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EX-23.1 - Luxeyard, Inc. | v206311_ex23-1.htm |
As
filed with the Securities and Exchange Commission on December 22,
2010
An
Exhibit List can be found on page II-3.
Registration
No. 333-168066
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Amendment
No. 4 to
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
TOP GEAR
INC.
(Exact
name of Registrant as specified in its charter)
Delaware
|
2090
|
30-0473898
|
||
(State
or other jurisdiction of
|
(Primary
Standard Industrial
|
(I.R.S.
Employer
|
||
incorporation
or organization)
|
Classification
Code)
|
Identification
No.)
|
72
Yehudah HaMaccabi Street
Unit
11
Tel Aviv,
Israel 61070
Tel:
(011) (972) 52-570-3774
(Address
and telephone number of Registrant's principal executive offices)
Delaware
Business Incorporators, Inc.
3422 Old
Capitol Trail
Suite
700
Wilmington
DE 19808-6192
302.996.5819
(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 Street
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. ¨
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. ¨
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. ¨
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. ¨
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(№)
|
|
|
Proposed
Maximum
Aggregate
Price
Per Share
|
|
|
Proposed
Maximum
Aggregate
Offering
Price(І)
|
|
|
Amount of
Registration Fee
|
|
||||
Common Stock, $0.0001 per
share
|
1,620,000
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$
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0.025
|
$
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40,500
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$
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2.88
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|||||||||
Total
|
1,620,000
|
$
|
0.025
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$
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40,500
|
$
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2.88
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(№)
|
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.
|
(І)
|
Estimated solely for
the purpose of calculating the registration fee pursuant to Rule
457(a) under the Securities Act of
1933.
|
The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until 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 DECEMBER 22, 2010
PROSPECTUS
Top Gear
Inc.
A MAXIMUM
OF 1,620,000 SHARES OF COMMON STOCK
OFFERING
PRICE $0.025 PER SHARE
The
selling stockholders named in this prospectus are offering for
resale 1,620,000 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 a
fixed offering price for these securities of $0.025 per share of common stock
offered through this prospectus unless and until our shares are quoted on the
OTC Bulletin Board. Our selling stockholders have advised us that, if our shares
are quoted on the OTC Bulletin Board, they will sell the shares of common stock
from time to time 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 4 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 fixed at $0.025 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, although there is no guarantee that such application will be
successful. 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.
We are
a development stage company and our auditors have issued a going concern
opinion. Even though we have commenced organizational operations and
the preparation of our kosher manual, we have generated no revenues to
date. Our marketing plan is not currently complete and partly remains
to be determined and we do not have sufficient capital to fully implement
our business plan or to remain in business for the next twelve
months.
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
2
TABLE OF
CONTENTS
Page
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||
Part
I
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||
SUMMARY
INFORMATION
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5
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RISK
FACTORS
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8
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Risks
Relating to Our Business
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9
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Risks
Relating to Owning Our Stock
|
|
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Risks
Relating to this Offering
|
14
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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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17
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USE
OF PROCEEEDS
|
17
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DIVIDEND
POLICY
|
17
|
|
DETERMINATION
OF THE OFFERING PRICE
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17
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|
DILUTION
|
18
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MARKET
FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
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18
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SELLING
STOCKHOLDERS
|
19
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MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION
|
23
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DESCRIPTION
OF BUSINESS
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32
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LEGAL
PROCEEDINGS
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41
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|
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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41
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EXECUTIVE
COMPENSATION
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44
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SECURITY
OWNERSHIP OF CERTAIN BENFICIAL OWNERS AND MANAGEMENT
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45
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
46
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3
DESCRIPTION
OF SECURITIES
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46
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PLAN
OF DISTRIBUTION
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49
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EXPERTS
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51
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CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE EXPERTS
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52
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INDEX
TO FINANCIAL STATEMENTS
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F-1
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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.
4
SUMMARY
INFORMATION
This
summary is a brief overview of the key aspects of the offering and does not
contain all of the information you should consider in making your investment
decision. It 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 4.
Corporate
Background
We
were incorporated on December 31, 2007. We are focused on offering kosher
supervision and certification services to food companies and producers that wish
to add a kosher symbol to their product labels. We plan to market and
distribute our kosher certification services by utilizing the internet as well
as other more traditional marketing channels.
We are
a development stage company that has not generated any revenues to date.
We must raise $72,980 in order to implement our marketing plan and remain in
business for the next twelve months. We have no financing plans at this
time. Our offices are currently located at 72 Yehudah HaMaccabi, Unit 11,
Tel Aviv, Israel 61070. Our telephone number is (011) (972) 52-570-3774. We have
secured a domain name www.go-kosher.net but do not currently have an operating
website. Our fiscal year end is December 31.
Any
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
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
|
1,620,000
shares of our common stock.
|
|
Offering
price
|
$0.025
per share of common stock.
|
|
Number
of shares outstanding before the offering
|
8,620,000
|
|
Number
of shares outstanding after the offering if all the shares are
sold
|
8,620,000
|
|
Our
executive officers and Directors currently hold 81.21% 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 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 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.
|
|
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 December 31, 2007
(date of inception) through September 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.
Nine
Months
Ended
September
30,
2010
|
Nine
Months
Ended
September
30,
2009
|
Year
Ended
December
31, 2009
|
Year
Ended
December
31, 2008
|
Cumulative
from
Inception
|
||||||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Operating
Expenses
|
$
|
22,582
|
$
|
578
|
$
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31,618
|
$
|
42,166
|
$
|
96,366
|
||||||||||
(Loss)
from Operations
|
$
|
(22,582
|
)
|
$
|
(578
|
)
|
$
|
(31,618
|
)
|
$
|
(42,166
|
)
|
$
|
(96,366
|
)
|
|||||
Other
Income
|
-
|
-
|
-
|
-
|
||||||||||||||||
Net
(Loss)
|
$
|
(22,582
|
)
|
$
|
(578
|
)
|
$
|
(31,618
|
)
|
$
|
(42,166
|
)
|
$
|
(96,366
|
)
|
|||||
(Loss)
Per Common Share
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
||||||||
Weighted
Average Number of Common Shares Outstanding – Basic and
Diluted
|
8,620,000
|
6,967,985
|
7,402,137
|
4,257,534
|
|
|
As of
September
30,2010
|
|
|
As of
December
31, 2009
|
|
|
As of
December
31, 2008
|
|
|||
Total
Assets
|
$
|
15,975
|
$
|
16,716
|
$
|
7,834
|
||||||
Total
Current Liabilities
|
$
|
21,701
|
$
|
-
|
$
|
-
|
||||||
Shareholders’
Equity (deficit)
|
$
|
(5,726
|
) |
$
|
16,716
|
$
|
7,834
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
15,975
|
$
|
16,716
|
$
|
7,834
|
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 $96,366 for the period from December 31, 2007, (date of
inception), through September 30, 2010. We anticipate generating losses for the
next 12 months. 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 December 31, 2007. We currently have no products,
customers, or revenues. Although we have begun initial planning for the
marketing of our kosher certification, 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 need to raise $72,980 to fully
implement our business plan and to remain operational during the next
twelve months. We do not have any current sources of financing to implement our
business plan and to remain operational during the next twelve months. Even with
this funding, if we do not generate any revenues within the next twelve months,
we may require additional financing in order to establish profitable
operations. Even with such additional funding, there is no assurance
that we will be profitable. Moreover, 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.
3.
Our business plan may be unsuccessful.
The
success of our business plan is dependent on our marketing our kosher
certification services. Our ability to develop this market and sell our kosher
certification services is unproven, and the lack of operating history makes it
difficult to validate our business plan. Our marketing plan is not
currently complete and partly remains to be determined. As a brand based
company, marketing and sales will be driven through the marketing of our kosher
supervision and certification services through launching an internet advertising
campaign that will be timed to coincide with the launch of our website, and
thereafter we will engage in radio, television and print advertising in national
publications related to the food industry, in particular, the nutrition, health
food, natural and organic food sectors. In addition, the success of our
business plan is dependent upon the market acceptance of our services and of our
kosher certification as reputable and trustworthy. 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 continuing as a
going concern.
8
4.
We have no operating history and have maintained losses since inception, which
we expect to continue in the future.
Management
believes that the Company needs to raise $72,980 to fully implement our business
plan and to 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 of our kosher certification
services. 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
5. Our executive officers and
Directors have significant voting power and may take actions
that may be
different from actions sought by our other stockholders.
Our
officers and Directors own approximately 81.21% 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.
6. 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 able to commit to us only up to 7 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.
7.
Our officers and Directors are located in Israel.
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:
9
|
·
|
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
obligation imposed by the judgment is enforceable according to the rules
relating to the enforceability of judgments in Israel and the substance of
the judgment is not contrary to public policy;
and
|
|
·
|
the
judgment is executory in the State in which it was
given.
|
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 was rendered by a court not competent to render it according to
the laws of private international law in
Israel;
|
|
·
|
the
judgment is in conflict with another judgment that was given in the same
matter between the same parties and that is still valid;
or
|
|
·
|
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.
|
Furthermore,
Israeli courts may not adjudicate a claim based on a violation of U.S.
securities laws if the court determines that Israel is not the most appropriate
forum in which to bring such a claim. Even if an Israeli court agrees to hear
such a claim, it may determine that Israeli law, not U.S. law, is applicable to
the claim. If U.S. law is found to be applicable, 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, none of our assets is held outside of the United States.
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 have a cause of action against these persons or us, you
may face potential difficulties in bringing lawsuits or, if successful, in
collecting judgments against these persons or us.
8. Our officers have no experience in
operating a kosher food certification business.
Since our
officers and Directors have no experience in operating a kosher certification
business or in the marketing of such services or the training of kosher food
supervisors, our officers and Directors may make inexperienced or uninformed
decisions regarding the operation of our business or the marketing of our
services, 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
9.
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
10.
Our success depends on independent contractors to provide the kosher food
supervision services at the customer’s site.
We intend
to outsource our kosher food supervision services to individuals who will be
trained by us. We will be relying on independent contractors for the
supply of an integral component of the services that we will be offering to
customers. We may not be successful in developing relationships with these
independent contractors, nor in properly training them to perform the necessary
tasks. 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 unable to enter into relationships with qualified contractors on acceptable
commercial terms, we may not be able to offer our services at competitive
prices, and our sales may decrease. In addition, because we will outsource
the kosher food supervision services that we will be providing, we will not have
complete control over the manner and delivery of the services. Any failure to
deliver those services to our customers in a timely and professional manner may
damage our reputation and brand, and could cause us to lose
customers.
11. We depend on market
acceptance of our kosher food certification services. If
our kosher food
certification services 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
kosher food certification services. Although we intend to differentiate
our certification from our competitors, no assurances can be given that we will
be able to successfully market our services or achieve consumer
acceptance. Moreover, failure to successfully commercialize our services
on a timely and cost-effective basis will have a material adverse effect on our
ability to compete in our targeted market.
12.
Failure to meet customers’ expectations could result in losses and
negative publicity, which would harm our business.
If our
certification services fail to meet our customers’ expectations, then our
revenues may be delayed or lost due to adverse customer reaction. In
addition, negative publicity about us and our services 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.
11
13.
We need to retain individuals with knowledge of the laws of kosher food
certification to support our services and ongoing operations.
The
training and development of a team of professionals to supervise and certify
products as kosher and to market our services to food manufacturers and
distributors will place a significant strain on our limited personnel,
management, and other resources. Our future success depends upon the
continued services of our executive officers who have critical knowledge of the
kosher certification industry and knowledge of the laws of kosher food
certification. 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 our services, which could adversely affect our financial
results and impair our growth.
14.
If we cannot build and maintain strong kosher certification loyalty our
business may suffer.
We
believe that the importance of our kosher certification symbol will increase as
more companies use our kosher certification services. Development and
awareness of our brand will depend largely on our ability to successfully
advertise and market our services. If we are unsuccessful, our kosher
certification may not be able to gain widespread acceptance among consumers who
are looking for kosher certifications on their food products. A failure to
develop and maintain the credibility of our kosher symbol in the kosher food
market could have a material adverse effect on our business, results of
operations and financial condition.
15.
We may be unable to protect our kosher certification
trademark.
Symbol
recognition is critical in attracting consumers to our kosher certification
services. If we are unable to trademark our kosher certification symbol or
to adequately protect our trade name against infringement or misappropriation,
our competitive position in the food market may be undermined, which could lead
to a significant decrease in the volume of manufactures and distributors
products that will request our kosher certification. Such a result would
materially and adversely affect our results of operations.
16. We may be unable to anticipate
changes in our target market, which may result in decreased demand for our
services.
Our
success depends in part on our ability to obtain the approval of our kosher
certification in our target market and to address any challenges to its
reliability, as well as any anti-Jewish sentiments in connection with the
provision of our services. Consumer preferences with regard to
stringencies relating to kosher food certification change from time to time and
our failure to anticipate, identify or react to these changes could result in
reduced demand for our kosher certification, which would adversely affect our
operating results and profitability.
17.
