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EX-3.3 - EXHIBIT 3.3 - Gopher Protocol Inc.ex33.htm
EX-4.9 - EXHIBIT 4.9 - Gopher Protocol Inc.ex49.htm
EX-21.1 - EXHIBIT 21.1 - Gopher Protocol Inc.ex211.htm
EX-31.1 - EXHIBIT 31.1 - Gopher Protocol Inc.ex311.htm
EX-32.2 - EXHIBIT 32.1 - Gopher Protocol Inc.ex321.htm
EX-10.13 - EXHIBIT 10.13 - Gopher Protocol Inc.ex1013.htm
EX-10.14 - EXHIBIT 10.14 - Gopher Protocol Inc.ex1014.htm
EX-10.15 - EXHIBIT 10.15 - Gopher Protocol Inc.ex1015.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
 1934
 
For the fiscal year ended: December 31, 2010
 
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 
Commission File Number: 333-161795
 
FOREX INTERNATIONAL TRADING CORP.
 
(Exact name of registrant as specified in its charter)

Nevada
 
27-0603137
State or other jurisdiction of
 
I.R.S. Employer Identification Number
incorporation or organization
   
 
One Grand Central Place
60 E 42nd Street, Suite 5310
New York, NY 10165

(Address of principal executive office)
 
Issuer's telephone number: 888-333-8075
 
Securities registered under Section 12(b) of the Exchange Act: None
 
Securities registered under Section 12(g) of the Exchange Act: None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes  x No o
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.) Yes  x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x No o
 
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
 
 
 
1

 
 

 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer, large accelerated filer or smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer     o
Accelerated filer     o
Non-accelerated filer     o
Smaller Reporting Company     x

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

As of April 4, 2011,  the market value of our common stock held by non-affiliates was approximately $27,262,143 which is computed using the closing price on that day of $0.42 per share.

As of April 4, 2011, 64,809,865 shares of common stock, $.00001 par value per share, of the registrant were outstanding.
 
Documents incorporated by reference:  None

 
 
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FORM 10-K
 
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
 
INDEX
     
Page
PART I
     
ITEM 1.
 
BUSINESS
5
ITEM 1A.
 
RISK FACTORS
9
ITEM 1B.
 
UNRESOLVED STAFF COMMENTS
16
ITEM 2.
 
PROPERTIES
16
ITEM 3.
 
LEGAL PROCEEDINGS
16
ITEM 4.
 
(REMOVED AND RESERVED)
16
PART II
     
ITEM 5.
 
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
17
ITEM 6.
 
SELECTED FINANCIAL DATA
19
ITEM 7.
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
19
ITEM 7A.
 
QUANITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
26
ITEM 8.
 
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
26
ITEM 9.
 
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
26
ITEM 9A.
 
CONTROLS AND PROCEDURES
27
ITEM 9A(T).
 
CONTROLS AND PROCEDURES
27
ITEM 9B.
 
OTHER INFORMATION
27
PART III
     
ITEM 10.
 
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
28
ITEM 11.
 
EXECUTIVE COMPENSATION
30
ITEM 12.
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
32
ITEM 13.
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
32
ITEM 14.
 
PRINCIPAL ACCOUNTANT FEES AND SERVICES
33
ITEM 15.
 
EXHIBITS
34


 

 
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STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
In this annual report, references to “Forex,” “FXIT,” “the Company,” “we,” “us,” and “our” refer to Forex International Trading Corp.
 
Except for the historical information contained herein, some of the statements in this report contain forward-looking statements that involve risks and uncertainties. These statements are found in the sections entitled "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures about Market Risk." They include statements concerning: our business strategy; expectations of market and customer response; liquidity and capital expenditures; future sources of revenues; expansion of our proposed product line; and trends in industry activity generally. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expect," "plan," "could," "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal," or "continue" or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including, but not limited to, the risks outlined under "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to our ability to successfully develop and market our products to customers; our ability to generate customer demand for our products in our target markets; the development of our target markets and market opportunities; our ability to manufacture suitable products at a competitive cost; market pricing for our products and for competing products; the extent of increasing competition; technological developments in our target markets and the development of alternate, competing technologies in them; and sales of shares by existing shareholders. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

 
 
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PART I
 
ITEM 1. BUSINESS
 
General
Forex International Trading Corp. and its subsidiaries and/or variable interests (“Forex”, “FXIT”, or the “Company”), a Nevada corporation, is principally engaged in offering foreign currency market trading to non-US resident clients, professionals and retail clients over its web-based trading systems.

Shares in the Company are listed for trading on the Over the Counter Bulletin Board listings (OTCBB: FXIT). The Company’s headquarters and operating offices are located in New York, NY. The CUSIP number for the Company is 34631J104 and the ISIA number of FXIT is – US34631J1043.
 
Overview and developments since inception to date:

The Company was incorporated on July 22, 2009 as a development stage company under the laws of the State of Nevada as “Forex International Trading Corp”. On September 9, 2009 the Company filed a Form S-1Registration Statement with the SEC, which became effective on or around March 5, 2010.

On April 19, 2010, the Company entered into a Software Licensing Agreement with Triple 8 Limited (“Triple 8”) which was dated April 12, 2010 whereby the Company licensed Triple 8’s proprietary trading software (the “Software”) for the purpose of developing a Forex Trading Platform and introducing prospective clients (“End Users”).  Triple 8 created a website for the Company, which will be funded by the Company at a cost of $50,000 (the “Setup Fee”).  Upon the Company and Triple 8 generating $100,000 in revenue under the agreement, the Company will be reimbursed 50% of the Setup Fee ($25,000).  The Company will receive 30% of the net profit generated from End Users, which will be increased to 50% in the event that the monthly volume generated by the Company is in excess of $250 million.  Triple 8 created a website for the Company under the domain www.4xint.com which is blocked for US and Canadian clients. The Company maintains a corporate website under the domain www.forex-international-trading.com.  
 
On December 18, 2010, the Company entered into a Securities Purchase Agreement with Forex New York City, LLC (“Forex NYC”) pursuant to which the Company acquired twenty percent (20%) of the issued and outstanding equity of Forex NYC (the “FNYC Interest”) on a fully diluted basis.  In consideration for the FNYC Interest, the Company issued and sold to Forex NYC 1,000,000 shares of common stock of the Company. On February 23, 2011, the Company entered into an additional Securities Purchase Agreement with Forex NYC, pursuant to which the Company acquired additional thirty percent (30%) of the issued and outstanding membership interest of Forex NYC (the “FNYC Interest”) on a fully diluted basis. In consideration for the additional FNYC Interest, the Company issued and sold to Forex NYC 675,000 shares of common stock of the Company. Forex NYC is a limited liability company organized under the laws of the State of New York with headquarters located at One Grand Central Place. Forex NYC is a based Forex investment training facility.
 
On November 17, 2010, the Company entered into a Share Exchange Agreement (the “APH Agreement”) with AP Holdings Limited (“APH”) pursuant to which the Company agreed to acquire 17,924 ordinary shares of Triple 8 Limited, a corporation organized under the laws of Cyprus, engaged in the business of operating a Forex trading platform (“Triple”).  The securities acquired from APH represent approximately 45% of the issued and outstanding securities of Triple.   Pursuant to the APH Agreement, in consideration  for the securities of Triple, the Company agreed to issue 36,000,000 shares of common stock of the Company as well as a 6%  Convertible Note (Conversion Price set to be $0.20 per share)  in the principal amount of $1,200,000 due February 15, 2011 (the “APH Note”).  On December 30, 2010, the Company and APH entered into an amendment to the APH Agreement whereby the number of shares to be delivered by the Company was reduced from 36,000,000 to 25,000,000.  Further, on December 30, 2010,  in order to expedite the transaction and avoid further dilution of the existing shareholders, Medirad Inc. and Rasel Ltd., shareholders of the Company, have agreed to return an aggregate of 70,000,000 shares of common stock to the Company for cancellation upon closing of the APH Agreement.  The above transaction closed on December 30, 2010 with an effective date of October 1, 2010.  The Company defaulted on its note payable to APH in connection with acquisition of Triple.  The note was due on February 15, 2011.
 
On April 5, 2011, the Company and AP Holdings Limited (“APH”), which currently owns 33,000,000 shares of common stock and a 6% Convertible Debenture in the amount of $1,000,000 (the “APH Note”) entered into an agreement whereby APH agreed to extend the maturity date of the APH Note from February 15, 2011 to June 30, 2011.  Further, APH agreed that its right to return 16,000,000 shares of common stock to the Company in consideration of 20% of the issued and outstanding securities of Triple is of no force and effect.  In consideration of the above, the Company agreed to return the 33,000,000 shares of common stock held by APH to treasury and issue APH 100,000 shares of Series A Preferred Stock.  The Series A Preferred Stock has a stated value of $100 per share and is convertible into our common stock at a conversion price of $0.30 per share representing 33,333,333 shares of common stock.  Further, the Series A Preferred Stock votes on an as converted basis multiplied by three and carries standard anti-dilution rights. 
 
 
 
 
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On April 5, 2011, the Company and Mladen Poropat, a shareholder of the Company, entered into an agreement whereby the parties agreed to convert the $200,000 6% Convertible Debenture, which was in default and was assigned by APH to Mr. Poropat, into 2,500,000 shares of common stock.
 
On February 23, 2011, the Company entered into a Securities Purchase Agreement with Wheatley Asset Management, LLC (“Wheatley”), pursuant to which the Company acquired fifty percent (50%) of the issued and outstanding   membership interest of Wheatley (the “Wheatley Interest”) on a fully diluted basis. In consideration for the Wheatley Interest, the Company issued and sold  to Wheatley 1,125,000 shares of common stock of the Company. Wheatley is a limited liability company organized under the laws of the State of New York with headquarters located at One Grand Central Place. Wheatley is an NFA Registered Introducing Broker (IB), Forex Firm and Commodity Trading Adviser (CTA).
 
As part of finalizing the Wheatley and Forex NYC acquisitions, on February 24, 2011 the Company entered into consulting agreement for M&A activities with Cross Point Capital Advisors (“Cross Point”).  The Company paid Cross Point a consulting fee of $150,000 in cash plus retainer of $9,500 per month for the next 18 months commencing on April 1, 2011 for bringing the Company M&A-related opportunities, and for structuring and advising the Company on those opportunities.
 
On April 5, 2011, the Company entered into a Share Exchange Agreement with H.A.M. Group Limited (“HAM”) pursuant to which it acquired 1,996 ordinary shares of Triple from HAM representing 5% of the issued and outstanding ordinary shares of Triple.  The Company presently owns approximately 50% of Triple.  In consideration of the shares, the Company issued HAM 12,000 shares of Series A Preferred Stock and a 6% Convertible Debenture due June 30, 2011 (the “HAM Note”).  The Series A Preferred Stock has a stated value of $100 per share and is convertible into our common stock at a conversion price of $0.30 per share representing 4,000,000 shares of common stock.  Further, the Series A Preferred Stock votes on an as converted basis multiplied by three and carries standard anti-dilution rights.  The Series A Preferred Stock does not carry preferential liquidation rights.  The HAM Note is convertible into shares of common stock at a conversion price of $0.20 per share. 
 
Operations
Our company, through our partial ownership interest in our affiliates, offers online brokerage services in financial instruments using our Forex trading platform to non-US based customers. Forex's targeted customer base for brokerage services includes active individual, professional and institutional traders.  Customers are entitled to open accounts directly with Triple 8’s subsidiaries or affiliates through our web site.  We also provide a `demo' trading system and an e-learning center that may be accessed by registering on the website.  We intend to develop, market and operate a software system that delivers foreign exchange services to the public through the Internet. We will offer an electronic trading platform which seamlessly integrates strategy trading tools, historical and streaming real-time market data, and direct-access order-routing and execution.  We allow our clients to be directly, through Triple 8 subsidiaries or their affiliates, connected to market prices. Under our method, clients are able to trade at market prices at fixed trading commissions.  
 
The Company has blocked the ability of potential subscribers in the United States and Canada from engaging in any transactions.  This restriction will be lifted once the Company has obtained the required licenses. As a result of  the acquisition of our interests in Wheatley, we can start to solicit US clients as long as we refer them to a licensed liquidity provider, which we have commenced developing through Wheatley.
 
 
 
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Clients and Customers
Forex's targeted customer base for brokerage services includes active individual, professional and institutional traders.  The entirety of the Company’s customer through Triple 8 subsidiaries or affiliate base is outside of the United States and Canada.  In connection with the acquisition of interests at  Forex NYC, the Company incorporated the offerings provided by Forex NYC under www.forexnewyorkcity.com into our website.  Per the acquisition of Wheatley interests the Company is working to incorporate Wheatley website into our corporate website. Wheatley stand alone website is operating under www. wheatleyassetmanagement.com.

Competition
The market for online forex brokerage services is intensely competitive and is rapidly evolving, and there appears to be substantial consolidation in the industry of online forex brokerage services, Internet-based real-time market data services, and trading analysis software tools. We believe that, due to the current and anticipated rapid growth of the market for integrated trading tools, real-time market data and online brokerage services, competition, as well as consolidation, will substantially increase and intensify in the future. We believe our ability to compete will depend upon many factors both within and outside our control, including, but not limited to: pricing; the timing and market acceptance of new products and services and enhancements developed by us and our competitors; technological developments; product content; our ability to design and support efficient, materially error-free Internet-based systems; market conditions, such as volatility in currency fluctuations, stock prices, inflation and recession; product and service functionality; data availability; ease of use; reliability; customer service and support; and sales and marketing efforts.

We will face direct competition from several publicly-traded and privately-held companies, including principally online brokerage firms, and providers of direct-access order execution services. Our competitors will include many foreign exchange online brokerage firms currently active in the United States and Europe. Many online brokerage firms currently offer direct-access service.

Many of our existing and potential competitors, which will include online discount and traditional brokerage firms, and financial institutions that are focusing more closely on online services, including direct-access services for active traders, have longer operating histories, significantly greater financial, technical and marketing resources, greater name recognition and a larger installed customer base than we will. Furthermore, there is the risk that larger financial institutions which offer online brokerage services as only one of many financial services may decide to use extremely low pricing rates in the foreign currency market to acquire and accumulate customer accounts and assets to derive interest income and income from their other financial services. Though we do plan to offer other financial services;  such pricing techniques, should they become common in our industry, could have a material, adverse effect on our results of operations, financial condition and business model.

Generally, competitors may be able to respond more quickly to new or emerging technologies or changes in customer requirements or to devote greater resources to the development, promotion and sale of their products and services than we will. There can be no assurance that our potential competitors will not develop products and services comparable or superior to those that will be developed and offered by us or adapt more quickly than us to new technologies, evolving industry trends or changing customer requirements, or that we will be able to timely and adequately complete the implementation, and appropriately maintain and enhance the operation, of our business model. Increased competition could result in price reductions, reduced margins, failure to obtain any significant market share, or loss of market share, any of which could materially adversely affect our business, financial condition and results of operations. There can be no assurance that we will be able to compete successfully against current or future competitors, or that competitive pressures faced by us will not have a material adverse effect on our business, financial condition and results of operations.

Corporate Headquarters
Our executive, administrative and operating offices are located at One Grand Central Place, 60 E 42nd Street, Suite 5310 New York, New York.
 
