Attached files
file | filename |
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EX-4.1 - Luxeyard, Inc. | v189443_ex4-1.htm |
EX-3.2 - Luxeyard, Inc. | v189443_ex3-2.htm |
EX-5.1 - Luxeyard, Inc. | v189443_ex5-1.htm |
EX-3.1 - Luxeyard, Inc. | v189443_ex3-1.htm |
EX-10.1 - Luxeyard, Inc. | v189443_ex10-1.htm |
EX-23.1 - Luxeyard, Inc. | v189443_ex23-1.htm |
As filed
with the Securities and Exchange Commission on July 12, 2010
An
Exhibit List can be found on page II-3.
Registration
No. ________
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
TOP GEAR
INC.
(Exact
name of Registrant as specified in its charter)
Delaware
|
2090
|
30-0473898
|
(State
or other jurisdiction of
|
(Primary
Standard Industrial
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Classification
Code)
|
Identification
No.)
|
72
Yehudah HaMaccabi Street
Unit
11
Tel Aviv,
Israel 61070
Tel:
(011) (972) 52-570-3774
(Address
and telephone number of Registrant's principal executive offices)
Delaware
Business Incorporators, Inc.
3422 Old
Capitol Trail
Suite
700
Wilmington
DE 19808-6192
302.996.5819
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies of
all Correspondence to:
SRK Law
Offices
7
Oppenheimer Street
Rabin
Science Park
Rehovot,
Israel
Telephone
No.: (718) 360-5351
Facsimile
No.: (011) (972) 8-936-6000
Approximate
date of commencement of proposed sale to the public: From time to time after the
effective date of this Registration Statement.
If any
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting
company. See definitions of “large accelerated filer,” “accelerated
filed,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
Calculation
of Registration Fee
Title of Class of
Securities to be
Registered
|
Amount to be
Registered(¹)
|
Proposed
Maximum
Aggregate Price
Per Share
|
Proposed
Maximum
Aggregate
Offering Price(²)
|
Amount of
Registration Fee
|
||||||||||||
Common
Stock, $0.0001 per share
|
1,620,000 | $ | 0.025 | $ | 40,500 | $ | 2.88 | |||||||||
Total
|
1,620,000 | $ | 0.025 | $ | 40,500 | $ | 2.88 |
(¹)
|
In
the event of a stock split, stock dividend or similar transaction
involving our common stock, the number of shares registered shall
automatically be increased to cover the additional shares of common stock
issuable pursuant to Rule 416 under the Securities Act of 1933, as
amended.
|
(²)
|
Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(a) under the Securities Act of
1933.
|
The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The
information in this prospectus is not complete and may be changed. The
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED JULY 12, 2010
PROSPECTUS
Top Gear
Inc.
A MAXIMUM
OF 1,620,000 SHARES
OF COMMON STOCK
OFFERING
PRICE $0.025 PER SHARE
The
selling stockholders named in this prospectus are offering for resale 1,620,000
shares of our common stock. The selling stockholders have advised us
that they will sell the shares of common stock from time to time after this
prospectus is declared effective and they have set a fixed offering price for
these securities of $0.025 per share of common stock offered through this
prospectus until our shares are quoted on the OTC Bulletin Board and thereafter
at prevailing market prices or privately negotiated prices. We will
pay all expenses incurred in this offering. There is no assurance
that an active trading market for our shares will develop, or, if developed,
that it will be sustained.
OUR
BUSINESS IS SUBJECT TO MANY RISKS AND AN INVESTMENT IN OUR COMMON STOCK WILL
ALSO INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS
DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 4 BEFORE
INVESTING IN OUR COMMON STOCK.
Prior to
this offering, there has been no public market for our common stock and we have
not applied for listing or quotation on any public market. The initial public
offering price will be fixed at $0.025 per share. The offering price bears no
relationship to our assets, book value, earnings or any other customary
investment criteria. After the effective date of the registration statement, we
intend to have a market maker file an application with the Financial Industry
Regulatory Authority (“FINRA”) to have our common stock
quoted on the OTC Bulletin Board. We currently have no market maker who is
willing to list quotations for our stock. There is no assurance that an active
trading market for our shares will develop, or, if developed, that it will be
sustained.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The
information in this prospectus is not complete and may be amended. We
may not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
No
underwriter or other person has been engaged to facilitate the sale of shares of
common stock in this offering. The Selling Stockholders may be deemed
underwriters of the shares of common stock that they are offering.
The date
of this prospectus is _______ __, 2010
ii
TABLE OF
CONTENTS
Page
|
||
Part
I
|
||
SUMMARY
INFORMATION
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1
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|
RISK
FACTORS
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4
|
|
Risks
Relating to Our Business
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4
|
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Risks
Relating to Owning Our Stock
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5
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Risks
Relating to this Offering
|
10
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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
|
13
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USE
OF PROCEEEDS
|
13
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DIVIDEND
POLICY
|
13
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DETERMINATION
OF THE OFFERING PRICE
|
13
|
|
DILUTION
|
14
|
|
MARKET
FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
|
14
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|
SELLING
STOCKHOLDERS
|
15
|
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION
|
19
|
|
DESCRIPTION
OF BUSINESS
|
26
|
|
LEGAL
PROCEEDINGS
|
36
|
|
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
|
36
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EXECUTIVE
COMPENSATION
|
38
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SECURITY
OWNERSHIP OF CERTAIN BENFICIAL OWNERS AND MANAGEMENT
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39
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
40
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iii
DESCRIPTION
OF SECURITIES
|
40
|
|
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||
PLAN
OF DISTRIBUTION
|
43
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EXPERTS
|
45
|
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CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE EXPERTS
|
46
|
|
INDEX
TO FINANCIAL STATEMENTS
|
F-1
|
You
should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from the
information contained in this prospectus. We are offering to sell,
and seeking offers to buy, our common stock only in jurisdictions where offers
and sales are permitted. The information contained in this prospectus
is accurate only as of the date of this prospectus, regardless of when this
prospectus is delivered or when any sale of our common stock
occurs.
iv
DEALER
PROSPECTUS DELIVERY OBLIGATION
Until
, (90 days after the effective date of this prospectus) all dealers that effect
transactions in these securities, whether or not participating in this offering,
may be required to deliver a prospectus. This is in addition to the dealers’
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
v
SUMMARY
INFORMATION
This
summary highlights certain information contained elsewhere in this prospectus.
You should read the entire prospectus carefully, including our financial
statements and related notes, and especially the risks described under "Risk
Factors" beginning on page 4. All references to "we," "us," "our," "Top Gear,"
"Company," ”Registrant” or similar terms used in this prospectus refer to Top
Gear Inc.
Corporate
Background
We were
incorporated on December 31, 2007. We are a development stage company
that has not generated any revenues to date. We are focused on offering kosher
supervision and certification services to food companies and producers that wish
to add a kosher symbol to their product labels. We plan to market and distribute our
kosher certification services by utilizing the internet as well as other more
traditional marketing channels.
Our
offices are currently located at 72 Yehudah HaMaccabi, Unit 11, Tel Aviv, Israel
61070. Our telephone number is (011) (972) 52-570-3774. We have secured a domain
name www.go-kosher.net but do not currently have an operating website. Our
fiscal year end is December 31. Any website references (URL’s) in this
Registration Statement are inactive textual references only and are not active
hyperlinks. The contents of these websites are not part of this prospectus, and
you should not consider the contents of these websites in making an investment
decision with respect to our common stock.
Our
auditors have issued an audit opinion which includes a statement describing
their doubts about whether we will continue as a going concern. In addition, our
financial status creates substantial doubt whether we will continue as a going
concern.
The
Offering
Shares
of common stock being offered by the selling stockholders
|
1,620,000
shares of our common stock.
|
|
Offering
price
|
$0.025
per share of common stock.
|
|
Number
of shares outstanding before the offering
|
8,620,000
|
|
Number
of shares outstanding after the offering if all the shares are
sold
|
8,620,000
|
|
Our
executive officers and Directors currently hold 81.21% of our shares, and,
as a result, they retain control over our
direction.
|
1
Market
for the common stock
|
There
is no public market for our common stock. After the effective date of the
registration statement, we intend to have a market maker file an
application on our behalf with the FINRA to have our common stock
quoted on the OTC Bulletin Board. We currently have no market maker who is
willing to list quotations for our stock. There is no assurance that a
trading market will develop, or, if developed, that it will be sustained.
Consequently, a purchaser of our common stock may find it difficult to
resell the securities offered herein should the purchaser desire to do so
when eligible for public resale.
|
|
Use
of proceeds
|
We
will not receive any proceeds from the sale of shares by the selling
stockholders.
|
|
Risk
Factors
|
See
“Risk Factors” and the other information in this prospectus for a
discussion of the factors you should consider before deciding to invest in
shares of our common stock.
|
2
Summary
Financial Data
The
following summary financial information for the period from December 31, 2007
(date of inception) through May 31, 2010, includes statement of operations and
balance sheet data from our audited financial statements. The information
contained in this table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition or Plan of Operation" and the
financial statements and accompanying notes included in this
prospectus.
Five
Months
Ended
May 31,
2010
|
Five
Months
Ended
May 31,
2009
|
Year
Ended
December
31, 2009
|
Year
Ended
December
31, 2008
|
Cumulative
from
Inception
|
||||||||||||||||
Revenues
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Operating
Expenses
|
$ | 13,449 | $ | 7 | $ | 31,618 | $ | 42,166 | $ | 87,233 | ||||||||||
(Loss)
from Operations
|
$ | (13,449 | ) | $ | (7 | ) | $ | (31,618 | ) | $ | (42,166 | ) | $ | (87,233 | ) | |||||
Other
Income
|
- | - | - | - | ||||||||||||||||
Net
(Loss)
|
$ | (13,449 | ) | $ | (7 | ) | $ | (31,618 | ) | $ | (42,166 | ) | $ | (87,233 | ) | |||||
(Loss)
Per Common Share
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||||||
Weighted
Average Number of Common Shares Outstanding – Basic and
Diluted
|
8,620,000 | 6,695,364 | 7,402,137 | 4,257,534 |
As of
May 31,
2010
|
As of
December
31, 2009
|
As of
December
31, 2008
|
||||||||||
Total
Assets
|
$ | 9,407 | $ | 16,716 | $ | 7,834 | ||||||
Total
Current Liabilities
|
$ | 6,000 | $ | - | $ | - | ||||||
Shareholders’
Equity (deficit)
|
$ | 3,407 | $ | 16,716 | $ | 7,834 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 9,407 | $ | 16,716 | $ | 7,834 |
3
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should
carefully consider the following factors and other information in this
prospectus before deciding to invest in us. If any of the following risks
actually occur, our business, financial condition, results of operations and
prospects for growth would likely suffer. As a result, you could lose all or
part of your investment.
Risks
Relating to Our Lack of Operating History
1. We
have a going concern opinion from our auditors, indicating the possibility that
we may not be able to continue to
operate.
We have
incurred net losses of $87,233 for the period from December 31, 2007, (date of
inception), through May 31, 2010. We anticipate generating losses for the next
12 months. We do not anticipate generating revenues before
the second quarter of 2011. Therefore, we may be unable to continue
operations in the future as a going concern. No adjustment has been
made in the accompanying financial statements to the amounts and classification
of assets and liabilities which could result should we be unable to continue as
a going concern. If we cannot continue as a viable entity, our stockholders may
lose some or all of their investment in us.
In
addition, our independent auditors included an explanatory paragraph in their
report on the accompanying financial statements regarding concerns about our
ability to continue as a going concern. As a
result, we may not be able to obtain additional necessary
funding. There can be no assurance that we will ever achieve any
revenues or profitability. The revenue and income potential of our proposed
business and operations are unproven, and the lack of operating history makes it
difficult to evaluate the future prospects of our business.
2. We are a development
stage company and may never be able to execute our business
plan.
We were
incorporated on December 31, 2007. We currently have no products,
customers, or revenues. Although we have begun initial planning for the
marketing of our kosher certification, we may not be able to execute our
business plan unless and until we are successful in raising additional
funds. We anticipate that we will require $70,321 to commence
operations, and to remain operational during the next twelve
months. If we do not generate any revenues within the next twelve
months, we may require additional financing in order to establish profitable
operations. Such
financing, if required, may not be forthcoming. Even if additional
financing is available, it may not be available on terms we find
favorable. Failure to secure the needed additional financing will
have a serious effect on our company's ability to survive. At this
time, there are no anticipated additional sources of funds in
place.
3. Our
business plan may be unsuccessful.
The
success of our business plan is dependent on our marketing our kosher
certification services. Our ability to develop this market and sell our kosher
certification services is unproven, and the lack of operating history makes it
difficult to validate our business plan. As a brand based company,
marketing and sales will be driven through the marketing of our kosher
supervision and certification services through launching an internet advertising
campaign that will be timed to coincide with the launch of our website, and
thereafter we will engage in radio, television and print advertising in national
publications related to the food industry, in particular, the nutrition, health
food, natural and organic food sectors. In addition, the success of
our business plan is dependent upon the market acceptance of our services and of
our kosher certification as reputable and trustworthy. Should the
target market not be as responsive as we anticipate, we will not have in place
alternate services or products that we can offer to ensure our continuing as a
going concern.
4
4. We
have no operating history and have maintained losses since inception, which we
expect to continue in the future.
Management
believes that an additional investment of $70,321 will be sufficient to commence
and continue our planned activities for approximately 12 months after the
offering. We also expect to continue to incur operating losses in
future periods. These losses will occur because we do not yet have any revenues
to offset the expenses associated with the marketing of our kosher
certification services. We cannot guarantee that we will ever be successful in
generating revenues in the future. We recognize that if we are unable to
generate revenues, we will not be able to earn profits or continue
operations.
There is
no history upon which to base any assumption as to the likelihood that we will
prove successful, and we can provide investors with no assurance that we will
generate any operating revenues or ever achieve profitable
operations. If we are unsuccessful in addressing these risks, our
business will most likely fail.
Risks
Relating to Our Business
5. Our
executive officers and Directors have significant voting power and may take
actions that may
be different from actions sought by our other stockholders.
Our
officers and Directors own approximately 81.21% of the outstanding shares of our
common stock. These
stockholders will be able to exercise significant influence over all matters
requiring stockholder approval. This influence over our affairs might
be adverse to the interest of our other stockholders. In addition,
this concentration of ownership could delay or prevent a change in control and
might have an adverse effect on the market price of our common
stock.
6. Since
our officers and Directors may work or consult for other companies, their other
activities could slow down our
operations.
Our
officers and Directors are not required to work exclusively for us and do not
devote all of their time to our operations. Presently, our officers
and Directors allocate only a portion of their time to the operation of our
business. Since our officers and Directors are currently employed
full-time elsewhere, they are able to commit to us only up to 7 hours a week.
Therefore, it is possible that their pursuit of other activities may slow our
operations and reduce our financial results because of the slow-down in
operations.
7. Our officers and
Directors are located in Israel.
Since all
of our officers and Directors are located in Israel, any attempt to enforce
liabilities upon such individuals under the U.S. securities and bankruptcy laws
may be difficult.
