Filed pursuant to Rule 424(b)(3)
Registration No. 333-156418
PROSPECTUS
TRADEON, INC.
2,794,880 SHARES OF COMMON STOCK
OFFERING PRICE $0.04 PER SHARE
The selling stockholders named in this prospectus are offering for resale
2,794,880 shares of our common stock at an offering price of $0.04 per share of
common stock until our shares are quoted on the Over-the-Counter Bulletin Board,
and thereafter at prevailing market prices or privately negotiated prices. We
will pay all expenses incurred in this offering (other than transfer taxes), and
the selling stockholders will receive all of the net proceeds from this
offering.
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 5 BEFORE INVESTING
IN OUR COMMON STOCK.
There is currently no public market for our common stock and we have not applied
for listing or quotation on any public market. We intend to seek a market maker
to file an application with the Financial Industry Regulatory Authority to have
our common stock quoted on the Over-the-Counter Bulletin Board. We do not
currently have a market maker who is willing to list quotations for our common
stock, and there can be 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.
No underwriter or other person has been engaged to facilitate the sale of shares
of common stock in this offering. You should rely only on the information
contained in this prospectus and the information we have referred you to. We
have not authorized any person to provide you with any information about this
offering, TradeOn, Inc. or the shares of our common stock offered hereby that is
different from the information included in this prospectus. If anyone provides
you with different information, you should not rely on it.
The date of this prospectus is January 5, 2009
TABLE OF CONTENTS
THE FOLLOWING TABLE OF CONTENTS HAS BEEN DESIGNED TO HELP YOU FIND INFORMATION
CONTAINED IN THIS PROSPECTUS. WE ENCOURAGE YOU TO READ THE ENTIRE PROSPECTUS.
Page
----
PROSPECTUS SUMMARY.......................................................... 1
RISK FACTORS................................................................ 5
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS................... 12
TAX CONSIDERATIONS.......................................................... 12
USE OF PROCEEDS............................................................. 12
DETERMINATION OF THE OFFERING PRICE......................................... 12
MARKET FOR OUR COMMON STOCK................................................. 13
DIVIDEND POLICY............................................................. 13
DILUTION.................................................................... 13
SELLING STOCKHOLDERS........................................................ 14
PLAN OF DISTRIBUTION........................................................ 16
DESCRIPTION OF SECURITIES................................................... 18
SHARES ELIGIBLE FOR FUTURE SALE............................................. 20
EXPERTS..................................................................... 21
LEGAL REPRESENTATION........................................................ 21
OUR BUSINESS................................................................ 21
LEGAL MATTERS............................................................... 26
MANAGEMENT.................................................................. 27
EXECUTIVE COMPENSATION...................................................... 29
COMPENSATION OF DIRECTORS................................................... 29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................. 30
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............. 30
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION........................ 31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION....................................................... 32
WHERE YOU CAN GET MORE INFORMATION.......................................... 37
FINANCIAL STATEMENTS........................................................ 38
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PROSPECTUS SUMMARY
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 5. ALL REFERENCES TO "WE," "US," "OUR,"
"TRADEON," "COMPANY" OR SIMILAR TERMS USED IN THIS PROSPECTUS REFER TO TRADEON,
INC. UNLESS OTHERWISE INDICATED, THE TERM "FISCAL YEAR" REFERS TO OUR FISCAL
YEAR ENDING OCTOBER 31. UNLESS OTHERWISE INDICATED, THE TERM "COMMON STOCK"
REFERS TO SHARES OF THE COMPANY'S COMMON STOCK.
CORPORATE BACKGROUND AND BUSINESS OVERVIEW
We were incorporated in the state of Nevada on December 7, 2007. Our offices are
currently located at 30 Eliahu Miferrera St. Tel Aviv 69865 Israel. Our
telephone number is +1 (866) 261-2522.
We are a development stage company that has no revenue and has had limited
operations to date. From December 7, 2007 (inception) to October 31, 2008, we
have incurred accumulated net losses of $6,944. Based on our financial history
since inception, our independent auditor has expressed doubt as to our ability
to continue as a going concern.
Subsequent to our incorporation, we have been in the process of establishing
ourselves as a company that will focus its operations on developing and
commercializing an internet based, mobile price comparison service for use by
the general public. We have named our system TradeOnSMS. It is planned to accept
text messages from mobile phones containing search keywords, once received the
TradeOnSMS system will search the internet for the lowest price and send a text
message back to the mobile phone with that info.
We plan on earning revenues through customer subscription based fees to our
TradeOnSMS service. At this stage in our development, there can be no assurance
that we will be successful in generating revenues from our subscription based
online system or that prospective users seeking price comparison via mobile
phone will be receptive to using our service.
Since incorporation, we have not made any significant purchases or sale of
assets, nor have we been involved in any mergers, acquisitions or
consolidations. TradeOn has never declared bankruptcy, has never been in
receivership, and has never been involved in any legal action or proceedings.
Our goals over the next 12 months are to:
* complete development of our TradeOnSMS system by October 2009;
* drive traffic to our website through marketing efforts, where
customers will be able to subscribe to our service;
* generate revenue by January of 2010 through the sale of subscriptions;
and
* achieve break-even results of operations.
We have two executive officers who also serve as our directors. Mr. Amit Sachs,
our President and a Director, resides in Israel. He has sixteen years of
experience as a manager of a leading household electronics importing and
marketing firm in Israel. He has been involved in building and inspecting
factories in China, Turkey and Germany. Mr. Moshe Basson, our Secretary,
Treasurer and a Director, resides in Israel. For the last eighteen years, Mr.
Basson has been the president of Moshe Marketing, a company that specialists in
1
food and health products in Israel. Neither of our officers lives in Nevada or
in the United States.
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 have spent only approximately $6,944 on development of our
business. Between May 2007 and September 2008, we were focused primarily on
raising capital to execute our business plan, and on September 24, 2008 we
closed on a private placement of our common stock pursuant to which we sold
2,794,880 shares of our common stock for total gross proceeds of $70,000. We
have sold and issued an aggregate of 6,794,880 shares of our common stock since
our inception through the September 2008 private placement and the private
placement of our common stock to members of our management, for total proceeds
of approximately $70,000. Since our inception we have not made any significant
purchases or sale of assets, nor have we been involved in any mergers,
acquisitions or consolidations.
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SUMMARY OF THE OFFERING
Shares of common stock being offered
by the selling stockholders: 2,794,880 shares of our common stock.
Offering price: $0.04 per share of common stock.
Number of shares outstanding before
the offering: 6,794,880
Number of shares outstanding after
the offering, if all the shares
are sold: 6,794,880
Market for the common stock: Our executive officers and directors
currently hold 58.8% of our shares, and,
as a result, they retain control over
our direction.
There is no public market for our common
stock. After the effective date of the
registration statement of which this
prospectus is a part, we intend to seek
a market maker to file an application on
our behalf to have our common stock
quoted on the Over-the-Counter 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.
Use of Proceeds: We will not receive any proceeds from
the sale of the shares of common stock
by the selling stockholders identified
in this prospectus. The selling
stockholders will receive all net
proceeds from the sale of the shares
offered by this prospectus.
Risk Factors: See "Risk Factors" beginning on page 5
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.
Dividend Policy: We have not declared or paid any
dividends on our common stock since our
inception, and we do not anticipate
paying any such dividends for the
foreseeable future.
3
SUMMARY FINANCIAL DATA
The following summary financial information for the period from December 7, 2007
(date of inception) through October 31, 2008, 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 and Results of Operation" and the
financial statements and accompanying notes included in this prospectus.
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.
STATEMENT OF OPERATIONS
Period from Inception
(December 7, 2007) to
October 31, 2008
----------------
Net loss $ 6,944
Net loss per common share: --
Basic and diluted (less than $0.01 per share) 0
Weighted average number of Common shares outstanding: 4,314,318
BALANCE SHEET DATA
October 31, 2008
----------------
Total assets $ 63,847
Total liabilities --
Total Liabilities and Stockholders' Equity $ 63,847
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RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND OTHER INFORMATION IN THIS
PROSPECTUS BEFORE DECIDING TO INVEST IN OUR COMPANY. IF ANY OF THE FOLLOWING
RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS
AND PROSPECTS FOR GROWTH COULD BE SERIOUSLY HARMED. AS A RESULT, THE TRADING
PRICE OF OUR COMMON STOCK COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR
INVESTMENT.
RISKS RELATED TO OUR BUSINESS
AS A COMPANY IN THE EARLY STAGE OF DEVELOPMENT WITH AN UNPROVEN BUSINESS
STRATEGY, OUR LIMITED HISTORY OF OPERATIONS MAKES EVALUATION OF OUR BUSINESS AND
PROSPECTS DIFFICULT.
We were incorporated on December 7, 2007. We currently have no products,
customers, or revenues. Our business prospects are difficult to predict because
of our limited operating history, early stage of development and unproven
business strategy. Our primary business activities will be to develop and
commercialize a mobile price comparison service for use by the general public.
Although we believe that our TradeOnSMS system has significant profit potential,
we may not attain profitable operations and our management may not succeed in
realizing our business objectives.
OUR BUSINESS PLAN MAY BE UNSUCCESSFUL, AND IF IT FAILS, WE WILL NOT HAVE
ALTERNATE SERVICES OR PRODUCTS TO OFFER IN ORDER TO ENSURE OUR CONTINUATION AS A
GOING CONCERN.
The success of our business plan is dependent on the development of our sole
product, our mobile price comparison service. Our ability to develop TradeOnSMS
system is unproven, and the lack of operating history makes it difficult to
validate our business plan. In addition, the success of our business plan is
dependent upon the market acceptance of our system. Should this system be too
narrowly focused or should the target market not be as responsive as we
anticipate, we will not have in place alternate services or products that we can
offer to ensure our continuation as a going concern.
WE HAVE MAINTAINED LOSSES SINCE INCEPTION, WHICH WE EXPECT WILL CONTINUE IN THE
FUTURE.
Our management believes that the prior investment of approximately $70,000 by
our current stockholders will be sufficient to commence and continue our planned
activities for approximately 12 months after this offering. We expect, however,
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 development, marketing and sales of our TradeOnSMS system. 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
assumptions regarding 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.
OUR INDEPENDENT AUDITORS HAVE EXPRESSED DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN, INDICATING THE POSSIBILITY THAT WE MAY NOT BE ABLE TO CONTINUE TO
OPERATE.
