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EX-23.1 - HAVAYA CORP | v201973_ex23-1.htm |
As
filed with the Securities and Exchange Commission on November 12,
2010
Registration
No. 333-165083
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Amendment
No. 7 to
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
HAVAYA
CORP.
(Exact
name of Registrant as specified in its charter)
Delaware
|
3843
|
74-3245242
|
(State
or other jurisdiction of
|
(Primary
Standard Industrial
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Classification
Code)
|
Identification
No.)
|
51
Sheshet Hayamim St., Kfar Saba, 44269 Israel
Tel:
1-800-878-5756
(Address
and telephone number of Registrant's principal executive offices)
Delaware
Intercorp, Inc.
113
Barksdale Professional Center,
Newark,
Delaware, County of New Castle, 19711
Phone:
888.324.1817
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies of
all Correspondence to:
SRK Law
Offices
7
Oppenheimer St.
Rabin
Science Park
Rehovot,
Israel
Telephone
No.: (718) 360-5351
Facsimile
No.: (011) (972) 8-936-6000
Approximate
date of commencement of proposed sale to the public: From time to time after the
effective date of this Registration Statement.
If any
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under 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. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under 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. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under 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. o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company.
See definitions of “large accelerated filer,” “accelerated filed,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
Calculation
of Registration Fee
Title of Class of
Securities to be
Registered
|
Amount to be
Registered
(1)
|
Proposed
Maximum
Aggregate Price
Per Share
|
Proposed
Maximum
Aggregate
Offering Priced (2)
|
Amount of
Registration Fee
(3)
|
||||||||||||
Common
Stock, $0.0001 per share
|
2,000,000
|
$
|
0.02
|
$
|
40,000
|
$
|
3.68
|
|||||||||
Total
|
2,000,000
|
$
|
0.02
|
$
|
40,000
|
$
|
3.68
|
(1)
|
In
the event of a stock split, stock dividend or similar transaction
involving our common stock, the number of shares registered shall
automatically be increased to cover the additional shares of common stock
issuable pursuant to Rule 416 under the Securities Act of 1933, as
amended.
|
(2)
|
Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933.
|
(3)
|
Previously
paid.
|
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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The
information in this prospectus is not complete and may be changed. The
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED NOVEMBER 12, 2010
PROSPECTUS
Havaya
Corp.
A MAXIMUM
OF 2,000,000 SHARES OF COMMON STOCK
OFFERING
PRICE $0.02 PER SHARE
The
selling stockholders named in this prospectus are offering for resale 2,000,000
shares of our common stock. The selling stockholders have advised us that
they will sell the shares of common stock from time to time after this
prospectus is declared effective and they have set an offering price for these
securities of $0.02 per share of common stock offered through this prospectus
until our shares are quoted on the OTC Bulletin Board and thereafter at
prevailing market prices or privately negotiated prices. We will pay all
expenses incurred in this offering. There is no assurance that an active
trading market for our shares will develop, or, if developed, that it will be
sustained.
OUR
BUSINESS IS SUBJECT TO MANY RISKS AND AN INVESTMENT IN OUR COMMON STOCK WILL
ALSO INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS
DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 8 BEFORE
INVESTING IN OUR COMMON STOCK.
Prior to
this offering, there has been no public market for our common stock and we have
not applied for listing or quotation on any public market. The initial
public offering price will be $0.02 per share. The offering price bears no
relationship to our assets, book value, earnings or any other customary
investment criteria. After the effective date of the registration
statement, we intend to have a market maker file an application with the
Financial Industry Regulatory Authority (“FINRA”) to have our common stock
quoted on the OTC Bulletin Board. We currently have no market maker who is
willing to list quotations for our stock. There is no assurance that an
active trading market for our shares will develop, or, if developed, that it
will be sustained.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The
information in this prospectus is not complete and may be amended. We may
not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
No
underwriter or other person has been engaged to facilitate the sale of shares of
common stock in this offering. The Selling Stockholders may be deemed
underwriters of the shares of common stock that they are offering.
The date
of this prospectus is _______ __ , 2010
1
TABLE OF
CONTENTS
Page
|
||
Part
I
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||
SUMMARY
INFORMATION
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5
|
|
RISK
FACTORS
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8
|
|
Risks
Relating to Our Business
|
9
|
|
Risks
Relating to Our Strategy and Industry
|
10
|
|
Risks
Relating to this Offering
|
14
|
|
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
|
16
|
|
USE
OF PROCEEEDS
|
17
|
|
DIVIDEND
POLICY
|
17
|
|
DETERMINATION
OF THE OFFERING PRICE
|
17
|
|
DILUTION
|
17
|
|
MARKET
FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
|
18
|
|
SELLING
STOCKHOLDERS
|
19
|
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
|
22
|
|
DESCRIPTION
OF BUSINESS
|
28
|
|
LEGAL
PROCEEDINGS
|
41
|
|
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
|
41
|
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EXECUTIVE
COMPENSATION
|
44
|
|
SECURITY
OWNERSHIP OF CERTAIN BENFICIAL OWNERS AND MANAGEMENT
|
44
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS PERSONS
|
46
|
|
DESCRIPTION
OF SECURITIES
|
46
|
|
PLAN
OF DISTRIBUTION
|
49
|
|
EXPERTS
|
51
|
|
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
|
52
|
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE EXPERTS
|
52
|
|
ADDITIONAL
INFORMATION
|
52
|
|
INDEX
TO FINANCIAL STATEMENTS
|
F-1
|
2
You
should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from the
information contained in this prospectus.
We are
offering to sell, and seeking offers to buy, our common stock only in
jurisdictions where offers and sales are permitted. The information
contained in this prospectus is accurate only as of the date of this prospectus,
regardless of when this prospectus is delivered or when any sale of our common
stock occurs.
3
DEALER
PROSPECTUS DELIVERY OBLIGATION
Until
____________ _ (90 days after the effective date of this prospectus), 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 to their unsold allotments or
subscriptions.
4
SUMMARY
INFORMATION
This
summary highlights certain information contained elsewhere in this prospectus.
You should read the entire prospectus carefully, including our financial
statements and related notes, and especially the risks described under "Risk
Factors" beginning on page 8. All references to "we," "us," "our,"
"Havaya," "Company," ”Registrant” or similar terms used in this prospectus refer
to Havaya Corp.
Corporate
Background
We were
incorporated on November 21, 2007. We are a development stage company that
has not generated any revenues to date. We have executed an agreement with
Pacific Naturals, a California based teeth whitening kit manufacturer, for the
supply of teeth whitening kits at wholesale prices with the Havaya brand
labeling and packaging, and for the provision of fulfillment services. We
are focused on marketing and offering private label teeth whitening kits.
We plan to market and distribute these kits through a fulfillment center (online
and via a 1-800 telephone number) to be operated by Pacific Naturals with
delivery by means of commercial ground/air services direct to the
consumer.
Our
offices are currently located at 51 Sheshet Hayamim St., Kfar Saba, 44269
Israel. Our telephone number is 1-800-878-5756. We have secured a domain
name (www.havayacorp.com) but do not currently have an operating website.
The website references (URL’s) in this Registration Statement are inactive
textual references only and are not active hyperlinks. The contents of
these websites are not part of this prospectus, and you should not consider the
contents of these websites in making an investment decision with respect to our
common stock. Our fiscal year end is December 31.
Our
auditors have issued an audit opinion which includes a statement describing
their doubts about whether we will continue as a going concern. In addition, our
financial status creates substantial doubt whether we will continue as a going
concern.
The
Offering
Shares
of common stock being offered by the selling
stockholders
|
2,000,000
shares of our common stock.
|
|
Offering
price
|
$0.02
per share of common stock.
|
|
Number
of shares outstanding before the offering
|
6,500,000
|
|
Number
of shares outstanding after the offering if all the shares are
sold
|
6,500,000
|
|
Our
executive officers and Directors currently hold 69.23% of our shares, and,
as a result, they retain control over our
direction.
|
5
Market
for the common stock
|
There is no public market for our
common stock. After the effective date of the registration statement, we
intend to have a market maker file an application on our behalf with the
NASD to have our common stock quoted on the OTC Bulletin Board. We
currently have no market maker who is willing to list quotations for our
stock. There is no assurance 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. In
addition, we do not intend to register or qualify our common stock for
secondary trading in any state. Since many states restrict the
resale of securities that have not been registered or qualified for
resale, the potential secondary market for our common stock will be
limited.
|
|
Use
of proceeds
|
We
will not receive any proceeds from the sale of shares by the selling
stockholders.
|
|
Risk
Factors
|
See
“Risk Factors” and the other information in this prospectus for a
discussion of the factors you should consider before deciding to invest in
shares of our common
stock.
|
6
Summary
Financial Data
The
following summary financial information for the period from November 21, 2007
(date of inception) through June 30, 2010, includes statement of operations and
balance sheet data from our audited financial statements. The information
contained in this table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition or Plan of Operation" and the
financial statements and accompanying notes included in this
prospectus.
Six months
Ended
June 30,
2010
|
Year Ended
December 31,
2009
|
Year Ended
December 31,
2008
|
Cumulative
from Inception
(November 21,
2007) Through
June 30,
2010
|
|||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Operating
Expenses
|
$
|
14,294
|
$
|
27,997
|
$
|
2,640
|
$
|
44,931
|
||||||||
(Loss)
from Operations
|
$
|
(14,294
|
)
|
$
|
(27,997
|
)
|
$
|
(2,640
|
)
|
$
|
(44,931
|
)
|
||||
Other
Income (expense)
|
$
|
(678
|
) |
$
|
1,155
|
$
|
-
|
$
|
477
|
|||||||
Net
(Loss)
|
$
|
(14,972
|
)
|
$
|
(26,842
|
)
|
$
|
(2,640
|
)
|
$
|
(44,454
|
)
|
||||
(Loss)
Per Common Share
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
|||||||
Weighted
Average Number of Common Shares Outstanding – Basic and
Diluted
|
5,886,740
|
$
|
4,563,014
|
$
|
1,449,315
|
|
As of
June 30,
2010
|
As of
December
31,
2009
|
As of
December
31,
2008
|
|||||||||
Total
Current Assets
|
$
|
22,400
|
$
|
18,543
|
$
|
-
|
||||||
Total
Assets
|
$
|
22,400
|
$
|
18,543
|
$
|
-
|
||||||
Total
Current Liabilities
|
$
|
6,504
|
$
|
8,025
|
$
|
2,640
|
||||||
Total
Liabilities
|
$
|
6,504
|
$
|
8,025
|
$
|
2,640
|
||||||
Total
Stockholders’ Equity (Deficit)
|
$
|
15,896
|
$
|
10,518
|
$
|
(2,640
|
)
|
|||||
Total
Liabilities and Stockholders’ Equity (Deficit)
|
$
|
22,400
|
$
|
18,543
|
$
|
-
|
7
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should
carefully consider the following factors and other information in this
prospectus before deciding to invest in us. If any of the following risks
actually occur, our business, financial condition, results of operations and
prospects for growth would likely suffer. As a result, you could lose all or
part of your investment.
Risks
Relating to Our Lack of Operating History
1. We have a going concern
opinion from our auditors, indicating the possibility that we may not be able to
continue to operate.
We have
incurred net losses of $44,931 for the period from November 21, 2007 (date of
inception) through June 30, 2010. We anticipate generating losses for the next
12 months. We do not anticipate generating revenues before January 2011.
Therefore, we may be unable to continue operations in the future as a going
concern. No adjustment has been made in the accompanying financial
statements to the amounts and classification of assets and liabilities which
could result should we be unable to continue as a going concern. If we cannot
continue as a viable entity, our stockholders may lose some or all of their
investment in us.
In
addition, our independent auditors included an explanatory paragraph in their
report on the accompanying financial statements regarding concerns about our
ability to continue as a going concern. As a result, we may not be able to
obtain additional necessary funding. There can be no assurance that we
will ever achieve any revenues or profitability. The revenue and income
potential of our proposed business and operations are unproven, and the lack of
operating history makes it difficult to evaluate the future prospects of our
business.
2. We are a development stage
company and may never be able to execute our business plan.
We were
incorporated on November 21, 2007. We currently have no products, customers, or
revenues. Although we have begun initial planning for the marketing and
reselling of teeth whitening kits with our private label, we may not be able to
execute our business plan unless and until we are successful in raising
additional funds. We anticipate that we will require $103,200, in addition to
the $60,350 that has been invested by our current shareholders, to continue our
operations and to remain operational during the next twelve months. We will
require additional financing in order to establish profitable operations. Such
financing, if required, may not be forthcoming. Even if additional financing is
available, it may not be available on terms we find favorable. Failure to secure
the needed additional financing will have a serious effect on our company's
ability to survive. At this time, there are no anticipated additional sources of
funds in place, except for a commitment by our Directors to loan us up to
$10,000 in the aggregate, if necessary to help cover our costs to comply with
the federal securities laws over the next 12 months.
3.
Our business plan may be unsuccessful.
The
success of our business plan is dependent on our having a valid agreement with
one or more teeth whitening kit manufacturers for the supply of teeth whitening
kits at wholesale prices and our marketing and sale of these teeth whitening
kits. Our ability to develop this market and sell our private label teeth
whitening kits is unproven, and the lack of operating history makes it difficult
to validate our business plan. As a brand based company, marketing and
sales will be driven through the marketing of our private label teeth whitening
kits through infomercials placed on cable television channels as well as
e-marketing through the internet, and at a later stage offering our branded kits
to drug stores, food outlets and supermarkets. In addition, the success of our
business plan is dependent upon the market acceptance of and our intended
competitive pricing for our private label teeth whitening kits. Should the
target market not be as responsive as we anticipate, we will not have in place
alternate services or products that we can offer to ensure our continuation as a
going concern.
8
4.
Our business plan may fail because we will be dependent upon third parties for
distribution and fulfillment operations with respect to the private label teeth
whitening kits.
We intend
to outsource our distribution and fulfillment operations and therefore will be
dependent on our distributors to manage inventory, process orders and distribute
our private label teeth whitening kits to our customers in a timely manner. We
have engaged a third party that will provide the distribution and fulfillment
services. If we are unable to maintain the relationship with our distributor, we
may not be able to offer our products at competitive prices, and our sales may
decrease.
In
addition, because we will outsource to distributors a number of traditional
retail functions relating to the distribution of our private label products, we
expect to have limited control over how and when orders are fulfilled. Any
inability to offer the products at competitive prices and any failure to deliver
those products to our customers in a timely and accurate manner may damage our
reputation and brand, and could cause us to lose customers.
5.
We have no operating history and have maintained losses since inception, which
we expect to continue in the future.
Management
believes that an additional investment of $103,200 will be sufficient to enable
us to commence sales and continue our planned activities for approximately 12
months after the offering. We also expect to continue to incur operating
losses in future periods. These losses will occur because we do not yet have any
revenues to offset the expenses associated with the marketing and sale of our
private label teeth whitening kits. We cannot guarantee that we will ever be
successful in generating revenues in the future. We recognize that if we are
unable to generate revenues, we will not be able to earn profits or continue
operations.
There is
no history upon which to base any assumption as to the likelihood that we will
prove successful, and we can provide investors with no assurance that we will
generate any operating revenues or ever achieve profitable operations. If
we are unsuccessful in addressing these risks, our business will most likely
fail.
Risks
Relating to Our Business
6.
Our executive officers and Directors have significant voting power and may take
different actions from actions sought by our other stockholders.
Our
officers and Directors own approximately 69.23% of the outstanding shares of our
common stock.
These
stockholders will be able to exercise significant influence over all matters
requiring stockholder approval. This influence over our affairs might be
adverse to the interest of our other stockholders. In addition, this
concentration of ownership could delay or prevent a change in control and might
have an adverse effect on the market price of our common
stock.
9
7. Since our officers and
Directors may work or consult for other companies, their other activities could slow down our
operations.
Our
officers and Directors are not required to work exclusively for us and do not
devote all of their time to our operations. Presently, our officers and
Directors allocate only a portion of their time to the operation of our
business. Since our officers and Directors are currently employed full-time
elsewhere, they are each able to commit to us only up to 8-15 hours a week.
Therefore, it is possible that their pursuit of other activities may slow our
operations and reduce our financial results because of the slow-down in
operations.
8.
Our officers and Directors are located in Israel and our assets may also be held
from time to time outside of the United States.
Since all
of our officers and Directors are located in Israel, any attempt to enforce
liabilities upon such individuals under the U.S. securities and bankruptcy laws
may be difficult.
In
accordance with the Israeli Law on Enforcement of Foreign Judgments, 5718-1958,
and subject to certain time limitations (the application to enforce the judgment
must be made within five years of the date of judgment or such other period as
might be agreed between Israel and the United States), an Israeli court may
declare a foreign civil judgment enforceable if it finds that:
•
|
the
judgment was rendered by a court which was, according to the laws of the
State in which the court is located, competent to render the judgment;
|
|
•
|
the
judgment may no longer be appealed;
|
|
•
|
the
tenor of the judgment is not repugnant to the laws of the State of Israel
or to public policy in Israel; and
|
|
•
|
the
judgment is executory in the State in which it was given.
|
It is
unlikely that an Israeli court would deem the tenor of a judgment of a court of
the United States in relation to federal securities law to be repugnant to the
laws of the State of Israel or to public policy in Israel. However, given
that the decision by Israeli courts to enforce foreign judgments is
discretionary, such a decision cannot be guaranteed.
An
Israeli court will not declare a foreign judgment enforceable if:
•
|
the
judgment was obtained by fraud;
|
|
•
|
there
is a finding of lack of due process;
|
|
•
|
the
judgment is in conflict with another judgment that was given in the same
matter between the same parties and that is still
valid;
|
|
•
|
at
the time the action was instituted in the foreign court, a suit in the
same matter and between the same parties was pending before a court or
tribunal in Israel; or
|
|
•
|
the
judgment was rendered by a court not competent to render it according to
the laws of private international law in Israel. It should be noted
that Israeli courts deem U.S. courts competent to render judgments under
federal securities law according to the laws of private international law
in Israel.
|
|
Furthermore,
anyone bringing a claim against the Company or its directors in Israel will need
to show that the Israeli court is not a forum non conveniens, i.e.
inappropriate venue to hear such a claim. An Israeli court, in considering
whether it is a forum non
conveniens, will consider which legal forum is most connected to the
dispute, the reasonable expectations of the parties with respect to the place of
jurisdiction of the dispute, and public considerations, such as which forum has
a true interest in dealing with the dispute. If the Israeli court, having
ruled that it is an appropriate forum to hear the claim, decides that U.S. law
has the strongest linkage to the parties and other circumstances of the case, it
will apply U.S. law in adjudicating the claim. In that case, the content of
applicable U.S. law must be proven as a fact, which can be a time-consuming and
costly process.
Our
assets may also be held from time to time outside of the United States.