In
accordance with the Israeli Law on Enforcement of Foreign Judgments, 5718-1958,
and subject to certain time limitations (the application to enforce the judgment
must be made within five years of the date of judgment or such other period as
might be agreed between Israel and the United States), an Israeli court may
declare a foreign civil judgment enforceable if it finds that:
5
|
·
|
the
judgment was rendered by a court which was, according to the laws of the
State in which the court is located, competent to render the
judgment;
|
|
·
|
the
judgment may no longer be appealed;
|
|
·
|
the
obligation imposed by the judgment is enforceable according to the rules
relating to the enforceability of judgments in Israel and the substance of
the judgment is not contrary to public policy;
and
|
|
·
|
the
judgment is executory in the State in which it was
given.
|
An
Israeli court will not declare a foreign judgment enforceable if:
|
·
|
the
judgment was obtained by fraud;
|
|
·
|
there
is a finding of lack of due
process;
|
|
·
|
the
judgment was rendered by a court not competent to render it according to
the laws of private international law in
Israel;
|
|
·
|
the
judgment is in conflict with another judgment that was given in the same
matter between the same parties and that is still valid;
or
|
|
·
|
the
time the action was instituted in the foreign court, a suit in the same
matter and between the same parties was pending before a court or tribunal
in Israel.
|
Furthermore,
Israeli courts may not adjudicate a claim based on a violation of U.S.
securities laws if the court determines that Israel is not the most appropriate
forum in which to bring such a claim. Even if an Israeli court agrees to hear
such a claim, it may determine that Israeli law, not U.S. law, is applicable to
the claim. If U.S. law is found to be applicable, the content of applicable U.S.
law must be proven as a fact, which can be a time-consuming and costly
process.
Our
assets may also be held from time to time outside of the United States.
Currently, none of our assets is held outside of the United States. Since our Directors and
executive officers do not reside in the United States it may be difficult for
courts in the United States to obtain jurisdiction over our foreign assets or
persons and, as a result, it may be difficult or impossible for you to enforce
judgments rendered against us or our Directors or executive officers in United
States courts. Thus, investing in us may pose a greater risk because should any situation arise
in the future in which you have a cause of action against these persons or
us, you may face potential difficulties in bringing lawsuits or, if
successful, in collecting judgments against these persons or us.
8. Our officers have no experience in
operating a kosher food certification business.
Since our
officers and Directors have no experience in operating a kosher certification
business or in the marketing of such services or the training of kosher food
supervisors, our officers and Directors may make inexperienced or uninformed
decisions regarding the operation of our business or the marketing of our
services, which could harm our business and result in our having to suspend or
cease operations, which could cause investors to lose their entire
investment.
6
9. We
may not have effective internal controls.
In
connection with Section 404 of the Sarbanes-Oxley Act of 2002, we need to assess
the adequacy of our internal control, remediate any weaknesses that may be
identified, validate that controls are functioning as documented and implement a
continuous reporting and improvement process for internal
controls. We may discover deficiencies that require us to improve our
procedures, processes and systems in order to ensure that our internal controls
are adequate and effective and that we are in compliance with the requirements
of Section 404 of the Sarbanes-Oxley Act. If the deficiencies are not
adequately addressed, or if we are unable to complete all of our testing and any
remediation in time for compliance with the requirements of Section 404 of the
Sarbanes-Oxley Act and the SEC rules under it, we would be unable to conclude
that our internal controls over financial reporting are designed and operating
effectively, which could adversely affect investor confidence in our internal
controls over financial reporting.
Risks
Relating to Our Strategy and Industry
10. Our success depends on
independent contractors to provide the kosher food supervision services at the
customer’s site.
We intend
to outsource our kosher food supervision services to individuals who will be
trained by us. We will be relying on independent contractors for the
supply of an integral component of the services that we will be offering to
customers. We may not be successful in developing relationships with
these independent contractors, nor in properly training them to perform the
necessary tasks. In addition, these third party contractors may not
dedicate sufficient resources or give sufficient priority to satisfying our
requirements or needs. There is no history upon which to base any
assumption as to the likelihood that we will prove successful in selecting
qualified third party independent contractors or in negotiating any agreements
with them. If we are unable to enter into relationships with
qualified contractors on acceptable commercial terms, we may not be able to
offer our services at competitive prices, and our sales may
decrease. In addition, because we will outsource the kosher food
supervision services that we will be providing, we will not have complete
control over the manner and delivery of the services. Any failure to deliver
those services to our customers in a timely and professional manner may damage
our reputation and brand, and could cause us to lose customers.
11. We depend on market
acceptance of our kosher food certification services. If our
kosher food certification
services do not gain market acceptance, our ability to compete will be
adversely
affected.
Our
success will depend in large part on our ability to successfully market our
kosher food certification services. Although we intend to
differentiate our certification from our competitors, no assurances can be given
that we will be able to successfully market our services or achieve consumer
acceptance. Moreover, failure to successfully commercialize our
services on a timely and cost-effective basis will have a material adverse
effect on our ability to compete in our targeted
market.
12. Failure
to meet customers’ expectations could result in losses and negative publicity,
which would harm our business.
If our
certification services fail to meet our customers’ expectations, then our
revenues may be delayed or lost due to adverse customer reaction. In
addition, negative publicity about us and our services could adversely affect
our ability to attract or retain customers. Furthermore, disappointed
customers may initiate claims for damages against us, regardless of our
responsibility for their disappointment.
7
13. We
need to retain key personnel to support our services and ongoing
operations.
The
training and development of a team of professionals to supervise and certify
products as kosher and to market our services to food manufacturers and
distributors will place a significant strain on our limited personnel,
management, and other resources. Our future success depends upon the
continued services of our executive officers who have critical industry
experience and knowledge of the laws of kosher food
certification. The loss of the services of any of our officers or the
lack of availability of other skilled personnel would negatively impact our
ability to market and sell our services, which could adversely affect our
financial results and impair our growth.
14. If
we cannot build and maintain strong kosher certification loyalty our business
may suffer.
We
believe that the importance of our kosher certification symbol will increase as
more companies use our kosher certification services. Development and
awareness of our brand will depend largely on our ability to successfully
advertise and market our services. If we are unsuccessful, our kosher
certification may not be able to gain widespread acceptance among consumers who
are looking for kosher certifications on their food products. A
failure to develop and maintain the credibility of our kosher symbol in the
kosher food market could have a material adverse effect on our business, results
of operations and financial condition.
15. We
may be unable to protect our kosher certification trademark.
Symbol
recognition is critical in attracting consumers to our kosher certification
services. If we are unable to trademark our kosher certification
symbol or to adequately protect our trade name against infringement or
misappropriation, our competitive position in the food market may be undermined,
which could lead to a significant decrease in the volume of manufactures and
distributors products that will request our kosher
certification. Such a result would materially and adversely affect
our results of operations.
16. We may be unable to
anticipate changes in consumer preferences, which may result in decreased demand
for our products.
Our
success depends in part on our ability to obtain the approval of our kosher
certification in our target market and to address any challenges to its
authenticity, as well as any anti-Jewish sentiments in connection with the
provision of our services. Consumer preferences change from time to
time and our failure to anticipate, identify or react to these changes could
result in reduced demand for our kosher certification, which would adversely
affect our operating results and profitability.
17. We
may incur losses as a result of claims that may be brought against us due to
defective supervision and/or incorrect certification.
We may be
liable if we mistakenly certify products as being kosher that in fact do not
meet the accepted standards for being considered kosher. We also may
be required to withdraw our certification or recall some products if they are
mistakenly certified or mislabeled. A significant judgment against us or a
widespread withdrawal of certification or recall of products with our
certification could have a material adverse effect on our business and financial
condition.
18. If
a third party asserts that our kosher certification symbol infringes upon its
proprietary rights, we could be required to redesign our symbol, pay significant
royalties, or enter into license agreements.
Although
presently we are not aware of any such claims, a third party may assert that our
kosher certification symbol violates its intellectual property rights. As the
number of kosher certification service organizations in our market increases we
believe that infringement claims will become more common. Any claims
against us, regardless of their merit, could:
8
·
|
Be
expensive and time-consuming to
defend;
|
·
|
Result
in negative publicity;
|
·
|
Force
us to stop using our kosher certification
symbol;
|
·
|
Divert
management’s attention and our other resources;
or
|
·
|
Require
us to enter into royalty or licensing agreements in order to obtain the
right to use our symbol, which right may not be available on terms
acceptable to us, if at all.
|
In
addition, we believe that any successful challenge to our use of a trademark or
domain name could substantially diminish our ability to conduct business in a
particular market or jurisdiction and thus could decrease our revenues and/or
result in losses to our business.
19. Our
lack of business diversification could result in the loss of your investment if
revenues from our primary service offering decrease.
Currently,
our business is focused on the marketing and sale of kosher food supervision and
certification services. We do not have any other lines of business or
other sources of revenue if we are unable to successfully implement our business
plan. Our lack of business diversification could cause you to lose
all or some of your investment if we are unable to generate revenues by the sale
of our services since we do not have any other lines of business or alternative
revenue sources.
20. An
unsuccessful material strategic transaction or relationship could result in
operating difficulties and other harmful consequences to our
business.
We expect
to evaluate a wide array of potential strategic transactions and relationships
with third parties who will interact with our potential clients or who may be
recipients of our kosher food supervision and certification
services. From time to time, we may engage in discussions
regarding potential acquisitions or joint ventures. Any of these transactions
could be material to our financial condition and results of operations, and the
failure of any of these material relationships and transactions may have a
negative financial impact on our business.
21. Political,
economic and military conditions in Israel and in the Middle East as a whole
could negatively impact our business.
Political,
economic and military conditions in Israel may have a direct influence on us
because our executive officers are located there. Since the
establishment of the State of Israel in 1948, a number of armed conflicts have
taken place between Israel and its Arab neighbors. A state of
hostility, varying in degree and intensity, has led to security and economic
problems for Israel. Any major hostilities involving Israel, acts of
terrorism or the interruption or curtailment of trade between Israel and its
present trading partners could adversely affect our operations. We
cannot assure you that ongoing hostilities related to Israel such as those
exhibited in the Gaza incursion in 2008-2009 and the current altercations in
connection with the maritime blockade on Gaza will not have a material adverse
effect on our business or on our share price. Several Arab countries
still restrict business with Israeli companies and these restrictions may have
an adverse impact on our operating results, financial condition or the expansion
of our business. Any on-going or future violence between Israel and
the Palestinians, armed conflicts, terrorist activities, tension along the
Israeli-Lebanese or the Israeli-Syrian borders, or political instability in the
region would likely disrupt international trading activities in Israel and may
materially and negatively affect our business conditions and could harm our
results of operations. Certain countries, as well as certain
companies and organizations, continue to participate in a boycott of Israeli
firms and others doing business with Israel and Israeli companies. Thus, there
may be business opportunities in the future from which we will be
precluded. In addition, such boycott policies or practices may change
over time and we cannot predict whether certain companies and organizations,
will be subject thereto. The boycott policies or practices directed
towards Israel or Israeli businesses could, individually or in the aggregate,
have a material adverse affect on our business in the future.
9
Risks
Relating to this Offering
22. NASD sales practice
requirements may limit a stockholder’s ability to buy and sell our
stock.
In
addition to the "penny stock" rules described below, the NASD has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the NASD believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The NASD requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may have the effect
of reducing the level of trading activity in our common stock. As a result,
fewer broker-dealers may be willing to make a market in our common stock,
reducing a stockholder's ability to resell shares of our common
stock.
23. There
is no public market for the securities and even if a market is created, the
market price of our common stock will be subject
to volatility.
Prior to
this offering, there has been no public market for our securities and there can
be no assurance that an active trading market for the securities offered herein
will develop after this offering, or, if developed, be sustained. We anticipate
that, upon completion of this offering, our common stock will be eligible for
quotation on the OTC Bulletin Board. If, for any reason, however, our
securities are not eligible for initial or continued quotation on the OTC
Bulletin Board or a public trading market does not develop, purchasers of the
common stock may have difficulty selling their securities should they desire to
do so and purchasers of our common stock may lose their entire investment if
they are unable to sell our securities.
24. The
price of our shares in this offering was arbitrarily determined by us and may
not reflect the actual market price for the securities.
The
initial public offering price of the common stock was determined by us
arbitrarily. The price is not based on our financial condition and
prospects, market prices of similar securities of comparable publicly traded
companies, certain financial and operating information of companies engaged in
similar activities to ours, or general conditions of the securities market. The
price may not be indicative of the market price, if any, for the common stock in
the trading market after this offering. The market price of the securities
offered herein, if any, may decline below the initial public offering price. The
stock market has experienced extreme price and volume fluctuations. In the past,
securities class action litigation has often been instituted against various
companies following periods of volatility in the market price of their
securities. If instituted against us, regardless of the outcome, such litigation
would result in substantial costs and a diversion of management's attention and
resources, which would increase our operating expenses and affect our financial
condition and business operations.
10
25. State
securities laws may limit secondary trading, which may restrict the states in
which you may sell the shares offered by this
prospectus.
If you
purchase shares of our common stock sold in this offering, you may not be able
to resell the shares in any state unless and until the shares of our common
stock are qualified for secondary trading under the applicable securities laws
of such state or there is confirmation that an exemption, such as listing in
certain recognized securities manuals, is available for secondary trading in
such state. We currently do not intend to register or qualify our stock in any
state. Because the shares of our common stock registered hereunder
have not been registered for resale under the blue sky laws of any state, and we
have no current plans to register or qualify our shares in any state, the
holders of such shares and persons who desire to purchase such shares in any
trading market that might develop in the future, should be aware that there may
be significant state blue sky restrictions upon the ability of investors to
purchase and sell such shares. In this regard, each state's statutes
and regulations must be reviewed before engaging in any securities sales
activities in a state to determine what is permitted, or not permitted, in a
particular state. Furthermore, even in those states that do not
require registration or qualification for the resale of registered securities,
such states may require the filing of notices or place additional conditions on
the availability of exemptions. Accordingly, since many states
continue to restrict the resale of securities that have not been qualified for
resale, investors should consider any potential secondary market for our
securities to be a limited one.
26. Our
stock is a penny stock. Trading of our stock may be restricted by the SEC's
penny stock regulations,
which may limit a stockholder's ability to buy and sell our stock.
If a
trading market does develop for our stock, it is likely we will be subject to
the regulations applicable to "Penny Stock," the regulations of the SEC
promulgated under the Exchange Act that require additional disclosure relating
to the market for penny stocks in connection with trades in any stock defined as
a penny stock. The SEC regulations define penny stocks to be any non-NASDAQ
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions. Unless an exception is available, those
regulations require the broker-dealer to deliver, prior to any transaction
involving a penny stock, a standardized risk disclosure schedule prepared by the
SEC, to provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, monthly account statements showing the market value of each penny
stock held in the purchaser’s account, to make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity, if any, in the
secondary market for a stock that becomes subject to the penny stock rules.
Consequently, these penny stock rules may affect the ability of broker-dealers
to trade our securities. We believe that the penny stock rules discourage market
investor interest in and limit the marketability of our common
stock.
11
27. Should
our stock become listed on the OTC Bulletin Board, if we fail to remain current
on our reporting requirements, we could be removed from the OTC Bulletin Board,
which would limit the ability of broker-dealers to sell our securities and the
ability of stockholders to sell their securities in the secondary
market.
Companies
trading on the Over-The-Counter Bulletin Board, which we are seeking to become,
must be reporting issuers under Section 12 of the Securities Exchange Act of
1934, as amended, and must be current in their reports under Section 13, in
order to maintain price quotation privileges on the OTC Bulletin Board.
Currently, we have sufficient resources to comply with our future reporting
requirements. However, the lack of resources to prepare and file our reports,
including the inability to pay our auditor, could result in our failure to
remain current on our reporting requirements, which could result in our being
removed from the OTC Bulletin Board. As a result, the market liquidity for our
securities could be severely adversely affected by limiting the ability of
broker-dealers to sell our securities and the ability of stockholders to sell
their securities in the secondary market. In addition, we may
be unable to get re-listed on the OTC Bulletin Board, which may have an adverse
material effect on our Company.
28. We have not paid
dividends in the past and do not expect to pay dividends in the future. Any
return on investment may be limited to the value of our common
stock.
We have
never paid cash dividends on our common stock and do not anticipate paying cash
dividends in the foreseeable future. The payment of dividends on our common
stock will depend on earnings, financial condition and other business and
economic factors affecting it at such time, as the board of directors may
consider relevant.
29. Efforts
to comply with recently enacted changes in securities laws and regulations will
increase our costs and require additional management resources, and we still may
fail to comply.
