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EX-4.2 - EXHIBIT 4.2 - GBT Technologies Inc. | ex42.htm |
EX-4.1 - EXHIBIT 4.1 - GBT Technologies Inc. | ex41.htm |
EX-23.1 - EXHIBIT 23.1 - GBT Technologies Inc. | ex231.htm |
As filed
with the Securities and Exchange Commission on November 2,
2009
Registration
No. 333-161795_________
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NO. 1 TO
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
Forex
International Trading Corp.
(Name of small business issuer in its
charter)
Nevada
|
6289
|
27-0603137
|
(State
or Other Jurisdiction of
|
(Primary
Standard Industrial
|
(I.R.S.
Employer
|
Incorporation
or Organization)
|
Classification
Code Number)
|
Identification
No.)
|
Forex
International Trading Corp.
1618
N. Fairfax Avenue
Los
Angeles, California 90046
(Address,
including zip code, and telephone number, of registrant's principal executive
offices and principal place of business)
Moshe
J. Schnapp, CEO
Forex
International Trading Corp.
1618
N. Fairfax Avenue
Los
Angeles, California 90046
Telephone:
323-822-1750
Facsimile: 323-822-1784
(Name,
address, including zip code, and telephone number for agent for
service)
Copies
to:
Stephen
M. Fleming
Law
Offices of Stephen M. Fleming PLLC
49
Front Street, Suite 206
Rockville
Centre, NY 11570
Telephone:
(516) 833-5034
Fax:
(516) 977-1209
Approximate
date of commencement of proposed sale to the public:
As soon
as practicable after the effective date of this registration
statement
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨
If this
Form is a post effective amendment filed under Rule 462(c) of the Securities
Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
If this
Form is a post effective amendment filed under Rule 462(d) of the Securities
Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filed, a non accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer (Do not check if a smaller reporting company) ¨
|
Smaller
reporting company x
|
i
CALCULATION
OF REGISTRATION FEE
Title
of each class of securities
to
be registered
|
Amount to be Registered
(1)
|
Proposed
Maximum Offering Price Per Security (2)
|
Proposed
Maximum Aggregate Offering Price
|
Amount
of Registration Fee
|
||||||||||||
Shares
of Common Stock, $.00001 par value per share, to be sold by the
company
|
20,000,000
|
$
|
0.01
|
$
|
200,000
|
$
|
11.16
|
(1)
|
Includes
shares of our common stock, par value $.00001 per share, which may be
offered pursuant to this registration statement.
|
(2)
|
Estimated
solely for purposes of calculating the registration fee in accordance with
Rule 457(e) under the Securities Act of
1933.
|
The
registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
Forex
International Trading Corp.
Up
to 20,000,000 Shares of Common Stock at $0.01 per Share
We are a
development stage company and have generated limited revenue to
date. The prospectus relates to the sale by us of up to 20,000,000
shares of common stock. This is our initial public
offering. Upon the effectiveness of this prospectus we may offer to
sell shares of our common stock being offered in this prospectus at a purchase
price of $0.01 per share. We may receive up to $200,000 in gross
proceeds from the sale of shares of our common stock by us in the
offering. There is no minimum number of shares that must be sold in
this offering. As a result, we will retain the proceeds from any
funds raised and the proceeds will not be returned to the
investor. In the event that we only raise a minimum amount under this
offering, we will immediately utilize the proceeds. As a result, if
you are an initial investor and we fail to raise additional proceeds, your
investment will be rendered worthless. For example, if we only sell
$10,000 (5% of the offering) or $20,000 (10% of the offering) in securities, we
will utilize the proceeds in our operations but we will not be able to implement
our business plan to any meaningful extent rendering your investment
worthless.
Our
common stock is not traded on any exchange or in the over-the-counter market.
After the date of this prospectus, we expect to have an application filed with
Financial Industry Regulatory Authority Inc. for our common stock to be eligible
for trading on the OTC Bulletin Board. There is no guarantee that we
will be successful in trading on the OTCBB.
We are
offering the shares directly to the public through our sole officer and
Director, without payment of commissions or any other form of
remuneration. Proceeds to our company have been computed before
deductions of offering expenses, printing, legal, accounting, transfer agent,
and other fees. Such expenses are estimated at $32,000. The net
offering proceeds are thus estimated at $168,000 upon sale of the maximum
offering. However, there is no guarantee that we will sell all shares
in this offering. Assuming the offering is only subscribed for
2,000,000 shares, then we will only receive $20,000 in gross
proceeds. As our expenses are $32,000, we will be unable to implement
our business plan in any meaningful way.
No escrow
account will be set up and all proceeds raised in the offering will be deposited
immediately into our corporate account to be utilized for working capital in the
priority set by management of our company.
THIS
OFFERING IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK TO THE PUBLIC
INVESTORS AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT (SEE RISK FACTORS AND DILUTION). THE OFFERING PRICE HAS
BEEN ARBITRARILY DETERMINED BY OUR COMPANY BASED UPON WHAT IT BELIEVES
PURCHASERS OF SUCH SPECULATIVE ISSUES WOULD BE WILLING TO PAY FOR THE SECURITIES
OF THE COMPANY AND BEARS NO RELATIONSHIP WHATSOEVER TO ASSETS, EARNINGS, BOOK
VALUE OR ANY OTHER ESTABLISHED CRITERIA OF VALUE.
The
Securities offered hereby involve a high degree of risk.
See “Risk
Factors” beginning on
page 4.
We may
amend or supplement this prospectus from time to time by filing amendments or
supplements as required. You should read the entire prospectus and any
amendments or supplements carefully before you make your investment
decision.
The date
of this prospectus is ______, ___2009.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
iii
Page
No.
|
|
PROSPECTUS
SUMMARY
|
1
|
Forex
International Trading Corp.
|
1
|
The
Offering
|
1
|
Selected
Financial Data
|
2
|
RISK
FACTORS
|
3
|
USE
OF PROCEEDS
|
11
|
DETERMINATION
OF OFFERING PRICE
|
11
|
DILUTION
OF THE PRICE YOU PAY FOR YOUR SHARES
|
10
|
PLAN
OF DISTRIBUTION; TERMS OF OFFERING
|
12
|
BUSINESS
|
13
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
|
17
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
18
|
MANAGEMENT
|
19
|
EXECUTIVE
COMPENSATION
|
20
|
21
|
|
DESCRIPTION
OF SECURITIES
|
21
|
INTERESTS
OF NAMED EXPERTS AND COUNSEL
|
22
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
22
|
LEGAL
PROCEEDINGS
|
22
|
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
|
22
|
EXPERTS
|
23
|
LEGAL
MATTERS
|
23
|
FINANCIAL
STATEMENTS
|
F-1
|
The
following prospectus summary is qualified in its entirety by, and should read in
conjunction with, the more detailed information and our Financial Statements and
Notes thereto appearing elsewhere in this prospectus. This summary does
not contain all of the information you should consider before investing in our
common stock. You should read the entire prospectus
carefully.
Forex
International Trading Corp.
We are a
development stage company. Forex International Trading Corp.
("Forex") intends to develop and then subsequently market a web-based
and real-time online trading system for foreign exchange trading for
professional and retail clients over the internet. Should we raise
the adequate capital, our Company hopes to develop the
needed software and it then intends to commence
marketing such trading program over the Internet. In addition,
we hope to provide consulting services to foreign currency
traders. We may also attempt to acquire existing trading
platforms operating in the foreign exchange trading industry. We are
not presently in negotiations with any potential target and there is no
guarantee that we will be able to identify any target and close such
acquisition.
We are a
company without revenues or operations, we have minimal assets and have incurred
losses since inception. This means that there is substantial doubt that we
can continue as an ongoing business operation for the next 12
months. As such, we may have to cease operations and investors in the
offering may lose their entire investment. As a result of the
foregoing, our independent auditors, in their report covering our financial
statements for the period ended July 31, 2009 stated that there was substantial
doubt about our ability to continue as a going
concern. .
Our
principal executive office is located at 1618 N. Fairfax Avenue, Los Angeles,
California 90046, and our telephone number is (323) 822-1750. We were
formed under the laws of the State of Nevada on July 22, 2009.
The terms
"Forex", "we," "us" and "our" as used in this prospectus refer to Forex
International Trading Corp.
The
Offering
The
following is a brief summary of the offering.
Securities
being offered:
|
Up
to 20,000,000 shares of common stock, par value $.00001 per share, being
conducted by our sole executive officer and director, on as a “direct
public offering” basis at $0.01 per share. No escrow account will be set
up and all proceeds raised in the offering will be deposited immediately
into our corporate account to be utilized for working capital in the
priorities set by management of our company. The offering conducted by our
company will commence when the Securities and Exchange Commission declares
this prospectus effective. The offering conducted by our company will
terminate upon the earlier of the sale of all the shares of common stock
being offered or 180 business days after the date hereof, which may be
extended for an additional 90 days in our sole discretion. In
the event that all shares are sold under this prospectus by our company,
persons who purchase shares will own 20,000,000 shares of common stock out
of 100,000,000 shares of common stock outstanding, or
20%. However, in the event that only 2,000,000 ($20,000) shares
are sold under this prospectus by our Company, our investors will own
2,000,000 out of 82,000,000 shares of common stock or
2.4%. There is no minimum number of shares that must be sold in
this offering. As a result, we will retain the proceeds from
any funds raised and the proceeds will not be returned to the
investor. In the event that we only raise a minimum amount
under this offering, we will immediately utilize the
proceeds. As a result, if you are an initial investor and we
fail to raise additional proceeds, your investment will be rendered
worthless. For example, if we only sell $10,000 (5% of the
offering) or $20,000 (10% of the offering) in securities, we will utilize
the proceeds in our operations but we will not be able to implement our
business plan to any meaningful extent rendering your investment
worthless.
|
Offering
price per share:
|
$0.01per
share.
|
Number
of shares outstanding before the offering:
|
80,000,000.
|
Number
of shares outstanding after the offering assuming that all of the shares
are sold:
|
100,000,000.
|
Net
proceeds to us:
|
Assuming
the offering is only subscribed for 2,000,000 shares, then we will only
receive $20,000 in gross proceeds. As our expenses are $32,000,
we will be unable to implement our business plan in any meaningful
way. In the event that we sell the full 20,000,000 shares, we
will receive $200,000 in gross proceeds or $168,000 net
proceeds.
|
Use
of proceeds:
|
We
will use the proceeds to pay administrative expenses, the implementation
of our business plan including the development of our trading software and
working capital.
|
Market
for common shares
|
There
is no public market for our common shares. We intend to have a market
maker file an application on our behalf with FINRA to have our common
stock quoted on the OTC Bulletin Board. There is no assurance that we will
be accepted to trade on the OTCBB, that a trading market will develop, or,
if developed, that it will be sustained. Consequently, a purchaser of our
common stock may find it difficult to resell the securities offered herein
should the purchaser desire to do so when eligible for public
resale.
|
Risk
Factors
|
The
purchase of our common stock involves a high degree of risk. You should
carefully review and consider "Risk Factors" beginning on page
4.
|
The above
information regarding common stock to be outstanding after the offering is based
on 80,000,000 shares of common stock outstanding as of October 21,
2009.
The above
Offering Price of $0.01 per share has been arbitrarily determined by our
company. It bears no relation to our assets, book value, or any other customary
investment criteria, including our prior operating history. Among factors
considered by us in determining the offering price were our lack of operating
history, the proceeds to be raised by the offering, our relative cash
requirements, estimates of our business potential, the limited financial
resources of our company, the amount of equity and control desired to be
retained by the present stockholders. There is no minimum number of
shares that must be sold in this offering. As a result, we will
retain the proceeds from any funds raised and the proceeds will not be returned
to the investor. In the event that we only raise a minimum amount
under this offering, we will immediately utilize the proceeds. As a
result, if you are an initial investor and we fail to raise additional proceeds,
your investment will be rendered worthless. For example, if we only
sell $10,000 (5% of the offering) or $20,000 (10% of the offering) in
securities, we will utilize the proceeds in our operations but we will not be
able to implement our business plan to any meaningful extent rendering your
investment worthless.
1
Selected
Financial Data
The
following information summarizes the more complete historical financial
information at the end of this prospectus.
As
of July 31, 2009
(Audited)
|
||||
Balance
Sheet
|
||||
Total
Assets
|
$
|
5,800
|
||
Total
Liabilities
|
$
|
53,125
|
||
Stockholders
Deficit
|
$
|
(47,325)
|
||
From
Inception on July 22, 2009 through July 31, 2009
(Audited)
|
||||
Income
Statement
|
||||
Revenue
|
$
|
5,000
|
||
Total
Expenses
|
$
|
53,125
|
||
Net
Loss
|
$
|
(48,125)
|
2
RISK
FACTORS
Any
investment in our common stock involves a high degree of risk. You should
consider carefully the risks and uncertainties that we deem to be material and
which we are aware described below, and all other information contained in this
prospectus, before you decide whether to purchase our common stock. The
occurrence of any of the following risk factors could harm our
business. You
may lose part or all of your investment due to any of these risks or
uncertainties.
Risks
Relating to Forex International Trading Corp.
We
have no operating history upon which you may evaluate our
operations.
We intend
to develop software for a trading currency platform. We intend to
also acquire trading platforms operating in the foreign exchange trading
industry. We are not presently in negotiations with any potential
target and there is no guarantee that we will be able to indentify any target
and close such acquisition. We have no operating history upon which
you may evaluate our business and prospects. In addition, our revenue
model has yet to evolve and because of our lack of operating history,
period-to-period comparisons of our results of operations will not be meaningful
in the short term and should not be relied upon as indicators of future
performance. Our business and prospects must be considered in light of the risk,
expense and difficulties frequently encountered by companies in early stages of
development, particularly companies in new and rapidly evolving markets such as
currency trading. Our failure to address these risks successfully
could materially and adversely affect our business and operations.
