Item 1. Business
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this current report and unless otherwise indicated, the terms “we”, “us” and “our” mean Science to Consumers, Inc., unless otherwise indicated.
General Overview
We were incorporated in the State of Nevada on April 15, 2013. Our company is planning to be a distributor of Argan oil and Argan oil products to stores, spas, massage therapy offices and individuals in Germany. We intend to bring the 100% pure and organic Argan oil and skin products made with Argan oil directly from the manufacturers in Morocco to Germany and in the future to the rest of Europe. In addition, we are also looking to market, sell, and distribute anti-aging products, as on December 29, 2015 our company signed a five-year exclusive licensing agreement with Biomatrix, Inc. for the People’s Republic of China and Europe. The agreement will allow Science to Consumers Inc., to market and sell at least six of the special formulated anti-aging products including the DermaLastyl line. The first products that our company plans to sell is DermLastyl skin care products. DermaLastyl is a trademarked anti-aging cream that aims to help to reduce wrinkles through the use of science. The key ingredient, Tropoelastin, is a patented formulation of elastin produced by genetic engineering that aims to promote healing and renewing of the skin. The DermaLastyl line are genetically engineered products on the market that aims to help restore elastin and elastic properties to the skin and around the eyes. We expect to generate revenues in China from sales of our products to individual customers and commercial customers such as spas, stores and massage therapy offices. In addition, an e-commerce strategy is being developed to market the Products online in China and an e-commerce website is being developed for the Chinese market and should be ready by the end of October 2016. Our corporate website has been updated and changed to reflect our name change to www.sciencetoconsumers.com.
At this stage, we have no revenues. The past operations had our company engaged in preparing our business plan and the development of our website and e-commerce shopping cart for China. Our potential client list consists of 4 companies ranging from beauty stores, spas massage therapy offices, and cosmetic distributors.
The majority of our business will be initially marketed in China, Hong Kong, and Germany but as our operations expand, we plan to expand to other European markets. We are also looking at opportunities to expand our operations and expand other product lines in the USA, European, and Asian markets.
Our company will focus on providing helpful customer service. We are currently selling six products that are available to be purchased through our website, and wholesale orders are also being accepted from June 1, 2016. Our company plans on engaging in an e-commerce strategy to be able to drive its online sales. In addition, our company is targeting cosmetic distribution companies in China and Hong Kong as part of its sales strategy. Our company is also looking at distributing its licensed products through some potential JV partnerships.
Our company is also working with the Licensee to re-design and re-package the product line to better reflect the Chinese market place.
On July 31, 2014, our company’s board of directors approved a resolution to effect a 7 new for 1 old forward split of our authorized and our issued and outstanding shares of common stock. A Certificate of Change for the stock split was filed and became effective with the Nevada Secretary of State on August 19, 2014. Consequently, our authorized share capital increased from 75,000,000 to 525,000,000 shares of common stock and our issued and outstanding common stock, at that time, increased from 4,250,000 to 29,900,000 shares, all with a par value of $0.001.
The forward stock split was approved by the Financial Industry Regulatory Authority (FINRA) with an effective date of August 19, 2014.
On November 25, 2014, our board of directors approved an agreement and plan of merger to merge with our wholly-owned subsidiary Science to Consumers, Inc., a Nevada corporation, to effect a name change from Argan Beauty Corp. to Science to Consumers, Inc. Science to Consumers, Inc. was formed solely for the change of name.
Articles of Merger to effect the merger and change of name were filed and became effective with the Nevada Secretary of State on December 23, 2014. The name change was reviewed by the FINRA and was approved for filing with an effective date of December 24, 2014. The name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on December 24, 2014 under the symbol "BEUT". Our CUSIP number is 808645105.
Effective August 18, 2015, Burt Ensley resigned as chief executive officer of our company. Mr. Ensley will remain as a company advisor. In connection with the resignation of Mr. Ensley, Edwon Lam was appointed as chief executive officer.
Mr. Ensley's resignation was not the result of any disagreement with our company regarding our operations, policies, practices or otherwise.
Our new principal executive office is located at Room 1618, American Bank Centre, 555 Ren Min Road, Guangzhou, China. . Our telephone number is +86 139 022 55701.