We have incurred net losses of $6,944 for the period from December 7, 2007 (date
of inception) through October 31, 2008. We anticipate generating losses for the
next 12 months, with revenues beginning no earlier than December of 2009.
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. In addition, our independent
5
auditors included an explanatory paragraph in their report on the accompanying
financial statements regarding concerns about our ability to continue as a going
concern.
To date, we have completed only initial stages of our business plan and we can
provide no assurance that we will be able to generate enough revenue from our
business in order to achieve profitability. It is not possible at this time for
us to predict with assurance the potential success of our business. 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. If we cannot continue as a viable entity, our
stockholders may lose some or all of their investment in our Company.
WE MAY NOT BE ABLE TO EXECUTE OUR BUSINESS PLAN OR STAY IN BUSINESS WITHOUT
ADDITIONAL FUNDING.
Our ability to successfully develop our technology and to eventually produce and
sell our product to generate operating revenues depends on our ability to obtain
the necessary financing to implement our business plan. We raised approximately
$70,000 from private placements of our common stock, which we required to
commence operations and which will help us remain operational during the next 12
months. However, we will require additional financing, through issuance of debt
and/or equity, 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. At this time, there are no
anticipated sources of additional funds in place. Failure to secure the needed
additional financing will have an adverse effect on our ability to remain in
business.
BECAUSE OUR CURRENT OFFICERS AND DIRECTORS ARE NOT RESIDENTS OF THE UNITED
STATES, IT MAY BE DIFFICULT FOR SHAREHOLDERS TO RECOVER AGAINST THEM.
Both of our officers and directors are located outside of the United States, in
Israel. Were one or more shareholders to bring an action against our management
in the United States and succeed, either through default or on the merits, and
obtain a financial award against an officer or director of the Company, that
shareholder may be required to enforce and collect on his, her or its judgment
in these countries, unless the officer or director owned assets which were
located in the United States. Further, shareholder efforts to bring an action in
these countries against its citizens for any alleged breach of a duty in a
foreign jurisdiction may be difficult, as prosecution of a claim in a foreign
jurisdiction, and in particular a foreign nation, is fraught with difficulty and
may be effectively, if not financially, unfeasible.
WE HAVE LIMITED SALES AND MARKETING EXPERIENCE, WHICH INCREASES THE RISK OF OUR
INABILITY TO BUILD A SUCCESSFUL BUSINESS.
Our management has limited experience marketing our proposed product and no
distribution system has yet been developed and tested. Our President and
director, Amit Sachs, who will be primarily responsible for marketing and sales
of our product, has no experience in our industry or in marketing. Further, we
have budgeted only $15,000 toward these efforts over the next 12 months, which
is a very limited amount of capital with which to launch our effort. Given the
relatively small budget and limited experience of our officers, there can be no
assurance that our efforts will be successful. Further, if our initial efforts
to create a market for our products are not successful, there can be no
assurance that we will be able to attract and retain qualified individuals with
the necessary marketing and sales expertise to significantly grow our sales. Our
future success will depend, among other factors, upon whether our product can be
sold at a profitable price and the extent to which consumers acquire, adopt, and
continue to use it. There can be no assurance that our product will gain wide
acceptance in its targeted markets or that we will be able to effectively market
our product.
6
IF OUR ESTIMATES RELATED TO EXPENDITURES ARE ERRONEOUS OR INACCURATE, OUR
BUSINESS WILL FAIL AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.
Our success is dependent in part upon the accuracy of our management's estimates
of expenditures for legal and accounting services, including those that we
expect to incur as a publicly reporting company, and expenses for website
development, production and development of our TradeOnSMS system, and
administrative expenses, which management estimates to total approximately
$61,000 over the next 12 months. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Expenditures" below for
additional detail. If such estimates are erroneous or inaccurate, or we
encounter unforeseen costs, we may not be able to carry out our business plan,
which could result in the failure of our business and you could lose your entire
investment.
WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST OUR COMPETITORS.
We are engaged in a rapidly evolving technology industry, and face direct
competition from companies that offer mobile price comparison, as well as from
companies that offer price comparison through their website and at any time can
offer similar service like ours to existing customers. We are aware of
approximately 6 companies that offer mobile price comparison in North America.
Such competitors may have greater resources, research and development staff,
sales and marketing staff and facilities than we do. In addition, other recently
developed technologies are, or may in the future be, the basis of competitive
products. There can be no assurance that our competitors will not develop
technologies and products that are more effective than those being developed by
us or that would render our technology and product obsolete or noncompetitive.
OUR OFFICERS AND DIRECTORS WILL COLLECTIVELY ALLOCATE ONLY A PORTION OF THEIR
TIME TO OUR COMPANY'S BUSINESS, WHICH COULD HAVE A NEGATIVE IMPACT ON TRADEON'S
SUCCESS.
Currently, our officers and directors allocate only a portion of their time, or
up to approximately 30 hours per week, to the operation of TradeOn's business.
If our business develops faster than anticipated, or if their other commitments
require devotion of more substantial amounts of time, our ability to create and
sustain a successful business could be negatively impacted.
WE NEED TO RETAIN KEY PERSONNEL TO SUPPORT OUR PRODUCT AND ONGOING OPERATIONS.
The development and marketing of our product will continue to place a
significant strain on our management and other resources. Our future success
depends upon the continued services of our executive officers who have critical
industry experience and relationships that we rely on to implement our business
plan. The loss of the services of Amit Sachs, our President and a Director,
would negatively impact our ability to sell our product, which could adversely
affect our financial results and impair our growth. Currently, we have no
employment agreement with Mr. Sachs and do not anticipate entering into any such
agreement in the foreseeable future.
INVESTORS WILL HAVE LITTLE VOICE REGARDING OUR MANAGEMENT DUE TO THE LARGE
OWNERSHIP POSITION HELD BY OUR EXISTING MANAGEMENT AND THUS IT WOULD BE
DIFFICULT FOR NEW INVESTORS TO MAKE CHANGES IN OUR OPERATIONS OR MANAGEMENT, AND
THEREFORE, SHAREHOLDERS WOULD BE SUBJECT TO DECISIONS MADE BY MANAGEMENT AND THE
MAJORITY SHAREHOLDERS, INCLUDING THE ELECTION OF DIRECTORS.
Our officers and directors directly own 4,000,000 shares of the total of
6,794,880 issued and outstanding shares of our common stock (or 58.8% of our
outstanding stock) and are in a position to continue to control us. Of these
6,794,880 shares, Mr. Sachs, our President and Director, owns 4,000,000 shares,
and Mr. Basson, our Secretary, Treasurer, and Director, owns 4,000,000 shares.
Such control enables our officers and directors to control all important
decisions relating to the direction and operations of the Company without the
7
input of our investors. Moreover, investors will not be able to effect a change
in our Board of Directors, business, or management.
RISKS RELATING TO OUR COMMON STOCK
THERE IS CURRENTLY NO PUBLIC MARKET FOR OUR SECURITIES, AND THERE CAN BE NO
ASSURANCE THAT ANY PUBLIC MARKET WILL DEVELOP OR THAT OUR COMMON STOCK WILL BE
QUOTED FOR TRADING.
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.
After the effective date of the registration statement of which this prospectus
is a part, we intend to identify a market maker to file an application with the
Financial Industry Regulatory Authority ("FINRA") to have our common stock
quoted on the Over-the-Counter Bulletin Board. We do not currently have a market
maker who is willing to participate in this application process, and even if we
identify a market maker, there can be no assurance as to whether such
application will be accepted. Our common stock may never be quoted on the
Over-the-Counter Bulletin Board, or, even if quoted, a public market may not
materialize.
If our securities are not eligible for initial quotation, or if quoted, are not
eligible for continued quotation on the Over-the-Counter Bulletin Board or a
public trading market does not develop, purchasers of the common stock may have
difficulty selling or be unable to sell their securities should they desire to
do so, rendering their shares effectively worthless and resulting in a complete
loss of their investment.
BECAUSE WE WILL BE SUBJECT TO "PENNY STOCK" RULES ONCE OUR SHARES ARE QUOTED ON
THE OVER-THE-COUNTER BULLETIN BOARD, THE LEVEL OF TRADING ACTIVITY IN OUR STOCK
MAY BE REDUCED.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00 (other than securities registered on some national securities
exchanges). 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 that 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, if the broker-dealer is the sole market
maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
broker-dealers who sell these securities to persons other than established
customers and "accredited investors" 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. Consequently, these
requirements may have the effect of reducing the level of trading activity, if
any, in the secondary market for a security subject to the penny stock rules. If
a trading market does develop for our common stock, these regulations will
likely be applicable, and investors in our common stock may find it difficult to
sell their shares.
FINRA SALES PRACTICE REQUIREMENTS MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND
SELL OUR STOCK.
FINRA 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, FINRA believes that there is a high probability that speculative
8
low priced securities will not be suitable for at least some customers. FINRA
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.
STATE SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES
IN WHICH YOU CAN SELL THE SHARES OFFERED BY THIS PROSPECTUS.
If you purchase shares of our common stock sold by the selling stockholders 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. There can be no assurance that we
will be successful in registering or qualifying our common stock for secondary
trading, or identifying an available exemption for secondary trading in our
common stock in every state. If we fail to register or qualify, or to obtain or
verify an exemption for the secondary trading of, our common stock in any
particular state, the shares of common stock could not be offered or sold to, or
purchased by, a resident of that state. In the event that a significant number
of states refuse to permit secondary trading in our common stock, the market for
the common stock will be limited which could drive down the market price of our
common stock and reduce the liquidity of the shares of our common stock and a
stockholder's ability to resell shares of our common stock at all or at current
market prices, which could increase a stockholder's risk of losing some or all
of his investment.
THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE
RISK THAT YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE PRICE THAT YOU
MAY PAY FOR THE SHARES.
Even if our shares are quoted for trading on the OTCBB following this offering
and a public market develops for our common stock, the market price of our
common stock may be volatile. It may fluctuate significantly in response to the
following factors:
* variations in quarterly operating results;
* our announcements of significant contracts and achievement of
milestones;
* our relationships with other companies or capital commitments;
* additions or departures of key personnel;
* sales of common stock or termination of stock transfer restrictions;
* changes in financial estimates by securities analysts, if any; and
* fluctuations in stock market price and volume.
Your inability to sell your shares during a decline in the price of our stock
may increase losses that you may suffer as a result of your investment.