We
have not yet developed our online brokerage system for foreign exchange trading
nor have we designed such system and, as a result, we will have to spend a
considerable amount of money on developing our trading platform and there is no
guarantee that the Company will have adequate capital to implement its plan that
we will be able to develop a trading system that is competitive or that we
generate revenues.
Our
intent to become an online trading service for foreign currency traders which is
reliant upon the design and development of our online brokerage system for
foreign exchange trading and commercialization of this service. The
development and commercialization of our platform requires significant
funding. While it will be our intent to raise the necessary funding
to create our platform, there is no guarantee that we will be able to do
so. Further, if we are able to raise adequate funding to design and
develop our platform, there is no guarantee that we will be able to penetrate
the market or generate revenue.
Our
working capital is limited and we will likely need to complete this offering in
order to fully implement our business.
We have
limited working capital on hand. Our ability to commence and continue operations
and operate as a going concern is wholly contingent on the successful completion
of this offering, our ability to borrow funds from Moshe J. Schnapp, the sole
executive officer of our company, and unrelated third parties, and the receipt
of proceeds from the sale of our product range. As we are not generating
material revenue and we have been funded primarily through loans from a
shareholder, in order to conduct operations for a minimum period of one year
from the date of the filing we will require approximately $40,000 of
funding. If adequate funds are not available, we may not be able to
fund our expansion, take advantage of acquisition opportunities, develop or
enhance products or services or respond to competitive pressures. Such inability
could have a material adverse effect on our business, results of operations and
financial condition. As of this date, we have generated a net
loss and there can be no assurance that significant income will be forthcoming
in the future.
Our
independent auditors have expressed substantial doubt about our ability to
continue as a going concern, which may hinder our ability to obtain future
financing and which may force us to cease operations.
In their
report dated October 22, 2009, our independent auditors stated that our
financial statements for the period ended July 31, 2009 were prepared assuming
that we would continue as a going concern. Our ability to continue as a going
concern is an issue raised as a result of recurring losses from operations and
cash flow deficiencies since our inception. Our ability to continue as a going
concern is subject to our ability to generate a profit and/or obtain necessary
funding from outside sources, including obtaining additional funding from the
sale of our securities, increasing sales or obtaining loans and grants from
various financial institutions where possible. If we are unable to continue as a
going concern, you may lose your entire investment.
We
may need and be unable to obtain additional funding on satisfactory terms, which
could dilute our shareholders or impose burdensome financial restrictions on our
business.
Even if
the maximum offering is sold, unforeseeable circumstances may occur which could
compel us to seek additional funds. Because the offering has no minimum amount,
it can close with only a small amount of proceeds raised. Furthermore, future
events, including the problems, delays, expenses and other difficulties
frequently encountered by start-up companies may lead to cost increases that
could make the net proceeds of this offering insufficient to fund our proposed
business plan. Thus, the proceeds of the offering may be insufficient to
accomplish our objectives and we may have to borrow or otherwise raise
additional funds to accomplish such objectives. We may seek additional sources
of capital, including an additional offering of our equity securities, an
offering of debt securities or obtaining financing through a bank or other
entity. This may not be available on a timely basis, in sufficient amounts or on
terms acceptable to us. Our inability to raise additional equity capital or
borrow funds required to affect our business plan, may have a material adverse
effect on our financial condition and future prospects. Additionally, to the
extent that further funding ultimately proves to be available, both debt and
equity financing involve risks. Debt financing may require us to pay significant
amounts of interest and principal payments, reducing the resources available to
us to expand our existing businesses. Some types of equity financing may be
highly dilative to our stockholders' interest in our assets and earnings. Any
debt financing or other financing of securities senior to common stock will
likely include financial and other covenants that will restrict our
flexibility.
We will have inadequate capital to
pay significant additional expenses we expect to incur as a public company and,
as a result, we will be required to raise additional capital further diluting
investors that participate in this offering.
Following
the effective date of this prospectus, we will be a reporting company subject to
the requirements of section 15(d) of the Exchange Act. In order to
comply with such reporting requirements, we will incur additional administrative
expenses including substantial legal and accounting expenses. We
expect such fees to be approximately $40,000 per year. As a result,
we will be required to raise additional debt or equity financing of which there
is no guarantee that such financing will be available or available on acceptable
terms. To date, Rasel Ltd., a shareholder of the company, has loaned
the company $75,000. If we are required to raise additional funds and
if we raise such proceeds in the form of equity, the investors in this offering
will be further diluted.
Our
success will be dependent on attracting key and other personnel, particularly in
the areas of management, technical services and customer support.
We
believe that our success will depend on continued employment of Moshe J.
Schnapp, our sole executive, officer director and employee, for the development
of our platform. Such experience will be important to the establishment of our
business. The loss of Moshe J. Schnapp during this early development stage could
disrupt and negatively affect our business and operations. Our
success also depends on having highly trained technical and customer support
personnel.
We may
have difficulty attracting and employing members to our senior management team
and sufficient technical and customer support personnel to keep up with our
growth needs. This shortage could limit our ability to increase sales and to
sell services. Competition for personnel is intense. If we cannot hire suitable
personnel to meet our growth needs, our business and operations will be
negatively affected.
Our
success will be dependent upon our receipt and maintenance of regulatory
approvals in the major customer markets around the world.
We
believe that our success, in large part, depends upon our ability to receive and
retain regulatory approval in the major markets around the world. For example,
if we are to market our services in the United States, we will be required to
obtain the approval of the National Futures Association. Such
approvals will both expand the variety of services which we can offer and
bolster our reputation among potential customers.
3
Fluctuations
in our quarterly results may adversely affect our stock price assuming we are
traded on the OTCBB or pink sheets in the future.
Our
quarterly operating results will likely vary. Assuming we are traded
on the OTCBB or pink sheets in the future, our operating results will likely
fall below the expectations of securities analysts or investors in some future
quarter or quarters. Our failure to meet these expectations would likely
adversely affect the market price of our common stock. Our quarterly operating results may vary
depending on a number of factors, including:
·
|
Unexpected
cost in developing our software to be utilized in our
platform;
|
·
|
demand
of buyers and sellers to use and transact business on our
platform;
|
·
|
actions
taken by our competitors, including new product introductions, fee
schedules, pricing policies and
enhancements;
|
·
|
cash
flow problems that may occur;
|
·
|
the
quality and success of, and potential continuous changes in, sales or
marketing strategies assuming that we successfully develop our
platform;
|
·
|
the
timing, completion, cost and effect of our development and launch of a
planned Forex trading platform;
|
·
|
the
size and frequency of any trading errors for which we ultimately suffer
the economic burden, in whole or in
part;
|
·
|
changes
in demand for our products and services due to the rapid pace in which new
technology is offered to customers in our
industry;
|
·
|
costs
or adverse financial consequences that may occur with respect to
regulatory compliance or other regulatory issues, particularly relating to
laws, rules or regulations that may be enacted with a focus on the active
trader market; and
|
·
|
general
economic and market factors that affect active trading, including changes
in the securities and financial
markets.
|
Our
industry is intensely competitive, which will make it difficult to attract and
retain customers.
The
markets for online brokerage services, client software and Internet-based
trading tools, and real-time market data services is intensely competitive and
rapidly evolving, and there has been substantial consolidation of those three
products and services occurring in the industry. We believe that competition
from large online brokerage firms and smaller brokerage firms focused on active
traders, as well as consolidation, will substantially increase and intensify in
the future. Competition may be further intensified by the size of the active
trader market. We believe our ability to compete will depend upon
many factors both within and outside our control. These include: price pressure;
the timing and market acceptance of new products and services and enhancements
developed by us and our competitors; the development and support of efficient,
materially error-free Internet-based systems; product and service functionality;
data availability and cost; clearing costs; ease of use; reliability; customer
service and support; and sales and marketing decisions and efforts.
There
is no guarantee that we will adequately be able to protect our intellectual
property and software licenses which may have a negative impact on our
operations.
While we
will seek to protect our technology that we will develop, it will not be
possible for us to detect all possible infringements of our software, text,
designs and other works of authorship. Also, copyright protection does not
extend to functional features of software and will not be effective to prevent
third parties from duplicating any of our future-developed software's
capabilities through engineering research and development. In addition, our
technology and intellectual property may receive limited or no protection in
some countries, and the global nature of the Internet makes it impossible to
control the ultimate destination of our work.
If our
future-developed software is found to infringe on the copyrights or patents of a
third party, the third party or a court or other administrative body could
require us to pay royalties for past use and for continued use, or to modify or
replace the software to avoid infringement. We cannot assure you that we would
be able to modify or replace this software.
Any of
these claims, with or without merit, could subject us to costly litigation,
divert our technical and management personnel and materially and adversely
affect our business and operations.
There
is no guarantee that we will adequately be able to protect our trademarks and
service marks which may have a negative impact on our operations.
Proprietary
rights are important to our success and our competitive position. Our actions
may be inadequate to protect any trademarks and other proprietary rights or to
prevent others from claiming violations of their trademarks and other
proprietary rights. We may not be able to protect our domain names for our
websites as trademarks because those names may be too generic or perceived as
describing a product or service or its attributes rather than serving a
trademark function.
If we are
unable to protect our proprietary rights in trademarks, service marks and other
indications of origin, competitors will be able to use names and marks that are
identical to ours or sufficiently similar to ours to cause confusion among
potential customers. This confusion may result in the diversion of business to
our competitors, the loss of customers and the degradation of our reputation.
Litigation against those who infringe upon our service marks, trademarks and
similar rights may be expensive. Because of the difficulty in proving damages in
trademark litigation, it may be very difficult to recover damages.
4
Except
for a search for the name Forex International Trading Corp., we have not
conducted searches to determine whether our service marks, trademarks and
similar items may infringe on the rights of third parties. Despite having
searched a mark, there may be a successful assertion of claims of trademark or
service mark infringement. If a third party successfully asserts claims of
trademark, service mark or other infringement, the third party or a court or
other administrative body may require us to change our service marks,
trademarks, company names, the design of our sites and materials and our
Internet domain name (web address), as well as to pay damages for any
infringement. A change in service marks, trademarks, company names, the design
of our sites and materials and Internet domain names may cause difficulties for
our customers in locating us or cause them to fail to connect our new names and
marks with our prior names and marks, resulting in loss of
business.
The
nature of our business may result in potential liability to customers which
would have a negative impact upon our results of operations.
Many
aspects of the forex brokerage business, including online trading services,
involve substantial risks of liability. In recent years there has been an
increasing incidence of litigation involving the securities brokerage industry,
including class action and other suits that generally seek substantial damages,
including in some cases punitive damages. In particular, our future proprietary
order routing technology will be designed to automatically locate, with
immediacy, the best available price in completing execution of a trade triggered
by programmed market entry and exit rules. There are risks that the electronic
communications and other systems upon which these products and services rely,
and will continue to rely, or our products and services themselves, as a result
of flaws or other imperfections in their designs or performance, may operate too
slowly, fail or cause confusion or uncertainty to the user. Major failures of
this kind may affect all customers who are online simultaneously. Any such
litigation could have a material adverse effect on our business, financial
condition, results of operations and prospects.
We
may not be able to make future acquisitions and new strategic alliances, and,
even if we do, such acquisitions and alliances may disrupt or otherwise
negatively affect our business.
Although
we do not have any specific plans for any acquisition or alliance, our business
plan contemplates that we may make acquisitions in complementary companies,
technologies and assets. Future acquisitions are subject to the
following risks:
·
|
we
may not be able to agree on the terms of the acquisition or alliance, such
as the amount or price of our acquired
interest;
|
·
|
acquisitions
and alliances may cause a disruption in our ongoing business, distract a
relatively new management team and make it difficult to implement or
maintain our systems, controls and
procedures;
|
·
|
we
may acquire companies or make strategic alliances in markets in which we
have little experience;
|
·
|
we
may not be able successfully to integrate the services, products and
personnel of any acquisition or new alliance into our
operations;
|
·
|
we
may be required to incur debt or issue equity securities to pay for
acquisitions, which may be dilutive to existing shareholders, or we may
not be able to finance the acquisitions at all;
and
|
·
|
our
acquisitions and strategic alliances may not be successful, and we may
lose our entire investment.
|
In
addition, we will face competition from other parties, including large public
and private companies, venture capital firms, and other companies, in our search
for suitable acquisitions and alliances. Many of the companies we will compete
with for acquisitions have substantially greater name recognition and financial
resources than we have, which may limit our opportunity to acquire interests in
new companies, technologies and assets or create strategic alliances. Even if we
are able to find suitable acquisition candidates or develop acceptable strategic
alliances, doing so may require more time and expense than we expect because of
intense competition.
The
international nature of our business will add additional complexity and risks to
our business.
The
nature of the foreign currency business will bring us into contact with
different countries and markets. We hope to continue to expand further in
international markets. Our international business may be subject to a variety of
risks, including:
·
|
market
risk or loss of uncovered
transactions;
|
·
|
governmental
regulation and political
instability;
|
·
|
collecting
international accounts receivable and
income;
|
·
|
the
imposition of barriers to trade and taxes;
and
|
·
|
difficulties
associated with enforcing contractual obligations and intellectual
property rights.
|
These
factors may have a negative effect on any future international operations and
may adversely affect our business and operations. We may not be able
to compete effectively with other providers of e-commerce services.
Concerns
regarding security of transactions and transmitting confidential information
over the Internet may adversely affect our business.
We
believe that concern regarding the security of confidential information
transmitted over the Internet, including, for example, business requirements,
credit card numbers and other forms of payment methods, prevents many potential
customers from engaging in online trading. If we do not add sufficient security
features to future product releases, our services may not gain market acceptance
or we may face additional legal exposure.
5
Our
e-commerce capability depends on real-time accurate product
information.