As
directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules
requiring public companies to include a report of management on our internal
controls over financial reporting in their annual reports on Form 10-K. In
addition, the public accounting firm auditing our financial statements must
attest to and report on management’s assessment of the effectiveness of our
internal controls over financial reporting. These requirements are not presently
applicable to us but we will become subject to these requirements subsequent to
the effective date of this prospectus. If and when these regulations become
applicable to us, and if we are unable to conclude that we have effective
internal controls over financial reporting or if our independent auditors are
unable to provide us with an unqualified report as to the effectiveness of our
internal controls over financial reporting as required by Section 404 of the
Sarbanes-Oxley Act of 2002, investors could lose confidence in the reliability
of our financial statements, which could result in a decrease in the value of
our securities. We have not yet begun a formal process to evaluate our internal
controls over financial reporting. Given the status of our efforts, coupled with
the fact that guidance from regulatory authorities in the area of internal
controls continues to evolve, substantial uncertainty exists regarding our
ability to comply by applicable deadlines.
30. We have not yet engaged the services
of a transfer agent which may affect our stockholders’ ability to transfer their
shares in the Company.
We have
not yet engaged the services of a transfer agent, and until a transfer agent is
retained, the Company will act as its own transfer agent. The absence
of a professional transfer agent may result in delays in the recordation of
share transfers and the issuance of new stock certificates, which has the
potential to disrupt the orderly transfer of stock from one stockholder to
another.
12
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some
discussions in this prospectus may contain forward-looking statements that
involve risks and uncertainties. These statements relate to future events or
future financial performance. A number of important factors could cause our
actual results to differ materially from those expressed in any forward-looking
statements made by us in this prospectus. Forward-looking statements are often
identified by words like: "believe," "expect," "estimate," "anticipate,"
"intend," "project" and similar expressions or words which, by their nature,
refer to future events. In some cases, you can also identify forward-looking
statements by terminology such as "may," "will," "should," "plans," "predicts,"
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled Risk Factors beginning on page 4, that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. In
addition, you are directed to factors discussed in the Description of Business
section beginning on page 26, the Management's Discussion and Analysis of
Financial Condition or Plan of Operation section beginning on page 19, as well
as those discussed elsewhere in this prospectus.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, or
achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our
financial statements are stated in United States Dollars (US$) and are prepared
in accordance with accounting principles generally accepted in the United
States.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of the common stock by the Selling
Stockholders pursuant to this prospectus. Please read “Selling Stockholders” for
a list of the persons that will receive proceeds from the sale of common stock
owned by them pursuant to this prospectus.
DIVIDEND
POLICY
We have
not declared or paid any dividend since inception on our common stock. We do not
anticipate that we will declare or pay dividends in the foreseeable future on
our common stock.
DETERMINATION
OF THE OFFERING PRICE
There has
been no public market for our common shares. The price of the shares we are
offering was arbitrarily determined at $0.025 per share. We believe that this
price reflects the appropriate price that a potential investor would be willing
to invest in our company at this initial stage of our development.
Because we have no significant
operating history and have not generated any revenues to date, the price of our
common stock is not based on past earnings and bears no relationship whatsoever
to our business plan, the price paid for our shares by our founders, our assets,
earnings, book value or any other criteria of value. The offering price should
not be regarded as an indicator of the future market price of the securities,
which is likely to fluctuate. No valuation or appraisal has been prepared for
our business and potential business expansion.
13
DILUTION
The
common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. None of the proceeds from the sale by the
Selling Stockholders will be delivered to the Company, and therefore the
proposed public offering will not include a public
contribution. Accordingly, there will be no dilution to our
existing shareholders.
MARKET
FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market Information
There is
no public market for our common stock.
We have
issued 8,620,000 common shares since our inception in December 31, 2007, all of
which are restricted shares. See "Certain Relationships and Related
Transactions" below regarding these shares. There are no outstanding
options or warrants or securities that are convertible into shares of common
stock.
Holders
We had 46
holders of record for our common shares as of July 9, 2010.
Securities Authorized for Issuance
under Equity Compensation Plans
We do not
have any compensation plan under which equity securities are authorized for
issuance.
14
SELLING
SECURITY HOLDERS
The
selling stockholders named in this prospectus are offering all of the 1,620,000
shares of common stock offered through this prospectus. The selling
stockholders are non-U.S. persons who acquired the 1,620,000 shares of common
stock offered through this prospectus from us in a series of private placement
transactions that occurred from June until September 2009 at a price per share
of $0.025 and for an aggregate investment of $40,500. The private placement
transactions were under Regulation S, thus exempting them from the registration
requirements of the United States Securities Act of 1933.
The
following table provides as of July 9, 2010, information regarding the
beneficial ownership of our common stock held by each of the selling
stockholders, including:
1.
|
The
number of shares beneficially owned by each prior to this
offering;
|
2.
|
The
total number of shares that are to be offered by
each;
|
3.
|
The
total number of shares that will be beneficially owned by each upon
completion of the offering; and
|
4.
|
The
percentage owned by each upon completion of the
offering.
|
Beneficial
Ownership
Before
Offering(¹)
|
Beneficial
Ownership
After
Offering(¹)
|
|||||||||||||||||||
Name
of Selling Stockholder(¹)
|
Number
of
Shares
|
Percent(²)
|
Number
of
Shares
Being
Offered
|
Number
of
Shares
|
Percent(²)
|
|||||||||||||||
Amiram
Baroch Barr
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Eran
Ben Aroya
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Boruch
Yossef Blau
|
80,000 | 1.00 | 80,000 | 0 | 0 | |||||||||||||||
Tomer
Busani
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Idan
Cohen
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Yehudit
Gal Cohen
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Sharon
Dabush
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Rotem
Fadlon
|
20,000 | 0.25 | 20,000 | 0 | 0 |
15
Roy
Fadlon
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Zah
Zadok Fadlon
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Yuval
Feldbrin
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Keren
Geldbard
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Maya
Gil Bar
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Joshua
Gluck
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Rebecca
Greenhouse
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Ya’akov
Greenhouse
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Shlomie
Grosskopf
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Maya
Gutwein
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Hannah
Hassel
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Karmela
Hay
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Itai
Hyams
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Yarden
Karako
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Moshe
Katz
|
80,000 | 1.00 | 80,000 | 0 | 0 | |||||||||||||||
Yael
Levy
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Naftalie
Elimelech Lipschitz
|
80,000 | 1.00 | 80,000 | 0 | 0 | |||||||||||||||
Pnina
Morgenstern
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Herschel
Chaim Nowogrodski
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Shmuel
Osher Nowogrodski
|
40,000 | 0.50 | 40,000 | 0 | 0 |
16
Yehuda
Ariyeh Leib Nowogrodski
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Avraham
Ohayon
|
80,000 | 1.00 | 80,000 | 0 | 0 | |||||||||||||||
Sergejs
Petuhovs
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Anfija
Pojasnikova
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Meir
Chaim Sellam
|
80,000 | 1.00 | 80,000 | 0 | 0 | |||||||||||||||
Moche
Sellam
|
80,000 | 1.00 | 80,000 | 0 | 0 | |||||||||||||||
Neta
Shapira
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Shahaf
Shitrit
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Hanaia
Yomtov Lipa Steinmetz
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Darja
Stripkane
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Matan
Tadmor
|
20,000 | 0.25 | 20,000 | 0 | 0 | |||||||||||||||
Solomon
Tangi
|
40,000 | 0.50 | 40,000 | 0 | 0 | |||||||||||||||
Daniel
Tangi
|
80,000 | 1.00 | 80,000 | 0 | 0 | |||||||||||||||
Marcelle
Tangi
|
60,000 | 0.75 | 60,000 | 0 | 0 | |||||||||||||||
Michael
Morris Tangi
|
60,000 | 0.75 | 60,000 | 0 | 0 | |||||||||||||||
Jonathan
Abraham Tangi
|
40,000 | 0.50 | 40,000 | |||||||||||||||||
TOTAL
|
1,620,000 | 18.25 | 1,620,000 |
NIL
|
NIL
|
(¹)
|
The
named party beneficially owns and has sole voting and investment power
over all shares or rights to these shares, unless otherwise shown in the
table. The numbers in this table assume that none of the selling
stockholders sells shares of common stock not being offered in this
prospectus or purchases additional shares of common stock, and assumes
that all shares offered are sold.
|
(²)
|
Applicable
percentage of ownership is based on 8,620,000 shares of common stock
outstanding as of June 30, 2010.
|
17
Except as
disclosed above, none of the selling stockholders:
|
(i)
|
has
had a material relationship with us or any of our affiliates other than as
a stockholder at any time within the past three years;
nor
|
|
(ii)
|
has
ever been one of our officers or
Directors.
|
18
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion of our
plan of
operation should be
read in conjunction with the financial statements and related notes that appear
elsewhere in this prospectus. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those discussed in “Risk Factors” beginning
on page 4 of this
prospectus. All
forward-looking statements speak only as of the date on which they are made. We
undertake no obligation to update such statements to reflect events that occur
or circumstances that exist after the date on which they are
made.
Overview
We are a
development stage company with limited operations and no revenues from our
business operations. Our auditors have issued a going concern
opinion. This means that our auditors believe there is substantial doubt that we
can continue as an on-going business for the next twelve months. We do not
anticipate that we will generate significant revenues until we are in a
position to market our services to prospective customers. Accordingly, we
must raise cash from sources other than our operations in order to implement our
marketing plan.
In our
management’s opinion, there is a market for reasonably-priced and efficient
kosher supervision and certification services.
We
believe that we will need to raise an additional $70,321 in order to allow us to
begin our market development and remain in business for twelve months. We expect
to begin to generate revenues in the second quarter of 2011. If we raise the
necessary funds, but are unable to generate revenues within twelve months of the
effectiveness of this Registration Statement for any reason, or if we are unable
to make a reasonable profit within twelve months of the effectiveness of this
Registration Statement, we may have to suspend or cease operations. At the
present time, we have not made any arrangements to raise additional
cash. We may seek to obtain additional funds through a second public
offering, private placement of securities, or loans. Other than as described in
this paragraph, we have no other financing plans at this time.
Plan
of Operation
Our
specific goal is to become a leading kosher food certification organization.
Assuming we raise the additional funds necessary for us to operate our business,
our plan of operation is as follows:
We plan
to operate our business under the name GO KOSHER. Our plan of
operation will rely strongly on the convenience and global access offered by the
internet. By intelligently utilizing the internet as well as other
more traditional channels, we plan to achieve our primary operational objective
of attracting candidates to build a US- network of qualified and motivated
independent contractors to provide our kosher supervision services.
We have
retained a kashrut specialist as a consultant to our company. The consultant is
a kashrut supervisor (mashgiach) for kosher certification and we intend for this
individual to assist us in compiling our kosher manual. We plan to
distribute this manual to our potential supervisors as part of our
correspondence course and as a means to qualify those who participate in the
course as competent kosher field representatives.
19
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In
the fourth quarter of 2010, we hope to complete the preparation of
our kosher manual as well as design the marketing materials that our
sales representatives will use to market our services to prospective
customers.
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In
October 2010, we plan to attend the Americas Food and Beverage Show in
Miami, Florida. If we are sufficiently funded, we will have a
booth at which we will present our business at this
show.
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In
the first quarter of 2011, we plan to purchase online advertising, such as
Google Search Ads and ads on koshertoday.com and just-food.com, to locate
potential field representatives.
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Towards
the end of the first quarter of 2011 and during the second quarter of
2011, we intend to start advertising to locate customers for our kosher
certification services. We hope that we will already have field
representatives in place by this time and hence we will be in a position
to advertise in specific zip codes (both via in print and online ads
specifically targeting customers) that correspond to the geographic areas
that the field representatives have purchased from
us.
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In
the second quarter of 2011, we hope to be fully operational – namely, that
our web site will be fully functional both for our field representatives
as well as for customers of our kosher certification
services. We hope to have our first kosher clients certified by
the end of the second quarter of
2011.
|
Contractor
Sourcing
The
locating and training of independent contractors to perform the required
supervisory services will be critical tasks in our plan of
operation. We will use independent contractors for the provision of
our supervisory services in order to maintain low company
overhead. We plan to recruit a qualified work force that will be
dispersed throughout the US and that will be prepared to engage in projects when
required. Customers will be referred to these qualified contractors as per
their logistical requirements and geographic locations so as to optimize cost
effective operations with regard to travel costs and other logistical
issues. We intend to document our service guidelines and inspection
procedures in our kosher manuals which will be made available on-line
for training and review purposes. We plan for our contractors to
utilize on-line reporting tools as well as billing software.
In order
to locate and attract contractors, we plan to advertise on our
website. We intend for our website to employ effective SEO (search
engine optimization) strategies to direct the contractor search to the relevant
business sectors and to advertise these opportunities and invite prospective
candidates to enlist online via our website. We plan to tailor banner
messages to appeal to both novices and experienced candidates who may wish to
enroll for training with us.
In
addition, we intend to employ e-mail campaigns, social networking and direct
sales to attract and engage prospective contractors. Social
networking is the latest most popular business development tool that engages
people in an interactive manner and allows for the forming of focused and
effective interpersonal relationships. Two prime examples are Facebook and
Linked-In. We plan to utilize these online social media sites in a
variety of campaigns aimed at different target audiences such as food producers,
distributors, retailers, brand managers, and more. By focusing a social
media campaign on employment opportunities, we expect to attract a sufficient
number of qualified applicants aspiring to become independent kosher supervision
service providers.
We also
plan to have our sales staff attend relevant international exhibitions to
directly approach and solicit potential contractors. For example, we
intend to erect a booth and establish a presence at relevant exhibitions to
enable us to meet potential candidates face to face. Similarly,
employment and career related exhibitions may offer fertile ground for finding
qualified contractors who may handle projects for the Company.
20
Contractor
Training
Those
wishing to become our field representatives will be required to enroll in a
three-month correspondence course. The training course curriculum
will include:
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Traditional
kosher laws
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Current
kosher product lists and food preparation
regulations
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Food
processing and preparation
standards
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Food
processing machinery and technical
processes
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Ingredient
and foodstuff research methods
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Company
administration and procedures
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After
completing the course, the students will be expected to pass an online, open
book exam. Once they have passed the exam and proven that they are capable of
conducting inspections, they will be registered as our field representatives and
will become eligible for handling inspection projects.
We also
plan to design and launch a web site which will be user friendly and will be
used as a marketing tool for our field representatives. We plan to
launch this by the first quarter of 2011. Once the web site is launched,
we intend to do internet marketing such as banner ads as well as search engine
advertising in order to locate field representatives.
Allocating Projects among
our Contractors
People
wishing to become our kosher supervision contractors will be asked to purchase
the right to serve as our kosher supervision services contractor in certain
geographic areas, each designated by a zip code. Contractors will be
required to pay us $5,000 per zip code per year for the right to be the
exclusive GO KOSHER service provider in such geographic area. From
every $5,000 we receive, we plan to allocate up to $2,500 for internet marketing
in that area.
We intend
to pay each of our contractors a sales commission of 70% of the annual fees
collected from our customers located in such contractor’s geographic
area. We plan on charging small businesses an annual fee of around
$3,600, and large businesses an annual fee of around $9,000 to maintain their
kosher certification.
Since we
intend to market our kosher supervision services at the same time that we will
be marketing to build our network of field representatives, we may have
situations where we have companies interested in our services without having the
necessary field representatives to administer the kosher
certification. Until we have trained a sufficient number of field
representatives, we plan to outsource projects to established, qualified
companies that employ kosher food supervisors. At this stage, we
intend to allocate work to outside contractors on a project by project
basis. We will monitor the contractors’ performance to ensure that
our services are being performed in a professional manner. We expect
to phase out our use of other companies once the number of field representatives
trained by us increases to enable us to allocate projects to our own stable of
field representatives.
