The Forex Note was offered and sold to ATL in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated thereunder. ATL is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.
The accrued balance of the note including interest as of July 31, 2010 is $503,151.
The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since the Date of Inception.
We conducted our audits in accordance with standards required by the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Although these estimates are based on management’s best knowledge of current events and circumstances that may impact the Company in the future, actual results may differ from these estimates.
Basis of consolidation - The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary and all variable interest entities for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated upon consolidation. Control is determined based on ownership rights or, when applicable, whether the Company is considered the primary beneficiary of a variable interest entity
Marketable securities - The Company determines the appropriate classification of all marketable securities as held-to-maturity, available-for-sale or trading at the time of purchase, and re-evaluates such classification as of each balance sheet date. The Company assesses whether temporary or other-than-temporary gains or losses on its marketable securities have occurred due to increases or declines in fair value or other market conditions. The Company had marketable securities within continuing operations during the year, which have been sold in the market.
Cash and Cash Equivalents - The Company maintains a cash balance in a non-interest bearing account that currently does not exceed federally insured limits. For purposes of financial statement presentation, the Company considers all highly liquid instruments with a maturity of three months or less to be cash.
Revenue Recognition - The Company uses the accrual basis of accounting for all transactions. The Company recognized revenue and gains when earned and related costs of sales and expenses when incurred.
Fixed and other Assets - Fixed assets are stated at cost, less accumulated depreciation. Office furniture and equipment are depreciated using the straight-line method over seven years. Computer equipment and software are depreciated using the straight-line method over three years. Leasehold improvements are amortized on a straight-line basis over the lesser of the useful life or the life of the lease (three years).
Costs of software acquired along with payroll costs and consulting fees relating to the development of internal use software, including that used to provide internet solutions, are capitalized. Once the software is placed in service, the costs are amortized over the estimated useful life.
Costs of Debt Discount are amortized over the life of the note that was discounted – two years.
Variable Interest Entities - The Company is required to consolidate variable interest entities (“VIE's”), where it is the entity’s primary beneficiary. VIE's are entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The primary beneficiary is the party that has exposure to a majority of the expected losses and/or expected residual returns of the VIE. For the year ended July 31, 2010, the balance sheets and results of operations of FOREX INTERNATIONAL TRADING CORP M.S. LTD, our wholly owned subsidiary, which is not active in operation and serving as our agent or long arm, is consolidated into these financial stateme nts.
Loss per Share - Net loss per share is provided in accordance with ASC Codification Topic 260 Section S99-1 and Statement of Financial Accounting Standards No. 128 (SFAS #128) “Earnings Per Share”. Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. The Company had no dilutive common stock equivalents, such as stock options or warrants as of July 31, 2010 and as of July 31, 2009.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Foreign currency translation - The Company considers the United States Dollar (“US Dollar” or "$") to be the functional currency of the Company and its subsidiary. The reporting currency of the Company is the US Dollar and accordingly, all amounts included in the consolidated financial statements have been presented or translated into US Dollars. For non-US subsidiary that do not utilize the US Dollar as its functional currency, assets and liabilities are translated to US Dollars at period-end exchange rates, and income and expense items are translated at weighted-average rates of exchange prevailing during the period. Translation adjustments are recorded in “Accumulated other comprehensive income” within stockholders’ equity. Foreign currency transaction gains and losses are included in the consolidated r esults of operations for the periods presented.
Fair value of financial instruments - Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of July 31, 2010. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values are assumed to approximate carrying values for cash and payables because they are short-term in nature and their carrying amounts approximated fair values or they are payable on demand.
Segment reporting - The Company follows Statement of ASC Codification Topic 220 and Statement of Financial Accounting Standards No. 130, “Disclosures About Segments of an Enterprise and Related Information”. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
Dividends - The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception.
Recent pronouncements - In May 2008, FAS No. 163, “Accounting for Financial Guarantee Insurance Contracts”, and SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”, were issued. In March 2008, FAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133 was issued.
The Financial Accounting Standards Board (FASB) issued Statement No. 168 – become effective on July 1, 2009 – The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles which makes the Accounting Standards Codification (ASC) the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities for interim and annual periods ending after September 15, 2009. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The adoption of ASC Topic 105 did not have a material impact on the Company’s financial position, cash flows or result of operations. Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a mat erial effect on the Company’s operations or financial position.
Stock-Based Compensation - The Company accounts for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations and has adopted the disclosure only alternative of ASC Codification Topic 220 and SFAS No. 123, “Accounting for Stock-Based Compensation”. Options granted to consultants, independent representatives and other non-employees are accounted for using the fair value method as prescribed by ASC Codification Topic 220 and SFAS No. 123.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a Smaller Reporting Company, the Company is not required to include the disclosure under this Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 appears at Page F-1, which appears after the signature page to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change or disagreements with accountants during the previous two fiscal years.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the applicable period to ensure that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Ex change Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were effective for the reporting period ending July 31, 2010.
Managements Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| | · | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets; |
| | · | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
| | · | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations and provide only reasonable assurance, not absolute assurance, with respect to financial statement preparation and presentation. The design of an internal control system reflects resource constraints and the benefits must be considered relative to the costs of implementing and maintaining the system.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of July 31, 2010. This assessment was based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, we believe that as of July 31, 2010 the Company’s internal control over financial reporting was effective based on those criteria.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal controls over financial reporting during the fourth quarter of 2010 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9A(T). CONTROLS AND PROCEDURES
Not applicable.
ITEM 9B. OTHER INFORMATION
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE.
Below are the names and certain information regarding our executive officers and directors:
| Name | | Age | | Position with the Company |
| Moshe J. Schnapp | | 48 | | Director, Chief Financial Officer, President, Secretary, and Treasurer |
| Darren Dunckel | | 42 | | Chief Executive Officer |
| William Glass | | 40 | | Director |
| Anita Atias | | 33 | | Director |
| Stewart Reich | | 67 | | Director |
Set forth below is a biographical description of each of our directors and senior executive officers based on information supplied by each of them.
Moshe J. Schnapp
Mr. Schnapp has served as our sole executive officer and director since inception. Moshe Schnapp served as President and Director of Yasheng Eco-Trade Corporation (f/k/a Emvelco Corp.) (OTCBB: YASH) from April 2005 to August 2006. Mr. Schnapp has served as the President of American Realty Group since 2000. In addition, from 1995 to 1999, Mr. Schnapp served as the CEO and a director of Genesis Development & Construction (NASDAQ: GDCUF). From 1990- 1995, Mr. Schnapp was the CEO and a director of Engel General Developers (NASDAQ: ENGEF). Mr. Schnapp received a B.A. in Economic and Accounting in 1987 from Haifa University, a Master in Business Administration in 1994 from Tel Aviv University and a Ph.D. in 1995 in Commercial and Industrial Economics from Pacific Wes tern University.
