
$
|
16,100
|
|
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Period From
|
|
|
Cumulative From
|
|
|
|
For the
|
|
|
March 21, 2011
|
|
|
March 21, 2011
|
|
|
|
Six Months Ended
|
|
|
(Date of Inception)
|
|
|
(Date of Inception)
|
|
|
|
January 31, 2012
|
|
|
To July 31, 2011
|
|
|
To January 31, 2012
|
|
|
|
(unaudited)
|
|
|
|
|
|
(unaudited)
|
|
Revenue
|
|
$
|
105,400
|
|
|
$
|
-
|
|
|
$
|
105,400
|
|
Cost of Sales
|
|
|
88,180
|
|
|
|
-
|
|
|
|
88,180
|
|
Operating expenses
|
|
|
43,201
|
|
|
|
21,100
|
|
|
|
64,301
|
|
Net inccome (loss)
|
|
$
|
(25,981
|
)
|
|
$
|
(21,100
|
)
|
|
$
|
(47,081
|
)
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and diluted
|
|
|
34,630,085
|
|
|
|
24,880,000
|
|
|
|
30,557,265
|
|
In addition to the other information provided in this prospectus, you should carefully consider the following risk factors in evaluating our business before purchasing any of our common stock. All material risks are discussed in this section.
Risks Related to our Business
Our generating
limited
revenues from operations makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.
We have generated $105,400 in revenues as of March 1, 2012 from the sale of products to one customer in the Philippines. However , it is difficult, if not impossible, to forecast our future results based upon our historical data. Because of the related uncertainties, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales, revenues or expenses. If we make poor budgetary decisions as a result of unreliable data, we may never become profitable or incur losses, which may result in a decline in our stock price.
Our auditors have indicated in their report that there is substantial doubt about our ability to continue as a going concern as a result of our lack of revenues and if we are unable to generate significant revenue or secure financing we may be required to cease or curtail our operations.
Our auditors have indicated in their report that our lack of revenues raise substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty. If we are unable to generate significant revenue or secure financing we may be required to cease or curtail our operations.
Any decrease in the availability, or increase in the cost, of security systems and related software, including the Robot Locator, we purchase for resale could materially affect our earnings.
Our operations depend heavily on the availability of security systems and related software, including the Robot Locator, we will resell. We will purchase all of the security systems and related software products we will resell from NSJ-Japan, an affiliate. However, if NSJ-Japan is unable or unwilling to provide us with security systems and related software, including the Robot Locator, on terms favorable to us, we may be unable to resell certain products. This could result in a decrease in profit and damage to our reputation in our industry. In the event our costs of acquiring these security systems and related software products increase, we may not be able to pass these higher costs on to our customers in full or at all. Any increase in the prices for these products could materially increase our costs and therefore lower our earnings.
Our revenue will decrease if there is less demand for special use security system products.
We are subject to the general changes in economic conditions affecting the purchase of special use security system and locator products. Demand for our products is typically affected by a number of economic factors, including, but not limited to,
consumer demand for the type of special use security system products we will sell and competition with other types special use electronic or other types of locator products. If there is a decline in demand for our special use security system products, our revenue will likewise decrease.
Our customer base for our products is limited because we can primarily sell only to customers with a broad user base in a limited geographic area.
It is essentially impractical for an individual isolated user to purchase and use our product on an economical basis. The primary customers for our products are condominium or apartment buildings or planned residential communities where there is a concentration of potential users. This limitation on potential customer base could hinder our ability to generate revenues.
Because our reputation will depend upon third parties that will provide the monitoring services necessary for the products we distribute, our reputation may be harmed by such third party’s failure to provide adequate service at a reasonable price level.
Our products require the purchasers to contract separately with a third party monitoring service. Third parties that provide the monitoring services necessary for the products we
distribute may not provide adequate service at a reasonable price level, potentially harming our reputation and decreasing our revenues.
We face increasing competition from domestic and foreign companies.
The security system products industry in throughout the world is fragmented. Our ability to compete against other Japanese and international enterprises is, to a significant extent, dependent on our ability to distinguish our products from those of our competitors by providing large volumes of high quality products that appeal to consumers’ tastes and preferences at reasonable prices. Some of our competitors have been in business longer than we have and are more established. Our competitors may provide products comparable or superior to those we provide or adapt more quickly than we do to evolving industry trends or changing market requirements. Increased competition may result in price reductions, higher supplier prices, reduced margins and loss of market share, any of which could materially adversely affect our profit margins.
Our sales and reputation may be affected by product liability claims, litigation or, product recalls in relation to our products.
The sale of special use security system products involves an inherent risk of injury to consumers. We face risks associated with product liability claims, litigation, or product recalls, if our products cause injury or do not work properly. If any of our products did not work properly, and we were unable to detect this, our products could be subject to product liability claims or product recalls.
We have not procured a product liability or general liability insurance policy for our business. To the extent that we suffer a loss of a type which would normally be covered by product liability or general liability insurance in the United States, we would incur significant expenses in defending any action against us and in paying any claims that result from a settlement or judgment against us. Product liability claims and product recalls could have a material adverse effect on the demand for our products and on our business goodwill and reputation. Adverse publicity could result in a loss of consumer confidence in our products.
Our sales and reputation may be affected by the action or inaction of third parties that will provide the monitoring services necessary for the products we
distribute
,
and our reputation may be harmed by such third party
’
s failure to provide adequate service
,
reducing our revenues.
We will depend upon third parties to provide monitoring services necessary for the products we distribute. Our sales and reputation may be affected by the action or inaction of third parties that will provide the monitoring services necessary for the products we distribute, and our reputation may be harmed by such third partys failure to provide adequate service, reducing our revenues.
General economic conditions could reduce our revenues.
General economic conditions in the world outside of Japan where we will sell have an impact on our business and financial results. The global economy in general remains uncertain. As a result, individuals and companies may delay or reduce expenditures. Weak economic conditions and/or softness in the consumer or business channels could result in lower demand for our products, resulting in lower sales, earnings and cash flows.
A conflict of interest may exist for our Chairman Joko Toshikazu due to his position and interest in us and in NSJ-Japan, our main supplier
and his position on both sides of the Funding Agreement
.
NSJ-Japan is a Japanese manufacturing company owned 50.84% by Mr. Joko Toshikazu, our chairman. NSJ-Japan is the main supplier of the products we will sell. Mr. Toshikazu may face a conflict in calculating the price the products are sold to us and the determining amount of products we purchase. However,
the Distribution Agreement as amended contains certain provisions limiting Mr. Joko’s unilitaral rights in areas such as pricing, ordering and termination. Because Mr. Toshikazu controls us, he effectively sits on both sides of the Funding Agreement and, therefore, has the power to modify this arrangement. Modification might reduce and/or eliminate funds received under the Funding Agreement. However, b
ecause Mr. Toshikazu has a fiduciary duty to us and our shareholders, he has indicated that he will assure strict adherence to
these
provision
s
of the
Agreement and will provide all funding as needed without unilaterally modifying the Funding Agreement
.
We depend heavily on key personnel, and turnover of key senior management could harm our business.
Our future business and results of operations depend in significant part upon the continued contributions of our chairman Joko Toshikazu. If we lose his services or if he fails to perform in his current positions, or if we are not able to attract and retain skilled employees as needed, our business could suffer. Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key employees in managing the product acquisition, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future.
Our management has limited experience in managing the day to day operations of a public company and, as a result, we may incur additional expenses associated with the management of our company.