We may be
responsible for loading information into our database and categorizing the
information for trading purposes. This process entails a number of risks,
including dependence on our suppliers both to provide us in a timely manner with
accurate, complete and current information and to update this information
promptly when it changes. If our suppliers do not provide us in a timely manner
with accurate, complete and current information, our database may be less useful
to our customers and users and may expose us to liability. We cannot guarantee
that the information available in our database will always be accurate, complete
and current or comply with governmental regulations either due to third-party or
internal errors. This could expose us to liability or result in decreased
acceptance of our products and services, which could have a material and adverse
affect on our business and operations. We are aware of cases in which the data
provided to us by third parties has not been consistently accurate and, as a
result of which, we have experienced customer dissatisfaction and lawsuits by
customers. In addition, our contracts with the third-party data suppliers must
be renewed on a regular basis and the costs for such information may increase,
with our company having little or no negotiating influence in such a
situation.
Our
market is characterized by rapid technological change, and we may not be able to
keep up with such change in a cost-effective way.
Our
market is characterized by rapid technological change and frequent new product
announcements. Significant technological changes could render eventually our
future-developed technology obsolete. If we are unable to respond successfully
to these developments or do not respond in a cost-effective way, our business
and operations will suffer. To be successful, we must adapt to our rapidly
changing market by continually improving the responsiveness, services and
features of our products and services, by developing or acquiring new features
to meet customer needs and by successfully developing and introducing new
versions of our Internet-based e-commerce business software on a timely basis.
The life cycles of the software that will be used to support our e-commerce
services are difficult to predict because the market for our e-commerce will be
new and emerging and will be characterized by changing customer needs and
industry standards. The introduction of on-line products employing new
technologies and industry standards could render our future-developed system
obsolete and unmarketable. If a new software language becomes the industry
standard, we may need to rewrite our future-developed software to remain
competitive, which we may not successfully accomplish in a timely and
cost-effective manner.
In
addition, as traffic to our platform increases, if at all, we may need to expand
and upgrade our technology, transaction processing systems and network hardware
and software. We may not be able to project accurately the rate of growth in our
on-line businesses. We also may not be able to expand and upgrade our systems
and network hardware and software capabilities to accommodate increased use of
our on-line businesses, which would have a material and adverse affect on our
business and operations.
An
unexpected event, such as a power or telecommunications failure, fire or flood,
or physical or electronic break-in at any of our facilities or those of any
third parties on which we rely, could cause a loss of critical data and prevent
us from offering services. If our hosting and information technology services
were interrupted, including from failure of other parties' software that we
integrate into our technology, our business and the businesses of our
marketplaces using these services would be disrupted, which could result in
decreased revenues, lost customers and impaired business reputation for us and
them. As a result, we could experience greater difficulty attracting new
customers. A failure by us or any third parties on which we rely to provide
these services satisfactorily would impair our ability to support the operations
of our services and could subject us to legal claims.
In
addition, to a large extent, our company's profits will be dependent upon the
operation of its internal risk management system. There is no guarantee that
such system will operate successfully in every eventuality.
Forex is
a Nevada corporation. Anti-takeover provisions of Nevada law may make it
difficult for a third party to acquire control of us, even if a change in
control would be beneficial to our shareholders. In addition, our board of
directors may issue preferred stock with voting or conversion rights that may
have the effect of delaying, deferring or preventing a change of control.
Preventing a change of control could adversely affect the market price of Forex
common stock and the voting and other rights of holders of Forex common
stock.
Our
common stock price is likely to be highly volatile.
Assuming
we are successful in being approved to trade on the OTCBB or the pinksheets, of
which there is no guarantee, the market price of our common stock is likely to
be highly volatile, as the stock market in general, and the market for
Internet-related and technology companies in particular, has been highly
volatile. Our shareholders may not be able to resell their shares of our common
stock following periods of volatility because of the market's adverse reaction
to this volatility. Factors that could cause this volatility may
include, among other things:
·
|
announcements
of technological innovations and the creation and failure of B2B
marketplaces;
|
·
|
actual
or anticipated variations in quarterly operating
results;
|
6
·
|
new
sales formats or new products or
services;
|
·
|
changes
in financial estimates by securities
analysts;
|
·
|
conditions
or trends in the Internet, B2B and other
industries;
|
·
|
changes
in the market valuations of other Internet
companies;
|
·
|
announcements
by us or our competitors of significant acquisitions, strategic
partnerships or joint ventures;
|
·
|
changes
in capital commitments;
|
·
|
additions
or departures of key personnel;
|
·
|
sales
of our common stock; and
|
·
|
general
market conditions.
|
Many of
these factors are beyond our control.
Risks
Relating to Our Common Shares
There
is no minimum raise required in this offering and all funds raised in this
offering will be deposited directly into our corporate account and will not be
held in escrow and, as a result, if we do not raise an adequate amount of funds
to implement our business plan, you may lose your entire
investment.
No escrow
account will be set up and all proceeds raised in the offering will be deposited
immediately into our corporate account to be utilized for working capital in the
priorities set by management of our company. There is no minimum
number of shares that must be sold in this offering. As a result, we
will retain the proceeds from any funds raised and the proceeds will not be
returned to the investor. In the event that we only raise a minimum
amount under this offering, we will immediately utilize the
proceeds. As a result, if you are an initial investor and we fail to
raise additional proceeds, your investment will be rendered
worthless. For example, if we only sell $10,000 (5% of the offering)
or $20,000 (10% of the offering) in securities, we will utilize the proceeds in
our operations but we will not be able to implement our business plan to any
meaningful extent rendering your investment worthless. We cannot
guarantee that we will be able to raise adequate funds in this offering to
implement its business plan. In the event that we do not raise adequate funds
and the subscriber has invested in our company, then the subscriber’s investment
may be lost entirely.
Since
this is a direct public offering and there is no underwriter, we may not be able
to sell any shares ourselves.
We have
not retained an underwriter to sell these shares. We will conduct this offering
as a direct public offering, meaning there is no guarantee as to how much money
we will be able to raise through the sale of our stock. If we fail to sell all
the shares we are trying to sell, our ability to expand and complete our
business plan will be materially affected, and you may lose all or substantially
all of your investment.
You
will not receive dividend income from an investment in the shares and as a
result, you may never see a return on your investment.
We
have never declared or paid a cash dividend on our shares nor will we in the
foreseeable future. We currently intend to retain any future earnings, if any,
to finance the operation and expansion of our business. Accordingly, investors
who anticipate the need for immediate income from their investments by way of
cash dividends should refrain from purchasing any of the securities offered by
our company. As we do not intend to declare dividends in the future you may
never see a return on your investment and you indeed may lose your entire
investment.
We
have arbitrarily determined the initial public offering price and this may not
be the market price of the shares after the offering.
The
offering price of the shares has been arbitrarily determined by us based on what
we believe purchasers of such speculative issues would be willing to pay for the
shares of our company and does not necessarily bear any material relationship to
book value, par value, or any other established criterion of value. As a result,
it may be difficult for you to resell your shares at or above the offering
price. You may also lose your entire investment if the price of the shares being
sold is too high.
You
may not be able to resell any shares you purchased in this
offering.
There
is no trading market for our common stock at present and there has been no
trading market to date. We have not undertaken any discussions, preliminary or
otherwise, with any prospective market maker concerning the participation of
such market maker in the aftermarket of our common stock. There is no assurance
that a trading market will ever develop or, if such a market does develop, that
it will continue. This means that it may be hard or impossible for you to find a
willing buyer for your stock should you decide to sell it in the future or to
resell the shares at or above the offering price.
Our
issuance of further shares and the eligibility of issued shares for resale will
dilute our common stock and could lower the price a willing buyer would pay for
our common stock.
The
shares, if all are sold, being offered in this prospectus (excluding the shares
held by the selling stock holder) represents 20% of our total issued and
outstanding shares on a fully-diluted basis. Present shareholders acquired their
shares of common stock at prices substantially below the offering price, upon
completion of the Offering, there will be an immediate substantial dilution to
subscribers in the book value of each common share, and the present management
will realize an immediate increase thereon. (See “Dilution.”) We calculate net
tangible book value per share by subtracting from our total assets all
intangible assets and total liabilities, and dividing the result by the number
of outstanding shares of common stock. Furthermore, we may issue additional
shares, options and warrants and we may grant stock options to our employees,
officers, directors and consultants under our future stock option plans, all of
which may further dilute our net tangible book value. The dilution of our shares
could lower the price a willing buyer would pay for our shares based on the fact
our net asset value per share and/or our earnings ratio per share would be
reduced.
7
Future
sales of restricted shares could decrease the price a willing buyer would pay
for shares of our common stock and impair our ability to raise
capital.
The
80,000,000 shares of common stock presently issued and outstanding as of the
date hereof are “restricted securities” as that term is defined under the
Securities Act of 1933, as amended, (the “Securities Act”) and in the future may
be sold in compliance with Rule 144 of the Securities Act, or pursuant to a
Registration Statement filed under the Securities Act. Rule 144
provides, in essence, that a person holding restricted securities for a period
of six months may sell those securities. With respect to affiliates, Rule 144
provides, in essence, that an affiliate holding restricted securities
for a period of six months may sell those securities in unsolicited brokerage
transactions or in transactions with a market maker, in an amount equal to one
percent of our outstanding common stock every three months. Additionally, Rule
144 requires that an issuer of securities make available adequate current public
information with respect to the issuer. Such information is deemed available if
the issuer satisfies the reporting requirements of sections 13 or 15(d) of the
Securities and Exchange Act of 1934 (the “Securities Exchange Act”) or of Rule
15c2-11 there under. Any sales may have a depressive effect on the market price
of our securities in any market which may develop for such shares.
State
securities laws may limit secondary trading, which may restrict the states in
which and conditions under which you can sell the shares offered by this
prospectus.
Secondary
trading in common stock sold in this offering will not be possible in any state
until the common stock is qualified for sale under the applicable securities
laws of the state or there is confirmation that an exemption, such as listing in
certain recognized securities manuals, is available for secondary trading in the
state. If we fail to register or qualify, or to obtain or verify an exemption
for the secondary trading of, the common stock in any particular state, the
common stock could not be offered or sold to, or purchased by, a resident of
that state. In the event that a significant number of states refuse to permit
secondary trading in our common stock, the liquidity for the common stock could
be significantly impacted thus causing you to realize a loss on your
investment.
We
may issue shares of preferred stock in the future that may adversely impact your
rights as holders of our common stock.
Our
articles of incorporation authorize us to issue up to 20,000,000 shares of
"blank check" preferred stock. Accordingly, our board of directors will have the
authority to fix and determine the relative rights and preferences of preferred
shares, as well as the authority to issue such shares, without further
stockholder approval. As a result, our board of directors could authorize the
issuance of a series of preferred stock that would grant to holders preferred
rights to our assets upon liquidation, the right to receive dividends before
dividends are declared to holders of our common stock, and the right to the
redemption of such preferred shares, together with a premium, prior to the
redemption of the common stock. To the extent that we do issue such additional
shares of preferred stock, your rights as holders of common stock could be
impaired thereby, including, without limitation, dilution of your ownership
interests in us. In addition, shares of preferred stock could be issued with
terms calculated to delay or prevent a change in control or make removal of
management more difficult, which may not be in your interest as holders of
common stock.
Our
common stock is subject to the "penny stock" rules of the sec and the trading
market in our securities is limited, which makes transactions in our stock
cumbersome and may reduce the value of an investment in our stock.
The SEC
has adopted Rule 3a51-1 which establishes the definition of a "penny stock," for
the purposes relevant to us, as any equity security that has a market price of
less than $5.00 per share or with an exercise price of less than $5.00 per
share, subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, Rule 15g-9 requires:
·
|
that
a broker or dealer approve a person's account for transactions in penny
stocks; and
|
|
·
|
the
broker or dealer receives from the investor a written agreement to the
transaction, setting forth the identity and quantity of the penny stock to
be purchased.
|
In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:
·
|
obtain
financial information and investment experience objectives of the person;
and
|
|
·
|
make
a reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks.
|
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the SEC relating to the penny stock market,
which, in highlight form:
·
|
sets
forth the basis on which the broker or dealer made the suitability
determination; and
|
|
·
|
that
the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
|
Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
8
Generally,
brokers may be less willing to execute transactions in securities subject to the
"penny stock" rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our
stock.
Capitalization
The
following table sets forth the capitalization of the company as of July 31, 2009
and as adjusted to give effect to the sale and issuance of 20,000,000 shares of
common stock being offered hereby at the initial public offering price of $.01
per share and the application of the estimated proceeds therefrom. This table
should be read in conjunction with the more detailed financial statements and
notes thereto included elsewhere herein.
July
31, 2009
|
||||||||
Actual
|
As
Adjusted
(1)
|
|||||||
Stockholders’
equity (deficit):
Preferred
Stock $.00001 par value, 20,000,000 shares authorized, no shares issued
and outstanding
|
-
|
-
|
||||||
Common
Stock, $.00001 par value, 400,000,000 shares authorized, 80,000,000 shares
issued and outstanding
|
800
|
|||||||
90,000,000
issued and outstanding - pro forma (1)
|
100,800
|
|||||||
Additional
paid-in capital
|
||||||||
Loss
accumulated during the development stage
|
(48,125)
|
(48,125)
|
||||||
Total
stockholders equity (deficit)
|
(47,325)
|
52,675
|
||||||
Total
Capitalization
|
$
|
(47,325)
|
52,675
|
To
record the sale of 10,000,000 shares of common stock being offered at
$0.01 per share at initial public offering, of which there is no
guarantee.
|
9
DILUTION
The
difference between the public offering price per share of common stock and the
pro forma net tangible book value per share of our common stock after this
offering constitutes the dilution to investors in this offering. Net tangible
book value per share is determined by dividing our net tangible book value,
which is our total tangible assets less total liabilities (including the value
of common stock which may be converted into cash), by the number of outstanding
shares of our common stock.
At July
31, 2009, our net tangible book value was at a surplus of ($1,686), or
approximately ($0.00001) per share of common stock. After giving effect to the
sale of 20,000,000 shares of common stock and the deduction of estimated
expenses of this offering of $32,000, our pro forma net tangible book value at
July 31, 2009, would have been $144,686 or $0.00145 per share, representing an
immediate increase in net tangible book value of $0.00144 per share to the
initial stockholders and an immediate dilution of $0.00001 per share to new
investors.