We may incur losses as a result of claims that may be brought against us due to
defective supervision and/or incorrect certification.
We may be
liable if we mistakenly certify products as being kosher that in fact do not
meet the accepted standards for being considered kosher. We also may be
required to withdraw our certification or recall some products if they are
mistakenly certified or mislabeled. A significant judgment against us or a
widespread withdrawal of certification or recall of products with our
certification could have a material adverse effect on our business and financial
condition.
18.
If a third party asserts that our kosher certification symbol infringes upon its
proprietary rights, we could be required to redesign our symbol, 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
kosher certification symbol violates its intellectual property rights. As the
number of kosher certification service organizations in our market increases we
believe that infringement claims will become more common. Any claims
against us, regardless of their merit, could:
12
·
|
Be
expensive and time-consuming to
defend;
|
·
|
Result
in negative publicity;
|
·
|
Force
us to stop using our kosher certification
symbol;
|
·
|
Divert
management’s attention and our other resources;
or
|
·
|
Require
us to enter into royalty or licensing agreements in order to obtain the
right to use our symbol, 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.
19. Our lack
of business diversification could result in the loss of your investment if
revenues from our primary service offering decrease.
Currently,
our business is focused on the marketing and sale of kosher food supervision and
certification services. 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 our
services since we do not have any other lines of business or alternative revenue
sources.
20.
An unsuccessful material strategic transaction or relationship could result in
operating difficulties and other harmful consequences to our
business.
In the
first quarter of 2011, we plan to develop and evaluate a wide array of potential
strategic transactions and relationships with third parties who will interact
with our potential clients or who may be recipients of our kosher food
supervision and certification services. 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.
21.
Political, economic and military conditions in Israel and in the Middle East as
a whole could negatively impact our business.
Political,
economic and military conditions in Israel may have a direct influence on us
because our executive officers are located there. Since the establishment
of the State of Israel in 1948, a number of armed conflicts have taken place
between Israel and its Arab neighbors. A state of hostility, varying in
degree and intensity, has led to security and economic problems for
Israel. Any major hostilities involving Israel, acts of terrorism or the
interruption or curtailment of trade between Israel and its present trading
partners could adversely affect our operations. We cannot assure you that
ongoing hostilities related to Israel such as those exhibited in the Gaza
incursion in 2008-2009 and the current altercations in connection with the
maritime blockade on Gaza will not have a material adverse effect on our
business or on our share price. Several Arab countries still restrict
business with Israeli companies and these restrictions may have an adverse
impact on our operating results, financial condition or the expansion of our
business. Any on-going or future violence between Israel and the
Palestinians, armed conflicts, terrorist activities, tension along the
Israeli-Lebanese or the Israeli-Syrian borders, or political instability in the
region would likely disrupt international trading activities in Israel and may
materially and negatively affect our business conditions and could harm our
results of operations. Certain countries, as well as certain companies and
organizations, continue to participate in a boycott of Israeli firms and others
doing business with Israel and Israeli companies. Thus, there may be business
opportunities in the future from which we will be precluded. In addition,
such boycott policies or practices may change over time and we cannot predict
whether certain companies and organizations, will be subject thereto. The
boycott policies or practices directed towards Israel or Israeli businesses
could, individually or in the aggregate, have a material adverse affect on our
business in the future.
13
Risks
Relating to this Offering
22. 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.
23. 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.
24.
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
25. 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. We currently do not intend to register or qualify our stock in any
state. 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.
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.
26. 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.
15
27.
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, 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.
28. 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.
29.
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, the Company 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.
16
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 4, 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 Description of Business
section beginning on page 26, the Management's Discussion and Analysis of
Financial Condition or Plan of Operation section beginning on page 19, as well
as those discussed elsewhere in this prospectus.
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 $0.025 per share. We believe that this
price reflects the appropriate price that a potential investor would be willing
to invest in our company at this initial stage of our development.
Because
we have no operating history beyond our organizational and planning activities,
and have not generated any revenues to date, the price of our common stock is
not based on past earnings and 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. No valuation or appraisal has been prepared for our business and
potential business expansion.
17
DILUTION
The
common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. 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. Accordingly, there will be no dilution to our
existing shareholders.
MARKET
FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market Information
There is
no public market for our common stock.
We have
issued 8,620,000 common shares since our inception in December 31, 2007, all of
which are restricted shares. See "Certain Relationships and Related
Transactions" below regarding these shares. There are no outstanding
options or warrants or securities that are convertible into shares of common
stock.
Holders
We had 46
holders of record for our common shares as of November 1, 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 1,620,000
shares of common stock offered through this prospectus. The selling
stockholders are non-U.S. persons who acquired the 1,620,000 shares of common
stock offered through this prospectus from us in a series of private placement
transactions that occurred from June until September 2009 at a price per share
of $0.025 and for an aggregate investment of $40,500. The private placement
transactions were under Regulation S, thus exempting them from the registration
requirements of the United States Securities Act of 1933.
The
following table provides as of November 1, 2010, information regarding the
beneficial ownership of our common stock held by each of the selling
stockholders, including:
1.
|
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(№)
|
|
|
|
|
Beneficial Ownership
After Offering(№)
|
|
||||||||||||
Name of Selling Stockholder(№)
|
|
Number of
Shares
|
|
|
Percent(І)
|
|
|
Number of
Shares
Being
Offered
|
|
|
Number of
Shares
|
|
|
Percent(І)
|
|
|||||
Amiram
Baroch Barr
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Eran
Ben Aroya
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Boruch
Yossef Blau
|
80,000
|
0.93
|
80,000
|
0
|
0
|
|||||||||||||||
Tomer
Busani
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Idan
Cohen
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Yehudit
Gal Cohen
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Sharon
Dabush
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Rotem
Fadlon
|
20,000
|
0.23
|
20,000
|
0
|
0
|
19
Roy
Fadlon
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Zah
Zadok Fadlon
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Yuval
Feldbrin
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Keren
Geldbard
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Maya
Gil Bar
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Joshua
Gluck
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Rebecca
Greenhouse
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Ya’akov
Greenhouse
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Shlomie
Grosskopf
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Maya
Gutwein
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Hannah
Hassel
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Karmela
Hay
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Itai
Hyams
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Yarden
Karako
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Moshe
Katz
|
80,000
|
0.93
|
80,000
|
0
|
0
|
|||||||||||||||
Yael
Levy
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Naftalie
Elimelech Lipschitz
|
80,000
|
0.93
|
80,000
|
0
|
0
|
|||||||||||||||
Pnina
Morgenstern
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Herschel
Chaim Nowogrodski
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Shmuel
Osher Nowogrodski
|
40,000
|
0.46
|
40,000
|
0
|
0
|
20
Yehuda
Ariyeh Leib Nowogrodski
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Avraham
Ohayon
|
80,000
|
0.93
|
80,000
|
0
|
0
|
|||||||||||||||
Sergejs
Petuhovs
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Anfija
Pojasnikova
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Meir
Chaim Sellam
|
80,000
|
0.93
|
80,000
|
0
|
0
|
|||||||||||||||
Moche
Sellam
|
80,000
|
0.93
|
80,000
|
0
|
0
|
|||||||||||||||
Neta
Shapira
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Shahaf
Shitrit
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Hanaia
Yomtov Lipa Steinmetz
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Darja
Stripkane
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Matan
Tadmor
|
20,000
|
0.23
|
20,000
|
0
|
0
|
|||||||||||||||
Solomon
Tangi
|
40,000
|
0.46
|
40,000
|
0
|
0
|
|||||||||||||||
Daniel
Tangi
|
80,000
|
0.93
|
80,000
|
0
|
0
|
|||||||||||||||
Marcelle
Tangi
|
60,000
|
0.70
|
60,000
|
0
|
0
|
|||||||||||||||
Michael
Morris Tangi
|
60,000
|
0.70
|
60,000
|
0
|
0
|
|||||||||||||||
Jonathan
Abraham Tangi
|
40,000
|
0.46
|
40,000
|
|||||||||||||||||
TOTAL
|
1,620,000
|
18.72
|
1,620,000
|
NIL
|
NIL
|
(№)
|
The named party
beneficially owns and has sole voting and investment power over all
shares or rights to these shares. The numbers in this table assume that
none of the selling stockholders purchases additional shares of common
stock, and assumes that all shares offered are
sold.
|
|
|
(І)
|
Applicable
percentage of ownership is based on 8,620,000 shares of common
stock outstanding as of September 30,
2010.
|
21
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.
|
22
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 4 of this
prospectus. All
forward-looking statements speak only as of the date on which they are made.
Events may occur or circumstances may change after the date on which these
forward-looking statements are made which could cause actual results to differ
materially from those in these forward-looking statements.
Overview
We are
a development stage company that has commenced organizational activities but has
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 in a position to market our services to prospective customers.
Accordingly, we must raise cash in order to implement our marketing
plan.
In our
management’s opinion, there is a market for reasonably-priced and efficient
kosher supervision and certification services.
We
believe that we will need to raise $72,980 in order to allow us to fully
implement our business plan and remain in business for twelve months.
If we are unable to raise additional financing to implement our complete
marketing plan as detailed below, we intend to limit our marketing activities to
no-cost and low-cost social media tools and sites such as LinkedIn, Twitter, and
Facebook, and to market our services as well as by means of free networking and
promotional tools such as e-mail lists, Internet groups, and blog posts. We hope
to create, at minimal cost, a web presence that will draw attention to our
business plan and kosher certification services and to the fact that we are
looking to attract field representatives. If we raise sufficient funds to
finance and implement our marketing plan, we expect to begin to generate
revenues in the second quarter of 2011. If we are unable to finance our
marketing plan, we may have to curtail our activities. 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. We may
seek to obtain additional funds through a second public offering, private
placement of securities, or loans. Other than as described in this paragraph, we
have no other financing plans at this time. Our marketing plan is not
currently complete and partly remains to be determined.
Plan
of Operation
Our
specific goal is to become a leading kosher food certification organization.
Assuming we raise the additional funds necessary for us to operate our business,
our plan of operation is as follows:
We plan
to operate our business under the name GO KOSHER. Our plan of
operation will rely strongly on the convenience and global access offered by the
internet. By intelligently utilizing the internet as well as other
more traditional channels, we plan to achieve our primary operational objective
of attracting candidates to build a US- network of qualified and motivated
independent contractors to provide our kosher supervision services.
We
envision three groups within our corporate structure working together to promote
our Company and to advance our goals: a marketing team, a sales team, and a team
of field representatives. Until we are able to raise additional funding or our
cash flow permits us to hire employees, the responsibilities of our proposed
marketing and sales teams will be administered by our officers and Directors,
who are not receiving any compensation for their activities on behalf of the
Company. We plan for our marketing team, initially consisting of our Secretary,
to create the positioning for the Company and to determine how we will promote
our organization. We expect our marketing team to create the tools, materials,
and directions to be used by our sales team. We plan for our sales team,
initially consisting of our President, to work “on-the-ground” locally, finding
contractors to work as field representatives and developing regional promotional
mechanisms to sell our services to potential customers. The third group, our
field representatives, will be independent contractors associated with our sales
team and located in each of the local regions designated for activity. These
field representatives, who will be responsible for inspection and certification
projects, will follow the directives of our marketing team and report directly
to our sales team. While the responsibilities of our marketing team and sales
team will overlap in some ways, we expect these two groups to complement one
another. Our marketing plan is not currently complete and partly remains to
be determined.
Activities to
Date
We have
interviewed several kashrut specialists and finalized an agreement with one of
them for the preparation of a kashrut manual. On June 7, 2010 we entered
into a consulting agreement with a kashrut specialist to serve as a consultant
to our company. The consultant is a kashrut supervisor (mashgiach) for kosher
certification and we intend for this individual to assist us in compiling our
kosher manual. We plan to distribute this manual to our potential
supervisors as part of our correspondence course and as a means to qualify those
who participate in the course as competent kosher field
representatives.
23
The
consulting agreement is for an initial term of one year, renewable upon
agreement of the parties. The consultant agreed to assist us with the
development of our kosher manual and to assist in oversight of the kosher
certification process. We agreed to pay the consultant a fee of
$5,000 for the preparation of the kosher manual, of which $500 will be
paid upon completion of the outline and $4,500 will be paid upon completion of
the manual. Payment for additional tasks, such as assisting with the
training of our sales representatives, will be agreed to in
writing. We also agreed to reimburse the consultant for pre-approved
reasonable expenses incurred. The consultant undertook not to compete
with us during the term of the agreement and for a period of one year
thereafter. We will own all work product resulting from the services
of the consultant. Since the signing of the consulting agreement, the
consultant has met with our Directors on several occasions to
discuss details of the kosher manual and to assert his readiness and
ability to prepare training materials as well as the kosher
manual. The consultant has recently completed the outline of the
kashrut manual.