21
As the
number of field representatives trained by us grows, we expect to be able to
expand our operations. Initially, we plan to invest resources in locating and
training prospective candidates to work as kosher food supervisors, but
as our business expands we expect to be able to reduce the resources
dedicated to recruiting contractors.
Marketing/Advertising
Strategy
To
penetrate the market and achieve product exposure, assuming we raise the
additional funds necessary for us to operate our business, we plan to launch our
online marketing campaign sometime in the first quarter of 2011.
Our
overall strategy is to modernize the image of kosher food certification by
dispelling the common misconception that acquiring kosher certification is
difficult, time consuming, and costly. Our goal is to spread the
message that we have revolutionized the kosher certification process by setting
a new standard in kosher certification that is simple, fast, and
inexpensive.
Our
kosher certification symbol will be
central to all marketing collateral and will portray a modern, fresh and healthy
image. In addition, our kosher certification symbol will be marketed
and its reputation built upon the fact that kosher certification has a
reputation as being a safeguard against unsafe food preparation practices, thus
assuring consumers that the products they are buying are safe.
In order
to attract customers, we plan to launch an internet advertising campaign that
will be timed to coincide with the opening of our new website. We intend for our
corporate website to establish our internet presence and to employ effective
search engine optimization strategies to 'spread the word' and begin drawing
attention to the website and our Company. As the chief internet
drivers are search engines, we plan to post the relevant keywords on our site to
be picked up and displayed when potential clients conduct online searches for
kosher services.
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Google Search Ads –
Using critical keywords in a company’s advertisement, Google is able to
match searches using one of the advertisement’s keywords, and place the
company’s ad next to the search results. The cost of
Google ads is performance related and we estimate that an effective
campaign would cost around $2,000 per month. People clicking on
our advertisements will be led to a landing page where we will ask the
interested party to fill in the required fields, after which we will
send them a reply e-mail with our brochure and marketing material
discussing the benefits of our kosher certification services and of
affixing our kosher symbol to their
products.
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Banner Ads – We
plan to run banner ads for a period of three months. The costs
of banner ads are linked to the amount of traffic the banners attract.
The charges are calculated by cost per click or cost per impression.
The following are examples of suitable websites on which we will
consider placing banner ads:
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22
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www.koshertoday.com
– a site dedicated to kosher professionals with 5,400 opt-in subscribers
weekly. Estimated cost of $1,000 for a three month subscription that
includes full and vertical banners.
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www.just-food.com
– International readership - Americas 57%, EMEA 29% and Asia & Oceania
14% - excellent platform for food news, news releases, forums,
etc. We intend to advertise on the homepage leader board
position for a period of three months at a cost of $1,755 per
month.
|
After the
initial three months, we intend to analyze the results and allocate our
marketing budget accordingly to be most effective.
In
addition, we intend to engage in advertising in magazines and trade publications
related to the food industry, in particular, the nutrition, health food, natural
and organic food sectors.
The food
industry includes the following relevant magazines:
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Food Processing
– a quarter-page advertisement in this magazine may be read by over
100,000 industry professionals. The estimated cost of a
quarter-page ad is $2,109 per issue with a minimum run of three
issues.
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Prepared Foods
– reaches the desks of 40,000 marketing and sales decision-makers in
the food industry. The estimated cost of a quarter-page
advertisement is $676 per issue with a minimum run of three issues.
|
We plan
to have our advertisements be strongly 'lifestyle' themed and focus on the
benefits of obtaining kosher food certification. We will
consider including special offers in these advertisements that will be repeated
in both the traditional print and digital media.
We plan
for our marketing team to attend food trade shows and health food conferences
such as:
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·
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The
Americas Food and Beverage Show in Miami in October
2010
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·
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The
Foods and Nutrition Conference and Expo in San Diego in September
2011
|
The rapid
growth in the organic and wellness markets indicates that a substantial pool of
potential customers exists who may look to us for assistance in penetrating
their market.
23
We also
plan to publish a kosher cookbook with traditional as well as new recipes that
will include only products certified by us.
We plan
to make all marketing collateral available in digital formats on our website
with a simple print option in various international languages.
Customer
Service Center
Once we
are fully funded, we intend for our website to include a 24 hour help line that
will be manned by trained personnel to answer any queries and respond to
requests for additional information regarding our services. We intend
to either operate this service from the state of Israel where there are many
English speakers or, if costs are competitive, in the United States.
Potential customers will be able to submit requests for quotations online
as well as access a frequently asked questions page. Eventually we
plan to have a merchant account to be able to accept credit cards from
contractors.
Activities
to Date
We were
incorporated under the laws of the State of Delaware on December 31,
2007. We are a development stage company. From our
inception to date, we have not generated any revenues, and our operations have
been limited to organizational, start-up, and capital formation
activities. We currently have no employees, but we have retained a
kashrut specialist as a consultant. To date we have conducted certain
preliminary market research using publicly available resources regarding the
kosher food market. We have also conducted preliminary
market research of competing service providers in our target
markets.
Results
of Operations
During
the period from December 31, 2007 (date of inception) through May 31, 2010, we
incurred a net loss of $87,233. This loss consisted primarily of incorporation
costs and administrative expenses. Since inception, we have sold 8,620,000
shares of our common stock.
Purchase
or Sale of Equipment
We do not
expect to purchase or sell any plant or significant equipment.
Liquidity
and Capital Resources
Our
balance sheet as of May 31, 2010, reflects assets of $9,407. Cash and cash
equivalents from inception to date have been insufficient to provide the working
capital necessary to operate to date.
We
anticipate generating losses and, therefore, may be unable to continue
operations in the future. If we require additional capital, we would have to
issue debt or equity or enter into a strategic arrangement with a third party.
There can be no assurance that additional capital will be available to us. We
currently have no agreements, arrangements or understandings with any person to
obtain funds through bank loans, lines of credit or any other
sources.
24
Going
Concern Consideration
Our
independent auditors included an explanatory paragraph in their report on the
accompanying financial statements regarding concerns about our ability to
continue as a going concern. Our financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure by our independent auditors.
Seasonality
We do not
expect our sales to be impacted by seasonal demands for our
services.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
The
Company does not expect the adoption of any recently issued accounting
pronouncements to have a significant impact on our net results of operations,
financial position, or cash flows.
25
DESCRIPTION
OF BUSINESS
Overview
of the Company
We are a
development stage company that was incorporated on December 31,
2007. We have commenced only limited operations, primarily focused on
planning the offering of kosher certification and supervision services to
companies and producers that wish to add a kosher symbol to their product
labels. We have never declared bankruptcy, have never been in
receivership, and have never been involved in any legal action or
proceedings. We have not made any significant purchase or sale of
assets, nor has the Company been involved in any mergers, acquisitions or
consolidations, or the purchase or sale of a significant amount of assets not in
the ordinary course of business. We are not a blank check registrant
as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act
of 1933, because we have a specific business plan and
purpose. Neither the Company nor its officers, Directors, promoters
or affiliates, has had preliminary contact or discussions with, nor do we have
any present plans, proposals, arrangements or understandings with any
representatives of the owners of any business or company regarding the
possibility of an acquisition or merger.
We have
not generated any revenue to date and we do not expect to generate revenues
prior to the second quarter of 2011. We do not currently have
sufficient capital to operate our business, and, we will require additional
funding in the future to sustain our operations. There is no
assurance that we will have revenue in the future or that we will be able to
secure the necessary funding to develop our business.
We intend
to offer kosher supervision and certification services to food companies and
producers that wish to add a kosher symbol to their product
labels. By promoting the various commercial benefits of having a
kosher certificate and positioning kosher certification as an essential part of
a business development strategy, we plan to attract food companies seeking to
increase their sales and strengthen their market position.
Our
offices are currently located at 72 Yehudah HaMaccabi, Unit 11, Tel Aviv, 61070,
Israel. Our telephone number is +972-52-570-3774. We do not currently
have a website; however, we have reserved a domain name
www.go-kosher.net.
The
Market Opportunity
Recent
food contamination statistics indicate that the various government agencies set
up to control such outbreaks are unable to prevent such
occurrences. Contaminated milk affected 300,000 babies in China,
leading to the death of four infants. A deadly peanut salmonella
outbreak in the United States in 2009 infected 714 citizens and caused the death
of nine people, resulting in the largest product recall in U.S.
history. (Source:
http://foodpoisoning.pritzkerlaw.com/archives/cat-peanut-butter-salmonella-lawsuit.html.)
Consumers
are beginning to realize that they can no longer trust that the products and
produce available in their stores are safe. Many are losing faith in
the government regulatory bodies, such as the U.S. Food and Drug Administration
(FDA), to ensure the safety of the products they are purchasing.
Consumers
are becoming increasingly disillusioned with food supplier’s claims of quality
and are looking for other forms of confirmation of product safety outside of the
regular framework and independent of government or corporate
control. Consumers are looking for suppliers and products that have
solid safety records and reputations.
26
One of
the oldest and most well known food regulatory systems is a religious system
known as keeping “kosher”. Adhering to kosher dietary laws is a
requirement for religious Jews. As part of keeping kosher, religious
Jews will only purchase foods that have been certified as being
kosher.
What is
Kosher?
The term
kosher refers to food and food preparation methods that are based on Jewish
dietary laws.
These
laws specify, among others, the following primary requirements:
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The
product cannot contain both meat and milk
products
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The
product must contain only kosher ingredients. This means that
the product may not contain ingredients derived from non-kosher animals,
such as pork or shellfish; may not contain food additives derived from
non-kosher animals, such as gelatin or glycerin; and may not contain
ingredients derived from kosher animals that have not been slaughtered in
accordance with Jewish law.
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Animals
that are kosher, such as cows, must be slaughtered in a specific
way.
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Every
machine used in the food preparation process must not come in contact with
non-kosher ingredients.
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(Source -
http://www.soundvision.com/Info/halalhealthy/kosherlabeling.asp)
What is Kosher
Certification?
A kosher
certificate indicates that a product has undergone stringent inspections by a
recognized kosher agency and that it has been prepared and packaged in
facilities that comply with the dietary requirements of Jewish
law. Certification agencies provide the inspection and maintenance
services based on their individual standards and interpretations of kosher
laws.
The
certification process includes a thorough ingredient review which includes an
inspection of all the processing aids and machines, as well as an inspection of
the plant and processes. Scheduled and unannounced inspections are carried out
to supervise and review the preparation processes and sourced
materials. A food producer is permitted to display the kosher symbol
of the certifying organization on the food producer’s products as long as it
continues to adhere to certain kosher standards and practices.
Although
an integral part of the Jewish religion, the kosher certification process has
become widely recognized amongst non-Jews as a reliable system of ensuring that
products have been prepared safely and that any livestock involved has been
treated humanely. (Source:
http://www.oukosher.org/index.php/common/article/setting_the_record_straight_on_kosher_slaughter.)
The
kosher symbol that these kosher certifying organizations place on products that
they supervise is often sought after by many consumers who seek the additional
confirmation that the foods that they are purchasing have been inspected by an
external organization.
27
A product
carrying a kosher symbol notifies an individual that the food product has been
inspected by an external group motivated by religious conviction, which may be
far more convincing to consumers than any government or corporate
certification.
The
kosher certification system has operated for thousands of years and is not based
on profit margins or annual production budgets. For this reason, many
people believe that the religious certifiers do a better job than the government
or corporations at keeping food clean and safe.
In this
regard, kosher certification agencies have recently been inundated with
producers, suppliers and distributors who are seeking to take advantage of this
consumer trend by having their products certified as kosher. (Source:
http://www.oukosher.org/index.php/common/article/the_kosher_consumer_speaks/.)
Until
recently, the kosher certification market has been serviced mainly by non-profit
organizations. Generally, kosher certification organizations are bureaucratic in
nature, slow, and costly, and run by people who lack the business motivation to
meet the growing demand. We expect to be able to offer cost effective
services and rapid certification to clients, who have up until now had to deal
with bureaucratic organizations that are often inefficient, outdated and
over-worked.
By
implementing modern systems and fully utilizing the latest technologies, we plan
to revolutionize the whole kosher certification industry.
Our
Services
We plan
to market and offer kosher supervision and certification services to companies
and producers that wish to add a kosher symbol to their products’
labels. By promoting the various commercial benefits of having a
kosher certificate and positioning kosher certification as an essential part of
a business development strategy, we intend to attract food companies seeking to
increase their sales and market reach.
A company
requesting kosher certification will be charged for the initial inspection
process and for on-going inspections conducted by our independent contractors,
whose reports will be reviewed by our head office. Upon meeting our
kosher food requirements, we will issue a kosher certification and permit the
company to affix our kosher symbol on its product’s label. We will
continue to perform regular inspections of the food plant to ensure that the
company complies with all of our strict conditions.
We will
enter into a kosher certification services contract with each potential
customer. These contracts will be of an ongoing nature since the inspection
process is not a one-time event. The food preparation process must be
reviewed and re-evaluated every time a new technology, ingredient or process is
added or adjusted. The kosher certification will then be issued and
regular follow up inspections will be scheduled at six month
intervals.
There are
at least three means by which potential kosher certification customers may
contact us. First, our field representatives may locate the potential
customers. Second, potential customers may see our targeted
advertisements in a specific region or area for which we have assigned a field
representative and contact us, in which case we will refer the customer to the
field representative who is responsible for the geographic area in which the
potential customer is located. Third, potential customers located in
geographic areas for which we have not assigned a field representative may see
our national advertising in trade magazines and contact us, in which case we
will either assign a field representative to handle the customer’s needs or
outsource the kosher certification process, if necessary.
28
Certification
Process
The
Application
Clients
wishing to have their products certified as kosher will be asked to complete a
detailed application asking for comprehensive product information and production
details, including the following information:
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kosher
designation - dairy, meat, “parve” (neither meat nor dairy) and/or
Passover
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type
of product and distribution strategy (retail or
industrial)
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product
name, brand name and/or private
label
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company's
motivation for seeking
certification
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detailed
product ingredient list including the identity of the manufacturers of
such ingredients, listing whether or not the product ingredients are
labeled with a known kosher label.
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raw
materials list and suppliers
details
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ingredient
and raw material shipping methods
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list
of processes (flow-chart) involved in
production
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number
of production plants involved and their
locations
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manufacturing
details of ingredients used and their kosher
status
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The
information supplied in the application must be comprehensive as it is an
essential component in determining the costs involved and will affect the price
quotation that will be submitted to the client for the kosher certification
services.
The
Inspection
Once the
client approves a proposal, we will assign one of our field
representatives to the project. He will conduct an on-site inspection and
submit a report. As part of the inspection, our field representative
will thoroughly tour the production facility to make sure it adheres to kosher
laws (e.g., no dairy/meat products in the same facility; no non-kosher
meat). Our field representative will also look at all the ingredients
used in the manufacturing process and will note which of these items are already
labeled as kosher and which ones are not. Items that are not labeled
kosher will be brought to the attention of our main office, and we will explain
the need for our customer to switch to kosher labeled ingredients.
The
Evaluation
The
inspection report and all other data gathered will be thoroughly evaluated by
us. If any issues arise that require further attention, they will addressed at
this stage; such as, the use of ingredients in the manufacturing process that
are not labeled kosher, the mixing of dairy and meat products,
etc. Any outstanding issues will be repeatedly assessed and addressed
until they are resolved to ensure that the product complies with the required
kosher standard. In order to gain certification, we will require customers
to switch to kosher labeled ingredients, as well as comply with all other kosher
requirements.
29
Certification
Only
after everything is deemed acceptable will we approve the granting of a kosher
certificate and authorize the display of our kosher symbol on the client’s
product labels. The kosher certificate issued will be valid as long
as certain conditions are adhered to, including providing access to our
supervisors for additional inspections.