The
following table illustrates the dilution to the new investors on a per-share
basis:
Public
Offering Price
|
$
|
0.0100
|
||||||
Net
Tangible book value before this
|
||||||||
Offering
|
$
|
0.00001
|
||||||
Increase
attributable to new investors
|
$
|
0.00145
|
||||||
Pro
forma net tangible book value after this offering
|
$
|
0.00144
|
||||||
Dilution
to new investors
|
$
|
0.00001
|
The
pro forma net tangible book value after the offering is calculated as
follows:
|
||||
Numerator:
|
||||
Net
tangible book value before this offering
|
$
|
(47,325)
|
||
Net
Proceeds from the offering assuming the entire offering is
sold
|
200,000
|
|||
$
|
152,675
|
|||
Denominator:
|
||||
Shares
of common stock outstanding prior to this offering
|
80,000,000
|
|||
Shares
of common stock assuming the entire offering is sold
|
20,000,000
|
|||
100,000,000
|
||||
The
following illustrates dilution at varying levels of proceeds from the
Offering:
|
ASSUMING
|
|||||||||||||||
20% of |
50%
of
|
75%
of
|
MAXIMUM
|
|||||||||||||
OFFERING
|
OFFERING
|
OFFERING
|
OFFERING
|
|||||||||||||
Public
offering price per share
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
||||||||
Net
tangible book value per
|
||||||||||||||||
share
as July 31, 2009
|
0.00001
|
0.00001
|
0.00001
|
0.00001
|
||||||||||||
Increase
(loss) per share attributable
|
||||||||||||||||
to
this offering
|
(0.000242
|
) |
0.000250
|
0.000010
|
0.000010
|
|||||||||||
Pro
forma net tangible book
|
||||||||||||||||
value
per share after this offering
|
(0.000232
|
) |
0.000260
|
0.000622
|
0.000949
|
|||||||||||
Dilution
to new investors
|
0.01023
|
0.00974
|
0.00938
|
0.00905
|
||||||||||||
Percentage
of Dilution
|
102
|
%
|
97
|
%
|
94
|
%
|
91
|
%
|
||||||||
The
following table sets forth with respect to the existing shareholders, a
comparison of the number of shares of Common Stock owned by the existing
shareholders, the number of common stock to be purchased from our company by the
purchasers of the shares of common stock offered hereby and the respective
aggregate consideration paid to our company and the average price per
share:
Number
of
|
Amount
|
Average
|
||||||||||||||||
shares
purchased
|
Percent
|
of
consideration
|
Percent
|
price
per share
|
||||||||||||||
Existing
shareholders
|
80,000,000
|
80.0
|
%
|
$
|
800
|
0.003
|
%
|
$
|
0.000010
|
|||||||||
New
investors
|
20,000,000
|
20.0
|
%
|
$
|
200,000
|
99.007
|
%
|
$
|
0.010
|
|||||||||
100,000,000
|
100.0
|
%
|
$
|
200,800
|
100.0
|
%
|
$
|
0.002
|
10
USE
OF PROCEEDS
If the
event that we sell only 10,000,000 shares, we estimate that we will receive
gross proceeds of approximately $68,000 ($100,000 of gross proceeds, less
offering expenses of approximately $32,000 ). There is no minimum number of
shares that must be sold in this offering. As a result, we will
retain the proceeds from any funds raised and the proceeds will not be returned
to the investor. In the event that we only raise a minimum amount
under this offering, we will immediately utilize the proceeds. As a
result, if you are an initial investor and we fail to raise additional proceeds,
your investment will be rendered worthless. For example, if we only
sell $10,000 (5% of the offering) or $20,000 (10% of the offering) in
securities, we will utilize the proceeds in our operations but we will not be
able to implement our business plan to any meaningful extent rendering your
investment worthless.. If the maximum number of shares of common stock is sold,
we estimate that we will receive net proceeds of approximately $143,000
($200,000 of gross proceeds, less offering expenses of approximately $32,000 )
from our sale of the 20,000,000 shares of common stock offered by us. This
estimate is based on an initial public offering price of $0.01 per share and is
before deduction for any commissions or non-accountable expenses we may pay to
registered broker-dealers, if any We have no plans, arrangements or
agreements to pay commissions or offer any shares through registered
broker-dealers. Subscription funds will not be placed into escrow, trust or any
other similar arrangement. There are no investor protections for the return of
subscription funds once accepted. Once we receive the purchase price for the
shares, we will be able to use the funds.
We expect
to use the net proceeds of the offering for the following purposes:
|
5% | 10% |
50%
|
Maximum
|
||||||
Website
development
|
$10,000 | $10,000 |
10,000
|
40,000
|
||||||
Marketing
|
$10,000 |
10,000
|
40,000
|
|||||||
Rent
|
5,000
|
5,000
|
||||||||
Purchase
of equipment
|
||||||||||
and
software
|
5,000
|
10,000
|
||||||||
General
and administrative
|
||||||||||
Expenses
|
5,000
|
10,000
|
||||||||
Legal
and
accounting
|
5,000
|
10,000
|
||||||||
Working
capital
|
3,000
|
28.000
|
||||||||
Total
|
$10,000 | $20,000 |
$
|
43,000
|
$
|
143,000
|
Our
future capital requirements and the adequacy of available funds will depend on
numerous factors, including the successful commercialization of our products,
competing technological and market developments, and the development of
strategic alliances for the development and marketing of our
products. We intend to try to obtain funds through equity or debt
financing, strategic alliances with corporate partners and others, or through
other sources. On October 6, 2009 and October 20, 2009, Rasel Ltd., a
shareholder of our company, loaned $25,000 and $50,000, respectively, to our
company. The loans from Rasel Ltd. carry 4% annual interest and
principal and interest mature within one year. In the event Forex's
plans change or its assumptions change or prove to be inaccurate or the funds
available prove to be insufficient to fund operations at the planned level (due
to further unanticipated expenses, delays, problems or otherwise), We could be
required to obtain additional funds earlier than expected. We do not have any
committed sources of additional financing, and there can be no assurance that
additional funding, if necessary, will be available on acceptable terms, if at
all. If adequate funds are not available, we may be required to further delay,
scale-back, or eliminate certain aspects of our operations or attempt to obtain
funds through arrangements with collaborative partners or others that may
require us to relinquish rights to certain of our technologies, product
candidates, products or potential markets. If adequate funds are not
available, our business, financial condition and results of operations will be
materially and adversely affected.
Until
required for operations, our policy is to invest its cash reserves in bank
deposits. We expect that its operating results will fluctuate
significantly from quarter to quarter in the future and will depend on a number
of factors, most of which are outside our control.
The price
of the shares we are offering was arbitrarily determined in order for us to
raise $200,000 in this offering. The offering price bears no relationship
whatsoever to our assets, future earnings, future book value or other criteria
of value. Among the factors considered were:
•
|
our
lack of operating history;
|
•
|
the
proceeds to be raised by the offering: and
|
•
|
· estimates
of our business potential.
· the
limited financial resources of our company.
· the
amount of equity and control desired to be retained by the present
stockholders.
|
11
PLAN
OF DISTRIBUTION; TERMS OF THE OFFERING
The
Offering
We are
offering up to a total of 20,000,000 shares of common stock on a as a
direct public offering. The offering price is $0.01 per share. The offering will
be for a period of 180 business days from the effective date and may be extended
for an additional 90 business days if we choose to do so. In our sole
discretion, we have the right to terminate the offering at any time, even before
we have sold the 20,000,000 shares. There are no specific events which might
trigger our decision to terminate the offering. There is no minimum
number of shares that must be sold in this offering. As a result, we
will retain the proceeds from any funds raised and the proceeds will not be
returned to the investor. In the event that we only raise a minimum
amount under this offering, we will immediately utilize the
proceeds. As a result, if you are an initial investor and we fail to
raise additional proceeds, your investment will be rendered
worthless. For example, if we only sell $10,000 (5% of the offering)
or $20,000 (10% of the offering) in securities, we will utilize the proceeds in
our operations but we will not be able to implement our business plan to any
meaningful extent rendering your investment worthless.
We have
not established a minimum amount of proceeds that we must receive in the
offering before any proceeds may be accepted. We cannot assure you that all or
any of the shares offered under this prospectus will be sold. No one has
committed to purchase any of the shares offered. Therefore, we may only sell a
nominal amount of shares and receive minimal proceeds from the offering. We
reserve the right to withdraw or cancel this offering and to accept or reject
any subscription in whole or in part, for any reason or for no reason.
Subscriptions will be accepted or rejected promptly. All monies from rejected
subscriptions will be returned immediately by us to the subscriber, without
interest or deductions.
Any
accepted subscriptions will be made on a rolling basis. Once accepted, the funds
will be deposited into an account maintained by us and be immediately available
to us. Subscription funds will not be placed into escrow, trust or any other
similar arrangement. There are no investor protections for the return of
subscription funds once accepted. Once we receive the purchase price for the
shares, we will be able to use the funds. Certificates for shares purchased will
be issued and distributed promptly after a subscription is accepted and "good
funds" are received in our account.
We will
sell the shares in this offering through our sole executive officer and
director. The officers and directors engaged in the sale of the securities will
receive no commission from the sale of the shares nor will they register as a
broker-dealer pursuant to Section 15 of the Securities Exchange Act of 1934 in
reliance upon Rule 3(a)4-1. Rule 3(a)4-1 sets forth those conditions under which
a person associated with an issuer may participate in the offering of the
issuer's securities and not be deemed to be a broker-dealer. Our officers and
directors satisfy the requirements of Rule 3(a)4-1 in that:
-
|
None
of such persons is subject to a statutory disqualification, as that term
is defined in Section 3(a)(39) of the Act, at the time of his
participation; and,
|
|
-
|
None
of such persons is compensated in connection with his or her participation
by the payment of commissions or other remuneration based either directly
or indirectly on transactions in securities; and
|
|
-
|
None
of such persons is, at the time of his participation, an associated person
of a broker- dealer; and
|
|
-
|
All
of such persons meet the conditions of Paragraph (a)(4)(ii) of Rule
3(a)4-1 of the Exchange Act, in that they (A) primarily perform, or are
intended primarily to perform at the end of the offering, substantial
duties for or on behalf of the issuer otherwise than in connection with
transactions in securities; and (B) are not a broker or dealer, or an
associated person of a broker or dealer, within the preceding twelve (12)
months; and (C) do not participate in selling and offering of securities
for any issuer more than once every twelve (12) months other than in
reliance on Paragraphs (a)(4)(i) or
(a)(4)(iii).
|
As long
as we satisfy all of these conditions, we are comfortable that we will be able
to satisfy the requirements of Rule 3a4-1 of the Exchange
Act.
As our
officers and directors will sell the shares being offered pursuant to this
offering, Regulation M prohibits us and our officers and directors from certain
types of trading activities during the time of distribution of our securities.
Specifically, Regulation M prohibits our officers and directors from bidding for
or purchasing any common stock or attempting to induce any other person to
purchase any common stock, until the distribution of our securities pursuant to
this offering has ended.
We have
no intention of inviting broker-dealer participation in this
offering.
We intend
to advertise and hold investment meetings in various states where the offering
will be registered. We will also distribute the prospectus to potential
investors at the meetings and to our friends and relatives who are interested in
us and a possible investment in the offering.
Offering
Period and Expiration Date
This
offering will commence on the effective date of this prospectus, as determined
by the Securities and Exchange Commission and continue for a period of 180
business days. We may extend the offering for an additional 90 business days
unless the offering is completed or otherwise terminated by us.
Procedures
for Subscribing
If you
decide to subscribe for any shares in this offering, you must deliver a check or
certified funds for acceptance or rejection together with a subscription
agreement. There are no minimum share purchase requirements for individual
investors. All checks for subscriptions must be made payable to "Forex
International Trading Corp." Upon receipt, all funds provided as
subscriptions will be immediately deposited into our account and be
available.
Right
to Reject Subscriptions
We
maintain the right to accept or reject subscriptions in whole or in part, for
any reason or for no reason. All monies from rejected subscriptions will be
returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours of our
having received them.
12
BUSINESS
Our
Background
Forex
International Trading Corp. was incorporated pursuant to the laws of the State
of Nevada on July 22, 2009. Our fiscal year end is July 31.
Our
Business
We are a
development stage company. We plan to offer online trading
services to professional and retail clients over a web-based live and real-time
proprietary trading system. Forex was formed with the express intent
of providing online trading services to retail customers giving them access to
online foreign currency trading.
We are a
company without significant revenues or operations, we have minimal assets, and
have incurred a negligible profit since inception.
Recent
Developments
To date,
we have been focused on forming our company and other administrative
matters. In addition, we have also begun our evaluation of outside
web designs, software developers and other service
providers. Further, as one of our shareholders has recently loaned us
$75,000, we now plan to commence negotiations with these
providers.
Upon
completion of our public offering, our specific goal is to:
●
|
We
will immediately hire an outside web designer to begin development of our
website and begin negotiations with service providers to develop our
network infrastructure and transaction processing systems. The
negotiation of service providers and the development and maintenance of
the website, network infrastructure and transaction processing systems
will be ongoing during the life of our operations. Developing a
workable version of our website will take approximately three months, and
developing workable versions of our network infrastructure and transaction
processing systems will take approximately six
months.
|
●
|
We
will also begin software development. We intend to rely on third
party service providers to develop our software. To date we have not
entered into any formal relationship with any third parties to provide
these services, and we intend to start the process following completion of
the offering.
|
●
|
Approximately
90 days after we complete our public offering, we intend to promote our
website primarily through viral marketing, such as blogs, postings on
online communities and other methods of getting Internet users to refer
others to our website by e-mail or word of mouth. We also intend to
use search engine optimization, the marketing of our website and software
via search engines by purchasing sponsored placement in search result, and
to enter into affiliate marketing relationships with website providers to
increase our access to Internet consumers. We believe that it will
cost a minimum of $10,000 for our marketing campaign. Marketing is
an on-going matter that will continue during the life of our operations.
|
●
|
Approximately
six to nine months after we complete our public offering, we believe that
we will be able to begin
operations.
|
Until our
website is fully operational, our network infrastructure and transaction
processing systems are in place we will not be able to provide our services.