In
addition, we have developed the focus and “message” of our business and
developed a preliminary marketing plan and budget for advertising our services
to prospective companies and prospective field representatives.
|
·
|
We
are in the process of designing our graphic/web design materials for use
as part of our advertising and promotional materials and expect to
complete the design by the end of the fourth quarter of
2010.
|
|
·
|
In
the fourth quarter of 2010, we hope to complete the preparation of
our kosher manual as well as complete the design of the marketing
materials that our sales representatives will use to market our services
to prospective customers.
|
|
·
|
In
March 2011, we plan to attend the International Food and Drink Event Show
in London. If we are sufficiently funded, we will have a booth
at which we will present our business at this
show.
|
|
·
|
In
the first quarter of 2011, we plan to purchase online advertising, such as
Google Search Ads and ads on koshertoday.com and just-food.com, for use in
the second quarter of 2011 to locate potential field representatives, and
to develop and evaluate a wide array of potential strategic transactions
and relationships with third parties who will interact with our potential
clients or who may be recipients of our kosher food supervision and
certification services.
|
|
·
|
By
the beginning of the third quarter of 2011, we hope to be fully
operational – namely, that our web site will be fully functional both for
our field representatives as well as for customers of our kosher
certification services and that we will have a network of fully-trained
field representatives in place to provide our kosher supervision services.
We hope to have our first kosher clients certified during the third
quarter of 2011.
|
We plan
to design and launch a website which will be user friendly and will be used as a
marketing tool for our field representatives. We plan to launch our
website during the second quarter of 2011. Concurrently with the
launch of our web site, we intend to launch our internet advertising campaign
and commence internet marketing such as banner ads as well as search engine
advertising in order to locate potential customers for our services and locate
additional field representatives.
We
estimate that the cost of developing our website will be $4,000. We
plan to have our website consist of two major components: (i) one for field
representatives and (ii) one for customers and the general public. We
plan for the field representative component of our website to require
password-protected login, and to contain both general resources and
client-specific information and accounting. We plan for the
customer/general public component to include a general section with information
about the benefits of kashrut supervision, in general, and our services, in
particular. Once a customer has signed up for our services, we plan
to issue to him a password and login information to enable the customer to enter
a password-protected, personal accounting section, which we expect will include
the ability to contact our field representatives and to provide
feedback.
We
estimate that of the $4,000 to develop our website, the graphic design costs to
develop the “look and feel” of our web site, together with images and layout for
the entire website, will be approximately $1,500. We estimate that
the programming costs for the entire website will be approximately
$2,500. Since we envision that the section of our website for our
field representatives and the section of our website for customers and the
general public will be similar in complexity and contain the same number of
pages, we believe that the website programming costs will be split evenly
between the two sections. The $4,000 estimated cost does not include
any potential purchase of online reporting tools and billing software nor
software licenses and/or customized programming solutions to enhance our
website.
In
addition to reserving a domain name, we have held some meetings to create a
preliminary plan for our website (i.e., required pages, types of information,
restricted sections, etc.), but we have not begun writing or designing the
site.
Before
our website can be launched, we will need to hire a graphic artist to design the
site and an HTML programmer to create it. We will also need to
finalize the information and layout. We currently plan to develop at
least a portion of our website using WordPress, a free tool that we expect will
enable us to modify the website contents ourselves, once the initial design has
been completed. We estimate that from start to launch, building the
site will take us approximately 6 weeks. We expect to begin
development work on our website in the second quarter of 2011
We have
already paid our accounting and legal fees related to this offering and we have
sufficient funds to cover the remaining costs associated with the filing of this
amended registration statement.
24
Contractor Sourcing
The
locating and training of independent contractors to perform the required
supervisory services will be critical tasks in our plan of
operation. We will use independent contractors for the provision of
our supervisory services in order to maintain low company
overhead. We plan to recruit a qualified work force that will be
dispersed throughout the US and that will be prepared to engage in projects when
required. Customers will be referred to these qualified contractors as per
their logistical requirements and geographic locations so as to optimize cost
effective operations with regard to travel costs and other logistical
issues. We intend to document our service guidelines and inspection
procedures in our kosher manual which will be made available on-line
for training and review purposes. We plan for our contractors to
utilize on-line reporting tools as well as billing software.
We have
not yet determined whether we will purchase the online reporting tools and
billing software from a third party or internally develop the reporting tools
and billing software. In any event, we intend for the reporting tools
and billing software to be password-protected and to enable relevant parties
(staff, field representatives, etc.) to access and enter information as
appropriate. Since we have not yet determined whether to purchase or
develop these items and since we do not currently have the necessary funds to
develop or purchase them, we have not yet assessed the costs associated with
this development and/or purchase.
In order
to locate and attract contractors, we plan to advertise on our
website. We intend for our website to employ effective SEO (search
engine optimization) strategies to direct the contractor search to the relevant
business sectors and to advertise these opportunities and invite prospective
candidates to enlist online via our website. We plan to tailor banner
messages to appeal to both novices and experienced candidates who may wish to
enroll for training with us.
In
addition, we intend to employ e-mail campaigns, social networking and direct
sales to attract and engage prospective contractors. Social
networking is the latest most popular business development tool that engages
people in an interactive manner and allows for the forming of focused and
effective interpersonal relationships. Two prime examples are Facebook and
Linked-In. We plan to utilize these online social media sites in a
variety of campaigns aimed at different target audiences such as food producers,
distributors, retailers, brand managers, and more. By focusing a social
media campaign on employment opportunities, we expect to attract a sufficient
number of qualified applicants aspiring to become independent kosher supervision
service providers.
We also
plan to have members of our marketing and sales staff attend relevant
international exhibitions to directly approach and solicit potential
contractors. For example, we intend to erect a booth and establish a
presence at relevant exhibitions to enable us to meet potential candidates face
to face. Similarly, employment and career related exhibitions may
offer fertile ground for finding qualified contractors who may handle projects
for the Company.
25
Contractor
Training
Those
wishing to become our field representatives will be required to enroll in a
three-month training/correspondence course. Our Directors, at no charge to
the Company, will prepare the three-month training/correspondence course based
on the kashrut manual being prepared by our kashrut consultant. We
anticipate that it will take three months to develop our three month
training/correspondence course. We plan to complete the development
of this course in the second quarter of 2011. We may ask the kashrut
consultant for assistance in the preparation of a training/ correspondence
course and pay him on a per hour basis for his help with the training
materials. The cost to the Company to administer the course and
evaluate the course participants is estimated to be $3,000. We plan
to charge each field representative $150 to enroll in the training
course. We expect to have fully trained field representatives in place
during the third quarter of 2011.
The
training course curriculum will include:
|
·
|
Traditional
kosher laws
|
|
·
|
Current
kosher product lists and food preparation
regulations
|
|
·
|
Food
processing and preparation
standards
|
|
·
|
Food
processing machinery and technical
processes
|
|
·
|
Ingredient
and foodstuff research methods
|
|
·
|
Company
administration and procedures
|
After
completing the course, the students will be expected to pass an online, open
book exam, which will be administered through our website. Once they have passed
the exam and proven that they are capable of conducting inspections, they will
be registered as our field representatives and will become eligible for handling
inspection projects.
Allocating Projects among
our Contractors
People
wishing to become our kosher supervision contractors will be asked to purchase
the right to serve as our kosher supervision services contractor in certain
geographic areas, each designated by a zip code. Contractors will be
required to pay us $5,000 per zip code per year for the right to be the
exclusive GO KOSHER service provider in such geographic area. From
every $5,000 we receive, we plan to allocate up to $2,500 for internet marketing
in that area.
We intend
to pay each of our contractors a sales commission of 70% of the annual fees
collected from our customers located in such contractor’s geographic
area. We plan on charging small businesses an annual fee of around
$3,600, and large businesses an annual fee of around $9,000 to maintain their
kosher certification. We are considering adding another price category for
companies with a turnover of less than $1m in order to be cost competitive in
the small business category.
Outsourced
Contractors
Since we
intend to market our kosher supervision services at the same time that we will
be marketing to build our network of field representatives, we may have
situations where we have companies interested in our services without having the
necessary field representatives to administer the kosher
certification. Until we have trained a sufficient number of field
representatives, we plan to outsource projects to qualified individuals who are
capable of serving as kosher food supervisors. At this stage, we
intend to allocate work to outside contractors on a project by project
basis. We will monitor the contractors’ performance to ensure that
our services are being performed in a professional manner. We expect
to phase out our use of other companies once the number of field representatives
trained by us increases to enable us to allocate projects to our own stable of
field representatives.
We intend
to employ various methods to secure the services of temporary outsourced
contractors until such time as we have trained a sufficient number of field
representatives who are capable of providing our kashrut certification services
to our customer, with the method employed in each case dependent on the location
of the particular customer’s facilities. In locations that are in proximity to
rabbinical seminaries training young men to be rabbis, we plan to approach these
yeshivot (schools) and utilize their rabbinical students. In more remote areas
which are not near rabbinical seminaries, we will attempt to locate qualified
independent contractors who are familiar with the kashrut laws, for example,
Chabad emissaries. Alternatively, if we are unable to locate any qualified
contractors near by, we may have to incur the travel expenses associated with
sending rabbinical students to these remote areas.
We plan
to put into place reporting mechanisms whereby our outsourced contractors will
report to us on a regular basis to enable us to evaluate their performance and
progress at the customers’ facilities. Because we intend to retain
independent contractors who are rabbinical students, our outsourced contractors
will already be knowledgeable of the laws of kashrut. We intend to
prepare a checklist that each outsourced contractor will be required to follow,
outlining the certification process and the duties of the outsourced
contractor. We will ask each contractor to report to us via email on
his activities and any questions or problems that he may encounter at a
customer’s facility. We will work with the contractors to set
realistic milestones and goals and then communicate with them in real time to
ensure that these expectations are satisfied.
26
Initially,
we will not incur any additional costs to monitor the performance of these
outsourced contractors since our officers and Directors will be responsible for
supervising the performance of these contractors. At some point in
the future, if the number of outsourced contractors increases, our management
may have to dedicate more of their time to the performance of this task, and we
may eventually have to hire employees to perform these tasks.
We do not
plan to use outsourced contractors over the long term, and instead we intend to
develop our own network of field representatives. We plan to phase
out the use of outsourced contractors as trained field representatives become
available; however, we envision that in many cases these outsourced contractors
may themselves become field representatives. We do not have a firm
time table for phasing out these outsourced contractors as this process will
depend on various factors, including the speed with which we are able to retain
and train field representatives who are ready to take over from the outsourced
contractors.
Our
outsourced contractors will not be subject to the same pay structure that we
plan to utilize with our field representatives. We intend to pay our outsourced
contractors a fee for each visit they make to a customer, which fee will be
negotiated on a case-by-case basis with each contractor.
27
As the
number of field representatives trained by us grows, we expect to be able to
expand our operations. Initially, we plan to invest resources in locating and
training prospective candidates to work as kosher food supervisors, but
as our business expands we expect to be able to reduce the resources
dedicated to recruiting contractors.
Marketing/Advertising
Strategy
To
penetrate the market and achieve product exposure, assuming we raise the
additional funds necessary for us to operate our business, we plan to launch our
online marketing campaign sometime in the second quarter of 2011. We
anticipate the cost for our marketing and advertising campaign for the next
twelve months to be $16,980 which will be used for Google ads, Banner Ads,
targeted web-site advertising, and print advertising. Our marketing plan
is not currently complete and partly remains to be determined.
Our
overall strategy is to modernize the image of kosher food certification by
dispelling the common misconception that acquiring kosher certification is
difficult, time consuming, and costly. Our goal is to spread the
message that we have revolutionized the kosher certification process by setting
a new standard in kosher certification that is simple, fast, and
inexpensive.
Our
kosher certification symbol will be central to
all marketing collateral and will portray a modern, fresh and healthy
image. In addition, our kosher certification symbol will be marketed
and its reputation built upon the fact that kosher certification has a
reputation as being a safeguard against unsafe food preparation practices, thus
assuring consumers that the products they are buying are safe.
In order
to attract customers, we plan to launch an internet advertising campaign that
will be timed to coincide with the launch of our new website, which we intend to
be operational in the second quarter of 2011. We intend for our corporate
website to establish our internet presence and to employ effective search engine
optimization strategies to 'spread the word' and begin drawing attention to the
website and our Company. As the chief internet drivers are search
engines, we plan to post the relevant keywords on our site to be picked up and
displayed when potential clients conduct online searches for kosher
services.
|
●
|
Google Search Ads –
Using critical keywords in a company’s advertisement, Google is able to
match searches using one of the advertisement’s keywords, and place the
company’s ad next to the search results. The cost of
Google ads is performance related and we estimate that an effective
campaign would cost around $2,000 per month. People clicking on
our advertisements will be led to a landing page where we will ask the
interested party to fill in the required fields, after which we will
send them a reply e-mail with our brochure and marketing material
discussing the benefits of our kosher certification services and of
affixing our kosher symbol to their
products.
|
|
·
|
Banner Ads – We
plan to run banner ads for a period of three months. The costs
of banner ads are linked to the amount of traffic the banners attract.
The charges are calculated by cost per click or cost per impression.