Darren Dunckel
Mr. Dunckel has served as the Company’s Chief Executive Officer since April 23, 2010. In addition, Mr. Dunckel is also a member of the Board of Directors of the Company. From 2005 to the present, Mr. Dunckel has served as the President of several privately owned companies. As President, he oversees management of real estate acquisitions and development and sales in the United States and overseas. Since 2004, Mr. Dunckel has served as the President of My Daily Corporation, managing the operations of this financial services company. From 2002 through 2004, Mr. Dunckel was Vice President, Regional Director for the Newport Group managing the territory for financial and consulting services. From 2000 to 2002, Mr. Dunckel was Vice President, Regional Director for New York Life Investment Mana gement consulting with financial advisors and corporations with respect to investments and financial services. Mr. Dunckel was appointed on September 17, 2007 to the Board of Directors as a director of Emvelco Corp., a publicly traded company (f/k/a Vortex Resources Corp). Mr. Dunckel resigned from Emvelco Corp board on April 2009 to pursue other opportunities.
Anita Atias
Mrs. Atias was appointed to the Board of Directors of the Company on July 29, 2010. Mrs. Atias has served as the Operations Manager and Human resources Administrator of the Online Trading Academy Franchise since 2008 and served as its Executive Administrator from 2004 to 2008. Prior to 2008, from 2003 to 2004 Mrs. Atias served as an attorney for a foreign law firm. Mrs. Atias holds both a B.A. in Communication and a Law Degree from Haifa University and is currently attending the University of California, Irvine.
Stewart Reich
Mr. Reich was appointed to the Board of Directors of the Company on July 29, 2010. Mr. Reich was a member of the Board of Directors of Yasheng Eco-Trade Corporation from June 2004 until August 2008, was CEO and President of Golden Telecom Inc., Russia’s largest alternative voice and data service provider as well as its largest ISP, since 1997. In September 1992, Mr. Reich was employed as Chief Financial Officer at UTEL (Ukraine Telecommunications), of which he was appointed President in November 1992. Prior to that, Mr. Reich held various positions at a number of subsidiaries of AT&T Corp. Mr. Reich will serve as Co-Chairman of the Company’s Board of Directors.
William Glass
Mr. Glass was appointed to the Board of Directors of the Company on August 5, 2010. From 2008 to present, Mr. Glass is presently employed by Gemini Energy. In additional, since 2004, Mr. Glass serves as a member of the Board of Directors and as a consultant to Platinum Energy Resources (Pinksheets: PGRI). From 2000 to 2003, Mr. Glass served as Vice President of Gas Operations and Manager of Natural Gas Trading for Mieco Inc. in Houston, Texas. From 1996 to 2000, Mr. Glass worked as an energy trader at the Atlanta, Georgia based Southern Company Energy Marketing. Mr. Glass also has a Bachelors of Business Administration in both Finance and Accounting from Texas A&M University.
Our directors are elected for a term of one year or until their successors are elected and qualified. There is no family relationship between any of our officers and directors.
Agreements with Officers and Directors
On April 23, 2010, the Company entered into an Employment Agreement (the “Dunckel Agreement”) with Darren Dunckel (“Dunckel”) whereby the Company will employ Dunckel as its Chief Executive Officer for a term of two years (the “Term”). For his services during the Term as Chief Executive Officer, the Company will pay Dunckel a salary of $120,000 to be paid on a monthly basis at a rate of $10,000 per month. Dunckel was also granted a signing bonus consisting of 4,000,000 shares of common stock of the Company upon signing the Dunckel Agreement. Additionally, if the Company generates net income of at least $1,000,000 during any fiscal year during the Term, the Company will pay Dunckel an annual bonus in the amount of $100,000. Dunckel will also receive dur ing the Term such medical, health and disability insurance as the Company provides to its executive officers, two weeks of vacation in each calendar year and eligibility to participate in such pension, profit-sharing, retirement and other benefits as are available to executive officers of the Company.
On July 29, 2010, Anita Atias and Stewart Reich were elected as members of the Board of Directors of the Company. On August 5, 2010, Mr. William Glass was elected as a member of the Board of Directors. Mrs. Atias, Mr. Reich and Mr. Glass will each receive on an annual basis at the commencement of each term shares of common stock of the Company registered on a Form S-8 Registration Statement equal to $6,000 divided by the Company’s market price discounted by 25%.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires executive officers and directors, and persons who beneficially own more than ten percent of the Company’s common stock, to file initial reports of ownership and reports of changes in ownership with the SEC for Companies registered under Section 12 of the Exchange Act (“Section 12”) . Since we are not registered under Section 12, the executive officers, directors and greater than ten percent beneficial owners were not required by SEC regulations to file forms under 16(a)
Code of Ethics
We have adopted a Code of Ethics that applies to all officers, directors and employees. The Company will provide to any person without charge a copy of such code of ethics upon written request to the Company at 1061 ½ N Spaulding Ave., West Hollywood, California 90046.
ITEM 11. EXECUTIVE COMPENSATION
The following tables set forth all compensation paid in respect of our Chief Executive Officer and our most highly compensated three executive officers (collectively, the "Named Executive Officers") for the year ended July 31, 2010 only as the Company did not pay any compensation during the year ended July 31, 2009.
Summary Compensation Table
| Name and Principle | | | | Salary | | | Bonus | | | Restricted Stock Awards | | | Option Awards | | | NonEquity Incentive Plan Compensation | | | Nonqualified Deferred Compensation Earnings | | | All Other Compensation | | | Total | |
| Position | | Years | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ( $) | | | ($) | | | ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Moshe J. Schnapp CFO | | 2010 | | | 28,150 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | 78,844 | | | | 40,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officer.
There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our sole officer and director other than as described herein.
Director Compensation
Pursuant to the employment agreement between the Company and Darren Dunckel, the Company will pay Mr. Dunckel a salary of $120,000 to be paid on a monthly basis at a rate of $10,000 per month. Mr. Dunckel was also granted a signing bonus consisting of 4,000,000 shares of common stock of the Company upon signing the agreement. Additionally, if the Company generates net income of at least $1,000,000 during any fiscal year during the Term, the Company will pay Mr. Dunckel an annual bonus in the amount of $100,000.
Pursuant to the respective employment agreements between the Company and each director, Mrs. Atais, Mr. Reich, and Mr. Glass will receive shares of common stock of the Company registered on a Form S-8 Registration Statement equal to $6,000 divided by the Company’s market price discounted by 25% on an annual basis at the commencement of each term.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth the beneficial ownership of our company's common stock as of September 1, 2010, as to
| | · | each person known to beneficially own more than 5% of the Company's common stock |
| | · | all directors and officers as a group |
Unless otherwise indicated, each of the stockholders can be reached at our principal executive offices located at 1061 ½ N Spaulding Ave., West Hollywood, California 90046.
| Name of Beneficial Owner | | Common Stock Beneficially Owned (1) | | Percentage of Common Stock (1) | |
| Moshe J. Schnapp (2) (3) (4) | | | 0 | | | -- | |
| Darren Dunckel (2) | | | 4,000,000 | | | 3.84% | |
| Anita Atias (2) | | | 0 | | | -- | |
| Stewart Reich (2) | | | 0 | | | -- | |
| William Glass (2) | | | 0 | | | -- | |
| Medirad, Inc. | | | 40,000,000 | (3) | | 38.4 | % |
| Rasel Ltd | | | 40,000,000 | (4) | | 38.4 | % |
| All officers and directors as a group (1 person) | | | 0 | | | -- | |
* less than 1%,
(1) Beneficial ownership is determined in accordance with the Rule 13d-3(d)(1) of the Exchange Act, as amended and generally includes voting or investment power with respect to securities. Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table.