We believe that we will have to spend approximately $25,000 in order to
ensure that our website is fully operational and our network infrastructure and
transaction processing systems are in place. If we are unable to negotiate
suitable terms with service providers to develop and maintain our website and
software and to attract customers to our website, we may have to suspend or
cease operations.
Products
and Services
Our
company plans to offer online brokerage services in financial instruments using
our proposed Forex trading platform. Forex's targeted customer base for
brokerage services will include active individual, professional and
institutional traders.
Customers
will be entitled to open accounts directly through our web site. As
part of its code of conduct, all customer monies will be segregated in custodian
accounts. We also intend to provide a `demo' trading system and an
e-learning center that may be accessed by registering on the
website.
We intend
to develop, markets and operates a software system delivering foreign exchange
services to the public through the Internet. We intend to offer an electronic
trading platform which seamlessly integrates strategy trading tools, historical
and streaming real-time market data, and direct-access order-routing and
execution.
We intend
to allow our clients to be directly connected to market prices. Under the
method, clients will be able to trade at market prices with the
addition of a predefined and fixed commission. We believe this
will allow clients to be directly connected to very competitive market
prices.
Sales
and Marketing
Offline
Marketing
Our
company plans to attempt to reach its target customers through advertising
campaigns for its products and services in local financial newspapers, articles
providing in-depth market commentary on the specific company products, one-day
seminars, events and conventions. Forex plans to use the services of various
advertising companies to reach targeted customers through advertising
campaigns.
Online
Marketing
Online
marketing will include campaigns in Google, business portals, search engines and
other financial websites.
Call
Center
Follow-up
activities to our company's marketing campaigns will be performed by our planned
multi-lingual call center that directly contact potential customers who express
an interest in our company's products and services.
Forex
plans to include services such as strategy trading features and functions,
streaming real-time charts and quotes, streaming news, state-of-the-art
analytical charting, time and sales data, quote lists, option chains, market
leaders data, profit/loss tracking, and wireless access.
Industry
Background
We
believe over the past decade, the volume of trading in the world's foreign
exchange market has grown dramatically. Recently, even more dramatic
than the growth in the foreign exchange markets, has been the growth of
direct-access trading through electronic marketplaces. We believe that one of
the reasons for this growth is the growing presence of direct-access trading
solutions.
We
believe that technological innovation, including development of sophisticated
trading software tools, increased use of and reliance upon the Internet,
proliferation of online financial market data and information, and market
acceptance of electronic brokerage services, including direct-access brokerage
services, will continue to stimulate increased online trading activity. We
believe it to be inevitable that over time almost all trading will be conducted
electronically, in one form or another. We believe that direct access is
expected to become the industry standard for online trading. The recent
acquisitions by virtually every major online brokerage firm of direct-access
technology underscores this reality.
13
However,
not all accounts are alike. Analysts have estimated that daily online trading
volume is highly concentrated in the most actively-traded online
accounts.
With the
proliferation of online brokerage services (and, now, the more powerful and
efficient direct-access online brokerage services), the increased accessibility
to market data, we believe that serious, active traders, professional and
non-professional, are demanding powerful, Internet-based, real-time strategy
trading platforms that are seamlessly integrated with the best-available order
execution technology and include analytical tools which support the design and
testing of custom trading strategies.
Partnerships
Our
company's marketing strategy includes the extension of its customer base through
partnerships with relevant players in the financial markets. These partnerships
include Franchising Agreements, Introducing Broker Agreements, Affiliate
Agreements, White Label Agreements and Licensing Agreements with financial
institutions whereby the institutions will refer clients to our company and
receive a commission from our company for such referrals.
Distribution
In
addition to its direct contacts with its future customers, our company plans to
actively seek brokerage firms and other financial institutions to whose
customers it can offer the ability to trade with Forex while sharing the income
generated from the trading activity of such customers. Our company aims to
further develop this system of forging relationships with Introducing Brokers
and Affiliates on an international level. This use of the trading platform would
allow Introducing Brokers to provide their customers access to the foreign
currency and other financial markets without the cost of running a trading room
and developing an electronic trading system themselves.
Customer
Money
All
customer money will be deposited in our company's custodian accounts in
different countries. All money will be managed by our back office
system.
Technology
Development
We
believe that our success will depend, in large part, on our ability to offer
unique, Internet-based strategy trading technologies with state-of-the-art,
intelligent direct-access order execution technologies, and continuously enhance
those technologies, as well as develop and implement a well-designed and
user-friendly all-in-one platform. We intend to consistently improve our system
and implement new features and protocols. For instance, we plan to incorporate a
new technology into our system that will give our system the benefit of more
design capabilities in addition to not requiring downloads of plug-ins. By
eliminating plug-ins, the customer will be able to access the trading platform
through firewalls on the computer.
We also
plan on working to improve the style of trading platforms, making them more
user-friendly.
The
market for strategy trading tools, streaming real-time market data and news
services, and online order execution services is characterized by:
·
|
rapidly
changing technology;
|
·
|
evolving
industry standards in computer hardware, programming tools and languages,
operating systems, database technology and information delivery
systems;
|
·
|
changes
in customer requirements;
|
·
|
and
frequent new product and service introductions and
enhancements.
|
Our
success will depend in part upon our ability to develop and maintain competitive
technologies and to develop and introduce new products, services and
enhancements in a timely and cost-effective manner that meets changing
conditions such as evolving customer needs, existing and new competitive product
and service offerings, emerging industry standards and changing technology.
There can be no assurance that we will be able to develop and market, on a
timely basis, if at all, products, services or enhancements that respond to
changing market conditions or that will be accepted by customers. Any failure by
us to anticipate or to respond quickly to changing market conditions, or any
significant delays in the introduction of new products and services or
enhancements could cause customers to delay or decide against the use of our
products and services and could have a material adverse effect on our business,
financial condition and results of operations.
Customer
Support and Training
We plan
to provide client services and support and product-use training in the following
ways:
CUSTOMER
SERVICES AND SUPPORT. Forex plans to provides telephone customer services to its
brokerage customers through its dealing room as well as call centers. Technical
support to subscription and brokerage customers who use Forex would be provided
by Forex's technical support team via telephone, electronic mail and
fax.
PRODUCT-USE
TRAINING. We intend to use education important to try to help our customers
enhance their ability to use our products and services fully and effectively.
The majority of our training materials will consist of extensive online
documentation and technical assistance information on our Web sites so that our
customers may learn to use and take full advantage of the technology of
Forex.
14
Intellectual
Property
Our
success is and will be heavily dependent on proprietary software technology,
including certain technology currently in development. We will view our
software technology as proprietary, and rely, and will be relying, on a
combination of trade secret and trademark laws, nondisclosure agreements and
other contractual provisions and technical measures to establish and protect our
proprietary rights.
Despite
efforts to protect our proposal proprietary rights, unauthorized parties may
copy or otherwise may obtain, use or exploit our software or technology
independently. Policing unauthorized use of our software technology is
difficult, and it is extremely difficult to determine the extent to which piracy
of software technology exists. Piracy can be expected to be a persistent
problem, particularly in international markets and as a result of the growing
use of the Internet. In addition, effective protection of intellectual property
rights may be unavailable or limited in certain countries, including some in
which we may attempt to expand sales efforts. There can be no assurance that the
steps taken by us to protect our proprietary rights will be adequate or that our
competitors will not independently develop technologies that are substantially
equivalent or superior to ours.
There has
been substantial litigation in the software industry involving intellectual
property rights. We do not believe that we are infringing, or that any
technology in development will infringe, the intellectual property rights of
others. The risk of infringement by us is heightened with respect to our
business model technology, as that technology has not stood any significant test
of time. There can be no assurance that infringement claims would not have a
material adverse effect on our business, financial condition and results of
operations. In addition, to the extent that we acquire or license a portion of
the software or data included in our products or services from third parties
(data is licensed from third parties), or market products licensed from others
generally, our exposure to infringement actions may increase because we must
rely upon such third parties for information as to the origin and ownership of
such acquired or licensed software or data technology. In the future, litigation
may be necessary to establish, define, enforce and protect trade secrets,
copyrights, trademarks and other intellectual property rights. We may also be
subject to litigation to defend against claimed infringement of the rights of
others or to determine the scope and validity of the intellectual property
rights of others. Any such litigation could be costly and divert management's
attention, which could have a material adverse effect on our business, financial
condition and results of operations. Adverse determinations in such litigation
could result in the loss of proprietary rights, subject us to significant
liabilities, require us to seek licenses from third parties, which could be
expensive, or prevent us from selling our products or services or using our
trademarks, any one of which could have a material adverse effect on our
business, financial condition and results of operations.
Our
Competition
The
market for online brokerage services is intensely competitive and rapidly
evolving, and there appears to be substantial consolidation in the industry of
online brokerage services, Internet-based real-time market data services, and
trading analysis software tools. We believe that, due to the current and
anticipated rapid growth of the market for integrated trading tools, real-time
market data and online brokerage services, competition, as well as
consolidation, will substantially increase and intensify in the future. We
believe our ability to compete will depend upon many factors both within and
outside our control, including, but not limited to,: pricing; the timing and
market acceptance of new products and services and enhancements developed by us
and our competitors; technological developments; product content; our ability to
design and support efficient, materially error-free Internet-based systems;
market conditions, such as volatility in currency fluctuations, stock prices,
inflation and recession; product and service functionality; data availability;
ease of use; reliability; customer service and support; and sales and marketing
efforts.
We will
face direct competition from several publicly-traded and privately-held
companies, principally online brokerage firms, including providers of
direct-access order execution services. Our competitors will include many
foreign exchange online brokerage firms currently active in the United States
and Europe. Many online brokerage firms currently offer direct-access
service.
Many of
our existing and potential competitors, which will include online discount and
traditional brokerage firms, and financial institutions that are focusing more
closely on online services, including direct-access services for active traders,
have longer operating histories, significantly greater financial, technical and
marketing resources, greater name recognition and a larger installed customer
base than we will. Furthermore, there is the risk that larger financial
institutions which offer online brokerage services as only one of many financial
services may decide to use extremely low pricing rates in the foreign currency
market to acquire and accumulate customer accounts and assets to derive interest
income and income from their other financial services. We do not plan to offer
other financial services; therefore, such pricing techniques, should they become
common in our industry, could have a material, adverse effect on our results of
operations, financial condition and business model.
Generally,
competitors may be able to respond more quickly to new or emerging technologies
or changes in customer requirements or to devote greater resources to the
development, promotion and sale of their products and services than we will.
There can be no assurance that our potential competitors will not develop
products and services comparable or superior to those that will be developed and
offered by us or adapt more quickly than us to new technologies, evolving
industry trends or changing customer requirements, or that we will be able to
timely and adequately complete the implementation, and appropriately maintain
and enhance the operation, of our business model. Increased competition could
result in price reductions, reduced margins, failure to obtain any significant
market share, or loss of market share, any of which could materially adversely
affect our business, financial condition and results of operations. There can be
no assurance that we will be able to compete successfully against current or
future competitors, or that competitive pressures faced by us will not have a
material adverse effect on our business, financial condition and results of
operations.
Our
Research and Development
Research
and development expenses include expenses associated with the development of new
products, services and technology; enhancements to existing products, services
and technology; testing of products and services; and the creation of
documentation and other training and educational materials.
15
Government
Regulation
Regulation
Our proposed business and industry are highly regulated. In the
United States, regulatory bodies are charged with safeguarding the integrity of
the forex and other financial markets
and with protecting the interest of customers participating in those
markets. In recent years, the financial services industry in the
United States has been subject to increasing regulatory oversight. The
regulatory bodies that regulate our business and industry in the United States
have proposed and may consider additional legislative and regulatory initiatives
and may adopt new or revised regulations that may affect the way in which we
conduct our business. Prior to commencing operations, we will be required to
register as a Futures Commission Merchant (FCM) and Forex Dealer Merchant (FDM)
and/or Introducing Broker (IB) with the Commodity Futures Trading Commission and
as a member of the National Futures Association, which serves as its designated
self regulatory examining authority. Prior to obtaining the required
registrations in the United States or other applicable jurisdiction, we will
block any traffic from the United States and will not allow any trading by US
citizens or citizens of other jurisdictions.
Upon commencing operations we also will be regulated by
governmental bodies and/or self-regulatory organizations in jurisdictions
outside of the United States in which we operate. For example,
assuming that we operate in each of these jurisdictions, of which there is no
guarantee, we will be regulated by the Financial Services Authority in the
United Kingdom, the Monetary Authority of Singapore in Singapore, the Australian
Securities and Investments Commission in Australia and the Securities and
Futures Commission in Hong Kong, assuming we operate in these
jurisdictions. We have not commenced the process to register in any
of these countries. Many of the regulations we will be governed by
are intended to protect the public, our customers and the integrity of the
markets. These regulators and self-regulatory organizations regulate
the conduct of our business in many ways and conduct regular examinations to
monitor our compliance with these regulations. Among other things, we will be
subject to laws, rules and regulations that cover all aspects of the Forex business,
including:
•
|
sales
methods;
|
|
•
|
trading
practices;
|
|
•
|
use
and safekeeping of customers’ funds and
securities;
|
|
•
|
capital
structure;
|
|
•
|
record-keeping; and
|
|
•
|
conduct
of directors, officers and
employees.
|
For
trading by customers in jurisdictions outside the United States, we intend to
conduct a regulatory review of our trading operations in all jurisdictions we
deem material to ensure compliance with local laws.