Currently, the only assets of ours that are held outside of the United States
are product samples for testing, for package design, and for future marketing
purposes. We expect such product samples to continue to be held outside of
the United States in the future until they are used pursuant to our testing,
design, and marketing activities. Since our Directors and executive
officers do not reside in the United States, it may be difficult for courts in
the United States to obtain jurisdiction over our foreign assets or persons, and
as a result, it may be difficult or impossible for you to enforce judgments
rendered against us or our Directors or executive officers in United States
courts. Thus, investing in us may pose a greater risk because should any
situation arise in the future in which you would have a cause of action against
these persons or against us, you may face potential difficulties in bringing
lawsuits or, if successful, in collecting judgments against these persons or
against the Company.
9. Our officers have no experience in
operating a dental care product business.
Since our
officers and Directors have no experience in operating a dental care product
business or in the marketing of teeth whitening kits, they may make
inexperienced or uninformed decisions regarding the operation of our business or
the marketing of our products, which could harm our business and result in our
having to suspend or cease operations, which could cause investors to lose their
entire investment.
10.
We may not have effective internal controls.
In
connection with Section 404 of the Sarbanes-Oxley Act of 2002, we need to assess
the adequacy of our internal control, remediate any weaknesses that may be
identified, validate that controls are functioning as documented and implement a
continuous reporting and improvement process for internal controls. We may
discover deficiencies that require us to improve our procedures, processes and
systems in order to ensure that our internal controls are adequate and effective
and that we are in compliance with the requirements of Section 404 of the
Sarbanes-Oxley Act. If the deficiencies are not adequately addressed, or
if we are unable to complete all of our testing and any remediation in time for
compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and
the SEC rules under it, we would be unable to conclude that our internal
controls over financial reporting are designed and operating effectively, which
could adversely affect investor confidence in our internal controls over
financial reporting.
Risks
Relating to Our Strategy and Industry
11.
Our success depends on independent contractors to manufacture and supply us with
teeth whitening kits, and to label, package, and ship these private label
products.
We intend
to purchase teeth whitening kits from third party manufacturers/suppliers and
affix our private label on such kits. We will be relying on independent
contractors for the supply of the teeth whitening kits and for the labeling,
packaging, and shipping of these private label products. We may not be
successful in developing relationships with these independent contractors. In
addition, these third party contractors may not dedicate sufficient resources or
give sufficient priority to satisfying our requirements or needs. There is
no history upon which to base any assumption as to the likelihood that we will
prove successful in selecting qualified third party independent contractors or
in negotiating any agreements with them. If we are unsuccessful in
addressing these risks, our business will most likely fail.
10
12.
We do not have commitments from potential suppliers and other independent
contractors.
We may
experience shortages of supplies and inventory because we currently have an
agreement with only one supplier, which supplier will also be providing us
with order fulfillment services. Our success is dependent on our ability
to timely provide our customers with our private label teeth whitening
kits. Although we intend to directly market these products, we will be
dependent on our suppliers and other independent contractors for the manufacture
and supply of the teeth whitening kits and for the labeling, packaging, and
shipment of these private label products. While we have entered into a
contract with one independent contractor for the supply of teeth whitening kits
and the provision of fulfillment services, no assurance can be given that we
will enter into agreements with other suppliers for the supply of teeth
whitening kits at acceptable levels of quality and price, or with other
independent contractors who will provide us with order fulfillment services at
acceptable levels of quality and price. While we anticipate having good
relationships with our potential suppliers and other independent contractors, if
we are unable to secure additional sources of supply or order fulfillment
services from one or more independent contractors on a timely basis and on
acceptable terms, our results of operations could be adversely
affected.
13.
Future regulation of teeth whitening products could restrict our business,
prevent us from offering the private label products, and/or increase our cost of
doing business.
The U.S.
Food and Drug Administration (“FDA”) currently considers teeth whitening
products to be cosmetic items which do not require FDA approval. However,
the laws, regulations, or rulings that specifically address the sale of teeth
whitening products are subject to change. We are unable to predict the impact,
if any, that future legislation, judicial precedents, or regulations relating to
teeth whitening products may have on our business, financial condition, and
results of operations. The increasing growth of the dental products and services
market heightens the risk that the United States and other governments will seek
to increase the regulation of such market, which could have a material adverse
effect on our business, financial condition, and operating results.
In
November 2009, the American Dental Association (“ADA”) requested that the FDA
enact some form of regulation of teeth whitening products. Based on a resolution
from the ADA’s House of Delegates and after receiving complaints from consumers
and dental professionals, the ADA officially petitioned the FDA to take
action. We expect to rely upon our potential suppliers to meet the various
regulatory and other legal requirements applicable to the products that will be
supplied by them to us. We have inserted a clause in our agreement with
our current supplier to require the supplier to comply with all FDA regulations;
however, we will be relying upon our supplier’s diligence in preparing,
packaging and labeling the kits in order to comply with all U.S. regulatory
laws. In the event of any non-compliance, we may be fined or face exposure
to civil or criminal liability, and we could potentially receive negative
publicity.
International
sales of medical devices are also subject to the regulatory requirements of each
country. In Europe, the regulations of the European Union require that a device
have a CE Mark, a mark that indicates conformance with European Union laws and
regulations before a medical device can be sold in that market. The regulatory
international review process varies from country to country. We will rely upon
our suppliers to comply with the regulatory laws of such countries. Failure to
comply with the laws of each such country could have a material adverse effect
on our operations and, at the very least, could prevent us from continuing to
sell kits in such country.
14 The
reselling of teeth whitening kits is subject to current governmental
regulations.
The
marketing, distribution and sale of the private label teeth whitening kits that
we propose to sell will be subject to the requirements of federal law. While the
Food and Drug Administration (FDA) currently classifies teeth whitening products
as cosmetic products that are not subject to FDA regulations, the products we
plan to sell are subject to the Federal Food, Drug and Cosmetic Act, which
regulates the advertising, record keeping, labeling, handling, storage and sale
of cosmetics. We are not
currently required to hold any licenses to conduct our business as presently
operated.
While we
believe we are and will be in substantial compliance with the laws and
regulations which regulate our business, the failure to comply with any of these
laws or regulations, or the imposition of new laws or regulations could
negatively impact our proposed business.
11
15. We face intense competition
and many of our competitors have substantially greater resources than we
do.
We will
operate in a highly competitive environment. In addition, the competition
in the market for teeth whitening and cosmetic dental products and services may
intensify. There are numerous well-established companies based in the
United States with longer operating histories, significantly greater resources
and name recognition, and a larger base of distributors and retailers. In
addition, there are smaller entrepreneurial companies who are developing
products and services that will compete with the teeth whitening kits that we
plan to resell under our private label. As a result, these competitors
have greater credibility with our potential customers. They also may be
able to adopt more aggressive pricing policies and devote greater resources to
the development, promotion, and sale of their products. These
competitors may make it difficult for us to market and sell our products and
compete in the teeth whitening market, which could harm our
business.
16. We depend on market
acceptance of the teeth whitening kits that we plan to resell under our private
label. If these kits do not gain market acceptance,
our ability to compete will be adversely
affected.
Our
success will depend in large part on our ability to successfully market our
private label teeth whitening kits. Although we intend to retain a
packaging consultant and copywriter to assist us in differentiating our products
from those of our competitors on the basis of packaging and our advertising
campaign, the products we plan to resell will be similar in content and effect
to the products of some of our competitors and to the products that our proposed
supplier sells directly and through other distributors. Therefore, no assurances
can be given that we will be able to successfully market our kits or achieve
consumer acceptance. Moreover, failure to successfully commercialize our
private label kits on a timely and cost-effective basis will have a material
adverse effect on our ability to compete in our targeted market. In
addition, medical and dental insurance policies generally do not cover teeth
whitening or other cosmetic dental products and procedures, which may have an
adverse impact upon the market acceptance of our products.
17.
Failure to meet customers’ expectations or deliver expected performance
could result in losses and negative publicity, which would harm our
business.
If the
teeth whitening products which we plan to resell fail to perform in the manner
expected by our customers, then our revenues may be delayed or lost due to
adverse customer reaction. In addition, negative publicity about us and
our private label products could adversely affect our ability to attract or
retain customers. Furthermore, disappointed customers may initiate claims
for damages against us, regardless of our responsibility for their
disappointment.
18.
We need to retain key personnel to support our services and ongoing
operations.
The
marketing and sale of our private label teeth whitening kits will continue to
place a significant strain on our limited personnel, management, and other
resources. Our future success depends upon the continued services of our
executive officers and the hiring of key employees and contractors who have
critical industry experience and relationships that we rely on to implement our
business plan. The loss of the services of any of our officers or the lack
of availability of other skilled personnel would negatively impact our ability
to market and sell the private label teeth whitening products, which could
adversely affect our financial results and impair our growth.
19.
If we cannot build and maintain strong brand loyalty to our private label
products our business may suffer.
We
believe that the importance of brand recognition will increase as more companies
produce competing teeth whitening products and kits. Development and
awareness of our brand will depend largely on our ability to successfully
advertise and market our private label products. If we are unsuccessful,
our private label may not be able to gain widespread acceptance among
consumers. A failure to develop our private label sufficiently could have
a material adverse effect on our business, results of operations and financial
condition.
12
20.
We may be unable to protect our brand name.
Brand
recognition is critical in attracting consumers to our product. We have
researched the availability of the trademark “Havaya” and have not found any
inherent obstacle to registering the trademark with the US patent and trademark
office. Nevertheless, if we are unable to trademark our brand name or to
adequately protect our trade name against infringement or misappropriation, our
competitive position in the teeth whitening market may be undermined, which
could lead to a significant decrease in the volume of private label products
that we resell. Such a result would materially and adversely affect our
results of operations.
21.
We may incur losses as a result of claims that may be brought against us due to
defective products or as a result of product recalls.
While we
are not aware of any claims having been brought in connection with the teeth
whitening products we plan to resell, we may be liable if the use of the private
label products we resell causes injury, illness, or death. We also may be
required to withdraw or recall some of our private label products if they become
contaminated or are damaged or mislabeled. The most common complaint may
be that the kits do not include adequate amounts of gel to complete the
whitening process. A significant product liability judgment against us or
a widespread product withdrawal or recall could have a material adverse effect
on our business and financial condition.
22.
If a third party asserts that we infringe upon its proprietary rights, we could
be required to redesign our product, change suppliers, pay significant
royalties, or enter into license agreements.
Although
presently we are not aware of any such claims, a third party may assert that our
private label teeth whitening kit violates its intellectual property rights. As
the number of teeth whitening products in our market increases we believe that
infringement claims will become more common. Any claims against us,
regardless of their merit, could:
•
|
Be
expensive and time-consuming to defend;
|
•
|
Result
in negative publicity;
|
•
|
Force
us to stop selling our products;
|
•
|
Require
us to engage a new supplier for our teeth whitening
kits;
|
•
|
Divert
management’s attention and our other resources; and
|
•
|
Require
us to enter into royalty or licensing agreements in order to obtain the
right to sell our products, which right may not be available on terms
acceptable to us, if at all.
|
In
addition, we believe that any successful challenge to our use of a trademark or
domain name could substantially diminish our ability to conduct business in a
particular market or jurisdiction and thus could decrease our revenues and/or
result in losses to our business.
23.
Our lack of business
diversification could result in the loss of your investment if revenues from our
primary products decrease.
Currently,
our business is focused on the marketing and sale of teeth whitening kits that
we will purchase from third party manufacturers. We do not have any other
lines of business or other sources of revenue if we are unable to successfully
implement our business plan. Our lack of business diversification could
cause you to lose all or some of your investment if we are unable to generate
revenues by the sale of teeth whitening kits since we do not have any other
lines of business or alternative revenue sources.
13
24.
An unsuccessful material strategic transaction or relationship could result in
operating difficulties and other harmful consequences to our
business.
We expect
to evaluate a wide array of potential strategic transactions and relationships
with third parties. From time to time, we may engage in discussions
regarding potential acquisitions or joint ventures. Any of these transactions
could be material to our financial condition and results of operations, and the
failure of any of these material relationships and transactions may have a
negative financial impact on our business.
Risks
Relating to this Offering
25. NASD sales practice
requirements may limit a stockholder’s ability to buy and sell our stock.
In
addition to the "penny stock" rules described below, the NASD has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to
their non-institutional customers, broker-dealers must make reasonable efforts
to obtain information about the customer's financial status, tax status,
investment objectives and other information. Under interpretations of these
rules, the NASD believes that there is a high probability that speculative low
priced securities will not be suitable for at least some customers. The NASD
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may have the effect of reducing the level
of trading activity in our common stock. As a result, fewer broker-dealers may
be willing to make a market in our common stock, reducing a stockholder's
ability to resell shares of our common stock.
26. There is no public market
for the securities and even if a market is created, the market price of our
common stock will be subject to volatility.
Prior to
this offering, there has been no public market for our securities and there can
be no assurance that an active trading market for the securities offered herein
will develop after this offering, or, if developed, be sustained. We anticipate
that, upon completion of this offering, our common stock will be eligible for
quotation on the OTC Bulletin Board. If, for any reason, however, our
securities are not eligible for initial or continued quotation on the OTC
Bulletin Board or a public trading market does not develop, purchasers of the
common stock may have difficulty selling their securities should they desire to
do so and purchasers of our common stock may lose their entire investment if
they are unable to sell our securities.
27.
The price of our shares in this offering was arbitrarily determined by us and
may not reflect the actual market price for the securities.
The
initial public offering price of the common stock was determined by us
arbitrarily. The price is not based on our financial condition and
prospects, market prices of similar securities of comparable publicly traded
companies, certain financial and operating information of companies engaged in
similar activities to ours, or general conditions of the securities market. The
price may not be indicative of the market price, if any, for the common stock in
the trading market after this offering. The market price of the securities
offered herein, if any, may decline below the initial public offering price. The
stock market has experienced extreme price and volume fluctuations. In the past,
securities class action litigation has often been instituted against various
companies following periods of volatility in the market price of their
securities. If instituted against us, regardless of the outcome, such litigation
would result in substantial costs and a diversion of management's attention and
resources, which would increase our operating expenses and affect our financial
condition and business operations.
14
28. State securities laws may
limit secondary trading, which may restrict the states in which you may sell the shares offered by this
prospectus.
If you
purchase shares of our common stock sold in this offering, you may not be able
to resell the shares in any state unless and until the shares of our common
stock are qualified for secondary trading under the applicable securities laws
of such state or there is confirmation that an exemption, such as listing in
certain recognized securities manuals, is available for secondary trading in
such state. Thirty-three states have what is commonly referred to as a “manual
exemption” for secondary trading of securities such as those to be resold by
selling stockholders under this registration statement. In these states, so long
as the issuer obtains and maintains a listing in Mergent, Inc. or Standard and
Poor’s Corporate Manual, secondary trading of common stock can occur without any
filing, review or approval by state regulatory authorities in these states.
These states are: Alaska, Arizona, Arkansas, Colorado, Connecticut, District of
Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland,
Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Jersey, New
Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island,
South Carolina, Texas, Utah, Washington, West Virginia, and Wyoming. Ten states
provide for an exemption for non-issuer transactions in outstanding securities
effected through a registered broker-dealer when the securities are subject to
registration under Section 12 of the Securities Exchange Act of 1934 for at
least 90 days (180 days in Alabama). These states are: Alabama, Colorado,
District of Columbia, Illinois, Kansas, Missouri , New Jersey, New Mexico,
Oklahoma, and Rhode Island .
We
currently do not intend to register or qualify our stock in any state or seek
coverage in one of the recognized securities manuals. Because the shares of our
common stock registered hereunder have not been registered for resale under the
blue sky laws of any state, and we have no current plans to register or qualify
our shares in any state, the holders of such shares and persons who desire to
purchase such shares in any trading market that might develop in the future
should be aware that there may be significant state blue sky restrictions upon
the ability of investors to purchase and sell such shares. In this regard, each
state's statutes and regulations must be reviewed before engaging in any
securities sales activities in a state to determine what is permitted, or not
permitted, in a particular state. Nevertheless, we do intend to file a Form 8-A
promptly after this registration statement becomes effective, thereby subjecting
our stock registered hereunder to registration under Section 12 of the
Securities Exchange Act of 1934. Furthermore, even in those states that do not
require registration or qualification for the resale of registered securities,
such states may require the filing of notices or place additional conditions on
the availability of exemptions. Accordingly, since many states continue to
restrict the resale of securities that have not been qualified for resale,
investors should consider any potential secondary market for our securities to
be a limited one.
29. Our stock is a penny stock.
Trading of our stock may be restricted by the SEC's penny stock regulations, which may limit a
stockholder's ability to buy and sell our stock.
If a
trading market does develop for our stock, it is likely we will be subject to
the regulations applicable to "Penny Stock," the regulations of the SEC
promulgated under the Exchange Act that require additional disclosure relating
to the market for penny stocks in connection with trades in any stock defined as
a penny stock. The SEC regulations define penny stocks to be any non-NASDAQ
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions. Unless an exception is available, those regulations
require the broker-dealer to deliver, prior to any transaction involving a penny
stock, a standardized risk disclosure schedule prepared by the SEC, to provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction,
monthly account statements showing the market value of each penny stock held in
the purchaser’s account, to make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity, if any, in the secondary
market for a stock that becomes subject to the penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage market investor
interest in and limit the marketability of our common stock.
30.
Stockholders may have limited access to information because we are not yet
a reporting issuer and may not become
one.
|
While we
intend to file a Form 8-A promptly after this registration statement becomes
effective and thereby become a “reporting issuer” under Section 12 of the
Securities Exchange Act of 1934, we are not currently a reporting issuer and
upon this registration statement becoming effective we will be required to
comply only with the limited reporting obligations required by Section 13(a) of
the Exchange Act. These reporting obligations may be automatically
suspended under Section 15(d) of the Exchange Act if on the first day of any
fiscal year other than the fiscal year in which our registration statement
became effective, there are fewer than 300
shareholders. If we do not become a reporting issuer and instead make a
decision to suspend our public reporting, we will no longer be obligated to file
periodic reports with SEC and your access to our business information will be
restricted. In addition, if we do not become a reporting issuer, we will
not be required to furnish proxy statements to security holders, and our
directors, officers and principal beneficial owners will not be required to
report their beneficial ownership of securities to the SEC pursuant to Section
16 of the Exchange Act.
15
31.
Should our stock become listed on the OTC Bulletin Board, if we fail to remain
current on our reporting requirements, we could be removed from the OTC Bulletin
Board which would limit the ability of broker-dealers to sell our securities and
the ability of stockholders to sell their securities in the secondary
market.
Companies
trading on the Over-The-Counter Bulletin Board, one of which we are seeking to
become, must be reporting issuers under Section 12 of the Securities Exchange
Act of 1934, as amended, and must be current in their reports under Section 13,
in order to maintain price quotation privileges on the OTC Bulletin Board.
Currently we have sufficient resources to comply with our future reporting
requirements; however, the lack of resources to prepare and file our reports,
including the inability to pay our auditor, could result in our failure to
remain current on our reporting requirements, which could result in our being
removed from the OTC Bulletin Board. As a result, the market liquidity for our
securities could be severely adversely affected by limiting the ability of
broker-dealers to sell our securities and the ability of stockholders to sell
their securities in the secondary market. In addition, we may be
unable to get re-listed on the OTC Bulletin Board, which may have an adverse
material effect on our company.