Follow-up
Inspections
We intend
to conduct follow-up inspections randomly to ensure that the client is adhering
to all of the kosher food requirements and conditions of our contract with the
client. Clients are obligated to inform us of any changes in their
supply chain, production procedures, or other operations that may affect the
kosher status of their products. Failure to comply will result in
official warnings and possible de-certification, depending on the seriousness of
the non-compliance or violations.
Example
of Certification Process
A cookie
manufacturer requests kosher certification. We dispatch a field
representative to inspect the site and issue a report. The field representative
ensures that there are no milk or meat products being used in the preparation of
the product. He focuses on each of the ingredients being used, such as flour,
chocolate, sugar, etc. All of these ingredients must be labeled as kosher for
the end product, the cookie, to receive our kosher certificate. If
any ingredients are not labeled as kosher, our field representative will suggest
to the manufacturer that he locate and use a kosher supplier of the ingredient
or that the cookie manufacturer’s supplier itself obtain kosher certification
(this will take longer; hence we would recommend that our client simply switch
to a kosher labeled ingredient). In the event that the cookie
manufacturer refuses to use kosher ingredients, we will not be able to issue our
kosher certificate and the only fees to be charged will be for the initial
inspection process.
Services
Pricing Model
Pricing
in this business is structured and scalable due to the fact that each client and
request has to be dealt with individually. The complexity of each
individual product, and more specifically the number of ingredients or
preparation procedures required, directly affects the kosher certification
process and therefore the costs. There are logistical costs involved in
checking the kosher conditions relating to a product as they involve physical
inspections by qualified personnel at several locations such as processing
plants, supply depots and packaging facilities. Each product or company
has to be assessed individually and it is up to each client whether it wishes to
incur the costs of kosher certification.
Some
certified products may be manufactured, for example, in a factory that handles
only kosher items, and then relatively few inspections will be required.
Others may be processed at a location where non-kosher as well as kosher
foods are produced, necessitating thorough inspections, alternative processing
stipulations, and frequent return visits.
However,
it is important to note that the kosher certification costs are almost
negligible when one examines the end product price. As Rabbi Berel Wein has
noted:
"…due to
the volume of goods produced, the cost of certification per unit is so small
that it really does not figure in the cost of the product. The cost of
kosher certification is always viewed as an advertising expense and not as a
manufacturing expense." Wein, Berel (December 27, 2002), "The problem
with Shinui", Jerusalem Post, p. 8B.
30
We plan
to charge food manufacturers the following amounts for their initial
inspections, which amounts will be based on the customers’ annual
turnover.
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Businesses
turning over less than $3M annually -
$2,500
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Businesses
turning over between $3M and $10M annually -
$10,000
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Businesses
turning over more than $10M will be on a deal by deal
basis
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In
addition to charging for the initial inspection, we plant to charge our
customers a fixed annual fee for maintenance of the kosher
certification. We intend to charge small businesses approximately
$3,600 a year and large businesses approximately $9,000 annually to maintain
their kosher certification.
The
Kosher Food Market
Over $150
billion worth of kosher certified products are consumed annually all over the
world, a figure that is growing at 15% per annum. (Source:
http://www.foodnavigator-usa.com/Legislation/Kosher-certification-moves-forward)
In the US
market alone, consumers spend approximately $6.7 billion a year on kosher
products. Over 10,000 companies produce 75,000 different kosher food products
for the US kosher consumers, and approximately 3,000 new products are introduced
into the kosher market every year. Since 1984, the number of U.S. products
listed as kosher, has jumped from 16,000 to nearly 80,000, and the number
continues to
grow. (Source: http://www.kosher.org.au/kosher_market.htm.)
Globally,
the future potential for the kosher certification market is clearly reflected in
the statistics of new products launched all over the world. Of the 49,752 new
products launched, 6,252 have a kosher marking or make some claim to being
kosher. (Source: http://www.foodnavigator.com/Financial-Industry/No-additives-or-preservatives-lead-label-claims-Mintel.) It
is projected that more producers and suppliers will follow this trend in an
attempt to satisfy the consumer demand for kosher, safer products, and to
increase their market reach and share.
According
to a new report by market research firm Mintel, quality is the main reason
consumers give for purchasing kosher products. They are assured of higher
quality products because the products have been processed by a system based on a
strictly religious framework. The motivation for profit is less relevant
to the equation, and thus the supplier and product are seen as more
trust-worthy. (Source:
http://www.mintel.com/press-release/3-in-5-kosher-food-buyers-purchase-for-food-quality-not-religion-?id=321.)
An
interesting example of the increasing demand for kosher certified products from
non-Jewish markets is the markets in India and China that have been showing
signs of rapid growth over recent years. Steve Sichel, director of
development for Star-K Kosher Certification, says that that the kosher
certification markets in India and China have been growing at a surprising 15%
per annum.
(Source: http://www.nutraingredients-usa.com/Consumer-Trends/China-and-India-see-rise-in-demand-for-kosher-certs). Since
the percentage of the population that is Jewish has not substantially
increased in these countries, we believe that increase in demand is
not related to any religious motivation, but to fact that consumers trust the
kosher symbol and see it as a symbol of quality, ensured by an external,
independent inspection body. (Source:
http://www.nutraingredients-usa.com/Consumer-Trends/China-and-India-see-rise-in-demand-for-kosher-certs.)
31
We
believe that the increasing demand for kosher certification in the United States
will not be able to be met by the existing network of kosher certification
organizations.
Target
Market
Our
target market is the growing sector of businesses and food producers that are
realizing the benefits to having kosher certification of their products. It is
obvious that kosher certification has grown beyond its original religious and
cultural bounds. Originally exclusively relevant to the Jewish public, it has
gained a general reputation of cleanliness and purity that is being sought
after in today’s market. The kosher symbol represents a superior level of
inspection and quality guaranteed by standards not associated with any
corporation or government.
Consumers
in general are becoming a lot more aware of the quality of food they buy, how it
is prepared, and where it comes from. This target market is clearly
defined as it has already engaged in the organic and health food trend, a new
market sector that holds great promise for kosher certification opportunities.
Many of the new companies and products that are springing up to satisfy this
consumer trend will be interested in adding value and quality to their products
in the form of a kosher certificate. This consumer group is sophisticated and
tends towards purchasing products that offer healthy or organic
alternatives. We plan to target the producers of healthy snack foods,
cookies, sauces, dips, breakfast cereals, soft drinks, and other organic grocery
items for kosher certification services to add appeal to their
products.
Another
sector of the target market is the increasing number of vegetarians and lactose
sensitive consumers who trust the kosher symbols to inform them if the product
they plan on purchasing contains either meat or dairy ingredients.
Vegetarians recognize and trust the kosher “parve” label, which indicates
that the product contains neither meat nor milk ingredients, to guarantee that a
product is truly vegetarian. As a reliable indication of a product’s
contents, the kosher symbol indicates to them if a product is safe and suitable
for their controlled diets.
In
addition, the target market includes mainly Jews, but interestingly also
includes Muslims, Seventh Day Adventists, and Jehovah’s Witnesses who also
respect the kosher symbol since they adhere to dietary restrictions that are
similar to the kosher laws. (Source:
http://www.nutraingredients-usa.com/Consumer-Trends/China-and-India-see-rise-in-demand-for-kosher-certs.)
The
target market for kosher certification extends throughout the food and
ingredient supply chain as items that carry a kosher symbol hold an added value.
The products command higher prices as consumers who can afford to be more
discerning about what they eat are generally from a higher income bracket and
are less-price sensitive.
Our
Competition
There are
many well established kosher certification agencies presently in the market. As
with many religious issues, interpretation of the ancient kosher laws and their
implementation has created a variety of groups who adhere to different levels of
strictness when it comes to the ingredients and processes involved.
Different certifying authorities have different opinions about what
constitutes a kosher product or environment.
32
Kosher
certifying agencies have traditionally covered very limited geographical areas,
due to the travel requirement for personal inspections and involvement in the
daily preparation processes. This limitation has resulted in a large
number of regional kosher certifiers that have only built up reliable
reputations within their local markets. We intend to enter the market with a
technological edge, designed to reach and service the global
market.
The most
widely recognized kosher symbols and the related certification agencies
are:
OU is a
trademark of the Orthodox Union that has been in existence for 80 years and has
an international presence. The OU certifies more than 400,000 products,
making it the world's most recognized and the world's most trusted
kosher symbol. (Source: http://www.oukosher.org/)
CRC is
the trademark of the Chicago Rabbinical Council – the largest regional Jewish
Orthodox organization in North America. The CRC is a not-for-profit
offering a wide variety of Jewish services including kosher supervision and
certification around the world throughout the year, including Passover
supervision. (Source: http://www.crcweb.org/)
OK is
trademark of Organized Kashrus Laboratories NY. Founded in 1935, the
company operates internationally and certifies over 100 000 products. (Source:
http://www.ok.org)
Start-K
is trademark of Star-K Kosher Certification MD. STAR-K Kosher Certification, a
not-for-profit agency, certifies food products, as well as industrial food
chemicals, in over 1,000 locations worldwide. It has been in a business alliance
with NSF International since 2003 to expand operations. (Source:
http://www.star-k.org/)
Kaf
Kosher is the trademark of KOF-K Kosher Supervision, NJ and has been operating
for almost 40 years. KOF-K was the first Kashrus organization to introduce
computer technology to the complexities of Kashrus supervision/management.
(Source: http://www.kof-k.org)
33
Competitive
Advantages
Our
services are intended to have the following competitive advantages compared with
our competitors’ services:
|
·
|
We
plan to run our kosher certification service company as a
business
|
|
·
|
We
plan to implement a simple and easy online registration process for our
services
|
|
·
|
We
intend for our field representatives to be well motivated and as such to
perform their tasks in a professional
manner
|
|
·
|
We
plan for a quick turn-around time from initial inquiry to on-site
inspection to kosher certification (if the kosher rules and standards are
followed by the customer)
|
Expenditures
Subject
to our raising additional capital, the following chart provides an overview of
our budgeted expenditures in US Dollars by significant area of activity over the
next 12 months:
Legal
and Accounting (including SEC compliance)
|
20,000 | |||
Advertising
/ Marketing
|
14,321 | |||
Design
of Symbol / Preparing Training Materials
|
5,000 | |||
Overhead
– Telephone / Internet
|
3,000 | |||
Travel
|
5,000 | |||
Training
Field Representatives
|
3,000 | |||
Misc.
|
20,000 | |||
Total
|
$ | 70,321 |
Sources
and Availability of Products and Supplies
The
nature of our intended services does not mandate any dependence on one or a few
major products or suppliers.
Dependence
on One or a Few Major Customers
The
nature of our services does not mandate any dependence on one or a few major
customers or food distributors.
Patent,
Trademark, License & Franchise Restrictions and Contractual Obligations
& Concessions
We have
not entered into any franchise agreements or other contracts that have given, or
could give rise to, obligations or concessions. We intend to protect our
certification symbols on the basis of applicable trademark and tradename laws.
Beyond our trade name, we do not hold any other intellectual
property.
34
Existing
or Probable Government Regulations
Companies
engaged in the manufacture, packaging and distribution of food items are subject
to extensive regulation by various government agencies which, pursuant to
statutes, rules, and regulations, prescribe labeling requirements. In some
states the labeling of food products as being “kosher” is subject to “standard
of identity” requirements. To the extent that any product that we seek to label
as “kosher” does not conform to an applicable standard, special permission to
market such a product is required.
New
government laws and regulations may be introduced in the future that could
result in additional compliance costs, seizures, confiscations, recalls or
monetary fines, any of which could prevent or inhibit the labeling of products
as “kosher”. If we fail to comply with applicable laws and regulations, our
clients and us may be subject to civil remedies, including fines, injunctions,
recalls or seizures, which could have a material adverse effect on our business,
results of operations and financial condition.
Research
and Development Activities and Costs
We have
not incurred any costs to date and have no plans to undertake research and
development activities during the next year of operation.
Costs
and Effects of Compliance with Environmental Laws and Regulations
We are
not in a business that involves the use of materials in a manufacturing stage
where such materials are likely to result in the violation of any existing
environmental rules and/or regulations. Further, we do not own any real property
that could lead to liability as a landowner. Therefore, we do not anticipate
that there will be any substantial costs associated with the compliance of
environmental laws and regulations.
Employees
We have
commenced only limited operations; therefore, we have no employees. Our officers
and Directors provide service to us on an as-needed basis. When we commence full
operations, we will need to hire full-time management and administrative support
staff. For a detailed description, see "Plan of Operation".
Description
of Property
We do not
own any real property. We currently maintain our corporate office at 72 Yehudah
HaMaccabi Street, Unit 11 Tel Aviv, Israel 61070. Our principal executive
officer provides us with the use of this space at no cost to the Company. This
space will be sufficient until we commence full operations.
Reports
to Security Holders
We will
make available to securities holders an annual report, including audited
financials, on Form 10-K. While we intend to become a “reporting issuer” under
Section 12 of the Securities Exchange Act of 1934, we are not currently a
reporting company, but upon effectiveness of this registration statement, we
will be required to file reports with the SEC pursuant to the Securities
Exchange Act of 1934; such as annual reports on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K.
WHERE
YOU CAN GET MORE INFORMATION
In
accordance with the Securities Act of 1933, we are filing with the SEC a
registration statement on Form S-1 covering the securities in this offering. As
permitted by rules and regulations of the SEC, this prospectus does not contain
all of the information in the registration statement. For further information
regarding both our Company and the securities in this offering, we refer you to
the registration statement, including all exhibits and schedules, together
with other filed materials, which you may read and copy without charge
at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549, on official business days during the hours of 10 a.m. to 3
p.m. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an
internet site containing reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The
internet address of this site http://www.sec.gov.
35
We know
of no existing or pending legal proceedings against us, nor are we involved as a
plaintiff in any proceeding or pending litigation. There are no proceedings in
which any of our Directors, officers or any of their respective affiliates, or
any beneficial stockholder, is an adverse party or has a material interest
adverse to our interest.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
Directors hold office until the next annual general meeting of the stockholders
or until their successors are elected and qualified. Our officers are appointed
by our Board of Directors and hold office until the earlier of their death,
retirement, resignation, or removal.
Our
officers and Directors and their ages and positions are as follows:
Name
|
Age
|
Position
|
||
Mr.
Omri Amos Shalom
|
27
|
President,
Treasurer and Director
|
||
Mr.
Akiva Bergman
|
38
|
Secretary
and Director
|
Since
2008, Omri Amos Shalom has worked as a Sales Executive for the AIG Israel
Insurance Company where he
is responsible for offering AIG’s insurance product to customers in the Israeli
insurance market. From 2005 to 2008, Mr. Shalom worked for Oren Pool and
Gym Corporation in Netanya, Israel as a spa manager at a luxury residential
complex. From 2003 to 2005, Mr. Shalom served in the Israeli Defense Forces
(IDF). Mr. Shalom graduated from the Amal High School in Nahariya in
2001.
The Board
has concluded that Mr. Shalom should serve as Director of the Company because of
his marketing and sales experience, which will be useful when we begin marketing
our services to prospective customers.
Since
2005, Mr. Bergman has been employed at the Mayanot Hachayim Tour Company in Bnei
Brak, Israel. Mr. Bergman has organized large scale kosher group travels,
including organizing flights, accommodations, as well as kosher food in foreign
countries in Eastern Europe. Mr. Bergman graduated from the Chachmei Lublin High
School in Bnei Brak in 1995.
The Board
has concluded that Mr. Akiva Bergman should serve as a Director of the Company
because of his extensive experience in providing kosher services and his proven
organizational skills.
36
Committees
of the Board of Directors
We do not
presently have a separately constituted audit committee, compensation committee,
nominating committee, executive committee or any other committees of our Board
of Directors. As such, our entire Board of Directors acts as our audit
committee.
Audit
Committee Financial Expert
Our Board
of Directors does not currently have any member who qualifies as an audit
committee financial expert. We believe that the cost related to retaining such a
financial expert at this time is prohibitive. Further, because we are in the
start-up stage of our business operations, we believe the services of an audit
committee financial expert are not warranted at this time.