Registered FCMs and FDMs traditionally have been subject to a
variety of rules that require that they know their customers and monitor their
customers’ transactions for suspicious financial activities. With the passage of
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, or the Patriot Act, FCMs, FDMs and
IBs are now subject to even more stringent requirements. As required by the
Patriot Act, prior to commencing operations, we will establish comprehensive
anti-money laundering and customer identification procedures, designated an
anti-money laundering compliance officer, train our employees and conducted an
independent audit of our program. Our customer identification procedures will
include both a documentary and a non- documentary review and analysis of the potential customer.
Our documentary review requires the collection and confirmation of multiple
forms of identification and other documentary evidence from each prospective
customer in order to validate such prospective customer’s
identity.
Our mode
of operation and profitability may be directly affected by:
·
|
additional
legislation;
|
·
|
changes
in rules promulgated by the Commodity Futures Trading Commission, the
National Futures Association, the Board of Governors of the Federal
Reserve System, the FSA, the various stock and futures exchanges and other
self-regulatory organizations; and
|
·
|
changes
in the interpretation or enforcement of existing rules and laws,
particularly any changes focused on online brokerage firms that target an
active trader customer base.
|
It is
possible that other agencies will attempt to regulate our current and planned
online and other electronic service activities with rules that may include
compliance requirements relating to record keeping, data processing, other
operation methods, privacy, pricing, content and quality of goods and services
as the market for online commerce evolves. Because of the growth in the
electronic commerce market, Congress had held hearings on whether to regulate
providers of services and transactions in the electronic commerce market. As a
result, federal or state authorities could enact laws, rules or regulations, not
only with respect to online brokerage services, but other online services we
provide or may in the future provide. Such laws, rules and regulations, if and
when enacted, could have a material adverse effect on our business, financial
condition, results of operations and prospects. In addition, since our company's
activities and customer base are international, regulatory developments in other
countries, including those of which we are unaware, could have an effect on our
company and its operations.
Employees
As
of October 21, 2009, we have no employees other than our sole officer
and director. We anticipate that we will not hire any employees in the
next twelve months, unless we generate significant
revenues.
We
believe our future success depends in large part upon the continued service of
our sole officer and director, Moshe J. Schnapp.
Facilities
Our
executive, administrative and operating offices are located 1618 N. Fairfax
Avenue, Los Angeles, CA 90046. This is also the home residence of our sole
officer and director, Moshe J. Schnapp. Mr. Schnapp makes this space
available to our company free of charge. There is no written agreement
documenting this arrangement. We intend to lease office space for a new
executive, administrative, and operating office. We estimate that the cost
will be $5,000 per month. As of the date of this prospectus, we have not
entered into any lease agreement nor have we identified any third party service
providers.
16
MANAGEMENT'S
DISCUSSION AND ANAYLSIS OR PLAN OF OPERATION
This
section of the prospectus includes a number of forward-looking statements that
reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words
like: believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events. You
should not place undue certainty on these forward-looking statements, which
apply only as of the date of this prospectus. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or our
predictions.
We are a
development stage company, have only recently started operations and have only
generated limited revenues from our business operations.
We
believe the technical aspects of our website, network infrastructure, and
transaction processing systems will be sufficiently developed to use for our
operations and we will have a sufficient inventory of products 120 days from the
completion of our offering. Accordingly, we must raise cash from sources
other than operations. Our only other source for cash at this time is
investments by others in our company. We must raise cash to implement our
project and begin our operations. The money we raise in this offering will
last 12 months. We intend to also acquire potential targets operating
in the foreign exchange trading industry. We are not presently in
negotiations with any potential target and there is no guarantee that we will be
able to identify any target and close such acquisition.
We have
only one officer and director. He is responsible for our managerial and
organizational structure which will include preparation of disclosure and
accounting controls under the Sarbanes Oxley Act of 2002. When theses
controls are implemented, he will be responsible for the administration of the
controls. Should he not have sufficient experience, he may be incapable of
creating and implementing the controls which may cause us to be subject to
sanctions and fines by the Securities and Exchange Commission which ultimately
could cause you to lose your investment.
Result of
Operations
Since
inception (July 22, 2009) through July 31, 2009, we have only generated $5,000
in revenue. The revenue was derived from consulting services with respect to the
foreign exchange industry provided to one party. We do not expect to
generate material consulting service revenue in the near
future. There were no costs associated with the revenue generated to
date. We incurred $53,125 in expenses and a net loss of
$48,125.
Plan of
Operation
To date,
we have been focused on forming our company and other administrative
matters. In addition, we have also begun our evaluation of outside
web designs, software developers and other service
providers. Further, as one of our shareholders has recently loaned us
$75,000, we now plan to commence negotiations with these
providers.
Upon
completion of our public offering, our specific goal is to:
●
|
We
will immediately hire an outside web designer to begin development of our
website and begin negotiations with service providers to develop our
network infrastructure and transaction processing systems. The
negotiation of service providers and the development and maintenance of
the website, network infrastructure and transaction processing systems
will be ongoing during the life of our operations. Developing a
workable version of our website will take approximately three months, and
developing workable versions of our network infrastructure and transaction
processing systems will take approximately six
months.
|
●
|
We
will also begin software development. We intend to rely on third
party service providers to develop our software. To date we have not
entered into any formal relationship with any third parties to provide
these services, and we intend to start the process following completion of
the offering.
|
●
|
Approximately
90 days after we complete our public offering, we intend to promote our
website primarily through viral marketing, such as blogs, postings on
online communities and other methods of getting Internet users to refer
others to our website by e-mail or word of mouth. We also intend to
use search engine optimization, the marketing of our website and software
via search engines by purchasing sponsored placement in search result, and
to enter into affiliate marketing relationships with website providers to
increase our access to Internet consumers. We believe that it will
cost a minimum of $10,000 for our marketing campaign. Marketing is
an on-going matter that will continue during the life of our operations.
|
●
|
Approximately
six to nine months after we complete our public offering, we believe that
we will be able to begin
operations.
|
If we
cannot generate sufficient revenues to continue operations, we will suspend or
cease operations. If we cease operations, we do not know what we will do
and we do not have any plans to do anything else.
Limited
Operating History; Need for Additional Capital
There is
no historical financial information about us upon which to base an evaluation of
our performance. We are in development stage operations and have not generated
any revenues. We cannot guarantee we will be successful in our business
operations. Our business is subject to risks inherent in the establishment of a
new business enterprise, including limited capital resources and possible cost
overruns.
To become
profitable and competitive, we have to develop our website, network
infrastructure, and transaction processing systems; complete our trading
platform and secure third parties to create the website, services and software
to be offered on our website. We are seeking equity financing to provide
for the capital required to implement our operations. We have no assurance
that future financing will be available to us on acceptable terms. If financing
is not available on satisfactory terms, we may be unable to continue, develop or
expand our operations. Equity financing could result in additional dilution to
existing shareholders.
Liquidity
and Capital Resources
Our
future capital requirements and the adequacy of available funds will depend on
numerous factors, including the successful commercialization of our products,
competing technological and market developments, and the development of
strategic alliances for the development and marketing of our
products. Our company intends to try to obtain additional funds
through equity or debt financing, strategic alliances with corporate partners
and others, or through other sources. On October 6, 2009 and October 20, 2009,
Rasel Ltd., a shareholder of our company, loaned $25,000 and $50,000,
respectively, to our company. We expect to use the proceeds to fund
our short-term and long-term capital requirements including paying
administrative expenses associated with maintaining our public company’s filings
for the next 12 months. If we raise less than $200,000 in this
offering, we will not be able to fully implement our business
plan. Specifically, we will not be able to acquire certain equipment
to operate our planned operations at an optimal level. In addition,
we will need to limit our marketing efforts, which will limit our ability to
generate revenues, if any. Further, in order to implement our
business plan on a minimal basis for 12 months, we expect that we will need to
raise at minimum $40,000 from this offering. In the event Forex's
plans change or its assumptions change or prove to be inaccurate or the funds
available prove to be insufficient to fund operations at the planned level (due
to further unanticipated expenses, delays, problems or otherwise), Forex could
be required to obtain additional funds earlier than expected. Forex
does not have any committed sources of additional financing, and there can be no
assurance that additional funding, if necessary, will be available on acceptable
terms, if at all. If adequate funds are not available, we may be required to
further delay, scale-back, or eliminate certain aspects of our operations or
attempt to obtain funds through arrangements with collaborative partners or
others that may require us to relinquish rights to certain of our technologies,
product candidates, products, or potential markets. If adequate funds are not
available, Forex's business, financial condition, and results of operations will
be materially and adversely affected.
Until
required for operations, Forex's policy will be to invest its cash reserves in
bank deposits. Forex expects that its operating results will
fluctuate significantly from quarter to quarter in the future and will depend on
a number of factors, most of which are outside Forex's control.
17
SECURITIES
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information, as of October 21, 2009 with
respect to the beneficial ownership of the Company's outstanding common stock by
(i) any holder of more than five (5%) percent; (ii) each of the named executive
officers, directors and director nominees; and (iii) our directors, director
nominees and named executive officers as a group. Except as otherwise indicated,
each of the stockholders listed below has sole voting and investment power over
the shares beneficially owned. The below table is based on 80,000,000 shares of
common stock outstanding as of October 21, 2009.
Name
of Beneficial Owner
|
Common
Stock Beneficially Owned (1)
|
Percentage
of Common Stock (1)
|
|||||
Moshe
J. Schnapp (2)
|
0
|
--
|
|||||
Medirad,
Inc.
|
40,000,000
|
(3)
|
50.0
|
%
|
|||
Rasel
Ltd
|
40,000,000
|
(3)
|
50.0
|
%
|
|||
All
officers and directors as a group (1 person)
|
0
|
--
|
* less
than 1%,
(1)
Beneficial ownership is determined in accordance with the Rule 13d-3(d)(1) of
the Exchange Act, as amended and generally includes voting or investment power
with respect to securities. Pursuant to the rules and regulations of the
Securities and Exchange Commission, shares of common stock that an individual or
group has a right to acquire within 60 days pursuant to the exercise of options
or warrants are deemed to be outstanding for the purposes of computing the
percentage ownership of such individual or group, but are not deemed to be
outstanding for the purposes of computing the percentage ownership of any other
person shown in the table.
(2)
Officer and/or director of the Company.
(3) Sean
Schnapp, the sole executive officer and director of Medirad, Inc., has voting
and dispositive control over the shares held by Medirad, Inc. Sean
Schnapp is the son of Moshe Schnapp, our sole executive officer and
director.
(4) Tom
Schnapp, the sole executive officer and director of Rasel Ltd, has voting and
dispositive control over the shares held by Rasel Ltd. Tom Schnapp is
the son of Moshe Schnapp, our sole executive officer and director.
18
MANAGEMENT
Officers
and Directors
The name,
address, age, and positions of our present sole officer and director is set
forth below:
Name
and Address
|
Age
|
Position(s)
|
Moshe
J. Schnapp
1618
N. Fairfax Avenue,
Los
Angeles, CA 90046
|
47
|
Chief
Executive Officer, Chief Financial Officer, President, Secretary,
Treasurer and sole
Director
|
Our sole
director will serve until is successor is elected and qualified, or until the
earlier of his death, resignation or removal from office. Our sole officer
was elected by the board of directors for a one year term, and will serve until
his successor is duly elected and qualified, or until the earlier of his death,
resignation or removal from office. The board of directors has no
nominating, auditing, or compensation committees.
Background
of Our Sole Officer and Director
Moshe
J. Schnapp—President, Chief Executive Officer, Chief Financial Officer,
Treasurer, Secretary and sole director.
Mr.
Schnapp has served as our sole executive officer and director since
inception. Moshe Schnapp served as President and Director of Yasheng
Eco-Trade Corporation (f/k/a Emvelco Corp.) (OTCBB: YASH) from April 2005 to
August 2006. Mr. Schnapp has served as the President of
American Realty Group since 2000. In addition, from 1995 to 1999, Mr.
Schnapp served as the CEO and a director of Genesis Development &
Construction (NASDAQ: GDCUF). From 1990- 1995, Mr. Schnapp
was the CEO and a director of Engel General Developers (NASDAQ:
ENGEF). From 1983 to 1990, Mr. Schnapp served as a manager for Stern
Aberdam & Wisekopf, a CPA Firm. Mr. Schnapp received a B.A. in
Economic and Accounting in 1987 from Haifa University, a Master in Business
Administration in 1994 from Tel Aviv University and a Ph.D. in Commercial and
Industrial Economics from Pacific Western University.
Mr.
Schnapp devotes approximately 25 hours per week to our operations and will
devote additional time as required. Mr. Schnapp is not an officer or
director of any other reporting company.
Audit
Committee Financial Expert
We do not
have an audit committee financial expert because we believe the cost related to
retaining a financial expert at this time is prohibitive. Further, because
we have no operations, at the present time, we believe the services of a
financial expert are not warranted.
Conflicts
of Interest
Mr.
Schnapp devotes approximately 25 hours per week to Forex. The only
conflict that exists is Mr. Schnapp's devotion of time to other projects.
Mr. Schnapp's current work interests, noted above, are not competitors of
our company since the purpose of these other businesses is not to offer Forex
related services.
19
EXECUTIVE
COMPENSATION
The
following table sets forth the compensation paid by us from inception on July
22, 2009 through July 31, 2009, to our sole officer and director. The
information includes the dollar value of base salaries, bonus awards and number
of stock options granted, and certain other compensation, if any.
Summary
Compensation Table
Name
and Principle
Position
|
Years
|
Salary
($)
|
Bonus
($)
|
Restricted
Stock Awards ($)
|
Option
Awards
($)
|
NonEquity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensatio Earnings ($)
|
All
Other Compensation
($)
|
Total
($)
|
||||||||
Moshe
J. Schnapp
CEO
President,
Secretary, Treasurer, and sole Director
|
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
The
compensation discussed herein addresses all compensation awarded to, earned by,
or paid to our named executive officer.