Our Current Business
On October 1, 2013, Science to Consumers Inc., a private Nevada corporation (the “Assignor”), entered into a License Agreement with Protein Genomics Inc., a Delaware corporation, pursuant to which the Assignor acquired the rights from Protein Genomics Inc. to sell certain products. The terms of the Assignment Agreement signed on October 1, 2013 have not been met and mutually both parties agreed to enter into a new agreement with similar terms and pricing were negotiated and entered into a new agreement on January 19, 2015.
On January 19, 2015, our company, as assignee, entered into an Assignment Agreement with the Assignor, pursuant to which we have acquired the right, title and interest to the License Agreement and all obligations, benefits and advantages thereunder in relation to the territory under the License Agreement for consumer skin care products supplied by Protein Genomics. Under the terms of the Assignment Agreement, Burt Ensley, the current sole director and officer of the Assignor and a former chief executive officer of our company, shall be issued 2,000,000 shares of common stock of our company as consideration for the transfer of the License Agreement.
Under the License Agreement our company will provide direct to consumer sales, marketing and distribution of finished consumer skin care products provided by Protein Genomics via direct response advertisements and other worldwide marketing and distribution channels. Our company will create direct response advertisements for the products in consultation with Protein Genomics, which shall initially consist of direct response print advertisements and television commercials and other forms of direct response advertisements.
Our company shall manage all creative testing, media, buying, telemarketing fulfillment and credit card processing relating to the sale of the consumer skin care products through direct response advertisements and will work with Protein Genomics on appropriate publicity and home shopping opportunities for the products. We may also work together with respect to the packaging of the products.
Our company may also present buying opportunities online of the products as part of our overall web strategy including order acceptance, billing and collection.
Protein Genomics will provide our company with finished inventory, claims substantiation with respect to each product including any relevant clinical data and support for any such claims, assistance in securing testimonials and cooperation from experts and arranging for appearances by our former chief executive officer, Burt Ensley, to promote the products in our direct response advertising channels. Protein Genomics will also provide us with fully cleared content required by our company to create the direct response advertisements, ensure that any patents and intellectual property are in good standing and defend against any potential competition or infringement.
The terms of the Assignment Agreement signed on January 19, 2015 have not been met and a new agreement with similar terms and pricing were negotiated and entered into on December 29, 2015.
Effective December 29, 2015, we entered into an exclusive license agreement with Biomatrix Inc., a Delaware corporation, pursuant to which we obtained the exclusive rights to sell certain proprietary skincare products of Biomatrix by direct to consumer marketing and sales in the territories of China and Europe. In consideration for the marketing, sales and distribution services to be provided by our company, Biomatrix has agreed to supply product inventory at a rate not less favorable than that provided to any third party. Additionally, Biomatrix has agreed to transfer to our company 100% equity ownership of Biomatrix Inc., an Arizona corporation which holds all right and title to the product distribution rights acquired. In consideration of transfer of title and rights acquired, we agreed to issue to Biomatrix (Delaware) 2,000,000 restricted common shares in the capital stock of our company.
The initial term of the exclusive license agreement is for 5 years, subject to our company achieving minimum sales of $250,000 and $500,000 during the first and second years of the agreement, respectively. Thereafter, the term will automatically renew for successive 5 year periods provided that we achieve a minimum $500,000 in sales of the licensed products during each calendar year of the term, excluding the first year.
Closing of the transaction is subject to completion of due diligence and to the transfer of the Biomatrix, Arizona securities to our Company. Biomatrix Arizona will become our wholly owned subsidiary upon completion of the transaction.
Our Current Products
We are currently selling six products that are available to be purchased through our website, and wholesale orders are also being accepted from June 1, 2016. Our company plans on engaging in an e-commerce strategy to be able to drive its online sales. In addition, the company is targeting cosmetic distribution companies in China and Hong Kong as part of its sales strategy.
Our company is also working with our distributors to re-design and re-package the product line to better reflect the Chinese market place. In addition, patents and trademarks are also being applied for in China to better protect the brand being developed in China by our company’s distributors.
The products being sold by our company currently are Dermalastyl Facial Scrub, Dermalastyl Bx Pro, Dermalastyl Bx Elastropin, Dermalastyl-e Intensive Eye Serum, Dermalastyl-m Wrinkle Eye Radicator, Dermalastyl-m Anti- Wrinkle after shave for Men.
Customers
Until we are able to market and sell our products in spas, stores and massage therapy offices, our primary customers will be individual consumers purchasing online and by telephone. Our customers will consist of women and men of various ages.