Involvement
in Legal Proceedings
None of
our Directors, nominee for Directors or officers has appeared as a party during
the past ten years in any legal proceedings that may bear on his ability or
integrity to serve as a Director or officer of the Company.
Board
Leadership Structure
The
Company has chosen to combine the principal executive officer and Board chairman
positions. The Company believes that this Board leadership structure is the most
appropriate for the Company for the following reasons. First, the Company is a
development stage company and at this early stage it is more efficient to have
the leadership of the Board in the same hands as the principal executive officer
of the Company. The challenges faced by the Company at this stage – obtaining
financing and developing our business – are most efficiently dealt with by
having one person intimately familiar with both the operational aspects as well
as the strategic aspects of the Company’s business. Second, Mr. Shalom is
uniquely suited to fulfill both positions of responsibility because of his sales
abilities which will be helpful in recruiting sales representatives, marketing
our kosher certification, and obtaining additional financing, if
necessary.
Code
of Ethics
We do not
currently have a Code of Ethics applicable to our principal executive, financial
and accounting officers; however, the Company plans to implement such a code in
the fourth quarter of 2010.
Potential
Conflict of Interest
Since we
do not have an audit or compensation committee comprised of independent
Directors, the functions that would have been performed by such committees are
performed by our Board of Directors. Thus, there is a potential conflict of
interest in that our Directors have the authority to determine issues concerning
management compensation, in essence their own, and audit issues that may affect
management decisions. We are not aware of any other conflicts of interest with
any of our executives or Directors.
37
Board’s
Role in Risk Oversight
The Board
assesses on an ongoing basis the risks faced by the Company. These risks include
financial, competitive, and operational risks. The Board dedicates time at each
of its meetings to review and consider the relevant risks faced by the Company
at that time. In addition, since the Company does not have an Audit Committee,
the Company’s Directors are also responsible for the assessment and oversight of
the Company’s financial risk exposures.
EXECUTIVE
COMPENSATION
Except
for the shares rendered to our officers for the services they provided to us, we
have not paid, nor do we owe, any compensation to our executive officers. We
have not paid any compensation to our officers since inception.
We have
no employment agreements with any of our executive officers or
employees.
Option/SAR
Grants
We do not
currently have a stock option plan. No individual grants of stock options,
whether or not in tandem with stock appreciation rights known as SARs or
freestanding SARs have been made to any executive officer or any Director since
our inception; accordingly, no stock options have been granted or exercised by
any of the officers or Directors since we were founded.
We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance. No individual grants or agreements regarding
future payouts under non-stock price-based plans have been made to any executive
officer or any Director or any employee or consultant since our inception;
accordingly, no future payouts under non-stock price-based plans or agreements
have been granted or entered into or exercised by any of the officers or
Directors or employees or consultants since we were founded.
Compensation
of Directors
There are
no arrangements pursuant to which Directors are or will be compensated in the
future for any services provided as a Director.
Employment
Contracts, Termination of Employment, Change-in-Control
Arrangements
There is
currently no employment or other contracts or arrangements with officers or
Directors. There are no compensation plans or arrangements, including payments
to be made by us, with respect to our officers, Directors or consultants that
would result from the resignation, retirement or any other termination of such
Directors, officers or consultants from us. There are no arrangements for
Directors, officers, employees or consultants that would result from a
change-in-control.
38
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of July 9, 2010, certain information with respect
to the beneficial ownership of our common stock by each stockholder known by us
to be the beneficial owner of more than 5% of our common stock and by each of
our current Directors and executive officers. Each person has sole voting and
investment power with respect to the shares of common stock, except as otherwise
indicated. Information relating to beneficial ownership of common stock by our
principal stockholders and management is based upon information furnished by
each person using "beneficial ownership" concepts under the rules of the
Securities and Exchange Commission. Under these rules, a person is deemed to be
a beneficial owner of a security if that person has or shares voting power,
which includes the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the disposition of
the shares. The person is also deemed to be a beneficial owner of any security
of which that person has a right to acquire beneficial ownership within 60 days.
Under the Securities and Exchange Commission rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not have
any pecuniary beneficial interest.
The
percentages below are calculated based on 8,620,000 shares of our common stock
issued and outstanding as of July 9, 2010. We do not have any outstanding
options, warrants or other securities exercisable for or convertible into shares
of our common stock.
Name and Address
of Beneficial
Owner(²)
|
Amount and Nature
of Beneficial Ownership
|
Percentage of Class(¹)
|
||||||||
Common
Stock
|
Mr.
Omri Amos Shalom
|
6,000,000 | 69.60 | |||||||
Common
Stock
|
Mr.
Akiva Bergman
|
1,000,000 | 11.60 | |||||||
All
officers as a Group
|
7,000,000 | 81.20 |
(¹)
|
Based
on 8,620,000 shares of our common stock
outstanding.
|
(²)
|
The
address for Mr. Shalom is 72 Yehudah HaMaccabi, Unit 11 Tel Aviv, Israel
61070
|
The
address for Mr. Bergman is 72 Yehudah HaMaccabi, Unit 11 Tel Aviv, Israel
61070
We are
unaware of any contract or other arrangement the operation of which may at a
subsequent date result in a change in control of our Company.
Future
Sales by Existing Stockholders
As of the
date of this prospectus, there are 46 stockholders of record holding a total of
8,620,000 shares of common stock. All of our issued shares of common stock are
"restricted securities", as that term is defined in Rule 144 of the Rules and
Regulations of the SEC promulgated under the Securities Act. Of these 8,620,000
shares, the 1,620,000 shares held by the Selling Stockholders are being
registered in this offering and will be freely tradable without restriction or
further registration under the Securities Act. The 7,000,000 shares held by our
“affiliates”, as such term is defined in Rule 144, are not being registered in
this offering and may be sold in the public market commencing one year after
their acquisition, subject to the availability of current public information,
volume restrictions, and certain restrictions on the manner of sale. All
of the 7,000,000 shares held by our affiliates have been held for over a
year.
39
Shares
purchased in this offering, which will be immediately resalable, and sales of
all of our other shares after applicable restrictions expire, could have a
depressive effect on the market price, if any, of our common stock and the
shares we are offering.
We do not
have any issued and outstanding securities that are convertible into common
stock. We have not registered any shares for sale by security holders under the
Securities Act. None of our stockholders are entitled to registration rights.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Other
than the transactions discussed below, we have not entered into any transaction
nor are there any proposed transactions in which any of our Directors, executive
officers, stockholders or any member of the immediate family of any of the
foregoing had or is to have a direct or indirect material interest.
On April
17, 2008, we issued 6,000,000 shares of our common stock to Mr. Omri Amos
Shalom, our President, Treasurer and Director, for cash payment of $600. We
believe this issuance was deemed to be exempt under Regulation S of the
Securities Act. No advertising or general solicitation was employed in offering
the securities. The offering and sale was made only to Mr. Omri Shalom, who is a
non-U.S. citizen, and transfer was restricted by us in accordance with the
requirements of the Securities Act of 1933.
On
February 16, 2009, we issued 1,000,000 shares of our common stock to Mr. Akiva
Bergman, our Secretary and Director, for a $140 subscription receivable which
was paid on March 26, 2010. We believe this issuance was deemed to be exempt
under the Securities Act. No advertising or general solicitation was employed in
offering the securities. The offering and sale was made only to Mr. Akiva
Bergman and transfer was restricted by us in accordance with the requirements of
the Securities Act of 1933.
Our
officers and Directors may be considered promoters of the Registrant due to
their participation in and management of the business since its
incorporation.
Director
Independence
We are
not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent Directors.”
We do not believe that any of our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of
NASDAQ.
DESCRIPTION
OF SECURITIES
Our
authorized capital stock consists of 100,000,000 shares of common stock, par
value $0.0001 per share.
40
The
holders of our common stock:
·
|
Have
equal ratable rights to dividends from funds legally available therefore,
when, as and if declared by our Board of
Directors;
|
·
|
Are
entitled to share ratably in all of our assets available for distribution
to holders of common stock upon liquidation, dissolution or winding up of
our affairs;
|
·
|
Do
not have pre-emptive, subscription or conversion rights and there are no
redemption or sinking fund provisions or rights;
and
|
·
|
Are
entitled to one non-cumulative vote per share on all matters on which
stockholders may vote.
|
The
common shares are not subject to any future call or assessment and all have
equal voting rights. There are no special rights or restrictions of any nature
attached to any of the common shares and they all rank at equal rate each with
the other, as to all benefits, which might accrue to the holders of the common
shares. All registered stockholders are entitled to receive a notice of any
general annual meeting to be convened by our Board of Directors.
At any
general meeting, each outstanding share of stock having voting power is entitled
to one vote. To the knowledge of our management, at the date hereof, our
officers and Directors are the only persons to exercise control, directly or
indirectly, over more than 10% of our outstanding common shares. See "Security
Ownership of Certain Beneficial Owners and Management."
We refer
you to our Certificate of Incorporation and Bylaws which form a part of this
registration statement for a more complete description of the rights and
liabilities of holders of our securities.
Non-cumulative
Voting
Holders
of shares of our common stock do not have cumulative voting rights, which means
that the holders of more than 50% of the outstanding shares, voting for the
election of Directors, can elect all of the Directors to be elected, if they so
choose, and, in such event, the holders of the remaining shares will not be able
to elect any of our Directors.
Cash
Dividends
As of the
date of this Registration Statement, we have not paid any cash dividends to
stockholders. The declaration of any future cash dividend will be at the
discretion of our Board of Directors and will depend upon our earnings, if any,
our capital requirements and financial position, our general economic and other
pertinent conditions. It is our present intention not to pay any cash dividends
in the foreseeable future, but rather to reinvest earnings, if any, into our
business.
We have
not engaged a transfer agent to serve as transfer agent for shares of our common
stock. We intend to retain a transfer agent as soon as practicable following the
effectiveness of this Registration Statement. Until we engage such a transfer
agent, we will be responsible for all record-keeping and administrative
functions in connection with the shares of our common stock. Our officers do not
have any experience acting as a transfer agent for publicly traded
securities.
41
Admission
to Quotation on the OTC Bulletin Board
We intend
to have a market maker file an application for our common stock to be quoted on
the OTC Bulletin Board. However, we do not have a market maker that has agreed
to file such application. If our securities are not quoted on the OTC Bulletin
Board, a security holder may find it more difficult to dispose of, or to obtain
accurate quotations, as to the market value of our securities. The OTC Bulletin
Board differs from national and regional stock exchanges in that it
(1) is
not situated in a single location but operates through communication of bids,
offers and confirmations between broker-dealers, and
(2)
securities admitted to quotation are offered by one or more Broker-dealers
rather than the "specialist" common to stock exchanges.
To
qualify for quotation on the OTC Bulletin Board, an equity security must have
one registered broker-dealer, known as the market maker, willing to list bid or
sale quotations and to sponsor the company listing. If it meets the
qualifications for trading securities on the OTC Bulletin Board our securities
will trade on the OTC Bulletin Board. We may not now or ever qualify for
quotation on the OTC Bulletin Board. We currently have no market maker who is
willing to list quotations for our securities.
SHARES
ELIGIBLE FOR FUTURE SALE
Prior to
this offering, there was no public market for our common stock. We cannot
predict the effect, if any, that market sales of shares of our common stock or
the availability of shares of our common stock for sale will have on the market
price of our common stock. Sales of substantial amounts of our common stock in
the public market could adversely affect the market prices of our common stock
and could impair our future ability to raise capital through the sale of our
equity securities.
We have
outstanding an aggregate of 8,620,000 shares of our common stock. Of
these shares, all of the 1,620,000 shares to be registered in this offering will
be freely tradable without restriction or further registration under the
Securities Act, unless those shares are purchased by our “affiliates,” as that
term is defined in Rule 144 under the Securities Act.
The
remaining 7,000,000 shares of common stock to be outstanding after
this offering will be restricted as a result of securities laws. Restricted
securities may be sold in the public market only if they have been registered or
if they qualify for an exemption from registration under Rule 144 under the
Securities Act.
Rule 144
In
general, under Rule 144 as currently in effect, a person who is not one of
our affiliates and who is not deemed to have been one of our affiliates at any
time during the three months preceding a sale and who has beneficially owned
shares of our common stock that are deemed restricted securities for at least
six months would be entitled after such six-month holding period to sell the
common stock held by such person, subject to the continued availability of
current public information about us (which current public information
requirement is eliminated after a one-year holding
period).
42
A person
who is one of our affiliates and who has beneficially owned shares of our common
stock that are deemed restricted securities for at least one year would be
entitled after such one year holding period to sell within any three-month
period a number of shares that does not exceed 1% of the number of shares of our
common stock then outstanding, which will equal 86,200 shares immediately
after this offering, subject to the continued availability of current public
information about us and the filing of a Form 144 notice of sale if the sale is
for an amount in excess of 5,000 shares or for an aggregate sale price of more
than $50,000 in a three-month period.
This
prospectus relates to the registration of 1,620,000 shares of common stock on
behalf of the selling stockholders.
There
is no current market for our shares
There has
been no market for our securities. Our common stock is not traded on any
exchange or on the over-the-counter market. After the effective date of the
registration statement relating to this prospectus, we hope to have a market
maker file an application with FINRA Regulations, Inc. for our common stock to
be eligible for trading on the Over the Counter Bulletin Board. We do not yet
have a market maker who has agreed to file such application. The selling
security holders will be offering our shares of common stock at a fixed price of
$0.025 per share until our shares are quoted on the OTC Bulletin Board and
thereafter will be sold at prevailing market prices or privately negotiated
prices.
The
selling security holders may, from time to time, sell all or a portion of the
shares of common stock on any market upon which the common stock may be listed
or quoted (anticipated to be the OTC Bulletin Board in the United States), in
privately negotiated transactions or otherwise. Such sales may be at fixed
prices prevailing at the time of sale, at prices related to the market prices or
at negotiated prices. Moreover, the shares of common stock being offered for
resale by this prospectus may be sold by the selling security holders by one or
more of the following methods, without limitation: (a) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; (b)
privately negotiated transactions; (c) market sales (both long and short to the
extent permitted under the federal securities laws); (d) at the market to or
through market makers or into an existing market for the shares; (e) through
transactions in options, swaps or other derivatives (whether exchange listed or
otherwise); and (f) a combination of any of the aforementioned methods of
sale.
In the
event of the transfer by any of the selling security holders of its common
shares to any pledgee, donee or other transferee, we will amend this prospectus
and the registration statement of which this prospectus forms a part by the
filing of a post-effective amendment in order to have the pledgee, donee or
other transferee in place of the selling security holder who has transferred
his, her or its shares.
In
effecting sales, brokers and dealers engaged by the selling security holders may
arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from a selling security holder or, if any of
the broker-dealers act as an agent for the purchaser of such shares, from a
purchaser in amounts to be negotiated which are not expected to exceed those
customary in the types of transactions involved. Broker-dealers may agree with a
selling security holder to sell a specified number of the shares of common stock
at a stipulated price per share. Such an agreement may also require the
broker-dealer to purchase as principal any unsold shares of common stock at the
price required to fulfill the broker-dealer commitment to the selling security
holder if such broker-dealer is unable to sell the shares on behalf of the
selling security holder. Broker-dealers who acquire shares of common stock as
principal may thereafter resell the shares of common stock from time to time in
transactions which may involve block transactions and sales to and through other
broker-dealers, including transactions of the nature described above. Such sales
by a broker-dealer could be at prices and on terms then prevailing at the time
of sale, at prices related to the then-current market price or in negotiated
transactions. In connection with such resales, the broker-dealer may pay to or
receive from the purchasers of the shares commissions as described
above.