Our chairman Joko Toshikazu is responsible for the operations and reporting of our company. The requirements of operating as a small public company are new to the management team and the employees as a whole. This may require us to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be more costly than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.
Risks Related to Japan
Because our supplier’s operations are located in Japan, the following risks could affect our business of our supplier and thus harm our revenues.
The value of our securities will be affected by the foreign exchange rate between U.S. dollars and the Japanese Yen.
The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and the Japanese Yen, and between those currencies and other currencies in which our sales may be denominated. Currently, the Japanese Yen is stronger than U.S. Dollars. For example, to the extent that we need to convert U.S. dollars into the Japanese Yen for our operational needs and should the Japanese Yen appreciate against the U.S. dollar at that time, our financial position, the business of the Company, and the price of our common stock may be harmed.
In the event that the U.S. dollars appreciate against the Japanese Yen, our costs will increase. If we cannot pass the resulting cost increase on to our customers, our profitability and operating results will suffer. In addition, if our sales to international customers grow rapidly, we are subject to the risk of foreign currency depreciation.
It may be difficult for stockholders to enforce any judgment obtained in the United States against us, which may limit the remedies otherwise available to our stockholders.
All of our assets are located outside the United States and all of our current operations are conducted in Japan. Moreover, all of our directors and officers are nationals or residents of Japan. All or a substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for our stockholders to effect service of process within the United States upon these persons. In addition, there is uncertainty as to whether the courts of Japan would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities law of the United States or any state thereof, or be competent to hear original actions brought in Japan against us or such persons predicated upon the securities laws of the United States or any state thereof. Further, Japan’s treaties do not provide for reciprocal recognition and enforcement of judgments of U.S. courts.
Risks Related to the Market for our Stock
Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws.
Our common stock is currently not quoted on any market. No market may ever develop for our common stock, or if developed, may not be sustained in the future.
The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the Shares available for trading on the OTCBB, investors should consider any secondary market for the Company's securities to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication which permits a "manual exemption." This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
Accordingly, our shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
We will be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.
The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. We anticipate that our common stock will become a “penny stock”, and we will become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
We do not anticipate that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
Sales of our common stock under Rule 144 could reduce the price of our stock.
There are
1
9
,178
,775 shares of our common stock held by non-affiliates and 20,
120
,000 shares held by affiliates Rule 144 of the Securities Act of 1933 defines as restricted securities.
330,000
of our shares held by non-affiliates and 2
0
,000 shares held by affiliates are being registered in this offering, however the remaining non-affiliate shares as well as all of the remaining affiliates’ shares will still be subject to the resale restrictions of Rule 144. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.
Because we do not have an audit or compensation committee, shareholders will have to rely on the entire board of directors, none of which are independent, to perform these functions.
We do not have an audit or compensation committee comprised of independent directors. Indeed, we do not have any audit or compensation committee. These functions are performed by the board of directors as a whole. No members of the board of directors are independent directors. Thus, there is a potential conflict in that board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions.
Certain of our stockholders hold a significant percentage of our outstanding voting securities which could reduce the ability of minority shareholders to effect certain corporate actions
.
Our officers, directors and principal shareholders are the beneficial owners of approximately
53.75
% of our outstanding voting securities. As a result, they possess significant influence and can elect a majority of our board of directors and authorize or prevent proposed significant corporate transactions. Their ownership and control may also have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer.
Special Information Regarding Forward Looking Statements
Some of the statements in this prospectus are “forward-looking statements.” These forward-looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, the factors set forth above under “Risk Factors.” The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar expressions identify forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements in this document to reflect any future or developments. However, the Private Securities Litigation Reform Act of 1995 is not available to us as a non-reporting issuer and as an issuer of penny stocks. Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection with an initial public offering.
USE OF PROCEEDS
Not applicable. We will not receive any proceeds from the sale of shares offered by the selling shareholders.
DETERMINATION OF OFFERING PRICE
Our management has determined the offering price for the selling shareholders' shares. The price of the shares we are offering was arbitrarily determined based the following factors:
·
|
our lack of significant revenues
|
·
|
the price we believe a purchaser is willing to pay for our stock
|
The offering price does not bear any relationship to our assets, results of operations, or book value, or to any other generally accepted criteria of valuation. Prior to this offering, there has been no market for our securities. We have no agreement, written or oral, with our selling shareholders about this price. Based upon oral conversations with our selling shareholders, we believe that none of our selling shareholders disagree with this price.
DILUTION
Not applicable. We are not offering any shares in this registration statement. All shares are being registered on behalf of our selling shareholders.
SELLING SHAREHOLDERS
The selling security holders named below are selling the securities. The table assumes that all of the securities will be sold in this offering. However, any or all of the securities listed below may be retained by any of the selling security holders, and therefore, no accurate forecast can be made as to the number of securities that will be held by the selling security holders upon termination of this offering.
We believe that the selling security holders listed in the table have sole voting and investment powers with respect to the securities indicated. We will not receive any proceeds from the sale of the securities by the selling security holders. None of our selling security holders is or is affiliated with a broker-dealer. All selling security holders may be deemed underwriters.
Name of Shareholders
|
|
Total
Shares
Owned
|
|
|
Shares
Registered
|
|
|
Remaining Shares if All Registered Shares Sold [2]
|
|
|
% Before
Offering
|
|
|
% After
Offering
|
|
Relationship to Us
|
Toshikazu Joko[1]
|
|
|
20
,110,000
|
|
|
|
10,000
|
|
|
|
2
0
,100,000
|
|
|
|
51.17
|
%
|
|
|
51.15
|
%
|
Officer/Director since inception; Principal shareholder and Management of Distributor
|
Sumiyo Nakanishi
|
|
|
110,000
|
|
|
|
10,000
|
|
|
|
100,000
|
|
|
|
*
|
|
|
|
*
|
|
Employee of Supplier
|
Toshiya Chinzan
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Eiichi Takano
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Takashi Sakiyama
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Keiichi Morimoto
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Naoki Takeda
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Ken Moriyasu
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Yoshimi Mituzawa
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Yoshiko Mitsuzawa
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Shinsuke Mituzawa
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Kenji Kakutani
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Kenichi Umekawa
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
Director
|
Kazuo Tanaka
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Kuniyuki Terai
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Kazuhiro Akune
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Shinichi Saito
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Shuji Nakagawa
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Yoshiyuki Hojo
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Akiya Hojo
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Junko Hojo
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Yuuki Hojo
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Shinya Hojo
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Takahisa Sato
|
|
|
160,000
|
|
|
|
10,000
|
|
|
|
150,000
|
|
|
|
*
|
|
|
|
*
|
|
|
Kyoko Joko
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Hideki Wakasa
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Harue Yoshida
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Keiko Yoshida
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Junichi Okumura
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Noriyuki Taga
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Kazue Yonemura
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Koichiro Yonemura
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Takuma Yonemura
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
Hideaki Yonemura
|
|
|
110,000
|
|
|
|
10,000
|
|
|
|
100,000
|
|
|
|
*
|
|
|
|
*
|
|
Employee of Supplier
|
Saori Ikeda
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
|
|
TOTAL
|
|
|
|
|
|
|
350,000
|
|
|
|
20,450,000
|
|
|
|
|
|
|
|
|
|
|
* Less than 1%
[1] Includes 300,000 shares owned by Venus Holdings Limited Company, Toshikazu Joko principal.
[2] Assuming sale of all shares registered hereunder.
