Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
POST
EFFECTIVE AMENDMENT #1 TO FORM SB-2
ON
FORM S-1
SEC
FILE NO: 333-148346
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
CHERRY TANKERS,
INC.
(Exact
name of registrant as specified in its charter)
Delaware
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5139
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98-0531496
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(State
or jurisdiction of incorporation or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
Number)
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Cherry
Tankers, Inc.
78 Sokolov
Street
Herzeliya, Israel,
46497
Phone:
011-972-9-958-3777
Facsimile:
011-972-9-956-3756
(Address
and telephone number of principal executive offices)
National
Corporate Research Ltd.
615
South DuPont Highway
Dover,
Delaware 19901
Phone:
1-800-483-1140
(Name,
address, and telephone number of agent for service)
Approximate
date of proposed sale to the public:
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As soon as practicable after the effective date of
this Registration
Statement
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If any of
the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. x
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated
filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act (Check one):
Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company x
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(Do
not check if a smaller reporting company)
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CALCULATION
OF REGISTRATION FEE
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TITLE OF EACH
CLASS OF
SECURITIES
TO BE
REGISTERED
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AMOUNT TO BE
REGISTERED
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PROPOSED
MAXIMUM
OFFERING
PRICE PER
SHARE (1)
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PROPOSED
MAXIMUM
AGGREGATE
OFFERING
PRICE (2)
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AMOUNT OF
REGISTRATION
FEE (2) (3)
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Common
Stock
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2,000,000
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$0.00066
per share
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$1,325.38
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$0.052
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(1)
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Based
on the last sales price on August 7, 2008 (the last date on which a sale
was made)
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(2)
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Estimated
solely for the purpose of calculating the registration fee in accordance
with Rule 457 under the Securities Act.
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(3) |
Pursuant to Rule 457(p) under the Securities Act, the
Registration fee is to be set off against a portion of the $15.72
registration fee paid in connection with the Company’s Registration
Statement on Form SB-2 that was filed on December 26,
2007. |
THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
SUBJECT
TO COMPLETION, Dated February 24 , 2009
PROSPECTUS
Cherry
Tankers, Inc.
2,000,000
SHARES
COMMON
STOCK
The
selling shareholders named in this prospectus are offering all of the shares of
common stock offered through this prospectus for a period of up to two years
from the effective date.
Our
common stock is quoted for trading on the OTC Bulletin Board under symbol
“CTKE”
THE
PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. See section
entitled "Risk Factors" on pages 6-15 .
The information in this prospectus is
not complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
The
selling shareholders will sell our shares at prevailing market prices through
the facilities of the OTC Bulletin Board or privately negotiated
prices.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
Date of this Prospectus is: February 24 , 2009
Table
of Contents
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PAGE
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Summary
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5 |
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Risk
Factors
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6 |
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Forward-Looking
Statements
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15 |
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Use
of Proceeds
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15 |
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Determination
of Offering Price
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16 |
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Dilution
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16 |
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Selling
Shareholders
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16 |
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Plan
of Distribution
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18 |
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Description
of Securities
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19 |
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Interests
of Named Experts and Council
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20 |
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Description
of Business
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20 |
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Description
of Property
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21 |
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Legal
Proceedings
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21 |
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Market
for Common Equity and Related Shareholder Issues
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21 |
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Financial
Statements
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F-1 |
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Management’s
Discussion and Analysis
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23 |
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Changes
in and Disagreements with Accountants
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25 |
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Available
Information
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25 |
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Reports
to Security Holders
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25 |
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Directors,
Executive Officers, Promoters and Control Persons
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25 |
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Executive
Compensation
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26 |
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Security
Ownership of Certain Beneficial Owners and Management
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27 |
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Certain
Relationships and Related Transactions
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28 |
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Disclosure
of Commission Position of Indemnification for Securities Act
Liablities
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29 |
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Summary
Prospective
investors are urged to read this prospectus in its entirety.
As used
in this prospectus, references to “Cherry Tankers,” the “Company,” “we,” “our,”
or “us” refer to Cherry Tankers, Inc., unless the context otherwise
indicates.
The
following summary highlights selected information contained in this prospectus.
Before making an investment decision, you should read the entire prospectus
carefully, including the “Risk Factors” section, the financial statements and
the notes to the financial statements.
Corporate
Background
Cherry
Tankers, Inc. was incorporated under the laws of the State of Delaware on March
30, 2007. We hoped to revolutionize the footwear industry by providing a
technology that makes an orthotic shoe that alleviates lower back, knee and hip
pain by pinpointing the wearer’s anatomical center of gravity and adjusting his
current center accordingly.
We have
defaulted on our technology license and we are unable to carry out our original
business plan. Our Subsidiary has granted a renewable,
non-transferable, sub-licensable license of our technology to a sole
proprietorship owned by one of our Directors.
We are
seeking a merger partner.
We have
not generated any revenue to date and are a development stage company. We
currently have no employees.
Our
offices are currently located at 78 Sokolov Street, Herzeliya, Israel. Our
telephone number is 011-972-9-958-3777. We do not currently have a
website.
The
Offering
Securities
offered:
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2,000,000
shares of common stock
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Offering
price:
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$0.00066
per share until a market develops and thereafter at market prices or
prices negotiated in private transactions
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Terms
of the Offering:
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The
selling shareholders will determine when and how they will sell the common
stock offered in this prospectus.
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Termination
of the Offering:
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The
offering will conclude when all of the 2,000,000 shares of common stock
have been sold, the shares no longer need to be registered to be sold due
to the operation of Rule 144(k) or we decide at any time to terminate the
registration of the shares at our sole discretion. In any event, the
offering shall be terminated no later than two years from the effective
date of this registration statement.
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Securities
Issued and to be Issued:
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13,705,000
shares of our common stock are issued and outstanding as of the date of
this prospectus. All of the common stock to be sold under this prospectus
will be sold by existing shareholders.
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Use
of proceeds:
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We
will not receive any proceeds from the sale of shares by the selling
stockholders.
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Summary
Financial Information
Balance
Sheets
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As of
December
31, 2008
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As of
December
31, 2007
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(audited)
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(audited)
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Cash
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$
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377
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$
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244,109
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Total
Assets
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$
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377
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$
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244,109
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Liabilities
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$
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13,200
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$
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38,029
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Total
Stockholders’ Equity
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$
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(12,823)
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$
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206,080
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Statement
of Operations
From
Incorporation on
March
30, 2007 to December 31, 2008
( audited )
Revenue
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$
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0
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Net
Loss
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$
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288,881
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Risk
Factors
An
investment in our common stock involves a high degree of risk. A potential
investor should carefully consider the following factors and other information
in this Form S-1 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 would likely suffer. As a result, our
investors could lose all or part of their investment in our
Company.
Risks
related to our Company
1.
We are a development stage company and may never be able to effectuate our
business plan or achieve any revenues or profitability. Therefore, at this stage
of our business, potential investors have a high probability of losing their
entire investment.
We were
established on March 30, 2007, and have no operating history. We are in the
development stage and are subject to all of the risks inherent in the
establishment of a new business enterprise. We have had no revenues or customers
to date. Our operations to date have been focused on organizational, start-up,
and capital formation activities. As a development stage company, we are a
highly speculative venture involving significant financial risk. It is uncertain
as to when we will become profitable, if ever.
There is
nothing at this time on which to base an assumption that our business operations
will prove to be successful or that we will ever be able to operate profitably.
We may not be able to successfully effectuate our business. There can be no
assurance that we will ever achieve any revenues or profitability. The revenue
and income potential of our proposed business and operations is unproven as the
lack of operating history makes it difficult to evaluate the future prospects of
our business.
2.
We expect losses in the future because we have no revenues.
We are
expecting losses over the next twelve months because we do not yet have any
revenues to offset the expenses associated with the development and the
marketing of our footwear to alleviate lower back, knee and hip pain. We cannot
guarantee that we will ever be successful in generating revenues in the future.
We recognize that if we are unable to generate revenues, we will not be able to
earn profits or continue operations. There is no history upon which to base any
assumption as to the likelihood that we will prove successful, and we can
provide investors with no assurance that we will generate any operating revenues
or ever achieve profitable operations.
In
January 2009, one of our shareholders lent us $11,000 to pay the legal and
accounting costs of preparing our annual report, and of preparing this
post-effective amendment to our registration statement that we originally filed
on Form SB-2, which became effective in January 2008.
3.
If our business strategy is not successful, we may not be able to continue
operations as a going concern, and our stockholders may lose their entire
investment in us.
As
discussed in the Notes to Consolidated Financial Statements included in this
Form S-1, as of December 31, 2008 we had no revenues and incurred a net loss of
$218,903 for the year ended December 31, 2008 and $69,978 for the period
ended December 31, 2007. These factors raise substantial doubt that we will be
able to continue operations as a going concern, and our registered independent
auditors included an explanatory paragraph regarding this uncertainty in their
report on our consolidated financial statements for the period ended
December 31, 2007 and the year ended December 31, 2008. Our ability to
continue as a going concern is dependent upon our generating cash flow
sufficient to fund operations and reducing operating expenses. Our business
strategy may not be successful in addressing these issues. If we cannot continue
as a going concern, our stockholders may lose their entire investment in
us.
4.
We have defaulted under our license agreement.
On
November 27, 2007, we entered into a patent licensing agreement (the “Patent
Licensing Agreement”) with Cherry Tankers Ltd., our Israeli subsidiary (the
“Subsidiary”). The Patent Licensing Agreement grants us an irrevocable,
non-transferable, perpetual right and license to make use of certain technology
and products in the orthopedic shoe soles field (the “Technology”) for the sole
purpose of manufacturing, marketing, distributing and selling the products based
on the Technology, on a worldwide basis, except in Israel. Under the
Patent Licensing Agreement, we are entitled to sub-license the Technology to
third-party strategic partners if agreed upon by both parties in advance.
The Subsidiary retains all rights, title and interest in and to the
Technology, including the design of the products, copyrights, trademarks and
trade secrets.
In consideration for the Technology,
the Company was obligated to pay development fees to the Subsidiary in
installments totaling $150,000. The first installment of $20,000 was due
on February 1, 2008. On February 1, 2008, we amended the agreement with
the Subsidiary to reschedule the installment due dates. The first
installment payment of development fees was due on July 15, 2008. On July
15, 2008, the Company did not make the first development fee installment
payment, and was in default on the Patent Licensing Agreement. On September
15, 2008, the Company did not make the second development fee installment
payment, and was in default on the Patent Licensing Agreement. On November
15, 2008, the Company did not make the third development fee installment
payment, and was in default on the Patent Licensing Agreement. On December 23,
2008, we amended the Patent Licensing Agreement with our Subsidiary to
reschedule the due dates of the installment payments to April 15, 2009 ($50,000)
and July 15, 2009 ($100,000). As part of the same amendment, we also granted the
Subsidiary the right to sublicense our technology in the Israeli market only. On
January 11, 2009, the Subsidiary granted a renewable, non-transferable, sub-licensable
license to make use of our technology for the sole purpose of manufacturing,
marketing, distributing and selling the shoes and otherwise exploiting our
technology in Israel to Elya Orthopedics (“Elya”). Elya is a sole proprietorship
owned by Yael Alush, our Secretary, Treasurer and Director. We are also looking
at other business opportunities, including sale or further sublicensing of our
technology or seeking an acquirer.
5.
Since our officers can work or consult for other companies, their activities
could slow down our operations.
Our
officers are also members of our Board of Directors, and they are not required
to work exclusively for us. They do not devote all of their time to our
operations. Therefore, it is possible that a conflict of interest with regard to
their time may arise based on their employment for other companies. Their other
activities may prevent them from devoting full-time to our operations which
could slow our operations and may reduce our financial results because of the
slow down in operations. It is expected that our Directors will devote between
five and ten hours per week to our operations on an ongoing basis, and will
devote whole days and even multiple days at a stretch when
required.
6.
We are heavily dependent upon our officers and Directors. The loss of either Dr.
Gepstein or Ms. Alush, upon whose knowledge, leadership and technical expertise
we rely, would harm our ability to execute our business plan.
We are
dependent on the continued contributions of Dr. Reuven Gepstein, our President,
Chief Executive Officer and Director, and Ms. Yael Alush, our Secretary,
Treasurer and Director, whose knowledge and leadership would be difficult to
replace. If we were to lose either of their services, or if either of them is
not available to us when we need them, our ability to execute our business plan
would be harmed, and we may be forced to cease operations until such time as we
could hire a suitable replacement.
7.
We operate in a competitive market with limited personnel resources, and a
failure to attract and retain qualified employees could harm our ability to
execute our business plan.