 
 
 
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Government Regulation
Our proposed business and industry are highly regulated. In the United States (where the Company currently does not operate), regulatory bodies are charged with safeguarding the integrity of the forex and other financial markets and with protecting the interest of customers participating in those markets.  In recent years, the financial services industry in the United States has been subject to increasing regulatory oversight. The regulatory bodies that regulate our business and industry in the United States have proposed and may consider additional legislative and regulatory initiatives and may adopt new or revised regulations that may affect the way in which we conduct our business. Prior to commencing operations in the United States, we will be required to register as a Futures Commission Merchant (FCM) and Forex Dealer Merchant (FDM) and/or Introducing Broker (IB) with the Commodity Futures Trading Commission and as a member of the National Futures Association, which serves as its designated self regulatory examining authority.  The Company  initially registered through its Chief Executive Officer (“CEO”) as an Introducing Broker.  In order to be accepted as an Introducing Broker, the Company’s CEO  filed an application with the Commodity Futures Trading Commission and paid a nominal fee.  The Commodity Futures Trading Commission evaluated the application and determined that the Company’s CEO is eligible.  Prior to obtaining the required registrations in the United States or other applicable jurisdiction, we will block any traffic from the United States and will not allow any trading by US citizens.  Upon being accepted as an Introductory Broker, we will be required to comply with various ongoing compliance issues including maintaining and having available for inspection books and records that support and explain all aspects of our commodity futures business.  These records must be maintained in an orderly fashion at our main business.  All required books and records must be kept for five years and readily accessible for the most recent two years.  Additionally, we will have continuing responsibility to have the necessary policies and procedures in place to diligently supervise our employees and agents.  We expect that we will be audited at various times to ensure that we are complying with the foregoing. Given the acquisition of the Wheatley Interests, all US trading operations will occur via the Wheatley website; as such, the Company is not hosting any  trading activities for US clients directly on its website.

Upon commencing operations in the United States we also will be regulated by governmental bodies and/or self-regulatory organizations in jurisdictions outside of the United States in which we operate.  For example, assuming that we operate in each of these jurisdictions, of which there is no guarantee, we will be regulated by the Financial Services Authority in the United Kingdom, the Monetary Authority of Singapore in Singapore, the Australian Securities and Investments Commission in Australia and the Securities and Futures Commission in Hong Kong, assuming we operate in these jurisdictions.  We have not commenced the process to register in any of these countries.  Many of the regulations we will be governed by are intended to protect the public, our customers and the integrity of the markets.  These regulators and self-regulatory organizations regulate the conduct of our business in many ways and conduct regular examinations to monitor our compliance with these regulations. Among other things, we will be subject to laws, rules and regulations that cover all aspects of the Forex business, including:
 
 
           •           sales methods;

           •           trading practices;

           •           use and safekeeping of customers’ funds and securities;

           •           capital structure;

           •           anti-money laundering;

           •           record-keeping; and

           •           conduct of directors, officers and employees.

For trading by customers in jurisdictions outside the United States, we intend to conduct a regulatory review of our trading operations in all jurisdictions we deem material to ensure compliance with local laws.

Registered FCMs and FDMs traditionally have been subject to a variety of rules that require that they know their customers and monitor their customers’ transactions for suspicious financial activities. With the passage of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the Patriot Act, FCMs, FDMs and IBs are now subject to even more stringent requirements. As required by the Patriot Act, prior to commencing operations in the United States, we will establish comprehensive anti-money laundering and customer identification procedures, designated an anti-money laundering compliance officer, train our employees and conducted an independent audit of our program. Our customer identification procedures will include both a documentary and a non- documentary review and analysis of the potential customer. Our documentary review requires the collection and confirmation of multiple forms of identification and other documentary evidence from each prospective customer in order to validate such prospective customer’s identity.
 
 
 
 
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FXIT's mode of operation and profitability may be directly affected by:

·
additional legislation;

·
changes in rules promulgated by the Commodity Futures Trading Commission, the National Futures Association, the Board of Governors of the Federal Reserve System, the FSA, the various stock and futures exchanges and other self-regulatory organizations; and

·
changes in the interpretation or enforcement of existing rules and laws, particularly any changes focused on online brokerage firms that target an active trader customer base.

Governmental concern is focused in two basic areas: that the customer has sufficient trading experience and has sufficient risk capital to engage in active trading.  The Company will require customers to maintain a $500 opening balance to open an account.  We believe the Company's minimum suitability requirements, as well as the extensive user education documentation and tutorials offered on its Web site, are consistent with the rules and regulations concerning active trading.

It is possible that other agencies will attempt to regulate our planned domestic online and other electronic service activities with rules that may include compliance requirements relating to record keeping, data processing, other operation methods, privacy, pricing, content and quality of goods and services as the market for online commerce evolves. Because of the growth in the electronic commerce market, Congress had held hearings on whether to regulate providers of services and transactions in the electronic commerce market. As a result, federal or state authorities could enact laws, rules or regulations, not only with respect to online brokerage services, but other online services we provide or may in the future provide. Such laws, rules and regulations, if and when enacted, could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, since our company's activities and customer base are international, regulatory developments in other countries, including those of which we are unaware, could have an effect on our company and its operations.
 
Employees
Darren Dunckel, William Glass,  Stewart Reich and Liat Franco comprise the officers and directors of the Company.  Mr. Dunckel and Ms. Franco are the only employees of the Company.  As of the date of this filing. Triple 8 has 66 employees.
 
ITEM 1A. RISK FACTORS
 
As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item 1A. Risk Factors.  Despite not being a requirement, we consider the following factors to be risks to our continued growth and development:

We will be required to raise additional capital in order to implement significant growth plans.
 
Our working capital is positive and will allow conducting our business in the next twelve months. In order to achieve substantial presence in the markets we will have to borrow funds from Moshe J. Schnapp’s contacts, and unrelated third parties, and the receipt of proceeds from the sale of our product range.  If adequate funds are not available, we may not be able to fund our expansion, take advantage of acquisition opportunities, develop or enhance products or services, respond to competitive pressures or maintain our public filings. Such inability could have a material adverse effect on our business, results of operations and financial condition.
 
 
 
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We may need and be unable to obtain additional funding on satisfactory terms, which could dilute our shareholders or impose burdensome financial restrictions on our business.
 
Unforeseeable circumstances may occur which could compel us to seek additional funds.. Furthermore, future events, including the problems, delays, expenses and other difficulties frequently encountered by start-up companies may lead to cost increases that could make the net proceeds of this offering insufficient to fund our proposed business plan. Thus, the proceeds of the offering may be insufficient to accomplish our objectives and we may have to borrow or otherwise raise additional funds to accomplish such objectives. We may seek additional sources of capital, including an additional offering of our equity securities, an offering of debt securities or obtaining financing through a bank or other entity. This may not be available on a timely basis, in sufficient amounts or on terms acceptable to us. Our inability to raise additional equity capital or borrow funds required to affect our business plan, may have a material adverse effect on our financial condition and future prospects. Additionally, to the extent that further funding ultimately proves to be available, both debt and equity financing involve risks. Debt financing may require us to pay significant amounts of interest and principal payments, reducing the resources available to us to expand our existing businesses. Some types of equity financing may be highly dilative to our stockholders' interest in our assets and earnings. Any debt financing or other financing of securities senior to common stock will likely include financial and other covenants that will restrict our flexibility.
 
We will have inadequate capital to pay significant additional expenses we expect to incur as a public company and, as a result, we will be required to raise additional capital further diluting investors that participated in prior offerings.
 
We are a reporting company subject to the requirements of section 15(d) of the Exchange Act.  In order to comply with such reporting requirements, we will incur additional administrative expenses including substantial legal and accounting expenses.  We expect such fees to be approximately $50,000 per year.  As a result, we will be required to raise additional debt or equity financing, of which there is no guarantee that such financing will be available or available on acceptable terms.  To date, Rasel Ltd., a shareholder of the company, has loaned the company $125,000 ($130,547 including interest accrued to year end) and on January 5, 2011, the Company closed private placement memorandum and issued 3,655,635 restricted shares to accredited investors at an aggregate purchase price of $520,000.  If we are required to raise additional funds and if we raise such proceeds in the form of equity, our shareholders will be further diluted.
 
Our success will be dependent on attracting key and other personnel, particularly in the areas of management, technical services and customer support.
 
We believe that our success will depend on the continued efforts of Darren Dunckel for the development of our platform. Such experience will be important to the establishment of our business. The loss of Darren Dunckel during this early  stage could disrupt and negatively affect our business and operations.  Our success also depends on having highly trained technical and customer support personnel.
 
We may have difficulty attracting and employing members to our senior management team and sufficient technical and customer support personnel to keep up with our growth needs. This shortage could limit our ability to increase sales and to sell services. Competition for personnel is intense. If we cannot hire suitable personnel to meet our growth needs, our business and operations will be negatively affected.
 
Our success will be dependent upon our receipt and maintenance of regulatory approvals in the major customer markets around the world.
 
We believe that our success, in large part, depends upon our ability to receive and obtain regulatory approval in the major markets around the world. For example, if we are to market our services in the United States, we will be required to obtain the approval of the Commodities Futures Trading Commission and the National Futures Association.  Until we obtain the required registrations from each jurisdiction, we will not be able to generate customers or revenue in such jurisdiction.  As a result, if we do not obtain the required registrations, we will not be able to generate revenues and we will not be able to implement our operations in any meaningful way.
 
 
 
 
 
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 Many of the regulations we will be governed by are intended to protect the public, our customers and the integrity of the markets.  If we are successful in registering in any jurisdiction, these regulators and self-regulatory organizations regulate the conduct of our business in many ways and conduct regular examinations to monitor our compliance with these regulations. Among other things, we will be subject to laws, rules and regulations that cover all aspects of the Forex business, including:
 
           •           sales methods;
 
           •           trading practices;
 
           •           use and safekeeping of customers’ funds and securities;
 
           •           capital structure;
 
           •           anti-money laundering;
 
           •           record-keeping; and
 
           •           conduct of directors, officers and employees.
 
If the regulators determine that we breached or violated any rule, law or regulation, we may be subject to sanctions, fines or revocation of our registration in such jurisdiction, which will have a negative impact on our operations and may require that we cease operations assuming that we have developed operations.
 
Fluctuations in our quarterly results may adversely affect our stock price.
 
Our quarterly operating results will likely vary.  Our operating results will likely fall below the expectations of securities analysts or investors in some future quarter or quarters. Our failure to meet these expectations would likely adversely affect the market price of our common stock.    Our quarterly operating results may vary depending on a number of factors, including:
 
·
Unexpected cost in developing our software to be utilized in our platform;
 
·
demand of buyers and sellers to use and transact business on our platform;
 
·
actions taken by our competitors, including new product introductions, fee schedules, pricing policies and enhancements;
 
·
cash flow problems that may occur;
 
·
the quality and success of, and potential continuous changes in, sales or marketing strategies assuming that we successfully develop our platform;
 
·
the timing, completion, cost and effect of our development and launch of a planned Forex trading platform;
 
·
the size and frequency of any trading errors for which we ultimately suffer the economic burden, in whole or in part;
 
·
changes in demand for our products and services due to the rapid pace in which new technology is offered to customers in our industry;
 
 
 
11

 
 
 
·
costs or adverse financial consequences that may occur with respect to regulatory compliance or other regulatory issues, particularly relating to laws, rules or regulations that may be enacted with a focus on the active trader market; and
 
·
general economic and market factors that affect active trading, including changes in the securities and financial markets.
 
Our industry is intensely competitive, which will make it difficult to attract and retain customers.
 
The markets for online forex brokerage services and Internet-based trading tools, and real-time market data services is intensely competitive and rapidly evolving, and there has been substantial consolidation of those three products and services occurring in the industry. We believe that competition from large online brokerage firms and smaller brokerage firms focused on active traders, as well as consolidation, will substantially increase and intensify in the future. Competition may be further intensified by the size of the active trader market.  We believe our ability to compete will depend upon many factors both within and outside our control. These include: price pressure; the timing and market acceptance of new products and services and enhancements developed by us and our competitors; the development and support of efficient, materially error-free Internet-based systems; product and service functionality; data availability and cost; clearing costs; ease of use; reliability; customer service and support; and sales and marketing decisions and efforts.
 
There is no guarantee that we will adequately be able to protect our  properties and software licenses which may have a negative impact on our operations.
 
While we will seek to protect our technology that we will develop, it will not be possible for us to detect all possible infringements of our software, text, designs and other works of authorship. Also, copyright protection does not extend to functional features of software and will not be effective to prevent third parties from duplicating any of our future-developed software's capabilities through engineering research and development. In addition, our technology and intellectual property may receive limited or no protection in some countries, and the global nature of the Internet makes it impossible to control the ultimate destination of our work.
 
If our future-developed software is found to infringe on the copyrights or patents of a third party, the third party or a court or other administrative body could require us to pay royalties for past use and for continued use, or to modify or replace the software to avoid infringement. We cannot assure you that we would be able to modify or replace this software.
 
Any of these claims, with or without merit, could subject us to costly litigation, divert our technical and management personnel and materially and adversely affect our business and operations.
 
There is no guarantee that we will adequately be able to protect  trademarks and service marks which may have a negative impact on our operations.
 
Proprietary rights are important to our success and our competitive position. Our actions may be inadequate to protect any trademarks and other proprietary rights or to prevent others from claiming violations of their trademarks and other proprietary rights. We may not be able to protect our domain names for our websites as trademarks because those names may be too generic or perceived as describing a product or service or its attributes rather than serving a trademark function.
 
If we are unable to protect our proprietary rights in trademarks, service marks and other indications of origin, competitors will be able to use names and marks that are identical to ours or sufficiently similar to ours to cause confusion among potential customers. This confusion may result in the diversion of business to our competitors, the loss of customers and the degradation of our reputation. Litigation against those who infringe upon our service marks, trademarks and similar rights may be expensive. Because of the difficulty in proving damages in trademark litigation, it may be very difficult to recover damages.
 
 
 
12

 
 
 
Except for a search for the name Forex International Trading Corp., we have not conducted searches to determine whether our service marks, trademarks and similar items may infringe on the rights of third parties. Despite having searched a mark, there may be a successful assertion of claims of trademark or service mark infringement. If a third party successfully asserts claims of trademark, service mark or other infringement, the third party or a court or other administrative body may require us to change our service marks, trademarks, company names, the design of our sites and materials and our Internet domain name (web address), as well as to pay damages for any infringement. A change in service marks, trademarks, company names, the design of our sites and materials and Internet domain names may cause difficulties for our customers in locating us or cause them to fail to connect our new names and marks with our prior names and marks, resulting in loss of business.
 
The nature of our business may result in potential liability to customers which would have a negative impact upon our results of operations.
 
Many aspects of the forex brokerage business, including online trading services, involve substantial risks of liability. In recent years there has been an increasing incidence of litigation involving the securities brokerage industry, including class action and other suits that generally seek substantial damages, including in some cases punitive damages. In particular, our future proprietary order routing technology will be designed to automatically locate, with immediacy, the best available price in completing execution of a trade triggered by programmed market entry and exit rules. There are risks that the electronic communications and other systems upon which these products and services rely, and will continue to rely, or our products and services themselves, as a result of flaws or other imperfections in their designs or performance, may operate too slowly, fail or cause confusion or uncertainty to the user. Major failures of this kind may affect all customers who are online simultaneously. Any such litigation could have a material adverse effect on our business, financial condition, results of operations and prospects.
 