43
The
selling security holders and any broker-dealers or agents that participate with
the selling security holders in the sale of the shares of common stock may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with these sales. In that event, any commissions received by the
broker-dealers or agents and any profit on the resale of the shares of common
stock purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
From time
to time, any of the selling security holders may pledge shares of common stock
pursuant to the margin provisions of customer agreements with brokers. Upon a
default by a selling security holder, their broker may offer and sell the
pledged shares of common stock from time to time. Upon a sale of the shares of
common stock, the selling security holders intend to comply with the prospectus
delivery requirements under the Securities Act by delivering a prospectus to
each purchaser in the transaction. We intend to file any amendments or other
necessary documents in compliance with the Securities Act which may be required
in the event any of the selling security holders defaults under any customer
agreement with brokers.
To the
extent required under the Securities Act, a post effective amendment to this
registration statement will be filed disclosing the name of any broker-dealers,
the number of shares of common stock involved, the price at which the common
stock is to be sold, the commissions paid or discounts or concessions allowed to
such broker-dealers, where applicable, that such broker-dealers did not conduct
any investigation to verify the information set out or incorporated by reference
in this prospectus and other facts material to the transaction.
We and
the selling security holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations under it, including, without
limitation, Rule 10b-5 and, insofar as a selling security holder is a
distribution participant and we, under certain circumstances, may be a
distribution participant, under Regulation M. All of the foregoing may affect
the marketability of the common stock.
All
expenses of the registration statement including, but not limited to, legal,
accounting, printing and mailing fees are and will be borne by us. Any
commissions, discounts or other fees payable to brokers or dealers in connection
with any sale of the shares of common stock will be borne by the selling
security holders, the purchasers participating in such transaction, or
both.
Any
shares of common stock covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act, as amended, may be sold under
Rule 144 rather than pursuant to this prospectus.
44
Penny
Stock Regulations
You
should note that our stock is a penny stock. Pursuant to Section 15(g) of the
Securities Exchange Act of 1934, as amended, and Rule 15g-9 and Rule 3a(51)-(1),
"penny stock" is defined to be any equity security that has a market price (as
defined) less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. Our securities are covered by the penny
stock rules, which impose additional sales practice requirements on
broker-dealers prior
to a transaction in a penny stock not otherwise exempt from those rules
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document in a form prepared by the SEC which provides information
about penny stocks and the nature and level of risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of our common stock.
Blue
Sky Restrictions on Resale
If a
selling security holder wants to sell shares of our common stock under this
registration statement in the United States, the selling security holders will
also need to comply with state securities laws, also known as “Blue Sky laws,”
with regard to secondary sales. All states offer a variety of exemption from
registration for secondary sales. Many states, for example, have an exemption
for secondary trading of securities registered under Section 12(g) of the
Securities Exchange Act of 1934 or for securities of issuers that publish
continuous disclosure of financial and non-financial information in a recognized
securities manual, such as Standard & Poor’s. The broker for a selling
security holder will be able to advise a selling security holder which states
our common stock is exempt from registration with that state for secondary
sales.
Any
person who purchases shares of our common stock from a selling security holder
under this registration statement who then wants to sell such shares will also
have to comply with Blue Sky laws regarding secondary sales.
When the
registration statement becomes effective, and a selling security holder
indicates in which state(s) he desires to sell his shares, we will be able to
identify whether it will need to register or will rely on an exemption there
from.
EXPERTS
No expert
or counsel named in this prospectus as having prepared or certified any part of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the common stock was employed on a contingency basis or had, or
is to receive, in connection with the offering, a substantial interest, directly
or indirectly, in the registrant or its subsidiary. Nor was any such person
connected with the Registrant or any of its parents, subsidiaries as a promoter,
managing or principal underwriter, voting trustee, Director, officer or
employee.
45
Our
financial statements for the period from inception to May 31, 2010, included in
this prospectus have been audited by Weinberg & Baer LLC, as set forth in
their report included in this prospectus.
Certain
legal matters, including the legality of the securities offered, will be passed
upon for us by SRK
Law Offices.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL
DISCLOSURE
Weinberg
& Baer LLC are our auditors. There have not been any disagreements with our
auditors on accounting and financial disclosure or any other matter.
46
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO FINANCIAL STATEMENTS
MAY
31, 2010, DECEMBER 31, 2009 AND 2008
Report
of Registered Independent Auditors
|
F-2
|
Financial
Statements-
|
|
Balance
Sheets as of May 31, 2010, December 31, 2009 and 2008
|
F-3
|
Statements
of Operations for the Periods Ended
|
|
May
31, 2010 and 2009, December 31, 2009 and 2008, and Cumulative from
Inception
|
F-4
|
Statement
of Stockholders’ Equity for the Period from Inception
|
|
through
May 31, 2010
|
F-5
|
Statements
of Cash Flows for the Periods Ended May 31, 2010 and 2009, December
31,
|
|
2009
and 2008, and Cumulative from Inception
|
F-6
|
Notes
to Financial Statements
|
F-7
|
F-1
REPORT
OF REGISTERED INDEPENDENT AUDITORS
To the
Board of Directors and Stockholders
of Top
Gear Inc.:
We have
audited the accompanying balance sheets of Top Gear Inc. (a Delaware corporation
in the development stage) as of May 31, 2010, December 31, 2009 and 2008, and
the related statements of operations, stockholders’ equity, and cash flows for
five months ended May 31, 2010 and 2009, and years ended December 31, 2009 and
2008, and from inception (December 31, 2007) through December 31, 2009. These
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Top Gear Inc. as of May 31, 2010,
December 31, 2009 and 2008, and the results of its operations and its cash flows
for the five months ended May 31, 2010 and 2009, and years ended December 31,
2009 and 2008, and from inception (December 31, 2007) through May 31, 2010, in
conformity with accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company is in the development stage, and has not established any
source of revenue to cover its operating costs. As such, it has incurred an
operating loss since inception. Further, as of May 31, 2010, the cash resources
of the Company were insufficient to meet its planned business objectives. These
and other factors raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plan regarding these matters is also
described in Note 2 to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Respectfully
submitted,
/s/
Weinberg & Baer LLC
Weinberg
& Baer LLC
Baltimore,
Maryland
June 25,
2010
F-2
ASSETS
|
||||||||||||
As
of
|
As
of
|
As
of
|
||||||||||
May
31,
|
December
31,
|
December
31,
|
||||||||||
2010
|
2009
|
2008
|
||||||||||
Current
Assets:
|
||||||||||||
Cash
and cash equivalents
|
$ | 9,407 | $ | 16,716 | $ | 7,834 | ||||||
Total
current assets
|
9,407 | 16,716 | 7,834 | |||||||||
Total
Assets
|
$ | 9,407 | $ | 16,716 | $ | 7,834 | ||||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||||||
Current
Liabilities:
|
||||||||||||
Accounts
payable and accrued liabilities
|
$ | 6,000 | $ | - | $ | - | ||||||
Total
current liabilities
|
6,000 | - | - | |||||||||
Commitments
and Contingencies
|
- | - | - | |||||||||
Stockholders'
Equity (Deficit):
|
||||||||||||
Common
stock, par value $0.0001 per share, 100,000,000 shares
authorized;
|
||||||||||||
8,620,000
shares issued and outstanding
|
||||||||||||
(6,000,000
shares issued and outstanding at December 31, 2008)
|
862 | 862 | 600 | |||||||||
Stock
subscriptions receivable
|
- | (140 | ) | - | ||||||||
Additional
paid-in capital
|
89,778 | 89,778 | 49,400 | |||||||||
(Deficit)
accumulated during development stage
|
(87,233 | ) | (73,784 | ) | (42,166 | ) | ||||||
Total
stockholders' equity (deficit)
|
3,407 | 16,716 | 7,834 | |||||||||
Total
Liabilities and Stockholders' Equity
|
$ | 9,407 | $ | 16,716 | $ | 7,834 |
The
accompanying notes to financial statements are
an
integral part of these statements.
F-3
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
FOR
THE FIVE MONTHS ENDED MAY 31, 2010 AND YEARS ENDED
DECEMBER
31, 2009 AND 2008, AND
CUMULATIVE
FROM INCEPTION (DECEMBER 31, 2007)
THROUGH
MAY 31, 2010
Five
Months Ended
|
Five
Months Ended
|
Year
Ended
|
Year
Ended
|
Cumulative
|
||||||||||||||||
May,
31
|
May,
31
|
December
31,
|
December
31,
|
From
|
||||||||||||||||
2010
|
2009
|
2009
|
2008
|
Inception
|
||||||||||||||||
Revenues
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Expenses:
|
||||||||||||||||||||
General
and administrative-
|
||||||||||||||||||||
Professional
fees
|
11,284 | - | - | 284 | 11,568 | |||||||||||||||
Consulting
fees
|
2,050 | - | 31,000 | 41,763 | 74,813 | |||||||||||||||
Other
|
115 | 7 | 618 | 119 | 852 | |||||||||||||||
Total
general and administrative expenses
|
13,449 | 7 | 31,618 | 42,166 | 87,233 | |||||||||||||||
- | ||||||||||||||||||||
(Loss)
from Operations
|
(13,449 | ) | (7 | ) | (31,618 | ) | (42,166 | ) | (87,233 | ) | ||||||||||
Other
Income (Expense)
|
- | - | - | - | - | |||||||||||||||
Provision
for income taxes
|
- | - | - | - | - | |||||||||||||||
Net
(Loss)
|
$ | (13,449 | ) | $ | (7 | ) | $ | (31,618 | ) | $ | (42,166 | ) | $ | (87,233 | ) | |||||
(Loss)
Per Common Share:
|
||||||||||||||||||||
(Loss)
per common share - Basic and Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||||||
Weighted
Average Number of Common Shares
|
||||||||||||||||||||
Outstanding
- Basic and Diluted
|
8,620,000 | 6,695,364 | 7,402,137 | 4,257,534 |
The
accompanying notes to financial statements are
an
integral part of these statements.
F-4
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
FOR
THE PERIOD FROM INCEPTION (DECEMBER 31, 2007)
THROUGH
MAY 31, 2010
(Deficit)
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Stock
|
Additional
|
During
the
|
||||||||||||||||||||||
Common
stock
|
Subscriptions
|
Paid-in
|
Development
|
|||||||||||||||||||||
Description
|
Shares
|
Amount
|
Receivable
|
Capital
|
Stage
|
Totals
|
||||||||||||||||||
Balance
- at inception
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Common
stock issued for cash
|
6,000,000 | 600 | - | - | - | 600 | ||||||||||||||||||
Capital Contribution | 49,400 | 49,400 | ||||||||||||||||||||||
Net
(loss) for the period
|
- | - | - | - | (42,166 | ) | (42,166 | ) | ||||||||||||||||
Balance
- December 31, 2008
|
6,000,000 | 600 | - | 49,400 | (42,166 | ) | 7,834 | |||||||||||||||||
Common
stock subscribed
|
1,000,000 | 100 | (140 | ) | 40 | - | - | |||||||||||||||||
Common
stock issued for cash
|
1,620,000 | 162 | - | 40,338 | - | 40,500 | ||||||||||||||||||
Net
(loss) for the period
|
- | - | - | - | (31,618 | ) | (31,618 | ) | ||||||||||||||||
Balance
-December 31, 2009
|
8,620,000 | 862 | (140 | ) | 89,778 | (73,784 | ) | 16,716 | ||||||||||||||||
Stock
subscription payment received
|
- | - | 140 | - | - | 140 | ||||||||||||||||||
Net
(loss) for the period
|
- | - | - | - | (13,449 | ) | (13,449 | ) | ||||||||||||||||
Balance
-May 31, 2010
|
8,620,000 | 862 | - | 89,778 | (87,233 | ) | 3,407 |
The
accompanying notes to financial statements are
an
integral part of these statements.
F-5
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
FOR
THE PERIODS ENDED MAY 31, 2010, DECEMBER 31, 2009 AND 2008, AND
CUMULATIVE
FROM INCEPTION (DECEMBER 31, 2007)
THROUGH
MAY 31, 2010
Five
Months Ended
|
Five
Months Ended
|
Year
Ended
|
Year
Ended
|
Cumulative
|
||||||||||||||||
May
31,
|
May
31,
|
December
31,
|
December
31,
|
From
|
||||||||||||||||
2010
|
2009
|
2009
|
2008
|
Inception
|
||||||||||||||||
Operating
Activities:
|
||||||||||||||||||||
Net
(loss)
|
$ | (13,449 | ) | $ | (7 | ) | $ | (31,618 | ) | $ | (42,166 | ) | $ | (87,233 | ) | |||||
Adjustments
to reconcile net (loss) to net cash
|
||||||||||||||||||||
provided
by operating activities:
|
||||||||||||||||||||
Changes
in net assets and liabilities-
|
||||||||||||||||||||
Accounts
payable and accrued liabilities
|
6,000 | - | - | - | 6,000 | |||||||||||||||
|
||||||||||||||||||||
Net
Cash Used in Operating Activities
|
(7,449 | ) | (7 | ) | (31,618 | ) | (42,166 | ) | (81,233 | ) | ||||||||||
Investing
Activities:
|
||||||||||||||||||||
Cash
provided by investing activities
|
- | - | - | - | - | |||||||||||||||
Net
Cash Provided by Investing Activities
|
- | - | - | - | - | |||||||||||||||
Financing
Activities:
|
||||||||||||||||||||
Proceeds
from common stock
|
140 | - | 40,500 | 50,000 | 90,640 | |||||||||||||||
Net
Cash Provided by Financing Activities
|
140 | - | 40,500 | 50,000 | 90,640 | |||||||||||||||
Net
(Decrease) Increase in Cash
|
(7,309 | ) | (7 | ) | 8,882 | 7,834 | 9,407 | |||||||||||||
Cash
- Beginning of Period
|
16,716 | 7,834 | 7,834 | - | - | |||||||||||||||
Cash
- End of Period
|
$ | 9,407 | $ | 7,827 | $ | 16,716 | $ | 7,834 | $ | 9,407 | ||||||||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||||||||||||||
Cash
paid during the period for:
|
||||||||||||||||||||
Interest
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Income
taxes
|
$ | - | $ | - | $ | - | $ | - | $ | - |
F-6
TOP
GEAR INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
Basis
of Presentation and Organization
Top Gear
Inc. (the “Company”) is in the development stage, and has limited operations.
The Company was incorporated under the laws of the State of Delaware on December
31, 2007 and began activity in 2008. The business plan of the Company is to
become a leading kosher food certification organization. The accompanying
financial statements of the Company were prepared from the accounts of the
Company under the accrual basis of accounting.
Cash and Cash
Equivalents
For
purposes of reporting within the statement of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
Revenue
Recognition
The Company is in the development stage
and has yet to realize revenues from operations. Once the Company has commenced
operations, it will recognize revenues when delivery of goods or completion of
services has occurred provided there is persuasive evidence of an agreement,
acceptance has been approved by its customers, the fee is fixed or determinable
based on the completion of stated terms and conditions, and collection of any
related receivable is probable.
Loss
per Common Share
Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. There were no dilutive financial instruments issued or outstanding for
the period ended May 31, 2010.
Income
Taxes
The
Company accounts for income taxes pursuant to FASB ASC 740. Deferred tax assets
and liabilities are determined based on temporary differences between the bases
of certain assets and liabilities for income tax and financial reporting
purposes. The deferred tax assets and liabilities are classified according to
the financial statement classification of the assets and liabilities generating
the differences.
The
Company maintains a valuation allowance with respect to deferred tax assets. The
Company establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company’s
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the Federal tax
laws.
Changes
in circumstances, such as the Company generating taxable income, could cause a
change in judgment about the realizability of the related deferred tax asset.
Any change in the valuation allowance will be included in income in the year of
the change in estimate.
F-7
Fair
Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is required in
estimating fair value. Accordingly, the estimates of fair value may not be
indicative of the amounts the Company could realize in a current market
exchange. As of May 31, 2010, December 31, 2009 and December 31, 2008, the
carrying value of accounts payable-trade and accrued liabilities approximated
fair value due to the short-term nature and maturity of these
instruments.