OUR INSIDERS BENEFICIALLY OWN A SIGNIFICANT PORTION OF OUR STOCK, AND
ACCORDINGLY, MAY HAVE CONTROL OVER STOCKHOLDER MATTERS, THE COMPANY'S BUSINESS
AND MANAGEMENT.
As of December 22, 2008 our executive officers and directors beneficially own
4,000,000 shares of our common stock in the aggregate, or approximately 58.82%
of our issued and outstanding common stock. Mr. Amit Sachs, our President and a
Director, owns 2,000,000 shares of our common stock, or approximately 29.41%,
and Mr. Moshe Basson, our Secretary, Treasurer and a Director, owns 2,000,000
9
shares of our common stock, or approximately 29.41%. As a result, our executive
officers, directors and affiliated persons will have significant influence to:
* elect or defeat the election of our directors;
* amend or prevent amendment of our articles of incorporation or bylaws;
* effect or prevent a merger, sale of assets or other corporate
transaction; and
* affect the outcome of any other matter submitted to the stockholders
for vote.
Moreover, because of the significant ownership position held by our insiders,
new investors will not be able to effect a change in the Company's business or
management, and therefore, shareholders would be subject to decisions made by
management and the majority shareholders.
In addition, sales of significant amounts of shares held by our directors and
executive officers, or the prospect of these sales, could adversely affect the
market price of our common stock. Management's stock ownership may discourage a
potential acquirer from making a tender offer or otherwise attempting to obtain
control of us, which in turn could reduce our stock price or prevent our
stockholders from realizing a premium over our stock price.
THE PRICE OF OUR SHARES IN THIS OFFERING WAS DETERMINED BY US AND MAY NOT
REFLECT THE ACTUAL MARKET PRICE FOR THE SECURITIES.
The initial offering price of the common stock offered by the selling
stockholders pursuant to this prospectus 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.
BECAUSE WE DO NOT INTEND TO PAY ANY DIVIDENDS ON OUR COMMON STOCK, HOLDERS OF
OUR COMMON STOCK MUST RELY ON STOCK APPRECIATION FOR ANY RETURN ON THEIR
INVESTMENT.
There are no restrictions in our Articles of Incorporation or Bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend we would not be able to pay our debts as they
become due in the usual course of business; or our total assets would be less
than the sum of our total liabilities plus the amount that would be needed to
satisfy the rights of shareholders who have preferential rights superior to
those receiving the distribution. We have not declared or paid any dividends on
our common stock since our inception, and we do not anticipate paying any such
dividends for the foreseeable future. Accordingly, holders of our common stock
will have to rely on capital appreciation, if any, to earn a return on their
investment in our common stock.
10
ADDITIONAL ISSUANCES OF OUR SHARES OF COMMON STOCK MAY RESULT IN IMMEDIATE
DILUTION TO EXISTING SHAREHOLDERS.
We are authorized to issue up to 100,000,000 shares of common stock, of which
6,794,880 shares are issued and outstanding. Our Board of Directors has the
authority to cause us to issue additional shares of common stock, and to
determine the rights, preferences and privilege of such shares, without consent
of any of our stockholders. We may issue shares in connection with financing
arrangements or otherwise. Any such issuances will result in immediate dilution
to our existing shareholders' interests, which will negatively affect the value
of your shares.
11
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO
OUR BUSINESS THAT ARE BASED ON OUR BELIEFS AS WELL AS ASSUMPTIONS MADE BY US OR
BASED UPON INFORMATION CURRENTLY AVAILABLE TO US. THESE STATEMENTS REFLECT OUR
CURRENT VIEWS AND ASSUMPTIONS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO
RISKS AND UNCERTAINTIES. 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 5, 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 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION SECTION BEGINNING ON PAGE 32, AND THE SECTION
ENTITLED "OUR BUSINESS" BEGINNING ON PAGE 21, AND AS WELL AS THOSE DISCUSSED
ELSEWHERE IN THIS PROSPECTUS. OTHER FACTORS INCLUDE, AMONG OTHERS: GENERAL
ECONOMIC AND BUSINESS CONDITIONS; INDUSTRY CAPACITY; INDUSTRY TRENDS;
COMPETITION; CHANGES IN BUSINESS STRATEGY OR DEVELOPMENT PLANS; PROJECT
PERFORMANCE; AVAILABILITY, TERMS, AND DEPLOYMENT OF CAPITAL; AND AVAILABILITY OF
QUALIFIED PERSONNEL.
THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF 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 EXPRESSLY DISCLAIM ANY OBLIGATION OR
UNDERTAKING TO DISSEMINATE ANY UPDATE OR REVISIONS OF ANY OF THE FORWARD-LOOKING
STATEMENTS TO REFLECT ANY CHANGE IN OUR EXPECTATIONS WITH REGARD THERETO OR TO
CONFORM THESE STATEMENTS TO ACTUAL RESULTS.
TAX CONSIDERATIONS
We are not providing any tax advice as to the acquisition, holding or
disposition of the securities offered herein. In making an investment decision,
investors are strongly encouraged to consult their own tax advisor to determine
the U.S. federal, state and any applicable foreign tax consequences relating to
their investment in our securities.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock by the
selling stockholders pursuant to this prospectus. The selling stockholders named
herein will receive all proceeds from the sale of the shares of our common stock
in this offering. Please see "Selling Stockholders" below for a list of these
individuals.
We will pay all expenses (other than transfer taxes) of the selling stockholders
in connection with this offering.
DETERMINATION OF THE OFFERING PRICE
There is no established public market for our shares of common stock. The
offering price of $0.04 per share was determined by us arbitrarily. 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.
This price bears no relationship whatsoever to our business plan, the price paid
12
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.
The selling stockholders will offer the shares of common stock for resale at
$0.04 per share until our shares are quoted on the Over-the-Counter Bulletin
Board, and thereafter at prevailing market prices or privately negotiated
prices. See "Plan of Distribution" for additional information.
MARKET FOR OUR COMMON STOCK
MARKET INFORMATION
There is no established public market for our common stock.
After the effective date of the registration statement of which this prospectus
is a part, we intend to seek a market maker to file an application with the
Financial Industry Regulatory Authority, Inc., or FINRA, to have our common
stock quoted on the Over-the-Counter Bulletin Board. We do not currently have a
market maker who is willing to list quotations for our common stock, and there
can be no assurance that an active trading market for our shares will develop,
or, if developed, that it will be sustained.
We have issued 6,794,880 shares of our common stock since the Company's
inception on December 7, 2007, all of which are restricted shares. See "Certain
Relationships and Related Transactions" below for information with respect to
some of these shares. There are no outstanding options or warrants or securities
that are convertible into shares of common stock.
HOLDERS
We had 37 holders of record of our common stock as of December 22, 2008.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We do not have any compensation plan under which equity securities are
authorized for issuance.
DIVIDEND POLICY
We have not paid any dividends since our incorporation and do not anticipate the
payment of dividends in the foreseeable future. At present, our policy is to
retain earnings, if any, to develop and market our product. The payment of
dividends in the future will depend upon, among other factors, our earnings,
capital requirements, and operating financial conditions.
DILUTION
The shares of common stock to be sold by the selling stockholders are shares
that are currently issued and outstanding. Accordingly, there will be no
dilution to our existing stockholders as a result of the offering by the selling
stockholders pursuant to this prospectus.
13
SELLING STOCKHOLDERS
The selling stockholders named in this prospectus are offering all of the
2,794,880 shares of common stock offered through this prospectus. The selling
stockholders are non-U.S. persons who acquired the 2,794,880 shares of common
stock offered through this prospectus from us in a private placement pursuant to
Regulation S of the Securities Act of 1933, as amended (the "Securities Act")
which closed on September 24, 2008, thus exempting these offerings from the
registration requirements of the Securities Act.
The following table provides as of December 22, 2008, information regarding the
beneficial ownership of our common stock held by each of the selling
stockholders, including:
1. The number and percentage of shares beneficially owned prior to this
offering;
2. The total number of shares to be offered hereby; and
3. The total number and percentage of shares that will be beneficially
owned upon completion of this offering.
All expenses incurred with respect to the registration of the offering by the
selling stockholders of these shares of common stock (other than transfer taxes)
will be borne by us, but we will not be obligated to pay any underwriting fees,
discounts, commissions or other expenses incurred by the selling stockholders in
connection with the sale of such shares.
The shares beneficially owned have been determined in accordance with rules
promulgated by the Securities and Exchange Commission, and the information is
not necessarily indicative of beneficial ownership for any other purpose. The
information in the table below is current as of the date of this prospectus. All
information contained in the table below is based upon information provided to
us by the selling stockholders and we have not independently verified this
information. The selling stockholders are not making any representation that any
shares covered by this prospectus will be offered for sale. The selling
stockholders may from time to time offer and sell pursuant to this prospectus
any or all of the common stock covered hereby.
For purposes of this table, beneficial ownership is determined in accordance
with the Securities and Exchange Commission rules, and includes investment power
with respect to shares and shares owned pursuant to warrants or options
exercisable within 60 days, if applicable. Except as indicated below, no selling
stockholders is the beneficial owner of any additional shares of common stock or
other equity securities issued by us or any securities convertible into, or
exercisable or exchangeable for, our equity securities.
We may require the selling stockholders to suspend the sales of the securities
offered by this prospectus upon the occurrence of any event that makes any
statement in this prospectus or the related registration statement untrue in any
material respect or that requires the changing of statements in these documents
in order to make statements in those documents not misleading.