Our
future success depends on our ability to identify, attract and retain qualified
personnel. Competition for employees in our industry is intense and we may not
be successful in attracting and retaining such personnel. We will be competing
with other footwear companies that have many more resources than we have. Other
footwear manufacturers may choose to enter our niche market and may have greater
resources and experience than we have in facilitating the necessary sales
channels.
8.
We may not be able to compete with current products, such as custom orthotics
special implants and other specially designed footwear, some of whose
manufacturers have greater resources and experience than we do.
The
corrective shoe market is intensely competitive and we believe that it will
become even more competitive in the future. Our footwear will compete with
numerous other footwear solutions to back pain, such as orthotics, custom
orthotics and other specially designed shoes. We will compete with national
companies such as Spenco Medical, Aetrex, Bio-sole, PowerStep and Pedag with
respect to orthotics. We will also compete with Dr. Wilson, Shoe Master, Health
Quest, OthoDynamics and Dr.’s Foot Laboratories with respect to custom
orthotics, and with MBT shoes and the APOS system in the specialized orthotic
footwear market.
While we
believe that we have certain competitive advantages against our competitors in
the orthotic footwear market, the entry of one or more of the large competitors
who sell orthotics and custom footwear into our potential market could force us
to reduce the prices that we charge to our customers. In some cases,
publicly-traded competitors may decide to undercut the price points of our
products by relying on their greater financial resources to increase sales. If
such an event should occur, it may result in a decrease in our ability to sell
our products at a profitable margin and may cause our products to be non-price
competitive. There can be no assurance that such an event will not occur in the
future, and such an event could severely limit our ability to increase sales or
expand our business and could have a serious negative effect on our financial
condition, results of operations and prospects. We can provide no assurance that
competitive pressures will not have a material adverse effect on
us.
9.
If we are unable to obtain funding, our business operations will be harmed. Even
if we do obtain funding, our then existing stockholders’ position in our Company
may be substantially diluted.
We must
find a partner to manufacture, advertise and distribute our footwear. In order
to expand our distribution beyond Israel, we will also need to obtain additional
funding. Even if we do find a partner to manufacture, advertise and distribute
our footwear, there can be no assurance that partner will have the capacity to
produce our products at a cost effective price. If any partner cannot produce
our products at a cost effective price, it will adversely affect our ability to
sell and market our products, which will mean that we will need to find another
partner who has that capacity.
Additionally,
finding a partner to manufacture, advertise and distribute our shoes may be a
lengthy and costly process, and at present we may not have sufficient means of
financing that search.
It is
possible that additional capital will be required to effectively support our
operations and to otherwise implement our overall business strategy. The
inability to raise the required capital will restrict our ability to grow and
may impair our ability to continue to conduct business operations. If we are
unable to obtain necessary financing, we will likely be required to curtail our
development plans which could cause the Company to become dormant. We currently
do not have any arrangements or agreements to raise additional capital. Any
additional equity financing may involve substantial dilution to our then
existing stockholders.
10.
There may be customs duties and tariffs on the export of shoes from one country
to another country.
Virtually
all of our footwear will be manufactured outside of the United States, and a
substantial portion of our products will be sold outside of the United States.
Accordingly, we will be subject to the risks generally associated with global
trade and doing business abroad, which include foreign laws and regulations,
varying consumer preferences across geographic regions, political unrest,
disruptions or delays in cross-border shipments and changes in economic
conditions in countries in which we manufacture or sell products. In addition,
disease outbreaks, terrorist acts and military conflict have increased the risks
of doing business abroad. These factors, among others, could affect our ability
to manufacture products or procure materials, our ability to import products,
our ability to sell products in international markets, and our cost of doing
business. If any of these or other factors make the conduct of business in a
particular country undesirable or impractical, our business could be adversely
affected. In addition, many of our imported products will be subject to duties,
tariffs or quotas that affect the cost and quantity of various types of goods
imported into the United States and other countries. Any country in which our
products are produced or sold may eliminate, adjust or impose new quotas,
duties, tariffs, safeguard measures, anti-dumping duties, cargo restrictions to
prevent terrorism, restrictions on the transfer of currency, or other charges or
restrictions, any of which could have an adverse effect on our results of
operations and financial condition.
11.
We may not be able to raise sufficient capital or generate adequate revenues to
meet our obligations and fund our operating expenses.
We have
not had any revenues since our inception. Failure to raise adequate capital and
generate adequate sales revenues to meet our obligations and develop and sustain
our operations could result in our having to curtail or cease operations.
Additionally, even if we do raise sufficient capital and generate revenues to
support our operating expenses, there can be no assurances that the revenues
will be sufficient to enable us to develop our business to a level where it will
generate profits and cash flows from operations sufficient to sustain us. These
matters raise substantial doubt about our ability to continue as a going
concern. Our registered independent auditors currently included an explanatory
paragraph in their report on our consolidated financial statements regarding
concerns about our ability to continue as a going concern. Accordingly, our
failure to generate sufficient revenues or to generate adequate capital could
result in the failure of our business and the loss of your entire
investment.
12.
Because we do not have an audit or compensation committee, stockholders will
have to rely on our Directors, who are not independent, to perform these
functions.
We do not
have an audit or compensation committee comprised of independent Directors.
Indeed, we do not have any audit or compensation committee. These functions are
performed by our two Directors, who are also our officers. Thus, there is a
potential conflict of interest in that our Directors have the authority to
determine issues concerning management compensation and audit issues that may
affect management decisions.
13.
We may be subject to tort claims for product liability for which we may not be
adequately insured.
Our
business relies on selling footwear to individuals who suffer from back, knee
and hip pain. Those persons may have a higher risk of injury than ordinary
consumers. Therefore, we may confront product liability claims in excess of what
we can afford to pay or even defend, which could have a material adverse effect
upon our financial condition and results of operations.
Since we
are a development stage company, we do yet have liability insurance and we
cannot be certain that we will be able to obtain adequate liability insurance
for our business at a cost that we can afford. Additionally, claims against us,
regardless of their merit or eventual outcome, may also have a material adverse
effect upon our ability to attract and retain business, and may cause us to
incur material expenses and significant management time for their
defense.
14.
If the costs of our raw materials increase, our profits are likely to
decline.
As noted
above, we must find a partner to manufacture, advertise and distribute our
footwear. If the cost of raw materials to that partner increases, those
additional costs are likely to be passed on to us. If we are not able to
increase the prices for our products to offset those costs, our profits from the
sale of our products are likely to decline.
15.
Our international operations involve inherent risks which could result in harm
to our business.
Virtually
all of our footwear will be manufactured outside of the United States. Our
management is located outside the United States and initially, we anticipate our
sales coming from outside the United States.
In the
future, we intend to sell our products into the United States and Europe.
Accordingly, we will be subject to the risks generally associated with global
trade and doing business abroad, which include foreign laws and regulations,
varying consumer preferences across geographic regions, political unrest,
disruptions or delays in cross-border shipments and changes in economic
conditions in countries in which we manufacture or sell products. In addition,
disease outbreaks, terrorist acts and military conflict have increased the risks
of doing business abroad. These factors, among others, could affect our ability
to manufacture products or procure materials, our ability to import products,
our ability to sell products in international markets, and our cost of doing
business. If any of these or other factors make the conduct of business in a
particular country undesirable or impractical, our business could be adversely
affected. In particular, once we commence operations, and assuming that we
effect our current plans, we will be subject to risks as a result of our planned
operations in Israel. See “Risk Factors Relating to Operations in Israel”
beginning on Page 13 .
16.
Currency exchange rate fluctuations could result in higher costs and decreased
margins.
We
anticipate that a majority of our products will be sold outside of the United
States. As a result, we will conduct transactions in various currencies, which
will increase our exposure to fluctuations in foreign currency exchange rates
relative to the U.S. dollar. We anticipate that our international revenues and
expenses generally will be derived from sales and operations in foreign
currencies, and these revenues and expenses could be affected by currency
fluctuations, including amounts recorded in foreign currencies and translated
into U.S. dollars for consolidated financial reporting. Currency exchange rate
fluctuations could also disrupt the business of any independent manufacturers
that produce our products by making their purchases of raw materials more
expensive and more difficult to finance. Foreign currency fluctuations could
have an adverse effect on our results of operations and financial
condition.
We do not
plan to engage in any hedging activities.
17.
Our intellectual property is only protected by patent applications that have
only been filed in the United States and in Israel.
Because
we do not have the funding to apply for protection elsewhere, our technology is
only protected by patent applications filed in the United States and in Israel
at the present time. Therefore, our technology may not be adequately protected
in other countries.
Because
we have filed patent applications but have not been granted actual patents,
there is a risk that we will not be granted patents, or that we will be granted
patents but the rights that are granted to us will not be broad enough to
protect our technology.
Additionally,
Israeli patent law provides that anyone who was using a patented invention in
Israel in good faith at the time that a patent application is filed, or who was
making good faith preparations to do so, has the right to continue using that
patented invention in his business without charge, even if the patent is issued.
The right may not be transferred except as part of the transfer of the business
in which the patent is used. The Company is not aware of anyone else who is
using the technology that it purchased under the Licensing
Agreement.
18.
Our success depends on third
party distribution channels.
We intend
to sell our footwear through a series of retailers and distributors. Our future
revenue growth will depend in large part on sales of our products through these
relationships. We may not be successful in developing these distribution
relationships. Retail stores and distributors may compete with us. In addition,
these distributors may not dedicate sufficient resources or give sufficient
priority to selling our products. Our failure to develop distribution channels,
the loss of a distribution relationship, or a decline in the efforts of a
material reseller or distributor could prevent us from generating sufficient
revenues to become profitable.
19.
We will rely on third party
manufacturing.
We intend
to outsource the manufacturing of our footwear. These manufacturers may not be
available to manufacture our products in a timely and cost effective manner. We
may not be able to locate manufacturers for our footwear on commercially
reasonable terms. If we cannot locate a manufacturing facility that will
manufacture our products on commercially reasonable terms, we will not be able
to deliver our products to our customers in a timely manner on a cost-effective
basis. A delay in providing our customers with our products and services would
harm our business.
Risk
Factors Relating to Our Common Shares
20.
We may issue additional common shares in the future, which would reduce our
current investors’ percentage of ownership and which may dilute our share
value.
Our
Certificate of Incorporation authorizes the issuance of 100,000,000 shares of
common stock, of which 13,705,000 shares are issued and outstanding. The future
issuance of additional shares of common stock, which we are currently authorized
to issue, may result in substantial dilution in the percentage of our common
stock held by our then existing stockholders. We may value any common stock
issued in the future on an arbitrary basis. The issuance of common stock for
future services or acquisitions or other corporate actions may have the effect
of diluting the value of the shares held by our investors, and might have an
adverse effect on any trading market for our common stock.
21.
NASD sales practice requirements may limit a stockholder’s ability to buy and
sell our stock.
In
addition to the “penny stock” rules described below, the NASD has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer’s financial status, tax status, investment
objectives and other information. Under interpretations of these rules, the NASD
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. The NASD requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common stock, which may have the effect of reducing the level of trading
activity in our common stock. As a result, fewer broker-dealers may be willing
to make a market in our common stock, reducing a stockholder’s ability to resell
shares of our common stock.
22.
Our common shares will be subject to the “Penny Stock” Rules of the SEC, and the
trading market in our securities will be limited, which will make transactions
in our stock cumbersome, which may reduce the value of an investment in our
stock.
The
Securities and Exchange Commission has adopted Rule 15g-9, which establishes the
definition of a “penny stock,” for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules
require:
|
|
that a broker or dealer approve a
person’s account for transactions in penny stocks;
and
|
|
|
that the broker or dealer receive
from the investor a written agreement to the transaction, setting forth
the identity and quantity of the penny stock to be
purchased.
|
In order
to approve a person’s account for transactions in penny stocks, the broker or
dealer must:
|
|
obtain
financial information and investment experience objectives of the person;
and
|
|
|
make a reasonable determination
that the transactions in penny stocks are suitable for that person, and
that the person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny
stocks.
|
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:
|
|
sets forth the basis on which the
broker or dealer made the suitability determination;
and
|
|
|
confirms that the broker or
dealer received a signed, written agreement from the investor prior to the
transaction.
|
Generally,
brokers may be less willing to execute transactions in securities subject to the
“penny stock” rules. This may make it more difficult for investors to dispose of
our common shares thus causing a decline in the market value of our
stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
23.
There is no current trading market for our securities, and if a trading market
does not develop, purchasers of our securities may have difficulty selling their
shares.
There is
currently no established public trading market for our securities and an active
trading market in our securities may not develop or, if developed, may not be
sustained. Our securities have
been admitted to and are quoted on the NASD Bulletin Board under the symbol OTC
BB CTKE, but an active public trading market has not developed. If no such
market develops, purchasers of the shares may have difficulty selling their
common stock should they desire to do so.
24.