32. We have not paid dividends
in the past and do not expect to pay dividends in the future. Any return
on investment may be limited to the value of our common stock.
We have
never paid cash dividends on our common stock and do not anticipate paying cash
dividends in the foreseeable future. The payment of dividends on our common
stock will depend on earnings, financial condition and other business and
economic factors affecting it at such time as the board of directors may
consider relevant.
33.
Efforts to comply with recently enacted changes in securities laws and
regulations will increase our costs and require additional management resources,
and we still may fail to comply.
As
directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules
requiring public companies to include a report of management on our internal
controls over financial reporting in their annual reports on Form 10-K. In
addition, the public accounting firm auditing our financial statements must
attest to and report on management’s assessment of the effectiveness of our
internal controls over financial reporting. These requirements are not presently
applicable to us but we will become subject to these requirements subsequent to
the effective date of this prospectus. If and when these regulations become
applicable to us, and if we are unable to conclude that we have effective
internal controls over financial reporting or if our independent auditors are
unable to provide us with an unqualified report as to the effectiveness of our
internal controls over financial reporting as required by Section 404 of the
Sarbanes-Oxley Act of 2002, investors could lose confidence in the reliability
of our financial statements, which could result in a decrease in the value of
our securities. We have not yet begun a formal process to evaluate our internal
controls over financial reporting. Given the status of our efforts, coupled with
the fact that guidance from regulatory authorities in the area of internal
controls continues to evolve, substantial uncertainty exists regarding our
ability to comply by applicable deadlines.
34.
We have not yet engaged the services of a transfer agent which may affect our
stockholders’ ability to transfer their shares in the Company.
We have
not yet engaged the services of a transfer agent, and until a transfer agent is
retained, Havaya will act as its own transfer agent. The absence of a
professional transfer agent may result in delays in the recordation of share
transfers and the issuance of new stock certificates, which has the potential to
disrupt the orderly transfer of stock from one stockholder to another.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some
discussions in this prospectus may contain forward-looking statements that
involve risks and uncertainties. These statements relate to future events
or future financial performance. A number of important factors could cause
our actual results to differ materially from those expressed in any
forward-looking statements made by us in this prospectus. 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. In some cases, you can also identify
forward-looking statements by terminology such as "may," "will," "should,"
"plans," "predicts," "potential" or "continue" or the negative of these terms or
other comparable terminology. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including the
risks in the section entitled Risk Factors beginning on page 8, that may cause
our or our industry's actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements. In addition, you are directed to factors
discussed in the Business section beginning on page 28, the Management's
Discussion and Analysis or Plan of Operation section beginning on page 22, and
as well as those discussed elsewhere in this prospectus.
16
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, or
achievements. Except as required by applicable law, including the
securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual
results.
Our
financial statements are stated in United States Dollars (US$) and are prepared
in accordance with accounting principles generally accepted in the United
States.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of the common stock by the Selling
Stockholders pursuant to this prospectus. Please read “Selling
Stockholders” for a list of the persons that will receive proceeds from the sale
of common stock owned by them pursuant to this prospectus.
DIVIDEND
POLICY
We have
not declared or paid any dividend since inception on our common stock. We
do not anticipate that we will declare or pay dividends in the foreseeable
future on our common stock.
DETERMINATION
OF THE OFFERING PRICE
There has
been no public market for our common shares. The price of the shares
we are offering was arbitrarily determined at $0.02 per share. We
believe that this price reflects the amount that a potential investor would be
willing to pay to invest in our company at this initial stage of our
development. Because we have no significant operating history and
have not generated any revenues to date, the price of our common stock is not
based on past earnings, nor is the price of our common stock indicative of the
current market value of the assets owned by us. No valuation or appraisal has
been prepared for our business and potential business expansion.
We
arbitrarily determined the price and it bears no relationship whatsoever to our
business plan, the price paid for our shares by our founders, our assets,
earnings, book value or any other criteria of value. The offering
price should not be regarded as an indicator of the future market price of the
securities, which is likely to fluctuate.
DILUTION
None of the proceeds from the sale by
the Selling Stockholders will be delivered to the Company, and therefore the
proposed public offering will not include a public contribution. Purchasers of our securities in this
offering will experience immediate and substantial dilution in the net tangible
book value of their common stock from the initial public offering
price.
17
The
historical net tangible book value as of June 30, 2010, was $15,896 or $0.002446
per share. Historical net tangible book value per share of common stock
is equal to our total tangible assets less total liabilities, divided by the
number of shares of common stock outstanding as of June 30, 2010. This
represents an immediate increase of $0.002346 per share to our officers for
shares held since 2008 and a substantial dilution of $0.017554 per share, or
approximately 88%, to new investors purchasing our securities in this offering.
Dilution in pro forma net tangible book value per share represents the
difference between the amount per share paid by purchasers of shares of our
common stock in the private placement offering and the pro forma net tangible
book value per share of our common stock immediately following this
offering.
MARKET
FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market
Information
There is
no public market for our common stock.
We have
issued 6,500,000 common shares since our inception in November 21, 2007, all of
which are restricted shares. See "Certain Relationships and Related
Transactions" above regarding these shares. There are no outstanding options or
warrants or securities that are convertible into shares of common
stock.
Holders
We had 45
holders of record for our common shares as of May 14, 2010.
Securities
Authorized for Issuance under Equity Compensation Plans
We do not
have any compensation plan under which equity securities are authorized for
issuance.
18
SELLING
SECURITY HOLDERS
The
selling stockholders named in this prospectus are offering all of the 2,000,000
shares of common stock offered through this prospectus. The selling
stockholders are non U.S. persons who acquired the 2,000,000 shares of common
stock offered through this prospectus from us in a series of private placement
transactions that occurred between February and June of 2009 at a price per
share of $0.02 and for an aggregate investment of $40,000. The private placement
transactions were pursuant to Regulation S, thus exempting these private
placements from the registration requirements of the United States Securities
Act of 1933.
The
following table provides as of May 17, 2010, information regarding the
beneficial ownership of our common stock held by each of the selling
stockholders, including:
1.
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The number of shares beneficially
owned by each prior to this
offering;
|
2.
|
The total number of shares that
are to be offered by each;
|
3.
|
The total number of shares that
will be beneficially owned by each upon completion of the offering;
and
|
4.
|
The percentage owned by each upon
completion of the offering.
|
Beneficial Ownership
Before Offering(¹)
|
Number of
Shares
|
Beneficial Ownership
After Offering(¹)
|
||||||||||||||
Name of Selling Stockholder(¹)
|
Number of
Shares
|
Percent(²)
|
Being
Offered
|
Number of
Shares
|
Percent(²)
|
|||||||||||
Kfir
Alfandari
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Yehonatan
Amosi
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Shachar
Azar Zar
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Yitshak
S. Azulay
|
37,500
|
0.58
|
37,500
|
0
|
0
|
|||||||||||
Idan
D. Bilibow
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Eyal
D. Caspi
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Ran
Darki
|
25,000
|
0.38
|
25,000
|
0
|
0
|
19
Naor
N. Eliahu
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Ido
Fadlon
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Itamar
Glazer
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Shimon
Goldstein
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Yisroel
Goldstein
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Amir
Halperin
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Moti
Kadoshi
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Ariel
H. Kahane
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Dina
Karako
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Oran
R. Karako
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Yakov
Karako
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Shlomo
Keller
|
37,500
|
0.58
|
37,500
|
0
|
0
|
|||||||||||
Guy
Y. Khawaz
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Shmuel
Kiper
|
37,500
|
0.58
|
37,500
|
0
|
0
|
|||||||||||
Israel
Kozlovski
|
37,500
|
0.58
|
37,500
|
0
|
0
|
|||||||||||
Shoshana
R. Kraushar
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Howard
Leader
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Kyla
Leader
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Soroh
Leader
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Symcha
Leader
|
50,000
|
0.76
|
50,000
|
0
|
0
|
20
Joseph
Lewin
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Yanai
M.M. Melamed
|
37,500
|
0.58
|
37,500
|
0
|
0
|
|||||||||||
Joe
S. Mozes
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Yoshua
Mozes
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Ilan
Nachmias
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Menachem
Roitenbarg
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Yoseph
Roitenbarg
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Boruch
Roth
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Rifkat
Roth
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Nir
Sasson
|
37,500
|
0.58
|
37,500
|
0
|
0
|
|||||||||||
Itay
Sayag
|
25,000
|
0.38
|
25,000
|
0
|
0
|
|||||||||||
Elad
D. Shoshan Kalushiner
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Yonatan
Simon
|
37,500
|
0.38
|
37,500
|
0
|
0
|
|||||||||||
Chaim
Y.D. Tangi
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
Ariel
Truman
|
262,500
|
4.04
|
262,500
|
0
|
0
|
|||||||||||
Jahezkel
Wasserstrum
|
50,000
|
0.76
|
50,000
|
0
|
0
|
|||||||||||
TOTAL
|
2,000,000
|
NIL
|
NIL
|
(¹)
|
The
named party beneficially owns and has sole voting and investment power
over all shares or rights to these shares, unless otherwise shown in the
table. The numbers in this table assume that none of the
selling stockholders sells shares of common stock not being offered in
this prospectus or purchases additional shares of common stock, and
assumes that all shares offered are
sold.
|
(²)
|
Applicable
percentage of ownership is based on 6,500,000 shares of common stock
outstanding as of May 17, 2010.
|
Except as
disclosed above, none of the selling stockholders:
(i)
|
has
had a material relationship with us or any of our affiliates other than as
a stockholder at any time within the past three years;
nor
|
(ii)
|
has
ever been one of our officers or
Directors.
|
21
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion of
our plan of
operation should be
read in conjunction with the financial statements and related notes that appear
elsewhere in this prospectus. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those discussed in “Risk Factors” beginning
on page 8 of this
prospectus. All
forward-looking statements speak only as of the date on which they are made. We
undertake no obligation to update such statements to reflect events that occur
or circumstances that exist after the date on which they are
made.
Overview
We are a
development stage company with limited operations and no revenues from our
business operations. Our auditors have issued a going concern opinion. This
means that our auditors believe there is substantial doubt that we can continue
as an on-going business for the next twelve months. We do not anticipate that we
will generate significant revenues until we are able to market the private label
teeth whitening kits and generate customers. Accordingly, we must raise cash
from sources other than our operations in order to implement our marketing
plan.
In our
management’s opinion, there is a market for reasonably priced teeth whitening
kits intended for application at home.
We
believe that we will need to raise an additional $103,200 in order to allow us
to begin our market development and to remain in business for twelve months. We
expect to begin to generate revenues in January 2011. If we raise the necessary
funds, but are unable to generate revenues within twelve months of the
effectiveness of this Registration Statement for any reason, or if we are unable
to make a reasonable profit within twelve months of the effectiveness of this
Registration Statement, we may have to suspend or cease operations. At the
present time, we have not made any arrangements to raise additional cash to
finance our operations. We may seek to obtain additional funds through a second
public offering, a private placement of securities, or loans. Other than as
described in this paragraph, we have no financing plans at this time, except for
a commitment by our directors to loan us up to $10,000 in the aggregate, if
necessary to help cover our costs to comply with the federal securities laws
over the next 12 months.
Plan
of Operation
Our
specific goal is to become a leading seller of teeth whitening kits for the home
market. Assuming we raise the additional funds necessary for us to operate our
business, our plan of operation is as follows:
We intend
to execute an agreement with one or more teeth whitening kit manufacturers for
the supply of teeth whitening kits at wholesale prices with the Havaya brand
labeling and packaging. In September 2009, we commenced discussions with Brite
Impressions Teeth Whitening Company, a manufacturer of teeth whitening kits that
can deliver privately labeled teeth whitening kits to us in a timely manner. In
May 2010, we entered into a supply agreement with Pacific Naturals, a
California-based company, which distributes teeth whitening kits manufactured by
Brite Impressions Teeth Whitening Company and provides order fulfillment
services. We intend to work with one or more suppliers based in the United
States to achieve competitive terms for the supply of our branded teeth
whitening kits. We then intend to resell the kits by marketing them to customers
through paid infomercials on cable television as well as on the
internet.
In July
2009, we commenced discussions with a fulfillment services provider, but we did
not sign an agreement. In May 2010, Pacific Naturals, our supplier, agreed to
also act as our fulfillment center. The order fulfillment services provider will
handle all incoming calls from customers, and will handle the entire sales
process, including billing and shipping.
22
Purchasing
Strategy
We intend
to purchase privately labeled teeth whitening kits from one or more suppliers in
the United States. We have entered into a supply agreement with Pacific
Naturals, a distributor of such kits.
We
believe that 100 teeth whitening kits will be sufficient for sampling, testing,
and design purposes, and therefore we issued an initial purchase
order for 100 kits. We directed that ten units be delivered to our offices in
Israel for product testing and design purposes. Ten units have been delivered to
our offices in Israel, and we are testing them. We have recently completed the
package design process.
We had
originally projected an initial order of 1,500 kits, which amount was based on
negotiations with our first potential supplier which required a minimum order of
1,500 kits. However, since our current supplier did not require us to place such
a large minimum order, when we actually placed our initial order, we ordered
only 100 kits, a quantity that is intended to satisfy our actual needs at this
stage.
We expect
to issue our first commercial order of the kits in December 2010 for a quantity
of approximately 5,000 kits, which we expect will cover a six-month production
and sales period. We based this projection on the assumption that we will be
able to sell 300 kits per month from the time we commence our advertising blitz,
which is planned for December 2010. A first commercial order of 5,000 kits will
allow us to maintain inventory at our fulfillment center warehouse, which will
protect us from unanticipated delays in production, in the event sales are
better than expected. Furthermore, we will save on printing costs with an order
of 5,000 kits since the cost per kit would be higher for a smaller first
commercial order. However, the quantity of our estimated first commercial order
may change depending on the level of historical and future forecasted
demand.
Our
initial projection of a first commercial order of 2,000 kits has been revised to
5,000 kits since our initial projection did not take into account the inventory
that we would like to maintain as a safety net against any production delays,
nor the savings we will realize on printing costs per kit on a larger first
commercial order.
Each
teeth whitening kit will contain twenty applications of the teeth whitening
system.
Sales
Strategy
We intend
to commence the marketing of our teeth whitening kits with a high visibility
launch campaign which will entail advertising on cable TV and through internet
marketing. Fulfillment of sales will be carried out through a 24/7 telephone
contact/order fulfillment center that will provide order processing, electronic
commerce, electronic payment facilities, shipping, logistics, warehousing and
inventory control.
Subject
to raising additional funds, we anticipate commencing our marketing campaign on
cable television by December 2010, and hence believe that the Company will
commence sales beginning at the end of 2010 or the beginning of 2011. After the
initial advertising campaign over a three week period we envision that we will
have more experience and more knowledge in order to target our potential
customers more precisely.
23
Once
sales of 1,000 units per month have been achieved, we will explore expanding our
market reach into the over-the-counter market by supplying teeth whitening kits
through distributors to food outlets, retail and drug stores, etc. This strategy
will be executed selectively to regions that have shown historical high growth
of sales during the earlier sales campaigns.
Fulfillment
Strategy
We intend
to retain an order fulfillment services company to:
·
|
Receive
orders electronically and by telephone;
|
|
·
|
Provide
central warehousing facilities;
|
|
·
|
Handle
payment and transaction processes;
|
|
·
|
Pick,
pack and ship products according to order
specifications;
|
|
·
|
Handle
delivery of products to final destinations; and
|
|
·
|
Handle
returns.
|
Marketing/Advertising
Strategy
To
penetrate the market and achieve product exposure, we plan to launch our product
regionally in several states with a three week “blitz” advertising campaign
using cable TV, broadcast TV and internet advertising. The cost of the TV
advertising campaign will be approximately $9,605, broken down as follows:
$3,330 on Lifetime Cable, $2,775 on Discovery Health, and $3,500 on the CW
Network (formerly UPN). Based on our budget, during our three week “blitz”
advertising campaign, we anticipate purchasing between 55-133 commercials on
Lifetime Cable at a cost of between $25-$50 per airing, 55-138 commercials on
Discovery Health at a running cost of $20-$50 per airing, and 8-17 commercials
on CW Network at a running cost of $200-$400 per airing (not including prime
time Monday – Friday or Sunday). Our cost assumptions for our advertising budget
for CW Network are based on the rate card which we received from them. As to the
other cable stations, we based our cost assumptions on a quotation that we
received from National TV Spots, a national advertising
agency.
Our first
campaign will be considered a test campaign. We will study the results of this
campaign in order to better target potential customers. We will be looking at
the number of orders that are received from different advertising slots. We
thereby hope to ascertain the best time to advertise on cable TV, and the best
channels, the best demographics, and the best cities to target. In this way, we
will put our limited resources to work on purchasing new advertising time to
best effect.
24
The next
sales phase will be a selective long term advertising campaign on the same media
channels to continue building on the Havaya brand recognition and to maintain
sales growth. We intend to budget up to $5,500 per month for additional cable TV
advertising.
We intend
to concentrate on marketing and advertising our product in the following three
ways:
|
1.
|
Via direct response TV
commercials on three major networks including UPN, Lifetime Cable, and
Discovery Health Cable. Commercials of 15 and 30 seconds will be screened
for three weeks at strategic times, Wednesday through to Friday, to focus
on our target audience. The advertisements will run at a minimum of one
per hour. Incoming call results will be studied and analyzed for fine
tuning of the advertising
campaign.
|
|
2.
|
We will launch a website with
direct on-line sales and promotions. We intend to market our website on
social media channels with banner advertisements enticing potential
customers with promotional
offers.
|
|
3.
|
Advertising will initially be
regional and thereafter be national, using an advertising and marketing
company which will devise, design and book media. This organization will
also strategize the most advantageous use of direct on-line advertising
with the concomitant telephone 1-800 number for direct purchasing and
payment method. An English language website will be constructed to offer
information and visuals plus on-line purchasing (e-commerce). We have not
yet selected an advertising company to perform the services we
require.
|
We have
established a 1-800 number and when required we will re-route this number to
Pacific Naturals or any other subcontractor that will become our fulfillment
services provider.
Activities
to Date
We were
incorporated under the laws of the State of Delaware on November 21, 2007. We
are a development stage company. We currently have no employees. From our
inception to date, we have not generated any revenues, and our operations have
been limited to organizational and start-up activities.
We have
conducted market research into the teeth whitening market in the United States.
Our research covered:
|
·
|
different types of teeth
whitening products currently available, including both professional
systems and home use
systems;
|
|
·
|
the benefit of using carbamide
peroxide versus hydrogen
peroxide;
|
|
·
|
the usage patterns for users of
teeth whitening products;
|
|
·
|
the target customers for teeth
whitening products; and
|
|
·
|
types of teeth whitening
kits.
|
25
We have
sourced supply of the teeth whitening kits, and have entered into a supply and
fulfillment agreement with Pacific Naturals. The supply and fulfillment
agreement is for an initial term of three years and will automatically renew for
additional one-year terms unless one party provides the other with a termination
notice. Either party may terminate the agreement for convenience upon ninety
days prior written notice; provided, however, that as long as we purchase twenty
thousand (20,000) private label products in the first year, Pacific Naturals may
not terminate the Agreement for convenience. Pacific Naturals has agreed to
label and package our private label products pursuant to our instructions.