Beneficial Ownership Beneficial Ownership
Prior to this Offering(1) After Offering
------------------------- Number of ------------------------
Name of Number of Shares Being Number of
Selling Stockholder Shares Percent(2) Offered Shares Percent(2)
- ------------------- ------ ---------- ------- ------ ----------
Yitshak Eli 200,000 2.94% 200,000 0 0
Asaf Tziklag (3) 8,000 * 8,000 0 0
Efrat Tziklag (3) 8,000 * 8,000 0 0
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Beneficial Ownership Beneficial Ownership
Prior to this Offering(1) After Offering
------------------------- Number of ------------------------
Name of Number of Shares Being Number of
Selling Stockholder Shares Percent(2) Offered Shares Percent(2)
- ------------------- ------ ---------- ------- ------ ----------
Lital Sharon 320,000 4.71% 320,000 0 0
Yoav Holtzer (4) 40,000 * 40,000 0 0
Ehud Holtzer (4) 8,000 * 8,000 0 0
Ishay Eliyahu (5) 24,000 * 24,000 0 0
Daniel Assor (6) 20,000 * 20,000 0 0
Rafi Assor (5) 20,000 * 20,000 0 0
Eran Rockman 8,000 * 8,000 0 0
Erez Lavy 8,000 * 8,000 0 0
Yoel Ronen 200,000 2.94% 200,000 0 0
Gil Asafrana 200,000 2.94% 200,000 0 0
Ronen Hirsh 8,000 * 8,000 0 0
Israel Levy (7) 8,000 * 8,000 0 0
David Shani 40,000 * 40,000 0 0
EliyahuBen dan 8,000 * 8,000 0 0
Dov Nahari (8) 200,000 2.94% 200,000 0 0
Rina Nahari (8) 200,000 2.94% 200,000 0 0
Oren Simanian (9) 200,000 2.94% 200,000 0 0
Michael Simanian (9) 200,000 2.94% 200,000 0 0
Ilya Rivkin 80,000 1.18% 80,000 0 0
Moti Farin 80,000 1.18% 80,000 0 0
Aloni Mizrachi 174,000 2.56% 174,000 0 0
Lior Dagan 8,000 * 8,000 0 0
Ricky Pichman 8,000 * 8,000 0 0
Moshe Rave 24,000 * 24,000 0 0
Ilan Shmaia 120,000 1.77% 120,000 0 0
David Engel 60,000 * 60,000 0 0
Amihay Kilstein 80,000 1.18% 80,000 0 0
Orit Assor (5) 20,000 * 20,000 0 0
Bloria Assor (5)(6) 20,000 * 20,000 0 0
Bina Gurung 176,880 2.60% 176,880 0 0
Baruch Gotlib 8,000 * 8,000 0 0
Amitay Lavy (7) 8,000 * 8,000 0 0
--------- ---- --------- ---- ----
TOTAL 2,794,880 % 2,794,880 NIL NIL
- ----------
* Represents less than 1%
(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 pursuant to
this prospectus or purchases additional shares of common stock, and assumes
that all shares offered are sold.
(2) Applicable percentage of ownership is based on 6,794,880 shares of common
stock outstanding as of December 22, 2008, on a fully diluted basis.
(3) Asaf Tziklag is the husband of Efrat Tziklag.
(4) Yoav Holtzer is the brother of Ehud Holtzer.
(5) Daniel Assor is the spouse of Orit Assor and is the son of Rafi Assor and
Bloria Assor
15
(6) Daniel Assor is the spouse of Bloria Assor
(7) Erez Lavy is the son of Amity Lavy
(8) Dov Nahari is the spouse of Rina Nahari
(9) Oren Simanian is the brother of Michael Simanian
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;
(ii) served as one of our officers or directors; nor
(iii) is a registered broker-dealer or an affiliate of a broker-dealer.
PLAN OF DISTRIBUTION
This prospectus relates to the registration of the resale of 2,794,880 shares of
our common stock on behalf of the selling stockholders named herein.
The selling stockholders may sell some or all of their shares at a fixed price
of $0.04 per share until our shares are quoted on the Over-the-Counter Bulletin
Board and thereafter at prevailing market prices or privately negotiated prices.
Sales by selling stockholders must be made at the fixed price of $0.04 until a
market develops for the stock.
The shares may be sold or distributed from time to time by the selling
stockholders or by pledgees, donees or transferees of, or successors in interest
to, the selling stockholders, directly to one or more purchasers (including
pledgees) or through brokers or dealers who act solely as agents. The
distribution of the shares may be effected in one or more of the following
methods:
* Ordinary broker transactions, which may include long or short sales;
* Transactions involving cross or block trades on any securities or
market where our common stock is trading;
* Purchases by brokers or dealers as principal and resale by such
purchasers for their own accounts pursuant to this prospectus;
* an exchange distribution in accordance with the rules of the
applicable exchange;
* ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
* privately negotiated transactions;
* at the market to or through market makers or into an existing market
for the shares;
* through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise);
* In other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents; or
* Any combination of the foregoing.
The selling security holders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
16
In addition, the selling stockholders may enter into hedging transactions with
broker-dealers who may engage in shares in the course of hedging the positions
they assume with the selling stockholders. The selling stockholders may also
enter into option or other transactions with broker-dealers that require the
delivery by such broker-dealers of the shares, which shares may be resold
thereafter pursuant to this prospectus.
Brokers, dealers, or agents participating in the distribution of the shares may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders and/or the purchasers of shares for whom such
broker-dealers may act as agent (which compensation as to a particular
broker-dealer may be in excess of customary commissions). Neither the selling
stockholders nor we can presently estimate the amount of such compensation. We
know of no existing arrangements between the selling stockholders and any other
stockholder, broker, dealer or agent relating to the sale or distribution of the
shares. We do not anticipate that either our stockholders or we will engage an
underwriter in the selling or distribution of our shares.
We will not receive any proceeds from the sale of the shares of the selling
stockholders pursuant to this prospectus. We have agreed to bear the expenses of
the registration of the shares, including legal and accounting fees, and such
expenses are estimated to be approximately $17,350.
The selling stockholders named in this prospectus must comply with the
requirements of the Securities Act and the Exchange Act in the offer and sale of
the common stock being offered by them. The selling stockholders and any
broker-dealers who execute sales for the selling stockholders may be deemed to
be an "underwriter" within the meaning of the Securities Act in connection with
such sales. In particular, during such times as the selling stockholders may be
deemed to be engaged in a distribution of the common stock, and therefore be
considered to be an underwriter, they must comply with applicable laws and may
among other things:
1. Not engage in any stabilization activities in connection with our
common stock;
2. Furnish each broker or dealer through which common stock may be
offered, such copies of this prospectus from time to time, as may be
required by such broker or dealer, and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities permitted under the Exchange
Act.
Any commissions received by broker-dealers and any profit on the resale of
shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act.
STATE SECURITIES - BLUE SKY LAWS
Transfer of our common stock may also be restricted under the securities
regulations or laws promulgated by various states and foreign jurisdictions,
commonly referred to as "Blue Sky" laws. Absent compliance with such individual
state laws, our common stock may not be traded in such jurisdictions. Because
the securities registered hereunder have not been registered for resale under
the Blue Sky laws of any state, the holders of such shares and persons who
desire to purchase them in any trading market that might develop in the future,
should be aware that there may be significant state Blue-Sky law restrictions
upon the ability of investors to sell the securities and of purchasers to
purchase the securities. Accordingly, investors may not be able to liquidate
their investments and should be prepared to hold the shares of our common stock
for an indefinite period of time.
17
REGULATION M
We have informed the selling stockholders that Regulation M promulgated under
the Exchange Act may be applicable to them with respect to any purchase or sale
of our common stock. In general, Rule 102 under Regulation M prohibits any
person connected with a distribution of our common stock from directly or
indirectly bidding for, or purchasing for any account in which it has a
beneficial interest, any of the shares or any right to purchase the shares, for
a period of one business day before and after completion of its participation in
the distribution.
During any distribution period, Regulation M prohibits the selling stockholders
and any other persons engaged in the distribution from engaging in any
stabilizing bid or purchasing our common stock except for the purpose of
preventing or retarding a decline in the open market price of the common stock.
None of these persons may effect any stabilizing transaction to facilitate any
offering at the market. As the selling stockholders will be offering and selling
our common stock at the market, Regulation M will prohibit them from effecting
any stabilizing transaction in contravention of Regulation M with respect to the
shares.
We also have advised the selling stockholders that they should be aware that the
anti-manipulation provisions of Regulation M under the Exchange Act will apply
to purchases and sales of shares of common stock by the selling stockholders,
and that there are restrictions on market-making activities by persons engaged
in the distribution of the shares. Under Regulation M, the selling stockholders
or their agents may not bid for, purchase, or attempt to induce any person to
bid for or purchase, shares of our common stock while such selling stockholders
are distributing shares covered by this prospectus. Regulation M may prohibit
the selling stockholders from covering short sales by purchasing shares while
the distribution is taking place, despite any contractual rights to do so under
the Agreement. We have advised the selling stockholders that they should consult
with their own legal counsel to ensure compliance with Regulation M.
DESCRIPTION OF SECURITIES
COMMON STOCK
Our authorized capital stock consists of 100,000,000 shares of common stock, par
value $0.0001 per share.
The holders of our common stock:
* Have equal ratable rights to dividends from funds legally available
therefore, when, as and if declared by our Board of Directors;
* Are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation, dissolution
or winding up of our affairs;
* Do not have pre-emptive, subscription or conversion rights and there
are no redemption or sinking fund provisions or rights; and
* Are entitled to one non-cumulative vote per share on all matters on
which stockholders may vote.
The shares of common stock 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 or "
pari passu," each with the other, as to all benefits, which might accrue to the
18
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, subject to the restrictions on joint registered owners
of common shares, on a showing of hands every stockholder who is present in
person and entitled to vote has one vote, and on a poll every stockholder has
one vote for each shares of common stock of which he is the registered owner and
may exercise such vote either in person or by proxy. 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 Articles of Incorporation and Bylaws, copies of which were
filed with the registration statement of which this prospectus is a part, and to
the applicable statutes of the State of Nevada for a more complete description
of the rights and liabilities of holders of our securities.
As of December 22, 2008 , there were 6,794,880 shares of our common stock issued
and outstanding.
OPTIONS, WARRANTS AND RIGHTS
There are no outstanding options, warrants, or rights to purchase any of our
securities.
PREFERRED STOCK
We are authorized to issue 50,000,000 shares of preferred stock with a par value
of $0.0001. As of December 22, 2008 there were no preferred shares issued and
outstanding.
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 prospectus, 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.
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TRANSFER AGENT
We have appointed the following transfer agent for our shares of common stock:
Island Capital Management, LLC, d/b/a Island Stock Transfer, 100 Second Avenue
S., Suite 300N St. Petersburg, Fl 33701 Phone: (727) 287-0010 Fax: (727)
287-0069. The transfer agent is responsible for all record-keeping and
administrative functions in connection with our issued and outstanding common
stock.
SHARES ELIGIBLE FOR FUTURE SALE
There is 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.
Upon completion of this offering, based on our outstanding shares as of December
22, 2008, we will have outstanding an aggregate of 6,794,880 shares of our
common stock. Of these shares, upon effectiveness of the registration statement
of which this prospectus forms a part, the 2,794,880 shares covered hereby will
be freely transferable without restriction or further registration under the
Securities Act.