(2) Officer and/or director of the Company.
(3) Sean Schnapp, the sole executive officer and director of Medirad, Inc., has voting and dispositive control over the shares held by Medirad, Inc. Sean Schnapp is the son of Moshe Schnapp, an executive officer and director.
(4) Tom Schnapp, the sole executive officer and director of Rasel Ltd, has voting and dispositive control over the shares held by Rasel Ltd. Tom Schnapp is the son of Moshe Schnapp, an executive officer and director
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
None.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
We have engaged Eugene M. Egeberg, CPA as our registered independent public accountant for the fiscal year ended July 31, 2010 and 2009.
Audit Fees. The aggregate fees billed by our auditors, for professional services rendered for the audit of our annual financial statements for the years ended July 31, 2010 and 2009 and for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q during these fiscal years were $3,350 for 2010 and $2,500 for 2009.
Tax Fees. We did not incurred fees to auditors for tax advice and tax compliance services during the fiscal years ended July 31, 2010 and 2009, respectively.
Other. None.
The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the principal accountant’s independence.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
| Exhibit No. | | Description |
| 4.1 | | Convertible Promissory Note issued by the Company to A.T. Limited dated July 8, 2010 (3) |
| 4.2 | | Secured and Collateralized Promissory Note issued by A.T. Limited to the Company dated July 8, 2010 (3) |
| 4.3 | | Collateral and Security Agreement by and between Forex International Trading Group and A.T. Limited dated July 7, 2010 (3) |
| 10.1 | | Software Licensing Agreement dated April 12, 2010, by and between Forex International Trading Corp and Triple 8 Limited (1) |
| 10.2 | | Employment Agreement dated April 23, 2010, by and between Forex International Trading Corp and Darren Dunckel (2) |
| 10.3 | | Letter Agreement by and between Forex International Trading Corp. and Anita Atias, dated July 29, 2010 (4) |
| 10.4 | | Letter Agreement by and between Forex International Trading Corp. and Stewart Reich, dated July 29, 2010 (4) |
| 10.5 | | Letter Agreement by and between Forex International Trading Corp. and Mr. William Glass, dated August 6, 2010 (5) |
| 31.1 | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
(1) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 20, 2010
(2) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on April 28, 2010
(3) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 13, 2010
(4) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 3, 2010
(5) Incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on August 9, 2010
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
| | FOREX INTERNATIONAL TRADING CORP. (Registrant) | |
| | | | |
| Date: September 7, 2010 | By: | /s/ Darren Dunckel | |
| | | Darren Dunckel | |
| | | Chief Executive Officer | |
| | | (Principal Executive Officer) | |
| | | | |
| | | | |
| | | | |
| Date: September 7, 2010 | By: | /s/ Mosche Schnapp | |
| | | Mosche Schnapp | |
| | | Chief Financial Officer | |
| | | (Principal Financial Accounting and | |
| | | Financial Officer) | |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| SIGNATURE | | NAME | | TITLE | | DATE |
| | | | | | | |
/s/ Moshe J. Schnapp | | Moshe J. Schnapp | | Director, Chief Financial Officer, President, Secretary, and Treasurer | | September 7, 2010 |
| | | | | | | |
| /s/William Glass | | William Glass | | Director | | September 7, 2010 |
| | | | | | | |
| /s/ Anita Atias | | Anita Atias | | Director | | September 7, 2010 |
| | | | | | | |
| /s/ Stewart Reich | | Stewart Reich | | Director | | September 7, 2010 |
| | | | | | | |
| | | | | | | |
| | | | | | | |
FOREX INTERNATIONAL TRADING CORP.
CONSOLIDATED AUDITED FINANCIAL STATEMENTS
For the Year Ended July 31, 2010
FOREX INTERNATIONAL TRADING CORP.
July 31, 2010
TABLE OF CONTENTS
| INDEPENDENT AUDITORS REPORT | F-2 |
| | |
| CONSOLIDATED AUDITED BALANCE SHEET | F-3 |
| | |
| CONSOLIDATED AUDITED STATEMENT OF OPERATIONS | F-4 |
| | |
| CONSOLIDATED AUDITED STATEMENT OF CASH FLOWS | F-6 |
| | |
| CONSOLIDATED AUDITED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY | F-5 |
| | |
NOTES TO CONSOLIDATED AUDITED FINANCIAL STATEMENTS | F-7 - F-17 |
EUGENE M EGEBERG
CERTIFIED PUBLIC ACCOUNTANT
2400 BOSTON STREET, SUITE 102
BALTIMORE, MARYLAND 21224
Telephone (410) 218-1711 Fax (410) 522-5889
To the Board of Directors and Stockholders
Forex International Trading Corp.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated balance sheet of Forex International Trading Corp., and its Wholly owned Subsidiary (collectively, the "Company") as of July 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the two years in the period ended January 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, such consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company. as of July 31, 2010 and 2009 and the results of its operations and its cash flows for each of the two years in the period ended July 31, 2010, in conformity with accounting principles generally accepted in the United States of America
Baltimore, Maryland, September 7, 2010
Eugene M Egeberg
Certified Public Accountant
FOREX INTERNATIONAL TRADING CORP.