We may not be able to make future acquisitions and new strategic alliances, and, even if we do, such acquisitions and alliances may disrupt or otherwise negatively affect our business.
 
 
 
Our business plan contemplates that we may make acquisitions in complementary companies, technologies and assets.  Future acquisitions are subject to the following risks:
 
·
we may not be able to agree on the terms of the acquisition or alliance, such as the amount or price of our acquired interest;
 
·
acquisitions and alliances may cause a disruption in our ongoing business, distract a relatively new management team and make it difficult to implement or maintain our systems, controls and procedures;
 
·
we may acquire companies or make strategic alliances in markets in which we have little experience;
 
·
we may not be able successfully to integrate the services, products and personnel of any acquisition or new alliance into our operations;
 
·
we may be required to incur debt or issue equity securities to pay for acquisitions, which may be dilutive to existing shareholders, or we may not be able to finance the acquisitions at all; and
 
·
our acquisitions and strategic alliances may not be successful, and we may lose our entire investment.

In addition, we will face competition from other parties, including large public and private companies, venture capital firms, and other companies, in our search for suitable acquisitions and alliances. Many of the companies we will compete with for acquisitions have substantially greater name recognition and financial resources than we have, which may limit our opportunity to acquire interests in new companies, technologies and assets or create strategic alliances. Even if we are able to find suitable acquisition candidates or develop acceptable strategic alliances, doing so may require more time and expense than we expect because of intense competition.
 
 
 
 
 
 
13

 
 
 
 
The international nature of our business will add additional complexity and risks to our business.
 
The nature of the foreign currency business will bring us into contact with different countries and markets. We hope to continue to expand further in international markets. Our international business may be subject to a variety of risks, including:
 
•           market risk or loss of uncovered transactions;
 
•           governmental regulation and political instability;
 
•           collecting international accounts receivable and income;
 
•           the imposition of barriers to trade and taxes; and
 
•           difficulties associated with enforcing contractual obligations and intellectual property rights.
 
These factors may have a negative effect on any future international operations and may adversely affect our business and operations.  We may not be able to compete effectively with other providers of e-commerce services.
 
Concerns regarding security of transactions and transmitting confidential information over the Internet may adversely affect our business.
 
We believe that concern regarding the security of confidential information transmitted over the Internet, including, for example, business requirements, credit card numbers and other forms of payment methods, prevents many potential customers from engaging in online trading. If we do not add sufficient security features to future product releases, our services may not gain market acceptance or we may face additional legal exposure.
 
Despite the measures we plan to take in the areas of encryption and password or other authentication software devices, our future infrastructure, like others, will be potentially vulnerable to physical or electronic break-ins, computer viruses, hackers or similar problems caused by employees, customers or other Internet users. If a person circumvents our security measures, that person could misappropriate proprietary information or cause interruptions in our operations. Security breaches that result in access to confidential information could damage our reputation and expose us to a risk of loss or liability. These risks may require us to make significant investments and efforts to protect against or remedy security breaches, which would increase the costs of maintaining our websites.
 
Our e-commerce capability depends on real-time accurate product information.
 
We may be responsible for loading information into our database and categorizing the information for trading purposes. This process entails a number of risks, including dependence on our suppliers both to provide us in a timely manner with accurate, complete and current information and to update this information promptly when it changes. If our suppliers do not provide us in a timely manner with accurate, complete and current information, our database may be less useful to our customers and users and may expose us to liability. We cannot guarantee that the information available in our database will always be accurate, complete and current or comply with governmental regulations either due to third-party or internal errors. This could expose us to liability or result in decreased acceptance of our products and services, which could have a material and adverse affect on our business and operations. We are aware of cases in which the data provided to us by third parties has not been consistently accurate and, as a result of which, we have experienced customer dissatisfaction and lawsuits by customers. In addition, our contracts with the third-party data suppliers must be renewed on a regular basis and the costs for such information may increase, with our company having little or no negotiating influence in such a situation.
 
 
 
14

 
 
 
Our market is characterized by rapid technological change, and we may not be able to keep up with such change in a cost-effective way.
 
Our market is characterized by rapid technological change and frequent new product announcements. Significant technological changes could render eventually our future-developed technology obsolete. If we are unable to respond successfully to these developments or do not respond in a cost-effective way, our business and operations will suffer. To be successful, we must adapt to our rapidly changing market by continually improving the responsiveness, services and features of our products and services, by developing or acquiring new features to meet customer needs and by successfully developing and introducing new versions of our Internet-based e-commerce business software on a timely basis. The life cycles of the software that will be used to support our e-commerce services are difficult to predict because the market for our e-commerce will be new and emerging and will be characterized by changing customer needs and industry standards. The introduction of on-line products employing new technologies and industry standards could render our future-developed system obsolete and unmarketable. If a new software language becomes the industry standard, we may need to rewrite our future-developed software to remain competitive, which we may not successfully accomplish in a timely and cost-effective manner.
 
In addition, as traffic to our platform increases, if at all, we may need to expand and upgrade our technology, transaction processing systems and network hardware and software. We may not be able to project accurately the rate of growth in our on-line businesses. We also may not be able to expand and upgrade our systems and network hardware and software capabilities to accommodate increased use of our on-line businesses, which would have a material and adverse affect on our business and operations.
 
An unexpected event, such as a power or telecommunications failure, fire or flood, or physical or electronic break-in at any of our facilities or those of any third parties on which we rely, could cause a loss of critical data and prevent us from offering services. If our hosting and information technology services were interrupted, including from failure of other parties' software that we integrate into our technology, our business and the businesses of our marketplaces using these services would be disrupted, which could result in decreased revenues, lost customers and impaired business reputation for us and them. As a result, we could experience greater difficulty attracting new customers. A failure by us or any third parties on which we rely to provide these services satisfactorily would impair our ability to support the operations of our services and could subject us to legal claims.
 
In addition, to a large extent, our company's profits will be dependent upon the operation of its internal risk management system. There is no guarantee that such system will operate successfully in every eventuality.
 
Anti-takeover provisions and our right to issue preferred stock could make a third party acquisition of us difficult.
 
 
Forex is a Nevada corporation. Anti-takeover provisions of Nevada law tend to make it difficult for a third party to acquire control of us, even if a change in control would be beneficial to our shareholders. In addition, our board of directors may issue preferred stock with voting or conversion rights that may have the effect of delaying, deferring or preventing a change of control. Preventing a change of control could adversely affect the market price of Forex common stock and the voting and other rights of holders of Forex common stock.
 
Our common stock price is likely to be highly volatile.
 
The market price of our common stock is likely to be highly volatile, as the stock market in general, and the market for Internet-related and technology companies in particular, has been highly volatile. Our shareholders may not be able to resell their shares of our common stock following periods of volatility because of the market's adverse reaction to this volatility.  Factors that could cause this volatility may include, among other things:
 
•           announcements of technological innovations and the creation and failure of B2B marketplaces;
 
•           actual or anticipated variations in quarterly operating results;
 
 
 
 
15

 
 
 
•           new sales formats or new products or services;
 
•           changes in financial estimates by securities analysts;
 
•           conditions or trends in the Internet, B2B and other industries;
 
•           changes in the market valuations of other Internet companies;
 
•           announcements by us or our competitors of significant acquisitions, strategic partnerships or joint ventures;
 
•           changes in capital commitments;
 
•           additions or departures of key personnel;
 
•           sales of our common stock; and
 
•           general market conditions.
 
Many of these factors are beyond our control.
 
ITEM 1B. UNRESOLVED STAFF COMMENTS
 
As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item 1B. Unresolved Staff Comments.
 
ITEM 2. PROPERTIES

The Company’s headquarters and operations office is located at One Grand Central Place 60 E 42nd Street,
Suite 5310 New York, New York 10165.  The Company contributes to Forex NYC and Wheatley lease payments of $9,500 per month for the space with term ending December 2011.  Future minimum payments of obligations under the commitment to contribute to the operating lease at March 18, 2011 are as follows:

·
Until: December 2011 - $95,000

The Company leases two virtual offices in Las Vegas Nevada and in Dallas, Texas paying about $250 per month for each virtual office.
 
 
ITEM 3. LEGAL PROCEEDINGS
 
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.  Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.  We are currently unaware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results.
 
ITEM 4. (REMOVED AND RESERVED)

Not applicable.


 
16

 

 
PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
 
On December 29, 2010, our common stock began trading on the OTC Bulletin Board under the symbol “FXIT”.   The Company is authorized to issue 400,000,000 of its $0.00001 par value common stock and 20,000,000 shares of its $0.00001 par value preferred stock.  As of December 31, 2010, 63,586,666 shares of common stock were issued and outstanding and zero (0) shares of preferred stock were issued and outstanding.  The Board of Directors reserves the right to issue shares of preferred stock in the future indicating preference or rights as appropriate.
 
 
Market Information

Our common stock commenced quotation on the OTCBB and OTCQB under the symbol “FXIT” as of December 9, 2010. The following table sets forth the range of high and low prices per share of our common stock for each period indicated.  As there was no trading in 2009, we have only included data for 2010 and 2011 through March 31, 2011.
 
Quarters Ended
Mar 31
   
Jun 30
   
Sept 30
   
Dec 31
 
 
High
 
Low
   
High
   
Low
   
High
   
Low
   
High
   
Low
 
2011
$  0.60  
0.18
                                     
2010
$
n/a
 
$
n/a
   
$
n/a
   
$
n/a
   
$
n/a
   
$
n/a
   
$
0.32
   
$
0.28
 
2009
$
n/a
 
$
n/a
   
$
n/a
   
$
n/a
   
$
n/a
   
$
n/a
   
$
n/a
   
$
n/a
 
 
Record Holders

The number of holders of record for our common stock as of December 31, 2010 was approximately thirty one (31), and as of the day of this filing about fourty four (44).

Dividends
The Company has not yet adopted any policy regarding payment of dividends.  No dividends have been paid or declared since the Date of Inception.

Securities Authorized for Issuance Under Equity Compensation Plans

We presently do not have equity compensation plans authorized.

Recent Issuances of Unregistered Securities

On July 22, 2009 the Company issued 40,000,000 shares of its $0.00001 par value common stock to Meridad Inc. and 40,000,000 shares of its $0.00001 par value common stock to Rasel Ltd.   These shares were issued at par with no Additional Paid In Capital for a total of $800.

On March 26, 2010 the Company entered into agreement with Island Capital Management, LLC for the purpose of obtaining DTC Corporate Eligibility. The Company paid as a fee $2,000 in cash and 120,000 shares of restricted stock for the purpose of obtaining DTC Eligibility, including but not limited to performing director, officer and control shareholder Background Reviews and Consultation Services with respect to transfer services, including obtaining CUSIP  number(s), documentation formatting and third-party professional consultation services.  The Company received DTC eligibility in December 2010.
 
 
 
17

 
 

 
On April 23, 2010, the Company entered into an Employment Agreement (the “Agreement”) with Darren Dunckel (“Executive”) whereby the Company will employ Executive as its Chief Executive Officer for a term of two years (the “Term”).  Executive was granted a signing bonus consisting of 4,000,000 shares of common stock of the Company upon signing the Agreement

On July 8, 2010, the Company issued a Convertible Promissory Note to ATL in aggregate principal amounts of $500,000 (the “Forex Note”).  In consideration for the Company issuing the Forex Note, ATL issued the Company a Secured and Collateralized Promissory Note in the principle amount of $400,000 (the “ATL Note”).  Concurrent with the conversion of the Forex Note, ATL must make a payment to the Company reducing a pro rata amount owed to the Company under the ATL Note.  On November 8, 2010, the Company and ATL agreed that various loans in the principal amount of $71,736 (the “Prepaid Amount”) provided by ATL to the Company shall be applied to the ATL Note reducing the principal of the ATL Note by such amount.  Accordingly, upon the initial conversions of the Forex Note, ATL will not be required to make such pro-rata payment reducing the ATL Note until the Prepaid Amount has been exceeded. On or about January 18, 2011 the Company issued 324,234 common shares to ATL to pay the Prepaid Amount, in lieu of cash.

On November 17, 2010, the Company entered into a Share Exchange Agreement - the APH Agreement with APH pursuant to APH agreement the Company agreed to issue 36,000,000 shares of common stock of the Company as well as a 6%  Convertible Note in the principal amount of $1,200,000 due February 15, 2011 (the “APH Note”).  On December 30, 2010, the Company and APH entered into an amendment to the APH Agreement whereby the number of shares to be delivered by the Company was reduced from 36,000,000 to 25,000,000.  Further, on December 30, 2010,  in order to expedite the transaction and avoid further dilution of the existing shareholders, Medirad Inc. and Rasel Ltd., shareholders of the Company, have agreed to return an aggregate of 70,000,000 shares of common stock to the Company for cancellation upon closing of the APH Agreement.  The above transaction closed on December 30, 2010 with an effective date of October 1, 2010.
 
On December 18, 2010, the Company entered into a Securities Purchase Agreement with Forex NYC pursuant to which the Company acquired twenty percent (20%) of the issued and outstanding equity of Forex NYC (the “FNYC Interest”) on a fully diluted basis.  In consideration for the FNYC Interest, the Company issued and sold to Forex NYC 1,000,000 shares of common stock of the Company. On February 23, 2011, the Company entered into additional Securities Purchase Agreement with Forex NYC, pursuant to which the Company acquired additional thirty percent (30%) of the issued and outstanding membership interest of Forex NYC (the “FNYC Interest”) on a fully diluted basis. In consideration for the additional FNYC Interest, the Company will issue and sold to Forex NYC 675,000 shares of common stock of the Company.
 
On January 5, 2011, the Company closed private placement memorandum and issued 3,655,635 restricted shares to accredited investors at an aggregate purchase price of $520,000.

On January 17, 2011 the Company issued to Core Consulting Group (“Core”) 700,000 restricted shares as part of the Company consideration under consulting agreement. Core is serving as the Company Investor relations firm

On February 23, 2011, the Company entered into a Securities Purchase Agreement with Wheatley, pursuant to which the Company issued Wheatley 1,125,000 shares of common stock of the Company in consideration of a 50% interest in Wheatley.

On March 28, 2011 the Company approved issuing to William Jordan ("WJ") 10,000 restricted shares as part of the Company consideration under consulting agreement. WJ served as consultant to the Company in connection with referral to third parties.
 
All the above shares of common stock of the Company were offered and sold by the Company in a securities purchase transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 (the “Securities Act”) and/or Rule 506 promulgated under the Securities Act. The investors are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act.

Director Agreements

On April 23, 2010, the Company issued Mr. Dunckel, Chief Executive Officer, 4,000,000 shares of common stock in conjunction with his April 2010 employment agreement
 
 
 
18

 
 

 
In conjunction with their respective employment agreements with the Company, the Company agreed to issue Mr. Glass, Mrs. Atias, and Mr. Reich shares of common stock of the Company registered on a Form S-8 Registration Statement equal to $6,000 divided by the Company’s market price discounted by 25% on an annual basis at the commencement of each term.  As of the date hereof, the Company has not issued the shares of common stock to its directors.