Share Issuances
The selling security holders, all non-citizens/non-residents of the U.S., acquired their shares by purchase exempt from registration under Regulation S of the 1933 at a price of approximately $.064 per share for aggregate proceeds of $23,076.92.
We relied upon Regulation S of the Securities Act of 1933, as amended for the above issuances to non US citizens or residents.
We believed that Regulation S was available because:
●
|
None of these issuances involved underwriters, underwriting discounts or commissions;
|
●
|
We placed Regulation “S” required restrictive legends on all certificates issued;
|
●
|
No offers or sales of stock under the Regulation “S” offering were made to persons in the United States;
|
●
|
No direct selling efforts of the Regulation “S” offering were made in the United States.
|
We believed that Section 4(2) of the Securities Act of 1933 was available because:
●
|
None of these issuances involved underwriters, underwriting discounts or commissions.
|
●
|
Restrictive legends were and will be placed on all certificates issued as described above.
|
●
|
The distribution did not involve general solicitation or advertising.
|
●
|
The distributions were made only to investors who were sophisticated enough to evaluate the risks of the investment.
|
In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:
●
|
Access to all our books and records.
|
●
|
Access to all material contracts and documents relating to our operations.
|
●
|
The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.
|
Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.
The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the Shares available for trading on the OTCBB, investors should consider any secondary market for the Company's securities to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication which permits a "manual exemption”. This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
We currently do not intend to and may not be able to qualify securities for resale in other states which require shares to be qualified before they can be resold by our shareholders.
PLAN OF DISTRIBUTION
Our common stock is currently not quoted on any market. No market may ever develop for our common stock, or if developed, may not be sustained in the future. Accordingly, our shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
Selling shareholders are offering up to 350,000 shares of common stock. The selling shareholders will offer their shares at $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. We will not receive proceeds from the sale of shares from the selling shareholders.
The securities offered by this prospectus will be sold by the selling shareholders. Selling shareholders in this offering may be considered underwriters. We are not aware of any underwriting arrangements that have been entered into by the selling shareholders. The distribution of the securities by the selling shareholders may be effected in one or more transactions that may take place in the over-the-counter market, including broker's transactions or privately negotiated transactions.
The selling shareholders may pledge all or a portion of the securities owned as collateral for margin accounts or in loan transactions, and the securities may be resold pursuant to the terms of such pledges, margin accounts or loan transactions. Upon default by such selling shareholders, the pledge in such loan transaction would have the same rights of sale as the selling shareholders under this prospectus. The selling shareholders may also enter into exchange traded listed option transactions, which require the delivery of the securities listed under this prospectus. After our securities are qualified for quotation on the over the counter bulletin board, the selling shareholders may also transfer securities owned in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer without consideration, and upon any such transfer the transferee would have the same rights of sale as such selling shareholders under this prospectus.
In addition to the above, each of the selling shareholders will be affected by the applicable provisions of the Securities Exchange Act of 1934, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the securities by the selling shareholders or any such other person. We have instructed our selling shareholders that they may not purchase any of our securities while they are selling shares under this registration statement.
Upon this registration statement being declared effective, the selling shareholders may offer and sell their shares from time to time until all of the shares registered are sold; however, this offering may not extend beyond two years from the initial effective date of this registration statement.
There can be no assurances that the selling shareholders will sell any or all of the securities. In various states, the securities may not be sold unless these securities have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
All of the foregoing may affect the marketability of our securities. Pursuant to oral promises we made to the selling shareholders, we will pay all the fees and expenses incident to the registration of the securities.
Should any substantial change occur regarding the status or other matters concerning the selling shareholders or us, we will file a post-effective amendment to this registration statement disclosing such matters.
OTC Bulletin Board Considerations
To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. We anticipate that after this registration statement is declared effective, market makers will enter “piggyback” quotes and our securities will thereafter trade on the OTC Bulletin Board.
The OTC Bulletin Board is separate and distinct from the NASDAQ stock market. NASDAQ has no business relationship with issuers of securities quoted on the OTC Bulletin Board. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTC Bulletin Board.
Although the NASDAQ stock market has rigorous listing standards to ensure the high quality of its issuers, and can delist issuers for not meeting those standards, the OTC Bulletin Board has no listing standards. Rather, it is the market maker who chooses to quote a security on the system, files the application, and is obligated to comply with keeping information about the issuer in its files. FINRA cannot deny an application by a market maker to quote the stock of a company. The only requirement for inclusion in the bulletin board is that the issuer be current in its reporting requirements with the SEC.
Although we anticipate listing on the OTC Bulletin board will increase liquidity for our stock, investors may have greater difficulty in getting orders filled because it is anticipated that if our stock trades on a public market, it initially will trade on the OTC Bulletin Board rather than on NASDAQ. Investors’ orders may be filled at a price much different than expected when an order is placed. Trading activity in general is not conducted as efficiently and effectively as with NASDAQ-listed securities.
Investors must contact a broker-dealer to trade OTC Bulletin Board securities. Investors do not have direct access to the bulletin board service. For bulletin board securities, there only has to be one market maker.
Bulletin board transactions are conducted almost entirely manually. Because there are no automated systems for negotiating trades on the bulletin board, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. Therefore, when investors place market orders - an order to buy or sell a specific number of shares at the current market price - it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and getting execution.
Because bulletin board stocks are usually not followed by analysts, there may be lower trading volume than for NASDAQ-listed securities.
LEGAL PRO
CEEDINGS
We are not aware of any pending or threatened legal proceedings in which we are involved.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The board of directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be elected for the term of one year, and until his successor is elected and qualified, or until his earlier resignation or removal. Our director and executive officer is as follows:
Name
|
|
Age
|
|
Position
|
Joko Toshikazu
|
|
53
|
|
Chairman of the Board, President, Treasurer and Secretary
|
Sumiyo Nakanishi
|
|
36
|
|
Vice President - Sales
|
Kenichi Umekawa
|
|
64
|
|
Director
|
Mr. Toshikazu joined us as Chairman of the Board, President, Treasurer and Secretary upon formation in March 2011. Since June 2006, he has been President and CEO of NSJ. Co., Ltd., our main supplier. He received a Bachelor of Economics in April 1980 from Osaka University of Economics/Department of Economics. He brings a complete knowledge of our industry and our products as well as contacts with potential customers outside Japan to our Board.
Ms. Nakanishi joined us as Vice President – Sales in January 2012. From April 2007 to January 2012, she was accounting manager of NSJ. Co., Ltd. From April 2005 to March 2007, she was General Affairs Section Manager of Nsec Co., Ltd., a security guard device developer. Ms. Nakanishi is fluent in English.
Mr. Umekawa joined us as Director in December 2011. From September 2010 to date, he has been self-employed as a consultant in the security business. From April 2008 to August 2010, he was Vice President, Universal Security Co., Ltd, a security firm. From June 2006 to March 2008, he was Director of Daiwa Real Estate Management Co., Ltd, a real estate management company. In March, 1969, he received a Bachelor of Law, Faculty of Law, Kansei Gakuin University. As a member of the board, Mr. Umekawa contributes his knowledge of the company’s industry and a deep understanding of all aspects of our industry, products and markets due to his prior business experience in companies involved in security business, as well substantial experience developing corporate strategy, assessing emerging industry trends, and business operations in connection with his various management positions in prior companies and businesses.
Mr. Toshikazu and Ms. Nakanishi are husband and wife.