The following are examples of suitable websites on which we will
consider placing banner ads:
|
28
|
·
|
www.koshertoday.com
– a site dedicated to kosher professionals with 5,400 opt-in subscribers
weekly. Estimated cost of $1,000 for a three month subscription that
includes full and vertical banners.
|
|
·
|
www.just-food.com – International
readership - Americas 57%, EMEA 29% and Asia & Oceania 14% - excellent
platform for food news, news releases, forums, etc. We intend
to advertise on the homepage leader board position for a period of
three months at a cost of $1,755 per month for a total cost of
$5,625.
|
After the
initial three months, we intend to analyze the results and allocate our
marketing budget accordingly to be most effective.
In
addition, we intend to engage in advertising in magazines and trade publications
related to the food industry, in particular, the nutrition, health food, natural
and organic food sectors.
The food
industry includes the following relevant magazines:
|
·
|
Food Processing
– a quarter-page advertisement in this magazine may be read by over
100,000 industry professionals. The estimated cost of a
quarter-page ad is $2,109 per issue with a minimum run of three
issues.
|
|
·
|
Prepared
Foods –
reaches the desks of 40,000 marketing and sales decision-makers in
the food industry. The estimated cost of a quarter-page
advertisement is $676 per issue with a minimum run of three issues for a
total cost of $2,028.
|
We plan
to have our advertisements be strongly 'lifestyle' themed and focus on the
benefits of obtaining kosher food certification. We will
consider including special offers in these advertisements that will be repeated
in both the traditional print and digital media.
Furthermore,
if we are sufficiently funded, we plan for members of our sales and marketing
teams to attend food trade shows and health food conferences such
as:
|
·
|
The
International Food and Drink Event Show in London in March
2011
|
|
·
|
The
Foods and Nutrition Conference and Expo in San Diego in September
2011
|
The rapid
growth in the organic and wellness markets indicates that a substantial pool of
potential customers exists who may look to us for assistance in penetrating
their market.
29
We also
plan to publish a kosher cookbook with traditional as well as new recipes that
will include only products certified by us.
We intend
for our marketing collateral to include a six page brochure describing our
services and the steps necessary for achieving kosher certification, along with
the potential marketing benefits customers’ will realize by being able to affix
the “Go-Kosher” symbol to their products. In addition, our marketing
collateral will include statements from our management team, from leading rabbis
and from others promoting our Company’s kosher certification
services. We also consider our website to be part of our marketing
collateral.
We plan
to make all marketing collateral available in digital formats on our
website. We expect to begin translating our marketing collateral into
various international languages in the third and fourth quarters of
2011.
Customer
Service Center
Once we
are fully funded, we intend for our website to include a 24 hour help line that
will be manned by trained personnel to answer any queries and respond to
requests for additional information regarding our services. We
intend to either operate this service from the state of Israel where there are
many English speakers or, if costs are competitive, in the United States.
Potential customers will be able to submit requests for quotations online as
well as access a frequently asked questions page. Eventually we plan
to have a merchant account to be able to accept credit cards from
contractors.
Activities
to Date
We
were incorporated under the laws of the State of Delaware on December 31, 2007.
We are a development stage company. From our inception to date, we have not
generated any revenues, and our activities have been limited to (i)
organizational, start-up, and capital formation activities; (ii) the
preparation of our kashrut manual, (iii) the development of the focus and
“message” of our business and (iv) the development of a preliminary marketing
plan and budget for advertising our services to prospective companies and
prospective field representatives. We currently have no employees, but we have
retained a kashrut specialist as a consultant. To date we have conducted certain
preliminary market research using publicly available resources regarding the
kosher food market. We have also conducted preliminary market
research of competing service providers in our target markets. Our marketing plan is
not currently complete and partly remains to be determined.
Results
of Operations
During
the period from December 31, 2007 (date of inception) through September 30,
2010, we incurred a net loss of $96,366. This loss consisted primarily of
incorporation costs and administrative expenses. Since inception, we have sold
8,620,000 shares of our common stock.
Purchase
or Sale of Equipment
We do not
expect to purchase or sell any plant or significant equipment.
Liquidity
and Capital Resources
Our
balance sheet as of September 30, 2010, reflects assets of $15,975. 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. If we require additional capital, we would have to
issue debt or equity or enter into a strategic arrangement with a third party.
At the present time, we have not made any arrangements to raise additional
cash. We may seek to obtain additional funds through a second public
offering, private placement of securities, or loans. Other than as
described in this paragraph, we have no other financing plans at this
time. 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.
30
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
services.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
The
Company does 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.
31
DESCRIPTION
OF BUSINESS
Overview
of the Company
We are
a development stage company that was incorporated on December 31, 2007. We have
commenced organizational activities, primarily focused on planning
the offering of kosher certification and supervision services to companies and
producers that wish to add a kosher symbol to their product labels. 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, or any persons associated with, 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 the second quarter of 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 offer kosher supervision and certification services to food companies and
producers that wish to add a kosher symbol to their product
labels. By promoting the various commercial benefits of having a
kosher certificate and positioning kosher certification as an essential part of
a business development strategy, we plan to attract food companies seeking to
increase their sales and strengthen their market position. To date we have
(i) interviewed several kashrut specialists and finalized an agreement with one
of them for the preparation of our kashrut manual, (ii) prepared an outline of
the kashrut manual, (iii) developed the focus and “message” of our business, and
(iv) developed a preliminary marketing plan and budget for advertising our
services to prospective companies and prospective field
representatives.
Our
offices are currently located at 72 Yehudah HaMaccabi, Unit 11, Tel Aviv, 61070,
Israel. Our telephone number is +972-52-570-3774. We do not currently
have a website; however, we have reserved a domain name www.go-kosher.net.
The
Market Opportunity
Recent
food contamination statistics indicate that the various government agencies set
up to control such outbreaks are unable to prevent such
occurrences. Contaminated milk affected 300,000 babies in China,
leading to the death of four infants. A deadly peanut salmonella
outbreak in the United States in 2009 caused more than 700 illnesses in 46
states and nine deaths. (Source:
http://foodpoisoning.pritzkerlaw.com/archives/peanut-butter-lawsuit-fda-seizes-salmonella-peanuts-from-westco.html).
Consumers
are beginning to realize that they can no longer trust that the products and
produce available in their stores are safe. Many are losing faith in the
government regulatory bodies, such as the U.S. Food and Drug Administration
(FDA), to ensure the safety of the products they are purchasing. (Source:
http://www.rd.com/your-america-inspiring-people-and-stories/problems-in-the-fda/article55513.html).
Our
management believes that consumers are becoming increasingly disillusioned with
food supplier’s claims of quality and are looking for other forms of
confirmation of product safety outside of the regular framework and independent
of government or corporate control. Consumers are looking for suppliers and
products that have solid safety records and reputations.
32
One of
the oldest and most well known food regulatory systems is a religious system
known as keeping “kosher”. Adhering to kosher dietary laws is a
requirement for religious Jews. As part of keeping kosher, religious
Jews will only purchase foods that have been certified as being
kosher.
What is
Kosher?
The term
kosher refers to food and food preparation methods that are based on Jewish
dietary laws.
These
laws specify, among others, the following primary requirements:
|
-
|
The
product cannot contain both meat and milk
products
|
|
-
|
The
product must contain only kosher ingredients. This means that
the product may not contain ingredients derived from non-kosher animals,
such as pork or shellfish; may not contain food additives derived from
non-kosher animals, such as gelatin or glycerin; and may not contain
ingredients derived from kosher animals that have not been slaughtered in
accordance with Jewish law.
|
|
-
|
Animals
that are kosher, such as cows, must be slaughtered in a specific
way.
|
|
-
|
Every
machine used in the food preparation process must not come in contact with
non-kosher ingredients.
|
(Source -
http://www.soundvision.com/Info/halalhealthy/kosherlabeling.asp)
What is Kosher
Certification?
A kosher
certificate indicates that a product has undergone stringent inspections by a
recognized kosher agency and that it has been prepared and packaged in
facilities that comply with the dietary requirements of Jewish
law. Certification agencies provide the inspection and maintenance
services based on their individual standards and interpretations of kosher
laws.
The
certification process includes a thorough ingredient review which includes an
inspection of all the processing aids and machines, as well as an inspection of
the plant and processes. Scheduled and unannounced inspections are carried out
to supervise and review the preparation processes and sourced
materials. A food producer is permitted to display the kosher symbol
of the certifying organization on the food producer’s products as long as it
continues to adhere to certain kosher standards and practices.
Although
an integral part of the Jewish religion, the kosher certification process has
become widely recognized amongst non-Jews as a reliable system of ensuring that
products have been prepared safely and that any livestock involved has been
treated humanely. (Source:
http://www.oukosher.org/index.php/common/article/setting_the_record_straight_on_kosher_slaughter.)
The
kosher symbol that these kosher certifying organizations place on products that
they supervise is often sought after by many consumers who seek the additional
confirmation that the foods that they are purchasing have been inspected by an
external organization.
33
A product
carrying a kosher symbol notifies an individual that the food product has been
inspected by an external group motivated by religious conviction, which may be
far more convincing to consumers than any government or corporate
certification.
We
believe that kosher certification system has operated for thousands of years and
is not based on profit margins or annual production budgets. For this
reason, many people believe that the religious certifiers do a better job than
the government or corporations at keeping food clean and safe.
In this
regard, kosher certification agencies have recently been inundated with
producers, suppliers and distributors who are seeking to take advantage of this
consumer trend by having their products certified as kosher. (Source:
http://www.oukosher.org/index.php/common/article/the_kosher_consumer_speaks/.)
Our
management believes that, until recently, the kosher certification market has
been serviced mainly by non-profit organizations.. We expect to be
able to offer cost effective services and rapid certification to clients, who
have up until now had to deal with bureaucratic organizations that are often
inefficient, outdated and over-worked.
Our
Services
We plan
to market and offer kosher supervision and certification services to companies
and producers that wish to add a kosher symbol to their products’
labels. By promoting the various commercial benefits of having a
kosher certificate and positioning kosher certification as an essential part of
a business development strategy, we intend to attract food companies seeking to
increase their sales and market reach.
A company
requesting kosher certification will be charged for the initial inspection
process and for on-going inspections conducted by our independent contractors,
whose reports will be reviewed by our head office. Upon meeting our
kosher food requirements, we will issue a kosher certification and permit the
company to affix our kosher symbol on its product’s label. We will
continue to perform regular inspections of the food plant to ensure that the
company complies with all of our strict conditions.
We will
enter into a kosher certification services contract with each potential
customer. These contracts will be of an ongoing nature since the inspection
process is not a one-time event. The food preparation process must be
reviewed and re-evaluated every time a new technology, ingredient or process is
added or adjusted. The kosher certification will then be issued and
regular follow up inspections will be scheduled at six month
intervals.
There are
at least three means by which potential kosher certification customers may
contact us. First, our field representatives may locate the potential customers.
Second, potential customers may see our targeted advertisements in a specific
region or area for which we have assigned a field representative and contact us,
in which case we will refer the customer to the field representative who is
responsible for the geographic area in which the potential customer is located.
Third, potential customers located in geographic areas for which we have not
assigned a field representative may see our national advertising in trade
magazines and contact us, in which case we will either assign a field
representative to handle the customer’s needs or outsource the kosher
certification process, if necessary.
Although
there are many well established kosher certification agencies presently in the
market, we believe that our business is viable since we plan to provide kosher
certification services promptly, expeditiously, and at a competitive cost. The
fees that national kashrut certification agencies charge depend on the
complexity of the facility, the number of products certified, location and
travel costs, and the number of visits required. (Source: Atlanta Kashruth
Commission, http://www.kosheratlanta.org/Certification.htm.). According to Rabbi
Markowitz from Shatz Kosher Services, kashrut certification costs from $3,000 to
$5,000 per year on average. (Source: JTA Wire Service, Kosher Certification:
Made in China March 11, 2008. http://www.jewishtimes.com/index.php/jewishtimes/news/jt/international_news/kosher_certification_made_in_china/).
According to the New York Times, food manufacturers pay kashrut supervisory
agencies an annual fee of between $1,000 and $5,000 to inspect their plants and
certify a product as kosher. (Source: NY Times, December 31, 1989.
http://www.nytimes.com/1989/12/31/business/what-s-new-kosher-foods-moving-mainstream-kosher-offers-seal-approval.html.).
The administrator of the OK Kosher Services has stated that the average annual
cost for kosher inspections can be as high as $40,000 for multi-plant
corporations. (Source: http://www.ok.org/Content.asp?ID=198). As described above
in the “Plan of Operation” section, we intend for our annual fees to be
competitive. We plan on charging small businesses an annual fee of around
$3,600, and large businesses an annual fee of around $9,000, to maintain their
kosher certification. We are considering adding another price category for
companies with a turnover of less than $1m in order to be cost competitive in
the small business category.