On March 7, 2011, Mr. Reich and Mr. Glass each had their agreements with the Company modified to receive restricted shares of common stock of the Company equal to $12,000 divided by the Company’s market price discounted by 25%.
.
The above issued securities were offered and sold in transactions made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder.

Equity Offering – Registered Offering
On May 4, 2010, the Company completed an equity offering in which 20,000,000 shares of par value common stock were sold for $0.01 per share for an aggregate raise of $200,000.  A total of 42 investors were solicited, all of which invested in the Company.

Issuer Purchases of Equity Securities
The Company did not repurchase any of its securities since inception to date.

ITEM 6. SELECTED FINANCIAL DATA
 
As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item 6. Selected Financial Data.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. In addition to historical information, this discussion includes forward-looking information that involves risks and assumptions which could cause actual results to differ materially from management's expectations. See "Forward-Looking Statements" included in this report.
 
General Overview

Forex was formed with the express intent of providing online trading services to retail customers giving them access to online foreign currency trading.  We offer online trading services to non US residents, professional and retail clients over a web-based live and real-time proprietary trading system.  The Company currently operates four websites (via its subsidiaries and not including affiliates), the corporate website, www.forex-international-trading.com , and the trading platform, which operates under an affiliate licensing agreement, www.4xint.com.  After the acquisition of interests in both Wheatley and Forex NYC the Company operates both http://forexnewyorkcity.com/ and http://wheatleyassetmanagement.com. All websites are currently under further development and construction and modifications may apply.  The Company is incorporated in the State of Nevada, and its corporate headquarters and principal offices are located in New York, NY.  Forex Sub, the Company’s wholly-owned subsidiary, is incorporated in the State of Israel and maintains only one bank account and one self-trading account on behalf of the Company.  
 
Acquisitions and Divestitures

On December 18, 2010, the Company entered into a Securities Purchase Agreement with Forex NYC pursuant to which the Company acquired twenty percent (20%) of the issued and outstanding equity of FNYC Interest on a fully diluted basis.  In consideration for the FNYC Interest, the Company issued and sold to Forex NYC 1,000,000 shares of common stock of the Company. On February 23, 2011, the Company entered into additional Securities Purchase Agreement with Forex NYC, pursuant to which the Company acquired additional thirty percent (30%) of the issued and outstanding membership interest of FNYC Interest on a fully diluted basis. In consideration for the additional FNYC Interest, the Company will issue and sold to Forex NYC 675,000 shares of common stock of the Company. Forex NYC is a limited liability company organized under the laws of the State of New York with headquarters located at One Grand Central Place. Forex NYC is a based Forex investment training facility.
 
 
 
 
19

 
 
 
On November 17, 2010, the Company entered into a Share Exchange Agreement the APH Agreement with APH pursuant to which the Company agreed to acquire 17,924 ordinary shares of Triple.  The securities acquired from APH represent approximately 45% of the issued and outstanding securities of Triple.   Pursuant to the APH Agreement, in consideration  for the securities of Triple, the Company agreed to issue 36,000,000 shares of common stock of the Company as well as a 6%  Convertible Note in the principal amount of $1,200,000 due February 15, 2011 (the “APH Note”).  On December 30, 2010, the Company and APH entered into an amendment to the APH Agreement whereby the number of shares to be delivered by the Company was reduced from 36,000,000 to 25,000,000.  Further, on December 30, 2010,  in order to expedite the transaction and avoid further dilution of the existing shareholders, Medirad Inc. and Rasel Ltd., shareholders of the Company, have agreed to return an aggregate of 70,000,000 shares of common stock to the Company for cancellation upon closing of the APH Agreement.  The above transaction closed on December 30, 2010.
 
Due to the fact that the transaction with APH closed at yearend, we have shown a consolidated balance sheet in the financial statements, but unconsolidated statements of operating income and cash flow.
 
On April 5, 2011, the Company and APH, which owns 33,000,000 shares of common stock and a 6% Convertible Debenture in the amount of $1,000,000 (the “APH Note”) entered into an agreement whereby  APH agreed to extend the maturity date of the APH Note from February 15, 2011 to June 30, 2011.  Further, APH agreed that its right to return 16,000,000 shares of common stock to the Company in consideration of 20% of the issued and outstanding securities of Triple is of no force and effect.  In consideration of the above, the Company agreed to return the 33,000,000 shares of common stock held by APH to treasury and issue APH 100,000 shares of Series A Preferred Stock.  The Series A Preferred Stock has a stated value of $100 per share and is convertible into our common stock at a conversion price of $0.30 per share representing 33,333,333 shares of common stock.  Further, the Series A Preferred Stock votes on an as converted basis multiplied by three and carries standard anti-dilution rights. 
 
On April 5, 2011, the Company and Mladen Poropat, a shareholder of the Company, entered into an agreement whereby the parties agreed to convert the $200,000 6% Convertible Debenture, which was in default and was assigned by APH to Mr. Poropat, into 2,500,000 shares of common stock.
 
On February 23, 2011, the Company entered into a Securities Purchase Agreement with Wheatley pursuant to which the Company acquired fifty percent (50%) of the Wheatley Interest on a fully diluted basis. In consideration for the Wheatley Interest, the Company will issue and sell to Wheatley 1,125,000 shares of common stock of the Company. Wheatley is a limited liability company organized under the laws of the State of New York with headquarters located at One Grand Central Place. Wheatley is an NFA Registered Introducing Broker (IB), Forex Firm and Commodity Trading Adviser (CTA).  
 
2010 and 2009 Results of Operations:

Due to the commencement of our business during this year, the consolidated statements of operations for the years ended December 31, 2010 and July 31 2009 are not comparable. This section of the report should be read together with Notes of the Company’s restated consolidated financials as well as the disclosures in this filling.
 
The consolidated statements of operations for the years ended December 31, 2010 and July 31, 2009 are compared (subject to the above description) in the sections below:
 
Revenues
The following table summarizes our revenues for the year ended December 31, 2010 and July 31, 2009:
 
Year ended December 31 and July 31, respectively
 
2010
   
2009
 
Total revenues
 
$
148,281
   
$
68,916
 
 
The increase in revenues is attributed to the commencement of our trading platform in May 2010 for clients outside the US.
 
 
 
20

 
 
 
The following table summarizes our cost of revenues for the year ended December 31, 2010 and July 31, 2009:
 
Year ended December 31 and July 31, respectively
 
2010
   
2009
 
Total cost of revenues
 
$
0
   
$
0
 

Operating Expenses
The following table summarizes our operating expenses for the year ended December 31, 2010 and July 31, 2009:
 
Year ended December 31 and July 31, respectively
 
2010
   
2009
 
Total operating expenses
 
$
539,827
   
$
236,313
 
 
The increase in operating expenses is attributed to the commencement of our trading platform in May 2010 for clients outside the US.

Net interest income (expense)
The following table summarizes our net interest income for the year ended December 31, 2010 and July 31, 2009:
 
Year ended December 31 and  July 31, respectively
 
2010
   
2009
 
Interest income
 
$
---
   
$
3,025
 
Interest expense
 
$
(48,108
)
 
$
(40,932)
 
Net interest expense
 
$
  (48,108)
 
 
$
(37,907)
 

The increase in interest expense is attributed to the issuance of notes payable to finance operations in 2010.  In 2009 we did not have any operations, and as such we did not accrue any interest expenses or income.

Liquidity and Capital Resources

As of December 31, 2010, our cash, cash equivalents were $3,078,339 (at December 31, 2009, our cash and cash equivalents were $307), an increase of approximately $3,078,007 from December 31, 2009 to December 31, 2010. The increase in our cash and cash equivalents is primarily the result of our private placements of restricted stock, and the acquisition of approximately 45% of Triple yearend.  In our financial statements included herein, we have consolidated the balance sheet of Triple with our balance sheet, but because the acquisition occurred at year end, we have not consolidated the statement of cash flow and statement of operating income.

Cash flow used by operating activities for the year ended December 31, 2010 was $355,157, and cash flow used by operating activities in 2009 was $97,046.  In 2010, the Company had an operating platform, whereas in 2009, Company activities were limited to production of financial statements and legal fees in connection with our public offering.  Cash flow used by investing activities for the year ended December 31, 2010 was $24,442,639, and cash flow used by investing activities in 2009 was $58,152.  Cash from used by investing activities in 2010 includes an adjustment to reflect the cash from the acquisition of a subsidiary.  Cash provided by financing activities in the year ended December 31, 2010 was $27,875,828, and cash flow provided by financing activities was $240,291 for the year ended July 31, 2009. During 2010, FXIT completed restricted registered offering of common stock to accredited investors, raising $200,000, and issued advances on equity in the amount of $520,000 for a private placement that was completed shortly after yearend.  In 2009, FXIT completed a private placement of 80MM shares to Rasel and Medirad, respectively, in the aggregate amount of $800.
 
 
 
 
21

 
 

 
Our future capital requirements and the adequacy of available funds will depend on numerous factors, including the successful commercialization of our products, competing technological and market developments, and the development of strategic alliances for the development and marketing of our products.  Our Company intends to try to obtain additional funds through equity or debt financing, strategic alliances with corporate partners and others, or through other sources. On October 6, 2009, October 20, 2009 and January 29, 2010, Rasel Ltd., a shareholder of our company, loaned $25,000, $50,000 and $50,000, respectively, to our company.   .
 
We expect to use the proceeds to fund our short-term capital requirements including paying administrative expenses associated with maintaining our public company’s filings for the next 12 months.    In order to implement our business plan and pay various administrative expenses on a minimal basis for 12 months, we expect that we will need approximately a minimum of $50,000 per month.   We expect to be able to remain in operation for a period of 12 months with cash on hand.  In the event Forex's plans change or its assumptions change or prove to be inaccurate or the funds available prove to be insufficient to fund operations at the planned level (due to further unanticipated expenses, delays, and problems or otherwise), Forex could be required to obtain additional funds earlier than expected.  Forex does  have  committed sources of additional financing, though there can be no assurance that additional funding, if necessary, will be available on acceptable terms, if at all. If adequate funds are not available, we may be required to further delay, scale-back, or eliminate certain aspects of our operations or attempt to obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies, product candidates, products, or potential markets. If adequate funds are not available, Forex's business, financial condition, and results of operations will be materially and adversely affected.
 
Until required for operations, Forex's policy will be to invest its cash reserves in bank deposits or deploy its cash in short term loans.  Forex expects that its operating results will fluctuate significantly from quarter to quarter in the future and will depend on a number of factors, most of which are outside Forex's control.

Debt Financing Arrangements

Rasel, LTD - Affiliated Party (During 2010)
On October 6, 2009 the Company signed a Note Payable for $25,000 payable to Rasel due on October 6, 2010 at 4% per annum.   The proceeds were used to pay for half of an existing Accounts Payable to Stephen Fleming for legal fees incurred at the Company’s inception.

On October 20, 2009 the Company signed a Note Payable for $50,000 payable to Rasel due on October 20, 2010 at 4% per annum.   These proceeds were used to pay for startup costs, audit fees and future expenses.

On January 22, 2010 the Company signed a Note Payable for $50,000 payable to Rasel due on October 30, 2011 at 4% per annum.   These proceeds will be used for working capital and future expenses.

On January 22, 2010 the Company signed an amendment to extend the maturity date of the Promissory Notes in the amount of $50,000 and $25,000 dated October 6, 2009 and October 20, 2009, respectively, to October 30, 2011.

On March 2, 2011 the Company and Rasel agreed to extend the maturity of all notes to December 31, 2012 in consideration of adding a conversion feature to said note with either a 5% discount to the market price or a fixed price of $0.60. Said extension of maturity was agreed to be effective as of December 30, 2010,

The accrued balance of the notes including interest as of December 31, 2010 is $130,547.

A.T. Limited – Convertible Note and Accrued Interest
On July 8, 2010, the Company issued a Convertible Promissory Note to A.T. Limited (“ATL”) in aggregate principal amounts of $500,000 (the “Forex Note”).  In consideration for the Company issuing the ATL Note, ATL issued the Company a Secured and Collateralized Promissory Note in the principle amount of $400,000 (the “ATL Note”).
 
 
 
22

 
 

 
The Forex Note bears interest at 10%, matures two years from the date of issuance and is convertible into our common stock, at ATL’s option, at a conversion price of $0.20 subject to adjustment.  On the 21st trading day following each conversion, the number of shares of common stock issuable to ATL pursuant to the Forex Note shall be adjusted such that the aggregate number of shares of common stock issuable to ATL is equal to the amount converted divided by 75% of the average of the three lowest closing bid prices during the 20 trading days following delivery of the shares of common stock upon the initial conversion.  Concurrent with the conversion of the Forex Note, ATL must make a payment to the Company reducing a pro rata amount owed to the Company under the ATL Note.  As of July 12, 2010, the Company is received a trading symbol (FXIT) but has not commenced trading.  Based on fixed conversion price of $0.20, the Forex Note in the aggregate amount of $500,000, excluding interest, is convertible into 2,500,000 shares of our common stock.  ATL has agreed to restrict their ability to convert the Forex Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.

The ATL Note bears interest at the rate of 12% per annum and matures one year from the date of issuance.  No interest or principal payments are required until the maturity date, but both principal and interest may be prepaid prior to maturity date and ATL is required to pay down an amount equal to any amounts converted under the Forex Note.  The ATL Note is secured by shares of common stock of a publicly listed company on the Tel Aviv and London Stock Exchanges with an approximate market value of $400,000 (the “ATL Collateral”).  In the event that ATL defaults on the ATL Note, the Company may take possession of the ATL Collateral and, in the event that the ATL Collateral is insufficient to pay the full debt owed under the ATL Note, the Company may pursue further remedies against ATL.

On November 8, 2010, the Company and ATL agreed that various loans in the principal amount of $71,736 (the “Prepaid Amount”) provided by ATL to the Company shall be applied to the ATL Note reducing the principal of the ATL Note by such amount.  Accordingly, upon the initial conversions of the Forex Note, ATL will not be required to make such pro-rata payment reducing the ATL Note until the Prepaid Amount has been exceeded. On or about January 18, 2011 the Company issued 324,234 common shares to ATL to settle the Prepaid Amount in lieu of cash.

The Forex Note was offered and sold to ATL in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated thereunder. ATL is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

The accrued balance of the Forex note including interest as of December 31, 2010 is $524,110.

Dividends
The Company has not yet adopted any policy regarding payment of dividends.  No dividends have been paid or declared since the Date of Inception.

Critical Accounting Policies and Estimates
We conducted our audits in accordance with standards required by the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  Although these estimates are based on management’s best knowledge of current events and circumstances that may impact the Company in the future, actual results may differ from these estimates.

Basis of consolidation
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary and all variable interest entities for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated upon consolidation. Control is determined based on ownership rights or, when applicable, whether the Company is considered the primary beneficiary of a variable interest entity
 
 
 
23

 
 

 
Marketable securities
The Company determines the appropriate classification of all marketable securities as held-to-maturity, available-for-sale or trading at the time of purchase, and re-evaluates such classification as of each balance sheet date. The Company assesses whether temporary or other-than-temporary gains or losses on its marketable securities have occurred due to increases or declines in fair value or other market conditions. The Company had marketable securities within continuing operations during the year, which have been sold in the market.
 