Pacific Naturals has agreed to ensure that all products sold to us shall be
manufactured, labeled, packaged, and shipped in conformity with all applicable
governmental laws and regulations, and Pacific Naturals shall obtain and
maintain throughout the term of the agreement all necessary regulatory and
compliance certifications and approvals. Pacific Naturals has also agreed to
provide us with the following order fulfillment services: receive orders
electronically and by telephone; provide central warehousing facilities; handle
payment and transaction processes; pick, pack and ship products according to
order specifications; handle delivery of products to final destinations; and
handle returns.
Results
of Operations
During
the period from November 21, 2007 (date of inception) through June 30, 2010, we
incurred a net loss of $44,454. This loss consisted primarily of general and
administrative expenses, comprising professional fees paid for legal and
accounting services provided to us, travel expenses related to two business
trips to the Far East by a consultant to evaluate potential suppliers of teeth
whitening systems, and consulting fees for assistance with the writing of our
business plan. Since inception, we have sold 4,500,000 shares of common stock to
our Directors.
Purchase
or Sale of Equipment
We do not
expect to purchase or sell any plant or significant equipment.
Revenues
We had no
revenues for the period from November 21, 2007 (date of inception) through June
30, 2010.
Liquidity
and Capital Resources
Our
balance sheet as of June 30, 2010, reflects assets of $22,400. Cash and cash
equivalents from inception to date have been insufficient to provide the working
capital necessary to operate to date.
We
anticipate generating losses and, therefore, may be unable to continue
operations in the future. Except for private placement financing in 2009 and an
investment by both of our Directors in April 2010, we have not attempted to
raise any additional capital. To date, we have not attempted to raise additional
capital from any third party sources. In an effort to limit the dilution of our
shareholders, we have decided first to attempt to increase the value of our
company before raising additional capital from third parties. Since we require
additional capital, we may have to issue debt or equity or enter into a
strategic arrangement with a third party. We may also request that our current
Directors provide us with such interim financing. There can be no assurance that
additional capital will be available to us. We currently have no agreements,
arrangements or understandings with any person to obtain funds through bank
loans, lines of credit, or any other sources, except for a commitment by our
Directors to loan us up to $10,000 in the aggregate, if necessary to help cover
our costs to comply with the federal securities laws over the next 12
months.
Going
Concern Consideration
Our
independent auditors included an explanatory paragraph in their report on the
accompanying financial statements regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure by our
independent auditors.
Seasonality
We do not
expect our sales to be impacted by seasonal demands for our products and
services.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
26
CRITICAL
ACCOUNTING POLICIES
We do not
expect the adoption of any recently issued accounting pronouncements to have a
significant impact on our net results of operations, financial position, or cash
flows.
27
DESCRIPTION
OF BUSINESS
Overview
of the Company
We are a
development stage company that was incorporated on November 21, 2007. We have
commenced only limited operations, primarily focused on researching potential
suppliers and fulfillment centers. We have never declared bankruptcy, have never
been in receivership, and have never been involved in any legal action or
proceedings. We have not made any significant purchase or sale of assets, nor
has the Company been involved in any mergers, acquisitions or consolidations, or
the purchase or sale of a significant amount of assets not in the ordinary
course of business. We are not a blank check registrant, as that term is defined
in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, because we have
a specific business plan and purpose. Neither the Company nor its officers,
Directors, promoters or affiliates, has had preliminary contact or discussions
with, nor do we have any present plans, proposals, arrangements or
understandings with any representatives of the owners of any business or company
regarding the possibility of an acquisition or merger.
We have
not generated any revenue to date and we do not expect to generate revenues
prior to January 2011. We do not currently have sufficient capital to operate
our business, and, we will require additional funding in the future to sustain
our operations. There is no assurance that we will have revenue in the future or
that we will be able to secure the necessary funding to develop our
business.
We intend
to engage in the marketing and sale of a teeth whitening product for sale online
and through a fulfillment center (1-800 telephone number) with delivery via
commercial ground/air services direct to the consumer.
Our
offices are currently located at 51 Sheshet Hayamim St., Kfar Saba, 44269,
Israel. Our telephone number is 1-800-878-5756. We do not currently have a
website; however we have reserved a domain name
(www.havayacorp.com).
Mr.
Mordechai Dovid Meir Gober was our incorporator and initial President and sole
Director. Mr. Gober was never a shareholder of Havaya. The company remained
inactive until July 2008. In July of 2008, Mr. Gober introduced us to Mr.
Avraham Grundman. Upon the appointment of Mr. Grundman as one of our Directors
and officers in July 2008, Mr. Gober resigned all positions that he held in our
company. Thereafter, Mr. Grundman acted as the sole officer and Director of
Havaya until a new Secretary and additional Director was appointed in November
2008.
Recent Corporate
Developments
In 2009,
we conducted market research into the most cost effective teeth whitening system
to market to home users. We have located suppliers of teeth whitening kits, both
in the U.S. and in the Far East, and have decided to purchase teeth whitening
kits on a non-exclusive basis from U.S. manufacturers. In May 2010, we entered
into a supply and fulfillment agreement with Pacific Naturals for the supply of
teeth whitening kits and fulfillment of orders from our customers. Our agreement
with Pacific Naturals is not exclusive and Pacific Naturals has other
distributors in our target markets selling the same product that we intend to
offer, albeit under a different name. We do not expect to obtain any exclusive
arrangement with our suppliers. Since we plan to private label the teeth
whitening kits, we will be promoting the Havaya brand, which will be exclusive
to us.
In
addition, we have conducted preliminary research into advertising companies that
can assist us in targeting potential customers of teeth whitening kits and
focusing our cable TV advertising on such customers. In addition, we are looking
for advertising companies that have the ability to analyze our sales data in
order to further refine our cable TV advertising spots. We have located a
fulfillment house which will be responsible for order taking, billing, shipping,
and returns. We intend to contract its services when we are ready to commence
sales operations. In addition, in December 2009 we entered into preliminary
discussions with a production company regarding producing an infomercial, as
well as with a graphic design company to produce labels and packaging for our
teeth whitening kits. We have not executed an agreement with the production
company due to our current need to conserve funds until we raise additional
cash.
28
The
Market Opportunity
The
following market data regarding the teeth whitening market is publicly available
and we have not conducted any independent verification of this
data.
Toothpaste
was once the cornerstone of the daily dental routine, fighting plaque and
freshening breath. However, with the current emphasis on health and wellbeing,
oral care marketers are complementing hard-working pastes and gels with sturdy
flosses, multi-tasking mouthwashes and even futuristic cleaning devices. Add in
the desire for a flashbulb-friendly Hollywood smile, and the quest for whiter
and brighter teeth has become popular for consumers of all ages.
According
to The U.S. Market for Oral
Care Products , 7th Edition, the overall dental care market consisting of
toothpaste, whiteners, sugarless gum, manual and electric toothbrushes, floss
and other oral care in the USA was $9.1 billion in 2008 and is expected to reach
retail sales of $10.9 billion by 2014.
Teeth
whitening has recently become a common procedure in the field of cosmetic
dentistry. According to the American Academy of Cosmetic Dentistry, teeth
whitening is the most requested cosmetic dental procedure by patients of all
ages. As a person ages, the adult teeth often become darker due to changes in
the mineral structure of the tooth, as the enamel becomes less porous. Teeth can
also become stained by bacterial pigments, foodstuffs and tobacco. Certain
antibiotic medications (like tetracycline) can also lead to teeth stains or a
reduction in the brilliance of the enamel.
Our
strategy is to penetrate the U.S. market by positioning our Company as a
provider of a cost effective, quality solution. On market entry, we intend to
market the teeth whitening kits with our private label at a price below that of
most of our competitors, and through the use of on-line and cable television
advertising we will attempt to achieve rapid growth. It is hoped that our future
positioning will enable us to enter the retail market outlets in order to
dramatically expand sales.
In the
teeth whitening industry, the consumer has basically four options:
|
·
|
Professional teeth whitening by a
dentist;
|
|
·
|
Teeth whitening by laser light
system requiring qualified
oversight;
|
|
·
|
Toothpaste whiteners;
and
|
|
·
|
Home use kits including bleaching
strips, bleaching pens, and bleaching
gels.
|
Dental
consumers desiring affordable, fast results often try over-the-counter products.
Last year alone, Americans spent more than $1 billion on over-the-counter
whitening products (The U.S.
Market for Oral Care Products , 7th Edition). Jonathan B. Levine, founder
of the GoSMILE brand, predicts that the market for tooth-whitening products and
services will reach $15 billion by 2010 (Jonathan B. Levine, "Smile! The Ultimate Guide to
Achieving Smile Beauty").
Consumer
awareness of over-the-counter (OTC) whitening products has increased in the last
five years, with many consumers now using products at home, rather than opting
for professional dental bleaching, a process that has been around since the
mid-1980s.
The
results of teeth whitening are usually impressive, but it is by no means a
permanent solution. The process has to be repeated time and again at regular
intervals to maintain the shine and impeccable white color.
Our
Private Label Product
We plan
to market and sell a private label teeth whitening product for the ‘home use’
market. We intend to resell a private label teeth whitening kit that will be
designed for use at home to provide the customer with all the necessary
equipment and gel to perform effective teeth whitening treatments. While the
products we plan to resell will be similar in content and effect to the products
of some of our competitors and to the products that potential suppliers sell
directly and through other distributors, we intend to retain a packaging
consultant and copywriter to assist us in differentiating our private label
product on the basis of packaging and an advertising campaign. We intend to
enter the market with a unique logo to supplement our slogan which is “White and
Bright, your smile is right!” In addition, we plan to design an outer box which
will fit our kits. We intend for the box to include a photo of a model with
sparkling white teeth.
29
We expect
that the teeth whitening kits will be comprised of:
|
·
|
1 mouth tray for gel to be filled
at home (containing lip guards and breathable
holes);
|
|
·
|
1 x 10cc gel tube for 20
applications (the gel tube has a shelf life of 12
months);
|
|
·
|
1 x travel case (white box) to
store the tray; and
|
|
·
|
instructions.
|
Our
private label kits will be based on carbamide peroxide. The concentrate will be
in the range of 16% - 22%. To keep our overhead low, we intend to outsource our
manufacturing and logistics operations, and purchase the teeth whitening kits in
bulk from suppliers. The kits will arrive privately labeled from our suppliers
and will be sent directly to our fulfillment services provider. Our fulfillment
services provider will receive orders electronically and by telephone; provide
central warehousing facilities; handle payment and transaction processes; pick,
pack and ship products according to order specifications; handle delivery of
products to final destinations; and handle returns.
We intend
to have our own label affixed to each box kit. Each kit will have an instruction
manual which will explain to the customer the exact usage pattern and amount of
gel to apply. If our instructions are followed, then each kit should contain
enough gel for twenty applications. In addition, we plan to work with Just in
Time (JIT) inventory to minimize warehousing needs. As our inventory falls below
five hundred kits, we will place a re-order with our kit supplier. We plan to
market the kits through 15- and 30- second infomercials placed on cable TV
channels, as well as e-marketing through the internet. We intend to build our
brand name through our marketing strategy.
We will
initially resell our private label products through our cable TV campaign, as
well as through online advertising on internet web sites. Our advertising will
advertise a 1-800 telephone number from which customers may call our fulfillment
service provider. Delivery to the customer will take place via commercial
ground/air services.
According
to Forrester Research (US
Online Retail Forecast 2009 -2014 , March 5, 2010), U.S. online retail
sales grew by 11% in 2009 to reach $155.2 billion, and with a 10% compound
annual growth rate, US online retail sales are forecasted to reach $248.7
billion by 2014. Forrester Research estimates that by 2010, 13.8% of all
health and beauty sales will be made online.
In the
future, we intend to explore the possibility of selling kits to distributors
that supply retail outlets, such as drug stores, food outlets, and
supermarkets.
Our goal
is to be able to deliver our private label teeth whitening kits to the consumer
quickly. We plan to sell our private label products at a competitive price and
to back up our private label products with a money-back guarantee. We have
entered into a formal agreement with one supplier. We believe that on the basis
of this agreement and our discussions with other potential suppliers that we
will be able to order quantities of teeth whitening kits at prices that would
enable us to resell them at prices that will be competitive with comparable
products available in the market. We have conducted market research and are
familiar with the market prices for comparable kits. On May 5, 2010, we placed
an initial order for 100 teeth whitening kits from Pacific Naturals. On May 27,
2010, we received delivery of the ten teeth whitening kits that we directed be
shipped to our offices in Israel. All 100 kits have been paid for in
full.
Target
Market
With
today’s emphasis on longevity and pride of looks, the target market for our
products incorporates people of all ages, in all income ranges. However, we plan
to focus our marketing on women between the ages of 18 and 54 in the low, middle
and upper income groups.
30
The U.S.
Market will be the primary target for our products, as it is currently the
largest market with $1.5 billion in sales. ( The U.S. Market for Oral Care
Products , 7th Edition). The American Academy of Cosmetic Dentistry
(AACD) has estimated that the demand for tooth whitening has increased by 300%
over the past decade. Tooth whitening is the number one dental procedure
requested by people under the age of 20 and between the ages of 30 and 50.
(Source: the website of Dentalblogs.com). While initially performed
in the dentist’s office and requiring several visits, the process has become
simpler and is now offered as an over the counter product allowing people to
perform their own tooth whitening.
A recent
study shows that women would opt for professional teeth whitening treatments
over any other cosmetic procedure, including surgical options, such as
liposuction, as well as nonsurgical options, like Botox (European Journal of Plastic
Surgery). With the cost of teeth whitening at the dentist office at an
all time high and the demands on time associated with a trip to the dentist, we
are confident that today's women are looking for a simpler at-home
option.
Internet
advertising is an integral part of our strategy and we hope to capture a large
portion of the target market online. We plan to advertise our banners on
websites targeted at woman, such as those maintained by iVillage, Inc., Women’s
Health America, Inc., National Women’s Health Resource Center, Inc. , and
others. The younger generations (aged 20 – 45), which form the core of the
target market, are regular internet users, and, in general, have been socially
conditioned by the media and entertainment industry to value the importance of
improving and maintaining personal appearance.
The fact
that our teeth whitening kits will be available for convenient purchase online
and will offer the comfort and ease of a do-it-yourself home treatment solution,
is intended to address the needs of this core market that is accustomed to the
convenience of the internet.
Product
Pricing
We intend
to sell our private label kits online at a price of $29.99 plus a uniform charge
for shipment throughout the continental United States of $8.00 for shipping (an
additional charge of $2.00 will be added for shipping to Alaska and Hawaii),
which will be below most of our current competitors’ prices, and therefore
should be attractive to prospective customers.
Our costs
per unit are based on the fees that Pacific Naturals will charge us pursuant to
our Supply Agreement with them.
A table
setting our product’s estimated pricing and costs per unit for the next five
years is set forth below:
2011
|
2012
|
2013
|
2014
|
2015
|
Average
5 years
|
|||||||||||||||||||
Sales
price/unit*
|
37.99 | 37.99 | 37.99 | 37.99 | 37.99 | 37.99 | ||||||||||||||||||
Cost/unit, consisting
of:
|
(14.29 | ) | (14.29 | ) | (14.29 | ) | (14.29 | ) | (14.29 | ) | (14.29 | ) | ||||||||||||
Unit
|
(3.20 | ) | (3.20 | ) | (3.20 | ) | (3.20 | ) | (3.20 | ) | (3.20 | ) | ||||||||||||
Shipping†
|
(4.35 | ) | (4.35 | ) | (4.35 | ) | (4.35 | ) | (4.35 | ) | (4.35 | ) | ||||||||||||
Fulfillment
House‡
|
(6.74 | ) | (6.74 | ) | (6.74 | ) | (6.74 | ) | (6.74 | ) | (6.74 | ) | ||||||||||||
Margin/unit
|
23.70 | 23.70 | 23.70 | 23.70 | 23.70 | 23.70 | ||||||||||||||||||
Operating cost/unit, consisting
of:
|
(35.83 | ) | (11.88 | ) | (9.67 | ) | (8.17 | ) | (8.17 | ) | (14.74 | ) | ||||||||||||
Legal
and Accounting
|
(6.94 | ) | (2.29 | ) | (1.22 | ) | (0.61 | ) | (0.61 | ) | (2.34 | ) | ||||||||||||
Advertising/marketing
|
(19.17 | ) | (6.25 | ) | (6.67 | ) | (6.67 | ) | (6.67 | ) | (9.08 | ) | ||||||||||||
Design/Printing
materials
|
(1.39 | ) | (0.42 | ) | (0.22 | ) | (0.11 | ) | (0.11 | ) | (0.45 | ) | ||||||||||||
Overhead
|
(3.33 | ) | (1.88 | ) | (1.00 | ) | (0.50 | ) | (0.50 | ) | (1.44 | ) | ||||||||||||
Travel
|
(2.22 | ) | (0.52 | ) | (0.28 | ) | (0.14 | ) | (0.14 | ) | (0.66 | ) | ||||||||||||
Miscellaneous
|
(2.78 | ) | (0.52 | ) | (0.28 | ) | (0.14 | ) | (0.14 | ) | (0.77 | ) | ||||||||||||
Net
profit/unit
|
(12.13 | ) | 11.83 | 14.04 | 15.54 | 15.54 | 8.96 |
*
includes shipping cost to customer in the amount of $8.00
†
anticipated average cost
‡ based
on average of 3 minutes per incoming call per order
The table
setting forth our product’s estimated operating cost per unit for the next five
years is based on the following sales projections which we expect will decrease
the operating cost per unit:
2011
|
2012
|
2013
|
2014
|
2015
|
||||||||||||||||
Sales
Projections
|
3,600 | 9,600 | 18,000 | 36,000 | 36,000 |
Our
Competition
Three
major teeth whitening options are available today. All three rely on varying
concentrations of peroxide and varying application times.
31
1.
|
In-Office
Whitening
|
Significant
color change in a short period of time is the major benefit of in-office
whitening. This protocol involves the carefully controlled use of a relatively
high-concentration peroxide gel applied to the teeth by the dentist or
trained technician after the gums have been protected with a paint-on rubber
dam. Generally, the peroxide remains on the teeth for several 15 to 20 minute
intervals that add up to an hour (at most). Those with particularly stubborn
staining may be advised to return for one or more additional bleaching sessions,
or may be asked to continue with a home-use whitening system.
In-office
teeth whitening cost: $650 per visit (on average) nationwide.