Mr. Toshikazu, our chairman and director, will devote approximately 75% of his time to our business and Ms. Nakanishi will devote all of her time to our business. With the addition of Ms. Nakanishi to our management as well the addition of CSI personnel under the Sales, Marketing and Backoffice Agreement, Mr. Toshikazu believes he will be able to devote all the time necessary to our business to assure successful implementation of our business plan.
Legal Proceedings
No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:
·
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,
|
·
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),
|
·
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,
|
·
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
|
·
Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity.
|
·
Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity.
|
·
Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of the date of this prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The business address of the shareholders is Kitahama Bldg., 2F, 1-7-19, Imabashi, Chuo-ku, Osaka, Japan.
Name
|
|
Number of Shares of
Common stock
[ 3 ]
|
|
|
Percentage
|
|
Joko Toshikazu [1]
|
|
|
20,110,000
|
|
|
|
51.17
|
%
|
Sumiyo Nakanishi [2]
|
|
|
20,110,000
|
|
|
|
51.17
|
|
Kenichi Umekawa
|
|
|
10,000
|
|
|
|
.03
|
%
|
Tatsuo Nakanishi
|
|
|
2,000,000
|
|
|
|
5.09
|
%
|
All executive officers and directors as a group [ 3 person s ]
|
|
|
20,120,000
|
|
|
|
56.29
|
%
|
_______________
[1] Includes 300,000 shares owned by Venus Holdings Limited Company, Toshikazu Joko principal.
[2] All shares held by Mr. Joko and Venus Holdings Limited Company. Ms. Nakanishi, his wife, disclaims beneficial ownership of these shares.
[ 3 ] Assumes none of the 10 ,000 shares owned by Mr. Toshikazu Joko being registered hereunder are sold.
This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 39,298,775 shares of common stock outstanding as of March 1, 2012 .
DESCRIPTION OF SECURITIES
The following description as a summary of the material terms of the provisions of our Articles of Incorporation and Bylaws. The Articles of Incorporation and Bylaws have been filed as exhibits to the registration statement of which this prospectus is a part.
Common Stock
We are authorized to issue 100,000,000 shares of common stock with $.001 par value per share. As of the date of this registration statement, there were
39,298,775
shares of common stock issued and outstanding held by
87
shareholders of the record.
Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders. The holders are not permitted to vote their shares cumulatively. Accordingly, the shareholders of our common stock who hold, in the aggregate, more than fifty percent of the total voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.
Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available. We have not paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.
Holders of our common stock have no preemptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution or windup , the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. There are not any provisions in our Articles of Incorporation or our Bylaws that would prevent or delay change in our control.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock in series as fixed by the Directors with a par value of $0.001 per share. As of the date of this registration statement, there are no preferred shares outstanding.
Preferred stock may be issued in series with preferences and designations as the Board of Directors may from time to time determine. The board may, without shareholders approval, issue preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of our common shareholders and may assist management in impeding an unfriendly takeover or attempted changes in control. There are no restrictions on our ability to repurchase or reclaim our preferred shares while there is any arrearage in the payment of dividends on our preferred stock.
INTEREST OF NAMED EXPERTS
The financial statements for the period from inception to July 31, 2011 included in this prospectus have been audited by Meyler & Company LLC. who are independent certified public accountants, to the extent and for the periods set forth in their report and are incorporated herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
The legality of the shares offered under this registration statement is being passed upon by Williams Law Group, P.A., Tampa, Florida. Michael T. Williams, principal of Williams Law Group, P.A., and two of his affiliates collectively own 193,775 shares of our common stock, all of which are being registered in this offering.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES
Our Bylaws, subject to the provisions of Nevada, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, 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 of 1933 and is, therefore, unenforceable.
DESCRIPTION OF BUSINESS
Organization
NSJ-US. Co., Ltd., or the “Company,” is a Nevada corporation formed on March 21, 2011.
Our principal executive office is located at Yotsubashi-Nissei Bldg., 2F, 1-1-7, Kitahorie, Nishi-ku, Osaka, Japan. Tel: +81-6-4391-0370. Our U.S. sales representative maintains a sales office in the U.S. at 1801 Avenue of the Stars, Suite 1203, Los Angeles, California 90067.
Business
Our business is the sale of security systems and related software, including a personal emergency security system known as Robot Locator, in all areas of the world except Japan. The Company has no current intention to merge with a non-public operating company.
We have been engaged in significant and continuous operational activities in furtherance of our business plan since inception. Initially these activities consisted of the following types of actions:
a.
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Incorporate company in state of Nevada
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b.
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Set up main executive office in Japan
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c.
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Open up bank account for the company
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·
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Developed our Business Plan and Marketing Plan
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·
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Secured Distribution Agreement with NSJ Japan
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·
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Commenced sales activities with two primary potential customers:
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a.
|
Takeda-Taban Environmental Global Solutions, Inc.
|
b.
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Representative of a Court system in California
|
·
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Commenced actions to become a Public Company in the U.S. to increase our presence and profile in the U.S. and elsewhere in the world by being a U.S. public company, an essential part of our business plan, and in that connection we:
|
b.
|
Travelled to the U.S. to meet U.S. counsel and begin process of drafting registration statement
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c.
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Located both accountants and auditors for the company
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d.
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Secured audited financial statements necessary for the filing of the registration statement
|
As significant sales do not occur without significant initial organization efforts as described above, these initial organizational activities ultimately resulted in our generating sales as of December 13, 2011 of $105,400, for which final payment from the customer Takeda-Taban Environmental Global Solutions, Inc., an unaffiliated third-party, in the Philippines was received in December 2011.
We paid NSJ. Co., Ltd., our supplier, $88,810 for this equipment that we sold. The contract included various costs of installation, paid by us to NSJ. Co., Ltd., our supplier, as follows:
o
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Installation of receivers and monitoring cameras = $15,000
|
o
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Wiring work for electrical power and internet=$8,000
|
o
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Set up the network connecting=$6,000
|
o
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Adjustment of the receivers and monitoring cameras=$1,000
|
o
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The validation of equipment=$700
|
o
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Travel expenses of 4 people=$12,000.
|
o
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Cost of wires and the other materials=$5,300
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The installation price we have to pay NSJ Japan determined by NSJ Japan’s estimate of actual cost.
The foundation laid by these initial operational activities also resulted in new agreements to market non-affiliated services For Net Creation Co., Ltd. We will market Search Engine Optimization and Internet Marketing services of Net Creations to businesses in the U.S. that want to have an internet presence through advertising Google and Yahoo and Search Engine Optimization in Japan. We continued development of our business plan by raising additional working capital and broadening our shareholder base in Japan through a Regulation S offering in November 2011. We also enhanced our management and marketing capability as well as our corporate governance structure by adding an independent director. In February 2012, further continuing to develop our business plan, we enhanced our marketing ability by hiring a new, English-speaking Vice President – Marketing.
Most recently in furtherance of our business plan, in order to enhance our presence in the U.S. and secure sales, marketing and backoffice support services in the U.S., in February 2012 we entered into a Sales, Marketing and Backoffice Support Services Agreement with
CSI Co., Ltd., a Japanese company with offices in the U.S. Pursuant to the Agreement, for a term of at least three years, CSI
will undertake certain sales and other marketing support activities on behalf of NSJ, as well as provide and make available to NSJ backoffice services for NSJ’s U.S. office.