The remaining 4,000,000 restricted shares of common stock to be outstanding
after this offering are owned by our executive officers and directors, known as
our "affiliates," and may not be resold in the public market except in
compliance with the registration requirements of the Securities Act or under an
exemption under Rule 144 under the Securities Act or otherwise.
RULE 144
In general, under Rule 144 as currently in effect, a person who is not one of
our affiliates and who is not deemed to have been one of our affiliates at any
time during the three months preceding a sale and who has beneficially owned
shares of our common stock that are deemed restricted securities for at least
six months would be entitled after such six-month holding period to sell the
common stock held by such person, subject to the continued availability of
current public information about us (which current public information
requirement is eliminated after a one-year holding period).
A person who is one of our affiliates, or has been an affiliate of ours 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 his or
her securities, provided that he or she sells an amount that does not exceed 1%
of the number of shares of our common stock then outstanding, or 68,000 shares
immediately after this offering (or, if our common stock is listed on a national
securities exchange, the average weekly trading volume of the shares during the
four calendar weeks preceding the filing of a notice on Form 144 with respect to
the sale), subject to the continued availability of current public information
about us, compliance with certain manner of sale provisions, 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.
Rule 144 is not available for resales of restricted securities of shell
companies or former shell companies until one year elapses from the time that
such company is no longer considered a shell company.
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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 Company, nor was any such person
connected with the Company as a promoter, managing or principal underwriter,
voting trustee, director, officer or employee.
Our financial statements for the period from December 7, 2007 (inception) to
October 31, 2008, included in this prospectus have been audited by Weinberg &
Associates LLC as set forth in their report included in this prospectus.
LEGAL REPRESENTATION
The validity of the issuance of the common stock offered hereby will be passed
upon for us by The O'Neal Law Firm, P.C., included in the opinion letter filed
as an exhibit to the Registration Statement of which this prospectus is a part.
OUR BUSINESS
OVERVIEW
We are a development stage company that was incorporated under the laws of the
state of Nevada on December 7, 2007. We have never declared bankruptcy, have
never been in receivership, and have never been involved in any legal action or
proceedings. Since becoming incorporated, we have not made any significant
purchase or sale of assets, nor have we been involved in any mergers,
acquisitions or consolidations. 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,
since we have a specific business plan or purpose.
Neither TradeOn, 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.
Our offices are currently located at 30 Eliahu Miferrera St. Tel Aviv 69865
Israel. Our telephone number is +1 (866) 261-2522. We do not have a website yet,
we expect to have an informational website in the next several months.
We have two executive officers who also serve as our directors. Mr. Amit Sachs,
our President and a Director, resides in Israel. He has sixteen years of
experience as a manager of a leading household electronics importing and
marketing firm in Israel. He also has been involved in building and inspecting
factories in China, Turkey and Germany. Mr. Moshe Basson, our Secretary,
Treasurer and a Director, resides in Israel. For the last eighteen years, Mr.
Basson has been the president of Moshe Marketing, a company that specialists in
food and health products in Israel. Neither of our officers lives in Nevada or
in the United States.
21
PRINCIPAL PRODUCTS AND SERVICES
We are planning to develop and commercialize a mobile price comparison service
for use by the general public. Our service will enable consumers while out
shopping in a store to compare or look up prices of a certain product by sending
a text message from their cell phone to our TradeOnSMS system. We have named our
system TradeOnSMS. Our planned system will accept text messages from mobile
phones containing the name or part number of a certain product. Once the text
message is received, TradeOnSMS will search the Internet for the best price and
retailer and send back a text message to the mobile phone with the results.
Our goal is to help consumers make informed purchase decisions by enabling them
to compare products, prices and stores while out shopping. We will generate
revenues from consumers that will subscribe to our service.
In our opinion such information will help consumers make smarter buying
decisions while out shopping when they have no access to computers with Internet
access. Our TradeOnSMS system will allow consumers to see how competitive a
local store is, and to decide whether to purchase a specific product there, or
buy it elsewhere.
The following describes a scenario demonstrating the potential usefulness of our
planned service: A consumer is out shopping at an electronics store and would
like to purchase an MP3 player, the consumer has no access to a computer or
Internet and therefore cannot know with certainty if he is getting the best
value for his money. Our planned TradeOnSMS system is being developed to
price-comparison information to consumers while they are out shopping. By using
his cell phone he will be able to send a text message to our TradeOnSMS system,
the text message can be "USB MP3 Player 2GB". The TradeOnSMS system will then
search the Internet for a retailer offering this particular item for the lowest
price. It will then automatically send a text message back to the consumer's
mobile phone with the search result in a timely manner. The results of all
queries will be saved in our database, enabling the user to review them later
from any computer via the Internet.
In order to use our planned system, prospective customers will be required to
create an online account and choose a username and password to secure their
online account. Upon completion, a final step will display the account
information and payment information to the customer for final confirmation and
payment processing. The customers will also be able to choose up to three cell
phone numbers that will be able to access our system.
When sending or receiving text messages to and from TradeOnSMS , customers'
mobile service provider may charge for the messages sent or received. These
charges are not affiliated with our service charge.. We have no arrangement with
any mobile service providers and will not generate revenue from these
independent charges of mobile service providers for the messages sent or
received by our users.
We have commenced only limited operations, primarily focused on organizational
matters and efforts related to this offering. Our TradeOnSMS system is currently
in the development stage and is not ready for commercial sale. We anticipate
that our product will be available in October of 2009, and that we will begin to
generate revenues no earlier than December of 2009.
At this stage in our development, there can be no assurance that we will be
successful in generating revenues from our subscription based TradeOnSMS system
or that prospective customers seeking for mobile price comparison will be
receptive to using our service.
22
SUBSCRIPTIONS AND REVENUES
We plan on earning revenues through customer subscription based fees to our
TradeOnSMS system.
Package Name Number of Text Messages Cost
------------ ----------------------- ----
Messaging 30 30 $14.99
Messaging 60 60 $25.99
Messaging 90 90 $35.99
For example, messaging plan "Messaging 30" allows the user to send 30 text
message queries to our system. The messages that the user receives from our
system will not be deducted from their message balance.
ACTIVITIES TO DATE
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. Since our inception we have not made any significant purchases or
sale of assets, nor have we been involved in any mergers, acquisitions or
consolidations. We have spent only approximately $6,944 on development of our
business since our inception, as our management believed it could better
implement our long-term business plan keeping expenditures at a minimum during
our early development stage until we raised a substantial amount of funds to
execute our business and marketing plan. Accordingly, between December 2007 and
September 2008, we were focused primarily on raising capital to execute our
business plan. We closed on a private placement of our common stock on September
24, 2008, pursuant to which we sold 2,794,880 shares of our common stock for
total gross proceeds of $69,872. We have sold and issued an aggregate of
6,794,880 shares of our common stock since our inception through the September
2008 private placement and the private placement of our common stock to members
of our management, for total proceeds of $70,791.
COMPETITION AND COMPETITIVE STRATEGY
Competition within the mobile price comparison industry is intense. Many of our
competitors have longer operating histories, greater financial, sales, marketing
and technological resources and longer established client relationships than we
do.
Our primary competition comes primarily from several industry participants:
Incumbent mobile price comparison players: These include companies such as
Frucall, Mobsaver, TicTap and Smarter.
Alternate mobile price comparison players: Other potential competitors are major
online price comparison portals and search engine companies, which can use their
existing user base to provide them with a mobile price comparison system. For
example, PriceGrabber.com had begun offering a mobile version to its site.
We seek to differentiate ourselves by providing our customers with an easy to
use and functional system. On an ongoing basis, we intend to add more features
to our future service such as: recommendation on similar products and price drop
alert.
23
MARKETING & SALES STRATEGY
When our service is ready for commercial sale, our sales strategy will be
focused on attracting visitors to our website, so they can become familiar with
our website and get acquainted with our services. We plan to focus our marketing
efforts in North America. We recognize that our current management and Board of
Directors might not have sufficient marketing experience and it is our intention
to seek consulting firms that specialize in this area.
We have established a budget of $5,000 for a consulting firm.
We also plan to utilize a variety of complementary marketing tools. These will
include:
ONLINE ADVERTISING
The majority of our advertising and promotional activities will be concentrated
on an online advertising campaign using Google AdWords. We have selected Google
because of its success and popularity for web users wishing to find something
using an internet search. The Google AdWords program will allow us to customize
the text of our advertisements, the frequency of each advertisement's
appearance, and the length of the advertising contract. For our purposes, we
believe that this will give us the maximum amount of flexibility and allow us to
closely monitor the costs of the marketing campaign.
EMAIL ADVERTISING CAMPAIGN
We anticipate that a newsletter style email advertising campaign may help to
enhance our online advertising campaign and bring us into direct contact with
people who are interested in mobile price comparison. In this regard, we are
considering acquiring email lists, which is something that can be done on an
incremental basis so as not to incur a large expense before determining whether
an email campaign works and meets our expectations.
RECIPROCAL ARRANGEMENTS
Our directors will attempt to establish reciprocal arrangements with other
related internet sites, where we each display the other's website link. The
purpose of this "cross pollination" arrangement is to encourage potential
customers to visit our website at no cost to us.
We have budgeted $10,000 for the Online Advertising, Email Advertising Campaign
and Reciprocal Arrangements, both of our executive officers will perform this
task.
SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
We believe there are no constraints on the sources or availability of products
and supplies related to our business. We will be producing our own product, and
the distribution of our product will be over the Internet and via text
messaging.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We do not have any customers at present. Our planned services have not yet been
developed. We plan on selling our products and services directly to end use
consumers over the Internet. Our intended offering will be priced for mass
24
market. We do not anticipate dependence on one or a few major customers into the
foreseeable future.
PATENTS, TRADEMARKS, LICENSES, FRANCHISE RESTRICTIONS AND CONTRACTUAL
OBLIGATIONS & CONCESSIONS
We have not obtained any copyrights, patents or trademarks in respect of any of
our intellectual property. We may obtain protection in the future, when we are
in a financial position to do so, but we do not foresee being in a position to
do so for least the next 12 months. We do not hold any other intellectual
property.
EFFECT OF EXISTING OR PROBABLE GOVERNMENT REGULATION
We do not believe that government regulation will have a material impact on the
way we conduct our business.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have not incurred any research and development costs to date. We have plans
to undertake certain research and development activities during the first year
of operation related to the development of our website. For additional details
please see "Management's Discussion and Analysis of Financial Condition and
Results of Operation - Plan of Operation" below.