(Source:
the website of Ceatus
Media Group LLC, entitled “Teeth Whitening: How it Works and What it
Costs” )
2.
|
Professionally Dispensed Take-Home Whitening
Kits
|
Many
dentists are of the opinion that professionally dispensed take-home whitening
kits can produce the best results over the long term. Take-home kits incorporate
an easy-to-use lower-concentration peroxide gel that remains on the teeth for an
hour or longer (sometimes overnight). The lower the peroxide percentage, the
longer it may safely remain on the teeth. The gel is applied to the teeth using
custom-made bleaching trays that resemble mouth guards.
Take-home
teeth whitening kit cost: $100 to $400.
(Source:
the website of Ceatus
Media Group LLC, entitled “Teeth Whitening: How it Works and What it
Costs”)
3.
|
Over-the-Counter
Whitening
|
The
cheapest and most convenient of the teeth whitening options, over-the-counter
bleaching, involves the use of a store-bought whitening kit, featuring a
bleaching gel with a concentration lower than that of the professionally
dispensed take-home whiteners. The gel is applied to the teeth via
one-size-fits-all trays, whitening strips, or paint-on applicators. In many
cases this may only whiten a few of the front teeth, unlike custom trays that
can whiten the entire smile.
Over-the-counter
teeth whitening cost: $20 to $100.
(Source:
the website of Ceatus
Media Group LLC, entitled “Teeth Whitening: How it Works and What it
Costs”)
Hydrogen
Peroxide vs. Carbamide Peroxide
The
bleach preference for in-office whitening, where time is limited, is powerful
and fast-acting hydrogen peroxide. When used in teeth bleaching, hydrogen
peroxide concentrations range from approximately 9 percent to 40
percent.
By
contrast, the bleach of preference for at-home teeth whitening is the slower
acting carbamide peroxide, which breaks down into hydrogen peroxide. Carbamide
peroxide has about a third of the strength of hydrogen peroxide. This means that
a 15 percent solution of carbamide peroxide is the rough equivalent of a five
percent solution of hydrogen peroxide.
32
There are
many teeth whitening kits being sold that compete with our proposed product. In
fact, our supplier, Pacific Naturals, sells white label teeth whitening kits to
other resellers for resale under private labels (however, we do not know which
of our competitors are reselling the same product as we are selling). Thus, the
chemical composition of the teeth whitening gel in our product will be identical
to the chemical composition of other products in the market. The following is a
sampling of the widely available products currently offered in the marketplace,
as well as some lesser-known products which are value-priced. Based on our
market research, we believe that the competitive products discussed below are
objectively representative of the teeth whitening products currently available
in the marketplace. We determined that the competitive products discussed below
are objectively representative of the teeth whitening products currently
available in the marketplace based on the following: (a) these products include
offerings from some large well-known companies, such as Proctor & Gamble,
some smaller well-known companies, such as BriteSmile, which operates several
professional teeth whitening centers throughout the USA, as well as some less
well-known, small companies, that offer their products over the internet and in
retail stores; (b) these products are similar to the products that we plan to
offer (either in composition or in the results that flow from their use); and
(c) these products are offered at a range of prices that includes both high-end
offerings and value-priced offerings, through a range of sales channels, such as
the internet, retail sales, and specialty locations.
Ultra-White Products,
Inc.
According
to its advertising material, Ultra-White is 70% cheaper than the cost of teeth
whitening services provided by dentists. Ultra-White was developed in 1996 by a
cosmetic dentist who is affiliated with both the American Dental Association and
the American Academy of Cosmetic Dentistry. Ultra-White has been used to treat
tooth discoloration in over 11,000 patients. It provides the same teeth
whitening process that is used by over 90% of dentists and has been available
online since 1997. All products come with a 90-day, 100% no risk money-back
guarantee. All of Ultra-White’s products are dispensed and supervised by an ADA
member cosmetic dentist. Ultra-White is sold in the U.S and abroad.
Ultra-White
offers the following products at the following prices:
16%
Deluxe Teeth Whitening System
|
$
|
98.95
2/172.42
|
||
22%
Deluxe Teeth Whitening System
|
$
|
99.95
2/176.92
|
||
16%
carbamide peroxide Teeth Whitening Gel
|
$
|
37.00
|
||
22%
carbamide peroxide Teeth Whitening Gel
|
$
|
38.00
|
||
Custom
Fit Teeth Bleaching Trays
|
$
|
69.07
|
||
Immediate
teeth bleaching custom trays
|
$
|
38.00
|
||
Zoom
whitening pen
|
$
|
45.54
|
(Source:
the website of Ultra-White Products, Inc. )
Pure White
Smiles
Pure
White Smiles offers a very powerful, high-viscosity 22% carbamide peroxide
Whitening Gel that is suitable for those who want extra whitening power for
tougher stains and faster whitening. It is a strong non-glycerin based gel
that delivers high power with low sensitivity. This gel is ideal for overnight
bleaching with the custom lab-created mouthpieces. The oversized pre-filled
syringes (5ml each) contain more whitening gel than most others and will provide
ten (10) whitening applications each, providing a total of 30 whitening
applications. This gel is the exact formula used by professional dental offices.
Pure White Smiles offers the following product at the following
price:
ProWhite
22% Kit with (3) Syringes
|
$
|
39.95
|
||
(5
ml each) - 3 pack
|
Each
package contains:
|
·
|
3 syringes (5ml each) of
Professional Whitening Gel (22% carbamide
peroxide);
|
|
·
|
Detailed usage instructions;
and
|
|
·
|
100% money-back
guarantee.
|
(Source:
the website of Pure White Smiles.)
BriteSmile
BriteSmile
To Go involves use of an easy to use click pen applicator that delivers teeth
whitening without any mess. The time released proprietary formula enables safe,
gentle and effective teeth whitening that dries rapidly. It requires two
30-second applications a day for two weeks, then use as desired. Each Whitening
Pen lasts for 30 days of whitening applications. BriteSmile offers the following
product at the following price:
33
BriteSmile
- 3 Pens To Go
|
$
|
69.95
|
(Source:
the website of BPI, entitled “britesmilewhitening.com”.)
Bleach
Pro
Bleach
Pro offers specially formulated 22% and 35% professional strength carbamide
peroxide teeth whitening kits and gel. Bleach Pro offers the following
products at the following prices:
· 22% Deluxe
Whitening Kit
|
$
|
54.95
|
||
· 22% Standard
Whitening Kit
|
$
|
34.95
|
||
· 22% Starter
Whitening Kit
|
$
|
20.95
|
(Source:
: the website of Bleach Pro Teeth Whitening Products.)
Do-It-Yourself
Store
Do-It-Yourself
Tooth Whitening Complete Kit
|
$
|
39.99/19.99
|
It
consists of:
|
·
|
Dental strength 22% carbamide
peroxide gel;
|
|
·
|
Special thermal forming mouth
pieces - heat in boiling water then press to teeth. Mouthpieces shrink to
fit teeth;
|
|
·
|
40 treatments, 1 full 10cc
syringe of 22% carbamide peroxide gel;
and
|
|
·
|
2 custom moldable
trays.
|
(Source:
the website of DoItYourselfStore, LLC.)
Teeth Whitening
Web
It
consists of:
· 4 Syringe
applicators
|
$
|
36.00
|
||
· Deluxe
Kit
|
$
|
69.00
|
||
· Maximum
strength 22% carbamide peroxide gel
|
||||
· Guaranteed to
whiten teeth 3-9 shades whiter
|
(Source:
the website of Teeth Whitening Web.com)
Crest 3D White Teeth Whitening
Systems
Crest 3D
White Teeth Whitening Systems is an enamel-safe teeth whitening system that
provides visibly whiter teeth, guaranteed. It is applied once a day for 30
minutes per application. It is claimed to produce noticeably whiter teeth in 3
to 14 days (depending on the product) and to be clinically-proven as being
effective.
· Crest 3D
Vivid
|
$
|
27.99
|
||
· Crest 3D
Advanced Vivid
|
$
|
44.99
|
||
· Crest 3D
Professional Effects
|
$
|
54.99
|
(Source:
the website of Crest, maintained by Proctor & Gamble
Company.)
Dr.
Collins
The Dr.
Collins All White Bleaching Kit is a 22% carbamide peroxide system that consists
of 4 trays, and 2 x 5ml bleach syringes. The product is available at
the Amazon website for $29.99.
(Source:
the website of Dr. Collins and the webpage maintained by Amazon.com, Inc
displaying the Dr. Collins product for sale.)
iWhite
The
iWhite Value Pack consists of a mouth tray with foam strips and is to be used
for 20 minutes a day for 5 days. The product sells at a price of
$79.99.
34
(Source: the
website of dentist.net)
GO SMiLE
The Go
SMiLE Smile Whitening System uses a hydrogen peroxide whitening serum and
consists of 20 single use ampoules to be used twice a day for 7
days. The product sells at a price of $89.00.
(Source:
the website of GO SMiLE, Inc.)
35
Hollywood
Smiles
Hollywood
Smiles offers several carbamide peroxide teeth whitening systems. The
Hollywood Smiles Tre Thin System sells at
a price of $34.95 and consists of:
|
·
|
Two (2) 5ml syringes of whitening
gel;
|
|
·
|
Tre Thin impression supplies;
and
|
|
·
|
Detailed
instructions.
|
(Source:
the website of Hollywood Smiles USA, Inc. )
Sapphire Professional Home
Whitening System
It
consists of two 22% Carbamide Peroxide Syringes and is sold at a price of
$25.99.
(Source:
the website of Just4Teeth, Inc.)
Discus Dental Day
White
It
consists of three syringes that contains three dual arch applications (38%
Carbamide Peroxide) and is sold for a price of $35.99.
(Source:
the website of Just4Teeth, Inc. )
Niveous
Shofu
Bleaching Niveous Whitening Kit. It contains 10 bleach ampules, 30
"booster" brushes, new Niveous liquid resin dam material, detailed instruction
booklet with illustrations and accessories, and is sold for a price of $187.05.
( Source : the website of
Midwaydental.com )
Rembrandt 2 Hour Whitening
Kit
It
consists of a convenient kit with eight ampoules of a 5% hydrogen peroxide gel
and customizable mouth trays and is sold at a price of
$18.99.
( Source
: Webpage on the site maintained by Amazon.com, Inc. displaying the Rembrandt
product for sale.)
36
Nupro Gold – Tooth Whitening
System
It
consists of teeth whitening gel pack with two syringes 15% carbamide peroxide
and is sold at a price of $19.99.
(Source:
the website of Just4Teeth, Inc. )
•
Degree of whitening achieved
We do
not claim that any exact degree of whiteness will be achieved by the use of our
product. Rather, based on our knowledge of our product and our review
of the teeth whitening market, including the claims made by our competitors’
products, we believe that the degree of whitening capable of being achieved by
our product is comparable to the degree of whitening capable of being achieved
by other competitive products currently being offered.
•
Number of uses required to achieve the optimal results
We
recommend that our product be administered for 1 hour per day for 14 days in
order to achieve visible teeth whitening. Some of our competitors
claim to achieve results in under 10 days; some claim to achieve optimal results
in 10-14 days; others recommend use of their project for longer than 14 days;
while some of competitors recommend use of their product until teeth have
reached the desired shade of white. While we recommend that our
product be administered once a day for 14 days, some of our competitors’
products require multiple daily applications. While we recommend that our
product be administered for 1 hour per treatment, some of our competitors’s recommend a
shorter daily treatment duration.
• Number of uses that the consumer
obtains per unit of product purchased
Our
product contains a 10cc syringe that has sufficient capacity to provide for 20
uses (both upper and lower teeth). Should a customer want either only upper or
lower teeth, then there would be sufficient gel for 40
uses. While our product, like most of our competitors’
products, contains a sufficient quantity of gel for the recommended treatment
period, some of our competitors do not include sufficient quantity of product in
their package to cover the recommended use for such product.
•
Duration of treatment
Based
on our review of the teeth whitening market and the composition of our product,
we recommend that our product be administered for 1 hour per day for 14 days in
order to achieve visible teeth whitening. As noted above, some of our
competitors recommend a shorter treatment duration and some recommend a longer
treatment duration.
•
Length of time after achieving desired result before treatment is required
again
Based
on our review of the teeth whitening market and the claims made by our
competitors’ products, we believe that both hydrogen peroxide and
carbamide peroxide teeth whitening systems have similar effects at the end of a
14 day period. We therefore infer that the effect of using our product will be
similar to other products currently on the market. Although some of our
competitors claim that “whiteness” lasts for 12-18 months after treatment, we
recommend that our product be used every 6 months for best
results.
•
History of use upon which to evaluate safety
We
believe that teeth whitening systems based on both hydrogen peroxide and
carbamide peroxide are one of the most common esthetic dental procedures in use
today. Whitening systems became an instant success in the late 1980’s with the
invention of the mouth tray. We are not aware of any studies
demonstrating any meaningful harm from the use of carbamide peroxide teeth
whitening products. Our supplier has been selling its teeth whitening
product for over five years.
37
Competitive
Advantages
Subject
to our maintaining our current supply agreement with Pacific Naturals and
entering into agreements with other potential suppliers, our private label
product is intended to have the following benefits:
·
|
Safe
and easy to use at home;
|
|
·
|
16-22%
carbamide peroxide;
|
|
·
|
Moderately
priced;
|
|
·
|
Competitive
pricing;
|
|
·
|
Our
mouth-trays have breathable holes; and
|
|
·
|
Nothing
artificial needs to be bonded to
teeth.
|
Many of
our competitors include or offer one or more of the benefits listed above, and
we intend to compete primarily on price and on our ability to market and fulfill
orders in an efficient manner.
38
Expenditures
Subject
to our raising additional capital, the following chart provides an overview of
our budgeted expenditures by significant area of activity over the next 12
months:
Legal
and Accounting (including Federal securities laws
compliance)
|
$
|
25,000
|
||
Advertising
/Marketing
|
$
|
69,000
|
||
Design
/ Printing Materials
|
$
|
5,000
|
||
Overheads
|
$
|
12,000
|
||
Travel
|
$
|
8,000
|
||
Misc.
|
$
|
10,000
|
||
Total
|
$
|
129,000
|
Sources
and Availability of Products and Supplies
We plan
to purchase the basic teeth whitening product from one or two main suppliers,
with alternative suppliers for back-up purposes in case of stock
shortages. However, if we end up entering into supply contracts for our
private label teeth whitening kits with only one or two suppliers, then we may
become dependent upon such supplier(s) for the supply of all of our private
label products. By “basic teeth whitening product,” we mean that the products
will contain substantially the same ingredients, and any differences in the
products supplied by different suppliers would be minor and immaterial with
respect to their content and effectiveness. We may sell different teeth
whitening kits from different suppliers under the same private label in the
event we enter into agreements with additional suppliers. It is our intention
that these kits will not differ in appearance or in their ingredients, but
rather only the identity of the supplier of these kits will differ.
Dependence
on One or a Few Major Customers
The
nature of our product offering does not mandate any dependence on one or a few
major customers.
Patent,
Trademark, License & Franchise Restrictions and Contractual Obligations
& Concessions
We have
not entered into any franchise agreements or other contracts that have given, or
could give rise to, obligations or concessions. We intend to protect our teeth
whitening products on the basis of applicable trademark and tradename laws.
Beyond our trade name, we do not hold any other intellectual
property.
Existing
or Probable Government Regulations
The
marketing, distribution and sale of the private label teeth whitening kits that
we propose to sell will be subject to the requirements of federal
law. Among the federal laws which may impact us are the Federal Food,
Drug and Cosmetic Act. While the Food and Drug Administration (FDA)
currently classifies teeth whitening products as cosmetic products that are not
subject to FDA regulations, the products we plan to sell are subject to the
Federal Food, Drug and Cosmetic Act, which regulates the advertising, record
keeping, labeling, handling, storage and sale of cosmetics. We are not currently
required to hold any licenses to conduct our business as presently
operated.
39
The
Federal Food, Drug and Cosmetic Act (“FDC Act”) regulates, among
other things, medical devices in the United States by classifying them
into one of three classes based on the extent of regulation believed necessary
to ensure safety and effectiveness. Class I devices are those devices for which
safety and effectiveness can reasonably be ensured through general controls,
such as device listing, adequate labeling, pre-market notification and adherence
to the Quality System Regulation (“QSR”) as well as medical device reporting,
labeling and other regulatory requirements. Some Class I medical devices are
exempt from the requirement of pre-market approval or clearance. Class II
devices are those devices for which safety and effectiveness can reasonably be
ensured through the use of special controls, such as performance standards,
post-market surveillance and patient registries, as well as adherence to the
general controls provisions applicable to Class I devices. Class III devices are
devices that generally must receive pre-market approval by the FDA pursuant to a
pre-market approval application (“PMA”) to ensure their safety and
effectiveness. Generally, Class III devices are limited to life sustaining, life
supporting or implantable devices; however, this classification can also apply
to novel technology or new intended uses or applications for existing
devices.
Before
most medical devices can be marketed in the United States, they are required by
the FDA to secure either clearance of a pre-market notification pursuant to
Section 510(k) of the FDC Act (a “510(k) Clearance”) or approval of a PMA.
Obtaining approval of a PMA can take several years. In contrast, the process of
obtaining 510(k) Clearance generally requires a submission of substantially less
data and generally involves a shorter review period. Most Class I and Class II
devices enter the market via the 510(k) Clearance procedure, while new Class III
devices ordinarily enter the market via the more rigorous PMA procedure. In
general, approval of a 510(k) Clearance may be obtained if a manufacturer or
seller of medical devices can establish that a new device is “substantially
equivalent” to a predicate device other than one that has an approved PMA. The
claim for substantial equivalence may have to be supported by various types of
information, including clinical data, indicating that the device is as safe and
effective for its intended use as its legally marketed equivalent device. The
510(k) Clearance is required to be filed and cleared by the FDA prior to
introducing a device into commercial distribution. Market clearance for a 510(k)
Notification submission may take 3 to 12 months or longer. If the FDA finds that
the device is not substantially equivalent to a predicate device, the device is
deemed a Class III device, and a manufacturer or seller is required to file a
PMA. Approval of a PMA for a new medical device usually requires, among other
things, extensive clinical data on the safety and effectiveness of the device.
PMA applications may take years to be approved after they are filed. In addition
to requiring clearance or approval for new medical devices, FDA rules also
require a new 510(k) filing and review period prior to marketing a changed or
modified version of an existing legally marketed device if such changes or
modifications could significantly affect the safety or effectiveness of that
device. The FDA prohibits the advertisement or promotion of any approved or
cleared device for uses other than those that are stated in the device’s
approved or cleared application.
However,
we believe that our private label teeth whitening kits will not require a 510(k)
submission because teeth whitening products are classified as cosmetics and not
as medical devices, and fall within an exemption under the 510(k)
regulation. The FDA regulations identifying “cosmetic product categories”
recognize that “dentrifices,” “mouthwashes and breath fresheners,” and “other
oral hygiene products” may come within the definition of a cosmetic: 21 C.F.R.
§720.4I(9).
While we
believe we are and will be in substantial compliance with the laws and
regulations which regulate our business, the failure to comply with any of those
laws or regulations, or the imposition of new laws or regulations could
negatively impact our proposed business.