There are
no other stock option plans, retirement, pension, or profit sharing plans for
the benefit of our sole officer and director other than as described
herein.
Employment
Agreements
We have
not entered into an employment agreement with our sole officer and director.
We do not contemplate entering into any employment agreements until such
time as we begin profitable operations.
Long-Term
Incentive Plan Awards
We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance.
Compensation
of Directors
Our sole
director does not receive any compensation for serving as a member of the board
of directors.
20
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The
Company's directors and executive officers are indemnified as provided by the
Nevada Revised Statutes and the Company's Bylaws. Limitation on Liability and
Indemnification of Directors and Officers under Nevada General Corporation Law a
director or officer is generally not individually liable to the corporation or
its shareholders for any damages as a result of any act or failure to act in his
capacity as a director or officer, unless it is proven that:
1. his
act or failure to act constituted a breach of his fiduciary duties as a director
or officer; and
2. his
breach of those duties involved intentional misconduct, fraud or a knowing
violation of law.
This
provision is intended to afford directors and officers protection against and to
limit their potential liability for monetary damages resulting from suits
alleging a breach of the duty of care by a director or officer. As a consequence
of this provision, stockholders of ours will be unable to recover monetary
damages against directors or officers for action taken by them that may
constitute negligence or gross negligence in performance of their duties unless
such conduct falls within one of the foregoing exceptions. The provision,
however, does not alter the applicable standards governing a director's or
officer's fiduciary duty and does not eliminate or limit our right or any
stockholder to obtain an injunction or any other type of non-monetary relief in
the event of a breach of fiduciary duty.
As
permitted by Nevada law, our By-Laws include a provision which provides for
indemnification of a director or officer by us against expenses, judgments,
fines and amounts paid in settlement of claims against the director or officer
arising from the fact that he was an officer or director, provided that the
director or officer acted in good faith and in a manner he or she believed to be
in or not opposed to our best interests. We have purchased insurance under a
policy that insures both our company and our officers and directors against
exposure and liability normally insured against under such policies, including
exposure on the indemnities described above.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, 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 and is, therefore,
unenforceable.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, or otherwise, the Company has 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.
MARKET
FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
There is
no market for our common stock.
As of
October 21, 2009, there were two holders of record of our common
stock.
We have
appointed Empire Stock Transfer, Henderson, Nevada, as transfer agent for our
shares of common stock. There have been no cash dividends declared on
our common stock. Dividends are declared at the sole discretion of our
board of directors.
DESCRIPTION
OF SECURITIES
Common
Stock
We are
authorized to issue 400,000,000 shares of common stock, par value $0.00001 per
share. Holders of common stock are entitled to one vote per share and to
receive dividends or other distributions when and if declared by the Board of
Directors. As of July 31, 2009, there were 80,000,000 shares of common
stock outstanding held by two shareholders of record.
Our
common stock does not have preemptive rights, meaning that our common
shareholders' ownership interest would be diluted if additional shares of common
stock are subsequently issued and the existing shareholders are not granted the
right, in the discretion of the Board of Directors, to maintain their percentage
ownership interest in our company. This lack of protection from dilution
to minority shareholders could allow our Board of Directors to issue additional
shares of our common stock to persons friendly with our existing management,
thus preventing any change in control of our company.
Upon any
liquidation, dissolution or winding-up of our company, our assets, after the
payment of debts and liabilities and any liquidation preferences of, and unpaid
dividends on, any class of preferred stock then outstanding, will be distributed
pro-rata to the holders of the common stock. The holders of the common stock
have no right to require us to redeem or purchase their shares.
The
holders of common stock are entitled to share equally in dividends, if and when
declared by our Board of Directors, out of funds legally available therefore,
subject to the priorities given to any class of preferred stock which may be
issued.
21
No
Cumulative Voting
Holders
of shares of our common stock do not have cumulative voting rights, which means
that the holders of more than 50% of the outstanding shares, voting for the
election of directors, can elect all of the directors to be elected, if they so
choose, and, in that event, the holders of the remaining shares will not be able
to elect any of our directors. After this offering is completed, assuming the
sale of all of the shares of common stock offered, present stockholders will own
approximately 80% of our outstanding shares.
Preferred
Stock
We are
authorized to issue 20,000,000 shares of preferred stock, $0.00001 par value per
share. We have no preferred shares issued and outstanding. However, the
Board of Directors may later determine to issue our preferred stock. If
issued, the preferred stock may be created and issued in one or more series and
with such designations, rights, preferences and restrictions as shall be stated
and expressed in the resolution(s) providing for the creation and issuance of
such preferred stock. If preferred stock is issued and we are subsequently
liquidated or dissolved, the preferred stockholders would have preferential
rights to receive a liquidating distribution for their shares prior to any
distribution to common shareholders.
Although
we have no present intent to do so, we could issue shares of preferred stock
with such terms and privileges that a third party acquisition of our corp. could
be difficult or impossible, thus entrenching our existing management in control
of our corp. indefinitely.
Dividend
Policy
To date,
we have not paid any dividends. The payment of dividends, if any, on our common
stock in the future is within the sole discretion of our Board of Directors and
will depend upon our earnings, capital requirements, financial condition, and
other relevant factors. Our sole director, Mr. Schnapp, does not intend to
declare any dividends on the common stock in the foreseeable future, but instead
intends to retain all earnings, if any, for use in our business
operations.
Transfer
Agent
We have
engaged Empire Stock Transfer, 2470 St. Rose Pkwy., Ste. 304, Henderson, NV
89074 as our transfer agent.
INTERESTS
OF NAMED EXPERTS AND COUNSEL
No
"expert" was hired on a contingent basis, or will receive a direct or indirect
interest in us, or was a promoter, underwriter, voting trustee, director,
officer, or employee of our company, at any time prior to filing this
Registration Statement.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On July
24, 2009, Forex International Trading Corp. sold 40,000,000 restricted shares of
common stock to Meridad Inc. for $400.00 cash, and 40,000,000 restricted shares
of common stock to Rasel Ltd. for $400.00 cash. Sean Schnapp and Tom
Schnapp, sons of Mr. Moshe Shcnapp, our sole executive officer and director, our
the sole shareholders of Meridad Inc. and Rasel Ltd.,
respectively. Forex relied on Section 4(2) of the
Securities Act as its exemption from registration when it issued the shares of
common stock to Meridad Inc. and Rasel Ltd. Both Meridad Inc. and
Rasel Ltd. agreed to hold the shares for investment purposes only and to
transfer such shares only in a registered offering or in reliance upon an
exemption therefrom.
On
October 6, 2009 and October 20, 2009, Rasel Ltd., a shareholder of our company,
loaned $25,000 and $50,000, respectively, to our company.
Our executive, administrative and
operating offices are located at Mr. Schnapp's home residence. Mr. Schnapp
provides space for our company's operations free of charge. There is not
written agreement evidencing this arrangement.
Sean Schnapp, Tom
Schnapp and Moshe Shcnapp may be considered promoters of our company as that
term is defined in Rule 405 under the Securities Act of
1933. Sean Schnapp, Tom Schnapp, and Moshe Shcnapp have not
received anything of value nor have they entered any arrangement to receive
something of value, whether directly or indirectly, from our
company. Further, Sean Schnapp, Tom Schnapp and Moshe Shcnapp have
not sold any assets to our company nor is there any arrangement whereby Sean
Schnapp, Tom Schnapp or Moshe Shcnapp intend to sell assets to our
company. D uring the last five
years, Sean Schnapp, Tom Schnapp and Moshe
Shcnapp have not:
·
|
have
had a petition under the Federal bankruptcy laws or any state insolvency
law filed by or against them, or had a receiver, fiscal agent or similar
officer appointed by a court for their business or property or any
partnership in which he was a general partner at or within the last two
years, or any corporation or business association of which he was an
executive officer at or within the last two
years;
|
·
|
been
convicted in a criminal proceeding or named subject of a pending criminal
proceeding;
|
·
|
subject
of any order, judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from, or otherwise limiting their involvement in
the securities industry or engaging in business in
general
|
·
|
been
the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal or State authority barring,
suspending or otherwise limiting for more than 60 days the right of such
person to engage in any activity in the securities
industry;
|
·
|
been
found by a court of competent jurisdiction in a civil action or by the
Commission to have violated any Federal or State securities law, and the
judgment in such civil action or finding by the Commission has not been
subsequently reversed, suspended, or
vacated.
|
·
|
been
found by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any Federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
|
22
LEGAL
PROCEEDINGS
We are
not party to any pending litigation and none is contemplated or
threatened.
EXPERTS
Our
financial statements for the period from inception on July 22, 2009 to July 31,
2009, included in this prospectus, have been audited by Eugene M. Egeberg, CPA,
834 South Milton Avenue, Baltimore, MD, telephone (410) 218-1711, as set forth
in their report included in this prospectus. Their report is given upon
their authority as experts in accounting and auditing.
LEGAL
MATTERS
Law
Offices of Stephen M. Fleming PLLC, 49 Front Street, Suite 206, Rockville
Centre, New York 11570, telephone (516) 833-5034, has acted as
our legal counsel.
23
FOREX
INTERNATIONAL TRADING CORP.
Audited
Financial Statements
For
the Period Since Inception July 22, 2009 to the Year Ended July 31,
2009
F-1
C
O N T E N T S
Report
of Independent Registered Public Accounting Firm
|
F-3
|
F-4
|
|
Statements
of Operations
|
F-5
|
Statements
of Cash Flows
|
F-6
|
Statements
of Stockholders' Equity (Deficit)
|
F-7
|
Notes
to the Financial Statements
|
F-8
- F-12
|
F-2
Eugene
M Egeberg
Certified
Public Accountant
834 South
Milton Avenue
Baltimore,
Maryland 21224
(410)
218-1711
INDEPENDENT
REGISTERED ACCOUNTING FIRM’S REPORT
To the
Stockholders
Forex
International Trading Corp.
We have
audited the accompanying balance sheet of Forex International Trading Corp. as
of July 31, 2009, and the related statements of operations and changes in
stockholder’s deficit and cash flows for the period from inception July 22, 2009
to the year ended July 31, 2009. These financial statements are
the responsibility of the Companies’ management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We
conducted our audits in accordance with U.S. generally accepted auditing
standards as well as standards required by the Public Companies Accounting
Oversight Board. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
There is
substantial doubt and uncertainty regarding the Company’s ability to continue in
existence as a Going Concern for the ensuing fiscal year. The
Company must continue to secure revenue and funding from outside sources in the
next fiscal year.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Forex International Trading Corp.
as of July 31, 2009, and the results of its operations and its cash flows for
the period then ended in conformity with U.S. generally accepted accounting
principles.
/s/ Eugene M. Egeberg
Eugene M
Egeberg
22
October 2009
Baltimore,
Maryland
F-3
FOREX INTERNATIONAL TRADING CORP. | ||||||||
(A DEVELOPMENT STAGE COMPANY) | ||||||||
BALANCE SHEET | ||||||||
JULY 31, 2009 | ||||||||
AUDITED |
ASSETS
|
|
|
||
July
31, 2009
|
||||
Current
Assets
|
||||
Cash and cash equivalents (Note 1) | $ | 800 | ||
Accounts
Receivable (Note
2)
|
5,000
|
|||
Total Current
Assets
|
5,800
|
|||
Property,
Plant and Equipment
|
||||
at cost, net of accumulated depreciation | - | |||
TOTAL
ASSETS
|
$ |
5,800
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
Current
Liabilities
|
||||
Accounts
payable and Accrued Liabilities (Notes 3 and
6)
|
$ |
53,125
|
||
Total Current
Liabilities
|
53,125
|
|||
TOTAL
LIABILITIES
|
$ |
53,125
|
||
Stockholders'
Equity:
|
||||
$ | 800 | |||
Common Stock -
$0.00001 par value - 400,000,000 shares authorized, 80,000,000 issued
|
||||
and
outstanding
as of 7/31/09 (Note
6)
|
||||
Preferred Stock
- $0.00001 par value - 20,000,000 shares
authorized, none issued and
|
- | |||
outstanding as of 7/31/09
|
||||
Additional
paid-in capital
|
-
|
|||
Retained earnings (deficit) (Note 5) | (48,125 | ) | ||
TOTAL
STOCKHOLDERS EQUITY
|
$ |
(47,325
|
) | |
|
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 5,800 | ||
|
The
accompanying notes are an integral part of these financial
statements.
F-4
FOREX
INTERNATIONAL TRADING CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF INCOME AND EXPENSES
FOR THE
PERIOD SINCE INCEPTION ON JULY 22, 2009 TO THE YEAR ENDED JULY 31,
2009
AUDITED
Cumulative
through
|
||||||||
July
31, 2009
|
||||||||
Revenue
|
$ | 5,000 | ||||||
Cost
of Revenue
|
- | |||||||
Gross
Profit (Loss)
|
5,000 | |||||||
Operating
Expenses
|
||||||||
Filing
Fees
|
$ | 125 | ||||||
Legal
Fees
|
50,000 | |||||||
2009
Corporate Audit
|
2,500 | |||||||
Transfer
Agent Fees
|
500 | |||||||
Total
Operating Expenses
|
$ | 53,125 | ||||||
Net
Income (Loss) from Operations
|
(48,125 | ) | ||||||
Other
Income (Expense), Net
|
- | |||||||
Net
Income (Loss) before Taxes
|
$ | (48,125 | ) | |||||
Income
Taxes
|
- | |||||||
Net
Income(Loss) after Taxes
|
$ | (48,125 | ) | |||||
Weighted
average number of common shares
|
||||||||
outstanding
- basic and fully diluted (Note
8)
|
80,000,000 | |||||||
Net
(Loss) per share - basic and fully diluted
|
$ | 0.0006016 | ||||||
The
accompanying notes are an integral part of these financial
statements.