Although
other established kosher certification agencies have web sites and provide new
customers with the option to sign up for kosher certification via the web, the
kosher certification process still involves on-site face-to-face meetings, as
well as telephone discussions with customers, before kosher certification is
awarded. While we will require our field representatives to perform on-site
visits, we intend to modernize and expedite the sales cycle and the
certification process by using modern communication tools, such as Skype, online
registration and filing capabilities, and email. In addition, we intend to
utilize commission-based local field representatives who will be responsible for
customer relations. Since our field representatives will receive a commission
for each customer inspected, they will have an incentive to perform the
inspection services expeditiously. At the same time, our kashrut certification
process will ensure that the value and quality of our certification is not
compromised, by providing for random inspections by management. As our business
grows, we expect to eventually dedicate an employee to quality
control.
34
With
regard to timing, although we do not have any definitive information regarding
our competitor’s turn-around time, by using automated online registration and
reporting tools we believe we will be able to (i) process new clients
efficiently and quickly, (ii) monitor and report the status of inspections, and
(iii) streamline the kosher certification process to save time and
expense. We intend for our field representatives to schedule a
meeting with a potential customer within one week of initial contact and to
issue a report on what changes need to be made in the company's production
lines/ingredients within seven business days after the initial
inspection. The company will then report back to us as soon as they
have implemented any necessary changes, and our representative will schedule a
follow-up meeting within seven business days to re-inspect the facility for
kosher certification. If the company meets all of its obligations, we
intend to issue the kosher certification electronically (so that the company may
post on its marketing material/packaging/and web site), and to courier a
physical certificate to the company for posting in its facility.
Certification
Process
The
Application
Clients
wishing to have their products certified as kosher will be asked to complete a
detailed application asking for comprehensive product information and production
details, including the following information:
|
·
|
kosher
designation - dairy, meat, “parve” (neither meat nor dairy) and/or
Passover
|
|
·
|
type
of product and distribution strategy (retail or
industrial)
|
|
·
|
product
name, brand name and/or private
label
|
|
·
|
company's
motivation for seeking
certification
|
|
·
|
detailed
product ingredient list including the identity of the manufacturers of
such ingredients, listing whether or not the product ingredients are
labeled with a known kosher label.
|
|
·
|
raw
materials list and suppliers
details
|
|
·
|
ingredient
and raw material shipping methods
|
|
·
|
list
of processes (flow-chart) involved in
production
|
|
·
|
number
of production plants involved and their
locations
|
|
·
|
manufacturing
details of ingredients used and their kosher
status
|
The
information supplied in the application must be comprehensive as it is an
essential component in determining the costs involved and will affect the price
quotation that will be submitted to the client for the kosher certification
services.
The
Inspection
Once the
client approves a proposal, we will assign one of our field
representatives to the project. He will conduct an on-site inspection and
submit a report. As part of the inspection, our field representative
will thoroughly tour the production facility to make sure it adheres to kosher
laws (e.g., no dairy/meat products in the same facility; no non-kosher
meat). Our field representative will also look at all the ingredients
used in the manufacturing process and will note which of these items are already
labeled as kosher and which ones are not. Items that are not labeled
kosher will be brought to the attention of our main office, and we will explain
the need for our customer to switch to kosher labeled ingredients.
The
Evaluation
The
inspection report and all other data gathered will be thoroughly evaluated by
us. If any issues arise that require further attention, they will addressed at
this stage; such as, the use of ingredients in the manufacturing process that
are not labeled kosher, the mixing of dairy and meat products,
etc. Any outstanding issues will be repeatedly assessed and addressed
until they are resolved to ensure that the product complies with the required
kosher standard. In order to gain certification, we will require customers
to switch to kosher labeled ingredients, as well as comply with all other kosher
requirements.
35
Certification
Only
after everything is deemed acceptable will we approve the granting of a kosher
certificate and authorize the display of our kosher symbol on the client’s
product labels. The kosher certificate issued will be valid as long
as certain conditions are adhered to, including providing access to our
supervisors for additional inspections.
Follow-up
Inspections
We intend
to conduct follow-up inspections randomly to ensure that the client is adhering
to all of the kosher food requirements and conditions of our contract with the
client. Clients are obligated to inform us of any changes in their
supply chain, production procedures, or other operations that may affect the
kosher status of their products. Failure to comply will result in
official warnings and possible de-certification, depending on the seriousness of
the non-compliance or violations.
Example
of Certification Process
A cookie
manufacturer requests kosher certification. We dispatch a field
representative to inspect the site and issue a report. The field representative
ensures that there are no milk or meat products being used in the preparation of
the product. He focuses on each of the ingredients being used, such as flour,
chocolate, sugar, etc. All of these ingredients must be labeled as kosher for
the end product, the cookie, to receive our kosher certificate. If
any ingredients are not labeled as kosher, our field representative will suggest
to the manufacturer that he locate and use a kosher supplier of the ingredient
or that the cookie manufacturer’s supplier itself obtain kosher certification
(this will take longer; hence we would recommend that our client simply switch
to a kosher labeled ingredient). In the event that the cookie
manufacturer refuses to use kosher ingredients, we will not be able to issue our
kosher certificate and the only fees to be charged will be for the initial
inspection process.
Services
Pricing Model
Pricing
in this business is structured and scalable due to the fact that each client and
request has to be dealt with individually. The complexity of each
individual product, and more specifically the number of ingredients or
preparation procedures required, directly affects the kosher certification
process and therefore the costs. There are logistical costs involved in
checking the kosher conditions relating to a product as they involve physical
inspections by qualified personnel at several locations such as processing
plants, supply depots and packaging facilities. Each product or company
has to be assessed individually and it is up to each client whether it wishes to
incur the costs of kosher certification.
Some
certified products may be manufactured, for example, in a factory that handles
only kosher items, and then relatively few inspections will be required.
Others may be processed at a location where non-kosher as well as kosher
foods are produced, necessitating thorough inspections, alternative processing
stipulations, and frequent return visits.
However,
it is important to note that the kosher certification costs are almost
negligible when one examines the end product price. As Rabbi Berel Wein has
noted:
"…due to
the volume of goods produced, the cost of certification per unit is so small
that it really does not figure in the cost of the product. The cost of
kosher certification is always viewed as an advertising expense and not as a
manufacturing expense." Wein, Berel (December 27, 2002), "The problem
with Shinui", Jerusalem Post, p. 8B.
36
We plan
to charge food manufacturers the following amounts for their initial
inspections, which amounts will be based on the customers’ annual
turnover.
|
·
|
Businesses
turning over less than $3M annually -
$2,500
|
|
·
|
Businesses
turning over between $3M and $10M annually -
$10,000
|
|
·
|
Businesses
turning over more than $10M will be on a deal by deal
basis
|
In
addition to charging for the initial inspection, we plant to charge our
customers a fixed annual fee for maintenance of the kosher
certification. We intend to charge small businesses approximately
$3,600 a year and large businesses approximately $9,000 annually to maintain
their kosher certification.
Strategic
Relationships
In the
first quarter of 2011, we plan to develop and evaluate a wide array of potential
strategic transactions and relationships with third parties who will interact
with our potential clients or who may be recipients of our kosher food
supervision and certification services. We intend to explore
relationships with existing certification services, offering to work with them
to cover a larger regional area by sub-contracting services to
them. We also plan to explore partnerships with local rabbinic
schools in various states to offer internships to their graduating students,
which would offer these recent graduates real-life experience with kashrut
supervision, while providing the Company with additional kashrut supervisors at
minimal expense. Finally, we plan to explore working with other
organizations that are currently marketing themselves to Jewish communities by
offering them the opportunity to represent our Company and to offer our services
at the same time they are marketing their own products and
services. Potential strategic transactions and relationships with
third parties will be sought on the Internet, via social media tools such as
LinkedIn, Facebook, etc., and through research into local organizations
interested in reaching similar markets.
From time
to time, we may engage in discussions regarding potential joint ventures to
create or strengthen strategic partnerships to further the development and
success of the company. Examples of such strategic transactions
include partnering with health-related organizations and causes, and obtaining
corporate brand endorsements to promote our business. We plan to
explore establishing mutually beneficial relationships with organizations such
as diabetic support groups, weight-loss organizations, heart foundations,
fitness clubs and sports organizations, and others third parties that may be
able to assist us with the promotion of the health benefits associated with
kosher products certification.
The
Kosher Food Market
Over $150
billion worth of kosher certified products are consumed annually all over the
world, a figure that is growing at 15% per annum. (Source:
http://www.foodnavigator-usa.com/Legislation/Kosher-certification-moves-forward)
In the US
market alone, by 2002, consumers were spending approximately $6.7 billion a year
on kosher products and the number was expected to grow another 15% within the
year. (Source: http://www.ok.org/Content.asp?ID=189.) There were 75,000
different kosher food products, and over 10,000 companies in the U.S. producing
products for the kosher market. Approximately 3,000 new products were being
introduced into the U.S. kosher market every year. (Source:
http://www.kosher.org.au/kosher_market.htm.)
Globally,
the future potential for the kosher certification market is clearly reflected in
the statistics of new products launched all over the world. Of the 49,752 new
products launched, 6,252 have a kosher marking or make some claim to being
kosher. (Source:
http://www.foodnavigator.com/Financial-Industry/No-additives-or-preservatives-lead-label-claims-Mintel.) It
is projected that more producers and suppliers will follow this trend in an
attempt to satisfy the consumer demand for kosher, safer products, and to
increase their market reach and share.
According
to a new report by market research firm Mintel, quality is the main reason
consumers give for purchasing kosher products. They are assured of higher
quality products because the products have been processed by a system based on a
strictly religious framework. The motivation for profit is less relevant to the
equation, and thus the supplier and product are seen as more trust-worthy.
(Source: http://www.mintel.com/press-release/3-in-5-kosher-food-buyers-purchase-for-food-quality-not-religion-?id=321.)
An
interesting example of the increasing demand for kosher certified products from
non-Jewish markets is the markets in India and China that have been showing
signs of rapid growth over recent years. (Source:
http://www.nutraingredients-usa.com/Consumer-Trends/China-and-India-see-rise-in-demand-for-kosher-certs).
Since the percentage of the population that is Jewish has not substantially
increased in these countries, we believe that increase in demand is not related
to any religious motivation, but to fact that consumers trust the kosher symbol
and see it as a symbol of quality, ensured by an external, independent
inspection body. (Source:
http://www.nutraingredients-usa.com/Consumer-Trends/China-and-India-see-rise-in-demand-for-kosher-certs.)
37
We
believe that the increasing demand for kosher certification in the United States
will not be able to be met by the existing network of kosher certification
organizations.
Target
Market
Our
target market is the growing sector of businesses and food producers that are
realizing the benefits to having kosher certification of their products. It is
obvious that kosher certification has grown beyond its original religious and
cultural bounds. Originally exclusively relevant to the Jewish public, it has
gained a general reputation of cleanliness and purity that is being sought
after in today’s market. The kosher symbol represents a superior level of
inspection and quality guaranteed by standards not associated with any
corporation or government.
Consumers
in general are becoming a lot more aware of the quality of food they buy, how it
is prepared, and where it comes from. This target market is clearly
defined as it has already engaged in the organic and health food trend, a new
market sector that holds great promise for kosher certification opportunities.
Many of the new companies and products that are springing up to satisfy this
consumer trend will be interested in adding value and quality to their products
in the form of a kosher certificate. This consumer group is sophisticated and
tends towards purchasing products that offer healthy or organic
alternatives. We plan to target the producers of healthy snack foods,
cookies, sauces, dips, breakfast cereals, soft drinks, and other organic grocery
items for kosher certification services to add appeal to their
products.
Another
sector of the target market is the increasing number of vegetarians and lactose
sensitive consumers who trust the kosher symbols to inform them if the product
they plan on purchasing contains either meat or dairy ingredients.
Vegetarians recognize and trust the kosher “parve” label, which indicates
that the product contains neither meat nor milk ingredients, to guarantee that a
product is truly vegetarian. As a reliable indication of a product’s
contents, the kosher symbol indicates to them if a product is safe and suitable
for their controlled diets.
In
addition, the target market includes mainly Jews, but interestingly also
includes Muslims and Seventh Day Adventists who also respect the kosher
symbol since they adhere to dietary restrictions that are similar to the kosher
laws. (Source:
http://www.nutraingredients-usa.com/Consumer-Trends/China-and-India-see-rise-in-demand-for-kosher-certs.)
The
target market for kosher certification extends throughout the food and
ingredient supply chain as items that carry a kosher symbol hold an added value.
The products command higher prices as consumers who can afford to be more
discerning about what they eat are generally from a higher income bracket and
are less-price sensitive.
Our
Competition
There are
many well established kosher certification agencies presently in the market. As
with many religious issues, interpretation of the ancient kosher laws and their
implementation has created a variety of groups who adhere to different levels of
strictness when it comes to the ingredients and processes involved.
Different certifying authorities have different opinions about what
constitutes a kosher product or environment.
38
Our
management believes that kosher certifying agencies have traditionally covered
very limited geographical areas, due to the travel requirement for personal
inspections and involvement in the daily preparation processes. We believe
that this limitation has resulted in a large number of regional kosher
certifiers that have only built up reliable reputations within their local
markets. We intend to enter the market with a strategy that will enable us to
reach and service the global market in a cost efficient manner.
