U.S. Lighting Group, Inc. - Quarter Report: 2016 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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For the quarterly period ended: June 30, 2016

or

For the transition period from:                               to                              

Commission File Number: 333-193386

THE LUXURIOUS TRAVEL CORP.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: 440-896-7000

__________________________________________

Former name or address if changed since last report)

Indicate by check mark if the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter period that the registrant was required to file such reports),  and (2) has been subject to such filing requirements for the past 90 days.     Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     x

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company, See the definition of "large accelerated filer," "accelerated filer" and "smaller reporting company in Rule 12b-2 of the Exchange Act.

 Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

EXPLANATORY NOTE

As used in this Quarterly Report on Form 10-Q (the “Form 10-Q”), unless the context requires otherwise, “we,” “our,” “us” or “the Company” refers to The Luxurious Travel Corp. Pursuant to Item 10(f) of Regulation S-K promulgated under the Securities Act of 1933, as amended (the “Securities Act”), we have elected to comply with the scaled disclosure requirements applicable to “smaller reporting companies” throughout this Form 10-Q. Except as specifically included in this Form 10-Q, items not required by the scaled disclosure requirements have been omitted.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

All statements contained in this Form 10-Q, other than statements that relate to present or historical conditions, are forward-looking statements, including, but not limited to, statements containing the words “believe,” “anticipate,” “expect” and words of similar import and are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on certain assumptions and analyses made by us in light of our assessment of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved, or whether such performance or results will be achieved at all. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause our actual performance or results to differ materially from those expressed in the statements. Important factors that could cause such differences include, but are not limited to: (i) our ability to continue as a going concern; (ii) our ability to raise additional financing on acceptable terms, or at all; (iii) industry competition, conditions, performance and consolidation; (iv) the effects of adverse general economic conditions, both within the United States and globally and the availability of debt and equity financing in view of the current economy; (v) any adverse economic or operational repercussions from terrorist activities, war or other armed conflicts; (vi) new product development and introduction in light of our lack of adequate financing; (vii) changes in business strategy or development plans; (viii) the ability to attract and retain qualified personnel; and (ix) the ability to protect our technology, among others.

Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations.

Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect thereto or with respect to other forward-looking statements.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE LUXURIOUS TRAVEL CORP.

BALANCE SHEETS

(Unaudited)

See notes to financial statements

THE LUXURIOUS TRAVEL CORP.

STATEMENT OF OPERATIONS

 See notes to financial statements

THE LUXURIOUS TRAVEL CORP.

STATEMENTS OF CASH FLOWS

(Unaudited)

See notes to financial statements

THE LUXURIOUS TRAVEL CORP.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2016

The Luxurious Travel Corporation (the “Company”) was formed in 2003 and was inactive until 2008. Until July 2016, the Company created and developed proprietary software that allows users to sell and market travel for groups and individuals, including special event, conference, executive meeting and other travel.

Recent developments

On July 13, 2016 (“Closing”), pursuant to a previously reported Share Exchange Agreement dated May 26, 2016 (the “Exchange Agreement”), the Company acquired all of the issued and outstanding capital stock of US Lighting Group, Inc. (“US Lighting Group”), an Eastlake, Ohio based independent designer and manufacturer of patent-pending, transformer less, LED lighting technologies. At Closing, the Company issued 24,500,000 shares of its common stock to the shareholders of US Lighting Group and Todd Delmay, our then Chief Executive Officer, Chief Financial Officer and principal shareholder, contributed a like number of shares of our common stock held by him to the capital of the Company. Thereupon, US Lighting Group became a wholly-owned subsidiary of the Company, Paul Spivak, the principal shareholder of US Lighting Group, became the principal shareholder of the Company and a “Change in Control” of the Company was deemed to have taken place (the “Change in Control Transaction”). In addition, at Closing, Todd Delmay resigned as the Company’s sole executive officer and as a director of the Company, Jeff Delmay resigned as a director of the Company and Mr. Spivak was appointed our sole director and Chief Executive Officer.

Prior to Closing, the Company declared and paid a cash dividend of $0.00575 per share to shareholders of record prior to Closing, other than Todd Delmay, who waived the right to receive the dividend on 11,750,000 of the 25,000,000 shares held by him prior to Closing. Accordingly, the aggregate amount dividend to the Company’s shareholders was $105,512 (the “Dividend”).

Contemporaneously with Closing, the Company consummated a private offering pursuant to the exemptions from registration afforded by Section 4(a)(2) and Rule 506 of Regulation D under the Securities Act, of 406,730 shares of our common stock at a price of $0.50 per share (the “Offering”). The net proceeds from the Offering were used to pay the Dividend, certain pre-Closing liabilities of the Company, expenses related to the Change in Control Transaction and the Offering and for working capital and other general corporate purposes.