The price of our common stock was arbitrarily determined by us and may not
reflect the actual market price for the securities.
The
offering price of our common stock was determined by us arbitrarily. The price
is not based on our financial condition and prospects, market prices of similar
securities of comparable publicly traded companies, certain financial and
operating information of companies engaged in similar activities to ours, or
general conditions of the securities market. The price may not be indicative of
the market price, if any, for the common stock in the trading market. The market
price of our securities may decline below the 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.
25.
Future sales by our stockholders could cause the stock price to
decline.
No
predictions can be made of the effect, if any, that market sales of shares of
common stock or the availability of such shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of significant amounts
of our common stock could adversely affect the prevailing market price of the
common stock, as well as impair our ability to raise capital through the
issuance of additional equity securities.
26.
State securities laws may limit secondary trading, which may restrict the states
in which and conditions under which you can sell your common stock.
Secondary
trading in our common stock will not be possible in any state until the common
stock is qualified for sale under the applicable securities laws of that state
or there is confirmation that an exemption, such as listing in certain
recognized securities manuals, is available for secondary trading in that state.
If we fail to register or qualify, or to obtain or verify an exemption for the
secondary trading of the common stock in any particular state, the 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 liquidity for the common stock could be significantly
impacted thus causing you to realize a loss on your investment.
27.
The requirements of being a public company may strain our resources and distract
our management.
As a
public company, we will be subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, or the Exchange Act, and the
Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. These requirements may
place a strain on our systems and resources. The Exchange Act requires that we
file annual, quarterly and current reports with respect to our business and
financial condition. The Sarbanes-Oxley Act requires that we maintain effective
disclosure controls and procedures and internal controls for financial
reporting. We will be required to document and test our internal control
procedures in order to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act, which requires annual management assessments of the
effectiveness of our internal controls over financial reporting and a report by
our registered independent auditors addressing these assessments. During
the course of our testing, we may identify deficiencies which we may not be able
to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for
compliance with the requirements of Section 404. In addition, if we fail to
achieve and maintain the adequacy of our internal controls, as such standards
are modified, supplemented or amended from time to time, we may not be able to
ensure that we can conclude on an ongoing basis that we have effective internal
controls over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act.
In order
to maintain and improve the effectiveness of our disclosure controls and
procedures and internal control over financial reporting, significant resources
and management oversight will be required. This may divert management’s
attention from other business concerns, which could have a material adverse
effect on our business, financial condition, results of operations and cash
flows. In addition, we may need to hire additional accounting and financial
staff with appropriate public company experience and technical accounting
knowledge, and we cannot assure you that we will be able to do so in a timely
fashion.
In
January 2009, one of our shareholders lent us $11,000 to pay the legal and
accounting costs of preparing our annual report for the year ended December 31,
2008, and of preparing this post-effective amendment to the registration
statement that we filed on Form SB-2, which became effective in January
2008.
28.
Because we do not intend to pay any cash dividends on our common stock, our
stockholders will not be able to receive a return on their shares unless they
sell them.
We intend
to retain any future earnings to finance the development and expansion of our
business. We do not anticipate paying any cash dividends on our common stock in
the foreseeable future. Unless we pay dividends, our stockholders will not be
able to receive a return on their shares unless the value of such shares
appreciates and they sell them. There is no assurance that stockholders will be
able to sell shares when desired.
Risk
Factors Relating to Operations in Israel
29.
Conditions in Israel affect our operations and may limit our ability to produce
and sell our products.
Our only
significant asset, our technology, is owned by Cherry Tankers Ltd., the Israeli
Subsidiary. Additionally, in order to take advantage of certain tax benefits
that are provided under Israeli law, we may agree that the Subsidiary will
manufacture our products in Israel, which would make us dependent on that
country’s economy. Our two Directors and officers also reside in Israel. Because
our Directors are located in Israel, our intellectual property is located in
Israel and our manufacturing operations may take place in Israel, our operations
may be directly influenced by the political, economic and military conditions
affecting Israel.
30.
Enforcement of judgments.
Israeli
courts might not enforce judgments rendered outside of Israel. Our officers and
Directors reside outside of the United States, therefore, any judgment obtained
in the United States against such persons may not be enforced. Additionally,
individuals might not be able to bring civil actions under United States
securities laws if they file a lawsuit in Israel. We have been advised by our
Israeli counsel that, subject to certain limitations, Israeli courts may enforce
a final executory judgment of a United States court for liquidated amounts in
civil matters after a hearing in Israel, provided that certain conditions are
met. If a foreign judgment is enforced by an Israeli court, it will be payable
in Israeli currency.
31.
Security issues.
Since the
establishment of the State of Israel in 1948, a number of armed conflicts have
taken place between Israel and its Arab neighbors. Any major hostilities
involving Israel or the interruption or curtailment of trade between Israel and
its present trading partners could materially adversely affect our operations.
Despite the negotiations towards peace between Israel and certain of its Arab
neighbors (including those that took place in Annapolis, Maryland during the
last week of November 2007), the future of these peace efforts is
uncertain.
From
October 2000 until recently, there was a significant increase in violence,
primarily in the West Bank and the Gaza Strip, and negotiations between Israel
and Palestinian representatives have ceased for periods of time. In January
2006, Hamas, the Islamic Resistance Movement, won the majority of the seats in
the Parliament of the Palestinian Authority. The election of a majority of
Hamas-supported candidates in the Palestinian Parliament and the tension among
the different Palestinian factions may create additional unrest and uncertainty.
Hamas does not recognize Israel's right to exist as a state and Israel considers
Hamas to be a terrorist organization. In June 2007, Hamas gained control of the
Gaza Strip and has since used that territory to fire projectiles at Israel’s
western Negev region on a daily basis. Accordingly, there can be no assurance
that the recent relative calm and renewal of negotiations between Israel and
Palestinian representatives will endure.
On
December 27, 2008, the Israel Defense Forces began a major incursion into the
Gaza Strip, which they refer to as “Operation Cast Lead.” The incursion was
preceded by increased rocket fire from Gaza on Israel’s western Negev region,
extending as far as 25 miles away. The incursion ended inconclusively in January
18, 2009. There is still occasional rocket fire in southern Israel but it is
significantly less frequent than it was in November and December 2008. There is
no assurance this relative quiet will last.
During
the summer of 2006, Israel was engaged in an armed conflict with Hezbollah, a
Lebanese Islamist Shiite militia group and political party. This conflict
involved missile strikes against civilian targets in northern Israel, and
negatively affected business conditions in Israel. Any renewed hostilities or
other factors related to Israel could have a material adverse effect on us or on
our business and could adversely affect our share price.
32.
Military Service.
Generally,
all non-exempt male adult citizens and permanent residents of Israel under the
age of 45 (or older, for citizens with certain occupations), are obligated to
perform military reserve duty annually, and are subject to being called to
active duty at any time under emergency circumstances. While our Directors are
not currently obligated to perform military reserve duties, any Israeli-resident
employees that we may hire in the future may be called upon to perform reserve
duties for significant periods of time. The absence of those employees may in
turn cause us to experience operating difficulties. Additionally, a number of
countries continue to restrict or ban business with Israel or Israeli companies,
which may limit our ability to make sales into those
countries.
33.
Exchange Rate Fluctuations.
Exchange
rate fluctuations between the U.S. dollar and the New Israeli Shekel (NIS) may
negatively affect our earnings. A substantial majority of our revenues and a
substantial portion of our expenses are denominated in U.S. dollars. However, as
our Company develops we anticipate that a significant portion of the expenses
associated with our Israeli operations, including personnel and
facilities-related expenses, will be incurred in NIS. Consequently, inflation in
Israel will have the effect of increasing the U.S. dollar cost of our operations
in Israel, unless it is offset on a timely basis by a devaluation of the NIS
relative to the U.S. dollar. We cannot predict any future trends in the rate of
inflation in Israel or the rate of valuation of the NIS against the U.S.
dollar.
34.
Tax Benefits.
Any
failure to obtain the tax benefits from the State of Israel that we anticipate
receiving could adversely affect our plans and prospects. Pursuant to the Law
for the Encouragement of Capital Investments, 1959, the Israeli government has
granted “Approved Enterprise” status to existing capital investment programs
under the Alternative Benefits Program. Consequently, if we meet the criteria to
become an Approved Enterprise, we would be eligible for certain tax benefits for
the first several years in which we generate taxable income. Currently, we have
not yet begun to generate taxable income for purposes of this law. Once we begin
to generate taxable income, our financial results could suffer if our tax
benefits are significantly reduced.
In order
to receive tax benefits, we must comply with a number of conditions and
criteria. If we fail to comply in whole or in part with these conditions and
criteria, the tax benefits that we receive could be partially or fully canceled
and we could be forced to refund the amount of the benefits we received,
adjusted for inflation and interest. Although we believe that we will operate in
compliance with the required conditions, we cannot assure you that this will
continue.
We cannot
assure you that we will, in the future, be eligible to receive additional tax
benefits under this law. Additionally, in the event that we increase our
activities outside the State of Israel, these activities generally will not be
eligible for inclusion in Israeli tax benefit programs. Accordingly, our
effective corporate tax rate could increase significantly in the
future.
35.
Our operations may be affected
by negative economic conditions in Israel.
Israel
has experienced periods of recession in economic activity in recent years,
resulting in low growth rates and growing unemployment. Our operations could be
adversely affected if the economic conditions in Israel were to deteriorate
again. In addition, due to significant economic measures proposed by the Israeli
government, there were several general strikes and work stoppages in each of the
most recent years, affecting all banks, airports and ports. These strikes had an
adverse effect on the Israeli economy and on business, and if they recur, they
could have an adverse effect on our ability to deliver products to our customers
and to receive raw materials from our suppliers in a timely manner. From time to
time, the Israeli trade unions threaten additional strikes or work-stoppages,
which may, if carried out, have a material adverse effect on the Israeli economy
and us.
Forward-Looking
Statements
This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as “anticipate,” “believe,” “plan,” “expect,”
“future,” “intend” and similar expressions to identify such forward-looking
statements. You should not place too much reliance on these forward-looking
statements. Our actual results are most likely to differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by us described in the “Risk Factors” section and elsewhere in this
prospectus.
Use
of Proceeds
We will
not receive any proceeds from the sale of the common stock offered through this
prospectus by the selling shareholders.
Determination
of Offering Price
The
selling shareholders will sell our shares at prevailing market prices through
the facilities of the OTC Bulletin Board or privately negotiated
prices.
Dilution
The
common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders.
Selling
Shareholders
The selling shareholders named in this
prospectus are offering all of the 2,000,000 shares of common stock offered
through this prospectus. Each of the selling stockholders has acquired his, her
or its shares pursuant to a private placement solely for investment and not with
a view to or for resale or distribution of such securities. The shares were
offered and sold to the selling stockholders in a private placement made between
July through October 2007 pursuant to the exemptions from registration under the
Securities Act provided by Regulations D and S of the Securities Act. None of
the selling stockholders are affiliates or controlled by our affiliates and none
of the selling stockholders are now or were at any time in the past an officer
or director of ours or any of our predecessors or
affiliates.