 Cash and Cash Equivalents
The Company maintains a cash balance in a non-interest bearing account that currently does not exceed federally insured limits. For purposes of financial statement presentation, the Company considers all highly liquid instruments with a maturity of three months or less to be cash.

Revenue Recognition
The Company uses the accrual basis of accounting for all transactions. The Company recognized revenue and gains when earned and related costs of sales and expenses when incurred.

Fixed and Other Assets
Fixed assets are stated at cost, less accumulated depreciation.  Office furniture and equipment are depreciated using the straight-line method over seven years.  Computer equipment and software are depreciated using the straight-line method over three years.  Leasehold improvements are amortized on a straight-line basis over the lesser of the useful life or the life of the lease (three years).

Costs of software acquired along with payroll costs and consulting fees relating to the development of internal use software, including that used to provide internet solutions, are capitalized.  Once the software is placed in service, the costs are amortized over the estimated useful life.

Costs of Debt Discount are amortized over the life of the note that was discounted, typically two years.

Variable Interest Entities
The Company is required to consolidate variable interest entities (“VIE's”), where it is the entity’s primary beneficiary. VIE's are entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The primary beneficiary is the party that has exposure to a majority of the expected losses and/or expected residual returns of the VIE.  For the year ended December 31, 2010, the balance sheets and results of operations of FOREX INTERNATIONAL TRADING CORP M.S. LTD, (our wholly owned subsidiary, which is not active in operation and serving as our agent), were consolidated into these financial statements.  The results of operations of Triple and its subsidiary were not consolidated, because the transaction occurred at yearend; only Triple balance sheet was consolidated.

On November 17, 2010, Company, entered into the APH Agreement with APH pursuant to which the Company agreed to acquire 17,924 ordinary shares of Triple.  The securities acquired from APH represent approximately 45% of the issued and outstanding securities of Triple.   Pursuant to the APH Agreement, in consideration  for the securities of Triple, the Company agreed to issue 36,000,000 shares of common stock of the Company as well as a 6%  Convertible Note in the principal amount of $1,200,000 due February 15, 2011 (the “APH Note”).  On December 30, 2010, the Company and APH entered into an amendment to the APH Agreement whereby the number of shares to be delivered by the Company was reduced from 36,000,000 to 25,000,000.  Further, on December 30, 2010,  in order to expedite the transaction and avoid further dilution of the existing shareholders, Medirad Inc. and Rasel Ltd., shareholders of the Company, have agreed to return an aggregate of 70,000,000 shares of common stock to the Company for cancellation upon closing of the APH Agreement.  The above transaction closed on December 30, 2010. Due to the Company default on the APH Note, the parties entered a settlement agreement which is summarized below:
 
On April 5, 2011, the Company and APH, which currently owns 33,000,000 shares of common stock and a 6% Convertible Debenture in the amount of $1,000,000 (the “APH Note”) entered into an agreement whereby  APH agreed to extend the maturity date of the APH Note from February 15, 2011 to June 30, 2011.  Further, APH agreed that its right to return 16,000,000 shares of common stock to the Company in consideration of 20% of the issued and outstanding securities of Triple is of no force and effect.  In consideration of the above, the Company agreed to return the 33,000,000 shares of common stock held by APH to treasury and issue APH 100,000 shares of Series A Preferred Stock.  The Series A Preferred Stock has a stated value of $100 per share and is convertible into our common stock at a conversion price of $0.30 per share representing 33,333,333 shares of common stock.  Further, the Series A Preferred Stock votes on an as converted basis multiplied by three and carries standard anti-dilution rights. 
 
 
 
24

 
 
 
On April 5, 2011, the Company and Mladen Poropat, a shareholder of the Company, entered into an agreement whereby the parties agreed to convert the $200,000 6% Convertible Debenture, which was in default and was assigned by APH to Mr. Poropat, into 2,500,000 shares of common stock.
 
Although the Company acquired approximately 45% of Triple, the Company determined that Triple was a VIE, and that the Company was the primary beneficiary of the VIE’s residual gains and losses, because it gained de-facto control of the Company’s operations through the appointment of one of its employees as the sole director of the VIE.  The Company therefore elected to consolidate Triple’s balance sheet only in the financials herein.

Loss per Share
Net loss per share is provided in accordance with ASC Codification Topic 260 Section S99-1 and Statement of Financial Accounting Standards No. 128 (SFAS #128) “Earnings Per Share”. Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period.  The Company had no dilutive common stock equivalents, such as stock options or warrants as of the date of these financials.

Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
 
Foreign currency translation
The Company considers the United States Dollar (“US Dollar” or "$") to be the functional currency of the Company and its subsidiary. The reporting currency of the Company is the US Dollar and accordingly, all amounts included in the consolidated financial statements have been presented or translated into US Dollars. For non-US subsidiaries that do not utilize the US Dollar as its functional currency, assets and liabilities are translated to US Dollars at period-end exchange rates, and income and expense items are translated at weighted-average rates of exchange prevailing during the period. Translation adjustments are recorded in “Accumulated other comprehensive income” within stockholders’ equity. Foreign currency transaction gains and losses are included in the consolidated results of operations for the periods presented.

Fair value of financial instruments
SFAS No. 107, Disclosures About Fair Value of Financial Instruments, requires disclosure of the fair value of certain financial instruments. The carrying value of financial instruments, which include cash and cash equivalents, loans payable, customer deposits and accrued expenses, approximate their fair values due to the short-term nature of these financial instruments. The carrying value of the Company’s note receivable approximates its fair value based on management’s best estimate of future cash collections.

Comprehensive Income
SFAS No. 130, Reporting Comprehensive Income, requires a full set of general-purpose financial statements to be expanded to include the reporting of comprehensive income. Comprehensive income is comprised of two components, net income and other comprehensive income. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non owner sources. As of December 31, 2010 foreign currency translation adjustments were the only items of other comprehensive income for the Company.

Segment reporting
The Company follows Statement of ASC Codification Topic 220 and Statement of Financial Accounting Standards No. 130, “Disclosures About Segments of an Enterprise and Related Information”.  The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
 
 
 
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Dividends
The Company has not yet adopted any policy regarding payment of dividends.  No dividends have been paid or declared since inception.

Recent pronouncements
In May 2008, FAS No. 163, “Accounting for Financial Guarantee Insurance Contracts”, and SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”, were issued. In March 2008, FAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133 was issued.

The Financial Accounting Standards Board (FASB) issued Statement No. 168 – become effective on July 1, 2009 – The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles which makes the Accounting Standards Codification (ASC) the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities for interim and annual periods ending after September 15, 2009. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The adoption of ASC Topic 105 did not have a material impact on the Company’s financial position, cash flows or result of operations. Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material effect on the Company’s operations or financial position.
 
Stock-Based Compensation
The Company accounts for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations and has adopted the disclosure only alternative of ASC Codification Topic 220 and SFAS No. 123, “Accounting for Stock-Based Compensation”. Options granted to consultants, independent representatives and other non-employees are accounted for using the fair value method as prescribed by ASC Codification Topic 220 and SFAS No. 123.

Year End
On October 18, 2010, the Board of Directors of the Company approved a change in the Company's fiscal year of July 31 to December 31 (the “Fiscal Year Change”).   The Company filed a transition report on Form 10-K covering the transition period of August 1, 2010 through December 31, 2010 (the “Transition Period”).  The Company also filed its Form 10-Q for the nine months ended September 30, 2010 accordingly.

Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern.   The future of the Company is dependent upon its ability to generate revenues and upon future profitable operations from the development of its new business opportunities.   The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
The information required by Item 8 appears at Page F-1, which appears after the signature page to this report.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
There has been no change or disagreements with accountants during the previous two fiscal years.
 
 
 
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ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the applicable period to ensure that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were effective for the reporting period ending December 31, 2010.
 
Managements Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 
·
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets;
 
 
·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
 
 
·
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations and provide only reasonable assurance, not absolute assurance, with respect to financial statement preparation and presentation. The design of an internal control system reflects resource constraints and the benefits must be considered relative to the costs of implementing and maintaining the system.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010. This assessment was based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, we believe that as of December 31, 2010 the Company’s internal control over financial reporting was effective based on those criteria.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal controls over financial reporting during the fourth quarter of 2010 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
ITEM 9A(T). CONTROLS AND PROCEDURES
 
Not applicable.

ITEM 9B. OTHER INFORMATION

Not applicable.


 
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PART III
 
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE.
 
Below are the names and certain information regarding our executive officers and directors:

Name
 
Age
 
Position with the Company
         
Darren Dunckel
 
43
 
Chief Executive Officer, President, Treasurer and Director
William Glass
 
40
 
Director
Liat Franco
 
36
 
Secretary
Stewart Reich
 
67
 
Chairman & Director
 
Mosche Schnapp, a former officer and director, and Anita Atias, a former director, resigned during the year ended December 31, 2010.

Set forth below is a biographical description of each of our directors and senior executive officers based on information supplied by each of them.
 
Mr. Schnapp resigned from the board on or around October 18, 2010 to pursue other opportunities, but still provides assistance to the Company through his network of contacts.

Darren Dunckel - Mr. Dunckel has served as the Company’s Chief Executive Officer since April 23, 2010.  In addition, Mr. Dunckel is also a member of the Board of Directors of the Company.  From 2005 to the present, Mr. Dunckel has served as the President of several privately owned companies. As President, he oversees management of real estate acquisitions and development and sales in the United States and overseas.  Since 2004, Mr. Dunckel has served as the President of My Daily Corporation, managing the operations of this financial services company.  From 2002 through 2004, Mr. Dunckel was Vice President, Regional Director for the Newport Group managing the territory for financial and consulting services. From 2000 to 2002, Mr. Dunckel was Vice President, Regional Director for New York Life Investment Management consulting with financial advisors and corporations with respect to investments and financial services.  Mr. Dunckel was appointed on September 17, 2007 to the Board of Directors as a director of Emvelco Corp., a publicly traded company (f/k/a Vortex Resources Corp).  Mr. Dunckel resigned from Emvelco Corp board on April 2009 to pursue other opportunities.

William Glass - Mr. Glass was appointed to the Board of Directors of the Company on August 5, 2010.  From 2008 to present, Mr. Glass is presently employed by Gemini Energy. In additional, since 2004, Mr. Glass serves as a member of the Board of Directors and as a consultant to Platinum Energy Resources (Pinksheets: PGRI).  From 2000 to 2003, Mr. Glass served as Vice President of Gas Operations and Manager of Natural Gas Trading for Mieco Inc. in Houston, Texas.  From 1996 to 2000, Mr. Glass worked as an energy trader at the Atlanta, Georgia based Southern Company Energy Marketing.  Mr. Glass also has a Bachelors of Business Administration in both Finance and Accounting from Texas A&M University.

Stewart Reich - Mr. Reich was appointed to the Board of Directors of the Company on July 29, 2010.  Mr. Reich was a member of the Board of Directors of Yasheng Eco-Trade Corporation from June 2004 until June 2010, was CEO and President of Golden Telecom Inc., Russia’s largest alternative voice and data service provider as well as its largest ISP, since 1997. In September 1992, Mr. Reich was employed as Chief Financial Officer at UTEL (Ukraine Telecommunications), of which he was appointed President in November 1992. Prior to that, Mr. Reich held various positions at a number of subsidiaries of AT&T Corp. Mr. Reich will serve as Chairman of the Company’s Board of Directors.

Liat Franco - On January 18, 2011, Mrs. L. Franco was appointed by the Company to serve as the Secretary of the Company.  Mrs. Franco will replace Mr. Darren Dunckel, the Company's Chief Executive Officer, who acted as the Company Secretary.  Mr. Dunckel will continue to serve as a director as well as Chief Executive Officer, President, Chief Financial Officer and Treasurer of the Company. Mrs. Franco graduated with a B.A. Magna Cum Laude from the University of California at Los Angeles and holds a J.D. from the UCLA School of Law in California where she specialized in corporate law, which she received in 2003.  Prior to joining the Company, Mrs. Franco served as a Security Officer for foreign consulate in Beverly Hills, California, from 2003 until 2009.  From 2009 to the present Mrs. Franco has served as a lecturer on contract law and evidence law at foreign college. On March 4, 2011, the Company entered into an Employment Agreement (the “Employment Agreement”) with Liat Franco whereby the Company will employ Ms. Franco as its Secretary for a term of one year (the “Term”).  Ms. Franco does not have any family relationship with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer.  
 
 
 
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Our directors are elected for a term of one year or until their successors are elected and qualified.

Family Relationships

There are no family relationships among our directors and executive officers. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer.

Involvement in Certain legal Proceedings

To our knowledge, during the last ten years, none of our directors and executive officers has:

 
·
Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

 
·
Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses.
  
 
·
Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities.

 
·
Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

 
·
Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.  

CORPORATE GOVERNANCE

Committees

We intend to appoint an audit committee. Accordingly, we will designate a director as an "audit committee financial expert", as that term is defined in the rules of the Securities and Exchange Commission, at such time.

The Board of Directors does not have a standing nominating committee. Nominations for election to the Board of Directors may be made by the Board of Directors or by any shareholder entitled to vote for the election of directors in accordance with our bylaws and Nevada law.

Meetings may be held from time to time to consider matters for which approval of our Board of Directors is desirable or is required by law.
 
Agreements with Officers and Directors

On April 23, 2010, the Company entered into the Dunckel Agreement with Darren Dunckel (“Dunckel”) whereby the Company will employ Dunckel as its Chief Executive Officer for a term of two years (the “Term”).   For his services during the Term as Chief Executive Officer, the Company will pay Dunckel a salary of $120,000 to be paid on a monthly basis at a rate of $10,000 per month.  Dunckel was also granted a signing bonus consisting of 4,000,000 shares of common stock of the Company upon signing the Dunckel Agreement.  Additionally, if the Company generates net income of at least $1,000,000 during any fiscal year during the Term, the Company will pay Dunckel an annual bonus in the amount of $100,000.  Dunckel will also receive during the Term such medical, health and disability insurance as the Company provides to its executive officers, two weeks of vacation in each calendar year and eligibility to participate in such pension, profit-sharing, retirement and other benefits as are available to executive officers of the Company.
 
 
 
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On July 29, 2010, Anita Atias and Stewart Reich were elected as members of the Board of Directors of the Company.  On August 5, 2010, Mr. William Glass was elected as a member of the Board of Directors.  Mr. Reich and Mr. Glass will each receive on an annual basis at the commencement of each term shares of common stock of the Company registered on a Form S-8 Registration Statement equal to $6,000 divided by the Company’s market price discounted by 25%.  Mrs. Atias has since resigned from the Board due to a conflict of interest. On March 4, 2011, the Company amended the Director Agreements by and between the Company and William Glass and Stewart Reich whereby Mr. Glass and Mr. Reich will each receive shares of common stock of the Company equal to $12,000 divided by the Company’s market price discounted by 25% on an annual basis.  The shares of common stock will be restricted as required under the Securities Act of 1933, as amended.
 