CONSOLIDATED BALANCE SHEET
JULY 31, 2010
(LAST YEAR AUDITED RESTATED SEPTEMBER 7, 2010)
| ASSETS | | | | | | |
| | | | | | | |
| | | | | | | |
| | | July 31, 2010 | | | July 31, 2009 | |
| | | AUDITED | | | AUDITED | |
| Current Assets | | | | | | |
| Cash and cash equivalents | | $ | 85,893 | | | $ | 800 | |
| Secured Note and Debt Discount | | | 453,025 | | | | - | |
| Prepaid Expenses and Accounts Receivable | | | 4,207 | | | | 5,000 | |
| | | | | | | | | |
Total Current Assets | | | 543,125 | | | | 5,800 | |
| | | | | | | | | |
| Other Assets | | | | | | | | |
| Capitalization of Offering Costs | | | 50,625 | | | | 50,625 | |
| | | | | | | | | |
Total Other Assets | | | 50,625 | | | | 50,625 | |
| | | | | | | | | |
| Fixed Asset | | | | | | | | |
| Property and Equipment, Net | | | 55,124 | | | | - | |
| | | | | | | | | |
| Other Assets | | | 176,336 | | | | - | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 825,211 | | | $ | 56,425 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable and Accrued Liabilities | | $ | 154,412 | | | $ | 53,125 | |
| | | | | | | | | |
Total Current Liabilities | | | 154,412 | | | | 53,125 | |
| | | | | | | | | |
| Long term Liabilities | | | | | | | | |
| Convertible Note & Accrued Interest | | | 503,151 | | | | - | |
| Rasel - Affiliated Party - Notes & Accrued Interest | | | 128,452 | | | | - | |
| | | | | | | | | |
Total Long term Liabilities | | | 631,603 | | | | - | |
| | | | | | | | | |
| Commitments and Contingencies | | | - | | | | - | |
| | | | | | | | | |
| TOTAL LIABILITIES | | $ | 786,015 | | | $ | 53,125 | |
| | | | | | | | | |
| Stockholders' Equity: | | | | | | | | |
| Common Stock - $0.00001 par value - 400,000,000 | | | | | | | | |
| shares authorized, 104,120,000 issued and | | | | | | | | |
| outstanding as of 7/31/10 | | $ | 1,041 | | | $ | 800 | |
| | | | | | | | | |
| Additional Paid-In Capital | | $ | 240,959 | | | | - | |
| | | | | | | | | |
| Surplus (Deficit) | | | (202,804 | ) | | | 2,500 | |
| | | | | | | | | |
| TOTAL STOCKHOLDERS EQUITY | | $ | 39,196 | | | $ | 3,300 | |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | $ | 825,211 | | | $ | 56,425 | |
| | | | | | | | | |
| | | | | | |
The accompanying notes are an integral part of these financial statements.
FOREX INTERNATIONAL TRADING CORP.
CONSOLIDATED AUDITED STATEMENT OF INCOME AND EXPENSES
FOR THE YEARS ENDED JULY 31, 2010 AND JULY 31, 2009
(LAST YEAR AUDITED RESTATED SEPTEMBER 7, 2010)
| | | | | | | |
| | | | | | | |
| Consulting & Services | | Year Ended | | | Year Ended | |
| | | July 31, 2010 | | | July 31, 2009 | |
| | | AUDITED | | | AUDITED | |
| Revenue | | | | | | |
| Net gain from foreign currency future operations | | $ | 39,416 | | | $ | - | |
| Consulting & Services | | | 29,500 | | | | 5,000 | |
| Cost of Revenue | | | - | | | | - | |
| | | | | | | | | |
| Gross Profit | | | 68,916 | | | | 5,000 | |
| | | | | | | | | |
| Operating Expenses | | | | | | | | |
| Salaries | | | 100,094 | | | | - | |
| Rent & Office | | | 13,229 | | | | | |
| Professional Fees | | | 74,048 | | | | 2,500 | |
| Filing Fees | | | 25,456 | | | | | |
| Depreciation & Amortization | | | 6,178 | | | | | |
| Travel | | | 13,745 | | | | | |
| Other Expenses | | | 3,563 | | | | | |
| Total Operating Expenses | | $ | 236,313 | | | $ | 2,500 | |
| | | | | | | | | |
| Net Profit (Loss) from Operations | | | (167,397 | ) | | | 2,500 | |
| | | | | | | | | |
| Financing Expenses | | | | | | | | |
| Interest Income | | | 3,025 | | | | - | |
| Finance Charges | | | (40,932 | ) | | | - | |
| Total Financing Expenses | | $ | (37,907 | ) | | $ | - | |
| | | | | | | | | |
| Net Profit (Loss) before Taxes | | $ | (205,304 | ) | | $ | 2,500 | |
| | | | | | | | | |
| Income Taxes | | | - | | | | - | |
| | | | | | | | | |
| Net Profit (Loss) after Taxes | | $ | (205,304 | ) | | $ | 2,500 | |
| | | | | | | | | |
| Weighted average number of common shares outstanding | | | | | | | | |
| Basic | | | 104,120,000 | | | | 80,000,000 | |
| Diluted | | | 106,620,000 | | | | 80,000,000 | |
| | | | | | | | | |
| Net Loss per share - basic | | $ | 0.0019718 | | | $ | 0.0000313 | |
| Net Loss per share - fully diluted | | $ | 0.0019256 | | | $ | 0.0000313 | |
| | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
FOREX INTERNATIONAL TRADING CORP.
CONSOLIDATED AUDITED CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JULY 31, 2010 AND ON JULY 31, 2009
(LAST YEAR AUDITED RESTATED SEPTEMBER 7, 2010)
| | | | | | | | | | | | | | | | |
| | | | | | Common | | | Additional | | | Retained | | | | |
| | | Shares | | | Stock | | | Paid In Capital | | | Earning (Deficit) | | | Total | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Balance at July 22, 2009 | | | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Stock Issued | | | 80,000,000 | | | | 800 | | | | - | | | | - | | | | 800 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Profit | | | - | | | | - | | | | - | | | | 2,500 | | | | 2,500 | |
| Balance at July 31, 2009 - Audited | | $ | 80,000,000 | | | $ | 800 | | | $ | - | | | $ | 2,500 | | | $ | 3,300 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Loss | | | | | | | | | | | | | | | (205,304 | ) | | | (205,304 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Shares Issuing | | | 20,000,000 | | | | 200 | | | | 199,800 | | | | | | | | 200,000 | |
| Restricted Shares Issuing | | | 4,120,000 | | | | 41 | | | | 41,159 | | | | | | | | 41,200 | |
| Balance at July 31, 2010 - Audited | | $ | 104,120,000 | | | $ | 1,041 | | | $ | 240,959 | | | $ | (202,804 | ) | | $ | 39,196 | |
| | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
FOREX INTERNATIONAL TRADING CORP.