The most
widely recognized kosher symbols and the related certification agencies
are:
OU is a
trademark of the Orthodox Union that has been in existence for 80 years and has
an international presence. The OU certifies more than 400,000 products,
making it the world's most recognized and the world's most trusted
kosher symbol. (Source: http://www.oukosher.org/)
CRC is
the trademark of the Chicago Rabbinical Council – the largest regional Jewish
Orthodox organization in North America. The CRC is a not-for-profit
offering a wide variety of Jewish services including kosher supervision and
certification around the world throughout the year, including Passover
supervision. (Source: http://www.crcweb.org/)
OK is
trademark of Organized Kashrus Laboratories NY. Founded in 1935, the
company operates internationally and certifies over 100 000 products. (Source:
http://www.ok.org)
Start-K
is trademark of Star-K Kosher Certification MD. STAR-K Kosher Certification, a
not-for-profit agency, certifies food products, as well as industrial food
chemicals, in over 1,000 locations worldwide. It has been in a business alliance
with NSF International since 2003 to expand operations. (Source:
http://www.star-k.org/)
Kaf
Kosher is the trademark of KOF-K Kosher Supervision, NJ and has been operating
for almost 40 years. KOF-K was the first Kashrus organization to introduce
computer technology to the complexities of Kashrus supervision/management.
(Source: http://www.kof-k.org)
39
Competitive
Advantages
Our
services are intended to have the following competitive advantages compared with
our competitors’ services:
|
·
|
We
plan to run our kosher certification service company as a
business
|
|
·
|
We
plan to implement a simple and easy online registration process for our
services
|
|
·
|
We
intend for our field representatives to be well motivated and as such to
perform their tasks in a professional
manner
|
Because
many kosher certification services (OU, OK, Chof-K, etc.) are run as non-profit
public service providers, and not as businesses, they are not driven to turn a
profit. Further, since, based on our knowledge of the industry, our competitors’
local representatives are not paid on a commission basis, we believe that such
individuals conducting the on-site inspections would be less motivated than
inspectors who receive a commission on each customer serviced.
Furthermore
based on our knowledge of the industry, the current certification organizations
often take a relatively long period of time to assign a supervisor, verify the
status of a company’s products, review the overall production process, put
someone in place to supervise the actual production, and finally come to a
determination. We believe that we will be able to provide a shorter turn-around
time from initial inquiry to on-site inspection and certification.
Finally,
by using the latest Internet and social media tools, such as a website that is
constantly being updated, blogs with the latest information, Linked-In and
Facebook, we plan to keep consumers up to date on the latest kosher food
offerings, as well as serve as advertisements for the food manufacturers that we
service and promote their product line directly to kosher food
consumers.
Expenditures
Subject
to our raising additional capital, the following chart provides an overview of
our budgeted expenditures in US Dollars by significant area of activity over the
next 12 months:
Legal
and Accounting (including SEC compliance, excluding the cost of this
filing)
|
20,000
|
|||
Advertising
/ Marketing
|
16,980
|
|||
Design
of Symbol / Preparing Training Materials
|
5,000
|
|||
Overhead
– Telephone / Internet
|
3,000
|
|||
Travel
|
5,000
|
|||
Training
Field Representatives
|
3,000
|
|||
Misc.*
|
20,000
|
|||
Total
|
$
|
72,980
|
* While
not all elements of the Miscellaneous category of expenditures have been defined
or identified by us, we have budgeted this extra allowance to cover such items
as: (i) equipment purchases (up to three laptop computers to be used by our
staff), (ii) software licenses and/or customized programming solutions to
enhance the website (programming of the website itself is included in the
Advertising/Marketing entry), and (iii) additional travel which may be required
by our Directors.
Sources
and Availability of Products and Supplies
The
nature of our intended services does not mandate any dependence on one or a few
major products or suppliers.
Dependence
on One or a Few Major Customers
The
nature of our services does not mandate any dependence on one or a few major
customers or food distributors.
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 trade
name, Go Kosher, and our certification symbols on the basis of applicable
trademark and trade name laws. Besides our trade name, we do not hold any other
intellectual property.
40
Existing
or Probable Government Regulations
Companies
engaged in the manufacture, packaging and distribution of food items are subject
to extensive regulation by various government agencies which, pursuant to
statutes, rules, and regulations, prescribe labeling requirements. In some
states the labeling of food products as being “kosher” is subject to “standard
of identity” requirements. To the extent that any product that we seek to label
as “kosher” does not conform to an applicable standard, special permission to
market such a product is required.
New
government laws and regulations may be introduced in the future that could
result in additional compliance costs, seizures, confiscations, recalls or
monetary fines, any of which could prevent or inhibit the labeling of products
as “kosher”. If we fail to comply with applicable laws and regulations, our
clients and us may be subject to civil remedies, including fines, injunctions,
recalls or seizures, which could have a material adverse effect on our business,
results of operations and financial condition.
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.
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 operational activities; 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 72 Yehudah
HaMaccabi Street, Unit 11 Tel Aviv, Israel 61070. Our principal executive
officer provides us with the use of this office, which is a part of his
residence, at no cost to the Company. 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 become a “reporting issuer” under
Section 12 of the Securities Exchange Act of 1934, w e are not currently a
reporting company, but upon effectiveness of this registration statement, we
will be required to file reports with the SEC pursuant to the Securities
Exchange Act of 1934; such as annual reports on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K.
WHERE
YOU CAN GET MORE INFORMATION
In
accordance with the Securities Act of 1933, we are filing with the SEC a
registration statement on Form S-1 covering the securities in this offering. As
permitted by rules and regulations of the SEC, this prospectus does not contain
all of the information in the registration statement. For further information
regarding both our Company and the securities in this offering, we refer you to
the registration statement, including all exhibits and schedules, together
with other filed materials, which you may read and copy without charge
at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549, on official business days during the hours of 10 a.m. to 3
p.m. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an
internet site containing reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The
internet address of this site http://www.sec.gov
.
41
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.
Mr.
Shalom’s term as President, Treasurer and Director commenced on January 3,
2008. His term as a Director extends until the next annual general
meeting of the stockholders, or until his successor is elected and
qualified. Mr. Shalom’s term as the Company’s President and Treasurer
extends until the earlier of his death, retirement, resignation or
removal.
Mr.
Bergman’s term as Secretary and Director commenced on February 16,
2009. His term as a Director extends until the next annual general
meeting of the stockholders, or until his successor is elected and
qualified. Mr. Bergman’s term as the Company’s Secretary extends
until the earlier of his death, retirement, resignation or removal.
Our
officers and Directors and their ages and positions are as follows:
Name
|
Age
|
Position
|
||
Mr.
Omri Amos Shalom
|
27
|
President,
Treasurer and Director (Principal Executive and Principal Financial and
Accounting Officer)
|
||
Mr.
Akiva Bergman
|
38
|
Secretary
and Director
|
Since
2008, Omri Amos Shalom has worked as a Sales Executive for the AIG Israel
Insurance Company where he is responsible for the sale and marketing of AIG’s
insurance products, such as home and car insurance, to potential customers in
Israel. From 2005 to 2008, Mr. Shalom worked for Oren Pool and Gym
Corporation in Netanya, Israel as a spa manager at a luxury residential complex.
From 2003 to 2005, Mr. Shalom served in the Israeli Defense Forces (IDF). Mr.
Shalom graduated from the Amal High School in Nahariya in 2001.
The Board
has concluded that Mr. Shalom should serve as Director of the Company because of
his marketing and sales experience, which will be useful when we begin marketing
our services to prospective customers.
Since
2005, Mr. Bergman has been employed at the Mayanot Hachayim Tour Company in Bnei
Brak, Israel as a travel agent/tour manager. Mr. Bergman has organized and
coordinated large scale religious group travels to Eastern Europe, which
required special logistics for traveling as well as Kosher food. His
responsibilities included organizing all traveling arrangements including
flights, accommodations, and in-country transportation, and coordinating the
provision of kosher food in foreign countries. Mr. Bergman graduated from the
Chachmei Lublin High School in Bnei Brak in 1995.
The Board
has concluded that Mr. Akiva Bergman should serve as a Director of the Company
because of his extensive experience in providing kosher services and his proven
organizational skills.
42
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 committees 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 related to 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 warranted at this time.
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 the following 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 developing our business – 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. Shalom is
uniquely suited to fulfill both positions of responsibility because of his sales
abilities which will be helpful in recruiting sales representatives, marketing
our kosher certification, and obtaining additional financing, if
necessary.
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 in
the fourth 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.
43
Board’s
Role in Risk Oversight
The Board
assesses on an ongoing basis the risks faced by the Company. These risks include
financial, 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 Company’s Directors are also responsible for the assessment and oversight of
the Company’s financial risk exposures.
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 is
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.
44
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of November 1, 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.
The
percentages below are calculated based on 8,620,000 shares of our common stock
issued and outstanding as of November 1, 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 (І)
|
|
Amount and Nature
of Beneficial Ownership
|
|
|
Percentage of Class
(№)
|
|
|||
Common
Stock
|
Mr.
Omri Amos Shalom
|
6,000,000
|
69.60
|
|||||||
Common
Stock
|
Mr.
Akiva Bergman
|
1,000,000
|
11.60
|
|||||||
All
officers as a Group
|
7,000,000
|
81.20
|
(№)
|
Based
on 8,620,000 shares of our common stock
outstanding.
|
(І)
|
The address for
Mr. Shalom is 72 Yehudah HaMaccabi, Unit 11 Tel Aviv, Israel
61070
|
|
The
address for Mr. Bergman is 72 Yehudah HaMaccabi, Unit 11 Tel Aviv, Israel
61070
|
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 46 stockholders of record holding a total of
8,620,000 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 8,620,000
shares, the 1,620,000 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 7,000,000 shares held by our
“affiliates”, as such term is defined in Rule 144, are not being registered in
this offering and may be sold in the public market commencing one year after
their acquisition, subject to the availability of current public information,
volume restrictions, and certain restrictions on the manner of sale. All
of the 7,000,000 shares held by our affiliates have been held for over a
year.
45
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.
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. We have not entered into any registration rights agreement with
the Selling Stockholders, and none of our stockholders is entitled to
registration rights.
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 April
17, 2008, we issued 6,000,000 shares of our common stock to Mr. Omri Amos
Shalom, our President, Treasurer and Director, for cash payment of $600. 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. Omri Shalom, who is a
non-U.S. citizen, and transfer was restricted by us in accordance with the
requirements of the Securities Act of 1933.
On
February 16, 2009, we issued 1,000,000 shares of our common stock to Mr. Akiva
Bergman, our Secretary and Director, for a $140 subscription receivable which
was paid on March 26, 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. Akiva Bergman 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 100,000,000 shares of common stock, par
value $0.0001 per share.
46
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
|
·
|
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.
At any
general meeting, each outstanding share of stock having voting power is entitled
to one vote. 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.
47
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
(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 8,620,000 shares of our common stock. Of
these shares, all of the 1,620,000 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 7,000,000 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).
48
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 one year would be
entitled after such one year 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 86,200 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.
PLAN OF
DISTRIBUTION
This
prospectus relates to the registration of 1,620,000 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 FINRA Regulations, 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
$0.025 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 exemption 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 there
from.
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.
51
Our
financial statements for the period from inception to May 31, 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.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL
DISCLOSURE
Weinberg
& Baer LLC are our auditors. There have not been any disagreements with our
auditors on accounting and financial disclosure or any other
matter.