On January 18, 2011, Mrs. L. Franco was appointed by the Company to serve as the Secretary of the Company.  For her services during the Term as Secretary, the Company will issue Ms. Franco 15,000 shares of common stock of the Company, which will have a restrictive legend under the Securities Act of 1933, as amended.  In the event that the Term of the Employment Agreement is extended, then the number of shares of common stock will be determined by dividing $6,000 by the market price on the first trading day of the Term.
 
Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires  executive officers and directors, and persons who beneficially own more than ten percent of the Company’s common stock, to file initial reports of ownership and reports of changes in ownership with the SEC for Companies registered under Section 12 of the Exchange Act (“Section 12”) . Since we are not registered under Section 12, the executive officers, directors and greater than ten percent beneficial owners were not required by SEC regulations to file forms under 16(a)
 
Code of Ethics
We have adopted a Code of Ethics that applies to all officers, directors and employees. The Company will provide to any person without charge a copy of such code of ethics upon written request to the Company at its registered offices.
 
ITEM 11. EXECUTIVE COMPENSATION
 
The following tables set forth all compensation paid in respect of our Chief Executive Officer and our most highly compensated three executive officers (collectively, the "Named Executive Officers") for the year ended December 31, 2010 only as the Company did not pay any compensation during the year ended July 31, 2009.


 
30

 

Summary Compensation Table

Name and
 
  
 
Salary
   
Bonus
   
Restricted Stock Awards
   
Option Awards
   
Non-Equity Incentive Plan Compensation
   
Nonqualified Deferred Compensation Earnings
   
All Other Compensation
   
Total
 
 
  Position
 
Year 
 
($)
   
($)
   
($)
   
($)
   
($)
   
( $)
   
($)
   
($)
 
                                                     
Moshe J. Schnapp
CEO(1)
 
2010
    28,286       0       0       0       0       0       0       0  
                                                                     
Darren Dunckel CEO
 
2010
    88,459               40,000       0       0       0       0       0  
 
(1)  
Resigned as an executive officer and director in 2010.

The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer.
 
There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our sole officer and director other than as described herein.

Director Compensation
Pursuant to the employment agreement between the Company and Dunckel, the Company will pay Mr. Dunckel a salary of $120,000 to be paid on a monthly basis at a rate of $10,000 per month.  Mr. Dunckel was also granted a signing bonus consisting of 4,000,000 shares of common stock of the Company upon signing the agreement.  Additionally, if the Company generates net income of at least $1,000,000 during any fiscal year during the Term, the Company will pay Mr. Dunckel an annual bonus in the amount of $100,000.

Pursuant to the respective employment agreements between the Company and each director,  Mr. Reich, and Mr. Glass will each receive shares of common stock of the Company equal to $12,000 divided by the Company’s market price discounted by 25% on an annual basis.  The shares of common stock will be restricted as required under the Securities Act of 1933, as amended.
 
For services during the Term as Secretary, the Company will issue Ms. Franco 15,000 shares of common stock of the Company, which will have a restrictive legend under the Securities Act of 1933, as amended.  In the event that the Term of the Employment Agreement is extended, then the number of shares of common stock will be determined by dividing $6,000 by the market price on the first trading day of the Term.
 
On December 29, 2010, Mrs. Atias resigned as a director of the Company due to a potential conflict of interest.  Ms. Atias is currently the Operations Manager for Online Trading Academy, and the Company operates in a similar industry. Ms. Atias was not compensated by the Company for her services.



 
31

 


Name
 
Fees Earned or Paid in Cash
($)
   
Stock
Awards ($)
   
Stock
Options ($)
   
Non-equity
Incentive Plan
Compensation ($)
   
Non-Qualified
Deferred
Compensation
Earnings ($)
   
All Other
Compensation
($)
   
Total ($)
 
Darren Dunckel   
   
88,458.36
     
4,000,000
    
   
0
     
0
     
0
     
0
     
4,088,458.36
 
William Glass
   
0
     
    0
     
0
     
0
     
0
     
0
         
Stewart Reich   
   
0
     
0
     
0
     
0
     
0
     
0
         
                                                         
 
Outstanding Equity Awards at Fiscal Year-End

There are no outstanding equity awards outstanding at December 31, 2010.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
The following table sets forth the beneficial ownership of our company's common stock as of April 5, 2011, as to
 
 
·
each person known to beneficially own more than 5% of the Company's common stock
 
 
·
each of our directors
 
 
·
each executive officer
 
 
·
all directors and officers as a group
 
Unless otherwise indicated, each of the stockholders can be reached at our principal executive offices located at  One Grand Central Place, 60 E 42nd Street, Suite 5310, New York, New York 10165.

 

Name of Beneficial Owner
 
Common Stock Beneficially Owned (1)
   
Percentage of Common Stock (1)
 
Darren Dunckel (2)
    4,000,000       11.66 %
Stewart Reich (2)
    0       *  
William Glass (2)
    0       *  
Liat Franco (2)
    0       *  
AP Holdings Limited (4)
    38,333,333       52.77 %
Medirad, Inc. (3)
    700,000       2.04 %
HAM Group Limited(5)
    7,000,000       20.40 %
Mladen Poropot
    2,500,000       7.29 %
                 
Total Officers and Directors (4 persons)
    4,000,000       11.66 %
 
* less than 1%,
 
(1) Beneficial ownership is determined in accordance with the Rule 13d-3(d)(1) of the Exchange Act, as amended and generally includes voting or investment power with respect to securities. Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table. The above is based on 34,309,865 shares of common stock outstanding as of April 5, 2011.
 
(2) Officer and/or director of the Company.
 
(3) Sean Schnapp, the sole executive officer and director of Medirad, Inc., has voting and dispositive control over the shares held by Medirad, Inc.  

(4) AP Holdings Limited beneficially owns 38,333,333 common shares which represents 33,333,333 shares of common stock issuable upon conversion of the Series A Preferred Stock and 5,000,000 shares of common stock issuable upon conversion of the 6% Convertible Debenture.   Shalom Atia, the sole executive officer and director of AP Holdings Limited, has voting and dispositive control over the shares held by AP Holdings Limited. 

(5) H.A.M. Group Limited (“HAM”) beneficially owns 7,000,000 common shares which represents 4,000,000 shares of common stock issuable upon conversion of the Series A Preferred Stock and 3,000,000 shares of common stock issuable upon conversion of the 6% Convertible Debenture.   Moshe Har Adir, the sole executive officer and director of HAM, has voting and dispositive control over the shares held by HAM. 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

On April 23, 2010, the Company entered into the Dunckel Agreement with Dunckel whereby the Company will employ Dunckel as its Chief Executive Officer for a term of two years (the “Term”).   For his services during the Term as Chief Executive Officer, the Company will pay Dunckel a salary of $120,000 to be paid on a monthly basis at a rate of $10,000 per month.  Dunckel was also granted a signing bonus consisting of 4,000,000 shares of common stock of the Company upon signing the Dunckel Agreement.  Additionally, if the Company generates net income of at least $1,000,000 during any fiscal year during the Term, the Company will pay Dunckel an annual bonus in the amount of $100,000.  Dunckel will also receive during the Term such medical, health and disability insurance as the Company provides to its executive officers, two weeks of vacation in each calendar year and eligibility to participate in such pension, profit-sharing, retirement and other benefits as are available to executive officers of the Company.
 
 
 
 
32

 
 
 
On July 29, 2010, Anita Atias and Stewart Reich were elected as members of the Board of Directors of the Company.  On August 5, 2010, Mr. William Glass was elected as a member of the Board of Directors.  Mr. Reich and Mr. Glass will each receive on an annual basis at the commencement of each term shares of common stock of the Company registered on a Form S-8 Registration Statement equal to $6,000 divided by the Company’s market price discounted by 25%.  Mrs. Atias has since resigned from the Board due to a conflict of interest. On March 4, 2011, the Company amended the Director Agreements by and between the Company and William Glass and Stewart Reich whereby Mr. Glass and Mr. Reich will each receive shares of common stock of the Company equal to $12,000 divided by the Company’s market price discounted by 25% on an annual basis.  The shares of common stock will be restricted as required under the Securities Act of 1933, as amended.
 
On January 18, 2011, Mrs. L. Franco was appointed by the Company to serve as the Secretary of the Company.  For her services during the Term as Secretary, the Company will issue Ms. Franco 15,000 shares of common stock of the Company, which will have a restrictive legend under the Securities Act of 1933, as amended.  In the event that the Term of the Employment Agreement is extended, then the number of shares of common stock will be determined by dividing $6,000 by the market price on the first trading day of the Term.
 
Rasel, LTD - Affiliated Party (During 2010)

On October 6, 2009 the Company signed a Note Payable for $25,000 payable to RASEL, LTD (“Rasel”) (an affiliated entity) due on October 6, 2010 at 4% per annum.   The proceeds were used to pay for half of an existing Accounts Payable to Stephen Fleming for legal fees incurred at the Company’s inception. On October 20, 2009 the Company signed a Note Payable for $50,000 payable to Rasel (a Company Shareholder) due on October 20, 2010 at 4% per annum.   These proceeds were used to pay for startup costs, audit fees and future expenses. On January 22, 2010 the Company signed a Note Payable for $50,000 payable to Rasel (a Company Shareholder) due on October 30, 2011 at 4% per annum.   These proceeds will be used for working capital and future expenses. On January 22, 2010 the Company signed an amendment to extend the maturity date of the Promissory Notes in the amount of $50,000 and $25,000 dated October 6, 2009 and October 20, 2009, respectively, to October 30, 2011. On March 2, 2011 the Company and Rasel agreed to extend the maturity of all notes to December 31, 2012 in consideration of adding a conversion feature to said note with either a 5% discount to the market price or a fixed price of $0.60. Said extension of maturity was agreed to be effective as of December 30, 2010, The accrued balance of the notes including interest as of December 31, 2010 is $130,547.

Procedures for Approval of Related Party Transactions

Our Board of Directors is charged with reviewing and approving all potential related party transactions.  All such related party transactions must then be reported under applicable SEC rules. We have not adopted other procedures for review, or standards for approval, of such transactions, but instead review them on a case-by-case basis.

Director Independence

Board of Directors has determined that Mr. Reich and Mr. Glass  are each independent directors as of December 31, 2010 based on the definition of independence in the listing standards of the Nasdaq Corporate Governance Rules.  The Board of Directors are currently evaluating committee charters with the goal of establishing a Compensation Committee, a Governance and Nominating Committee and an Audit Committee.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

We have engaged Eugene M. Edgeberg, CPA as our auditor for the fiscal year ended December 31, 2010 and 2009.

Audit Fees. The aggregate fees accrued for  professional services rendered for the audit of our annual financial statements for the years ended December 31, 2010 and 2009 and for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q during these fiscal years were $10,000 for 2010 and $2,500 for 2009.

The audit fees incurred in 2010 are not comparable to other periods, because the Company a) restated their financials during the year due to the incorrect classification of certain startup-related expenses in 2009, among other items, and b) the Company changed their fiscal year in 2010 to end on December 31, 2010 from July 31, 2010.

Tax Fees. We did not incur fees to auditors for tax advice and tax compliance services during the fiscal years ended July 31, 2010 and 2009, respectively.

The Company board has considered whether the provision of non-audit services is compatible with maintaining the principal accountant’s independence.
 
 
 
 
33

 
 
 
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
 
Exhibit No.
 
Description
3.1
 
Certificate of Incorporation of Forex International Trading Corp. (6)
     
3.2
  Bylaws of Forex International Trading Corp. (6)
     
3.3
 
Certificate of Designation for Series A Preferred Stock
     
4.1
 
Convertible Promissory Note issued by the Company to A.T. Limited dated July 8, 2010 (3)
     
4.2
 
Secured and Collateralized Promissory Note issued by A.T. Limited to the Company dated July 8, 2010 (3)
     
4.3   Collateral and Security Agreement by and between Forex International Trading Group and A.T. Limited dated July 7, 2010 (3)
     
4.4
 
Promissory Note issued to Rasel Ltd. Dated October 6, 2009(7)
     
4.5
 
Promissory Note issued to Rasel Ltd. Dated October 20, 2009 (7)
     
4.6
 
Letter Agreement between Rasel Ltd. and Forex International Trading Corp. dated January 22, 2011 (8)
     
4.7
 
Letter Agreement by and between Forex International Trading Group and A.T. Limited dated November 8, 2010(9)
     
4.8
 
6% Convertible Note issued to AP Holdings Limited (11)
     
4.9
 
6% Convertible Debenture issued to HAM Group Limited dated April 5, 2011
     
10.1
 
Software Licensing Agreement dated April 12, 2010, by and between Forex International Trading Corp and Triple 8 Limited (1)
     
10.2
 
Employment Agreement dated April 23, 2010, by and between Forex International Trading Corp and Darren Dunckel (2)
     
10.3
 
Letter Agreement by and between Forex International Trading Corp. and Anita Atias, dated July 29, 2010 (4)
     
10.4
 
Letter Agreement by and between Forex International Trading Corp. and Stewart Reich, dated July 29, 2010 (4)
     
10.5
 
Letter Agreement by and between Forex International Trading Corp. and Mr. William Glass, dated August 6, 2010 (5)
     
10.6
 
Share Exchange Agreement by and between Forex International Trading Corp. and AP Holdings Limited (10)
     
10.7
 
Letter Agreement by and between Forex International Trading Corp., AP Holdings Limited, Medirad Inc. and Rasel Ltd. (11)
     
10.8
 
Form of Securities Purchase Agreement by and between Forex International Trading Corp.  and Forex New York City, LLC (12)
     
10.9
 
Form of Securities Purchase Agreement by and between Forex International Trading Corp.  And Wheatley Asset Management , LLC(12)
     
10.10
 
Letter Amendment by and between Forex International Trading Corp. and William Glass, dated March 4, 2011 (13)
     
10.11
 
Letter Amendment by and between Forex International Trading Corp. and Stewart Reich, dated March 4, 2011 (13)
     
10.12
 
Employment Agreement by and between Forex International Trading Corp. and Liat Franco, dated March 7, 2011 (13)
     
10.13
 
Agreement between Forex International Trading Corp. and AP Holdings Limited dated April 5, 2011
     
10.14
 
Conversion Agreement between Mladen Poropat and Forex International Trading Corp. dated April 5, 2011
     
10.15
 
Share Exchange Agreement between Forex International Trading Corp. and HAM Group Limited dated April 5, 2011
     
21.1
 
List of Subsidiaries
     
31.1
 
Certification of Chief Executive and Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1
 
Certification of Chief Executive and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
99.1     Form of Securities Purchase Agreement by and between Forex International Trading Corp.  and Forex New York City, LLC (10)

                              
(1)           Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 20, 2010
(2)           Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 28, 2010
(3)           Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 13, 2010
(4)           Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 3, 2010
(5)           Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 9, 2010
(6)           Incorporated by reference to the Form S-1 Registration Statement filed with the SEC on September 9, 2009.
(7)           Incorporated by reference to the Form S-1 Registration Statement filed with the SEC on November 2, 2009.
(8)           Incorporated by reference to the Form S-1 Registration Statement filed with the SEC on January 29, 2010.
(9)           Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 22, 2010
(10)         Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on November 17, 2010
(11)         Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on January 3, 2011
(12)         Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on February 2, 2011
(13)         Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 9, 2011

 
 
 
34

 
 

 
   


 
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
 
 
 
 
 
FOREX INTERNATIONAL TRADING CORP.
(Registrant)
 
       
Date: April 5, 2011
By:
/s/ Darren Dunckel
 
   
Darren Dunckel
 
   
Chief Executive Officer, President,
 
   
Chief Financial Officer and Treasurer
 
   
(Principal Financial Accounting and
 
   
Financial Officer)
 
       

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE
 
NAME
 
TITLE
 
DATE
             
 
 
/s/Darren Dunckel
 
 
 
Darren Dunckel
 
 
 
Director
 
 
 
April 5, 2011
             
/s/William Glass
 
William Glass
 
Director
 
April 5, 2011
             
/s/Liat Franco
 
Liat Franco
 
Secretary
 
April 5, 2011
             
/s/ Stewart Reich
 
Stewart Reich
 
Director
 
April 5, 2011
             
             
             







 
35

 




 


 
FOREX INTERNATIONAL TRADING CORP.