CONSOLIDATED AUDITED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 2010 AND ON JULY 31, 2009
(LAST YEAR AUDITED RESTATED SEPTEMBER 7, 2010)
| | | | | | | |
| | | Year Ended | | | Year Ended | |
| | | July 31, 2010 | | | July 31, 2009 | |
| | | AUDITED | | | AUDITED | |
| Cash Flows From Operating Activities | | | | | | |
| Net Profit (loss) | | $ | (205,304 | ) | | $ | 2,500 | |
| | | | | | | | | |
| Adjustments to reconcile net income (loss) to | | | | | | | | |
| net cash (used) provided by operating activities: | | | | | | | | |
| | | | | | | | | |
| Depreciation & Amortization | | | 6,178 | | | | - | |
| Decrease (Increase) in Accounts Receivable | | | 793 | | | | (5,000 | ) |
| Increase in Accounts Payable and Accrued Expenses | | | 101,287 | | | | 53,125 | |
| | | | | | | | | |
| Net cash (used) by operating activities | | | (97,046 | ) | | | 50,625 | |
| | | | | | | | | |
| Cash Flows from Investing Activities | | | | | | | | |
| Purchase of fixed assets | | | (17,420 | ) | | | | |
| Leasehold improvements | | | (40,732 | ) | | | - | |
| | | | | | | | | |
| Net cash invested in investing activities | | | (58,152 | ) | | | - | |
| | | | | | | | | |
| Cash Flows From Financing Activities | | | | | | | | |
| Issuance of Common Stock | | | 241,200 | | | | 800 | |
| Increase in Capitalized Costs Related to Issuance of Stock | | | - | | | | (50,625 | ) |
| Issuance of Notes to Affiliated Party | | | 128,452 | | | | - | |
| Issuance of Convertible Notes to Third Party | | | 503,151 | | | | | |
| Investment in Secured Note | | | (403,025 | ) | | | | |
| Investment in Debt Discount | | | (100,000 | ) | | | | |
| Investment in Ghana Project | | | (24,128 | ) | | | | |
| Investment in Licensing and Websites | | | (105,359 | ) | | | | |
| | | | | | | | | |
| Net cash from financing activities | | | 240,291 | | | | (49,825 | ) |
| | | | | | | | | |
| Net Increase in cash and cash equivalents | | | 85,093 | | | | 800 | |
| | | | | | | | | |
| Cash and cash equivalents, Beginning of Period | | | 800 | | | | - | |
| | | | | | | | | |
| Cash and cash equivalents, End of Period | | $ | 85,893 | | | $ | 800 | |
| | | | | | | | | |
| | | | | | | | | |
| Non-cash transactions - Accrued interest on notes receivable | | $ | 3,025 | | | $ | - | |
| Non-cash transactions - Accrued interest on notes payable | | $ | 6,603 | | | | | |
| Non-cash transactions - Issuing of Convertible Note | | $ | 500,000 | | | $ | - | |
| Non-cash transactions - Receiving of Secured Note | | $ | 400,000 | | | | | |
| Non-cash transactions - Issuing of Restricted Shares | | $ | 41,200 | | | $ | - | |
| | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
FOREX INTERNATIONAL TRADING CORP.
JULY 31, 2010
NOTES TO CONSOLIDATED AUDITED
FINANCIAL STATEMENTS
NOTE 1
History and Organization of the Company
Forex International Trading Corp. and its fully owned subsidiary (“FXIT”, or “The Company”), a Nevada corporation, is principally engaged in offering foreign currency market trading to professionals and retail clients over its web-based trading system. On March 24, 2010 the Company incorporate fully owned subsidiary in the State of Israel under the name: FOREX INTERNATIONAL TRADING CORP M.S. LTD – Company number 514424985 (“Forex Sub”). To date Forex Sub did not commence any operations other than accept into its bank account proceeds from investors as the Company agent or long arm.
Shares in FXIT listed for trading on the Over the Counter Bulletin Board listings. (OTCBB: FXIT). The Company’s headquarters and operational offices are located in West Hollywood, California.
The Company was incorporated on July 22, 2009 (Date of Inception) as a development stage company under the laws of the State of Nevada as “Forex International Trading Corp.” and is licensed to engage in any lawful activity. On April 19, 2010, the Company entered into a Software Licensing Agreement with Triple 8 Limited (“Triple 8”) which was dated April 12, 2010 whereby the Company licensed Triple 8’s proprietary trading software (the “Software”) for the purpose of developing a Forex Trading Platform and introducing prospective clients (“End Users”). Triple 8 created a website for the Company under the domain www.4xint.com which is blocked for US clients. The Company maintains a corporate website under the domain www.forex-international-trading.com
NOTE 2
Summary of Significant Accounting Policies
Basis of consolidation
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary and all variable interest entities for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated upon consolidation. Control is determined based on ownership rights or, when applicable, whether the Company is considered the primary beneficiary of a variable interest entity
Marketable securities
The Company determines the appropriate classification of all marketable securities as held-to-maturity, available-for-sale or trading at the time of purchase, and re-evaluates such classification as of each balance sheet date. The Company assesses whether temporary or other-than-temporary gains or losses on its marketable securities have occurred due to increases or declines in fair value or other market conditions. The Company had marketable securities within continuing operations during the year, which have been sold in the market.
Cash and Cash Equivalents
The Company maintains a cash balance in a non-interest bearing account that currently does not exceed federally insured limits. For purposes of financial statement presentation, the Company considers all highly liquid instruments with a maturity of three months or less to be cash.
Revenue Recognition
The Company uses the accrual basis of accounting for all transactions. The Company recognized revenue and gains when earned and related costs of sales and expenses when incurred.
Fixed and other Assets
Fixed assets are stated at cost, less accumulated depreciation. Office furniture and equipment are depreciated using the straight-line method over seven years. Computer equipment and software are depreciated using the straight-line method over three years. Leasehold improvements are amortized on a straight-line basis over the lesser of the useful life or the life of the lease (three years).
Costs of software acquired along with payroll costs and consulting fees relating to the development of internal use software, including that used to provide internet solutions, are capitalized. Once the software is placed in service, the costs are amortized over the estimated useful life.
Costs of Debt Discount are amortized over the life of the note that was discounted – two years.
Variable Interest Entities
The Company is required to consolidate variable interest entities (“VIE's”), where it is the entity’s primary beneficiary. VIE's are entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The primary beneficiary is the party that has exposure to a majority of the expected losses and/or expected residual returns of the VIE. For the year ended July 31, 2010, the balance sheets and results of operations of FOREX INTERNATIONAL TRADING CORP M.S. LTD, our wholly owned subsidiary, which is not active in operation and serving as our agent or long arm, is consolidated into these financial statements.
Loss per Share
Net loss per share is provided in accordance with ASC Codification Topic 260 Section S99-1 and Statement of Financial Accounting Standards No. 128 (SFAS #128) “Earnings Per Share”. Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. The Company had no dilutive common stock equivalents, such as stock options or warrants as of July 31, 2010 and as of July 31, 2009.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Foreign currency translation
The Company considers the United States Dollar (“US Dollar” or "$") to be the functional currency of the Company and its subsidiary. The reporting currency of the Company is the US Dollar and accordingly, all amounts included in the consolidated financial statements have been presented or translated into US Dollars. For non-US subsidiary that do not utilize the US Dollar as its functional currency, assets and liabilities are translated to US Dollars at period-end exchange rates, and income and expense items are translated at weighted-average rates of exchange prevailing during the period. Translation adjustments are recorded in “Accumulated other comprehensive income” within stockholders’ equity. Foreign currency transaction gains and losses are included in the consolidated results of operations for the periods presented.
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of July 31, 2010. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values are assumed to approximate carrying values for cash and payables because they are short-term in nature and their carrying amounts approximated fair values or they are payable on demand.
Segment reporting
The Company follows Statement of ASC Codification Topic 220 and Statement of Financial Accounting Standards No. 130, “Disclosures About Segments of an Enterprise and Related Information”. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
Dividends
The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception.
Recent pronouncements
In May 2008, FAS No. 163, “Accounting for Financial Guarantee Insurance Contracts”, and SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”, were issued. In March 2008, FAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133 was issued.