Research
and Development Activities and Costs
We have
not incurred any costs to date and have no plans to undertake research and
development activities during the next year of operation.
40
Costs
and Effects of Compliance with Environmental Laws and Regulations
We are
not in a business that involves the use of materials in a manufacturing stage
where such materials are likely to result in the violation of any existing
environmental rules and/or regulations. Further, we do not own any
real property that could lead to liability as a landowner. Therefore,
we do not anticipate that there will be any substantial costs associated with
the compliance of environmental laws and regulations.
Employees
We have
commenced only limited operations; therefore, we have no employees. Our officers
and Directors provide service to us on an as-needed basis. When we commence full
operations, we will need to hire full-time management and administrative support
staff. For a detailed description, see "Plan of
Operation".
Description
of Property
We do not
own any real property. We currently maintain our corporate office at 51 Sheshet
Hayamim St., Kfar Saba, 44269 Israel, which is the residence of one of our
officers. Our principal executive officer provides us with the use of this space
at no cost to the Company. This space is not shared with any other corporations
and the space is not sufficient for any employees. This space will be
sufficient until we commence full operations.
Reports
to Security Holders
We will
make available to securities holders an annual report, including audited
financials, on Form 10-K. While we intend to file a Form 8-A promptly
after this registration statement becomes effective and thereby become a
“reporting issuer” under Section 12 of the Securities Exchange Act of 1934, we
are not currently a reporting issuer and upon this registration statement
becoming effective we will be required under Section 15(d) of the Exchange Act
to file the periodic reports required by Section 13(a) of the Exchange Act with
respect to each class of securities covered by our registration
statement. These reporting obligations may be automatically suspended
under Section 15(d) of the Exchange Act if on the first day of any fiscal year
other than the fiscal year in which our registration statement became effective
there are fewer than 300
shareholders. On the other hand, if we become a reporting issuer
under Section 12 of the Securities Exchange Act of 1934, we will be subject to
all of the obligations incumbent on a company with securities registered under
Section 12 of the Exchange Act, including the continuing obligation to file the
Section 13(a) reports; the directors, officers, and principal stockholders
beneficial ownership disclosure requirements of Section 16 of the Exchange Act;
and the proxy rules and regulations of Section 14 of the Exchange
Act.
LEGAL
PROCEEDINGS
We know
of no existing or pending legal proceedings against us, nor are we involved as a
plaintiff in any proceeding or pending litigation. There are no proceedings in
which any of our Directors, officers or any of their respective affiliates, or
any beneficial stockholder, is an adverse party or has a material interest
adverse to our interest.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
Directors hold office until the next annual general meeting of the stockholders
or until their successors are elected and qualified. Our officers are appointed
by our Board of Directors and hold office until the earlier of their death,
retirement, resignation, or removal.
Our
officers and Directors and their ages and positions are as follows:
Name
|
Age
|
Position
|
||
Avraham
Grundman
|
27
|
President,
Treasurer and Director
|
||
Benny
Adler
|
27
|
Secretary
and
Director
|
41
Mr.
Avraham Grundman
Mr.
Grundman has been our President, Treasurer and a Director since July 15,
2008.
Since
early 2008, Mr. Grundman has been a sales manager at the Kenion Rephaeli
Electronic Store in Jerusalem, Israel. Between the years 2006 and 2008 Mr.
Grundman was employed as a sales manager at Kensun, an online wholesaler of
Xenon lighting for car headlights. Mr. Grundman was responsible for
sales to international clients. From 2003 until 2006, Mr. Grundman was a sales
manager at IDT’s Jerusalem branch.
Mr.
Grundman is not an officer or Director of any other reporting
company. Mr. Grundman intends to devote approximately 8-15 hours of
his weekly business hours to our affairs.
The Board
has concluded that Mr. Grundman should serve as Director of the Company because
of his experience as a sale manager and his ability to oversee the sales
process.
Mr.
Benny Adler
Mr. Adler
has been our Secretary and a Director since November 24, 2008.
Since
2009, Mr. Adler has been working towards a Bachelors of Arts degree in
Management and Communications at the Open University of Raanana,
Israel.
Since
2009, Mr. Adler has been working at the Open University, marketing courses
offered at the Open University to potential students.
From 2003
until his employment at the Open University in 2009, Mr. Adler was employed at
Life Computers Ltd., one of Israel’s leading importers and distributors of
computer hardware. Mr. Adler had several positions at Life Computers
Ltd., including supervising inventory at its warehouse where several million
dollars worth of computer components were held and distributed. Mr. Adler final
position at Life Computer Ltd. was as a business-to-business sales
executive.
Mr. Adler
is not an officer or Director of any other reporting company. Mr.
Adler intends to devote approximately 8-15 hours of his weekly business hours to
our affairs.
The Board
has concluded that Mr. Adler should serve as director of the Company because of
his experience with inventory management and his sales experience.
Committees
of the Board of Directors
We do not
presently have a separately constituted audit committee, compensation committee,
nominating committee, executive committee or any other committee of our Board of
Directors. As such, our entire Board of Directors acts as our audit
committee.
Audit
Committee Financial Expert
Our Board
of Directors does not currently have any member who qualifies as an audit
committee financial expert. We believe that the cost of retaining such a
financial expert at this time is prohibitive. Further, because we are in the
start-up stage of our business operations, we believe the services of an audit
committee financial expert are not necessary at this time.
42
Involvement
in Legal Proceedings
None of
our Directors, nominee for Directors or officers has appeared as a party during
the past ten years in any legal proceedings that may bear on his ability or
integrity to serve as a Director or officer of the Company.
Board
Leadership Structure
The
Company has chosen to combine the principal executive officer and Board chairman
positions. The Company believes that this Board leadership structure
is the most appropriate for the Company for several reasons. First,
the Company is a development stage company and at this early stage it is more
efficient to have the leadership of the Board in the same hands as the principal
executive officer of the Company. The challenges faced by the Company
at this stage – obtaining financing and implementing a marketing and sales plan
– are most efficiently dealt with by having one person intimately familiar with
both the operational aspects as well as the strategic aspects of the Company’s
business. Second, Mr. Grundman is uniquely suited to fulfill both
positions of responsibility because he possesses sales and management
experience.
Code
of Ethics
We do not
currently have a Code of Ethics applicable to our principal executive, financial
and accounting officers; however, the Company plans to implement such a code by
the end of the second quarter of 2010.
Potential
Conflict of Interest
Since we
do not have an audit or compensation committee comprised of independent
Directors, the functions that would have been performed by such committees are
performed by our Board of Directors. Thus, there is a potential conflict of
interest in that our Directors have the authority to determine issues concerning
management compensation, in essence their own, and audit issues that may affect
management decisions. We are not aware of any other conflicts of interest with
any of our executives or Directors.
Board’s
Role in Risk Oversight
The Board
assesses on an ongoing basis the risks faced by the Company. These
risks include financial, technological, competitive, and operational
risks. The Board dedicates time at each of its meetings to review and
consider the relevant risks faced by the Company at that time. In
addition, since the Company does not have an Audit Committee, the Board is also
responsible for the assessment and oversight of the Company’s financial risk
exposures.
43
EXECUTIVE
COMPENSATION
We have
not paid, nor do we owe, any compensation to our executive officers. We have not
paid any compensation to our officers since inception.
We have
no employment agreements with any of our executive officers or
employees.
Option/SAR
Grants
We do not
currently have a stock option plan. No individual grants of stock options,
whether or not in tandem with stock appreciation rights known as SARs or
freestanding SARs have been made to any executive officer or any Director since
our inception; accordingly, no stock options have been granted or exercised by
any of the officers or Directors since we were founded.
Long-Term
Incentive Plans and Awards
We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance. No individual grants or agreements regarding
future payouts under non-stock price-based plans have been made to any executive
officer or any Director or any employee or consultant since our inception;
accordingly, no future payouts under non-stock price-based plans or agreements
have been granted or entered into or exercised by any of the officers or
Directors or employees or consultants since we were founded.
Compensation
of Directors
There are
no arrangements pursuant to which Directors are or will be compensated in the
future for any services provided as a Director.
Employment
Contracts, Termination of Employment, Change-in-Control
Arrangements
There are
currently no employment or other contracts or arrangements with officers or
Directors. There are no compensation plans or arrangements, including payments
to be made by us, with respect to our officers, Directors or consultants that
would result from the resignation, retirement or any other termination of such
Directors, officers or consultants from us. There are no arrangements for
Directors, officers, employees or consultants that would result from a
change-in-control.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of August 18, 2010, certain information with
respect to the beneficial ownership of our common stock by each stockholder
known by us to be the beneficial owner of more than 5% of our common stock and
by each of our current Directors and executive officers. Each person has sole
voting and investment power with respect to the shares of common stock, except
as otherwise indicated. Information relating to beneficial ownership of common
stock by our principal stockholders and management is based upon information
furnished by each person using "beneficial ownership" concepts under the rules
of the Securities and Exchange Commission. Under these rules, a person is deemed
to be a beneficial owner of a security if that person has or shares voting
power, which includes the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the disposition of
the shares. The person is also deemed to be a beneficial owner of any security
of which that person has a right to acquire beneficial ownership within 60 days.
Under the Securities and Exchange Commission rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not have
any pecuniary beneficial interest.
44
The
percentages below are calculated based on 6,500,000 shares of our common stock
issued and outstanding as of August 18, 2010. We do not have any outstanding
options, warrants or other securities exercisable for or convertible into shares
of our common stock.
Title of Class
|
Name and Address
of Beneficial
Owner (²)
|
Amount and Nature
of Beneficial Ownership
|
Percentage of Class(¹)
|
|||||||
Common
Stock
|
Avraham
Grundman
|
3,750,000 | 54.55 | % | ||||||
Common
Stock
|
Benny
Adler
|
750,000 | 9.09 | % | ||||||
All
officers as a Group
|
4,500,000 | 63.64 | % |
(¹)
|
Based on 6,500,000 shares of our
common stock outstanding.
|
(²)
|
The address for Mr. Avraham
Grundman is 51 Sheshet Hayamim St., Kfar Saba, 44269
Israel.
|
|
The address for Mr. Benny Adler
is 51 Sheshet Hayamim St., Kfar Saba, 44269
Israel.
|
We are
unaware of any contract or other arrangement the operation of which may at a
subsequent date result in a change in control of our Company.
Future
Sales by Existing Stockholders
As of the
date of this prospectus, there are 45 stockholders of record holding a total of
6,500,000 shares of common stock. All of our issued shares of common
stock are "restricted securities", as that term is defined in Rule 144 of the
Rules and Regulations of the SEC promulgated under the Securities Act. Of these
6,500,000 shares, the 2,000,000 shares held by the Selling Stockholders are
being registered in this offering and will be freely tradable without
restriction or further registration under the Securities Act. The
4,500,000 shares held by our “affiliates”, as such term is defined in Rule 144,
are not being registered in this offering. Of these 4,500,00 shares
held by our affiliates, three million five hundred thousand (3,500,000) shares
have been held for over a year and may be sold in the public market pursuant to
Rule 144(d)(ii), subject to the availability of current public information,
volume restrictions, and certain restrictions on the manner of
sale. An additional one million (1,000,000) shares held by our
affiliates will have been held for over a year by the end of April
2011. In the event that this registration statement becomes
effective, then, pursuant to Rule 144(d)(1)(i), these one million (1,000,000)
shares held by our affiliates may be sold in the public market three months
after the effective date, since they would have been held by our affiliates for
over six months, subject to the availability of current public information,
volume restrictions, and certain restrictions on the manner of
sale.
Shares
purchased in this offering, which will be immediately resalable, and sales of
all of our other shares after applicable restrictions expire, could have a
depressive effect on the market price, if any, of our common stock and the
shares we are offering. See the section entitled “Dilution” above.
We do not
have any issued and outstanding securities that are convertible into common
stock. We have not registered any shares for sale by security holders under the
Securities Act. None of our stockholders is entitled to registration
rights.
45
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Other
than the transactions discussed below, we have not entered into any transaction
nor are there any proposed transactions in which any of our Directors, executive
officers, stockholders or any member of the immediate family of any of the
foregoing had or is to have a direct or indirect material interest.
On July
15, 2008, we issued 3,000,000 shares of our common stock to Mr. Avraham
Grundman, our President, Treasurer and Director, for a cash payment to us of
$300, which was paid in February 2010. We believe this issuance was
deemed to be exempt under Section 4(2) of the Securities Act. No
advertising or general solicitation was employed in offering the
securities. The offering and sale was made only to Mr. Avraham
Grundman and transfer was restricted by us in accordance with the requirements
of the Securities Act of 1933.
On
November 24, 2008, we issued 500,000 shares of our common stock to Mr. Benny
Adler, our Secretary and Director, for a cash payment to us of $50, which was
paid in February 2010. We believe this issuance was deemed to be
exempt under Regulation S of the Securities Act. No advertising or
general solicitation was employed in offering the securities. The
offering and sale was made only to Mr. Benny Adler, who is a non-U.S. citizen,
and transfer was restricted by us in accordance with the requirements of the
Securities Act of 1933.
As of
March 31, 2010, our President, Mr. Avraham Grundman, has provided us with a loan
of $754. The loan is unsecured, non-interest bearing, and due on
demand.
On April
22, 2010, the Company issued 750,000 shares of common stock to our President,
Mr. Avraham Grundman, for cash payment of $15,000 which was received by the
Company in two installments on April 21 and April 22, 2010. We
believe this issuance was deemed to be exempt under Section 4(2) of the
Securities Act. No advertising or general solicitation was employed
in offering the securities. The offering and sale was made only to
Mr. Avraham Grundman and transfer was restricted by us in accordance with the
requirements of the Securities Act of 1933.
On April
22, 2010, the Company issued 250,000 shares of common stock to Mr. Benny Adler,
our Secretary and Director, for cash payment of $5,000 which was received by the
Company on April 22, 2010. We believe this issuance was deemed to be
exempt under Regulation S of the Securities Act. No advertising or
general solicitation was employed in offering the securities. The
offering and sale was made only to Mr. Benny Adler, who is a non-U.S. citizen,
and transfer was restricted by us in accordance with the requirements of the
Securities Act of 1933
Our
officers and Directors may be considered promoters of the Registrant due to
their participation in and management of the business since its
incorporation.
Director
Independence
We are
not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent Directors.”
We do not believe that any of our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of
NASDAQ.
DESCRIPTION
OF SECURITIES
Our
authorized capital stock consists of 200,000,000 shares of common stock, par
value $0.0001 per share.
The
holders of our common stock:
·
|
Have equal ratable rights to
dividends from funds legally available therefore, when, as and if declared
by our Board of Directors;
|
·
|
Are entitled to share ratably in
all of our assets available for distribution to holders of common stock
upon liquidation, dissolution or winding up of our
affairs;
|
·
|
Do not have pre-emptive,
subscription or conversion rights and there are no redemption or sinking
fund provisions or rights;
and
|
46
·
|
Are entitled to one
non-cumulative vote per share on all matters on which stockholders may
vote.
|
The
common shares are not subject to any future call or assessment and all have
equal voting rights. There are no special rights or restrictions of any nature
attached to any of the common shares and they all rank at equal rate each with
the other, as to all benefits, which might accrue to the holders of the common
shares. All registered stockholders are entitled to receive a notice of any
general annual meeting to be convened by our Board of Directors.
In
accordance with Section 3 of Article IV of our bylaws, each outstanding share of
stock having voting power is entitled to one vote at a meeting of the
stockholders. To the knowledge of our management, at the date hereof, our
officers and Directors are the only persons to exercise control, directly or
indirectly, over more than 10% of our outstanding common shares. See "Security
Ownership of Certain Beneficial Owners and Management".
We refer
you to our Certificate of Incorporation and Bylaws which form a part of this
registration statement for a more complete description of the rights and
liabilities of holders of our securities.
There are
no outstanding options, warrants, or rights to purchase any of our
securities.
Non-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 such event, the holders of the remaining shares will not be able
to elect any of our Directors.
Cash
Dividends
As of the
date of this Registration Statement, we have not paid any cash dividends to
stockholders. The declaration of any future cash dividend will be at the
discretion of our Board of Directors and will depend upon our earnings, if any,
our capital requirements and financial position, our general economic and other
pertinent conditions. It is our present intention not to pay any cash dividends
in the foreseeable future, but rather to reinvest earnings, if any, into our
business.
Transfer
Agent
We have
not engaged a transfer agent to serve as transfer agent for shares of our common
stock. We intend to retain a transfer agent as soon as practicable
following the effectiveness of this Registration Statement. Until we
engage such a transfer agent, we will be responsible for all record-keeping and
administrative functions in connection with the shares of our common
stock. Our officers do not have any experience acting as a transfer
agent for publicly traded securities.
Admission
to Quotation on the OTC Bulletin Board
We intend
to have a market maker file an application for our common stock to be quoted on
the OTC Bulletin Board. However, we do not have a market maker that has agreed
to file such application. If our securities are not quoted on the OTC
Bulletin Board, a security holder may find it more difficult to dispose of, or
to obtain accurate quotations as to the market value of, our securities. The OTC
Bulletin Board differs from national and regional stock exchanges in that
it:
47
(1) is
not situated in a single location but operates through communication of bids,
offers and confirmations between broker-dealers, and
(2)
securities admitted to quotation are offered by one or more broker-dealers
rather than the "specialist" common to stock exchanges.
To
qualify for quotation on the OTC Bulletin Board, an equity security must have
one registered broker-dealer, known as the market maker, willing to list bid or
sale quotations and to sponsor the company listing. If it meets the
qualifications for trading securities on the OTC Bulletin Board our securities
will trade on the OTC Bulletin Board. We may not now or ever qualify for
quotation on the OTC Bulletin Board. We currently have no market maker who is
willing to list quotations for our securities.
SHARES
ELIGIBLE FOR FUTURE SALE
Prior to
this offering, there was no public market for our common stock. We cannot
predict the effect, if any, that market sales of shares of our common stock or
the availability of shares of our common stock for sale will have on the market
price of our common stock. Sales of substantial amounts of our common stock in
the public market could adversely affect the market prices of our common stock
and could impair our future ability to raise capital through the sale of our
equity securities.
We have
outstanding an aggregate of 6,500,000 shares of our common stock. Of
these shares, all of the 2,000,000 shares to be registered in this offering will
be freely tradable without restriction or further registration under the
Securities Act, unless those shares are purchased by our “affiliates,” as that
term is defined in Rule 144 under the Securities Act.
The
remaining 4,500,000 shares of common stock to be outstanding after
this offering will be restricted as a result of securities laws. Restricted
securities may be sold in the public market only if they have been registered or
if they qualify for an exemption from registration under Rule 144 under the
Securities Act.
Rule 144
In
general, under Rule 144 as currently in effect, a person who is not one of
our affiliates and who is not deemed to have been one of our affiliates at any
time during the three months preceding a sale and who has beneficially owned
shares of our common stock that are deemed restricted securities for at least
six months would be entitled after such six-month holding period to sell the
common stock held by such person, subject to the continued availability of
current public information about us (which current public information
requirement is eliminated after a one-year holding period).