Deferred
Offering Costs
The
Company defers as other assets the direct incremental costs of raising capital
until such time as the offering is completed. At the time of the completion of
the offering, the costs are charged against the capital raised. Should the
offering be terminated, deferred offering costs are charged to operations during
the period in which the offering is terminated.
Common
Stock Registration Expenses
The
Company considers incremental costs and expenses related to the registration of
equity securities with the SEC, whether by contractual arrangement as of a
certain date or by demand, to be unrelated to original issuance transactions. As
such, subsequent registration costs and expenses are reflected in the
accompanying financial statements as general and administrative expenses, and
are expensed as incurred.
Lease
Obligations
All non
cancellable leases with an initial term greater than one year are categorized as
either capital leases or operating leases. Assets recorded under capital leases
are amortized according to the methods employed for property and equipment or
over the term of the related lease, if shorter.
Estimates
The
financial statements are prepared on the basis of accounting principles
generally accepted in the United States. The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of May 31, 2010, December 31, 2009 and December 31, 2008, and
expenses for the five months ended May 31, 2010 and the years ended December 31,
2009 and December 31, 2008, and cumulative from inception. Actual results could
differ from those estimates made by management.
Fiscal
Year End
The
Company has adopted a fiscal year end of December 31.
2.
Development Stage
Activities and Going Concern
The
Company is currently in the development stage, and has not commenced operations.
The business plan of the Company is to become a leading kosher food
certification organization.
On June
25, 2009, the Company offered a capital formation activity through a PPO, exempt
from registration under the Securities Act of 1933, to raise up to $40,500
through the issuance of 1,620,000 shares of its common stock, par value $0.0001
per share, at an offering price of $0.025 per share. As of September 8, 2009,
the Company raised $40,500 in proceeds with the issuance of 1,620,000 shares of
its common stock.
F-8
The Company commenced an activity to
submit a Registration Statement on Form S-1 to the Securities and Exchange
Commission (“SEC”) to register 1,620,000 of its outstanding shares of common
stock on behalf of selling stockholders. The Company will not receive any of the
proceeds of this registration activity once the shares of common stock are
sold.
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, which contemplate
continuation of the Company as a going concern. The Company has not established
any source of revenues to cover its operating costs, and as such, has incurred
an operating loss since inception. Further, as of May 31, 2010 the cash
resources of the Company were insufficient to meet its current business plan.
These and other factors raise substantial doubt about the Company’s ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
3.
Common
Stock
On April
17, 2008, the Company issued 6,000,000 shares of common stock to an officer and
director of the Company, for cash payment of $600.
On
February 16, 2009, the Company issued 1,000,000 shares of common stock to an
officer and director of the Company, for a $140 subscription
receivable.
On June
25, 2009, the Company began a capital formation activity through a PPO, exempt
from registration under the Securities Act of 1933, to raise up to $40,500
through the issuance of 1,620,000 shares of its common stock, par value $0.0001
per share, at an offering price of $0.025 per share. As of September 8, 2009,
the Company had received $40,500 in proceeds from the PPO.
The
Company also commenced an activity to submit a Registration Statement on Form
S-1 to the Securities and Exchange Commission (“SEC”) to register 1,620,000 of
its outstanding shares of common stock on behalf of selling stockholders. The
Company will not receive any of the proceeds of this registration activity once
the shares of common stock are sold.
4.
Income
Taxes
The
provision (benefit) for income taxes for the period ended May 31, 2010, December
31, 2009 and 2008, was as follows (assuming a 23% effective tax
rate):
2010
|
2009
|
2008
|
||||||||||
Current
Tax Provision:
|
||||||||||||
Federal-
|
||||||||||||
Taxable
income
|
$ | - | $ | - | $ | - | ||||||
|
||||||||||||
Total
current tax provision
|
$ | - | $ | - | $ | - | ||||||
|
||||||||||||
Deferred
Tax Provision:
|
||||||||||||
Federal-
|
||||||||||||
Loss
carryforwards
|
$ | 3,093 | $ | 7,272 | $ | 9,698 | ||||||
Change
in valuation allowance
|
(3,093 | ) | (7,272 | ) | (9,698 | ) | ||||||
|
||||||||||||
Total
deferred tax provision
|
$ | - | $ | - | $ | - |
F-9
The
Company had deferred income tax assets as of May 31, 2010, and December 31, 2009
and 2008, as follows:
2010
|
2009
|
2008
|
||||||||||
Loss
carryforwards
|
$ | 20,064 | $ | 16,970 | $ | 9,698 | ||||||
Less
- Valuation allowance
|
(20,064 | ) | (16,970 | ) | (9,698 | ) | ||||||
Total
net deferred tax assets
|
$ | - | $ | - | $ | - |
The
Company provided a valuation allowance equal to the deferred income tax assets
for the five months ended May 31, 2010 and for the years ended December 31, 2009
and 2008 because it is not presently known whether future taxable income will be
sufficient to utilize the loss carryforwards.
As of May
31, 2010, the Company had approximately $87,233 in tax loss carryforwards that
can be utilized future periods to reduce taxable income, and expire by the year
2030.
The
federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are
filed.
5. Related
Party Loans and Transactions
On April
17, 2008, the Company issued 6,000,000 shares of common stock to an officer and
director of the Company, for cash payment of $600. In addition, the officer and
director made a capital contribution of $49,400.
On
February 16, 2009, the Company issued 1.000,000 shares of common stock to an
officer and director of the Company, for $140 subscription
receivable.
6.
Recent Accounting
Pronouncements
In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), codified
in FASB ASC 820-10-65, which provides additional guidance for estimating fair
value in accordance with ASC 820-10 when the volume and level of activity for an
asset or liability have significantly decreased. ASC 820-10-65 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. The adoption of ASC 820-10-65 did not have an impact on the Company's
results of operations or financial condition.
In May
2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165") codified in
FASB ASC 855-10-05, which provides guidance to establish general standards of
accounting for and disclosures of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. FASB
ASC 855-10-05 also requires entities to disclose the date through which
subsequent events were evaluated as well as the rationale for why that date was
selected. FASB ASC 855-10-05 is effective for interim and annual periods ending
after June 15, 2009. FASB ASC 855-10-05 requires that public entities evaluate
subsequent events through the date that the financial statements are
issued.
In June
2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial
Assets - an amendment of FASB Statement No. 140" ("SFAS 166"), codified as FASB
ASC 860, which requires entities to provide more information regarding sales of
securitized financial assets and similar transactions, particularly if the
entity has continuing exposure to the risks related to transferred financial
assets. FASB ASC 860 eliminates the concept of a "qualifying special-purpose
entity," changes the requirements for derecognizing financial assets and
requires additional disclosures. FASB ASC 860 is effective for fiscal years
beginning after November 15, 2009. The adoption of FASB ASC 860 did not have an
impact on the Company's financial condition, results of operations or cash
flows.
F-10
In June
2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No.
46(R)" ("SFAS 167"), codified as FASB ASC 810-10, which modifies how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. FASB ASC
810-10 clarifies that the determination of whether a company is required to
consolidate an entity is based on, among other things, an entity's purpose and
design and a company's ability to direct the activities of the entity that most
significantly impact the entity's economic performance. FASB ASC 810-10 requires
an ongoing reassessment of whether a company is the primary beneficiary of a
variable interest entity. FASB ASC 810-10 also requires additional disclosures
about a company's involvement in variable interest entities and any significant
changes in risk exposure due to that involvement. FASB ASC 810-10 is effective
for fiscal years beginning after November 15, 2009. The adoption of FASB ASC
810-10 did not have an impact on the Company's financial condition, results of
operations or cash flows.
In June
2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles,
which establishes the FASB Accounting Standards Codification as the sole source
of authoritative generally accepted accounting principles. Pursuant to the
provisions of FASB ASC 105, we have updated references to GAAP in our financial
statements. The adoption of FASB ASC 105 did not impact the Company's financial
position or results of operations.
The
Company does not expect the adoption of any recently issued accounting
pronouncements to have a significant impact on our net results of operations,
financial position, or cash flows.
F-11
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Indemnification
of Directors, Officers, Employees and Agents
Section
145 of the Delaware General Corporation Law (the “DGCL”), as the same exists or
may hereafter be amended, provides that a Delaware corporation may indemnify any
persons who were, or are threatened to be made, parties to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the corporation’s best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his or her conduct was illegal. A Delaware corporation may
indemnify any persons who are, were or are threatened to be made, a party to any
threatened, pending or completed action or suit by or in the right of the
corporation by reason of the fact that such person was a director, officer,
employee or agent of such corporation, or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys’ fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the corporation’s best interests, provided that no
indemnification is permitted without judicial approval if the officer, director,
employee or agent is adjudged to be liable to the corporation. Where an officer,
director, employee, or agent is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him or
her against the expenses which such officer or director has actually and
reasonably incurred.
Section
145 of the DGCL further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him or her and incurred by him or her in
any such capacity, arising out of his or her status as such, whether or not the
corporation would otherwise have the power to indemnify him or her under Section
145 of the DGCL.
Article
12 of our bylaws provides that, to the fullest extent permitted by Delaware law,
as it may be amended from time to time, none of our directors will be personally
liable to us or our stockholders for monetary damages resulting from a breach of
fiduciary duty as a director. Our bylaws also provide discretionary
indemnification for the benefit of our directors, officers, and employees, to
the fullest extent permitted by Delaware law, as it may be amended from time to
time. Pursuant to our bylaws, we are required to indemnify our directors,
officers, employees and agents, and we have the discretion to advance his or her
related expenses, to the fullest extent permitted by law.
These
indemnification provisions may be sufficiently broad to permit indemnification
of our officers and directors for liabilities (including reimbursement of
expenses incurred) arising under the Securities Act. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our
directors or officers, or persons controlling us, pursuant to the foregoing
provisions, we have been informed that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
II-1
In the
event that a claim for indemnification against such liabilities (other than the
payment of expenses incurred or paid by a director, officer or controlling
person in a successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has
been settled by controlling precedent, submit to the court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Other
Expenses of Issuance and Distribution
The
estimated expenses payable by us in connection with the offering described in
this Registration Statement (other than the placement discounts and commissions)
will be as follows. With the exception of the filing fees for the U.S.
Securities Exchange Commission, all amounts are estimates. All such expenses
will be borne by the Registrant.
Name of Expense
|
Amount ($)
|
|||
Securities
and Exchange
|
3 | |||
Commission
registration fee
|
||||
Legal,
accounting fees and expenses (1)
|
25,000 | |||
Total
(1)
|
25,003 |
(1)
Estimated.
II-2
Recent
Sales of Unregistered Securities
On April
17, 2008, we issued 6,000,000 shares of our common stock to Mr. Omri Shalom, our
President, Treasurer and Director, for cash payment to us of $600. We believe
this issuance was deemed to be exempt under Regulation S of the Securities Act.
No advertising or general solicitation was employed in offering the securities.
The offering and sale was made only to Mr. Shalom, who is a non-U.S. citizen,
and transfer was restricted by us in accordance with the requirements of the
Securities Act of 1933.
On
February 16, 2009, we issued 1,000,000 shares of our common stock to Mr. Akiva
Bergman, our Secretary and Director, for cash payment to us of $140. We believe
this issuance was deemed to be exempt under the Securities Act. No advertising
or general solicitation was employed in offering the securities. The offering
and sale was made only to Mr. Bergman, and transfer was restricted by us in
accordance with the requirements of the Securities Act of 1933.
From June
through September 2009, we issued 1,620,000 shares of common stock to 44
investors in a fully subscribed private placement made pursuant to the exemption
from the registration requirements of the Securities Act provided by Regulation
S. The consideration paid for such shares was $0.025 per share, amounting in the
aggregate to $40,500. Each purchaser represented to us that such purchaser was
not a United States person (as defined in Regulation S) and was not acquiring
the shares for the account or benefit of a United States person. Each purchaser
further represented that at the time of the origination of contact concerning
the subscription for the units and the date of the execution and delivery of the
subscription agreement for such units, such purchaser was outside of the United
States. We did not make any offers in the United States, and there were no
selling efforts in the United States. There were no underwriters or
broker-dealers involved in the private placement and no underwriting discounts
or commissions were paid.
All of
the aforementioned issuances were made in reliance upon the exemption provided
in Section 4(2) of the Securities Act or Regulation S promulgated under the
Securities Act. No form of general solicitation or general advertising was
conducted in connection with any of these sales.
Exhibits
and Financial Statement Schedules
(a)
Exhibits:
Exhibit
|
Description
|
|
3.1
|
Articles
of Incorporation of Registrant.
|
|
3.2
|
Bylaws
of Registrant.
|
|
4.1
|
Specimen
Common Stock Certificate.
|
|
5.1
|
Opinion
of SRK Law Offices regarding the legality of the securities being
registered.
|
II-3
10.1
|
Consultant
Agreement with kashrut consultant dated June 7, 2010.
|
|
23.1
|
Consent
of Weinberg & Baer LLC.
|
|
23.2
|
Consent
of Legal Counsel (incorporated in Exhibit 5.1).
|
|
24.1
|
Power
of Attorney (contained on the signature page of this registration
statement).
|
Undertakings
(a) file,
during any period in which offers or sales are being made, a post-effective
amendment to this registration statement to:
(i) include
any prospectus required by section 10(a)(3) of the Securities
Act;
(ii) reflect
in the prospectus any facts or events which, individually or together, represent
a fundamental change in the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement; and
(iii) include
any material information with respect to the plan of distribution not previously
disclosed in this registration statement or any material change to such
information in the registration statement.
(b) that,
for the purpose of determining any liability under the Securities Act, each
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) to
file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(d) that
insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant,
the Registrant has been advised that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registration of expenses
incurred or paid by a director, officer or controlling person to the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(e) that,
for the purpose of determining liability under the Securities Act to any
purchaser, each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
II-5
(f) that,
for the purpose of determining liability of the Registrant under the Securities
Act to any purchaser in the initial distribution of the securities, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the Registrant will be a seller to the purchaser and
will be considered to offer or sell such securities to such
purchaser:
(i) any
preliminary prospectus or prospectus of the Registrant relating to the offering
filed pursuant to Rule 424;
(ii) any
free writing prospectus relating to the offering prepared by or on behalf of the
Registrant or used or referred to by the Registrant;
(iii) the
portion of any other free writing prospectus relating to the offering containing
material information about the Registrant or its securities provided by or on
behalf of the Registrant; and
(iv) any
other communication that is an offer in the offering made by the Registrant to
the purchaser.
II-6
Signatures
In
accordance with the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Form S-1 and has authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Tel Aviv, Israel on July 12, 2010.
TOP
GEAR INC.
|
||
By:
|
/s/ Omri
Amos Shalom
|
|
Name:
Omri Amos Shalom
|
||
Title:
President, Treasurer and Director
|
||
(Principal
Executive and Principal
|
||
Financial
and Accounting Officer)
|
In
accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
Date: July
12, 2010
|
|
/s/ Omri
Amos Shalom
|
Name:
Omri Amos Shalom
|
||
Title:
President, Treasurer and Director
|
||
(Principal
Executive and Principal
Financial
and Accounting
Officer)
|
Date: July
12, 2010
|
|
/s/
Akiva Bergman
|
Name:
Akiva Bergman
|
||
Title:
Secretary and
Director
|
II-7
POWER
OF ATTORNEY
KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Omri Amos Shalom and Akiva Bergman as his true and
lawful attorneys-in-fact, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this registration
statement and to sign a registration statement pursuant to Section 462(b) of the
Securities Act of 1933, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
Signature
|
Title
|
Date
|
||
/s/
Omri Amos Shalom
|
President
and Director
|
June
30, 2010
|
||
/s/
Akiva Bergman
|
Secretary
and Director
|
June
30, 2010
|