The accompanying interim financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with accounting principles generally accepted in the United States of America. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Company’s Registration Statement on Form 10-12G for the year ended March 31, 2017. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included, and all such adjustments are of a normal recurring nature. Operating results for the three and nine months ended December 31, 2017 are not necessarily indicative of the results that can be expected for the year ending March 31, 2018.
The accompanying notes are an integral part of these unaudited financial statements.
The accompanying notes are an integral part of these unaudited financial statements.
The accompanying notes are an integral part of these unaudited financial statements.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2017 AND 2016
(Unaudited)
NOTE 1 – NATURE OF OPERATIONS
Eternelle Skincare Products Inc. (the “Company” or “Eternelle”) was incorporated in the State of Nevada, United States of America, on November 18, 2005.
The Company’s business is to develop and market skincare products. Its plan is to build a state-of-the-art online store with a direct marketing and sales funnel aimed at targeted channels, using internet, social media, and content marketing. The Company’s marketing approach uses vetted channels that encompass several steps to gauge performance data from marketing tests against other campaigns in real-time with the ability to modify content delivery to targeted consumers immediately. The Company will engage a team with proprietary algorithmic software to assist in making these marketing decisions. Management believes this will provide the Company a distinct advantage over other companies that outsource marketing and advertising efforts to third parties.
The skincare space is well-suited for direct-to-consumer sales, and there are several channels that Eternelle will leverage to introduce its unique branding and creative advertising assets. Creating brand visibility, along with the back-end support to process orders, is one of Eternelle’s key strengths over smaller competitors in the space. In addition, Eternelle will create a brand that allows visibility and awareness to be molded organically, thereby increasing the brand’s value quickly.
In November 2017, Byron Striloff joined the management team as President of Eternelle. Mr. Byron Striloff brings over 35 years of experience in corporate and financial planning to the Company. Refer to Part II, Item 5 of this Form 10-Q for additional information about Mr. Byron Striloff. Additionally, as the Company grows, it will continue to expand its management team, as well as engage external consultants, to direct and manage the Company’s strategic growth.
The Company has identified a cosmetic and skincare manufacturer and has agreed upon product formulations, the design and sourcing of packaging, and product costs. The Company does not intend to enter into a long-term master supply agreement with the manufacturer. Rather, orders will be placed through individual purchase orders as needed. The Company’s activities are subject to significant risks and uncertainties, including the need for additional capital to carry out its plan of operation and competition from existing consumer product companies.
The majority of manufacturing, distribution, marketing, and sales operations will be outsourced. However, strategic planning and development will be performed internally by the Company. This includes, but is not limited to, developing our catalog of products, developing proprietary skincare formulations, pricing our products, deciding which markets to target, deciding which influencers to engage in marketing campaigns, developing sales channels such as our e-commerce sites, determining which marketing initiatives to pursue, and selecting strategic partners and suppliers to advance our business plan
NOTE 2 – BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended December 31, 2017 are not necessarily indicative of the results that may be expected for the year ending March 31, 2018. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended March 31, 2017 have been omitted. This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended March 31, 2017 included within the Company’s Form 10-12G as filed with the Securities and Exchange Commission.
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NOTE 3 – GOING CONCERN
These financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate the continuation of the Company as a going concern. The Company has no operating revenues and has incurred losses from operations. It also has excess liabilities over assets of $317,356 and requires substantial capital to fund inventory purchases, as well as costs to market its products. These factors raise doubt about the Company’s ability to continue as a going concern.
Management’s plans are to actively seek capital to enable the Company to procure its products to generate revenues and cash flows, and ultimately, achieve profitability. However, management cannot provide assurance that they can raise sufficient capital and whether the Company will ultimately achieve profitability, become cash flow positive, or raise additional debt and/or equity capital. If the Company is unable to raise additional capital in the near future or meet financing requirements, management expects that the Company will need to curtail operations, seek additional capital on less favorable terms, and/or pursue other remedial measures.
These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company become unable to continue as a going concern.
NOTE 4 –SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements and related disclosures have been prepared in accordance with U.S. GAAP applicable to interim financial information and with the instructions to Form 10-Q. In the opinion of management, all adjustments, consisting of only those of a normal recurring nature, considered necessary for a fair presentation of the financial position and interim results of Eternelle as of and for the periods presented have been included. Results for interim periods are not necessarily indicative of those that may be expected for a full year.
The year-end balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the financial statements do not include all disclosures required by U.S. GAAP. The financial information included herein should be read in conjunction with Eternelle’s financial statements and related notes for the year ended March 31, 2017 as filed in the Company’s Registration Statement on Form 10-12G.
Revenue Recognition
Revenue is recognized on a gross basis upon shipment or upon receipt of products by the customer, depending on the agreed-upon terms, provided that: there are no uncertainties regarding customer acceptance; persuasive evidence of an agreement exists documenting the specific terms of the transaction; the sales price is fixed or determinable; and collectibility is reasonably assured. Management assesses the business environment, the customer’s financial condition, historical collection experience, accounts receivable aging, and customer disputes to determine whether collectibility is reasonably assured. If collectibility is not considered reasonably assured at the time of sale, the Company does not recognize revenue until collection occurs. The Company expects to begin recognizing revenue in the second quarter of next fiscal year.
Website
Expenditures related to the planning and operation of the Company’s website are expensed as incurred. Expenditures related to the website application and infrastructure development are capitalized and amortized over the website’s estimated useful life of three (3) years. Amortization for the nine months ended December 31, 2017 was $1,344.
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Recent Accounting Pronouncements
The Financial Accounting Standards Board issues Accounting Standards Updates (“ASU”) to amend the authoritative literature in the Accounting Standards Codification (“ASC”). There have been a number of ASUs to date that amend the original text of the ASC. The Company believes those updates issued-to-date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company, or (iv) are not expected to have a significant impact on the Company.
NOTE 5 – RELATED-PARTY TRANSACTIONS
The Company’s Chief Executive Officer (“CEO”) advanced $47,598 to the Company during the nine months ended December 31, 2017 to pay for website development costs and operating expenses. The advances are due on demand and carry no interest. The related-party advances totaled $60,861 and $13,263 as of December 31, 2017 and March 31, 2017, respectively.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
The Company is not currently involved with and does not have knowledge of any pending or threatened litigation against the Company or any of its officers.
NOTE 7 – STOCKHOLDERS’ DEFICIT
During the three months ended December 31, 2017, the Company’s Board of Directors approved the rescission of 39,200,000 shares of common stock. Prior to the Company’s change in name and business focus, these shares were issued pending financial compensation to be received by the Company, agreements to be signed between the Company and certain consultants/shareholders, or specific performance by the consultants/shareholders. As these conditions were ultimately not met by these shareholders, the Board of Directors rescinded these shares. No value was ascribed to the shares cancelled, thus no gain was recorded. As of December 31, 2017, there were 116,862,660 shares issued and outstanding.
NOTE 8 – SUBSEQUENT EVENTS
Subsequent to December 31, 2017, the Company’s CEO advanced additional funds totaling approximately $4,000 to pay for operating costs.