The Company intends to focus its ongoing business efforts on the expansion of US Lighting Group’s LED lighting business. Accordingly, at Closing, the Company granted Todd Delmay an exclusive, perpetual, royalty-free license of our “travel shopper” hotel and travel booking software, which the Company had sought to commercialize in its prior operations. The Company also plans to take the necessary corporate and regulatory action to change the Company’s name to “US Lighting Group, Inc.” and secure a new trading symbol to better reflect its new corporate name and business focus.

Founded in 2011, US Lighting Group is an independent designer and manufacturer of high quality patent-pending, transformer less, “green” LED lighting tubes for sale and distribution into the commercial and industrial 4’ tube lighting sectors in the United States and abroad. Every US Lighting Group LED bulb is made in the USA at US Lighting Group’s own manufacturing facility located near Cleveland, Ohio. US Lighting Groups LED lighting tubes are distributed throughout the United States to various commercial and industrial end-users and resellers, and also available at several online retailers, including The Home Depot.

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with the Company’s most recent audited consolidated financial statements and notes hereto as of December 31, 2015.  Operating results for the six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

Uses of estimates in the preparation of financial statements

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 of the financial statements and the reported amounts of net revenue and expenses during each reporting period. Actual results could differ from those estimates.

Cash

The Company maintains cash balances at a financial institution where accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company's accounts at this institution may, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts.

Revenue recognition

The Company recognizes revenue when it is earned and realizable, when persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or determinable, and collectability is reasonably assured.

The Company recognizes net revenue when it has no further obligation to the customer. For air transactions, this is at the time of booking due to non-cancellation of the reservation. For hotel and car transactions, net revenue is recognized at the time of check-in or customer pick up, respectively. The timing of revenue recognition is different for air travel because the Company’s primary service to the customer is fulfilled at the time of booking. For cruise transactions, revenue is recognized at the time payment is made to the supplier.

The Company passes reservations booked by its customer to the travel supplier for a commission. In addition, the Company does not take on credit risk with the customer, it is not the primary obligor with the customer, it has no latitude in determining pricing, it takes no inventory risk, it has no ability to determine or change the product or services delivered, and the customer chooses the supplier.

Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

Income taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented.

Earnings per Share

Basic earnings per common share are computed using the weighted-average number of common shares outstanding during the year. Diluted earnings per common share are computed using the weighted-average number of common shares outstanding during the year plus the incremental shares outstanding assuming the exercise of dilutive stock options, restricted stock and convertible instruments. The Company had no dilutive instruments outstanding at June 30, 2016 or 2015.

The Company’s financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. As of June 30, 2016 the Company has an accumulated deficit of $81,750 and current cash flow will not fund 12 months of expenses. The Company believes it will not have enough cash to meet its various cash needs unless it is able to obtain additional cash from the issuance of debt or equity securities. The Company intends to raise funds from the issuance of equity and/or debt securities, but there is no assurance that additional funds from the issuance of equity will be available for the Company to finance its operations on acceptable terms, or at all. If adequate funds are not available, the Company may have to delay development or commercialization of products or technologies that the Company would otherwise seek to commercialize, or cease operations. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

As a result of the transactions described in “Recent Developments” in Footnote 1 above, the Company’s operations as of June 30, 2016 have been reclassified as discontinued.

One customer represented 97% of revenue in the six months ended June 30, 2016. Which is included in net loss from discontinued operations.

The Company has evaluated subsequent events through the date that these financial statements were issued. See “Recent Developments” in Footnote 1 above for information with respect to the Change in Control Transaction. the Dividend, the Offering and related matters.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2015.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and other reports filed by our Company from time to time with the U.S. Securities and Exchange Commission (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to us or our management identify forward-looking statements. Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including those set forth in “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

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 prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

Recent Developments 

On July 13, 2016 (“Closing”), pursuant to a previously reported Share Exchange Agreement dated May 26, 2016 (the “Exchange Agreement”), the Company acquired all of the issued and outstanding capital stock of US Lighting Group, Inc. (“US Lighting Group”), an Eastlake, Ohio based independent designer and manufacturer of patent-pending, transformer less, LED lighting technologies. At Closing, the Company issued 24,500,000 shares of its common stock to the shareholders of US Lighting Group and Todd Delmay, our then Chief Executive Officer, Chief Financial Officer and principal shareholder, contributed a like number of shares of our common stock held by him to the capital of the Company. Thereupon, US Lighting Group became a wholly-owned subsidiary of the Company, Paul Spivak, the principal shareholder of US Lighting Group, became the principal shareholder of the Company and a “Change in Control” of the Company was deemed to have taken place (the “Change in Control Transaction”). In addition, at Closing, Todd Delmay resigned as the Company’s sole executive officer and as a director of the Company, Jeff Delmay resigned as a director of the Company and Mr. Spivak was appointed our sole director and Chief Executive Officer.