We established a separate distribution company incorporated in the U.S. and not Japan to distribute products worldwide because we wanted a company solely involved in distribution and not manufacturing operations to sell our products as we believed being a U.S. public company would facilitate our ability to make sales worldwide but in particular in the U.S. where being a public company will enhance our visibility and credibility. We also believed that it would facilitate our ability to sign agreements to distribute other products outside of Japan, which has in fact occurred with the signing of the agreements with Net Creations as described above. With our enhanced internal and external sales capabilities and our new sales representative located the U.S., we are confident we can continue to successfully implement our business plan.
The Robot Locator security systems and related software products we have sold and will continue to sell are manufactured in Japan by NSJ. Co., Ltd. (“NSJ-Japan” or “Supplier”). It was established in 2006 specializing in the development and marketing in Japan of security systems and related software including the Robot Locator,, and is located in Yotsubashi-Nissei Bldg., 2F, 1-1-7, Kitahorie, Nishi-ku , Osaka, Japan. On March 21, 2011, we signed a ten year distribution agreement with NSJ-Japan. NSJ-Japan is a Japanese security systems and related software products development and manufacturing company owned 50.84% by Mr. Joko Toshikazu, our chairman. NSJ-Japan is currently the primary supplier of the products we sell. Under the distribution agreement, we are not prohibited from distributing products manufactured or supplied by entities other than the Supplier. We issued 24,755,000 shares of common stock to NSJ-Japan as consideration for granting us the rights under the Distribution Agreement. On September 27, 2011, we amended our Distribution agreement adding an additional five years to the term in exchange for the issuance of 14,000,000 shares of our common stock. The Distribution Agreement was further amended on December 31, 2011 with respect to certain provisions such as purchase price of Products, purchase orders, termination and rights to sell Products in Japan under certain conditions.
The Distribution Agreement, as amended, provides that the prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be no more than 30% in excess of the actual cost of Supplier in making the Products. Supplier has no right to put products to Distributor outside of the purchase order process contemplated in the Agreement. Further, there is no minimum purchase requirement in order for Distributor to maintain all its rights under this Agreement. All purchase orders from us are subject to acceptance in writing by Supplier; provided, however, that Supplier may not refuse to accept any Purchase Order if we indicate we have a certainty or reasonable expectation of selling the Products ordered within six months of the date of the Purchase Order. To avoid any conflict of interest, the Agreement may not be terminated for any reason if our Independent Director does not agree to the termination. In the absence of an Independent Director, a majority vote of our non-affiliated shareholders must vote to agree to such a termination. In the event a dispute between the parties arises as a result, it shall be resolved by Arbitration as set forth in this Agreement, with counsel for us selected by the our Independent Director, or in the absence of an Independent Director, a majority vote of our non-affiliated shareholders.
The Robot Locator™ is a Japanese-patented
physical tracking system for individuals, much in the same way of a product like “LoJack” for automobiles.
The Robot Locator System consists of a hand-held device, a receiver which receives emergency signals, as well as customizable and extendable software installed in the receivers. To use the device, The device holder registers their personal information in the device, so monitoring individuals can know who pushed the device’s button. The devices have a GPS locater, so monitoring individuals can know where is the device. When the button is pushed, the individual’s personal information along with the GPS location is sent to the receiver which transmits the information via the internet to NSJ’s server in Japan. NSJ relays the signal to the monitoring service selected by the user, generallya monitoring room maintained by the user or third parties separately contracted by the users which alerts local police or similar security officers to head to the scene. NSJ does not charge our customers for providing this relay service.
The Primary technology is RFID technology with identification information. RFID means Radio-frequency identification. It is an automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders.
There are two types of Robot Locator:
hand-held type
and
in-vehicle type
.
·
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Hand-held type with emergency button
|
o
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Retail price: US$200.00
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·
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In-vehicle type
|
o
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Electrical power is provided from cigar socket.
|
o
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Retail price : US$200.00
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The hand held type like a small box “panic button” device and is carried. The auto locater is a small box that plugs into the cigarette lighter.
There are three types of receivers for the Robot Locator, one indoor and two outdoor.
·
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Indoor type
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o
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Retail price: US$3,000
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·
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Outdoor type receiver - We have two types of outdoor use receiver, and choice of type depends on installation site.
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o
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Retail price: US$4,500
|
We contract with NSJ Japan to provide installation services at NSJ Japan’s estimated actual cost.
Although the information about the user is relayed to our server, we don’t provide monitoring services ourselves. Because our customers are and in the future are anticipated to be locations where there are a large number of users tied together by a housing or working relationship, such as a farm, planned residential community, condominium or court system where there is already some sort of property or personnel management system in place, we anticipate that the personnel management system in place will directly provide or contract for the monitoring service. Much like alarm system companies in the U.S. who, if alerted, contact the police or fire department directly and these security people respond when requested by the alarm company monitoring service, we anticipate the same method of the monitoring entity for our products also alerting local police, fire or security services. Just as with alarm companies in the U.S., we do not anticipate that monitoring services will need or have any formal contract with security personnel.
To date, since 2006, our supplier has sold 2,000 Robot Monitor systems and is currently monitoring 3,000 individuals solely in Japan.
For our recent sale in the Philippines, the customer was a large farming operation that bought our devices to monitor activity on their farm. For example, they use the Robot Locater to monitor when employees or cars go in and out the farm. Employees can use the Robot Locator to notify farm manager in case of accident or other problems requiring immediate action on the farm. The farm set up its own monitoring station on the farm and it is monitored by farm employees. Although we don’t sell TV monitoring systems normally, if the client requests, as Takeda-Taban Environmental Global Solutions did, we will sell and have installed that function as well.
As examples of potential customers and uses, in Japan our Supplier has sold Robot Locaters in two types of housing project, as follows:
Satsukidai: a planned residential community in Japan
o
|
The auto locater can also be used to access the property
|
●
|
A local guard company was hired by the community to monitor and users pay monitoring fees directly to the guard company.
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Higashi-Osaka : a condominium in Japan
o
|
The locator can be used not only for security but to access the property.
|
●
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The property managing company monitors for a monthly fee charged directly to the users
|
Customers for the Robot Locater products are large residential or farming project such as the Philippines farm and planned community and condominium in Japan. Management does have contacts outside of Japan as evidenced by the Philippines sale and current marketing efforts in the U.S. to a California court system. These contacts increase with the addition of Mr. Umekawa to our team. The establishment of a U.S. office and the addition of our English speaking Vice President-Sales and CSI marketing personnel in the U.S. will further facilitate our contacting U.S. customers.
Our products will be sold directly by our officers, directors and employees as well as CSI marketing and sales personnel in the U.S. to customers and potential customers. We will locate these customers primarily by personal contacts or referrals. Our current officers and directors have contacts in various parts of the world, as evidenced by our sale in the Philippines and current marketing efforts in the U.S.
Agreement with CSI
We entered into Marketing & Backoffice Support Services Agreement as of February 1, 2012 between
CSI Co., Ltd.