52
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO FINANCIAL STATEMENTS
MAY
31, 2010, DECEMBER 31, 2009 AND 2008
Report
of Registered Independent Auditors
|
F-2
|
|
Financial
Statements-
|
||
Balance
Sheets as of May 31, 2010, December 31, 2009 and
2008
|
F-3
|
|
Statements
of Operations for the Periods Ended May 31, 2010 and 2009, December 31,
2009 and 2008, and Cumulative from Inception
|
F-4
|
|
Statement
of Stockholders’ Equity for the Period from Inception through May 31,
2010
|
F-5
|
|
Statements
of Cash Flows for the Periods Ended May 31, 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 Top
Gear Inc.:
We have
audited the accompanying balance sheets of Top Gear Inc. (a Delaware corporation
in the development stage) as of May 31, 2010, December 31, 2009 and 2008, and
the related statements of operations, stockholders’ equity, and cash flows for
five months ended May 31, 2010 and 2009, and years ended December 31, 2009 and
2008, and from inception (December 31, 2007) through May 31, 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 Top Gear Inc. as of May 31, 2010,
December 31, 2009 and 2008, and the results of its operations and its cash flows
for the five months ended May 31, 2010 and 2009, and years ended December 31,
2009 and 2008, and from inception (December 31, 2007) through May 31, 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 May 31, 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,
/s/
Weinberg & Baer LLC
Weinberg
& Baer LLC
Baltimore,
Maryland
June 25,
2010
F-2
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
AS
OF MAY 31, 2010, DECEMBER 31, 2009 AND 2008
|
As of
|
As of
|
As of
|
|||||||||
|
May 31,
|
December
31,
|
December
31,
|
|||||||||
|
2010
|
2009
|
2008
|
|||||||||
ASSETS
|
||||||||||||
Current
Assets:
|
||||||||||||
Cash
and cash equivalents
|
$ | 9,407 | $ | 16,716 | $ | 7,834 | ||||||
Total
current assets
|
9,407 | 16,716 | 7,834 | |||||||||
Total
Assets
|
$ | 9,407 | $ | 16,716 | $ | 7,834 | ||||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||||||
Current
Liabilities:
|
||||||||||||
Accounts
payable and accrued liabilities
|
$ | 6,000 | $ | - | $ | - | ||||||
Total
current liabilities
|
6,000 | - | - | |||||||||
Commitments
and Contingencies
|
- | - | - | |||||||||
Stockholders'
Equity (Deficit):
|
||||||||||||
Common
stock, par value $0.0001 per share, 100,000,000 shares authorized;
8,620,000
shares issued and outstanding (6,000,000
shares issued and outstanding at December 31, 2008)
|
862 | 862 | 600 | |||||||||
Stock
subscriptions receivable
|
- | (140 | ) | - | ||||||||
Additional
paid-in capital
|
89,778 | 89,778 | 49,400 | |||||||||
(Deficit)
accumulated during development stage
|
(87,233 | ) | (73,784 | ) | (42,166 | ) | ||||||
Total
stockholders' equity (deficit)
|
3,407 | 16,716 | 7,834 | |||||||||
Total
Liabilities and Stockholders' Equity
|
$ | 9,407 | $ | 16,716 | $ | 7,834 |
The
accompanying notes to financial statements are
an
integral part of these statements.
F-3
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
FOR
THE FIVE MONTHS ENDED MAY 31, 2010 AND YEARS ENDED
DECEMBER
31, 2009 AND 2008, AND
CUMULATIVE
FROM INCEPTION (DECEMBER 31, 2007)
THROUGH
MAY 31, 2010
Five Months
Ended
|
Five Months
Ended
|
Year Ended
|
Year Ended
|
Cumulative
|
||||||||||||||||
May, 31
|
May, 31
|
December 31,
|
December 31,
|
From
|
||||||||||||||||
2010
|
2009
|
2009
|
2008
|
Inception
|
||||||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Expenses:
|
||||||||||||||||||||
General
and administrative-
|
||||||||||||||||||||
Professional
fees
|
11,284
|
-
|
-
|
284
|
11,568
|
|||||||||||||||
Consulting
fees
|
2,050
|
-
|
31,000
|
41,763
|
74,813
|
|||||||||||||||
Other
|
115
|
7
|
618
|
119
|
852
|
|||||||||||||||
Total
general and administrative expenses
|
13,449
|
7
|
31,618
|
42,166
|
87,233
|
|||||||||||||||
-
|
||||||||||||||||||||
(Loss)
from Operations
|
(13,449
|
)
|
(7
|
)
|
(31,618
|
)
|
(42,166
|
)
|
(87,233
|
)
|
||||||||||
Other
Income (Expense)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Provision
for income taxes
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net
(Loss)
|
$
|
(13,449
|
)
|
$
|
(7
|
)
|
$
|
(31,618
|
)
|
$
|
(42,166
|
)
|
$
|
(87,233
|
)
|
|||||
(Loss)
Per Common Share:
|
||||||||||||||||||||
(Loss)
per common share - Basic and Diluted
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
||||||||
Weighted
Average Number of Common Shares Outstanding - Basic and
Diluted
|
8,620,000
|
6,695,364
|
7,402,137
|
4,257,534
|
The
accompanying notes to financial statements are
an
integral part of these statements.
F-4
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS' EQUITY
FOR
THE PERIOD FROM INCEPTION (DECEMBER 31, 2007)
THROUGH
MAY 31, 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)
|
6,000,000
|
600
|
-
|
-
|
-
|
600
|
||||||||||||||||||
Capital
contribution
|
-
|
-
|
-
|
49,400
|
-
|
49,400
|
||||||||||||||||||
Net
(loss) for the period
|
-
|
-
|
-
|
-
|
(42,166
|
)
|
(42,166
|
)
|
||||||||||||||||
Balance
- December 31, 2008
|
6,000,000
|
600
|
-
|
49,400
|
(42,166
|
)
|
7,834
|
|||||||||||||||||
Common
stock subscribed ($0.00014/share)
|
1,000,000
|
100
|
(140
|
)
|
40
|
-
|
-
|
|||||||||||||||||
Common
stock issued for cash ($0.025/share)
|
1,620,000
|
162
|
-
|
40,338
|
-
|
40,500
|
||||||||||||||||||
Net
(loss) for the period
|
-
|
-
|
-
|
-
|
(31,618
|
)
|
(31,618
|
)
|
||||||||||||||||
Balance
-December 31, 2009
|
8,620,000
|
862
|
(140
|
)
|
89,778
|
(73,784
|
)
|
16,716
|
||||||||||||||||
Stock
subscription payment received
|
-
|
-
|
140
|
-
|
-
|
140
|
||||||||||||||||||
Net
(loss) for the period
|
-
|
-
|
-
|
-
|
(13,449
|
)
|
(13,449
|
)
|
||||||||||||||||
Balance
-May 31, 2010
|
8,620,000
|
862
|
-
|
89,778
|
(87,233
|
)
|
3,407
|
The
accompanying notes to financial statements are
an
integral part of these statements.
F-5
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
FOR
THE PERIODS ENDED MAY 31, 2010, DECEMBER 31, 2009 AND 2008, AND
CUMULATIVE
FROM INCEPTION (DECEMBER 31, 2007)
THROUGH
MAY 31, 2010
Five Months
Ended
|
Five Months
Ended
|
Year Ended
|
Year Ended
|
Cumulative
|
||||||||||||||||
May 31,
|
May 31,
|
December 31,
|
December 31,
|
From
|
||||||||||||||||
2010
|
2009
|
2009
|
2008
|
Inception
|
||||||||||||||||
Operating
Activities:
|
||||||||||||||||||||
Net
(loss)
|
$
|
(13,449
|
)
|
$
|
(7
|
)
|
$
|
(31,618
|
)
|
$
|
(42,166
|
)
|
$
|
(87,233
|
)
|
|||||
Adjustments
to reconcile net (loss) to net cash provided by operating
activities:
|
||||||||||||||||||||
Changes
in net assets and liabilities-Accounts payable and accrued
liabilities
|
6,000
|
-
|
-
|
-
|
6,000
|
|||||||||||||||
Net
Cash Used in Operating Activities
|
(7,449
|
)
|
(7
|
)
|
(31,618
|
)
|
(42,166
|
)
|
(81,233
|
)
|
||||||||||
Investing
Activities:
|
||||||||||||||||||||
Cash
provided by investing activities
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net
Cash Provided by Investing Activities
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Financing
Activities:
|
||||||||||||||||||||
Capital
contribution
|
-
|
-
|
-
|
49,400
|
49,400
|
|||||||||||||||
Proceeds
from common stock
|
140
|
-
|
40,500
|
600
|
41,240
|
|||||||||||||||
Net
Cash Provided by Financing Activities
|
140
|
-
|
40,500
|
50,000
|
90,640
|
|||||||||||||||
Net
(Decrease) Increase in Cash
|
(7,309
|
)
|
(7
|
)
|
8,882
|
7,834
|
9,407
|
|||||||||||||
Cash
- Beginning of Period
|
16,716
|
7,834
|
7,834
|
-
|
-
|
|||||||||||||||
Cash
- End of Period
|
$
|
9,407
|
$
|
7,827
|
$
|
16,716
|
$
|
7,834
|
$
|
9,407
|
||||||||||
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
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting
Policies
Basis
of Presentation and Organization
Top
Gear Inc. (the “Company”) is in the development stage, and has commenced
organizational activities. The Company was incorporated under the laws of the
State of Delaware on December 31, 2007 and began activity in 2008. The business
plan of the Company is to become a leading kosher food certification
organization. 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 May 31, 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.
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.
F-7
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 May 31, 2010, December 31, 2009 and December 31, 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 non
cancellable 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 May 31, 2010, December 31, 2009 and December 31, 2008, and
expenses for the five months ended May 31, 2010 and the years ended December 31,
2009 and December 31, 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 become a leading kosher food
certification organization.
On June
25, 2009, the Company offered a capital formation activity through a PPO, exempt
from registration under the Securities Act of 1933, to raise up to $40,500
through the issuance of 1,620,000 shares of its common stock, par value $0.0001
per share, at an offering price of $0.025 per share. As of September 8, 2009,
the Company raised $40,500 in proceeds with the issuance of 1,620,000 shares of
its common stock.
F-8
The
Company commenced an activity to submit a Registration Statement on Form S-1 to
the Securities and Exchange Commission (“SEC”) to register 1,620,000 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.
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 May 31, 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 April
17, 2008, the Company issued 6,000,000 shares of common stock to an officer and
director of the Company, for cash payment of $600.
On
February 16, 2009, the Company issued 1.000,000 shares of common stock to an
officer and director of the Company, for a $140 subscription
receivable.
On June
25, 2009, the Company began a capital formation activity through a PPO, exempt
from registration under the Securities Act of 1933, to raise up to $40,500
through the issuance of 1,620,000 shares of its common stock, par value $0.0001
per share, at an offering price of $0.025 per share. As of September 8, 2009,
the Company had received $40,500 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 1,620,000 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.
4. Income Taxes
The
provision (benefit) for income taxes for the period ended May 31, 2010, December
31, 2009 and 2008, was as follows (assuming a 23% effective tax
rate):
2010
|
2009
|
2008
|
||||||||||
Current
Tax Provision:
|
||||||||||||
Federal-
|
||||||||||||
Taxable
income
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Total
current tax provision
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Deferred
Tax Provision:
|
||||||||||||
Federal-
|
||||||||||||
Loss
carryforwards
|
$
|
3,093
|
$
|
7,272
|
$
|
9,698
|
||||||
Change
in valuation allowance
|
(3,093
|
)
|
(7,272
|
)
|
(9,698
|
)
|
||||||
Total
deferred tax provision
|
$
|
-
|
$
|
-
|
$
|
-
|
F-9
The
Company had deferred income tax assets as of May 31, 2010, and December 31, 2009
and 2008, as follows:
2010
|
2009
|
2008
|
||||||||||
Loss
carryforwards
|
$
|
20,064
|
$
|
16,970
|
$
|
9,698
|
||||||
Less
- Valuation allowance
|
(20,064
|
)
|
(16,970
|
)
|
(9,698
|
)
|
||||||
Total
net deferred tax assets
|
$
|
-
|
$
|
-
|
$
|
-
|
The
Company provided a valuation allowance equal to the deferred income tax assets
for the five months ended May 31, 2010 and for the years ended 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 May
31, 2010, the Company had approximately $87,233 in tax loss carryforwards that
can be utilized 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 April
17, 2008, the Company issued 6,000,000 shares of common stock to an officer and
director of the Company, for cash payment of $600. In addition, the officer and
director made a capital contribution of $49,400.
On
February 16, 2009, the Company issued 1.000,000 shares of common stock to an
officer and director of the Company, for $140 subscription
receivable.
The
Company's president and Director provides rent-free office space to the
Company.
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.
F-10
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.
The
Company does 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.
F-11
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO FINANCIAL STATEMENTS
SEPTEMBER
30, 2010
Financial
Statements -
|
||
Balance
Sheets as of September 30, 2010 and December 31,
2009
|
F-2
|
|
Statements
of Operations for the Three Months and Nine Months Ended September 30,
2010 and 2009 and Cumulative from Inception
|
F-3
|
|
Statement
of Stockholders’ Equity for the Period from Inception through September
30, 2010
|
F-4
|
|
Statements
of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 and
Cumulative from Inception
|
F-5
|
|
Notes
to Financial Statements
|
F-6
|
F-1
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
AS
OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
|
As of
|
As of
|
||||||
|
September
30,
|
December
31,
|
||||||
|
2010
|
2009
|
||||||
|
(Unaudited)
|
(Audited)
|
||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$
|
15,975
|
$
|
16,716
|
||||
Total
current assets
|
15,975
|
16,716
|
||||||
Total
Assets
|
$
|
15,975
|
$
|
16,716
|
||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable and accrued liabilities
|
$
|
5,726
|
$
|
-
|
||||
Loans
payable - Directors
|
15,975
|
-
|
||||||
Total
current liabilities
|
21,701
|
-
|
||||||
Commitments
and Contingencies
|
-
|
-
|
||||||
Stockholders'
Equity (Deficit):
|
||||||||
Common
stock, par value $0.0001 per share, 100,000,000 shares authorized;
8,620,000 shares issued and outstanding
|
862
|
862
|
||||||
Stock
subscriptions receivable
|
-
|
(140
|
)
|
|||||
Additional
paid-in capital
|
89,778
|
89,778
|
||||||
(Deficit)
accumulated during development stage
|
(96,366
|
)
|
(73,784
|
)
|
||||
Total
stockholders' equity (deficit)
|
(5,726
|
)
|
16,716
|
|||||
Total
Liabilities and Stockholders' Equity
|
$
|
15,975
|
$
|
16,716
|
The
accompanying notes to financial statements are
an
integral part of these statements.