The
following table provides as of the date of this prospectus, information
regarding the beneficial ownership of our common stock held by each of the
selling shareholders, including:
|
1.
|
the number of shares owned by
each prior to this offering;
|
|
2.
|
the total number of shares that
are to be offered for each;
|
|
3.
|
the total number of shares that
will be owned by each upon completion of the offering;
and
|
|
4.
|
the percentage owned by each upon
completion of the
offering.
|
|
|
Name of
Selling
Security (1)
|
|
|
|
Common
Shares
owned by
the Selling
Security
Holder
|
|
|
Number of
Shares
Offered by
Selling
Security
Holder
|
|
|
Number of Shares and
Percent of Total Issued and
Outstanding Held After the
Offering(1)
|
|
|
|
Last
name
|
|
First
name
|
|
|
|
|
|
|
|
# of Shares
|
|
|
% of Class
|
|
1
|
|
Agapova
|
|
Antonina
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
2
|
|
Agapova
|
|
Antonina
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
3
|
|
Balandins
|
|
Raitis
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
4
|
|
Belogorcevs
|
|
Aleksandrs
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
5
|
|
Blaubergs
|
|
Aigars
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
6
|
|
Borovkovs
|
|
Olegs
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
7
|
|
Brucka
|
|
Vladislava
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
8
|
|
Gabrans
|
|
Konstantins
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
9
|
|
Gamzjuka
|
|
Natalija
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
10
|
|
Gaule
|
|
Zaiga
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
11
|
|
Goldstein
|
|
Rachel
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
12
|
|
Gorsvane
|
|
Santa
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
13
|
|
Gucanovics
|
|
Igors
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
14
|
|
Horunova
|
|
Karina
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
15
|
|
Hudijevs
|
|
Vadims
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
16
|
|
Jurkovs
|
|
Deniss
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
17
|
|
Kalnina
|
|
Leva
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
18
|
|
Kalnina
|
|
Valentina
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
19
|
|
Kanenberga
|
|
Anita
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
20
|
|
Karklins
|
|
Janis
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
21
|
|
Karklins
|
|
Janis
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
22
|
|
Klavina
|
|
Inga
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
23
|
|
Kolodinskis
|
|
Boriss
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
24
|
|
Kovtuna
|
|
Dana
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
25
|
|
Kuporosovs
|
|
Arturs
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
26
|
|
Landina
|
|
Irina
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
27
|
|
Laposko
|
|
Einars
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
28
|
|
Liepina
|
|
Dace
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
29
|
|
Menberga
|
|
Alona
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
30
|
|
Menberga
|
|
Arina
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
31
|
|
Nikoluks
|
|
Vladimirs
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
32
|
|
Platais
|
|
Jurijs
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
33
|
|
Pogodina
|
|
Marina
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
34
|
|
Poskus
|
|
Rita
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
35
|
|
Prikulis
|
|
Andrejs
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
36
|
|
Rubene
|
|
Maija
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
37
|
|
Simonovs
|
|
Renats
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
38
|
|
Sipilo
|
|
Olegs
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
39
|
|
Stripkane
|
|
Darja
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
40
|
|
Stripkane
|
|
Jekaterina
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
41
|
|
Stripkane
|
|
Julija
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
0 |
|
|
|
0 |
|
42
|
|
Tihonova
|
|
Gertrude
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
43
|
|
Trakins
|
|
Ivo
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
44
|
|
Volfenfelds
|
|
Maksims
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
TOTAL
|
|
|
*
2,000,000 |
|
|
|
2,000,000 |
|
|
|
0 |
|
|
|
* |
|
*
Represents less than one percent of the total number of shares of common stock
outstanding as of the date of this filing.
(1)
Assumes all of the shares of common stock offered in this prospectus are sold
and no other shares of common stock are sold or issued during this offering
period. Based on 13,705,000 shares of common stock issued and outstanding as of
February 19 , 2009.
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. We will file a
post-effective amendment to this registration statement to reflect any material
changes to this prospectus.
Plan
of Distribution
The
selling shareholders may sell some or all of their common stock in one or more
transactions, including block transactions. There are no arrangements,
agreements or understandings with respect to the sale of these
securities.
The
selling shareholders will sell our shares at prevailing market prices through
the facilities of the OTC Bulletin Board or at privately negotiated
prices.
The
shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144.
If
applicable, the selling shareholders may distribute shares to one or more of
their partners who are unaffiliated with us. Such partners may, in turn,
distribute such shares as described above. If these shares being registered for
resale are transferred from the named selling shareholders and the new
shareholders wish to rely on the prospectus to resell these shares, then we must
first file a prospectus supplement naming these individuals as selling
shareholders and providing the information required concerning the identity of
each selling shareholder and he or her relationship to us. There is no agreement
or understanding between the selling shareholders and any partners with respect
to the distribution of the shares being registered for resale pursuant to this
registration statement.
We can
provide no assurance that all or any of the common stock offered will be sold by
the selling shareholders.
We are
bearing all costs relating to the registration of the common stock. The selling
shareholders, however, will pay any commissions or other fees payable to brokers
or dealers in connection with any sale of the common stock.
The
selling shareholders must comply with the requirements of the Securities Act and
the Securities Exchange Act in the offer and sale of the common stock. In
particular, during such times as the selling shareholders 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 law 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,
as amended 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 other than as permitted under the
Securities Exchange Act.
|
The
Securities Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from those rules, deliver a standardized risk disclosure
document prepared by the Commission, which:
|
*
|
contains a description of the
nature and level of risk in the market for penny stocks in both public
offerings and secondary
trading;
|
|
*
|
contains a description of the
broker's or dealer's duties to the customer and of the rights and remedies
available to the customer with respect to a violation of such duties or
other requirements
|
|
*
|
contains a brief, clear,
narrative description of a dealer market, including "bid" and "ask" prices
for penny stocks and the significance of the spread between the bid and
ask price;
|
|
*
|
contains a toll-free telephone
number for inquiries on disciplinary
actions;
|
|
*
|
defines significant terms in the
disclosure document or in the conduct of trading penny stocks;
and
|
|
*
|
contains such other information
and is in such form (including language, type, size, and format) as the
Commission shall require by rule or
regulation;
|
The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, the customer with:
|
*
|
bid and offer quotations for the
penny stock;
|
|
*
|
the compensation of the
broker-dealer and its salesperson in the
transaction;
|
|
*
|
the number of shares to which
such bid and ask prices apply, or other comparable information relating to
the depth and liquidity of the market for such stock;
and
|
|
*
|
monthly account statements
showing the market value of each penny stock held in the customer's
account.
|
In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
those securities.
Description
of Securities
General
Our
authorized capital stock consists of 100,000,000 shares of common stock at par
value of $0.001 per share.
Common
Stock
As of
February 19, 2009, there were 13,705,000 shares of our common stock issued and
outstanding that are held by 58 stockholders of record.
Holders
of our common stock are entitled to one vote for each share on all matters
submitted to a stockholder vote. Holders of common stock do not have cumulative
voting rights. Therefore, holders of a majority of the shares of common stock
voting for the election of directors can elect all of the directors. Holders of
our common stock representing a majority of the voting power of our capital
stock issued, outstanding and entitled to vote, represented in person or by
proxy, are necessary to constitute a quorum at any meeting of our stockholders.
A vote by the holders of a majority of our outstanding shares is required to
effectuate certain fundamental corporate changes such as liquidation, merger or
an amendment to our articles of incorporation.
Holders
of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock. Holders of our common stock have no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.
Preferred
Stock
We do not
have an authorized class of preferred stock.
Dividend
Policy
We have
never declared or paid any cash dividends on our common stock. We currently
intend to retain future earnings, if any, to finance the expansion of our
business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
Share
Purchase Warrants
We have
not issued and do not have outstanding any warrants to purchase shares of our
common stock.
Options
We have
not issued and do not have outstanding any options to purchase shares of our
common stock.
Convertible
Securities
We have
not issued and do not have outstanding any securities convertible into shares of
our common stock or any rights convertible or exchangeable into shares of our
common stock.
Interests
of Named Experts and Counsel
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, an interest, direct or indirect,
in the registrant or any of its parents or subsidiaries. Nor was any such person
connected with the registrant or any of its parents or subsidiaries as a
promoter, managing or principal underwriter, voting trustee, director, officer,
or employee.
The
financial statements included in this prospectus and the registration statement
have been audited by Davis Accounting Group, P.C., Certified Public Accountants
to the extent and for the periods set forth in their report appearing elsewhere
in this document and in the registration statement filed with the SEC, and are
included in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
Description
of Business
We were
focused on developing, marketing and selling footwear that will alleviate the
back, knee and hip pain resulting from walking abnormalities. We were granted a
perpetual, irrevocable, non-transferable (but sub-licensable) license to use a
patent pending technology that restores the human body’s center of gravity to
its optimal position for the sole purpose of manufacturing, marketing and
distributing and selling the footwear everywhere in the world except for Israel.
Our Israeli Subsidiary, described in the next paragraph, was expected to do the
same in Israel.
On
November 27, 2007, our wholly owned subsidiary, Cherry Tankers Ltd. or the
Israeli Subsidiary, purchased the rights to certain technology from its
inventors for nominal consideration. The technology included an Israeli patent
application and a United States provisional patent application titled “A system
and a method for selecting a type of a curved sole out of a limited group of
types of curved sole to match a person.”
We signed
a Licensing Agreement with the Israeli subsidiary, the Licensing Agreement,
pursuant to which we obtained a perpetual, irrevocable, non-transferable (but
sub-licensable) license to use the technology for the sole purpose of
manufacturing, marketing, distributing and selling the product (the footwear
that we plan to manufacture) everywhere in the world except for Israel. The
Israeli Subsidiary was to market our products in Israel.
In
consideration of the Licensing Agreement, we agreed to fund the Israeli
Subsidiary’s development activities for the footwear in an amount up to $150,000
pursuant to a schedule that was attached to the Licensing Agreement and we
agreed to pay royalty fees in an amount equal to 4% of Net Revenues (as defined
in the Licensing Agreement) from sales of the products or exploitation of the
technology.
The first
installment of $20,000 was due on February 1, 2008. On February 1, 2008,
we amended the agreement with the Subsidiary to reschedule the installment due
dates. The first installment payment of development fees was due on July
15, 2008. On July 15, 2008, the Company did not make the first development
fee installment payment, and was in default on the Patent Licensing
Agreement. On September 15, 2008, the Company did not make the second
development fee installment payment, and was in default on the Patent Licensing
Agreement. On November 15, 2008, the Company did not make the third
development fee installment payment, and was in default on the Patent Licensing
Agreement. On December 23, 2008, we amended the Patent Licensing Agreement with
our Subsidiary to reschedule the due dates of the installment payments to April
15, 2009 ($50,000) and July 15, 2009 ($100,000). As part of the same amendment,
we also granted the Subsidiary the right to sublicense our technology in the
Israeli market only. On January 11, 2009, the Subsidiary granted a renewable,
non-transferable, sub-licensable license to make use of our technology for the
sole purpose of manufacturing, marketing, distributing and selling the shoes and
otherwise exploiting our technology in Israel to Elya Orthopedics (“Elya”). Elya
is a sole proprietorship owned by Yael Alush, our Secretary, Treasurer and
Director.
We are
also looking at other business opportunities, including sale or further
sublicensing of our technology or seeking an acquirer. Because we have been
unable to raise sufficient cash to exploit it, we are in discussions to return
the technology to its developer in exchange for a cash payment.
Employees
We have
no employees as of the date of this prospectus.
Research
and Development Expenditures
We have
not incurred any other research or development expenditures since our
incorporation.
Subsidiaries
We have
one subsidiary, Cherry Tankers Ltd., an Israeli corporation.
Patents
and Trademarks
We do not
own, either legally or beneficially, any patents or trademarks. However, under
the License Agreement we have the right to use an idea for which a patent
application is pending.
Description
of Property
We
do not own or lease any property.
Legal
Proceedings
We are
currently not party to any legal proceedings. Our address for service
of process in Delaware is in care of National Corporate Research Ltd., 615 South
DuPont Highway, Dover, Delaware 19901.
Market
for Common Equity and Related Stockholder Matters
No
Public Market for Common Stock
While our
shares are quoted for trading on the OTC Bulletin Board under the symbol “CTKE”,
there is no liquid market for our stock. We cannot assure you that an
active trading market will develop and be sustained following the completion of
this offering. Without a public market, it may be difficult for an investor to
find a buyer for our common stock.
Stockholders
of Our Common Shares
As of the
date of this registration statement, we have 58 registered
shareholders.
Rule
144 Shares
In
addition to our 2,000,000 registered shares, a total of
11,705,000 shares of our common stock are available for resale to the
public in accordance with the volume and trading limitations of Rule 144 of the
Act. In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares of a company's common stock for at least six months,
provided that the company has been subject to the reporting requirements of the
Securities Act of 1934 for a minimum of 90 days, is entitled to sell within any
three month period a number of shares that does not exceed the greater
of:
|
1.
|
1% of the number of shares of the
company's common stock then outstanding which, in our case, will equal
137,050 shares as of the date of this prospectus;
or
|
|
2.
|
the average weekly trading volume
of the company's common stock during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to the
sale.
|
Sales
under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company. The resale provisions of Rule 144 do not apply to securities issuers
with no or nominal operations and no or nominal non-cash assets.
As of the
date of this prospectus, persons who are our affiliates hold 7,888,000 of
the 11,705,000 shares that may be sold pursuant to Rule 144.
Stock
Option Grants
To date,
we have not granted any stock options.
Registration
Rights
We have
not granted registration rights to the selling shareholders or to any other
persons.
Dividends
There are
no restrictions in our articles of incorporation or bylaws that prevent us from
declaring dividends. The Delaware Corporate Law, however, does prohibit us from
declaring dividends where, after giving effect to the distribution of the
dividend:
|
1.
|
we would not be able to pay our
debts as they become due in the usual course of business;
or
|
|
2.
|
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 any dividends, and we do not plan to declare any dividends in the
foreseeable future.