("CSI"), a Japan corporation with U.S. offices located at 1801 Avenue of the Stars, Suite 1203, Los Angeles, California 90067. CSI has English speaking marketing personnel located at its office in the U.S. in Los Angeles CA and related U.S. marketing and sales expertise. CSI agreed to undertake certain sales and other marketing support activities on behalf of NSJ for all its current and future products, as well as provide and make available to NSJ backoffice services for a U.S. representative office at CSI’s California office. In connection therewith, the parties agreed as follows:
1. NSJ-PROVIDED RESOURCES.
a.
|
NSJ Marketing Personnel. NSJ personnel, including its President, Vice President-Sales and Independent Director, shall act as marketing personnel for NSJ.
|
b.
|
Products and Services. NSJ will make available all Japan related products and services which it has the right to distribute in the U.S.
|
c.
|
Customer Service. NSJ will be responsible for all customer service.
|
d.
|
Prices. NSJ will be responsible for setting all prices on the Products.
|
2. CSI PROVIDED RESOURCES: Marketing, Advertising and Sales Expertise and Support.
CSI shall provide NSJ with the following:
a.
|
Sales and Marketing support, including access to CSI's marketing professionals, as well as consulting services and access to any technology or expertise used by or available to CSI for creating, implementing, managing or otherwise supporting sales and marketing and related activities.
|
b.
|
Advertising and sales support. Such support shall include consulting services and access to any technology or expertise used by or available to CSI for creating, implementing, managing or otherwise supporting advertising, sales and related activities, including all assistance requested by NSJ marketing personnel in marketing and selling the Products in the U.S.
|
c.
|
CSI Employees may directly market the Products to potential customers as directed and supervised by NSJ marketing personnel.
|
3. NSJ BACKOFFICE SUPPORT.
CSI shall make available to NSJ all backoffice support services it currently maintains for its own activities in its California office.
4. COMPENSATION.
NSJ shall pay to CSI as compensation for its services $300 per month plus 5% of the gross sales price of any products of NSJ that CSI assists in selling in the U.S. under this Agreement
Marketing Plan
During the next 12 months we intend to focus primarily on the sale of our Robot Locator product outside of Japan, focusing on developing a U.S. presence, and then leverage the U.S. presence to sell Net Creations services as well as our Robot Locater.
We anticipate our new English speaking Vice President-Sales as well as our new relationship with CSI and our establishment of a U.S. office will further this plan. Specifically, we intend to develop a website and focus on marketing our products on the internet through ad programs such as Google AdWords and YouTube. Ms. Nakanishi will respond to all initial inquiries and will refer the leads to CSI who will continue the marketing effort to the leads under Ms. Nakanishi’s supervision. We will continue our discussions with a potential customer with the California court system with whom we have had several preliminary meetings. We are also discussing with the representative of this customer the possibility of his becoming an additional sales representative for us in the U.S.
We anticipate that the cost of implementing this plan will be approximately $400,000 spent on marketing, product acquisition, office establishment and personnel, as follows:
o
|
Website Development: $30,000
|
o
|
Fee and Commissions to CSI: $15,000
|
o
|
Internet Marketing and Advertising as well as other advertising and publicity as advised by CSI: $95,000
|
·
|
Product acquisition: $ 200,000
|
o
|
Budgeted for acquisition of Robot Locater and related products to sell through our officers and directors as well as CSI as described above
|
o
|
We anticipate paying $60,000 for Ms. Nakanishi as a first year salary if we have funds available.
|
Net Creations Agreements
Our business plan envisions that we will market and distribute Japan related products in the U.S. and elsewhere in the world, except Japan. Thus we have attempted and will attempt to secure agreements to sell Japan related products and services in addition to Robot Locater products.
In that connection, we signed agreements dated December 20, 2011 to sell Search Engine Optimization and Internet Marketing services of Net Creations to businesses in the U.S. that want to have an internet presence through advertising Google and Yahoo and Search Engine Optimization in Japan. The agreements provide that we will receive a commission of 40% of Net Creations billings for these services to be paid upon collection. The Agreements are for a term of one year and shall be automatically renewed thereafter on a year to year basis, unless either party hereto gives the other party a written notice not to renew the Agreement at least thirty days before expiration of the original term or any extension of this Agreement. Either party hereto may cause the Agreement to be terminated upon the expiration of the initial or renewal term without paying the other party any remuneration for such termination. We are currently in the process of negotiating with a U.S. citizen to become our U.S. representative and presence for these services. The fact that Net Creations is in Japan will facilitate this business. All communications between customers in the U.S. and Net Creations in Japan will be through the internet. The purpose is to expose U.S. companies to Japanese markets through a internet marketing firm in Japan.
Our Competition and Our Market Position
Competition within the security systems industry is intense. We will compete with both large scale enterprises and smaller scale private companies. In addition, we also face competition from international security systems resellers. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do.
Our major competitors are companies providing personal guard services such as SECOM Co., Ltd. in Japan. We are small compared to most of our competitors.
We compete with these and other suppliers based upon the quality of our products, low cost management, management’s knowledge of the industry, and professional service.
Research and Development
We have not incurred research and development expenses in the last two fiscal years.
Our Intellectual Property
We have no intellectual property. The Robot Locator™ is subject to a registered trademark by our Supplier in Japan. The Registration number is 5179895. The date of grant is November 14, 2008 and the expiration date is November 14, 2028. Our Supplier also have a patent for the product in Japan. The patent number is 4142062. The date of grant is June 20, 2008 and the expiration date is June 20, 2028.
Our Employees
Our only employees are our two officers who for now will handle all of our sales and day-to-day management duties. We have no collective bargaining agreement with our employees. We consider our relationship with our employees to be excellent.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form S-1.
Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filing with the Securities and Exchange Commission.
Although the forward-looking statements in this Registration Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Overview
NSJ-US. Co., Ltd., or the “Company,” is a Nevada corporation formed on March 21, 2011.
Our principal executive office is located at Yotsubashi-Nissei Bldg., 2F, 1-1-7, Kitahorie, Nishi-ku, Osaka, Japan. Tel: +81-6-4391-0370. We have no separate U.S. office and utilize as a U.S. address that of our registered agent which is 1955 Baring Blvd., Sparks, NV 89434.
Our business is the sale of security systems and related software, including a personal emergency security system known as Robot Locator, in all areas of the world except Japan and to market and sell other Japan related products and services. We have been engaged in significant and continuous operational activities in furtherance of our business plan since inception as further described in “Business,” above. These activities have resulted in our generating sales as of December 13, 2011of $105,400, for which final payment from the customer Takeda-Taban Environmental Global Solutions, Inc. in the Philippines was received in December 2011. However, the fact that we purchase not only the products but also the installation services from our supplier reduced our net revenues received from sale of our Robot Locater product to this customer are will similarly reduce net revenues from future sales to other customers.
These operational activities also resulted in new agreements to market non-affiliated services For Net Creation Co., Ltd. We will market Search Engine Optimization and Internet Marketing services of Net Creations to businesses in the U.S. that want to have an internet presence through advertising Google and Yahoo and Search Engine Optimization in Japan. In addition, we raised additional working capital and broadened our shareholder base in Japan through a Regulation S offering in November 2011. We also enhanced our management and marketing capability as well as our corporate governance structure by adding an independent director.
We established a separate distribution company incorporated in the U.S. and not Japan to distribute products worldwide because we wanted a company solely involved in distribution and not manufacturing operations to sell our products as we believed being a U.S. public company would facilitate our ability to make sales worldwide. We also believed that it would facilitate our ability to sign agreements to distribute other complimentary products outside of Japan, which has in fact occurred with the signing of the agreements with Net Creations as described above. NSJ Japan distributed shares issued as consideration for the Distribution Agreement to its shareholders in order to broaden our shareholder base.
During the next 12 months we intend to focus primarily on the sale of our Robot Locator product outside of Japan, focusing on developing a U.S. presence, and then leverage the U.S. presence to sell Net Creations services as we;; as our Robot Locater. We anticipate our new English speaking Vice President-Sales as well as our new relationship with CSI and our establishment of a U.S. office will further this plan. We will continue our discussions with a potential customer with the California court system with whom we have had several preliminary meetings. We are also discussing with the representative of this customer the possibility of his becoming an additional sales representative for us in the U.S. We anticipate that the cost of implementing this plan will be approximately $400,000 spent on marketing, product acquisition, office establishment and personnel, as described in “Business – Marketing,” above.
