BEUT Science to Consumers Inc (CE)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

This quarterly 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 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 unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly 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 quarterly report, the terms “we”, “us”, “our” and “our company” mean Science to Consumers, Inc., unless otherwise indicated.

Corporate 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 can be found at 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 Licensor 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.

Our 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.

We do not have any subsidiaries.

We have never declared bankruptcy nor have we been in receivership.

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, 2,000,000 shares of common stock of our company was to be issued 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 were 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.

Marketing and Promotional Activities

During the quarter ended November 30, 2016, our distributor SHI TU KANG TRADING CO LTD ("STK") has signed a memorandum of understanding (MOU) with China Qipao Society (also known as The Chinese Cheongsam Association in some countries) to promote our Chinese brand name “朶米蘭詩” and generate sales through their apps “CQP 旗美薈”. China Qupao Society has more than 200,000 active members with about 420 international branches worldwide. As Qipao is not only the Chinese traditional costume, but also a great symbol of Chinese culture. Through their frequent show events and networks, our company will achieve brand awareness and promotion of our provide a better understanding of our company's skin care benefits to the female CQP members

STK has signed an official agreement on behalf of our company with Hai Tao Base ("HTB") to import products and display our products in the three most busiest and eye catching locations in Guangzhou downtown as well as University Campuses in both Guangzhou City and Conghua City. Similar to A S Watson chain stores in Hong Kong, HTB has signed contracts to major drug stores and expand their physical networks of more than 100 locations in the Guangdong area. Drug stores include Banzhi Lin (寶芝林), Great Forest (大森林),and Conghua GuangJi Tang (廣濟堂). The store expansion of HTB will definitely help our company to create product awareness and market penetration.

For the Hong Kong market, our company has decided to work with SaSa for consignment terms at various hot sales locations. Our company is also talking to different media companies including: OKI Media (http://okimedia.com.hk); Finger Shopping (http://www.fingershopping.com); HKTV Mall (http://www.hktvmall.com); FlyOn (http://www.flyonasia.com); Yahoo HK (https://hk.deals.yahoo.com/hong-kong) and Groupon (http://www.groupon.hk).

Results of Operations for the Three and Six Months Ended November 30, 2016 and 2015

The following summary of our results of operations should be read in conjunction with our unaudited financial statements for the three and six months ended November 30, 2016 and 2015.

Our operating results for the three and six months ended November 30, 2016 and 2015 are summarized as follows:

Our net loss for the three months ended November 30, 2016 was $18,109. Our net loss for six months ended November 30, 2016 was $12,121. During the six months ended November 30, 2016 we did not generate any revenue.

During the three months ended November 30, 2016, our operating expenses were amortization expenses of $871, general and administrative of $6,291 and professional fees of $10,947. During the three months ended November 30, 2015, our operating expenses were amortization expenses of $290 and professional fees of $11,831. The increase in operating expenses for this period compared to the previous period is primarily due to an increase of general and administrative expenses.

During the six months ended November 30, 2016, our operating expenses were amortization expenses of $1,742, general and administrative of $13,085 and professional fees of $13,085. During the six months ended November 30, 2015, our operating expenses were amortization expenses of $290 and professional fees of $15,948. The increase in operating expenses for this period compared to the previous period is primarily due to an increase of general and administrative expenses.

The weighted average number of shares outstanding were 31,900,000 and 29,908,852 for the six months ended November 30, 2016 and November 30, 2015, respectively.

As at November 30, 2016, our total current assets were $1,435 compared to $3,306 in total current assets at May 31, 2016. Total current assets were comprised cash and cash equivalents. As at November 30, 2016, our current liabilities were $69,269 compared to $64,423 in current liabilities as at May 31, 2016. Stockholders’ equity was ($61,159) as of November 30, 2016 compared to stockholders' equity of ($52,697) as of May 31, 2016.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the six months ended November 30, 2016, net cash flows used in operating activities was $22,421 compared to net cash provided by operating activities of $3,317 for the six months ended November 30, 2015.

Cash Flows from Investing Activities

For the six months ended November 30, 2016 net cash provided by investing activities was $Nil compared to net cash used in investing activities of $10,452 for the six months ended November 30, 2015.

Cash Flows from Financing Activities

For the six months ended November 30, 2016, cash flows from financing activities was $22,550 compared to net cash flows from financing activities of $6,000 for the six months ended November 30, 2015.

Plan of Operation and Future Financings

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next three months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We have and will continue to seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing.

Cash Requirements

We estimate our operating expenses and working capital requirements for the twelve month period to be as follows:

At present, our cash requirements for the next 12 months outweigh the funds available to maintain our operations or development of any future properties. Of the $111,500 that we require for the next 12 months, we had $1,435 in cash as of November 30, 2016, and a working capital deficit of $67,834. Until we complete a transaction, acquisition or business combination, our cash requirements will be in regards to maintaining our corporate existence, and ensuring compliance with our SEC continuous disclosure obligations, including our financial reporting requirements. In addition, we will require additional capital in order to investigate and conclude any future transaction, acquisition or business combination. In order to improve our liquidity, we plan to pursue additional equity financing from private investors or possibly a registered public offering. We do not currently have any definitive arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources that are available to us.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Going Concern

We have suffered recurring losses from operations and are dependent on our ability to raise capital from stockholders or other sources to meet our obligations and repay our liabilities arising from normal business operations when they become due. In their report on our audited financial statements for the year ended May 31, 2016, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosure describing the circumstances that lead to this disclosure by our independent auditors.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, and capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Basis of Presentation

The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.

Accounting Basis

Our company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). Our company has adopted a May 31 fiscal year end.

Cash and Cash Equivalents

Our company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. Our company had $1,435 of cash as of November 30, 2016 and $3,306 of cash as of May 31, 2016.

Fair Value of Financial Instruments

Our company’s financial instruments consist of cash and cash equivalents and amounts due to shareholder. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

Website Development Costs

Website development costs consist of costs incurred to develop internet websites to promote, advertise, and earn revenue with respect to our company’s business operations. Costs are amortized on a straight line basis over 3 years from when the internet web site has been completed.

Income Taxes

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Our company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.

Stock-Based Compensation

Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, our company has not adopted a stock option plan and has not granted any stock options.

Basic Income (Loss) Per Share

Basic income (loss) per share is calculated by dividing our company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing our company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of November 30, 2016 and May 31, 2016.

Comprehensive Income

ASC 220, “ Comprehensive Income ”, establishes standards for the reporting and display of comprehensive income, its components and accumulated balances. When applicable, our company would disclose this information on our Statement of Stockholders’ Deficit. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. Our company has not had any significant transactions that are required to be reported in other comprehensive income.

Recent Accounting Pronouncements

Our company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on our company's results of operations, financial position, or cash flow.