Marketing and Distribution
Our main source of marketing will be digital media via Internet. We plan to promote our products at our website www.sciencetoconsumers.com. As well as through our Chinese e-commerce platform and website which is being developed and should be ready by the end of October 2016. Our website will list the benefits of using our products. We will print business cards and have our website listed on it. We will print out brochures with our product list for our potential clients. The client will also be able to submit order requests and/or contact us via email linked to our website or call our company directly. In addition, in order to market our products online we will try and market the products by using search engine optimization, social media mediums as Twitter and Facebook
Furthermore, we plan to attend different fairs and trade shows to further promote our business, hand out business cards, meet potential clients and referrals.
At last, the best marketing of our business will be our pricing. We will focus on sourcing our product from suppliers with high quality product and competitive pricing. Involving no commission based agents we plan to take the product straight from the factory to the buyer, keeping the prices competitive.
Currently, our company is focused on marketing its products in China and our activities can be broken down into two segments as follows:
CHINA ACTIVITIES:
1. On September 1, 2016 our company signed an Exclusive Distributor Agreement signed with SHI TU KANG TRADING CO LTD., (STK ) with office located in Nan Sha district, Guangzhou China. STK is a privately owned cosmetics, health & beauty, fragrance, and personal care trading a distribution company. In order to leverage the infrastructure in place with STK as our company will rely on STK’s support on sharing resources, office space and depending on their full assistance to customize packaging, boxes design, private label with Chinese brand name patent ( ) for the Chinese market. The agreement states that STK will commit to provide the full turnkey services to simply importing products with valid import license from Hong Kong via Hai Tao Base official platform to marketing S2C products to their existing sales channels such as beauty parlours, drugstores, WeChat shops, beauty chain stores and as well some of their existing online shops.
2. S2C and STK have jointly agreed to develop a website for the China market. The website is still under development and is expected to be ready by end of October.
3. As part of the STK Agreement, STK with one of its key wholesalers has agreed to import products and display S2C products in three of the most busiest and eyes catching locations where there are guaranteed large volumes of visitors in Guangzhou city.
HONG KONG ACTIVITIES:
1. Our company is working on establishing a partnership agreement with a very large and leading cosmetics retailing group in Asia with over 280 retail stores and sales counters in Asia selling over 700 brands of skincare, fragrance, make up, hair care and body care products, health and beauty supplements including own brands and exclusive products. The potential partnership being negotiated will have the potential partner agreeing to buy S2C products but requirements of the order size are yet to be confirmed including but not limited to packaging revision, promoters at retail stores recruitment and renting a light box area
2. S2C will engage social media strategy to connect customers and use platforms like Facebook, Twitter and Instagram to spread more products awareness and create brand loyalty among customers, thus reinforcing what make S2C products unique. We have been doing some research on some Hong Kong cost effective social media companies such as: OKI Media ( http://okimedia.com.hk ); Finger Shopping (http://www.fingershopping.com); HK TV Mall ( http://www.hktvmall.com ); Groupon (http://www.groupon.hk);Yahoo HK (https://hk.deals.yahoo.com/hong-kong)
Competition
Our competition will include other distribution companies, importers, and agents with the same or similar product list. However, there is an increase in public interest in natural products and cosmetics and the field grows rapidly and there is a constant need for new pure and organic products. We expect competition to continue to intensify in the future. Competitors include companies with more substantial customer bases. There can be no assurance that we can maintain a competitive position against current or future competitors, particularly those with greater financial, marketing, service, and support, technical and other resources. Our failure to maintain a competitive position within the market could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that we will be able to compete successfully against current and future competitors, and competitive pressures faced by us may have a material adverse effect on our business, financial condition and results of operations.
Compliance with Government Regulation
We do not believe that government regulation will have a material impact on the way we conduct our business. However, our company will require to have in place the necessary import permits and licenses in order to import the products into China.
Insurance
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us, which could cause us to cease operations.
Research and Development
We have incurred $Nil in research and development expenditures over the last two fiscal years. We rely on our Licensor to conduct all research and development activities
Intellectual Property
We do not currently have any intellectual property, other than our domain name and website, www.sciencetoconsumers.com.
Employees
We are a development stage company and currently have no employees other than our president, chief financial officer, treasurer and sole director, Vitaliy Gorelik, our chief executive officer, Edwon Lam and Caroline Bastidas, our secretary.
Subsidiaries
We do not have any subsidiaries.