Financial
Statements
CHERRY
TANKERS INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
Report
of Registered Independent Auditors
|
|
|
F-2 |
|
|
|
|
|
|
Consolidated
Financial Statements-
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets as of December 31, 2008, and 2007
|
|
|
F-3 |
|
|
|
|
|
|
Consolidated
Statements of Operations for the Year Ended December 31,
2008,
|
|
|
|
|
Period
Ended December 31, 2007, and Cumulative from Inception
|
|
|
F-4 |
|
|
|
|
|
|
Consolidated
Statement of Stockholders’ Equity (Deficit) for the Period from
Inception
|
|
|
|
|
Through
December 31, 2008
|
|
|
F-5 |
|
|
|
|
|
|
Consolidated
Statements of Cash Flows for the Year Ended December 31,
2008,
|
|
|
|
|
Period
Ended December 31, 2007, and Cumulative from Inception
|
|
|
F-6 |
|
|
|
|
|
|
Notes
to Consolidated Financial Statements December 31, 2008, and
2007
|
|
|
F-7 |
|
REPORT
OF REGISTERED INDEPENDENT AUDITORS
To the
Board of Directors and Stockholders
of Cherry
Tankers Inc.:
We have
audited the accompanying consolidated balance sheets of Cherry Tankers Inc. (a
Delaware corporation in the development stage) and subsidiary as of December 31,
2008, and 2007, and the related consolidated statements of operations,
stockholders’ equity (deficit), and cash flows for each of the periods then
ended, and from inception (March 30, 2007) through December 31,
2008. These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. The Company is not required to have, nor were
we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Cherry Tankers
Inc. and subsidiary as of December 31, 2008, and 2007, and the results of its
consolidated operations and its consolidated cash flows for each of the periods
then ended, and from inception (March 30, 2007) through December 31, 2008, in
conformity with accounting principles generally accepted in the United States of
America.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2
to the consolidated financial statements, the Company is in the development
stage and has not established any source of revenues to cover its operating
costs. As such, it has incurred an operating loss since
inception. Further, as of December 31, 2008, and 2007, the cash
resources of the Company were insufficient to meet its planned business
objectives. These and other factors raise substantial doubt about the
Company’s ability to continue as a going concern. Management’s plan
regarding these matters is also described in Note 2 to the financial
statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Respectfully
submitted,
/S/ Davis
Accounting Group P.C.
Cedar
City, Utah,
January
15, 2009.
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
BALANCE SHEETS (NOTE 2)
AS
OF DECEMBER 31, 2008, AND 2007
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash
in bank
|
|
$ |
377 |
|
|
$ |
244,109 |
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
377 |
|
|
|
244,109 |
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$ |
377 |
|
|
$ |
244,109 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable - Trade
|
|
$ |
2,439 |
|
|
$ |
4,789 |
|
Accrued
liabilities
|
|
|
8,910 |
|
|
|
33,240 |
|
Due
to related party - Stockholder
|
|
|
1,851 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
13,200 |
|
|
|
38,029 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
13,200 |
|
|
|
38,029 |
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity (Deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, par value $0.0001 per share, 100,000,000
shares authorized;
13,705,000 shares issued and outstanding
|
|
|
1,370 |
|
|
|
1,370 |
|
Additional
paid-in capital
|
|
|
274,688 |
|
|
|
274,688 |
|
(Deficit)
accumulated during the development stage
|
|
|
(288,881 |
) |
|
|
(69,978 |
) |
|
|
|
|
|
|
|
|
|
Total
stockholders' equity (deficit)
|
|
|
(12,823 |
) |
|
|
206,080 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity (Deficit)
|
|
$ |
377 |
|
|
$ |
244,109 |
|
The
accompanying notes to consolidated financial statements are
an
integral part of these consolidated balance sheets.
CHERRY
TANKERS INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF OPERATIONS (NOTE 2)
FOR
THE YEAR ENDED DECEMBER 31, 2008, PERIOD ENDED
DECEMBER
31, 2007, AND CUMULATIVE FROM INCEPTION
(MARCH
30, 2007) THROUGH DECEMBER 31, 2008
|
|
Year
|
|
|
Period
|
|
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Cumulative
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
from
|
|
|
|
2008
|
|
|
2007
|
|
|
Inception
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative-
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
133,534 |
|
|
|
21,600 |
|
|
|
155,134 |
|
Accounting
and audit fees
|
|
|
31,627 |
|
|
|
16,000 |
|
|
|
47,627 |
|
Legal
fees
|
|
|
12,823 |
|
|
|
23,322 |
|
|
|
36,145 |
|
Transfer
agent fees
|
|
|
18,298 |
|
|
|
- |
|
|
|
18,298 |
|
Other
|
|
|
12,518 |
|
|
|
1,304 |
|
|
|
13,822 |
|
Other
professional fees
|
|
|
10,103 |
|
|
|
2,023 |
|
|
|
12,126 |
|
Travel
|
|
|
- |
|
|
|
5,236 |
|
|
|
5,236 |
|
Legal
- Incorporation fees
|
|
|
- |
|
|
|
493 |
|
|
|
493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
general and administrative expenses
|
|
|
218,903 |
|
|
|
69,978 |
|
|
|
288,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
from Operations
|
|
|
(218,903 |
) |
|
|
(69,978 |
) |
|
|
(288,881 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income (Expense)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for Income Taxes
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Loss)
|
|
$ |
(218,903 |
) |
|
$ |
(69,978 |
) |
|
$ |
(288,881 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Per Common
Share: |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) per common share - Basic and Diluted
|
|
$ |
(0.02 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Number of Common Shares Outstanding - Basic and
Diluted
|
|
|
13,705,000 |
|
|
|
9,742,827 |
|
|
|
|
|
The
accompanying notes to consolidated financial statements are
an
integral part of these consolidated statements.
CHERRY
TANKERS INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (NOTE 2)
FOR
THE PERIOD FROM INCEPTION (MARCH 30, 2007)
THROUGH
DECEMBER 31, 2008
|
|
|
|
|
|
|
|
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
|
|
|
|
Common stock
|
|
|
Paid-in
|
|
|
Development
|
|
|
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- March 30, 2007
|
|
|
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash
|
|
|
13,705,000 |
|
|
|
1,370 |
|
|
|
274,688 |
|
|
|
- |
|
|
|
276,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(69,978 |
) |
|
|
(69,978 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2007
|
|
|
13,705,000 |
|
|
|
1,370 |
|
|
|
274,688 |
|
|
|
(69,978 |
) |
|
|
206,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(218,903 |
) |
|
|
(218,903 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2008
|
|
|
13,705,000 |
|
|
$ |
1,370 |
|
|
$ |
274,688 |
|
|
$ |
(288,881 |
) |
|
$ |
(12,823 |
) |
The
accompanying notes to consolidated financial statements are
an
integral part of this consolidated statement.
CHERRY
TANKERS INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF CASH FLOWS (NOTE 2)
FOR
THE YEAR ENDED DECEMBER 31, 2008, PERIOD ENDED
DECEMBER
31, 2007, AND CUMULATIVE FROM INCEPTION (MARCH 30, 2007)
THROUGH
DECEMBER 31, 2008
|
|
Year Ended
|
|
|
Period Ended
|
|
|
Cumulative
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
From
|
|
|
|
2008
|
|
|
2007
|
|
|
Inception
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$ |
(218,903 |
) |
|
$ |
(69,978 |
) |
|
$ |
(288,881 |
) |
Adjustments
to reconcile net (loss) to net cash (used
in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in assets and liabilities-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,350 |
) |
|
|
4,789 |
|
|
|
2,439 |
|
Accrued
liabilities
|
|
|
(24,330 |
) |
|
|
33,240 |
|
|
|
8,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used in) Operating Activities
|
|
|
(245,583 |
) |
|
|
(31,949 |
) |
|
|
(277,532 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used in) Investing Activities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
from stockholder
|
|
|
2,301 |
|
|
|
- |
|
|
|
2,301 |
|
Repayment
of loan from stockholder
|
|
|
(450 |
) |
|
|
- |
|
|
|
(450 |
) |
Issuance
of common
stock for cash
|
|
|
- |
|
|
|
276,058 |
|
|
|
276,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
|
1,851 |
|
|
|
276,058 |
|
|
|
277,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Decrease) Increase in Cash
|
|
|
(243,732 |
) |
|
|
244,109 |
|
|
|
377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- Beginning of Period
|
|
|
244,109 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- End of Period
|
|
$ |
377 |
|
|
$ |
244,109 |
|
|
$ |
377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for:
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
The
accompanying notes to consolidated financial statements are
an
integral part of these consolidated statements.
1. Summary
of Significant Accounting Policies
Basis
of Presentation and Organization
Cherry
Tankers Inc. (“Cherry Tankers” or the “Company”) is a Delaware corporation in
the development stage and has not commenced operations. The Company
was incorporated under the laws of the State of Delaware on March 30,
2007. The business plan of Cherry Tankers is to manufacture, market,
and distribute orthopedic shoes based on licensed patented
technology. The accompanying consolidated financial statements of
Cherry Tankers and its wholly owned subsidiary were prepared from the accounts
of the entities under the accrual basis of accounting.
In April
2007, Cherry Tankers commenced a capital formation activity through a Private
Placement Offering (the “PPO #1”), exempt from registration under the Securities
Act of 1933, to raise up to $1,058 through the issuance of 10,580,000 shares of
its common stock to founders of the Company, par value $0.0001 per share, at an
offering price of $0.0001 per share. As of June 18, 2007, the Company
had closed PPO #1 and received proceeds of $1,000. The remaining $58
was received as of December 31, 2007.
On
November 27, 2007, Cherry Tankers organized and incorporated a wholly owned
subsidiary under the name Cherry Tankers Ltd. (an Israeli corporation) for the
purpose of research and development as well as manufacturing and marketing for
its products and services in Israel. Cherry Tankers currently owns
all of the 10,000 shares of capital stock issued and outstanding; each share
valued at 0.01 New Israeli Shekels.
In
addition, in July 2007, the Company began a second capital formation activity
through a Private Placement Offering (“PPO #2”), exempt from registration under
the Securities Act of 1933, to raise up to $50,000 through the issuance of
2,000,000 shares of its common stock, par value $0.0001 per share, at an
offering price of $0.025 per share. As of December 31, 2007, Cherry
Tankers had received $50,000 in proceeds from PPO #2 and closed the
offering. In December 2007, Cherry Tankers also submitted a
Registration Statement on Form SB-2 to the Securities and Exchange Commission
(“SEC”) to register 2,000,000 of its outstanding shares of common stock on
behalf of selling stockholders. This Registration Statement on Form
SB-2 became effective with the SEC on January 10, 2008. The Company
will not receive any of the proceeds of this registration activity once the
shares of common stock are sold.
In
December 2007, Cherry Tankers commenced a third capital formation activity
through a Private Placement Offering (“PPO #3”), exempt from registration under
the Securities Act of 1933, to raise up to $225,000 through the issuance of
1,125,000 shares of its common stock, par value $0.0001 per share, at an
offering price of $0.20 per share. As of December 9, 2007, the
Company had closed the PPO and received proceeds of $225,000.
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of Cherry
Tankers and its wholly owned subsidiary, Cherry Tankers Ltd.
(“Subsidiary”). All significant intercompany accounts and
transactions have been eliminated in consolidation.
Cash and Cash
Equivalents
For
purposes of reporting within the statement of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
Revenue Recognition
Cherry
Tankers is in the development stage and has yet to realize revenues from
operations. At the time the Company commences operations, it will
recognize revenues when delivery of goods or completion of services has
occurred, provided there is persuasive evidence of an agreement, acceptance has
been approved by its customers, the fee is fixed or determinable based on the
completion of stated terms and conditions, and collection of any related
receivable is probable.
Loss per Common
Share
Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Diluted loss per share is computed
similar to basic loss per share except that the denominator is increased to
include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common
shares were dilutive. There were no dilutive financial instruments
issued or outstanding as of December 31, 2008, and 2007.
Income Taxes
Cherry
Tankers accounts for income taxes pursuant to Statement of Financial Accounting
Standards (“SFAS”) No. 109, “Accounting for Income
Taxes” (“SFAS No.
109”). Under SFAS No. 109, deferred tax assets and liabilities are
determined based on temporary differences between the bases of certain assets
and liabilities for income tax and financial reporting purposes. The
deferred tax assets and liabilities are classified according to the financial
statement classification of the assets and liabilities generating the
differences.
The
Company maintains a valuation allowance with respect to deferred tax
assets. Cherry Tankers establishes a valuation allowance based upon
the potential likelihood of realizing the deferred tax asset while taking into
consideration the Company’s financial position and results of operations for the
current period. Future realization of the deferred tax benefit
depends on the existence of sufficient taxable income within the carryforward
period under Federal tax laws.
Changes
in circumstances, such as Cherry Tankers generating taxable income, could cause
a change in judgment about the realizability of the related deferred tax
asset. Any change in the valuation allowance will be included in
income in the year of the change in estimate.