A person
who is one of our affiliates and who has beneficially owned shares of our common
stock that are deemed restricted securities for at least six months would be
entitled after such six-month holding period to sell within any three-month
period a number of shares that does not exceed 1% of the number of shares of our
common stock then outstanding, which will equal 65,000 shares immediately
after this offering, subject to the continued availability of current public
information about us and the filing of a Form 144 notice of sale if the sale is
for an amount in excess of 5,000 shares or for an aggregate sale price of more
than $50,000 in a three-month period.
48
PLAN
OF DISTRIBUTION
This
prospectus relates to the registration of 2,000,000 shares of common stock on
behalf of the selling stockholders.
There
is no current market for our shares
There has
been no market for our securities. Our common stock is not traded on
any exchange or on the over-the-counter market. After the effective date of the
registration statement relating to this prospectus, we hope to have a market
maker file an application with the National Association of Securities Dealers,
Inc. for our common stock to be eligible for trading on the Over the Counter
Bulletin Board. We do not yet have a market maker who has agreed to file such
application. The selling security holders will be offering our shares
of common stock at a fixed price of $0.02 per share until our shares are quoted
on the OTC Bulletin Board, and thereafter will be sold at prevailing market
prices or privately negotiated prices.
The
selling security holders may, from time to time, sell all or a portion of the
shares of common stock on any market upon which the common stock may be listed
or quoted (anticipated to be the OTC Bulletin Board in the United States), in
privately negotiated transactions or otherwise. Such sales may be at fixed
prices prevailing at the time of sale, at prices related to the market prices or
at negotiated prices. Moreover, the shares of common stock being
offered for resale by this prospectus may be sold by the selling security
holders by one or more of the following methods, without limitation: (a)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; (b) privately negotiated transactions; (c) market sales (both long
and short to the extent permitted under the federal securities laws); (d) at the
market to or through market makers or into an existing market for the shares;
(e) through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise); and (f) a combination of any of the
aforementioned methods of sale.
In the
event of the transfer by any of the selling security holders of its common
shares to any pledgee, donee or other transferee, we will amend this prospectus
and the registration statement of which this prospectus forms a part by the
filing of a post-effective amendment in order to have the pledgee, donee or
other transferee in place of the selling security holder who has transferred
his, her or its shares.
In
effecting sales, brokers and dealers engaged by the selling security holders may
arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from a selling security holder or, if any of
the broker-dealers act as an agent for the purchaser of such shares, from a
purchaser in amounts to be negotiated which are not expected to exceed those
customary in the types of transactions involved. Broker-dealers may agree with a
selling security holder to sell a specified number of the shares of common stock
at a stipulated price per share. Such an agreement may also require the
broker-dealer to purchase as principal any unsold shares of common stock at the
price required to fulfill the broker-dealer commitment to the selling security
holder if such broker-dealer is unable to sell the shares on behalf of the
selling security holder. Broker-dealers who acquire shares of common stock as
principal may thereafter resell the shares of common stock from time to time in
transactions which may involve block transactions and sales to and through other
broker-dealers, including transactions of the nature described above. Such sales
by a broker-dealer could be at prices and on terms then prevailing at the time
of sale, at prices related to the then-current market price or in negotiated
transactions. In connection with such resales, the broker-dealer may pay to or
receive from the purchasers of the shares commissions as described
above.
49
The
selling security holders and any broker-dealers or agents that participate with
the selling security holders in the sale of the shares of common stock may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with these sales. In that event, any commissions received by the
broker-dealers or agents and any profit on the resale of the shares of common
stock purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
From time
to time, any of the selling security holders may pledge shares of common stock
pursuant to the margin provisions of customer agreements with brokers. Upon a
default by a selling security holder, their broker may offer and sell the
pledged shares of common stock from time to time. Upon a sale of the shares of
common stock, the selling security holders intend to comply with the prospectus
delivery requirements under the Securities Act by delivering a prospectus to
each purchaser in the transaction. We intend to file any amendments or other
necessary documents in compliance with the Securities Act which may be required
in the event any of the selling security holders defaults under any customer
agreement with brokers.
To the
extent required under the Securities Act, a post effective amendment to this
registration statement will be filed disclosing the name of any broker-dealers,
the number of shares of common stock involved, the price at which the common
stock is to be sold, the commissions paid or discounts or concessions allowed to
such broker-dealers, where applicable, that such broker-dealers did not conduct
any investigation to verify the information set out or incorporated by reference
in this prospectus and other facts material to the transaction.
We and
the selling security holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations under it, including, without
limitation, Rule 10b-5 and, insofar as a selling security holder is a
distribution participant and we, under certain circumstances, may be a
distribution participant, under Regulation M. All of the foregoing may affect
the marketability of the common stock.
All
expenses of the registration statement including, but not limited to, legal,
accounting, printing and mailing fees are and will be borne by us. Any
commissions, discounts or other fees payable to brokers or dealers in connection
with any sale of the shares of common stock will be borne by the selling
security holders, the purchasers participating in such transaction, or
both.
Any
shares of common stock covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act, as amended, may be sold under
Rule 144 rather than pursuant to this prospectus.
50
Penny
Stock Regulations
You
should note that our stock is a penny stock. Pursuant to Section
15(g) of the Securities Exchange Act of 1934, as amended and Rule 15g-9 and Rule
3a(51)-(1) "penny stock" is defined to be any equity security that has a market
price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers prior to a transaction in a penny stock not otherwise exempt from
those rules . The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
Blue
Sky Restrictions on Resale
If a
selling security holder wants to sell shares of our common stock under this
registration statement in the United States, the selling security holders will
also need to comply with state securities laws, also known as “Blue Sky laws,”
with regard to secondary sales. All states offer a variety of
exemptions from registration for secondary sales. Many states, for
example, have an exemption for secondary trading of securities registered under
Section 12(g) of the Securities Exchange Act of 1934 or for securities of
issuers that publish continuous disclosure of financial and non-financial
information in a recognized securities manual, such as Standard &
Poor’s. The broker for a selling security holder will be able to
advise a selling security holder which states our common stock is exempt from
registration with that state for secondary sales.
Any
person who purchases shares of our common stock from a selling security holder
under this registration statement who then wants to sell such shares will also
have to comply with Blue Sky laws regarding secondary sales.
When the
registration statement becomes effective, and a selling security holder
indicates in which state(s) he desires to sell his shares, we will be able to
identify whether it will need to register or will rely on an exemption
therefrom.
EXPERTS
No expert
or counsel named in this prospectus as having prepared or certified any part of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the common stock was employed on a contingency basis or had, or
is to receive, in connection with the offering, a substantial interest, directly
or indirectly, in the registrant or its subsidiary. Nor was any such person
connected with the Registrant or any of its parents, subsidiaries as a promoter,
managing or principal underwriter, voting trustee, Director, officer or
employee.
Our
financial statements for the period from inception to June 30, 2010, included in
this prospectus have been audited by Weinberg & Baer LLC, as set forth in
their report included in this prospectus.
Certain
legal matters, including the legality of the securities offered, will be passed
upon for us by SRK Law Offices.
51
DISCLOSURE
OF SEC POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our
Bylaws provide that Directors and officers shall be indemnified by us to the
fullest extent authorized by the Delaware General Corporation Law, against all
expenses and liabilities reasonably incurred in connection with services for us
or on our behalf. The Bylaws also authorize the Board of Directors to indemnify
any other person who we have the power to indemnify under the Delaware General
Corporation Law, and indemnification for such a person may be greater or
different from that provided in the Bylaws.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to Directors, officers and controlling persons of our Company under
the provisions described above, we have been informed 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.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Weinberg
& Baer LLC is our auditor. There have not been any changes in or
disagreements with accountants on accounting and financial disclosure or any
other matter.
WHERE
YOU CAN FIND MORE INFORMATION
We have
filed a registration statement on Form S-1 under the Securities Act with the SEC
for the securities offered hereby. This prospectus, which constitutes a part of
the registration statement, does not contain all of the information set forth in
the registration statement or the exhibits and schedules which are part of the
registration statement. For additional information about us and our securities,
we refer you to the registration statement and the accompanying exhibits and
schedules. Statements contained in this prospectus regarding the contents of any
contract or any other documents to which we refer are not necessarily complete.
In each instance, reference is made to the copy of the contract or document
filed as an exhibit to the registration statement, and each statement is
qualified in all respects by that reference. Copies of the registration
statement and the accompanying exhibits and schedules may be inspected without
charge (and copies may be obtained at prescribed rates) at the public reference
facility of the SEC at Room 1024, 100 F Street, N.E. Washington, D.C.
20549.
You can
request copies of these documents upon payment of a duplicating fee by writing
to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on
the operation of its public reference rooms. Our filings, including the
registration statement, will also be available to you on the Internet web site
maintained by the SEC at http://www.sec.gov.
52
HAVAYA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO FINANCIAL STATEMENTS
JUNE
30, 2010, DECEMBER 31, 2009 AND 2008
Report
of Registered Independent Auditors
|
F-2
|
|
Financial
Statements-
|
||
Balance
Sheets as of June 30, 2010, December 31, 2009 and 2008
|
F-3
|
|
Statements of Operations for the
Periods Ended June
30, 2010 and 2009, December 31, 2009 and 2008, and Cumulative from
Inception
|
F-4
|
|
Statement of Stockholders’ Equity
for the Period from Inception Through of June 30,
2010
|
F-5
|
|
Statements of Cash Flows for the
Periods Ended June 30, 2010 and 2009, December 31, 2009 and 2008 and
Cumulative from Inception
|
F-6
|
|
Notes
to Financial Statements
|
F-7
|
F-1
REPORT
OF REGISTERED INDEPENDENT AUDITORS
To the
Board of Directors and Stockholders
of Havaya
Corp.:
We have
audited the accompanying balance sheets of Havaya Corp. (a Delaware corporation
in the development stage) as of June 30, 2010, December 31, 2009 and 2008, and
the related statements of operations, stockholders’ equity, and cash flows for
the periods ended June 30, 2010 and 2009, December 31, 2009 and 2008, and from
inception (November 21, 2007) through June 30, 2010. These financial statements
are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our
audit.
We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. 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 audit provides a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Havaya Corp. as of June 30, 2010,
December 31, 2009 and 2008, and the results of its operations and its cash flows
for the periods ended June 30, 2010 and 2009, December 31, 2009 and 2008, and
from inception (November 21, 2007) through as June 30, 2010, in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company is in the development stage, and has not established any
source of revenue to cover its operating costs. As such, it has incurred an
operating loss since inception. Further, as of as June 30, 2010, the cash
resources of the Company were insufficient to meet its planned business
objectives. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plan regarding these
matters is also described in Note 2 to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Respectfully
submitted,
Weinberg
& Baer LLC
Baltimore,
Maryland
August
19, 2010
F-2
HAVAYA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
AS
OF JUNE 30, 2010, DECEMBER 31, 2009 AND 2008
June 30, 2010
|
December 31, 2009
|
December 31, 2008
|
||||||||||
ASSETS
|
||||||||||||
Current
Assets:
|
||||||||||||
Cash
and cash equivalents
|
$ | 22,376 | $ | 18,543 | $ | - | ||||||
Prepaid
expenses
|
24 | - | - | |||||||||
Total
current assets
|
22,400 | 18,543 | - | |||||||||
Total
Assets
|
$ | 22,400 | $ | 18,543 | $ | - | ||||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||||||
Current
Liabilities:
|
||||||||||||
Accounts
payable and accrued liabilities
|
$ | 5,750 | $ | 7,271 | $ | 1,771 | ||||||
Bank
overdraft
|
- | - | 115 | |||||||||
Due
to shareholders
|
754 | 754 | 754 | |||||||||
Total
current liabilities
|
6,504 | 8,025 | 2,640 | |||||||||
Total
liabilities
|
6,504 | 8,025 | 2,640 | |||||||||
Commitments
and Contingencies
|
- | - | - | |||||||||
Stockholders'
Equity (Deficit):
|
||||||||||||
Common
stock, par value $0.0001 per share, 200,000,000 shares authorized;
6,500,000, 5,500,000 and 3,500,000 shares issued and outstanding,
respectively
|
650 | 550 | 350 | |||||||||
Stock
subscriptions receivable
|
- | (350 | ) | (350 | ) | |||||||
Additional
paid-in capital
|
59,700 | 39,800 | - | |||||||||
(Deficit)
accumulated during development stage
|
(44,454 | ) | (29,482 | ) | (2,640 | ) | ||||||
Total
stockholders' equity (deficit)
|
15,896 | 10,518 | (2,640 | ) | ||||||||
Total
Liabilities and Stockholders' Equity
|
$ | 22,400 | $ | 18,543 | $ | - |
The
accompanying notes to financial statements are
an
integral part of these statements.
F-3
HAVAYA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
FOR
THE PERIODS ENDED JUNE 30, 2010 AND 2009, DECEMBER 31, 2009 AND 2008,
AND
CUMULATIVE
FROM INCEPTION (NOVEMBER 21, 2007)
THROUGH
JUNE 30, 2010
Cumulative
|
||||||||||||||||||||
Six Months Ended
|
Six Months Ended
|
Year Ended
|
Year Ended
|
From
|
||||||||||||||||
June 30, 2010
|
June 30, 2009
|
December 31, 2009
|
December 31, 2008
|
Inception
|
||||||||||||||||
Revenues
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Expenses:
|
||||||||||||||||||||
General
and administrative-
|
||||||||||||||||||||
Marketing
expenses
|
1,152 | - | - | - | 1,152 | |||||||||||||||
Professional
fees
|
9,898 | - | 5,500 | 1,025 | 16,423 | |||||||||||||||
Consulting
fees
|
- | - | 5,000 | - | 5,000 | |||||||||||||||
Travel
expenses
|
- | 16,705 | 16,705 | - | 16,705 | |||||||||||||||
Organization
costs
|
- | - | - | 1,500 | 1,500 | |||||||||||||||
Filing
Fees
|
2,946 | - | - | - | 2,946 | |||||||||||||||
Other
|
298 | 752 | 792 | 115 | 1,205 | |||||||||||||||
Total
general and administrative expenses
|
14,294 | 17,457 | 27,997 | 2,640 | 44,931 | |||||||||||||||
- | ||||||||||||||||||||
(Loss)
from Operations
|
(14,294 | ) | (17,457 | ) | (27,997 | ) | (2,640 | ) | (44,931 | ) | ||||||||||
Other
Income (Expense)
|
||||||||||||||||||||
Gains
(loss) on foreign currency exchange
|
199 | 1,155 | 1,155 | - | 1,354 | |||||||||||||||
Unrealized
loss on foreign currency
|
(877 | ) | - | - | - | (877 | ) | |||||||||||||
Provision
for income taxes
|
- | - | - | - | - | |||||||||||||||
Net
(Loss)
|
$ | (14,972 | ) | $ | (16,302 | ) | $ | (26,842 | ) | $ | (2,640 | ) | $ | (44,454 | ) | |||||
(Loss)
Per Common Share:
|
||||||||||||||||||||
(Loss)
per common share - Basic and Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | ||||||||
Weighted
Average Number of Common Shares Outstanding - Basic
and Diluted
|
5,886,740 | 3,610,497 | 4,563,014 | 1,449,315 |
The
accompanying notes to financial statements are
an
integral part of these statements.
F-4
HAVAYA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS' EQUITY
FOR
THE PERIOD FROM INCEPTION (NOVEMBER 21, 2007)
THROUGH
JUNE 30, 2010
(Deficit)
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Stock
|
Additional
|
During the
|
||||||||||||||||||||||
Common stock
|
Subscriptions
|
Paid-in
|
Development
|
|||||||||||||||||||||
Description
|
Shares
|
Amount
|
Receivable
|
Capital
|
Stage
|
Totals
|
||||||||||||||||||
Balance
– at inception
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Common
stock issued for cash ($0.0001/share)
|
500,000 | 50 | (50 | ) | - | - | - | |||||||||||||||||
Common
stock issued for cash ($0.0001/share)
|
3,000,000 | 300 | (300 | ) | - | - | - | |||||||||||||||||
Net
(loss) for the period
|
- | - | - | - | (2,640 | ) | (2,640 | ) | ||||||||||||||||
Balance
- December 31, 2008
|
3,500,000 | 350 | (350 | ) | - | (2,640 | ) | (2,640 | ) | |||||||||||||||
Common
stock issued for cash ($0.02/share)
|
2,000,000 | 200 | - | 39,800 | - | 40,000 | ||||||||||||||||||
Net
(loss) for the period
|
- | - | - | - | (26,842 | ) | (26,842 | ) | ||||||||||||||||
Balance
-December 31, 2009
|
5,500,000 | 550 | (350 | ) | 39,800 | (29,482 | ) | 10,518 | ||||||||||||||||
Stock
subscriptions payment received
|
- | 350 | - | - | 350 | |||||||||||||||||||
Common
stock issued for cash ($0.02/share)
|
1,000,000 | 100 | - | 19,900 | - | 20,000 | ||||||||||||||||||
Net
(loss) for the period
|
- | - | - | - | (14,972 | ) | (14,972 | ) | ||||||||||||||||
Balance
-June 30, 2010
|
6,500,000 | $ | 650 | $ | - | $ | 59,700 | $ | (44,454 | ) | $ | 15,896 |
The
accompanying notes to financial statements are
an
integral part of these statements.
F-5
HAVAYA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
FOR
THE PERIODS ENDED JUNE 30, 2010 AND 2009, DECEMBER 31, 2009 AND 2008,
AND
CUMULATIVE
FROM INCEPTION (NOVEMBER 21, 2007)
THROUGH
JUNE 30, 2010
Cumulative
|
||||||||||||||||||||
Six Months Ended
|
Six Months Ended
|
Year Ended
|
Year Ended
|
From
|
||||||||||||||||
June 30, 2010
|
June 30, 2009
|
December 31, 2009
|
December 31, 2008
|
Inception
|
||||||||||||||||
Operating
Activities:
|
||||||||||||||||||||
Net
(loss)
|
$ | (14,972 | ) | $ | (16,302 | ) | $ | (26,842 | ) | $ | (2,640 | ) | $ | (44,454 | ) | |||||
Adjustments
to reconcile net (loss) to net cash provided by operating
activities:
|
||||||||||||||||||||
Changes
in net assets and liabilities-
|
||||||||||||||||||||
Prepaid
expenses
|
(24 | ) | - | - | - | (24 | ) | |||||||||||||
Accounts
payable and accrued liabilities
|
(1,521 | ) | - | 5,500 | 1,771 | 5,750 | ||||||||||||||
Net
Cash Used in Operating Activities
|
(16,517 | ) | (16,302 | ) | (21,342 | ) | (869 | ) | (38,728 | ) | ||||||||||
Investing
Activities:
|
||||||||||||||||||||
Cash
used by investing activities
|
- | - | - | - | - | |||||||||||||||
Net
Cash Used by Investing Activities
|
- | - | - | - | - | |||||||||||||||
Financing
Activities:
|
||||||||||||||||||||
Proceeds
from bank overdraft
|
- | - | - | 115 | - | |||||||||||||||
Payments
of bank overdraft
|
- | (115 | ) | (115 | ) | - | - | |||||||||||||
Proceeds
from shareholder loans
|
- | - | - | 754 | 754 | |||||||||||||||
Proceeds
from common stock
|
20,350 | 40,000 | 40,000 | - | 60,350 | |||||||||||||||
Net
Cash Provided by Financing Activities
|
20,350 | 39,885 | 39,885 | 869 | 61,104 | |||||||||||||||
Net
(Decrease) Increase in Cash
|
3,833 | 23,583 | 18,543 | - | 22,376 | |||||||||||||||
Cash
- Beginning of Period
|
18,543 | - | - | - | - | |||||||||||||||
Cash
- End of Period
|
$ | 22,376 | $ | 23,583 | $ | 18,543 | $ | - | $ | 22,376 | ||||||||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||||||||||||||
Cash
paid during the period for:
|
||||||||||||||||||||
Interest
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Income
taxes
|
$ | - | $ | - | $ | - | $ | - | $ | - |
The
accompanying notes to financial statements are an integral part of these
statements.