F-2
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
FOR
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009, AND
CUMULATIVE
FROM INCEPTION (DECEMBER 31, 2007)
THROUGH
SEPTEMBER 30, 2010
(Unaudited)
|
Three
Months
Ended
|
Three
Months
Ended
|
Nine
Months
Ended
|
Nine
Months
Ended
|
Cumulative
|
|||||||||||||||
|
September,
30
|
September,
30
|
September,
30
|
September,
30
|
From
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
Inception
|
|||||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Expenses:
|
||||||||||||||||||||
General
and administrative-
|
||||||||||||||||||||
Professional
fees
|
8,400
|
-
|
19,909
|
-
|
20,193
|
|||||||||||||||
Consulting
fees
|
-
|
2,050
|
-
|
74,813
|
||||||||||||||||
Other
|
115
|
569
|
623
|
578
|
1,360
|
|||||||||||||||
Total
general and administrative expenses
|
8,515
|
569
|
22,582
|
578
|
96,366
|
|||||||||||||||
-
|
||||||||||||||||||||
(Loss)
from Operations
|
(8,515
|
)
|
(569
|
)
|
(22,582
|
)
|
(578
|
)
|
(96,366
|
)
|
||||||||||
Other
Income (Expense)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Provision
for income taxes
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net
(Loss)
|
$
|
(8,515
|
)
|
$
|
(569
|
)
|
$
|
(22,582
|
)
|
$
|
(578
|
)
|
$
|
(96,366
|
)
|
|||||
(Loss)
Per Common Share:
|
||||||||||||||||||||
(Loss)
per common share - Basic and Diluted
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||||||||
Weighted
Average Number of Common Shares Outstanding - Basic and
Diluted
|
8,620,000
|
7,405,000
|
8,620,000
|
6,967,985
|
The
accompanying notes to financial statements are
an
integral part of these statements.
F-3
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS' EQUITY
FOR
THE PERIOD FROM INCEPTION (DECEMBER 31, 2007)
THROUGH
SEPTEMBER 30, 2010
(Unaudited)
|
(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)
|
6,000,000
|
600
|
-
|
-
|
-
|
600
|
||||||||||||||||||
Capital
contribution
|
-
|
-
|
-
|
49,400
|
-
|
49,400
|
||||||||||||||||||
Net
(loss) for the period
|
-
|
-
|
-
|
-
|
(42,166
|
)
|
(42,166
|
)
|
||||||||||||||||
Balance
- December 31, 2008
|
6,000,000
|
600
|
-
|
49,400
|
(42,166
|
)
|
7,834
|
|||||||||||||||||
Common
stock subscribed ($0.00014/share)
|
1,000,000
|
100
|
(140
|
)
|
40
|
-
|
-
|
|||||||||||||||||
Common
stock issued for cash ($0.025/share)
|
1,620,000
|
162
|
-
|
40,338
|
-
|
40,500
|
||||||||||||||||||
Net
(loss) for the period
|
-
|
-
|
-
|
-
|
(31,618
|
)
|
(31,618
|
)
|
||||||||||||||||
Balance
-December 31, 2009
|
8,620,000
|
862
|
(140
|
)
|
89,778
|
(73,784
|
)
|
16,716
|
||||||||||||||||
Stock
subscription payment received
|
-
|
-
|
140
|
-
|
-
|
140
|
||||||||||||||||||
Net
(loss) for the period
|
-
|
-
|
-
|
-
|
(22,582
|
)
|
(22,582
|
)
|
||||||||||||||||
Balance
-September 30, 2010
|
8,620,000
|
862
|
-
|
89,778
|
(96,366
|
)
|
(5,726
|
)
|
The
accompanying notes to financial statements are
an
integral part of these statements.
F-4
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
FOR
NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009, AND
CUMULATIVE
FROM INCEPTION (DECEMBER 31, 2007)
THROUGH
SEPTEMBER 30, 2010
(Unaudited)
|
Nine
Months
Ended
|
Nine
Months
Ended
|
Cumulative
|
|||||||||
|
September
30,
|
September
30,
|
From
|
|||||||||
|
2010
|
2009
|
Inception
|
|||||||||
Operating
Activities:
|
||||||||||||
Net
(loss)
|
$
|
(22,582
|
)
|
$
|
(578
|
)
|
$
|
(96,366
|
)
|
|||
Adjustments
to reconcile net (loss) to net cash provided by operating
activities:
|
||||||||||||
Changes
in net assets and liabilities-
|
||||||||||||
Accounts
payable and accrued liabilities
|
5,726
|
-
|
5,726
|
|||||||||
Net
Cash Used in Operating Activities
|
(16,856
|
)
|
(578
|
)
|
(90,640
|
)
|
||||||
Investing
Activities:
|
||||||||||||
Cash
provided by investing activities
|
-
|
-
|
-
|
|||||||||
Net
Cash Provided by Investing Activities
|
-
|
-
|
-
|
|||||||||
Financing
Activities:
|
||||||||||||
Proceeds
from loans from directors
|
15,975
|
15,975
|
||||||||||
Capital
contribution
|
-
|
-
|
49,400
|
|||||||||
Proceeds
from common stock
|
140
|
39,500
|
41,240
|
|||||||||
Net
Cash Provided by Financing Activities
|
16,115
|
39,500
|
106,615
|
|||||||||
Net
(Decrease) Increase in Cash
|
(741
|
)
|
38,922
|
15,975
|
||||||||
Cash
- Beginning of Period
|
16,716
|
7,834
|
-
|
|||||||||
Cash
- End of Period
|
$
|
15,975
|
$
|
46,756
|
$
|
15,975
|
||||||
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-5
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting
Policies
Basis
of Presentation and Organization
Top
Gear Inc. (the “Company”) is in the development stage, and has commenced
organizational activities. The Company was incorporated under the laws of the
State of Delaware on December 31, 2007 and began activity in 2008. The business
plan of the Company is to become a leading kosher food certification
organization. The accompanying financial statements of the Company were prepared
from the accounts of the Company under the accrual basis of
accounting.
Unaudited
Interim Financial Statements
The
interim financial statements of the Company as of September 30, 2010, and for
the periods then ended, and cumulative from inception, are unaudited. However,
in the opinion of management, the interim financial statements include all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the Company’s financial position as of September 30, 2010, and
the results of its operations and its cash flows for the periods ended September
30, 2010, and cumulative from inception. These results are not necessarily
indicative of the results expected for the calendar year ending December 31,
2010. The accompanying financial statements and notes thereto do not reflect all
disclosures required under accounting principles generally accepted in the
United States. Refer to the Company’s audited financial statements as of
December 31, 2009, filed with the SEC, for additional information, including
significant accounting policies.
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 September 30, 2010.
F-6
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.
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 September 30, 2010 and December 31, 2009 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 non
cancellable 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 September 30, 2010 and expenses for the nine months ended
September 30, and cumulative from inception. Actual results could differ from
those estimates made by management.
F-7
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 become a leading kosher food
certification organization.
On June
25, 2009, the Company offered a capital formation activity through a PPO, exempt
from registration under the Securities Act of 1933, to raise up to $40,500
through the issuance of 1,620,000 shares of its common stock, par value $0.0001
per share, at an offering price of $0.025 per share. As of September 8, 2009,
the Company raised $40,500 in proceeds with the issuance of 1,620,000 shares of
its common stock.
The
Company commenced an activity to submit a Registration Statement on Form S-1 to
the Securities and Exchange Commission (“SEC”) to register 1,620,000 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.
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 September 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 April
17, 2008, the Company issued 6,000,000 shares of common stock to an officer and
director of the Company, for cash payment of $600.
On
February 16, 2009, the Company issued 1.000,000 shares of common stock to an
officer and director of the Company, for a $140 subscription
receivable.
On June
25, 2009, the Company began a capital formation activity through a PPO, exempt
from registration under the Securities Act of 1933, to raise up to $40,500
through the issuance of 1,620,000 shares of its common stock, par value $0.0001
per share, at an offering price of $0.025 per share. As of September 8, 2009,
the Company had received $40,500 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 1,620,000 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.
F-8
4. Income Taxes
The
provision (benefit) for income taxes for the period ended September 30, 2010 and
2009, was as follows (assuming a 23% effective tax rate):
2010
|
2009
|
|||||||
Current
Tax Provision:
|
||||||||
Federal-
|
||||||||
Taxable
income
|
$
|
-
|
$
|
-
|
||||
Total
current tax provision
|
$
|
-
|
$
|
-
|
||||
Deferred
Tax Provision:
|
||||||||
Federal-
|
||||||||
Loss
carryforwards
|
$
|
5,194
|
$
|
133
|
||||
Change
in valuation allowance
|
(5,194
|
)
|
(133
|
)
|
||||
Total
deferred tax provision
|
$
|
-
|
$
|
-
|
The
Company had deferred income tax assets as of September 30, 2010, and December
31, 2009, as follows:
2010
|
2009
|
|||||||
Loss
carryforwards
|
$
|
22,164
|
$
|
16,970
|
||||
Less
- Valuation allowance
|
(22,164
|
)
|
(16,970
|
)
|
||||
Total
net deferred tax assets
|
$
|
-
|
$
|
-
|
The
Company provided a valuation allowance equal to the deferred income tax assets
for the nine months ended September 30, 2010 and for the year ended December 31,
2009 because it is not presently known whether future taxable income will be
sufficient to utilize the loss carryforwards.
As of
September 30, 2010, the Company had approximately $96,366 in tax loss
carryforwards that can be utilized 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 April
17, 2008, the Company issued 6,000,000 shares of common stock to an officer and
director of the Company, for cash payment of $600. In addition, the officer and
director made a capital contribution of $49,400.
On
February 16, 2009, the Company issued 1.000,000 shares of common stock to an
officer and director of the Company, for $140 subscription
receivable.
The
Company's president and director provides rent-free office space to the
Company.
F-9
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.
The
Company does 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.
7. Subsequent Events
Subsequent
events have been evaluated through October 25, 2010, which is the date these
financial statements were available to be issued.
F-10
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.
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
VI of our Certificate of Incorporation 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. Pursuant to Article XII of our bylaws, we are required to
indemnify our directors and officers to the fullest extent permitted by Delaware
law, as it may be amended from time to time. Our bylaws also provide
for discretionary indemnification for the benefit of agents to the fullest
extent permissible under Delaware 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.
53
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
|
|||
Legal,
accounting fees and expenses (1)
|
25,000
|
|||
Total
(1)
|
25,003
|
(1)
Estimated.
54
Recent
Sales of Unregistered Securities
On April
17, 2008, we issued 6,000,000 shares of our common stock to Mr. Omri Shalom, our
President, Treasurer and Director, for cash payment to us of $600. 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. Shalom, who is a non-U.S. citizen,
and transfer was restricted by us in accordance with the requirements of the
Securities Act of 1933.
On
February 16, 2009, we issued 1,000,000 shares of our common stock to Mr. Akiva
Bergman, our Secretary and Director, for cash payment to us of $140. We believe
this issuance was deemed to be exempt under the Securities Act. No advertising
or general solicitation was employed in offering the securities. The offering
and sale was made only to Mr. Bergman, and transfer was restricted by us in
accordance with the requirements of the Securities Act of 1933.
From June
through September 2009, we issued 1,620,000 shares of common stock to 44
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 $0.025 per share, amounting in the
aggregate to $40,500. 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.
All of
the aforementioned issuances were made in reliance upon the exemption provided
in Section 4(2) of the Securities Act or Regulation S promulgated under the
Securities Act. No form of general solicitation or general advertising was
conducted in connection with any 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.
|
55
10.1*
|
Consultant
Agreement with kashrut consultant dated June 7, 2010.
|
|
10.2*
|
Form
of Subscription Agreement.
|
|
23.1
|
Consent
of Weinberg & Baer LLC.
|
|
23.2*
|
Consent
of Legal Counsel (incorporated in Exhibit 5.1).
|
|
24.1*
|
Power
of Attorney (contained on the signature page of the registration statement
filed on July 12, 2010).
|
*previously
filed
56
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 arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof)
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 material information with respect to the plan of distribution not previously
disclosed in this registration statement or any material change to such
information in the registration statement.
(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.
57
(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.
58
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. 4 to Form S-1 and has authorized
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Tel Aviv, Israel on December 22,
2010.
TOP
GEAR INC.
|
||
By:
|
/s/ Omri Amos
Shalom
|
|
Name:
Omri Amos Shalom
|
||
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: December
22, 2010
|
|
/s/ Omri Amos
Shalom
|
Name:
Omri Amos Shalom
|
||
Title:
President, Treasurer and Director
|
||
(Principal
Executive and Principal
Financial
and Accounting Officer)
|
Date: December
22, 2010
|
|
/s/ Akiva Bergman
|
Name:
Akiva Bergman
|
||
Title:
Secretary and Director
|
59