EMPLOYEES
We have commenced only limited operations, and therefore currently have no
employees other than our executive officers, who spend up to approximately 20
hours a week on our business. When we commence full operations, we expect to
hire full-time management and administrative support staff.
DESCRIPTION OF PROPERTY
We do not own interests any real property.
Our executive and head office is located at 30 Eliahu Miferrera St. Tel Aviv
69865 Israel. The office facility, which is approximately 350 square feet in
size, is provided to us free of charge by Amit Sachs, our President and a
director. We believe our current premises are adequate for our current
operations and we do not anticipate that we will require any additional premises
in the foreseeable future. When and if we require additional space, we intend to
move at that time.
REPORTS TO SECURITY HOLDERS
We will voluntarily make available to our stockholders an annual report,
including audited financials, on Form 10-K.
We are not currently a reporting company, but upon effectiveness of the
registration statement of which this prospectus forms a part, we will be
required to file reports with the SEC pursuant to the Securities Exchange Act of
1934, as amended. These reports include annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K. You may obtain copies of
these reports from the SEC's Public Reference Room at 100 F Street, NE.,
Washington, DC 20549, on official business days during the hours of 10 a.m. to 3
25
p.m. or on the SEC's website, at www.sec.gov. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We will also make these reports available on our website.
LEGAL MATTERS
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. Our address for service of process in Nevada
is EastBiz.com, Inc., 5348 Vegas Dr., Las Vegas, NV 89108 USA.
26
MANAGEMENT
The name, age and position of each of our directors and executive officers are
as follows:
Name Age Position
---- --- --------
Amit Sachs 40 President and Director
Moshe Basson 60 Secretary, Treasurer and Director
MR. AMIT SACHS
Mr. Sachs is our President and Director. He has served in these capacities since
we were incorporated on December 7, 2007. Mr. Sachs has been involved with Sachs
Co. a leading household electronics product. Sachs Co. is importing and
marketing electronics products in Israel, since 1992 to 2005 Mr. Sachs has been
managing the logistic department, service department and the warehouse. He has
been involved in building and inspecting factories in China, Turkey and Germany.
Since 2005 to present Mr. Sachs is managing the logistics and import department
at Sachs Co.
He is not an officer or director of any reporting company that files annual,
quarterly, or periodic reports with the United States Securities and Exchange
Commission.
MR. MOSHE BASSON
Mr. Basson is our Secretary, Treasurer and Director. He has served in these
capacities since we were incorporated on December 7, 2007. Since 1990, Mr.
Basson has been the president of Moshe Marketing, a company that specialists in
food and health products. Moshe Marketing has a distribution network in Israel
and its products are placed in supermarkets, bakeries, kiosks and small shops.
He is not an officer or director of any reporting company that files annual,
quarterly, or periodic reports with the United States Securities and Exchange
Commission.
BOARD COMPOSITION
Our Bylaws provide that the Board of Directors shall consist of one or more
members, but not more than nine, and that our shareholders shall determine the
number of directors at each regular meeting. Each director serves for a term
that expires at the next regular meeting of the shareholders or until his
successor is elected and qualified.
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. Nor do we have an audit committee "financial expert." As
such, our entire Board of Directors acts as our audit committee and handles
matters related to compensation and nominations of directors.
POTENTIAL CONFLICTS 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 directors. Thus, there is a potential conflict of interest in
27
that our directors and officers have the authority to determine issues
concerning management compensation 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.
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."
Our determination of independence of directors is made using the definition of
"independent director" contained in Rule 4200(a)(15) of the Marketplace Rules of
the NASDAQ Stock Market ("NASDAQ") , even though such definitions do not
currently apply to us because we are not listed on NASDAQ. We have determined
that none of our directors currently meet the definition of "independent" as
within the meaning of such rules as a result of their current positions as our
executive officers.
SIGNIFICANT EMPLOYEES
We have no significant employees other than the executive officers described
above.
FAMILY RELATIONSHIPS
There are no familial relationships among any of our officers and directors.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No director, person nominated to become a director, executive officer, promoter
or control person of our company has, during the last five years: (i) been
convicted in or is currently subject to a pending a criminal proceeding
(excluding traffic violations and other minor offenses); (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to any federal or state securities or banking or commodities
laws including, without limitation, in any way limiting involvement in any
business activity, or finding any violation with respect to such law, nor (iii)
any bankruptcy petition been filed by or against the business of which such
person was an executive officer or a general partner, whether at the time of the
bankruptcy or for the two years prior thereto.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
We have not implemented a formal policy or procedure by which our stockholders
can communicate directly with our Board of Directors. Nevertheless, every effort
has been made to ensure that the views of stockholders are heard by the Board of
Directors or individual directors, as applicable, and that appropriate responses
are provided to stockholders in a timely manner. We believe that we are
responsive to stockholder communications, and therefore have not considered it
necessary to adopt a formal process for stockholder communications with our
Board. During the upcoming year, our Board will continue to monitor whether it
would be appropriate to adopt such a process.
28
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation paid by
us to our officers and directors during the fiscal year ended October 31, 2008.
SUMMARY COMPENSATION TABLE
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- ---------
Amit Sachs, 2008 0 0 0 0 0 0 3,025(1) 3,025
President, CEO
and Director
Moshe Basson, 2008 0 0 0 0 0 0 3,000(2) 3,000
Secretary,
Treasurer
and Director
- ----------
(1) Amit Sachs was paid an aggregate of $3,000 in consideration for certain
consulting services provided to us.
(2) Moshe Basson was paid an aggregate of $3,000 in consideration for certain
consulting services provided to us.
OUTSTANDING EQUITY AWARDS AT 2008 FISCAL YEAR-END
We do not currently have a stock option plan nor any long-term incentive plans
that provide compensation intended to serve as incentive for performance. No
individual grants of stock options or other equity incentive awards have been
made to any executive officer or any director since our inception; accordingly,
none were outstanding at October 31, 2008.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS
There are currently no employment or other contracts or arrangements with our
executive officers. 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.
COMPENSATION OF DIRECTORS
We have no formal plan for compensating our directors for their services in
their capacity as directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of our Board of Directors. The Board of Directors may
award special remuneration to any director undertaking any special services on
behalf of TradeOn other than services ordinarily required of a director.
29
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 December 7, 2007, pursuant to the terms of a subscription agreement, we sold
2,000,000 shares of our common stock to Mr. Amit Sachs, our President and
Director, for cash payment to us of $0.00023 per share, or $459 in the
aggregate.
On December 7, 2007 pursuant to the terms of a subscription agreement, we sold
2,000,000 shares of our common stock to Mr. Moshe Basson, our Secretary,
Treasurer and Director, for cash payment to us of $0.00023 per share, or $459 in
the aggregate.
Our officers and directors may be considered promoters of the Company due to
their participation in and management of the business since its incorporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of
our common stock as of December 22, 2008 for:
* each person, or group of affiliated persons, known by us to
beneficially own more than 5% of our common stock;
* each of our executive officers;
* each of our directors; and
* all of our executive officers and directors as a group.
We have determined beneficial ownership in accordance with the rules of the
Securities and Exchange Commission. These rules generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or
investment power with respect to those securities. 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. Unless otherwise indicated, the
persons or entities identified in this table have sole voting and investment
power with respect to all shares shown as beneficially owned by them, subject to
applicable community property laws, and the address for each person listed in
the table is c/o TradeOn Inc., 30 Eliahu Miferrera St. Tel Aviv 69865 Israel.
The percentage ownership information shown in the table below is calculated
based on 6,794,880 shares of our common stock issued and outstanding as of
December 22, 2008. We do not have any outstanding options, warrants or other
securities exercisable for or convertible into shares of our common stock.
30
Name of Amount and Nature Percentage
Title of Class Beneficial Owner of Beneficial Ownership of Class
- -------------- ---------------- ----------------------- --------
Common Stock Amit Sachs 2,000,000 29.41%
President and
Director
Common Stock Moshe Basson 2,000,000 29.41%
Secretary,
Treasurer and
Director
All officers as a Group 4,000,000 58.82%
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.
We do not have any issued and outstanding securities that are convertible into
common stock. Other than the shares covered by the registration statement of
which this prospectus is a part, we have not registered any shares for sale by
security holders under the Securities Act. None of our stockholders are entitled
to registration rights.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to our directors, officers or persons
controlling us, we have been advised that it is the Securities and Exchange
Commission's opinion that such indemnification is against public policy as
expressed in such act and is, therefore, unenforceable.
31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND RESULTS 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 AND INFORMATION RELATING TO OUR BUSINESS THAT REFLECT
OUR CURRENT VIEWS AND ASSUMPTIONS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT
TO RISKS AND UNCERTAINTIES, INCLUDING THE RISKS IN THE SECTION ENTITLED RISK
FACTORS BEGINNING ON PAGE 5, 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.
THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF 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 EXPRESSLY DISCLAIM ANY OBLIGATION OR
UNDERTAKING TO DISSEMINATE ANY UPDATE OR REVISIONS OF ANY OF THE FORWARD-LOOKING
STATEMENTS TO REFLECT ANY CHANGE IN OUR EXPECTATIONS WITH REGARD THERETO OR 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.
OVERVIEW
We are a development stage company with limited operations and no revenues from
our business operations. We were incorporated under the laws of the state of
Nevada on December 7, 2007.
We are developing and plan to offer a mobile price comparison service for use by
the general public. Our service will enable consumers while out shopping in a
store to compare or look up prices of a certain product by sending a text
message from their cell phone to our system. We have named our system
TradeOnSMS. Our planned system will accept text messages from mobile phones
containing the name or part number of a certain product. Once the message is
received, TradeOnSMS will search the Internet for the best price and retailer
and send back a text message to the mobile phone with the results.
In our management opinion, the Internet has transformed the way consumers buy
goods. Consumers shop online to take advantage of convenience, selection and the
ability to compare prices between different stores. However, consumers have
difficulty making informed purchase decisions while out shopping and being away
from their computer and Internet access.
Our goal is to help consumers make informed purchase decisions by enabling them
to compare products, prices and stores while out shopping. We will generate
revenues from consumers that will subscribe to our service.
Our offices are currently located at 30 Eliahu Miferrera St. Tel Aviv 69865
Israel, which has been donated free of charge from our President and director,
Mr. Amit Sachs.