The Financial Accounting Standards Board (FASB) issued Statement No. 168 – become effective on July 1, 2009 – The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles which makes the Accounting Standards Codification (ASC) the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities for interim and annual periods ending after September 15, 2009. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The adoption of ASC Topic 105 did not have a material impact on the Company’s financial position, cash flows or result of operations. Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a m aterial effect on the Company’s operations or financial position.
Stock-Based Compensation
The Company accounts for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations and has adopted the disclosure only alternative of ASC Codification Topic 220 and SFAS No. 123, “Accounting for Stock-Based Compensation”. Options granted to consultants, independent representatives and other non-employees are accounted for using the fair value method as prescribed by ASC Codification Topic 220 and SFAS No. 123.
Year End
The Company has elected to operate on a Fiscal Accounting Year and Fiscal Tax Year ending on July 31st.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The future of the Company is dependent upon its ability to generate revenues and upon future profitable operations from the development of its new business opportunities. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
NOTE 3
Short Term Secured Note & Accrued Interest
On July 8, 2010, the Company issued a Convertible Promissory Note to A.T. Limited (“ATL”) in aggregate principal amounts of $500,000 (the “Forex Note”). In consideration for the Company issuing the ATL Note, ATL issued the Company a Secured and Collateralized Promissory Note in the principle amount of $400,000 (the “ATL Note”). Concurrent with the conversion of the Forex Note, ATL must make a payment to the Company reducing a pro rata amount owed to the Company under the ATL Note. The ATL Note bears interest at the rate of 12% per annum and matures one year from the date of issuance. No interest or principal payments are required until the maturity date, but both principal and interest may be prepaid prior to maturity date and ATL is required to pay down an amount equal to any amounts converted under the Forex Note. The ATL Note is secured by shares of common stock of a publicly listed company on the Tel Aviv and London Stock Exchanges with an approximate market value of $400,000 (the “ATL Collateral”). In the event that ATL defaults on the ATL Note, the Company may take possession of the ATL Collateral and, in the event that the ATL Collateral is insufficient to pay the full debt owed under the ATL Note, the Company may pursue further remedies against ATL.
Per the issuing and receiving the notes, the Company recognizes a debt discount for the difference in the face value of the notes - $100,000. Said Note Discount will be amortized over the life of the Company note – two years. The current portion of Note Discount was presented as current assets, while the remaining long term balance was presented as other asset.
NOTE 4
Property and Equipment, Net
Consist as the following, as of July 31, 2010 (Audited):
| Description | | Useful Life | | | Cost | | | Depreciation | | | Net | |
| | | (years) | | | $ | | | | Amortization | | | $ | | |
| Computers and Equipment | | | 3 | | | | 11,025 | | | | 613 | | | | 10,413 | |
| Furniture | | | 7 | | | | 6,395 | | | | 152 | | | | 6,243 | |
| Leasehold Improvements | | | 3 | | | | 40,732 | | | | 2,263 | | | | 38,469 | |
| Total | | | | | | | 58,152 | | | | 3,028 | | | | 55,124 | |
NOTE 5
Other Assets:
Gold Project JV
The Company entered into a joint venture with a third party: EA Emerging Ventures Corp (“EA”) to obtain exploring and exporting gold license from the Republic of Ghana. The Company will utilize its contact, know-how and expertise, trying to obtain JV the desire licensing. Per the agreement with EA, the Company will not be the beneficial owner of the Ghana subsidiary, and/or will not participate in the actual exploring costs. The Company role is designated to administrative and obtaining the license, and in return will be the sole distributer of potential gold designated for export and sales. Costs associated with the JV project acquired along with payroll costs and consulting fees relating to the development of the EA JV, including that used to provide minimal equipment solutions, are capitalized. Once the EA J V is placed in service, the costs will be amortized over the estimated useful life.
Debt Discount on Convertible Note, Net
As disclosed on footnote 3, per the issuing and receiving the ATL Note, the Company recognizes a debt discount for the difference in the face value of the notes - $100,000. Said Note Discount will be amortized over the life of the Company note – two years. The current portion of Note Discount was presented as current assets, while the remaining long term balance was presented as other asset.
White Label License & Websites, Net
On April 19, 2010, the Company entered into a Software Licensing Agreement with Triple 8 Limited (“Triple 8”) which was dated April 12, 2010 whereby the Company will license Triple 8’s proprietary trading software (the “Software”) for the purpose of developing a Forex Trading Platform and introducing prospective clients (“End Users”). Triple 8 created a website for the Company, which was funded by the Company at a cost of $50,000 (the “Setup Fee”). Upon the Company and Triple 8 generating $100,000 in revenue under the agreement, the Company will be reimbursed 50% of the Setup Fee ($25,000). The Company will receive 30% of the net profit generated from End Users, which will be increased to 50% in the event that the monthly volume generated by the Co mpany is in excess of $250 million. Said agreement with Triple 8 is considered by the Company as a mid-term-solution and in order to examine the system closely, the Company evaluate the platforms capabilities and flexibility to create a custom trading platform for the Company’s FUTURE clients. While the Company is developing its own custom software platform, it began operating said affiliate program with Triple 8 Limited’s existing trading platform. The custom platform will be designed to help clients evaluate risk not only on a per trade basis, but also from a portfolio perspective. The Company will then add additional features to their platform such as: (i) Easy deposit and withdrawal or funds transfers between existing banking/investment accounts; (ii) Total portfolio integration of client’s currency accounts with other investment accounts; and (iii) Detailed real time calculations of profits and losses, among others. As disclosed before, costs of software acquired along with payroll costs and consulting fees relating to the development of internal use software, including that used to provide internet solutions, are capitalized. Once the software is placed in service, the costs are amortized over the estimated useful life. As the Company treating said agreement as a midterm evaluation tool, no amortization was recorded on said costs.
Total Other Assets as presented in the Balance Sheet, consist as the following, as of July 31, 2010 (Audited):
| Description | | 31-Jul-10 | |
| | | Audited | |
| | | $ | | |
| Ghana Gold Project JV | | | 24,128 | |
| Debt Discount on Convertible Note, Net | | | 46,849 | |
| White Label License & Websites | | | 105,359 | |
| Total | | | 176,336 | |
NOTE 6
Accounts Payable
As of July 31, 2010 the Company owes $10,584 to Triple 8 Limited, in connection
with Software Licensing Agreement and the amount of $143,828 to other trades, including $4,881 to the Company Chairman and $115,924 to Glendon Advisors -controlled by a third party, which partner with the Company’s chairman on other un-related businesses.
NOTE 7
Income taxes
Deferred income tax assets and liabilities are computed annually for the differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable on the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
Since inception to July 31, 2010, there was no Income Tax Expense.
The provisions for income taxes differ from the amount computed by applying the statutory federal income tax rate to Income before provision for income taxes. The source and tax effects of the differences are as follows:
| U.S. federal statutory rate | | | 34.00 | % |
| Valuation reserve | | | 34.00 | % |
| Total | | | 0.00 | % |
As of July 31, 2010, the Company has a net operating loss carry forward of approximately $202,000 for tax purposes, which will be available to offset future taxable income. This carryforward will expire in various years through 2014.