F-5
FOREX INTERNATIONAL TRADING CORP. |
(A DEVELOPMENT STAGE COMPANY) |
STATEMENT OF CASH FLOWS |
FOR THE PERIOD SINCE INCEPTION ON JULY 22, 2009 TO THE YEAR ENDED JULY 31, 2009 |
AUDITED |
July
31, 2009
|
||||
Cash
Flows From Operating Activities
|
||||
Net
income (loss)
|
$ |
(48,125)
|
||
Adjustments to
reconcile net income (loss) to
|
||||
net
cash (used) provided by operating activities:
|
||||
Increase in
Accounts Receivable
|
(5,000)
|
|||
Increase in
Accounts Payable and Accrued Expenses
|
53,125
|
|||
Net
cash (used) by operating activities
|
-
|
|||
Cash
Flows From Investing Activities
|
||||
Purchase of
property, plant and equipment
|
-
|
|||
Net
cash used in investing activities
|
-
|
|||
Cash
Flows From Financing Activities
|
||||
Issuance of
Common Stock
|
800
|
|||
Issuance of
Preferred Stock
|
-
|
|||
Increase in
Retained Earnings
|
-
|
|||
Increase in
Contributed Capital
|
-
|
|||
Net
cash used in financing activities
|
800
|
|||
Net
decrease in cash and cash equivalents
|
800
|
|||
Cash
and cash equivalents, Beginning of Period
|
-
|
|||
Cash and cash equivalents, July 31, 2009 | $ | 800 | ||
|
|
The
accompanying notes are an integral part of these financial
statements.
F-6
FOREX
INTERNATIONAL TRADING CORP.
|
|||||||||||
(A
DEVELOPMENT STAGE COMPANY)
|
|||||||||||
CHANGES
IN STOCKHOLDERS' EQUITY
|
|||||||||||
FOR
THE PERIOD SINCE INCEPTION ON JULY 22, 2009 TO THE YEAR ENDED JULY 31,
2009
|
|||||||||||
AUDITED
|
Common
|
Additional
|
Retained
|
||||||||||||||
Stock
|
Paid
In Capital
|
Earnings
|
Total
|
|||||||||||||
Balance
at July 22, 2009
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Stock
Issued (Note 7)
|
800 | - | - | 800 | ||||||||||||
Additional
Paid in Capital
|
- | - | - | - | ||||||||||||
Retained
Earnings
|
- | - | - | - | ||||||||||||
Net
Income
|
- | - | (48,125 | ) | (48,125 | ) | ||||||||||
Balance
at July 31, 2009
|
$ | 800 | $ | - | $ | (48,125 | ) | $ | (47,325 | ) | ||||||
The
accompanying notes are an integral part of these financial
statements.
F-7
FOREX
INTERNATIONAL TRADING CORP.
(A
DEVELOPMENT STAGE COMPANY)
July
31, 2009
NOTES
TO FINANCIAL STATEMENTS
History and Organization of
the Company
The
Company was incorporated on July 22, 2009 (Date of Inception) as a development
stage company under the laws of the State of Nevada as “Forex International
Trading Corp.” and is licensed to engage in any lawful activity.
The
Company uses the accrual basis of accounting for all transactions.
NOTE 1
Cash and Cash
Equivalents
The
Company maintains a cash balance in a non-interest bearing account tha currently
does not exceed federally insured limits. For purposes of
financial statement presentation, the Company considers all highly liquid
instruments with a maturity of three months or less to be cash.
NOTE 2
Accounts
Receivable
The
Company currently has $5,000 in Accounts Receivable due from one client for
consulting services. This receivable is current and less than
30 days aging; therefore, no provision for allowance for doubtful accounts will
be made at the time of this audit.
NOTE 3
Accounts
Payable
As of
July 31, 2009, the Company currently owes three clients a total of $53,125 in
payables. This includes $2,500 for the current audit payable to
Eugene M Egeberg CPA, and $50,000 to the Law Offices of Stephen Fleming for
Legal Representation in connection with the filing of the S-1.
Revenue
Recognition
The
Company recognized revenue and gains when earned and related costs of sales and
expenses when incurred.
F-8
FOREX
INTERNATIONAL TRADING CORP.
(A
DEVELOPMENT STAGE COMPANY)
July
31, 2009
NOTES
TO FINANCIAL STATEMENTS
Loss per
Share
Net
loss per share is provided in accordance with Statement of Financial Accounting
Standards No. 128 (SFAS #128) “Earnings Per
Share”. Basic loss per share is computed by dividing losses
available to common stockholders by the weighted average number of common shares
outstanding during the period. The Company had no dilutive common
stock equivalents, such as stock options or warrants as of July 31,
2009.
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 of the financial statements and
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Fair value of financial
instruments
Fair
value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of July 31,
2009. The respective carrying value of certain on-balance-sheet
financial instruments approximated their fair values. These
financial instruments include cash and accounts payable. Fair values
are assumed to approximate carrying values for cash and payables because they
are short-term in nature and their carrying amounts approximated fair values or
they are payable on demand.
Segment
reporting
The
Company follows Statement of Financial Accounting Standards No. 130,
“Disclosures About Segments of an Enterprise and Related
Information”. The Company operates as a single segment and will
evaluate additional segment disclosure requirements as it expands its
operations.
Dividends
The
Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid or declared since
inception.
F-9
FOREX
INTERNATIONAL TRADING CORP.
(A
DEVELOPMENT STAGE COMPANY)
July
31, 2009
NOTES
TO FINANCIAL STATEMENTS
Recent
pronouncements
In May
2008, FAS No. 163, “Accounting for Financial Guarantee Insurance Contracts”, and
SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”, were
issued.
In March
2008, FAS No. 161, “Disclosures About Derivative Instruments and Hedging
Activities-an amendment of FASB Statement No. 133 was issued.
Stock-Based
Compensation
The
Company accounts for stock-based awards to employees in accordance with
Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
Employees” and related interpretations and has adopted the disclosure only
alternative of SFAS No. 123, “Accounting for Stock-Based
Compensation”. Options granted to consultants, independent
representatives and other non-employees are accounted for using the fair value
method as prescribed by SFAS No. 123.
Year End
The
Company has elected to operate on a Fiscal Accounting Year and Fiscal Tax Year
ending on July 31st.
NOTE 4
Going
Concern
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. The future of the Company is
dependent upon its ability to generate revenues and upon future profitable
operations from the development of its new business
opportunities. The financial statements do not include any
adjustments relating to the recoverability and classification of liabilities
that might be necessary in the event the Company cannot continue in
existence. (See Subsequent Events)
F-10
FOREX
INTERNATIONAL TRADING CORP.
(A
DEVELOPMENT STAGE COMPANY)
July
31, 2009
NOTES
TO FINANCIAL STATEMENTS
NOTE 5
Income
taxes
Deferred
income tax assets and liabilities are computed annually for the differences
between the financial statement and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted tax
laws and rates applicable on the periods in which the differences are expected
to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be
realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.
As of
July 31, 2009, there was no Income Tax Expense.
The
provisions for income taxes differs from the amount computed by applying the
statutory federal income tax rate to Income before provision for income taxes.
The source and tax effects of the differences are as follows:
U.S. federal statutory rate | 34.00 % | ||
Valuation reserve | 34.00 % | ||
Total | 0.00 % |
As of July 31, 2009, the Company has a
net operating loss carryforward of approximately $48,125 for tax purposes, which
will be available to offset future taxable income. This carryforward
will expire in various years through 2014.
The
Company accounts for the income taxes under SFAS No. 109, “Accounting for Income
Taxes”, which requires the use of the liability method. SFAS
No. 109 provides that deferred tax assets and liabilities are recorded based on
the differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes, referred to as temporary
differences. Deferred tax assets and liabilities at the end of
each period are determined using the current enacted tax rates applied to
taxable income in the periods in which the deferred tax assets and liabilities
are expected to be settled or realized.
F-11
FOREX
INTERNATIONAL TRADING CORP.
(A
DEVELOPMENT STAGE COMPANY)
July
31, 2009
NOTES
TO FINANCIAL STATEMENTS
NOTE 6
Subsequent
Events
On
October 6, 2009 the Company signed a Note Payable for $25,000 payable to RASEL,
LTD (a Company Shareholder) due on October 6, 2010 at 4%
annum. The proceeds were used to pay for half of an existing
Accounts Payable to Stephen Fleming for legal fees incurred at the Company’s
inception.
On
October 20, 2009 the Company signed a Note Payable for $50,000 payable to RASEL,
LTD (a Company Shareholder) due on October 20, 2010 at 4%
annum. These proceeds were used to pay for startup costs, audit
fees and future expenses not yet incurred.
NOTE 7
Stockholders’
Equity
The
Company was authorized to issue 400,000,000 shares of its $0.00001 par value
common stock and 20,000,000 shares of its $0.00001 par value preferred stock as
of July 31, 2009.
On July
22, 2009 the Company issued 40,000,000 shares of its $0.00001 par value common
stock to Meridad Inc. and 40,000,000 shares of its $0.00001 par value common
stock to Rasel Ltd. Shares were issued at par with no
Additional Paid In Capital for a total of $800.
NOTE 8
Earnings Per
Share
The
Company issued 80,000,000 shares of common stock at the Company’s inception on
July 22, 2009. Since there was no change in the number of
shares outstanding, the weighted average number of shares remains 80,000,000
through July 31, 2009.
F-12
Dealer
Prospectus Delivery Option
Until
__________, 2009, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect the their unsold
allotments or subscriptions.
PART
II—INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
24. INDEMNIFICATION
OF DIRECTORS AND OFFICERS.
Our
Certificate of Incorporation and Bylaws provide that we shall indemnify our
officers or directors against expenses incurred in connection with the defense
of any action in which they are made parties by reason of being our officers or
directors, except in relation to matters as which such director or officer shall
be adjudged in such action to be liable for negligence or misconduct in the
performance of his duty. One of our officers or directors could take the
position that this duty on our behalf to indemnify the director or officer may
include the duty to indemnify the officer or director for the violation of
securities laws.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act"), may be permitted to our directors, officers and
controlling persons pursuant to our Certificate of Incorporation, Bylaws, Nevada
laws or otherwise, we have been advised that in the opinion of the Securities
and Exchange Commission (the "Commission"), such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by one of
our directors, officers, or control persons, and the successful defense of any
action, suit or proceeding) is asserted by such director, officer or control
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
The
estimated expenses of the offering, all of which are to be paid by the
registrant, are as follows:
SEC
Registration Fee
|
$
|
100
|
||
Printing
Expenses
|
$
|
1,500
|
||
Audit/Administrative
Fees and Expenses
|
$
|
3,500
|
||
Blue
Sky Fees/Expenses
|
$
|
1000
|
||
Legal
Fees/Expenses
|
$
|
50,000
|
||
Transfer
Agent Fees
|
$
|
900
|
||
TOTAL
|
$
|
32,000
|
ITEM
26.
RECENT SALES OF UNREGISTERED
SECURITIES.
On July
24, 2009, Forex International Trading Corp. sold 40,000,000 restricted shares of
common stock to Meridad Inc. for $400.00 cash, and 40,000,000 restricted shares
of common stock to Rasel Ltd. for services valued at $400.00. Forex
International Trading Corp relied in Section 4(2) of the Securities Act as its
exemption from registration when it issued the shares of common stock to Meridad
Inc. and Rasel Ltd. Both Meridad Inc and Rasel Ltd. agreed to hold
the shares for investment purposes only and to transfer such shares only in a
registered offering or in reliance upon an exemption therefrom.
II-1
ITEM 27. EXHIBITS.
Exhibit
No.
|
Description
|
||
3.1
|
Certificate
of Incorporation of Forex International Trading Corp.
(1)
|
||
3.2
|
Bylaws
of Forex International Trading Corp. (1)
|
||
4.1
|
Promissory
Note issued to Rasel Ltd. Dated October 6, 2009
|
||
4.2
|
Promissory
Note issued to Rasel Ltd. Dated October 20, 2009
|
||
5.1
|
Opinion
of Law Offices of Stephen M. Fleming. (1)
|
||
23.1
|
Consent
of Eugene, Egeberg, CPA.
|
||
23.2
|
Consent
of Law Offices of Stephen M. Fleming PLLC (see Exhibit 5.1).
(1)
|
||
99.1
|
Form
of subscription agreement for Common Stock. (1)
|
||
(1)
Incorporated by reference to the Form S-1 Registration Statement filed with the
SEC on September 9, 2009.
ITEM
28. UNDERTAKINGS.
The
undersigned registrant hereby undertakes to:
(1)
File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i)
Include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, as amended (the "Securities Act");
(ii)
Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of the securities offered would
not exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement, and
(iii)
Include any additional or changed material information on the plan of
distribution.
(2)
For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3)
File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4)
For determining liability of the undersigned small business issuer under
the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned undertakes that in a primary offering of securities
of the undersigned small business issuer pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned small business issuer
will be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned small
business issuer relating to the offering required to be filed pursuant to Rule 424
;
(ii)
Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned small business issuer or used or referred to by the
undersigned small business issuer;
(iii)
The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned small business issuer or
its securities provided by or on behalf of the undersigned small business
issuer; and
(iv)
Any other communication that is an offer in the offering made by the
undersigned small business issuer to the purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
Each
prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of and included in the registration statement as of the date it is first
used after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
II-2
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Los Angeles, State of
California on October 30, 2009.
FOREX
INTERNATIONAL TRADING CORP.
|
|||
By:
|
/s/ Moshe
J. Schnapp
|
||
Moshe
J. Schnapp
|
|||
CEO,
President, CFO, Secretary, Treasurer, and Director
|
|||
In
accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities stated on October 30,, 2009:
Signature
|
Title
|
|
/s/
Moshe J. Schnapp
|
CEO,
President, CFO, Secretary, Treasurer, and Director
(Principal
Executive Officer, Principal Financial Officer, and Principal Accounting
Officer)
|
|
Moshe
J. Schnapp
|
II-3