From December 7, 2007 (inception) to October 31, 2008, have incurred accumulated
net losses of $6,944. As of October 31, 2008, we had $63,847 in current assets
and current liabilities of $0. Our auditors have issued a going concern opinion.
This means that our auditors believe there is substantial doubt as to whether we
can continue as an ongoing business for the next twelve months. We do not
32
anticipate that we will generate revenues at least until we have completed and
launched our TradeOnSMS system and website.
PLAN OF OPERATION
We have not generated any revenues since our inception on December 7, 2007. We
believe that our current funding will allow us to begin our product development,
market our TradeOnSMS system, and remain in business for 12 months. We do not
expect to generate revenues until we have completed development of our product,
which we expect will be ready for sale in October 2009. We expect that we will
be in a position to begin generating revenues approximately three months after
we launch our product, or in January 2010. If we are unable to generate revenues
within 12 months of the effectiveness of the registration statement of which
this prospectus is a part for any reason, or if we are unable to make a
reasonable profit within 12 months of the effectiveness of the registration
statement, we may have to suspend or cease operations. At the present time, we
have not made any arrangements to raise additional cash. If we need additional
funds, we may seek to obtain additional funds through additional private
placement(s) of our securities or loans. We have no other financing plans at
this time.
Our business is premised on the theory that consumers will be using their mobile
phone to compare or look up prices of products while out shopping. We believe
that the SMS price comparison system will become as popular as price comparison
on the Internet, and thus there will be a market opportunity for our product,
because it offers several advantages while out shopping when consumers have no
access to computers or Internet access.
Our current business objectives are:
* to develop and commercialize our TradeOnSMS system;
* to execute our marketing plan and to create interest in our product;
Our goals over the next 12 months are to:
* complete development of our TradeOnSMS system by September 2009;
* drive traffic to our website through marketing efforts, where
customers will be able to subscribe to our service;
* generate revenue by January of 2010 through the sale subscriptions;
and
* achieve break-even results of operations.
ACTIVITIES TO DATE
We were incorporated under the laws of the State of Nevada on December 7, 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. Since our inception we have not made
any significant purchases or sale of assets, nor have we been involved in any
mergers, acquisitions or consolidations. We have spent only approximately $6,944
on development of our business since our inception, as our management believed
it could better implement our long-term business plan by keeping expenditures at
a minimum until we raised a substantial amount of funds to execute our business
and marketing plan. Accordingly, between December 2007 and September 2008, we
were focused primarily on raising capital to execute our business plan. We
closed on a private placement of our common stock on September 24, 2008,
pursuant to which we sold 2,794,880 shares of our common stock for total gross
proceeds of $69,872.
33
EXPENDITURES
The following chart provides an overview of our budgeted expenditures by
significant area of activity over the next 12 months. These expenditures are
described in detail below under "Milestones."
Present to April 2009 to July 2009 to October 2009 to Present to
March 2009 June 2009 September 2009 December 2009 December 2009
---------- --------- -------------- ------------- -------------
Legal/Accounting $ 4,000 $ 4,000 $ 4,000 $ 4,000 $16,000
Graphic & Web Designer 1,000 1,000 1,000 1,000 4,000
TradeOnSMS Development 5,000 5,000 5,000 2,000 17,000
Computer Equipment 1,000 1,000 1,000 1,000 4,000
Graphic Design 500 500 -- -- 1,000
Advertising/Marketing -- -- 7,500 7,500 15,000
1,000 Free Subscription -- -- 2,400 -- 2,400
Office Supply & Misc 250 250 250 250 1,000
Telephone 150 150 150 150 600
------- ------- ------- ------- -------
$11,900 $11,900 $21,300 $15,900 $61,000
======= ======= ======= ======= =======
MILESTONES
PRESENT - MARCH 2009
MAIN OBJECTIVES:
* Identify and hire a software contactor to develop TradeOnSMS system;
* Initiate the development of our corporate and marketing collateral.
During this quarter, we plan to hire a software contractor to develop our
TradeOnSMS system. In order to reduce costs on software licensing for developing
and running our website we will engage a contractor that will use open source
software both for the operating system and the programming language. The
contractor's main duty will be to develop the TradeOnSMS system according to our
requirements. We estimate that it will take six to nine months to develop, test
and commercially launch our TradeOnSMS system. We have budgeted $17,000 over the
next twelve months for this task.
Our Secretary and Director, Mr. Moshe Basson, will be in charge on retaining an
independent graphic and web designer. We expect that such independent contractor
will finish developing our corporate collateral (including logo, letterheads &
stationeries). We also plan to develop and complete our information-only
website, which we expect to be completed by the end of the first quarter. We
have budgeted $1,000 per quarter over the next twelve months.
APRIL 2009 - JUNE 2009
MAIN OBJECTIVES:
* Develop the TradeOnSMS system; and
* Integrate an SMS gateway to our TradeOnSMS system.
34
During this quarter, we expect to focus on the development of our software
product. Our management will provide the contractor with the software
requirements specification for the TradeOnSMS system.
In order to be able to send/receive text messages to/from our future clients we
will need a SMS gateway server. We identified Kannel as our SMS gateway, Kannal
is an open source project to make a SMS gateway. The cost of the SMS gateway
software is free; the cost of sending/receiving a text message is about 12 cents
per message.
The contractor will be in charge of integrating Kannel SMS gateway to our
TradeOnSMS system.
JULY 2009 - SEPTEMBER 2009
MAIN OBJECTIVES:
* Launching TradeOnSMS - Beta Mode; and
* Gain customer awareness to our service.
During this quarter we will test the beta version of the TradeOnSMS system and
modify the software as needed to finalize development. We expect the final
version of the TradeOnSMS to be finalized by the end of this quarter.
In order to gain customer awareness, we plan to give away 1,000 free
subscriptions to our service. Each subscriber will get 10 free text queries. We
hope to gain customer awareness and at the same time, test our system on a small
scale. We hope to gain feedback from these free subscribers; feedback that will
be essential to us before launching our service commercially. Both of our
directors and officers will be approaching technology websites and blogs and
offer the free subscriptions to our service.
We estimate our cost for the 1,000 free subscriptions at $2,400.
OCTOBER 2009 - DECEMBER 2009
MAIN OBJECTIVES:
* Commercially launch TradeOnSMS; and
* Execute our marketing plan.
During this quarter to plan on commercially launching our TradeOnSMS system to
the public.
We will be using a variety of different marketing initiatives such as: email
campaigns, search engine promotions and web seminars, web advertising,
e-newsletters, online public relations and press releases.
Mr. Sachs will be primarily responsible for implementing our marketing and sales
plan, but both of our directors and officers will be performing this task. Our
budget for the web marketing campaign is $10,000. We have also budgeted an
additional $5,000 in case we need to hire a third party consulting firm to
assist us with the web marketing camping.
RESULTS OF OPERATIONS
During the period from December 7, 2007 (date of inception) through October 31,
2008, we incurred a net loss of $6,944. This loss consisted of incorporation
costs and consulting fees to our directors and officers. Since inception, we
have sold 6,794,880 shares of common stock.
35
PURCHASE OR SALE OF EQUIPMENT
We have not purchased or sold, and we do not expect to purchase or sell, any
plants or significant equipment over the twelve months.
REVENUES
We had no revenues for the period from June 27, 2006 (date of inception) through
October 31, 2008. We believe that we will be able to commence the commercial
launching of our TradeOnSMS system and execute our marketing plan by October
2009, and that that we will be in a position to begin generating revenues
approximately three months after we launch our product, or in January 2010.
LIQUIDITY AND CAPITAL RESOURCES
As previously noted, we have raised $918 from the sale of stock to our officers
and directors and $69,872 through a private placement to 35 non-affiliated
investors. At October 31, 2008 we had $63,847 in cash. As of the date hereof, we
have approximately $63,516 of which we anticipate needing approximately $20,750
for the yet unpaid expenses associated with this Registration Statement (See
ITEM 25 "Other Expenses if Issuance and Distribution"). Our budgeted
expenditures for the next twelve months are $69,400. Therefore, we presently
have a budgeted shortfall of approximately $18,234.
How long TradeOn will be able to satisfy its cash requirements depends on how
quickly our company can generate revenue and how much revenue can be generated.
We estimate that our current cash balances will be extinguished prior to the end
of October 2009, provided we do not have any unanticipated expenses. Although
there can be no assurance at present, we plan to be in a position to generate
revenues prior to the end of the year. We must generate at least $18,234 in
revenues in order to fund all expenditures under our 12-month budget.
If we fail to generate sufficient revenues, we will need to raise additional
funds for the future development of our business, or to respond to unanticipated
requirements or expenses. We do not currently have any arrangements for
financing and we can provide no assurance to investors we will be able to find
such financing. There can be no assurance that additional financing will be
available to us, or on terms that are acceptable. Consequently, we may not be
able to proceed with our intended business plans or complete the development and
commercialization of our product.
There are also no plans or expectations to purchase or sell any significant
equipment in the first year of operations.
GOING CONCERN CONSIDERATION
Our independent auditors included an explanatory paragraph in their report on
the accompanying financial statements expressing 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.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
36
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, of which this prospectus is a part, covering
the securities being offering in this offering. As permitted by rules and
regulations of the SEC, this prospectus does not contain all of the information
set forth 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, which you may
inspect without charge at the public reference facilities of the SEC's
Washington, D.C. office, 100 F Street, N.E., Washington, D.C. 20549, on official
business days during the hours of 10am and 3pm, and on the SEC Internet site at
http:\\www.sec.gov. Information regarding the operation of the public reference
rooms may be obtained by calling the SEC at 1-800-SEC-0330.
37
FINANCIAL STATEMENTS
TRADEON, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
OCTOBER 31, 2008
Report of Registered Independent Auditors ............................... F-1
Financial Statements-.................................................... F-2
Balance Sheets as of October 31, 2008.................................... F-3
Statements of Operations for the Periods Ended October 31, 2008
and Cumulative from Inception ........................................... F-4
Statement of Stockholders' Equity for the Period from Inception
Through October 31, 2008 ................................................ F-5
Statements of Cash Flows for the Periods Ended October 31, 2008
and Cumulative from Inception............................................ F-6
Notes to Financial Statements - October 31, 2008 ........................ F-7
38
REPORT OF REGISTERED INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
of TradeOn, Inc.:
We have audited the accompanying balance sheet of TradeOn, Inc. (a Nevada
corporation in the development stage) as of October 31, 2008, and the related
statement of operations, stockholders' equity, and cash flows for the year ended
October 31, 2008, and from inception (December 7, 2008) through October 31,
2008. 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 TradeOn, Inc. as of October 31,
2008, and the results of its operations and its cash flows for the year ended
October 31, 2008, and from inception (December 7, 2008) through October 31,
2008, 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 4 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 October 31, 2008, 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 4 to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Respectfully submitted,
/s/ Alan Weinberg CPA
- --------------------------------
Weinberg & Associates LLC
Baltimore, Maryland
November 24, 2008
F-1
TRADEON, INC.