The Company accounts for the income taxes under ASC Codification Topic 740 and SFAS No. 109, “Accounting for Income Taxes”, which requires the use of the liability method. SFAS No. 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the current enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.
NOTE 8
Straight and Convertible Notes:
Rasel - Affiliated Party – Straight Notes & Accrued Interest
On October 6, 2009 the Company signed a Note Payable for $25,000 payable to RASEL, LTD (a Company Shareholder) due on October 6, 2010 at 4% annum. The proceeds were used to pay for half of an existing Accounts Payable to Stephen Fleming for legal fees incurred at the Company’s inception.
On October 20, 2009 the Company signed a Note Payable for $50,000 payable to RASEL, LTD (a Company Shareholder) due on October 20, 2010 at 4% annum. These proceeds were used to pay for startup costs, audit fees and future expenses.
On January 22, 2010 the Company signed a Note Payable for $50,000 payable to RASEL, LTD (a Company Shareholder) due on October 30, 2011 at 4% annum. These proceeds will be used for working capital and future expenses.
On January 22, 2010 the Company signed an amendment to extend the maturity date of the Promissory Notes in the amount of $50,000 and $25,000 dated October 6, 2009 and October 20, 2009, respectively, to October 30, 2011.
The accrued balance of the notes including interest as of July 31, 2010 is $128,452.
AT Limited – Convertible Note & Accrued Interest
On July 8, 2010, the Company issued a Convertible Promissory Note to A.T. Limited (“ATL”) in aggregate principal amounts of $500,000 (the “Forex Note”). In consideration for the Company issuing the ATL Note, ATL issued the Company a Secured and Collateralized Promissory Note in the principle amount of $400,000 (the “ATL Note”).
The Forex Note bears interest at 10%, matures two years from the date of issuance and is convertible into our common stock, at ATL’s option, at a conversion price of $0.20 subject to adjustment. On the 21st trading day following each conversion, the number of shares of common stock issuable to ATL pursuant to the Forex Note shall be adjusted such that the aggregate number of shares of common stock issuable to ATL is equal to the amount converted divided by 75% of the average of the three lowest closing bid prices during the 20 trading days following delivery of the shares of common stock upon the initial conversion. Concurrent with the conversion of the Forex Note, ATL must make a payment to the Company reducing a pro rata amount owed to the Company under the ATL Note. As of July 12, 2 010, the Company is received a trading symbol (FXIT) but has not commenced trading. Based on fixed conversion price of $0.20, the Forex Note in the aggregate amount of $500,000, excluding interest, is convertible into 2,500,000 shares of our common stock.
ATL has agreed to restrict their ability to convert the Forex Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.
The ATL Note bears interest at the rate of 12% per annum and matures one year from the date of issuance. No interest or principal payments are required until the maturity date, but both principal and interest may be prepaid prior to maturity date and ATL is required to pay down an amount equal to any amounts converted under the Forex Note. The ATL Note is secured by shares of common stock of a publicly listed company on the Tel Aviv and London Stock Exchanges with an approximate market value of $400,000 (the “ATL Collateral”). In the event that ATL defaults on the ATL Note, the Company may take possession of the ATL Collateral and, in the event that the ATL Collateral is insufficient to pay the full debt owed under the ATL Note, the Company may pursue further remedies against A TL.
The Forex Note was offered and sold to ATL in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated thereunder. ATL is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.
The accrued balance of the note including interest as of July 31, 2010 is $503,151.
NOTE 9
Stockholders’ Equity
The Company was authorized to issue 400,000,000 shares of its $0.00001 par value common stock and 20,000,000 shares of its $0.00001 par value preferred stock as of July 31, 2010.
On July 22, 2009 the Company issued 40,000,000 shares of its $0.00001 par value common stock to Meridad Inc. and 40,000,000 shares of its $0.00001 par value common stock to Rasel Ltd. Shares were issued at par with no Additional Paid In Capital for a total of $800.
On March 26, 2010 the Company entered into agreement with Island Capital Management, LLC for the purpose of obtaining DTC Corporate Eligibility. The Company paid as a fee $2,000 in cash and 120,000 shares of restricted stock for the purpose of obtaining DTC Eligibility, performing director, officer and control shareholder Background Reviews and Consultation Services with respect to transfer services, including obtaining CUSIP number(s), documentation formatting and third-party professional consultation services.
On April 23, 2010, the Company entered into an Employment Agreement (the “Agreement”) with Darren Dunckel (“Executive”) whereby the Company will employ Executive as its Chief Executive Officer for a term of two years (the “Term”). As part of his employment agreement, executive was also granted a signing bonus consisting of 4,000,000 shares of common stock of the Company upon signing the Agreement.
Per Notice of Effectiveness received on March 4, 2010, the Company made on April and May 2010 an offering. The offering closed on May 4, 2010. The Company sold 20,000,000 shares of common stock for $0.01 per share for an aggregate raise of $200,000.
NOTE 10
Financial Statement RESTATEMENT
On September 7, 2010, the Company restated previously issued audited financial statements to capitalized prior legal expenses that were initially booked as expenses, were changed to capitalize the expense in the month(s) incurred. Regarding Statement of Cash Flows, these startup costs were re-classified to conform to the decision to capitalize rather than to expenses.
NOTE 11
Commitments and Contingencies
S-1 Registration Statement
The Company S-1 registration statement that was filled with the Security and Exchange Commission on Sep 9, 2009 received Notice of Effectiveness on March 4, 2010. During April 2010 Moshe Schnapp, an executive officer and director for the Company, was the only party that solicited the investors. A total of 42 investors were solicited, all of which invested in the Company.
Form 15C211and DTC eligibility
On March 22, 2010 the Company entered into agreement with Spartan Securities Group, Ltd for sponsoring the Company form 15C211. The broker dealer and or any of its affiliates were not compensated as part of said agreement.
On June 22, 2010 the Company filled with Broker Dealer an application to be filed with The Depository Trust Company (TDC) which request form for issued being made eligible in the secondary market. To date the Company issues were not declared DTC eligible. The Company pulled said application and instructed the Broker Dealer not to file it with TDC.
Wholly Owned Subsidiary
On March 24, 2010 the Company incorporate fully owned subsidiary in the State of Israel under the name: FOREX INTERNATIONAL TRADING CORP M.S. LTD – Company number 514-424-985 (“Forex Sub”). To date Forex Sub did not commence any operations other than accept into its bank account proceeds from investors as the Company agent or long arm.