Fair Value of Financial
Instruments
The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is
required in estimating fair value. Accordingly, the estimates of fair
value may not be indicative of the amounts Cherry Tankers could realize in a
current market exchange. As of December 31, 2008, and 2007, the
carrying value of the Company’s financial instruments approximated fair value
due to the short-term nature and maturity of these instruments.
Deferred Offering Costs
The
Company defers as other assets the direct incremental costs of raising capital
until such time as the offering is completed. At the time of the
completion of the offering, the costs are charged against the capital
raised. Should the offering be terminated, deferred offering costs
are charged to operations during the period in which the offering is
terminated.
Concentration of Risk
As of
December 31, 2008, and 2007, Cherry Tankers maintained its cash account at one
commercial bank. The balance in the account was subject to FDIC
coverage.
Common Stock Registration
Expenses
The
Company considers incremental costs and expenses related to the registration of
equity securities with the SEC, whether by contractual arrangement as of a
certain date or by demand, to be unrelated to original issuance
transactions. As such, subsequent registration costs and expenses are
reflected in the accompanying consolidated financial statements as general and
administrative expenses and are expensed as incurred.
Lease Obligations
All
noncancellable leases with an initial term greater than one year are categorized
as either capital leases or operating leases. Assets recorded under
capital leases are amortized according to the methods employed for property and
equipment or over the term of the related lease, if shorter.
Estimates
The
accompanying consolidated financial statements are prepared and presented on the
basis of accounting principles generally accepted in the United States of
America. The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of December 31, 2008, and 2007, and expenses for the year ended
December 31, 2008, period ended December 31, 2007, and cumulative from
inception. Actual results could differ from those estimates made by
management.
2. Development
Stage Activities and Going Concern
The
Company is currently in the development stage, and has not commenced
operations. The business plan of Cherry Tankers is to manufacture,
market, and distribute orthopedic shoes that will alleviate back, knee, and hip
pain resulting from walking abnormalities.
During
the period from inception through December 31, 2008, Cherry Tankers was
incorporated and completed capital formation activities to raise up to $276,058
from the sale of 13,705,000 shares of common stock through PPO’s to various
stockholders. As of December 31, 2008, Cherry Tankers raised $276,058
in proceeds from the PPO’s. Cherry Tankers also submitted to the SEC
a Registration Statement on Form SB-2 to register 2,000,000 shares of its common
stock for selling stockholders. This Registration Statement on Form
SB-2 became effective with the SEC on January 10, 2008. No proceeds
will be received by the Company from the sale of common stock by selling to
stockholders. The Company also intends to conduct additional capital
formation activities through the issuance of its common stock and to commence
operations.
The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going
concern. Cherry Tankers has not established any source of revenues to
cover its operating costs, and as such, has incurred an operating loss since
inception. Further, as of December 31, 2008, and 2007, the cash
resources of the Company were insufficient to meet its current business
plan. These and other factors raise substantial doubt about the
Company’s ability to continue as a going concern. The accompanying
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
3. Common
Stock
In April
2007, the Company commenced a capital formation activity through PPO #1, exempt
from registration under the Securities Act of 1933, to raise up to $1,058
through the issuance of 10,580,000 shares of its common stock to founders of the
Company, par value $0.0001 per share, at an offering price of $0.0001 per
share. As of June 18, 2007, Cherry Tankers had closed PPO #1 and
received proceeds of $1,000. The remaining $58 was received as of
December 31, 2007.
Additionally,
in July 2007, the Board of Directors of Cherry Tankers began PPO #2, exempt from
registration under the Securities Act of 1933, to raise up to $50,000 through
the issuance of 2,000,000 shares of its common stock, par value $0.0001 per
share, at an offering price of $0.025 per share. As of December 31,
2007, the Company had fully subscribed PPO #2, closed PPO #2, and received a
total of $50,000 in proceeds.
In
December 2007, Cherry Tankers commenced a capital formation activity through PPO
#3, exempt from registration under the Securities Act of 1933, to raise up to
$225,000 through the issuance of 1,125,000 shares of its common stock, par value
$0.0001 per share, at an offering price of $0.20 per share. As of
December 9, 2007, the Company had closed PPO #3 and received proceeds of
$225,000.
The
Company also commenced an activity to submit a Registration Statement on Form
SB-2 to the SEC to register 2,000,000 of its outstanding shares of common stock
on behalf of selling stockholders. This Registration Statement on
Form SB-2 became effective with the SEC on January 10, 2008. The
Company will not receive any of the proceeds of this registration activity once
the shares of common stock are sold.
4. Income
Taxes
The
provision (benefit) for income taxes for the year ended December 31, 2008 and
period ended December 31, 2007 was as follows (assuming a 23% effective tax
rate):
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Current
Tax Provision:
|
|
|
|
|
|
|
Federal
and state-
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Total
current tax provision
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Deferred
Tax Provision:
|
|
|
|
|
|
|
|
|
Federal
and state-
|
|
|
|
|
|
|
|
|
|
|
$ |
50,348 |
|
|
$ |
16,095 |
|
Change
in valuation allowance
|
|
|
(50,348 |
) |
|
|
(16,095 |
) |
|
|
|
|
|
|
|
|
|
Total
deferred tax provision
|
|
$ |
- |
|
|
$ |
- |
|
The
Company had deferred income tax assets as of December 31, 2008, and 2007, as
follows:
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Loss
carryforwards
|
|
$ |
66,443 |
|
|
$ |
16,095 |
|
Less
- Valuation allowance
|
|
|
(66,443 |
) |
|
|
(16,095 |
) |
|
|
|
|
|
|
|
|
|
Total
net deferred tax assets
|
|
$ |
- |
|
|
$ |
- |
|
As of
December 31, 2008, and 2007, Cherry Tankers had approximately $288,881, and
$69,978, respectively, in tax loss carryforwards that can be utilized in future
periods to reduce taxable income, and expire in the year 2028.
The
Company provided a valuation allowance equal to the deferred income tax assets
for the year ended December 31, 2008, and period ended December 31, 2007,
because it is not presently known whether future taxable income will be
sufficient to utilize the loss carryforwards.
5.
|
Patent
Licensing Agreement
|
On
November 27, 2007, Cherry Tankers entered into a patent licensing agreement (the
“Patent Licensing Agreement”) with its Subsidiary. The Patent
Licensing Agreement grants the Company an irrevocable, non-transferable,
perpetual right, and license to make use of certain technology and products in
the Orthopedic Shoe Soles field (the “Technology”) for the sole purpose of
manufacturing, marketing, distributing, and selling the products based on the
Technology, on a worldwide basis, except for in Israel. The Company
is entitled to sub-License the Technology to third-party strategic partners if
agreed upon by both parties in advance. The Subsidiary retains all
rights, title, and interest in and to the Technology, including the design of
the products, copyrights, trademarks, and trade secrets. In
consideration for the Technology, the Company is obligated to pay development
fees to the Subsidiary in the amount of $150,000 as well as royalties due each
calendar quarter based on 4% of Net Revenues.
6.
|
Commitment
and Contingencies
|
As
discussed in Note 5, on November 27, 2007, the Company entered into a Patent
Licensing Agreement with its Subsidiary. The Patent Licensing
Agreement grants the Company an irrevocable, non-transferable, perpetual right,
and license to make use of the Technology in the Orthopedic Shoe Soles field for
the sole purpose of manufacturing, marketing, distributing, and selling the
products based on the Technology, on a worldwide basis, except for in
Israel. The Company is entitled to sub-License the Technology to
third-party strategic partners if agreed upon by both parties in
advance. The Subsidiary retains all rights, title, and interest in
and to the Technology, including the design of the products, copyrights,
trademarks, and trade secrets. In consideration for the Technology,
the Company is obligated to pay development fees to the Subsidiary in
installments in the amount of $150,000.
The first
development fee installment of $20,000 was due on February 1,
2008. On February 1, 2008, the Company and Subsidiary amended the
Patent Licensing Agreement to rescheduling the installment due dates with the
first development fee installment payment of $20,000 due on July 15,
2008. On July 15, 2008, the Company did not make the first
development fee installment payment, and was in default on the Patent Licensing
Agreement. On September 15, 2008, and November 15, 2008,
respectively, the Company did not make the second and third
development fee installment payments of $50,000 each, and remained in default on
the Patent Licensing Agreement.
On
December 23, 2008, the Company and Subsidiary amended the Patent Licensing
Agreement to reschedule the installment payments and due dates as
follows:
Installment
#1 April
15, 2009
|
|
$ |
50,000 |
|
Installment
#2 July
15, 2009
|
|
|
100,000 |
|
|
|
$ |
150,000 |
|
The
Company is also obligated to pay the Subsidiary royalties in the amount of 4% of
Net Revenues.
This
amount will be due on the fifth business day following the end of each calendar
quarter.
On
November 22, 2007, the existing President, Secretary, Treasurer, Chief Executive
Officer, and Director notified Cherry Tankers of his resignation. On
the same day, the Company appointed an individual as President, Chief Executive
Officer, and Director. The Company also appointed another individual
as Secretary, Treasurer, and Director. Both individuals accepted
their positions on November 22, 2007.
8.
|
Related
Party Transactions
|
During
the year ended December 31, 2007, the Subsidiary purchased the right, title, and
interest of the Technology discussed in Note 5 for $1 from a stockholder of the
Company.
During
the year ended December 31, 2008, a stockholder loaned Cherry Tankers
$2,301. As of December 31, 2008, the Company repaid $450 of this
amount. The loan from the stockholder is unsecured, noninterest
bearing, and has no terms for repayment.
9.
|
Recent
Accounting Pronouncements
|
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115” (“SFAS No. 159”), which permits entities to measure many financial
instruments and certain other items at fair value that are not currently
required to be measured at fair value. An entity would report
unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date. The objective
is to improve financial reporting by providing entities the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. The decision about whether to elect the fair value option
is applied instrument by instrument, with a few exceptions: the decision is
irrevocable, and applied only to entire instruments – not to portions of
instruments. SFAS No. 159 requires disclosures that facilitate
comparisons (a) between entities that choose different measurement attributes
for similar assets and liabilities and (b) between assets and liabilities in the
financial statements of an entity that selects different measurement attributes
for similar assets and liabilities. SFAS No. 159 is effective for
financial statements issued for fiscal years beginning after November 15,
2007. Early adoption is permitted as of the beginning of a fiscal
year, provided the entity also elects to apply the provisions of SFAS No.
157. Upon implementation, an entity shall report the effect of the
first re-measurement to fair value as a cumulative-effect adjustment to the
opening balance of retained earnings. Since the provisions of SFAS
No. 159 are applied prospectively, any potential impact will depend on the
instruments selected for fair value measurement at the time of
implementation. The management of the Company does not believe that
this new pronouncement will have a material impact on its financial
statements.
In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations – Revised
2007” (“SFAS No. 141R”), which replaces FASB Statement No. 141, “Business
Combinations.” SFAS No. 141R establishes principles
and requirements intending to improve the relevance, representational
faithfulness, and comparability of information that a reporting entity provides
in its financial reports about a business combination and its
effects. This is accomplished through requiring the acquirer to
recognize assets acquired and liabilities assumed arising from contractual
contingencies as of the acquisition date, measured at their acquisition-date
fair values. This includes contractual contingencies only if it is
more likely than not that they meet the definition of an asset of a liability in
FASB Concepts Statement No. 6, “Elements of Financial
Statements – a
replacement of FASB Concepts Statement No. 3.” This statement also
requires the acquirer to recognize goodwill as of the acquisition date, measured
as a residual. However, this statement improves the way in which an
acquirer’s obligations to make payments conditioned on the outcome of future
events are recognized and measured, which in turn improves the measure of
goodwill. This statement also defines a bargain purchase as a
business combination in which the total acquisition-date fair value of the
consideration transferred plus any noncontrolling interest in the acquiree, and
it requires the acquirer to recognize excess in earnings as a gain attributable
to the acquirer. This, therefore, improves the representational
faithfulness and completeness of the information provided about both the
acquirer’s earnings during the period in which it makes a bargain purchase and
the measures of the assets acquired in the bargain purchase. The
management of Cherry Tankers does not expect the adoption of this pronouncement
to have a material impact on its financial statements.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51” (“SFAS
No. 160”), which
establishes accounting and reporting standards to improve the relevance,
comparability, and transparency of financial information in its consolidated
financial statements. This is accomplished by requiring all entities,
except not-for-profit organizations, that prepare consolidated financial
statements to (a) clearly identify, label, and present ownership interests in
subsidiaries held by parties other than the parent in the consolidated statement
of financial position within equity, but separate from the parent’s equity; (b)
clearly identify and present both the parent’s and the noncontrolling interest’s
attributable consolidated net income on the face of the consolidated statement
of income; (c) consistently account for changes in parent’s ownership interest
while the parent retains its controlling financial interest in subsidiary and
for all transactions that are economically similar to be accounted for
similarly; (d) measure of any gain, loss, or retained noncontrolling equity at
fair value after a subsidiary is deconsolidated; and (e) provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. This Statement also
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. SFAS No. 160 is effective for
fiscal years and interim periods on or after December 15, 2008. The
management of Cherry Tankers does not expect the adoption of this pronouncement
to have a material impact on its financial statements.