(A Development Stage Company)
BALANCE SHEET
(AUDITED)
October 31,
2008
--------
ASSETS
Current Assets
Cash in bank $ 63,847
--------
Total current assets $ 63,847
--------
Total Assets $ 63,847
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ --
--------
Total current liabilities $ --
--------
Stockholders' Equity
Preferred Stock, par value $0.0001 per share,
50,000,000 shares authorized, none outstanding
Common Stock, par value $0.0001 per share,
100,000,000 shares authorized, 6,794,880 shares
issued and outstanding on October 31, 2008 679
Additional paid-in capital 70,111
(Deficit) accumulated during the development stage
(6,944)
--------
Total stockholders' equity 63,847
--------
Total Liabilities and Stockholders' Equity $ 63,847
========
The Accompanying Notes Are an Integral Part of these Financial Statements
F-2
TRADEON, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(AUDITED)
December 7, 2007
(Inception) To
October 31,
2008
----------
Revenue $ --
Expenses
Consulting 6,026
Organization 918
----------
Loss before income taxes 6,944
----------
Provision for Income Taxes --
----------
Net (Loss) $ (6,944)
==========
Basic and Diluted
(Loss) per Common Shares a
----------
Weighted Average Number of Common Shares 4,314,318
----------
- ----------
a = Less than ($0.01) per share
The Accompanying Notes Are an Integral Part of these Financial Statements
F-3
TRADEON, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
(AUDITED)
Common Stock
------------------- Paid in Accumulated Total
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
# $ -- $ -- $ -- $ --
INCEPTION DECEMBER 7, 2007
Common stock issued to Directors 4,000,000 400 518 918
For cash December 7, 2007 @ $0.00023
Per Share
Private placement closed on 2,794,880 279 69,593 69,872
September 24, 2008 @ 0.025 per share
Net loss for the year (6,944) (6,944)
--------- ------ -------- -------- --------
BALANCE, OCTOBER 31, 2008 6,794,880 $ 679 $ 70,111 $ (6,944) $ 63,847
========= ====== ======== ======== ========
The Accompanying Notes Are an Integral Part of these Financial Statements
F-4
TRADEON, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(AUDITED)
December 7, 2007
(Inception) To
October 31,
2008
--------
OPERATING ACTIVITIES
Net(Loss) $ (6,944)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities --
--------
Net Cash (Used) by Operating Activities (6,944)
--------
FINANCING ACTIVITIES
Proceeds from issuance of common stock 70,791
--------
Cash Provided by Financing Activities 70,791
--------
Net Increase in Cash 63,847
Cash, Beginning of Period --
--------
Cash, End of Period $ 63,847
========
The Accompanying Notes Are an Integral Part of these Financial Statements
F-5
TRADEON, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2008
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was incorporated under the laws of the state of Nevada on December
7, 2007. The Company has limited operations and in accordance with SFAS #7, is
considered a development stage company and has not yet realized any revenues
from its planned operations.
As a development stage enterprise, the Company discloses the deficit accumulated
during the development stage and the cumulative statements of operations and
cash flows from inception to the current balance sheet date.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected an October 31 fiscal year end.
EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share" ("SFAS No.
128"), which specifies the computation, presentation and disclosure requirements
for earnings (loss) per share for entities with publicly held common stock. SFAS
No. 128 supersedes the provisions of APB No. 15, and requires the presentation
of basic earnings (loss) per share and diluted earnings (loss) per share. The
Company has adopted the provisions of SFAS No. 128 effective December 7, 2007
(inception).
Basic earnings (loss) per share amounts are computed by dividing the net income
(loss) by the weighted average number of common shares outstanding. Diluted
earnings (loss) per share are the same as basic earnings (loss) per share due to
the lack of dilutive items in the Company.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, consisting of
accounts payable and accrued liabilities approximate their fair value due to the
short-term maturity of such instruments. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial statements.
F-6
TRADEON, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
OCTOBER 31, 2008
INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). A deferred tax
asset or liability is recorded for all temporary differences between financial
and tax reporting and net operating loss carry forwards. Deferred tax expense
(benefit) results from the net change during the year of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
SOFTWARE DEVELOPMENT COSTS
Software development costs represent capitalized costs of design, configuration,
coding, installation and testing of the Company's website up to its initial
implementation. Upon implementation, the asset will be amortized to expense over
its estimated useful life of three years using the straight-line method. Ongoing
website post-implementation costs of operation, including training and
application maintenance, will be charged to expense as incurred.
NOTE 3. ADVERTISING
The Company's policy regarding advertising is to expense advertising when
incurred. The Company had not incurred any advertising expense as of October 31,
2008.
NOTE 4. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has net losses for the
period from inception (December 7, 2007) to October 31, 2008 of $6,944. This
condition raises substantial doubt about the Company's ability to continue as a
going concern. The Company's continuation as a going concern is dependent on its
ability to meet its obligations, to obtain additional financing as may be
required and ultimately to attain profitability. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
F-7
TRADEON, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
OCTOBER 31, 2008
Management is planning to raise additional funds through debt or equity
offerings. There can be no assurance that debt or equity financing will be
available to the Company on acceptable terms or at all, and there is no
guarantee that the Company will be successful in these efforts.
NOTE 5. RELATED PARTY TRANSACTIONS
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 6. INCOME TAXES
The Company uses the liability method, where deferred tax assets and liabilities
are determined based on the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting purposes. During fiscal 2008, the Company incurred net
losses and, therefore, has no tax liability. The net deferred tax asset
generated by the loss carry-forward has been fully reserved. The cumulative net
operating loss carry-forward is $6,944 at October 31, 2008, and will expire in
the year 2028.
As at October 31, 2008, deferred tax assets consisted of the following:
Net operating losses $1042
Less: valuation allowance (1042)
-------
Net deferred tax asset $ --
=======
NOTE 7. NET OPERATING LOSSES
As of October 31, 2008, the Company has a net operating loss carry-forward of
approximately $6,944, which will expire 20 years from the date the loss was
incurred.
NOTE 8. STOCKHOLDERS' EQUITY
AUTHORIZED
The Company is authorized to issue 100,000,000 shares of $0.0001 par value
common stock and 50,000,000 shares of preferred stock, par value $0.0001. All
common stock shares have equal voting rights, are non-assessable and have one
vote per share. Voting rights are not cumulative and, therefore, the holders of
more than 50% of the common stock could, if they choose to do so, elect all of
the directors of the Company.
F-8
TRADEON, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
OCTOBER 31, 2008
ISSUED AND OUTSTANDING
For transactions other than those with employee's stock, issuances are in
accordance with paragraph 8 of SFAS 123, where issuances shall be accounted for
based on the fair value of the consideration received. Transactions with
employee's stock issuance are in accordance with paragraphs (16-44) of SFAS 123,
where issuances shall be accounted for based on the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is the more reliable measure.
On December 7, 2007, the Company issued 4,000,000 common shares to its directors
for cash, valued at $0.00023 per share or $918.
Since inception (December 7, 2007) to the year ended October 31, 2008, the
Company accepted subscriptions for 2,794,880 shares of common stock from 35
investors pursuant to a series of private placement transactions which closed on
September 24, 2008. The private placements were not subject to any minimum
investment, and were priced at $0.025 per share, for aggregate gross proceeds of
approximately $70,000. The Company accepted the subscriptions on September 24,
2008.
NOTE 9. CONCENTRATION OF CREDIT RISK
The Company's cash and cash equivalents are invested in a major bank in Israel
and are not insured. Management believes that the financial institution that
holds the Company's investments are financially sound and accordingly, minimal
credit risk exists with respect to these investments.
NOTE 10. RECENT ACCOUNTING PRONOUNCEMENTS
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "Accounting for Financial Guarantee Insurance Contracts-and interpretation
of FASB Statement No. 60". SFAS No. 163 clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162
sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB's amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company's financial position, statements of operations, or cash flows at
this time.
F-9
TRADEON, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
OCTOBER 31, 2008
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities--an
amendment of FASB Statement No. 133. This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for "plain vanilla" share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). The Company
will adopt this Statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.
F-10
TRADEON, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
OCTOBER 31, 2008
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations. This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. This statement
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. An entity may not apply it before that date. The
effective date of this statement is the same as that of the related FASB
Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements. The Company will adopt this statement beginning March 1, 2009. It is
not believed that this will have an impact on the Company's consolidated
financial position, results of operations or cash flows.
In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities--Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available to
all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entities first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS
No. 159 beginning March 1, 2008 and is currently evaluating the potential impact
the adoption of this pronouncement will have on its consolidated financial
statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this statement does not require any
new fair value measurements. However, for some entities, the application of this
statement will change current practice. This statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Earlier application is
encouraged, provided that the reporting entity has not yet issued financial
statements for that fiscal year, including financial statements for an interim
period within that fiscal year. The Company will adopt this statement March 1,
2008, and it is not believed that this will have an impact on the Company's
consolidated financial position, results of operations or cash flows.
F-11
DEALER PROSPECTUS DELIVERY OBLIGATION
UNTIL APRIL 5, 2009, ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE YOU DIFFERENT
INFORMATION. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL NOR ARE THEY
SEEKING AN OFFER TO BUY THE SECURITIES REFERRED TO IN THIS PROSPECTUS IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED
IN THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE ARE CORRECT ONLY
AS OF THE DATE SHOWN ON THE COVER PAGE OF THESE DOCUMENTS, REGARDLESS OF THE
TIME OF THE DELIVERY OF THESE DOCUMENTS OR ANY SALE OF THE SECURITIES REFERRED
TO IN THIS PROSPECTUS.
TRADEON, INC.
2,794,880
SHARES
OF
COMMON STOCK
----------
PROSPECTUS
----------
JANUARY 5, 2009