CONSOLIDATED AUDITED FINANCIAL STATEMENTS

For the Year Ended December 31, 2010


FOREX INTERNATIONAL TRADING CORP.



TABLE OF CONTENTS

INDEPENDENT AUDITORS REPORT
F-2
   
CONSOLIDATED AUDITED BALANCE SHEET
F-3
   
CONSOLIDATED AUDITED STATEMENT OF OPERATIONS
F-4
   
CONSOLIDATED AUDITED STATEMENT OF CASH FLOWS
F-6
   
CONSOLIDATED AUDITED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
F-5
   
NOTES TO CONSOLIDATED AUDITED FINANCIAL STATEMENTS
F-7 - F-22



 
F-1

 

 
EUGENE M EGEBERG
CERTIFIED PUBLIC ACCOUNTANT
2400 BOSTON STREET, SUITE 102
BALTIMORE, MARYLAND  21224
Telephone (410) 218-1711 Fax (410) 522-5889


To the Board of Directors and Stockholders
Forex International Trading Corp.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
We have audited the accompanying consolidated balance sheet of Forex International Trading Corp., and its Wholly owned Subsidiaries (collectively, the "Company") as of December 31, 2010 and as of July 31, 2009, and the related consolidated statements of operations, stockholders' equity,  and cash flows for each of the two years in the period ended December 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. 
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 audits 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 and 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.
 
On December 30, 2010, the Company acquired approximately 45% of Triple 8 Limited, a foreign company which was audited separately and by another firm.  Those numbers have been consolidated with the Company’s Balance Sheet, because we have determined that the Company is the main beneficiary of the Variable Interest Entity, but its Statement of Cash Flow and Statement of Operating Income have not been consolidated into these financial statements, due to the fact that the transaction closed at year-end.  We were not engaged to express an opinion on Triple 8 Limited’s financial statement.  No such opinion is expressed by us herein.
 
In our opinion, based on our audits and the report of the other auditors, such consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company. as of December 31, 2010 and as of July 31, 2009 and the   results of its operations and its cash flows for each of the two years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America
 
Graphic
Baltimore, Maryland, March 29, 2011
 
Eugene M Egeberg
 
Certified Public Accountant
 
 
 
F-2

 


FOREX INTERNATIONAL TRADING CORP.
CONSOLIDATED BALANCE SHEET
[Missing Graphic Reference]
 
 
   
Consolidated
   
 
   
 
 
   
December 31, 2010
   
July 31, 2010
   
December 31, 2009
 
   
AUDITED
   
AUDITED
   
UNAUDITED
 
Current Assets
                 
Cash and cash equivalents
    3,078,339       85,893       307  
Secured Note and Debt Discount
    473,146       453,025       -  
Prepaid Expenses and Accounts Receivable
    188,075       4,207       -  
         Total Current Assets
    3,739,561       543,125       307  
                         
Fixed Assets
                       
Property and Equipment, Net
    1,442,222       55,124       -  
Goodwill
    26,594,710       -       -  
Other Assets
    346,755       226,962       50,625  
TOTAL ASSETS
    32,123,247       825,211       50,932  
                         
LIABILITIES AND STOCKHOLDERS' EQUITY
                       
Current Liabilities
                       
Accounts payable and Accrued Liabilities
    3,416,480       154,412       25,700  
Note Payable to APH with Accrued Interest
    1,208,800                  
         Total Current Liabilities
    4,625,280       154,412       25,700  
                         
Minority Interest
    497,361       -       -  
                         
Long term Liabilities
                       
Convertible Note & Accrued Interest
    654,658       631,603       -  
Other long-term liabilities
    75,000       -       75,129  
         Total Long term Liabilities
    729,658       631,603       75,129  
                         
Commitments and Contingencies
    -       -       -  
TOTAL LIABILITIES
    5,852,298       786,015       100,829  
                         
Stockholders' Deficit:
                       
Common Stock - $0.00001 par value - 400,000,000
                       
shares authorized, 63,586,666 issued and
                       
outstanding as of 12/31/10; 104,120,000 issued and
    636       1,041       800  
outstanding as of 7/31/10
                       
Additional Paid-In Capital
    26,760,664       240,959       -  
Accumulated deficit
    (490,351 )     (202,804 )     (50,697 )
TOTAL STOCKHOLDERS DEFICIT
    26,270,949       39,196       (49,897 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
    32,123,247       825,211       50,932  
                         
              -       -  
 
 
 
The accompanying notes are an integral part of these financial statements.  
                                                               

 
 
 
F-3

 
 

FOREX INTERNATIONAL TRADING CORP.
CONSOLIDATED AUDITED STATEMENT OF INCOME AND EXPENSES
(Does not include operating results of Triple 8 Limited)
 
 
 
   
 
   
 
   
 
 
 
 
Year Ended
   
Year Ended
   
Year Ended
 
   
December 31, 2010
   
July 31, 2010
   
July 31, 2009
 
   
AUDITED
   
AUDITED
   
AUDITED
 
Revenue
                 
Net gain from foreign currency future operations
    128,281       39,416       -  
Consulting & Services
    20,000       29,500       5000  
Total Revenue
    148,281       68,916       5,000  
Cost of Revenue
    -       -       -  
Gross Profit
    148,281       68,916       5,000  
                         
Operating Expenses
                       
Salaries
    177,208       100,094       -  
Rent & Office
    116,473       13,229       -  
Marketing expenses
    11,100       -       -  
Professional Fees
    73,067       74,048       2,500  
Filing Fees
    30,011       25,456       -  
Depreciation & Amortization
    105,458       6,178       -  
Travel
    25,510       13,745       -  
Other Expenses
    1,000       3,563       -  
Total Operating Expenses
    539,827       236,313       2,500  
                         
Net Profit (Loss) from Operations
    (391,546 )     (167,397 )     2,500  
  Interest Income
    -       3,025       -  
  Interest expense
    (48,108 )     (40,932 )     -  
Interest Expense, net
    (48,108 )     (37,907 )     -  
Pretax Income (Loss)
    (439,654 )     (205,304 )     2,500  
Income Taxes
    -       -       -  
Net Profit (Loss) after Taxes
    (439,654 )     (205,304 )     2,500  
Weighted average number of common shares outstanding
                       
Basic
    95,827,580       104,120,000       80,000,000  
Diluted
    95,827,580       104,120,000       80,000,000  
Net Loss per share - basic
    (0.00459 )     (0.00197 )     0.00003  
Net Loss per share - fully diluted
    (0.00459 )     (0.00197 )     0.00003  
                         
                         
                         
 
 
The accompanying notes are an integral part of these financial statements.


 
F-4

 


FOREX INTERNATIONAL TRADING CORP.
CONSOLIDATED AUDITED CHANGES IN STOCKHOLDERS' EQUITY
(Does not include the equity of Triple 8 Limited)
 
 
                               
                               
         
Common
   
Additional
   
Retained
       
   
Shares
   
Stock
   
Paid In Capital
   
Earning (Deficit)
   
Total
 
Balance at July 22, 2009
    -       -       -       -       -  
                                         
Stock Issued
    80,000,000       800       -       -       800  
Net Profit
    -       -       -       2,500       2,500  
Balance at July 31, 2009 - Audited
    80,000,000       800       -       2,500       3,300  
                                         
Net loss: transition period Aug 09-Dec 09 Audited
                            (53,197 )     (53,197 )
Balance at December 31, 2009 - Audited
    80,000,000       800       -       (50,697 )     (49,897 )
                                         
Stock issued in private placement
    20,000,000       200       199,800               200,000  
Restricted shares issued to an Executive
    4,000,000       40       39,960               40,000  
Restricted Shares Issued to a Consultant
    120,000       1       1,199               1,200  
AP Holdings shares issued to acquire approximately 45% of Triple 8 Limited
    25,000,000       250       25,799,750               25,800,000  
Shares issued to Forex NYC to acquire 20%
    1,000,000       10       199,990               200,000  
Return and cancellation of Medirad shares
    (30,000,000 )     (300 )     -               (300 )
Return and cancellation of Rasel LTD shares
    (40,000,000 )     (400 )     -               (400 )
Private placement shares issued
    3,466,666       35       519,965               520,000  
Net loss: for the year ended 12/31/10 - Audited
                            (439,654 )     (439,654 )
Balance at December 31, 2010 - Audited
    63,586,666       636       26,760,664       (490,351 )     26,270,949  
                                         
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
 
 
 
F-5

 
 

 




FOREX INTERNATIONAL TRADING CORP.
CONSOLIDATED AUDITED STATEMENT OF CASH FLOWS
 
 
                   
   
 
   
 
   
 
 
   
Year Ended
   
Year Ended
   
Year Ended
 
   
December 31 2010
   
July 31, 2010
   
July 31, 2009
 
   
AUDITED
   
AUDITED
   
AUDITED
 
Cash Flows From Operating Activities
                 
Net Profit (loss)
    (439,654 )     (205,304 )     2,500  
                         
Adjustments to reconcile net income (loss) to
                       
  net cash (used) provided by operating activities:
                       
Depreciation & amortization
    105,458       6,178       -  
Other adjustments
    (158,566 )     -       -  
Decrease (Increase) in Accounts Receivable
    (23,236 )     793       (5,000 )
Increase in Accounts Payable and Accrued Expenses
    160,841       101,287       53,125  
                         
Net cash provided (used) by operating activities
    (355,157 )     (97,046 )     50,625  
                         
Cash Flows from Investing Activities
                       
Purchase of fixed assets
    (20,097 )     (17,420 )     -  
Cash received from investment in subsidiary
    2,618,190       -       -  
Acquisition of Triple 8 Limited
    (27,000,000 )     -       -  
Leasehold improvements
    (40,732 )     (40,732 )     -  
                         
Net cash used by investing activities
    (24,442,639 )     (58,152 )     -  
                         
Cash Flows From Financing Activities
                       
Issuance of Common Stock
    441,200       241,200       800  
Advance on issuance of stock
    520,000                  
Increase in Capitalized Costs Related to Issuance of Stock
    -       -       (50,625 )
Issuance of note payable in connection with Triple 8 acquisition
    1,200,000       -       -  
Issuance of shares in connection with Triple 8 acquisition
    25,800,000       -       -  
Issuance of Notes to Affiliated Party
    54,159       128,452       -  
Issuance of Convertible Notes to Third Party
    511,507       503,151       -  
Consideration returned for return of shares
    (700 )     -       -  
Investment in Secured Note
    (411,047 )     (403,025 )     -  
Investment in Debt Discount
    (100,000 )     (100,000 )     -  
Investment in Project
    (33,932 )     (24,128 )     -  
Investment in Licensing and Websites
    (105,359 )     (105,359 )     -  
                         
Net cash provided (used) by financing activities
    27,875,828       240,291       (49,825 )
                         
Net Increase in cash and cash equivalents
    3,078,032       85,093       800  
                         
Cash and cash equivalents, Beginning of Period
    307       800       -  
                         
Cash and cash equivalents, End of Period
    3,078,339       85,893       800  
                         
                         
Non-cash transactions - Accrued interest on notes receivable
    23,145       3,025       -  
Non-cash transactions - Accrued interest on notes payable
    54,657       6,603       -  
Non-cash transactions - Issuing of Convertible Note
    500,000       500,000       -  
Non-cash transactions - Receiving of Secured Note
    400,000       400,000          
Non-cash transactions - Issuing of Restricted Shares
    41,200       41,200       -  
Non-cash transactions - Issuance of shares in connection with Triple 8 acquisition
    25,800,000       -       -  
Non-cash transactions - Issuance of note payable in connection with Triple 8 acquisition
    1,200,000       -       -  
                         
 
The accompanying notes are an integral part of these financial statements.  
 
 
 
 
F-6

 
 
 
 
FOREX INTERNATIONAL TRADING CORP.
 
DECEMBER 31, 2010
NOTES TO CONSOLIDATED AUDITED FINANCIAL STATEMENTS


NOTE 1
History and Organization of the Company
Forex International Trading Corp. and its subsidiaries and/or variable interests (“Forex”, “FXIT”, or the “Company”), a Nevada corporation, is principally engaged in offering foreign currency market trading to non US residents, professionals and retail clients over its web-based trading systems.

Shares in the Company are currently listed for trading on the Over the Counter Bulletin Board listings (OTCBB: FXIT). The Company’s headquarters and operating offices are located in New York, NY. The CUSIP number for the Company is 34631J104 and The ISIA number of FXIT is – US34631J1043.

On April 19, 2010, the Company entered into a Software Licensing Agreement with Triple 8 Limited (“Triple 8”) which was dated April 12, 2010 whereby the Company will license Triple 8’s proprietary trading software (the “Software”) for the purpose of developing a Forex Trading Platform and introducing prospective clients (“End Users”).  Triple 8 will create a website for the Company, which will be funded by the Company at a cost of $50,000 (the “Setup Fee”).  Upon the Company and Triple 8 generating $100,000 in revenue under the agreement, the Company will be reimbursed 50% of the Setup Fee ($25,000).  The Company will receive 30% of the net profit generated from End Users, which will be increased to 50% in the event that the monthly volume generated by the Company is in excess of $250 million.  Triple 8 created a website for the Company under the domain www.4xint.com which is blocked for US and Canadian clients. The Company maintains a corporate website under the domain www.forex-international-trading.com .  
 
Overview
The Company was incorporated on July 22, 2009 as a development stage company under the laws of the State of Nevada as “Forex International Trading Corp”. On September 9, 2009 the Company filed form S-1 General form for registration of securities under the Securities Act of 1933 with the SEC, which became effective on March 5, 2010.

On March 24, 2010 the Company incorporated its wholly-owned subsidiary in the State of Israel under the name: FOREX INTERNATIONAL TRADING CORP M.S. LTD – Company number 514424985 (“Forex Sub”). To date, Forex Sub has not commenced operations, and only accepts bank deposits on behalf of investors, as authorized by the Company
 
On April 19, 2010, the Company entered into a Software Licensing Agreement with Triple 8 as detailed above.  
 