In March
2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement 133”
(“SFAS No. 161”). SFAS No. 161 enhances required disclosures
regarding derivatives and hedging activities, including enhanced disclosures
regarding how: (a) an entity uses derivative instruments; (b)
derivative instruments and related hedged items are accounted for under SFAS No.
133, “Accounting for
Derivative Instruments and Hedging Activities”; and (c) derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. Specifically, SFAS No. 161
requires:
|
●
|
Disclosure
of the objectives for using derivative instruments in terms of underlying
risk and accounting designation
|
|
●
|
Disclosure
of the fair values of derivative instruments and their gains and losses in
a tabular format
|
|
●
|
Disclosure
of information about credit-risk-related contingent
features
|
|
●
|
Cross-reference
from the derivative footnote to other footnotes in which
derivative-related information is
disclosed.
|
SFAS No.
161 is effective for fiscal years and interim periods beginning after November
15, 2008. Earlier application is encouraged. The
management of Cherry Tankers does not expect the adoption of this pronouncement
to have a material impact on its financial statements.
In May
2008, the FASB issued FASB Statement No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”). SFAS No. 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States of America. The
sources of accounting principles that are generally accepted are categorized in
descending order as follows:
|
a)
|
FASB
Statements of Financial Accounting Standards and Interpretations, FASB
Statement 133 Implementation Issues, FASB Staff Positions, and American
Institute of Certified Public Accountants (AICPA) Accounting Research
Bulletins and Accounting Principles Board Opinions that are not superseded
by actions of the FASB
|
|
b)
|
FASB
Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and
Accounting Guides and Statements of
Position
|
|
c)
|
AICPA
Accounting Standards Executive Committee Practice Bulletins that have been
cleared by the FASB, consensus positions of the FASB Emerging Issues Task
Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts
(EITF D-Topics)
|
|
d)
|
Implementation
guides (Q&As) published by the FASB staff, AICPA Accounting
Interpretations, AICPA Industry Audit and Accounting Guides and Statements
of Position not cleared by the FASB, and practices that are widely
recognized and prevalent either generally or in the
industry.
|
On May
26, 2008, the FASB issued FASB Statement No. 163, “Accounting for Financial Guarantee
Insurance Contracts” (“SFAS No. 163”). SFAS No. 163 clarifies
how FASB Statement No. 60, “Accounting and Reporting by
Insurance Enterprises” (“SFAS No. 60”), applies to financial guarantee
insurance contracts issued by insurance enterprises including the recognition
and measurement of premium revenue and claim liabilities. It also
requires expanded disclosures about financial guarantee insurance
contracts.
The
accounting and disclosure requirements of SFAS No. 163 are intended to improve
the comparability and quality of information provided to users of financial
statements by creating consistency. Diversity exists in practice in
accounting for financial guarantee insurance contracts by insurance enterprises
under SFAS No. 60, “Accounting
and Reporting by Insurance Enterprises.” That diversity
results in inconsistencies in the recognition and measurement of claim
liabilities because of differing views about when a loss has been incurred under
FASB Statement No. 5, “Accounting for Contingencies”
(“SFAS No. 5”). SFAS No. 163 requires that an insurance enterprise
recognize a claim liability prior to an event of default when there is evidence
that credit deterioration has occurred in an insured financial
obligation. It also requires disclosure about (a) the risk-management
activities used by an insurance enterprise to evaluate credit deterioration in
its insured financial obligations and (b) the insurance enterprise’s
surveillance or watch list.
SFAS No.
163 is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and all interim periods within those fiscal years
except for disclosures about the insurance enterprise’s risk-management
activities. Disclosures about the insurance enterprise’s
risk-management activities are effective the first period beginning after
issuance of SFAS No. 163. Except for those disclosures, earlier
application is not permitted. The management of the Company does not
expect the adoption of this pronouncement to have material impact on its
financial statements.
On
January 11, 2009, Elya Orthopedics (“Elya”), a sole proprietorship owned by an
officer, Director, and stockholder of Cherry Tankers, entered into a patent
licensing agreement (the Patent License Agreement #2”) with the Company’s
Subsidiary.
The
Patent Licensing Agreement #2 grants to Elya an irrevocable, non-transferable,
renewable right, and license to make use of certain technology and products in
the Orthopedic Shoe Soles field (the “Technology #2”) for the sole purpose of
manufacturing, marketing, distributing, and selling the products based on the
Technology in Israel. Elya is entitled to sub-License the Technology
to third-party strategic partners if agreed upon by both parties in
advance. The Subsidiary retains all rights, title, and interest in
and to the Technology, including the design of the products, copyrights,
trademarks, and trade secrets. In consideration for the Technology,
Elya is obligated to pay development fees to the Subsidiary in the amount of
$150,000 as well as royalties due each calendar quarter based on 4% of Net
Revenues.
On January 12, 2009, a stockholder loaned to the Company $11,000 to pay
for legal and accounting fees. The loan from the stockholder is unsecured,
non-interest bearing, and is due in one payment on March 31, 2009 with a default
date of April 15, 2009.
Management’s
Discussion and Analysis or Plan of Operation
RESULTS
OF OPERATIONS
For
the year ended December 31, 2008 and period ended December 31,
2007
We have
not generated any revenues since inception, including for the year ended
December 31, 2008. Our operating activities during these periods consisted
primarily of developing our business plan.
General
and administrative expenses were $218,903 for the year ended December 31, 2008,
compared to $69,978 for the period ended December 31, 2007. The increase
in general and administrative expenses was due to an increase in our activity
level. General and administrative expenses primarily consist of consulting fees,
professional fees and filing fee expenses.
Our net
loss for the year ended December 31, 2008, was $218,903 or $0.02 per share,
compared to $69,978 or $0.01 per share for the period ended December 31,
2007. The weighted average number of shares outstanding was 13,705,000 as
of December 31, 2008, compared to 9,742,827 as of December
31, 2007.
LIQUIDITY
AND CAPITAL RESOURCES
As
of December 31, 2008
As of
December 31, 2008, our current assets were $377 and our current liabilities were
$13,200, resulting in negative working capital of $12,823.
As of
December 31, 2008, our total liabilities were $13,200, compared to total
liabilities of $38,029 as of December 31, 2007, all consisting of current
liabilities.
Stockholders’
equity decreased from of $206,080 as of December 31, 2007, to a
deficit of $12,823 as of December 31, 2008. This was the result of
the net loss for the year ended December 31, 2008.
For the
year ended December 31, 2008, net cash used in operating activities was
$245,583, compared to net cash used in operating activities of $31,949 for the
period ended December 31, 2007. Net cash used in operating activities for
the year ended December 31, 2008 was mainly the result of a net loss and payment
of accrued liabilities.
For the
year ended December 31, 2008, net cash used in investing activities was $0,
compared to net cash used in investing activities of $0 for the period
ended December 31, 2007.
Net cash
flows from financing activities for the year ended December 31, 2008 was $1,851,
compared to net cash flows from financing activities of $276,058 for the
period ended December 31, 2007.
Plan
of Operation
We
intend to continue to refine the technology we have licensed.
Our
license grants us worldwide marketing rights to the technology (except in
Israel) while allowing us to develop the technology further. Currently, our
technology employs an algorithm to measure a person’s center of gravity. We
intend to refine the measurement of this algorithm to better focus the center of
gravity.
We have
agreed to sublicense our technology to Elya Orthopedics, a sole proprietorship
owned by Yael Alush, who is one of our Directors. We intend to work with Elya
Orthopedics to develop footwear designs in both men’s and women’s
models.
We
plan to have our shoes manufactured in Israel.
We
are actively seeking strategic partners for the marketing of our
shoes.
Once we
have completed our medical studies, we intend to locate a large international
shoe manufacturer or orthopedic shoe distributor that will be a strategic
partner in marketing our product.
We
are seeking to establish a reputation and credibility in the medical field in
the major target markets.
We have
been in discussions with Israel’s leading medical institutions regarding the
conduct of research. We are currently awaiting a cost breakdown and anticipate
beginning medical research by the end of the first quarter of 2009.
We
may seek other opportunities.
If none
of the above is successful, we may seek other opportunities to maximize value
for our shareholders.
Additional
Capital Formation Activities
On
December 9, 2007, we raised $225,000 by selling 1,125,000 shares of our common
stock to two investors in a transaction that was exempt from registration
pursuant to the exemption from the registration requirements of the Securities
Act provided by Regulation S. We anticipate that the monies we have raised will
be used to finalize shoe production in Israel, allowing the Company to begin
marketing the product in the United States, and to pay some of the expenses
listed below.
Despite
this, we still do not have sufficient resources to effectuate our business. As
of December 31, 2008, we had approximately $377 in cash. We expect to incur a
minimum of $190,000 in expenses during the next twelve months of operations. We
estimate that this will be comprised of the following expenses:
|
|
Planned Expenditures Over The Next 12
|
|
|
|
Months (US$)
|
|
Category
|
|
|
|
Legal
and Accounting Fees
|
|
$ |
30,000 |
|
Marketing
Materials
|
|
|
3,000 |
|
Travel
Expenses
|
|
|
3,000 |
|
Office
Expenses
|
|
|
4,000 |
|
Development
/ Licensing
|
|
|
150,000 |
|
TOTAL
|
|
$ |
190,000 |
|
Additionally,
$20,000 will be needed for general working capital.
Accordingly,
we will have to raise the funds to pay for these expenses. We may have to borrow
money from our officers, or issue debt or equity securities, or seek to enter
into a strategic arrangement with a third party. There can be no assurance that
additional capital will be available to us. We currently have no agreements,
arrangements or understandings with any person to obtain funds through bank
loans, lines of credit or any other sources. Unless we are able to make
arrangements to raise additional funds, our inability to raise funds will have a
severe negative impact on our ability to remain a viable company.
In
January 2009, one of our shareholders lent us $11,000 to pay the legal and
accounting costs of preparing our annual report for the year ended December 31,
2008, and of preparing this post-effective amendment to the registration
statement that we filed on Form SB-2, which became effective in January
2008.
Going
Concern Consideration
Our
registered independent auditors included an explanatory paragraph in their
report on the accompanying consolidated financial statements regarding concerns
about our ability to continue as a going concern. Our consolidated financial
statements contain additional note disclosures describing the circumstances that
lead to this disclosure by our registered independent auditors.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
Changes
in and Disagreements with Accountants
We have
had no changes in or disagreements with our accountants.
Available
Information
We have
filed a registration statement on Form SB-2 under the Securities Act of 1933
with the Securities and Exchange Commission with respect to the shares of our
common stock offered through this prospectus. This prospectus is filed as a part
of that registration statement, but does not contain all of the information
contained in the registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of the referenced
contracts, agreements or documents of the company. We refer you to our
registration statement and each exhibit attached to it for a more detailed
description of matters involving the company, and the statements we have made in
this prospectus are qualified in their entirety by reference to these additional
materials. You may inspect the registration statement, exhibits and schedules
filed with the Securities and Exchange Commission at the Commission's principal
office in Washington, D.C. Copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the Securities
and Exchange Commission, 100 F Street NE, Washington, D.C. 20549. D.C. 20549.
Please call the Commission at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. The Securities and Exchange
Commission also maintains a web site at http://www.sec.gov that contains
reports, proxy statements and information regarding registrants that file
electronically with the Commission. Our registration statement and the
referenced exhibits can also be found on this site.
Reports
to Security Holders
Although
we are not required to deliver a copy of our annual report to our security
holders, we will voluntarily send a copy of our annual report, including audited
financial statements, to any registered shareholder who requests
it.
Since the
effectiveness of our registration statement on January 10, 2008, we have filed
reports with the Securities and Exchange Commission, including annual reports on
Form 10-K and interim reports on Form 10-Q.
Directors,
Executive Officers, Promoters and Control Persons
Our
executive officers and directors and their ages as of the date of this
prospectus are as follows:
Directors
and Executive Officers:
Name
of Director
|
|
Age
|
Dr.
Reuven Gepstein
Herzeliya
Medical Center
Herzeliya
Pituach, Israel
|
59
|
President,
Chief
Executive
Officer,
and
Director
|
Ms.
Yael Alush
78
Sokolov St. Herzeliya,
Israel
|
26
|
Secretary,
Treasurer
and
Director
|
Biographical
Information
Set forth
below is a brief description of the background and business experience of each
of our executive officers and directors for the past five years.