Employment Agreement
On April 23, 2010, the Company entered into an Employment Agreement (the “Agreement”) with Darren Dunckel (“Executive”) whereby the Company will employ Executive as its Chief Executive Officer for a term of two years (the “Term”). Executive does not have any family relationship with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer In addition, Executive has been appointed as a member of the Board of Directors of the Company. For his services during the Term as Chief Executive Officer, the Company will pay Executive a salary of $120,000 to be paid on a monthly basis at a rate of $10,000 per month. Executive will also be granted a signing bonus consisting of 4,000,000 shares of common stock of the C ompany upon signing the Agreement. Additionally, if the Company generates net income of at least $1,000,000 during any fiscal year during the Term, the Company will pay the Executive an annual bonus in the amount of $100,000. Executive will also receive during the Term such medical, health and disability insurance as the Company provides to its executive officers, two weeks of vacation in each calendar year and eligibility to participate in such pension, profit-sharing, retirement and other benefits as are available to executive officers of the Company.
Websites
The Company has two websites as disclosed in these financials. Both websites are currently under evaluation and further construction, as such modifications may apply. The Company has blocked the ability of potential subscribers in the United States & Canada from engaging in any transactions. This restriction may be lifted once Mr. Dunckel has obtained the required license
Lease Agreement
The Company’s headquarter and operation office (from June 1, 2009) is located at 1061 ½ N Spaulding Ave, West Hollywood, CA 90046, paying $2,500 per month (lease term ends May 30, 2013). Future minimum payments of obligations under the operating lease at July 31, 2010 are as follows: Until July 2011 - $30,000, Until July 2012 - $30,000, Until May 2013 - $25,000.
LOI – Forex NYC
On July 1, 2010, the Company entered into a Letter of Intent (the “LOI”) with Forex New York City LLC (“Forex NYC”) pursuant to which Forex NYC agreed to sell and the Company agreed to purchase a 10% interest in Forex NYC in consideration of a convertible debenture in the amount of $200,000 (the “Debenture”). The Debenture will mature on the six month anniversary of the issuance, carry 5% interest and is convertible into shares of common stock of the Company at a 25% discount to the market price. In lieu of issuing the Debenture, the Company may pay $200,000 in cash at closing. The Company will also acquire an option to acquire an additional 15% of Forex NYC. The purchase price for such option shall be based on a valuation of the greater of $2,000,000 or three times revenue. The option shall be exercisable commencing on the 30th month following the closing of the initial acquisition and shall expire on the 48th month following the closing of the initial acquisition. Except for various miscellaneous provisions, this LOI is non-binding. The LOI calls for the completion of definitive documentation and completion of due diligence prior to September 1, 2010. Final closing is subject to approval of the final definitive agreements by the Boards of Directors of the Company and Forex NYC. Forex NYC is also required to raise a minimum of $40,000 prior to close. There is no guarantee that the parties will reach a final agreement, that the Company will be able to raise the required funds to close the transaction or that the transaction will close on the terms set forth as agreed in the LOI.
Electing New Additional Board Members
On July 29, 2010, Anita Atias and Stewart Reich were elected as members of the Board of Directors of the Company. There is no understanding or arrangement between Mrs. Atias and Mr. Reich and any other person pursuant to which they were appointed as directors. Mrs. Atias and Mr. Reich do not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or an executive officer. Mrs. Atias and Mr. Reich have not had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant exceeding $120,000. Mrs. Atias and Mr. Reich will each receive on an annual basis at the commencement of each term shares of common stock of the Company registered on a Form S-8 Registration Statement equal to $6,000 divided by the Company’s market price discounted by 25%.
Legal Proceedings
From time to time, we may be a party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not involved currently in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations.
NOTE 12
Related Parties Transactions
The company borrowed the sum of $125,000 from RASEL, LTD (a Company Shareholder) as described in footnote 8.
Our offering closed on May 4, 2010. The Company sold 20,000,000 shares of common stock for $0.01 per share for an aggregate raise of $200,000. Moshe Schnapp, an executive officer and director for the Company, was the only party that solicited the investors. A total of 42 investors were solicited, all of which invested in the Company. No other potential investors were solicited.
Mr. Moshe Schnapp is serving as executive chairman of the Company without employment agreement. Since inception, Mr. Schnapp funded the working capital needs of the Company directly or via utilizes his business contact, such as un-related party to the Company: Glendon Advisors (though related to Mr. Schnapp), provided funding to the Company. As of July 31, 2010 Mr. schnapp credit balance amount to $4,881, and Glendon Advisors credit balance amount to $115,924. Nor Mr. Schnapp neither Glendon Advisors charge the Company with interest for said funding. There is no guarantee that additional funding to the Company will be available from Mr. Schnapp or Glendon Advisors.
During the year, Mr. Schnapp charged the Company for $28,150 as management fees.
NOTE 13
Subsequent Events
During June 2010, the Company identified a Forex operator in a non-regulated environment ("Target X"). The Company is presently in discussions with Target X to acquire 100% of the issued and outstanding securities of Target X in consideration of 80,000,000 shares of common stock. The Company approached Target X as a whole parallel to approaching various individual shareholders of Target X. As of filling of this report, several shareholders of Target X (the “Shareholders”) have expressed their willingness to sell their interest (approximately 45%) to the Company in accordance with the terms of the Company’s offer. The Company requested that the Shareholders deposit their interest in Target X with the Company’s attorney with irrevocable instructions to close the transaction automatically no later than December 31, 2010 regardless of the Company’s efforts to acquire an additional interest in Target X.
The closing shall be subject to Medirad Inc. and Rasel Ltd. (the "Majority Stockholders") entering into an agreement whereby the Majority Stockholders will return their exiting 80,000,000 shares of common stock to the Company for cancellation and convert $125,000 in notes payable (the "Notes") into shares of preferred stock. In connection with the conversion of the Notes, the Company shall issue the Majority Stockholders shares of preferred stock with a stated value of USD $125,000, which shall be convertible into shares of common stock at a 25% discount to the market price. The market price will be equal to the volume-weighted average price for the twenty trading days immediately preceding the actual issuance date. Further, the Majority Stockholders will commit to purchase up to $2,000,000 in Perpetual Redeemab le Cumulative 10% Preferred Stock in accordance with term to be agreeable. There is no guarantee that the Company will close all or part of the above transactions, if at all.
On August 5, 2010, Mr. William Glass was elected as member of the Board of Directors of the Company, which such appointment was accepted by Mr. Glass on August 9, 2010. There is no understanding or arrangement between Mr. Glass and any other person pursuant to which he was appointed as director. Mr. Glass does not have any family relationship with any director, executive officer or person nominated or chosen by us to become a director or an executive officer. Mr. Glass has not had direct or indirect material interest in any transaction or proposed transaction, in which the Company was or is a proposed participant exceeding $120,000. Mr. Glass will receive, on an annual basis at the commencement of each term, shares of common stock of the Company registered on a Form S-8 Registration Statemen t equal to $6,000 divided by the Company’s market price discounted by 25%.
On August 9, 2010 the Company obtained from Monitor Liability Managers, LLC a one year Binder for Directors, Officers and Corporate Liability Insurance. The aggregate limit of liability is $1,000,000 with $250,000 Shareholder Derivative Investigation Costs of Defense.
F-17