Results of OperationsFor the period from March 21, 2011
(date of inception)
to July 31, 2011:
Revenue
Since our company started on March 21, 2011, there was no revenue generated as of July 31, 2011.
Cost of Revenue
Since our company started on March 21, 2011, there was no cost of goods sold incurred as of July 31, 2011.
Expense
Our expenses consist of selling, general and administrative expenses as follows:
As of July 31, 2011, there was a total of $21,100 operating expenses as follows:
Legal fees
|
|
$
|
20,000
|
|
Registration Fee Total Professional Fees
|
|
|
1,100
|
|
Total expense
|
|
|
21,100
|
|
Income & Operation Taxes
We are subject to income taxes in the U.S.
We paid no income taxes in USA for the fiscal year ended July 31, 2011 due to the net operation loss in the USA.
Net Loss
We incurred net losses of $21, 1 00 for the period from March 21, 2011 to July 31, 2011.
For the six month period from August 1, 2011 to January 31, 2012:
Revenue
During the six months ended January 31, 2012, the Company earned $105,400 from sales to an unrelated third party.
Cost of Revenue
During the six months ended January 31, 2012, the Company incurred cost of revenue of $88,180 which was paid to a related party.
Expense
During the six months ended January 31, 2012, the Company incurred operating expenses of $43,201 broken down as follows:
Operating Expense
Professional Fees
|
|
|
|
Accounting services
|
|
$
|
8,250
|
|
Auditing fees
|
|
|
15,540
|
|
Legal fees
|
|
|
17,751
|
|
Total professional fees
|
|
|
41,151
|
|
Other expenses
|
|
|
1,750
|
|
Total expenses
|
|
$
|
43,201
|
|
Income & Operation Taxes
We are subject to income taxes in the U.S.
We paid no income taxes in USA for the period from March 31, 2011 (date of inception) to January 31, 2012 due to the net operation loss in the USA.
Net Loss
We incurred net losses of $25,981 for the six months ended January 31, 2012.
Commitments and Contingencies
These security systems and related software products are manufactured in Japan by NSJ. Co., Ltd. (“NSJ-Japan” or “Supplier”). It was established in 2006 specializing in the development and marketing in Japan of security systems and related software including the Robot Locator,, and is located in Yotsubashi-Nissei Bldg., 2F, 1-1-7, Kitahorie, Nishi-ku , Osaka, Japan. It has only sold products in Japan. On March 21, 2011, we signed a ten year distribution agreement with NSJ-Japan. NSJ-Japan is a Japanese security systems and related software products development and manufacturing company owned 50.84% by Mr. Joko Toshikazu, our chairman. NSJ-Japan is currently the primary supplier of the products we sell. Under the distribution agreement, we are not prohibited from distributing products manufactured or supplied by entities other than the Supplier. We issued 24,755,000 shares of common stock to NSJ-Japan as consideration for granting us the rights under the Distribution Agreement. On September 27, 2011, we amended our Distribution agreement adding an additional five years to the term in exchange for the issuance of 14,000,000 shares of our common stock. The Distribution Agreement was further amended on January 1, 2012 with respect to certain provisions such as purchase price of Products, purchase orders, termination and rights to sell Products in Japan under certain conditions.
The Distribution Agreement, as amended, provides that the prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be no more than 30% in excess of the actual cost of Supplier in making the Products. Supplier has no right to put products to Distributor outside of the purchase order process contemplated in the Agreement. Further, there is no minimum purchase requirement in order for Distributor to maintain all its rights under this Agreement. All purchase orders from Distributor are subject to acceptance in writing by us; provided, however, that we may not refuse to accept any Purchase Order if we indicate we have a certainty or reasonable expectation of selling the Products ordered within six months of the date of the Purchase Order. To avoid any conflict of interest, the Agreement may not be terminated for any reason if our Independent Director does not agree to the termination. In the absence of an Independent Director, a majority vote of our non-affiliated shareholders must vote to agree to such a termination. In the event a dispute between the parties arises as a result, it shall be resolved by Arbitration as set forth in this Agreement, with counsel for us selected by the our Independent Director, or in the absence of an Independent Director, a majority vote of our non-affiliated shareholders.
Pursuant to the Company's legal agreement, the Company is committed to pay$15,000 upon approval of a registration statement with the SEC.
Liquidity and Capital Resources
|
|
January 31, 2012
|
|
|
July 31,
2011
|
|
Current ratio *
|
|
|
0.25/1
|
|
|
|
.48/1
|
|
Cash
|
|
$
|
5,654
|
|
|
$
|
-
|
|
Working capital
|
|
$
|
(16,930
|
)
|
|
$
|
(16,100
|
)
|
Total assets
|
|
$
|
5,654
|
|
|
$
|
15,000
|
|
Total liabilities
|
|
$
|
22,584
|
|
|
$
|
31,100
|
|
Total equity (deficit)
|
|
$
|
(16,930
|
)
|
|
$
|
(16,100
|
)
|
Total Debt/Equity **
|
|
|
(1.33
|
)
|
|
|
(1.93
|
)
|
__________________
*Current Ratio = Current Assets /Current Liabilities
** Total Debt / Equity = Total Liabilities / Total Shareholders Equity.
The Company had cash and cash equivalents of $5,654 at January 31, 2012 and the working capital of $(16,930) with liabilities of $22,584 .
We entered into our first sales contract in November 2011 and received approximately $105,000 by December 2011.
On December 1, 2011, we sold approximately 350,000 shares at an approximate price of $0.064 per share for gross proceeds of 1,750,000 Japanese Yen (approximately $22,400).
As of March 1, 2012 , we have approximately $ 13 in cash.
We need to secure a minimum of $400,000 in funds to finance our business in the next 12 months, in addition to the funds which will be used to go and stay public, which funds will be used as described in “Overview” above. This amount does not include all our costs which we will incur irrespective of our business development activities, including bank service fees and those costs associated with SEC requirements associated with going and staying public, estimated to be approximately $60,000 in connection with this registration statement and thereafter less than $75,000 annually. However in order to become profitable we may still need to secure additional debt or equity funding. We hope to be able to raise additional funds from an offering of our stock in the future. However, this offering may not occur, or if it occurs, may not raise the required funding. We do not have any plans or specific agreements for new sources of funding, except for the anticipated loans from management as described below , or any planned material acquisitions.
On March 21, 2011, we entered into a Funding Agreement with Joko Toshikazu, our president and Director (“Lender”) to provide operational and going and staying public funding for us as follows:
1. FUNDING
The Company requires and will continue to require funding for the Company for its operations and for the Company’s going and staying public in the U.S., including but not limited to legal, accounting, EDGAR, filing, corporate and other fees and expenses (the “Funding”). Lender agrees to provide all Funding needed by the Company for its operations and for the Company’s going and staying public in the U.S. on the terms and conditions set forth in the Agreement.
2. TERM
The term of the Agreement began as of the date of this Agreement and terminates when the Company generates operating revenues or receives other financing in amounts necessary to fund its operations and for the Company’s going and staying public in the U.S., including but not limited to legal, accounting, EDGAR, filing, corporate and other fees and expenses.