On April 23, 2010, the Company entered into an Employment Agreement (the “Agreement”) with Darren Dunckel (“Executive”) whereby the Company will employ Executive as its Chief Executive Officer for a term of two years (the “Term”).  Executive does not have any family relationship with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer In addition, Executive has been appointed as a member of the Board of Directors of the Company.  For his services during the Term as Chief Executive Officer, the Company will pay Executive a salary of $120,000 to be paid on a monthly basis at a rate of $10,000 per month.  Executive will also be granted a signing bonus consisting of 4,000,000 shares of common stock of the Company upon signing the Agreement.  Additionally, if the Company generates net income of at least $1,000,000 during any fiscal year during the Term, the Company will pay the Executive an annual bonus in the amount of $100,000.  Executive will also receive during the Term such medical, health and disability insurance as the Company provides to its executive officers, two weeks of vacation in each calendar year and eligibility to participate in such pension, profit-sharing, retirement and other benefits as are available to executive officers of the Company.
 
 
 
F-7

 
 
 
On July 29, 2010, Anita Atias and Stewart Reich were elected as members of the Board of Directors of the Company.  There is no understanding or arrangement between Mrs. Atias and Mr. Reich and any other person pursuant to which they were appointed as directors.  Mrs. Atias and Mr. Reich do not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or an executive officer.  Mrs. Atias and Mr. Reich have not had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant exceeding $120,000. Mrs. Atias and Mr. Reich will each receive on an annual basis at the commencement of each term shares of common stock of the Company registered on a Form S-8 Registration Statement equal to $6,000 divided by the Company’s market price discounted by 25%. On December 29, 2010, Anita Atias, resigned as a director of the Company due to a potential conflict of interest.  Ms. Atias is currently the Operations Manager for Online Trading Academy and the Company now operates in a similar industry (See Subsequent Events).
 
On August 5, 2010, Mr. William Glass was elected as members of the Board of Directors of the Company, which such appointment was accepted by Mr. Glass on August 9, 2010.  There is no understanding or arrangement between Mr. Glass and any other person pursuant to which he was appointed as director.  Mr. Glass does not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or an executive officer.  Mr. Glass has not had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant exceeding $120,000. Mr. Glass will receive, on an annual basis at the commencement of each term, shares of common stock of the Company registered on a Form S-8 Registration Statement equal to $6,000 divided by the Company’s market price discounted by 25%. (See Subsequent Events).
 
On December 18, 2010, the Company entered into a Securities Purchase Agreement with Forex New York City, LLC (“Forex NYC”) pursuant to which the Company acquired twenty percent (20%) of the issued and outstanding equity of Forex NYC (the “FNYC Interest”) on a fully diluted basis.  In consideration for the FNYC Interest, the Company issued and sold to Forex NYC 1,000,000 shares of common stock of the Company (See Subsequent Events).
 
On November 17, 2010, the Company entered into a Share Exchange Agreement (the “APH Agreement”) with AP Holdings Limited (“APH”) pursuant to which the Company agreed to acquire 17,924 ordinary shares of Triple 8 Limited, a corporation organized under the laws of Cyprus, engaged in the business of operating a Forex trading platform (“Triple”).  The securities acquired from APH represent approximately 45% of the issued and outstanding securities of Triple.   Pursuant to the APH Agreement, in consideration  for the securities of Triple, the Company agreed to issue 36,000,000 shares of common stock of the Company as well as a 6%  Convertible Note in the principal amount of $1,200,000 due February 15, 2011 (the “APH Note”).  On December 30, 2010, the Company and APH entered into an amendment to the APH Agreement whereby the number of shares to be delivered by the Company was reduced from 36,000,000 to 25,000,000.  Further, on December 30, 2010, in order to expedite the transaction and avoid further dilution of the existing shareholders, Medirad Inc. and Rasel Ltd., shareholders of the Company, have agreed to return an aggregate of 70,000,000 shares of common stock to the Company for cancellation upon closing of the APH Agreement.  The above transaction closed on December 30, 2010. As of the date of these financial statements, the Company is on default on the APH Note. For settlement terms, please see Subsequent Events.
 
On December 29, 2010, the Company announced that it began trading on the Over the Counter (OTC) exchange under the symbol FXIT.  The Company also announced in December that it was eligible to receive deposits only from customers outside the US and Canada.
 
Risk Management

Overview
The Company has exposure to credit risk, liquidity risk and market price risk. The company's Management has overall responsibility for the oversight of the Company's risk management within parameters established by the board of Directors. Triple activities, given the above mentioned risks, are monitored and managed as follows:

Credit risk
Credit risk is the risk of financial loss to the Company if a client fails to meet its margin requirements due to a loss of funds. Clients are required to deposit cleared funds as margin before they can trade. If the clients' margin falls below the minimum margin requirement to maintain a position, they will be issued a margin call.
The clients either have to increase the margin that they have deposited by providing additional funds or to reduce and/or close out their position. At any point the clients' account is in a status of margin call, the company may, at its discretion, liquidate some or all of that client's positions in order to bring them back into line with their margin requirements. The company also has potential credit risk exposure to market counterparties with which it hedges and with banks that hold company's funds and customers' funds.
The Company manages a number of accounts with leading international banks and brokers and does not expect such counterparties to fail to meet their obligations.
 
 
 
 
F-8

 
 

 
Liquidity risk
The liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The company continuously monitors its working capital adequacy, including forecast and actual gross profit and cash flows from operations.

Market price risk
Market risk arises from open contracts with customers and counterparties. Exposure to market risk is closely monitored in accordance with limits, and reduced through hedging with other institutions. (i.e. clearing the contracts and recognize a loss or revenue from actions in derivative financial instruments). The company is exposed to currency risk for its financial assets and liabilities which are denominated predominantly in US dollars. The gains and losses arising from the company's exposure are recognized in the profit and loss account.

NOTE 2
Summary of Significant Accounting Policies

Basis of consolidation
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary and all variable interest entities for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated upon consolidation. Control is determined based on ownership rights or, when applicable, whether the Company is considered the primary beneficiary of a variable interest entity. The balance sheet of Triple 8 Limited and its subsidiary was consolidated, not including consolidation of Triple 8 Limited (and its subsidiary) operations, as the acquisition took place at yearend. .

Marketable securities
The Company determines the appropriate classification of all marketable securities as held-to-maturity, available-for-sale or trading at the time of purchase, and re-evaluates such classification as of each balance sheet date. The Company assesses whether temporary or other-than-temporary gains or losses on its marketable securities have occurred due to increases or declines in fair value or other market conditions. The Company had marketable securities within continuing operations during the year, which have been sold in the market.
 
 Cash and Cash Equivalents
The Company maintains a cash balance in a non-interest bearing account that currently does not exceed federally insured limits. For purposes of financial statement presentation, the Company considers all highly liquid instruments with a maturity of three months or less to be cash.

Revenue Recognition
The Company uses the accrual basis of accounting for all transactions. The Company recognized revenue and gains when earned and related costs of sales and expenses when incurred.

Fixed and Other Assets
Fixed assets are stated at cost, less accumulated depreciation.  Office furniture and equipment are depreciated using the straight-line method over seven years.  Computer equipment and software are depreciated using the straight-line method over three years.  Leasehold improvements are amortized on a straight-line basis over the lesser of the useful life or the life of the lease (three years).

Costs of software acquired along with payroll costs and consulting fees relating to the development of internal use software, including that used to provide internet solutions, are capitalized.  Once the software is placed in service, the costs are amortized over the estimated useful life.
 
 
 
 
F-9

 

 
Costs of Debt Discount are amortized over the life of the note that was discounted, typically two years.

Variable Interest Entities
The Company is required to consolidate variable interest entities (“VIE's”), where it is the entity’s primary beneficiary. VIE's are entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The primary beneficiary is the party that has exposure to a majority of the expected losses and/or expected residual returns of the VIE.  For the year ended December 31, 2010, the balance sheets and results of operations of FOREX INTERNATIONAL TRADING CORP M.S. LTD, (our wholly owned subsidiary, which is not active in operation and serving as our agent), were consolidated into these financial statements.  The Triple 8 acquisition took place at yearend; therefore, the balance sheet for Triple 8 is consolidated, but the statements of operation and cash flow are not.

On November 17, 2010, Forex International Trading Corp., a Nevada corporation (the “Company”), entered into a Share Exchange Agreement (the “APH Agreement”) with AP Holdings Limited (“APH”) pursuant to which the Company agreed to acquire 17,924 ordinary shares of Triple 8 Limited, a corporation organized under the laws of Cyprus, engaged in the business of operating a Forex trading platform (“Triple”).  The securities acquired from APH represent approximately 45% of the issued and outstanding securities of Triple.   Pursuant to the APH Agreement, in consideration  for the securities of Triple, the Company agreed to issue 36,000,000 shares of common stock of the Company as well as a 6%  Convertible Note in the principal amount of $1,200,000 due February 15, 2011 (the “APH Note”).  On December 30, 2010, the Company and APH entered into an amendment to the APH Agreement whereby the number of shares to be delivered by the Company was reduced from 36,000,000 to 25,000,000.  Further, on December 30, 2010,  in order to expedite the transaction and avoid further dilution of the existing shareholders, Medirad Inc. and Rasel Ltd., shareholders of the Company, have agreed to return an aggregate of 70,000,000 shares of common stock to the Company for cancellation upon closing of the APH Agreement.  The above transaction closed on December 30, 2010.
 
Although the Company acquired approximately 45% of Triple, the Company determined that Triple was a VIE, and that the Company was the primary beneficiary of the VIE’s residual gains and losses, because it gained de-facto control of the Company’s operations through the appointment of one of its employees as the sole director of the VIE.  The Company therefore elected to consolidate Triple’s balance sheet only in the financials herein, due to the fact that the transaction closed at yearend.

Loss per Share
Net loss per share is provided in accordance with ASC Codification Topic 260 Section S99-1 and Statement of Financial Accounting Standards No. 128 (SFAS #128) “Earnings Per Share”. Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period.  The Company had no dilutive common stock equivalents, such as stock options or warrants as of the date of these financials.

Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
 
Foreign currency translation
The Company considers the United States Dollar (“US Dollar” or "$") to be the functional currency of the Company and its subsidiary. The reporting currency of the Company is the US Dollar and accordingly, all amounts included in the consolidated financial statements have been presented or translated into US Dollars. For non-US subsidiaries that do not utilize the US Dollar as its functional currency, assets and liabilities are translated to US Dollars at period-end exchange rates, and income and expense items are translated at weighted-average rates of exchange prevailing during the period. Translation adjustments are recorded in “Accumulated other comprehensive income” within stockholders’ equity. Foreign currency transaction gains and losses are included in the consolidated results of operations for the periods presented.

Fair value of financial instruments
SFAS No. 107, Disclosures About Fair Value of Financial Instruments, requires disclosure of the fair value of certain financial instruments. The carrying value of financial instruments, which include cash and cash equivalents, loans payable, customer deposits and accrued expenses, approximate their fair values due to the short-term nature of these financial instruments. The carrying value of the Company’s note receivable approximates its fair value based on management’s best estimate of future cash collections.
 
 
 
F-10

 
 

 
Comprehensive Income
SFAS No. 130, Reporting Comprehensive Income, requires a full set of general-purpose financial statements to be expanded to include the reporting of comprehensive income. Comprehensive income is comprised of two components, net income and other comprehensive income. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non owner sources. As of December 31, 2010 foreign currency translation adjustments were the only items of other comprehensive income for the Company.

Segment reporting
The Company follows Statement of ASC Codification Topic 220 and Statement of Financial Accounting Standards No. 130, “Disclosures About Segments of an Enterprise and Related Information”.  The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

Dividends
The Company has not yet adopted any policy regarding payment of dividends.  No dividends have been paid or declared since inception.

Recent pronouncements
In May 2008, FAS No. 163, “Accounting for Financial Guarantee Insurance Contracts”, and SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”, were issued. In March 2008, FAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133 was issued.

The Financial Accounting Standards Board (FASB) issued Statement No. 168 – become effective on July 1, 2009 – The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles which makes the Accounting Standards Codification (ASC) the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities for interim and annual periods ending after September 15, 2009. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The adoption of ASC Topic 105 did not have a material impact on the Company’s financial position, cash flows or result of operations. Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material effect on the Company’s operations or financial position.
 
Stock-Based Compensation
The Company accounts for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations and has adopted the disclosure only alternative of ASC Codification Topic 220 and SFAS No. 123, “Accounting for Stock-Based Compensation”. Options granted to consultants, independent representatives and other non-employees are accounted for using the fair value method as prescribed by ASC Codification Topic 220 and SFAS No. 123.

Year End
On October 18, 2010, the Board of Directors of Forex the Company approved a change in the Company's fiscal year of July 31 to December 31 (the “Fiscal Year Change”).   The Company filed a transition report on Form 10-K covering the transition period of August 1, 2010 through December 31, 2010 (the “Transition Period”).  The Company also filed its Form 10-Q for the nine months ended September 30, 2010 accordingly.

Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern.   The future of the Company is dependent upon its ability to generate revenues and upon future profitable operations from the development of its new business opportunities.   The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

NOTE 3

Acquisitions and Divestitures
On November 17, 2010, the Company entered into a Share Exchange Agreement (the “APH Agreement”) with AP Holdings Limited (“APH”) pursuant to APH agreement the Company agreed to issue 36,000,000 shares of common stock of the Company as well as a 6%  Convertible Note in the principal amount of $1,200,000 due February 15, 2011 (the “APH Note”).  On December 30, 2010, the Company and APH entered into an amendment to the APH Agreement whereby the number of shares to be delivered by the Company was reduced from 36,000,000 to 25,000,000.  Further, on December 30, 2010, in order to expedite the transaction and avoid further dilution of the existing shareholders, Medirad Inc. and Rasel Ltd., shareholders of the Company, have agreed to return an aggregate of 70,000,000 shares of common stock to the Company for cancellation upon closing of the APH Agreement.  The above transaction closed on December 30, 2010.
 
Although the Company acquired approximately 45% of Triple, the Company determined that Triple was a VIE, and that the Company was the primary beneficiary of the VIE’s residual gains and losses, because it gained de-facto control of the Company’s operations through the appointment of one of its employees as the sole director of the VIE.  The Company therefore obligated to consolidate Triple’s balance sheet with its own, but given that the APH transaction closed at yearend, the income statement and statement of cash flows are not consolidated.



 
F-11

 



The following reflects the pro-forma income statement if Triple had been acquired on January 1, 2010, rather than at the end of the year:

   
FXIT
   
Triple 8
   
Consolidated
   
 
   
 
 
 
 
Year Ended
   
Year Ended
   
Year Ended
   
Year Ended
   
Year Ended
 
   
December 31, 2010
   
December 31, 2010
   
December 31, 2010
   
July 31, 2010
   
July 31, 2009
 
   
AUDITED
   
AUDITED
   
AUDITED
   
AUDITED
   
AUDITED
 
Total Revenue
    148,281       7,450,812       7,599,093       68,916       5,000  
Cost of Revenue
    -       1,686,371       1,686,371       -       -  
Gross Profit
    148,281       5,764,441       5,912,722       68,916       5,000  
Depreciation & Amortization
    105,458       348,209       453,667       6,178       -  
Total Other Operating Expenses
    434,369       4,532,859       4,967,228       230,135       2,500