F-6
HAVAYA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2010, DECEMBER 31, 2009 AND 2008
1.
Summary of
Significant Accounting Policies
Basis
of Presentation and Organization
Havaya
Corp. (the “Company”) is in the development stage, and has limited operations.
The Company was incorporated under the laws of the State of Delaware on November
21, 2007 and began activity in 2008. The business plan of the Company is to
import and market home teeth whitening kits. The accompanying financial
statements of the Company were prepared from the accounts of the Company under
the accrual basis of accounting.
Cash
and Cash Equivalents
For
purposes of reporting within the statement of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
Revenue
Recognition
The
Company is in the development stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
Loss
per Common Share
Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. There were no dilutive financial instruments issued or outstanding for
the period ended June 30, 2010.
Income
Taxes
The
Company accounts for income taxes pursuant to FASB ASC 740. Deferred tax assets
and liabilities are determined based on temporary differences between the bases
of certain assets and liabilities for income tax and financial reporting
purposes. The deferred tax assets and liabilities are classified according to
the financial statement classification of the assets and liabilities generating
the differences.
The
Company maintains a valuation allowance with respect to deferred tax assets. The
Company establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company’s
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the Federal tax
laws.
F-7
Changes
in circumstances, such as the Company generating taxable income, could cause a
change in judgment about the realizability of the related deferred tax asset.
Any change in the valuation allowance will be included in income in the year of
the change in estimate.
Fair
Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is required in
estimating fair value. Accordingly, the estimates of fair value may not be
indicative of the amounts the Company could realize in a current market
exchange. As of June 30, 2010, December 31, 2009 and 2008, the carrying value of
accounts payable-trade and accrued liabilities approximated fair value due to
the short-term nature and maturity of these instruments.
Deferred
Offering Costs
The
Company defers as other assets the direct incremental costs of raising capital
until such time as the offering is completed. At the time of the completion of
the offering, the costs are charged against the capital raised. Should the
offering be terminated, deferred offering costs are charged to operations during
the period in which the offering is terminated.
Common
Stock Registration Expenses
The
Company considers incremental costs and expenses related to the registration of
equity securities with the SEC, whether by contractual arrangement as of a
certain date or by demand, to be unrelated to original issuance transactions. As
such, subsequent registration costs and expenses are reflected in the
accompanying financial statements as general and administrative expenses, and
are expensed as incurred.
Lease
Obligations
All
noncancellable leases with an initial term greater than one year are categorized
as either capital leases or operating leases. Assets recorded under capital
leases are amortized according to the methods employed for property and
equipment or over the term of the related lease, if shorter.
Estimates
The
financial statements are prepared on the basis of accounting principles
generally accepted in the United States. 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 as of June 30, 2010, December 31, 2009 and 2008, and expenses for
the period ended June 30, 2010, December 31, 2009 and 2008, and cumulative from
inception. Actual results could differ from those estimates made by
management.
Fiscal
Year End
The
Company has adopted a fiscal year end of December 31.
2.
Development Stage
Activities and Going Concern
The
Company is currently in the development stage, and has not commenced operations.
The business plan of the Company is to import and market home teeth whitening
kits.
During
the period ended December 31, 2009, the Company offered a capital formation
activity through a PPO, exempt from registration under the Securities Act of
1933, to raise up to $40,000 through the issuance of 2,000,000 shares of its
common stock, par value $0.0001 per share, at an offering price of $0.02 per
share. As of December 31, 2009, the Company raised $40,000 in proceeds with the
issuance of 2,000,000 shares of its common stock.
F-8
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, which contemplate
continuation of the Company as a going concern. The Company has not established
any source of revenues to cover its operating costs, and as such, has incurred
an operating loss since inception. Further, as of June 30, 2010 the cash
resources of the Company were insufficient to meet its current business plan.
These and other factors raise substantial doubt about the Company’s ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
3.
Common
Stock
On July
15, 2008, the Company issued 3,000,000 shares of common stock to an officer and
director of the Company, for cash payment of $300.
On
November 24, 2008, the Company issued 500,000 shares of common stock to an
officer and director of the Company, for cash payment of $50.
On
January 31, 2009, the Company began a capital formation activity through a PPO,
exempt from registration under the Securities Act of 1933, to raise up to
$40,000 through the issuance of 2,000,000 shares of its common stock, par value
$0.0001 per share, at an offering price of $0.02 per share. As of December 31,
2009, the Company had received $40,000 in proceeds from the PPO.
The
Company also commenced an activity to submit a Registration Statement on Form
S-1 to the Securities and Exchange Commission (“SEC”) to register 2,000,000 of
its outstanding shares of common stock on behalf of selling stockholders. The
Company will not receive any of the proceeds of this registration activity once
the shares of common stock are sold.
On April
22, 2010, the Company issued 1,000,000 shares of common stock to officers and
directors of the Company, for cash payment of $20,000.
4.
Income
Taxes
The
provision (benefit) for income taxes for the periods ended June 30, 2010,
December 31, 2009 and 2008, was as follows (assuming a 23% effective tax
rate):
F-9
2010
|
2009
|
2008
|
||||||||||
Current
Tax Provision:
|
||||||||||||
Federal-
|
||||||||||||
Taxable
income
|
$ | - | $ | - | $ | - | ||||||
Total
current tax provision
|
$ | - | $ | - | $ | - | ||||||
Deferred
Tax Provision:
|
||||||||||||
Federal-
|
||||||||||||
Loss
carryforwards
|
$ | 3,444 | $ | 6,174 | $ | 607 | ||||||
Change
in valuation allowance
|
(3,444 | ) | (6,174 | ) | (607 | ) | ||||||
Total
deferred tax provision
|
$ | - | $ | - | $ | - |
The
Company had deferred income tax assets as of March 31, 2010, December 31, 2009
and 2008, as follows:
2010
|
2009
|
2008
|
||||||||||
Loss
carryforwards
|
$ | 10,225 | $ | 6,781 | $ | 607 | ||||||
Less
- Valuation allowance
|
(10,225 | ) | (6,781 | ) | (607 | ) | ||||||
Total
net deferred tax assets
|
$ | - | $ | - | $ | - |
The
Company provided a valuation allowance equal to the deferred income tax assets
for the periods ended June 30, 2010, December 31, 2009 and 2008 because it is
not presently known whether future taxable income will be sufficient to utilize
the loss carryforwards.
As of
June 30, 2010, the Company had approximately $44,454 in tax loss carryforwards
that can be utilized in future periods to reduce taxable income, and expire by
the year 2030.
The
federal income tax returns of the Company are subject to examination by the IRS,
generally for three years after they are filed.
5. Related
Party Loans and Transactions
On July
15, 2008, the Company issued 3,000,000 shares of common stock to an officer and
director of the Company, for cash payment of $300.
On
November 24, 2008, the Company issued 500,000 shares of common stock to an
officer and director of the Company, for cash payment of $50.
On April
22, 2010, the Company issued 1,000,000 shares of common stock to officers and
directors of the Company, for cash payment of $20,000.
As of
June 30, 2010, loans from related parties amounted to $754, and represented
working capital advances from officers who are also stockholders of the Company.
The loans are unsecured, non-interest bearing, and due on
demand.
F-10
6. Recent Accounting
Pronouncements
In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), codified
in FASB ASC 820-10-65, which provides additional guidance for estimating fair
value in accordance with ASC 820-10 when the volume and level of activity for an
asset or liability have significantly decreased. ASC 820-10-65 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. The adoption of ASC 820-10-65 did not have an impact on the Company's
results of operations or financial condition.
In May
2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165") codified in
FASB ASC 855-10-05, which provides guidance to establish general standards of
accounting for and disclosures of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. FASB
ASC 855-10-05 also requires entities to disclose the date through which
subsequent events were evaluated as well as the rationale for why that date was
selected. FASB ASC 855-10-05 is effective for interim and annual periods ending
after June 15, 2009. FASB ASC 855-10-05 requires that public entities evaluate
subsequent events through the date that the financial statements are
issued.
In June
2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial
Assets - an amendment of FASB Statement No. 140" ("SFAS 166"), codified as FASB
ASC 860, which requires entities to provide more information regarding sales of
securitized financial assets and similar transactions, particularly if the
entity has continuing exposure to the risks related to transferred financial
assets. FASB ASC 860 eliminates the concept of a "qualifying special-purpose
entity," changes the requirements for derecognizing financial assets and
requires additional disclosures. FASB ASC 860 is effective for fiscal years
beginning after November 15, 2009. The adoption of FASB ASC 860 did not have an
impact on the Company's financial condition, results of operations or cash
flows.
In June
2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No.
46(R)" ("SFAS 167"), codified as FASB ASC 810-10, which modifies how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. FASB ASC
810-10 clarifies that the determination of whether a company is required to
consolidate an entity is based on, among other things, an entity's purpose and
design and a company's ability to direct the activities of the entity that most
significantly impact the entity's economic performance. FASB ASC 810-10 requires
an ongoing reassessment of whether a company is the primary beneficiary of a
variable interest entity. FASB ASC 810-10 also requires additional disclosures
about a company's involvement in variable interest entities and any significant
changes in risk exposure due to that involvement. FASB ASC 810-10 is effective
for fiscal years beginning after November 15, 2009. The adoption of FASB ASC
810-10 did not have an impact on the Company's financial condition, results of
operations or cash flows.
In June
2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles,
which establishes the FASB Accounting Standards Codification as the sole source
of authoritative generally accepted accounting principles. Pursuant to the
provisions of FASB ASC 105, we have updated references to GAAP in our financial
statements. The adoption of FASB ASC 105 did not impact the Company's financial
position or results of operations.
7. Concentration of Credit
Risk
The
Company’s cash and cash equivalents are invested in a major bank
in Israel and are not insured. Management believes that the financial
institution that holds the Company’s investments is financially sound.
Accordingly, minimal credit risk exists with respect to these
investments.
F-11
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Indemnification
of Directors, Officers, Employees and Agents
Section
145 of the Delaware General Corporation Law (the “DGCL”), as the same exists or
may hereafter be amended, provides that a Delaware corporation may indemnify any
persons who were, or are threatened to be made, parties to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the corporation’s best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his or her conduct was illegal. A Delaware corporation may
indemnify any persons who are, were or are threatened to be made, a party to any
threatened, pending or completed action or suit by or in the right of the
corporation by reason of the fact that such person was a director, officer,
employee or agent of such corporation, or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys’ fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the corporation’s best interests, provided that no
indemnification is permitted without judicial approval if the officer, director,
employee or agent is adjudged to be liable to the corporation. Where an officer,
director, employee, or agent is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him or
her against the expenses which such officer or director has actually and
reasonably incurred.
Section
145 of the DGCL further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him or her and incurred by him or her in
any such capacity, arising out of his or her status as such, whether or not the
corporation would otherwise have the power to indemnify him or her under Section
145 of the DGCL.
Article
12 of our bylaws provides that, to the fullest extent permitted by Delaware law,
as it may be amended from time to time, none of our directors will be personally
liable to us or our stockholders for monetary damages resulting from a breach of
fiduciary duty as a director. Our bylaws also provide discretionary
indemnification for the benefit of our directors, officers, and employees, to
the fullest extent permitted by Delaware law, as it may be amended from time to
time. Pursuant to our bylaws, we are required to indemnify our directors,
officers, employees and agents, and we have the discretion to advance his or her
related expenses, to the fullest extent permitted by law.
These
indemnification provisions may be sufficiently broad to permit indemnification
of our officers and directors for liabilities (including reimbursement of
expenses incurred) arising under the Securities Act. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our
directors or officers, or persons controlling us, pursuant to the foregoing
provisions, we have been informed that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
II-1
In the
event that a claim for indemnification against such liabilities (other than the
payment of expenses incurred or paid by a director, officer or controlling
person in a successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has
been settled by controlling precedent, submit to the 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.
Other
Expenses of Issuance and Distribution
The
estimated expenses payable by us in connection with the offering described in
this Registration Statement (other than the placement discounts and commissions)
will be as follows. With the exception of the filing fees for the U.S.
Securities Exchange Commission, all amounts are estimates. All such expenses
will be borne by the Registrant.
Name
of Expense
|
Amount
|
|||
Securities
and Exchange Commission registration fee
|
3.83
|
|||
Legal,
accounting fees and expenses (1)
|
19,000
|
|||
Total
(1)
|
19,004
|
(1)
Estimated.
II-2
Recent
Sales of Unregistered Securities
On July
15, 2008, we issued 3,000,000 shares of our common stock to Mr. Avraham
Grundman, our President, Treasurer and Director, for cash payment to us of
$300. We believe this issuance was deemed to be exempt under Section
4(2) of the Securities Act. No advertising or general solicitation
was employed in offering the securities. The offering and sale was
made only to Mr. Avraham Grundman and transfer was restricted by us in
accordance with the requirements of the Securities Act of 1933.
On
November 24, 2008, we issued 500,000 shares of our common stock to Mr. Benny
Adler, our Secretary and Director, for cash payment to us of $50. We
believe this issuance was deemed to be exempt under Regulation S of the
Securities Act. No advertising or general solicitation was employed
in offering the securities. The offering and sale was made only to
Mr. Benny Adler, who is a non-U.S. citizen, and transfer was restricted by us in
accordance with the requirements of the Securities Act of 1933.
From
January through July 2009, we issued 2,000,000 shares of common stock to 43
investors in a fully subscribed private placement made pursuant to the exemption
from the registration requirements of the Securities Act provided by Regulation
S. The consideration paid for such shares was $0.02 per share,
amounting in the aggregate to $40,000. Each purchaser represented to
us that such purchaser was not a United States person (as defined in Regulation
S) and was not acquiring the shares for the account or benefit of a United
States person. Each purchaser further represented that at the time of the
origination of contact concerning the subscription for the units and the date of
the execution and delivery of the subscription agreement for such units, such
purchaser was outside of the United States. We did not make any offers in the
United States, and there were no selling efforts in the United States. There
were no underwriters or broker-dealers involved in the private placement and no
underwriting discounts or commissions were paid.
On April
22, 2010, the Company issued 750,000 shares of common stock to our President,
Mr. Avraham Grundman for cash payment of $15,000. We believe this issuance was
deemed to be exempt under Section 4(2) of the Securities Act. No
advertising or general solicitation was employed in offering the
securities. The offering and sale was made only to Mr. Avraham
Grundman and transfer was restricted by us in accordance with the requirements
of the Securities Act of 1933.
On April
22, 2010, the Company issued 250,000 shares of common stock to Mr. Benny Adler,
our Secretary and Director for cash payment of $5,000. We believe this issuance
was deemed to be exempt under Regulation S of the Securities Act. No
advertising or general solicitation was employed in offering the
securities. The offering and sale was made only to Mr. Benny Adler,
who is a non-U.S. citizen, and transfer was restricted by us in accordance with
the requirements of the Securities Act of 1933.
All of
the aforementioned issuances were made in reliance upon the exemption provided
in Section 4(2) of the Securities Act and Regulation S a promulgated under
the Securities Act. No form of general solicitation or general advertising was
conducted in connection with each of these sales.
Exhibits
and Financial Statement Schedules
(a)
Exhibits:
The
following exhibits are filed as part of this registration
statement:
Exhibit
|
Description
|
|
3.1*
|
Articles
of Incorporation of Registrant.
|
|
3.2*
|
Bylaws
of Registrant.
|
|
4.1*
|
Specimen
Common Stock Certificate.
|
|
5.1*
|
Opinion
of SRK Law Offices regarding the legality of the securities being
registered.
|
|
10.1*
|
Supply
Agreement with Pacific Naturals.
|
|
10.2*
|
Directors’
Undertaking to loan the Company up to $10,000 in the aggregate, if
necessary to help cover costs to comply with the federal securities laws
over the next 12 months.
|
|
23.1
|
Consent
of Weinberg & Baer LLC.
|
|
23.2*
|
Consent
of Legal Counsel (incorporated in Exhibit 5.1).
|
|
99.1*
|
Consent
of National TV
Spots
|
*previously
filed
II-3
Undertakings
The
undersigned Registrant hereby undertakes to:
(a) 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;
(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 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 prospectus
filed with the SEC pursuant to Rule 424(b) 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 information with respect to the plan of
distribution.
(b) that,
for the purpose of determining any liability under the Securities Act, each
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) to
file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(d) that
insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant,
the Registrant has been advised that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registration of expenses
incurred or paid by a director, officer or controlling person to 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 of 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.
(e) that,
for the purpose of determining liability under the Securities Act to any
purchaser, 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-4
(f) that,
for the purpose of determining liability of the Registrant under the Securities
Act to any purchaser in the initial distribution of the securities, 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 Registrant 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 Registrant relating to the offering
filed pursuant to Rule 424;
(ii) any
free writing prospectus relating to the offering prepared by or on behalf of the
Registrant or used or referred to by the Registrant;
(iii) the
portion of any other free writing prospectus relating to the offering containing
material information about the Registrant or its securities provided by or on
behalf of the Registrant; and
(iv) any
other communication that is an offer in the offering made by the Registrant to
the purchaser.
II-5
Signatures
In
accordance with the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 7 to Form S-1 and has authorized
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Kfar Saba, Israel on November 12,
2010.
HAVAYA
CORP.
|
||
By:
|
/s/ Avraham
Grundman
|
|
Name:
Avraham Grundman
|
||
Title:
President, Treasurer and Director
|
||
(Principal
Executive and Principal
Financial
and Accounting Officer)
|
In
accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
Date: November
12, 2010
|
/s/
Avraham Grundman
|
Name:
Avraham Grundman
|
|
Title:
President, Treasurer and Director
|
|
(Principal
Executive and Principal
Financial
and Accounting Officer)
|
|
Date: November
12, 2010
|
/s/
Benny Adler
|
Name:
Benny Adler
|
|
Title:
Secretary and
Director
|
II-6