Prior to Closing, the Company declared and paid a cash dividend of $0.00575 per share to shareholders of record prior to Closing, other than Todd Delmay, who waived the right to receive the dividend on 11,750,000 of the 25,000,000 shares held by him prior to Closing. Accordingly, the aggregate amount dividend to the Company’s shareholders was $105,512.50 (the “Dividend”).

Contemporaneously with Closing, the Company consummated a private offering pursuant to the exemptions from registration afforded by Section 4(a)(2) and Rule 506 of Regulation D under the Securities Act, of 406,730 shares of our common stock at a price of $0.50 per share (the “Offering”). The net proceeds from the Offering were used to pay the Dividend, certain pre-Closing liabilities of the Company, expenses related to the Change in Control Transaction and the Offering and for working capital and other general corporate purposes.

The Company intends to focus its ongoing business efforts on the expansion of US Lighting Group’s LED lighting business. Accordingly, at Closing, the Company we granted Todd Delmay an exclusive, perpetual, royalty-free license of our “travel shopper” hotel and travel booking software, which the Company had sought to commercialize in its prior operations. The Company also plans to take the necessary corporate and regulatory action to change the Company’s name to “US Lighting Group, Inc.” and secure a new trading symbol to better reflect its new corporate name and business focus.

Founded in 2011, US Lighting Group is an independent designer and manufacturer of high quality patent-pending, transformer less, “green” LED lighting tubes for sale and distribution into the commercial and industrial 4’ tube lighting sectors in the United States and abroad. Every US Lighting Group LED bulb is made in the USA at US Lighting Group’s own manufacturing facility located near Cleveland, Ohio. US Lighting Groups LED lighting tubes are distributed throughout the United States to various commercial and industrial end-users and resellers, and also available at several online retailers, including The Home Depot.

As a result of the Change in Control Transaction, the Dividend, the Offering and the related developments set forth above, the Company’s operations as of June 30, 2016 have been reclassified as discontinued and the discussion contained herein relates solely to those discontinued operations.

Results of Operations

Three months ended June 30, 2016 as compared to three months ended June 30, 2015

During the three months ended June 30, 2016 we generated $ 0 in revenue, as compared to $39,431 during the three months ended June 30, 2015. Our costs and expenses during the quarter ended June 30, 2016 were $21,869, as compared to $28,310 in the prior year’s period. The decreases in revenue and expenses were due to the discontinued operations of The Luxurious Travel Corp. in contemplation of completion of the Change in Control Transaction, which closed in July 2016. For the quarter ended June 30, 2016, we incurred a net loss of $21,869, as compared to net income of $11,121 for the quarter ended June 30, 2015.

Six months ended June 30, 2016 as compared to six months ended June 30, 2015

During the six months ended June 30, 2016 we generated $22,695 in revenue, as compared to $43,654 during the six months ended June 30, 2015. Our costs and expenses during the six months ended June 30, 2016 were $36,339, as compared to $43,065 for the prior year’s period. The decrease of revenue and expenses were due to the discontinued operations of The Luxurious Travel Corp. in contemplation of completion of the Change in Control Transaction, which closed in July 2016. For the six months ended June 30, 2016 we incurred a net loss of $13,644, as compared to net income of $589 in the six months ended June 30, 2015.

Liquidity and Capital Resources

At June 30, 2016, there was a cash balance of $ 0.

In addition to the proceeds from the Offering, as described under “Recent Developments” and revenues from the operations of US Lighting, we believe that we will require additional financing to fund our new business over the next twelve months. We anticipate that such financing will be secured through additional private offerings of our equity and/or debt securities, which may, if successfully completed result in additional dilution to existing securities. There can be no assurance that we will be successful in securing needed additional financing on commercially reasonable terms or otherwise. The absence of such financing, when needed, could significantly harm our business and results of operations.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits. 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.

As a “smaller reporting company,” we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of June 30, 2016. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the SEC's rules and form, due to, among other matters, a lack of segregation of duties.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II. - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not aware of any pending or threatened litigation against us that we expect will, individually or in the aggregate, have a material adverse effect on our business, financial condition, liquidity, or operating results. We cannot assure you that we will not be adversely affected in the future by legal proceedings.

ITEM 1A. RISK FACTORS

As a “smaller reporting company,” we are not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6.  EXHIBITS      

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.