3. FUNDING TERMS
The Funding will be provided by Lender on a non-interest bearing basis due upon demand. There is no limit on the amount of Funding which must be provided under the Agreement, and Lender agrees to provide all needed Funding. Lender further represents that he has sufficient liquid assets to meet all of Funding obligations under the Agreement.
There is no dollar limit to the amount Mr. Toshikauza has agreed to provide under the Funding Agreement.
Because Mr. Toshikazu controls us, he effectively sits on both sides of the Funding Agreement and, therefore, has the power to modify this arrangement. Modification might reduce and/or eliminate funds received under the Funding Agreement. However, because Mr. Toshikazu has a fiduciary duty to us and our shareholders, he has indicated that he will assure strict adherence to these provisions of the Agreement and will provide all funding as needed without unilaterally modifying the Funding Agreement.
Our lack of revenues raises substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if we are unable to generate significant revenue or secure financing we may be required to cease or curtail our operations.
DESCRIPTION OF PROPERTY
We have no separate U.S. office and utilize as a U.S. address that of our registered agent which is 1955 Baring Blvd., Sparks, NV 89434.
Our business office address in Japan is Yotsubashi-Nissei Bldg., 2F, 1-1-7, Kitahorie, Nishi-ku, Osaka, Japan.
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Number of Square Feet: 260
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Name of Landlord: Nissei Jitugyou Co., Ltd.
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Term of Lease: November 2011 to October 2013
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Monthly Rental (including maintenance and utilities) : $928
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The property is adequate for our current needs. We do not intend to renovate, improve, or develop properties. We are not subject to competitive conditions for property and currently have no property to insure. We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages. Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 21, 2011, we signed a ten year distribution agreement with NSJ-Japan. NSJ-Japan is a Japanese security systems and related software products development and manufacturing company owned 50.84% by Mr. Joko Toshikazu, our chairman. NSJ-Japan is currently the primary supplier of the products we sell. Under the distribution agreement, we are not prohibited from distributing products manufactured or supplied by entities other than the Supplier. We issued 24,755,000 shares of common stock to NSJ-Japan as consideration for granting us the rights under the Distribution Agreement. On September 27, 2011, we amended our Distribution agreement adding an additional five years to the term in exchange for the issuance of 14,000,000 shares of our common stock. The Distribution Agreement was further amended on January 1, 201 2 with respect to certain provisions such as purchase price of Products, purchase orders, termination and rights to sell Products in Japan under certain conditions.
The Distribution Agreement, as amended, provides that the prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be no more than 30% in excess of the actual cost of Supplier in making the Products. Supplier has no right to put products to Distributor outside of the purchase order process contemplated in the Agreement. Further, there is no minimum purchase requirement in order for Distributor to maintain all its rights under this Agreement. All purchase orders from Distributor are subject to acceptance in writing by us; provided, however, that we may not refuse to accept any Purchase Order if we indicate we have a certainty or reasonable expectation of selling the Products ordered within six months of the date of the Purchase Order. To avoid any conflict of interest, the Agreement may not be terminated for any reason if our Independent Director does not agree to the termination. In the absence of an Independent Director, a majority vote of our non-affiliated shareholders must vote to agree to such a termination. In the event a dispute between the parties arises as a result, it shall be resolved by Arbitration as set forth in this Agreement, with counsel for us selected by the our Independent Director, or in the absence of an Independent Director, a majority vote of our non-affiliated shareholders.
We entered into a funding agreement with Juko Toshikazu (“Lender”), our president and director. This agreement stipulates that the Lender will provide all funds necessary to continue operations in the United States until we have sufficient operating revenues or receives other financing in amounts necessary to fund its operations. The funding will be provided by the Lender on a non-interest bearing basis due upon demand. There is no limit on the amount of funding which must be provided under the agreement, and the Lender agrees to provide all needed funding. The Lender distributed $15,000 to the Company during the six months ended January 31, 2011 and $30,000 to the Company during the period ended July 31, 2011. The Company repaid $32,216 during the six months ended January 31, 2012. The amount due to the lender at January 31, 2012 and July 31, 2011 is $12,784 and $30,000, respectively.
During the six months ended January 31, 2012, the Company purchased equipment and services in the amount of $88,180 from NSJ. Co., LTD., a Japanese supplier who is a related party. The amount due to NSJ. Col., LTD., at January 31, 2012 related to the purchase and services is $0.
Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
There is no established public trading market for our securities and a regular trading market may not develop, or if developed, may not be sustained. A shareholder in all likelihood, therefore, will not be able to resell his or her securities should he or she desire to do so when eligible for public resales. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops.
Penny Stock Considerations
Our shares will be "penny stocks", as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Thus, our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.
In addition, under the penny stock regulations, the broker-dealer is required to:
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Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
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Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
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Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value, and information regarding the limited market in penny stocks; and
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Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction, prior to conducting any penny stock transaction in the customer's account.
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Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market, and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.
OTC Bulletin Board Qualification for Quotation
To have our shares of Common Stock on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our Common Stock. We have engaged in preliminary discussions with a FINRA Market Maker to file our application on Form 211 with FINRA, but as of the date of this Prospectus, no filing has been made. Based upon our counsel's prior experience, we anticipate that after this registration statement is declared effective, it will take approximately 2 - 8 weeks for FINRA to issue a trading symbol and allow sales of our Common Stock under Rule 144.
Sales of our common stock under Rule 144.
There are 19,178,775 shares of our common stock held by non-affiliates and 20,120,000 shares held by affiliates Rule 144 of the Securities Act of 1933 defines as restricted securities.
330,000 of our shares held by non-affiliates and 20,000 shares held by affiliates, management and non-management, are being registered in this offering, however the remaining non-affiliate shares as well as all of the remaining affiliates’ shares will still be subject to the resale restrictions of Rule 144. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.
Holders
As of the date of this registration statement, we had 87 shareholders of record of our common stock.
Dividends
We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.
Reports to Shareholders
As a result of this offering and assuming the registration statement is declared effective until before July 31, 2012 , as required under Section 15(d) of the Securities Exchange Act of 1934, we will file periodic reports with the Securities and Exchange Commission through July 31, 2012 , including a Form 10-K for the year ended July 31, 2012 , assuming this registration statement is declared effective before that date.
Where You Can Find Additional Information
We have filed with the Securities and Exchange Commission a registration statement on Form S-1. For further information about us and the shares of common stock to be sold in the offering, please refer to the registration statement and the exhibits and schedules thereto. The registration statement and exhibits may be inspected, without charge, and copies may be obtained at prescribed rates, at the SEC's Public Reference Room at 100 F St., N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The registration statement and other information filed with the SEC are also available at the web site maintained by the SEC at http://www.sec.gov.
EXECUTIVE COMPENSATION
We have not paid any compensation to our two executive officers and we have no agreements or understandings, written or oral, to pay Mr. Joko any compensation. We have agreed to pay Ms. Nakanishi an annual salary of $60,000; however, she has agreed that she will not receive any salary or benefits unless the Board reasonably believes we have or will have sufficient net income or other cash resources to fund our operating needs for the subsequent 12 months.
Board of Directors
Name
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Fees
earned
or paid
in cash
($)
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Stock
awards
($)
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Option
awards
($)
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Non-equity
incentive plan
compensation
($)
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Nonqualified
deferred
compensation
earnings
($)
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All other
compensation
($)
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Total
($)
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Joko Toshikazu
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0
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0
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0
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0
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0
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0
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0
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We have no compensation arrangements (such as fees for retainer, committee service, service as chairman of the board or a committee, and meeting attendance) with directors.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.