Dr.
Reuven Gepstein has been our director and our President and Chief Executive
Officer since joining our company on November 22, 2007. Dr. Gepstein is the head
of the Spinal unit at the Sapir Medical center in Israel. He is a practicing
spinal surgeon. Dr. Gepstein received his MD from the Technion School of
medicine in Israel in 1978 and received his specialization certificate in 1984.
He has been a practicing spinal surgeon ever since. Dr. Gepstein has written
numerous research papers in the field of spinal surgery and participated in
conferences on the matter in 2007 Switzerland 2006 Greece, Turkey, Israel, in
2005 in Russia, 2003 in Korea.
Ms. Yael
Alush has been our director, Treasurer and Secretary since joining the Company
on November 22, 2007. Ms. Alush is currently the owner of the ELYA Orthotics
Center in Herzeliya Israel. Ms. Alush is responsible for sales, customer
service, bookkeeping and sourcing of products. The facility caters to
individuals seeking out orthotics. Ms. Alush has been at ELYA Orthotics since
2003. Between 2001 and 2003 Ms. Alush worked at the Israel Center for Orthotics
where she worked as a customer service representative.
Term
of Office
Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors and hold
office until removed by the board.
Significant
Employees
We have
no significant employees.
Executive
Compensation
Summary
Compensation
Since our
incorporation on March 30, 2007, we have not paid any compensation to our
Directors or officers. On April 15, 2007, Dr. Reuven Gepstein, our President,
Chief Executive Officer and Director purchased 900,000 shares of our common
stock at par value, and on June 18, 2007, Mrs. Yael Alush, our Secretary,
Treasurer and Director purchased 962,500 shares of our common stock at par
value. Dr. Gepstein and Ms. Alush did not join us until November 22, 2007. The
officers and Directors of our Company do not intend to receive cash remuneration
or salaries for their efforts unless and until our business operations are
successful, at which time salaries and other remuneration will be established by
the Board of Directors, as appropriate.
We have
no employment agreements with any of our Directors or executive
officers.
During
the year ended December 31, 2008, no stock options or stock appreciation rights
were granted to any of our Directors or executive officers, none of our
Directors or executive officers exercised any stock options or stock
appreciation rights, and none of them held unexercised stock options as of
December 31, 2008. We have no long-term incentive plans.
The
following table sets forth information concerning the compensation paid or
earned during the year ended December 31, 2008 for services rendered to our
Company in all capacities by our principal executive officer and any officer
with total compensation over $100,000 per year.
SUMMARY COMPENSATION TABLE
|
|
Name
and
principal
position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Nonqualified
Deferred
Compensation
Earnings($)
|
|
|
All other
Compensation
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Reuven
Gepstein(1)
|
|
2008
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Ms. Yael Alush(2)
|
|
2008
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
(1)
Dr. Reuven Gepstein has been our President, Chief Executive Officer, and
Director since November 22, 2007.
(2) Ms.
Yael Alush has been our Secretary, Treasurer and Director since November 22,
2007.
Outstanding
Equity Awards
As of
December 31, 2008, none of our Directors or executive officers held unexercised
options, stock that had not vested, or equity incentive plan
awards.
Compensation
of Directors
No
compensation was paid to our Directors during the year ending December 31,
2008.
The
following table sets forth information concerning the compensation paid or
earned during the period ended December 31, 2007 to our
Directors.
DIRECTOR
COMPENSATION
Name
(a)
|
|
Fess
Earned
or Paid
in Cash
($)
(b)
|
|
|
Stock
Awards
($)
(c)
|
|
|
Option
Awards
($)
(d)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(e)
|
|
|
Non-
Qualified
Deferred
Compensation
Earnings
($)
(f)
|
|
|
All
Other
Compensation
($)
(g)
|
|
|
Total
($)
(j)
|
|
Dr
Reuven Gepstein
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Ms.
Yael Alush
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Security
Ownership of Certain Beneficial Owners and Management
The
following table provides the names and addresses of each person known to us to
own more than 5% of our outstanding common stock as of the date of this
prospectus, and by the officers and directors, individually and as a group as
of February 19, 2009 . Except as otherwise indicated, all shares are owned
directly.
Name
of Beneficial
Owner
|
|
Title Of Class
|
|
Amount and Nature of
Beneficial Ownership
|
|
|
Percent of Class
|
|
Dr.
Reuven Gepstein (1)
|
|
Common
|
|
|
900,000 |
|
|
|
6.57 |
% |
Yael
Alush (2)(3)
|
|
Common
|
|
|
962,500 |
|
|
|
7.02 |
% |
Directors
and Officers as a Group (2 persons)(3)
|
|
Common
|
|
|
1,862,000 |
|
|
|
13.59 |
% |
Rivka
Benchaya
97
Hanasi Street
Herzeliya,
Israel
|
|
Common
|
|
|
1,509,000 |
|
|
|
11.01 |
% |
Ofer
Ben-Ner
21
Hagefen Street
Tzaron,
Israel
|
|
Common
|
|
|
1,045,000 |
|
|
|
7.62 |
% |
Sharone
Perlstein(4)
4
HaOgen Street
Herzeliya,
Israel
|
|
Common
|
|
|
2,509,000 |
|
|
|
18.31 |
% |
Sivan
Alush(5)
3
Haait Street
Raanana,
Israel
|
|
Common
|
|
|
962,500 |
|
|
|
7.02 |
% |
Haim
Perlstein(6)
9
Meshesk Street
Givat
Chen, Israel
|
|
Common
|
|
|
467,500 |
|
|
|
3.41 |
% |
Atsmaout
Perlstein(7)
9
Meshesk Street
Givat
Chen, Israel
|
|
Common
|
|
|
467,500 |
|
|
|
3.41 |
% |
Shomit
Yaron(8)
4
HaOgen Street
Herzeliya,
Israel
|
|
Common
|
|
|
509,000 |
|
|
|
3.71 |
% |
(1) Our
President, Chief Executive Officer, and Director
(2) Our
Secretary, Treasurer and Director.
(3) Does
not include 962,500 shares owned by Sivan Alush, Ms. Yael Alush’s sister, with
respect to which Ms. Yael Alush disclaims beneficial ownership.
(4) Does
not include 467,500 shares owned by Haim Perlstein and 467,500 shares owned by
Atsmaout Perlstein, Mr. Sharone Perlstein’s father and mother, respectively,
with respect to which Mr. Sharone Perlstein disclaims beneficial ownership. Does
not include 509,000 shares owned by Shlomit Yaron, Mr. Sharone Perlstein’s wife,
with respect to which Mr. Sharone Perlstein disclaims beneficial
ownership.
(5) Does
not include 962,500 shares owned by Yael Alush, Ms. Sivan Alush’s sister and our
Secretary, Treasurer and Director, with respect to which Ms. Sivan Alush
disclaims beneficial ownership.
(6) Does
not include 467,500 shares owned by Atsmaout Perlstein and 2,509,000 shares
owned by Sharone Perlstein, Mr. Haim Perlstein’s former wife and son,
respectively, with respect to which Mr. Haim Perlstein disclaims beneficial
ownership.
(7) Does
not include 467,500 shares owned by Haim Perlstein and 2,509,000 shares owned by
Sharone Perlstein, Ms. Perlstein’s former husband and son, respectively, with
respect to which Ms. Perlstein disclaims beneficial ownership.
(8) Does
not include 2,509,000 shares owned by Sharone Perlstein, Ms. Yaron’s husband,
with respect to which Ms. Yaron disclaims beneficial ownership.
The
percent of class is based on 13,705,000 shares of common stock issued and
outstanding as of the date of this prospectus.
Certain
Relationships and Related Transactions
None of
the following parties has, since our date of incorporation, had any material
interest, direct or indirect, in any transaction with us or is in any presently
proposed transaction that has or will materially affect us:
*
|
Any
of our directors or officers;
|
*
|
Any
person proposed as a nominee for election as a
director;
|
*
|
Any
person who beneficially owns, directly or indirectly, shares carrying more
than 5% of the voting rights attached to our outstanding shares of common
stock;
|
*
|
Any
relative or spouse of any of the foregoing persons who has the same house
as such person;
|
*
|
Immediate
family members of directors, director nominees, executive officers and
owners of 5% or more of our common
stock.
|
Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
Our
directors and officers are indemnified as provided by the Delaware Corporations
Law and our Bylaws. We have been advised that in the opinion of the Securities
and Exchange Commission indemnification for liabilities arising under the
Securities Act is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by one of our directors, officers, or
controlling persons in connection with the securities being registered, we will,
unless in the opinion of our legal counsel the matter has been settled by
controlling precedent, submit the question of whether such indemnification is
against public policy to court of appropriate jurisdiction. We will then be
governed by the court's decision.
Until 90
days from the date of this prospectus, all dealers that effect transactions in
these securities whether or not participating in this offering, may be required
to deliver a prospectus. This is in addition to the dealer's obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
Part
II
Information
Not Required In The Prospectus
Other
Expenses Of Issuance And Distribution
The
estimated costs of this offering are as follows:
*Securities
and Exchange Commission registration fee
|
|
$ |
0.00 |
|
Accounting
fees and expenses
|
|
$ |
7,000.00 |
|
Legal
fees and expenses
|
|
$ |
5,000.00 |
|
|
|
|
|
|
Total
|
|
$ |
12,000.00 |
|
*Pursuant to Rule 457(p) under the Securities Act, the
registration fee is set off against fees previously paid.
All
amounts are estimates other than the Commission's registration fee.
We are
paying all expenses of the offering listed above. No portion of these expenses
will be borne by the selling shareholders. The selling shareholders, however,
will pay any other expenses incurred in selling their common stock, including
any brokerage commissions or costs of sale.
Indemnification
Of Directors And Officers
INDEMNIFICATION
OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Our
officers and directors are indemnified as provided by the Delaware General
Corporate Law and our bylaws.
Section
145 of the Delaware General Corporation Law provides that a corporation may
indemnify directors and officers as well as other employees and individuals
against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
any threatened, pending or completed actions, suits or proceedings in which such
person is made a party by reason of such person being or having been a director,
officer, employee or agent of our company. The Delaware General Corporation Law
provides that Section 145 is not exclusive of other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise. Article V of our bylaws
and Article VI of our certificate of incorporation provide that we shall
indemnify our directors and officers, our employees and other agents, to the
fullest extent permitted by the Delaware General Corporation Law and that we
shall pay the expenses incurred in defending any proceeding in advance of its
final disposition. However, the payment of expenses incurred by a director or
officer in advance of the final disposition of the proceeding will be made only
upon the receipt of an undertaking by the director or officer to repay all
amounts advanced if it should be ultimately determined that the director or
officer is not entitled to be indemnified.
Section
102(b)(7) of the Delaware General Corporation Law permits a corporation to
provide in its certificate of incorporation that a director of the corporation
shall not be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. Our certificate of incorporation provides for such
limitation of liability.
We do not
currently maintain standard policies of insurance under which coverage is
provided (a) to our directors, officers, employees and other agents against loss
arising from claims made by reason of breach of duty or other wrongful act, and
(b) to us with respect to payments which may be made by us to such officers and
directors pursuant to the above indemnification provision or otherwise as a
matter of law, although we may do so in the future.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and control persons pursuant to the
foregoing provisions or otherwise, we have been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy, and is, therefore, unenforceable.
Recent
Sales of Unregistered Securities
On April
15, 2007. we issued 1,000,000 shares of our common stock to Sharone Perlstein,
our founder and sole director at that time, in consideration for their par
value.
On April
15, 2007, we issued 900,000 shares of our common stock to Dr. Reuven Gepstein,
our President, Chief Executive Officer, Treasurer, and Director, in
consideration of their par value. The shares were issued in a transaction that
was exempt from the registration requirements of the Securities Act pursuant to
Regulation S promulgated by the Securities and Exchange
commission..
On April
15, 2007, we issued 3,777,000 shares of our common stock to four other
individuals in consideration of their par value. The shares were issued in a
transaction that was exempt from the registration requirements of the Securities
Act pursuant to Regulation S promulgated by the Securities and Exchange
commission.
On June
18, 2007, we issued 962,500 shares of our common stock to Yael Alush, our
Secretary and Director, in consideration of their par value. The shares were
issued under Regulation S promulgated by the Securities and Exchange
Commission.
On June
18, 2007, we issued 3,940,500 shares of our common stock to six other
individuals in consideration of their par value. The shares were issued in a
transaction that was exempt from the registration requirements of the Securities
Act pursuant to Regulation S promulgated by the Securities and Exchange
commission.
In July
through October of 2007, we issued 2,000,000 shares of common stock to 46
investors in a private placement pursuant to the exemption from the registration
requirements of the Securities Act provided by Regulation S, the 2007 Private
Placement. The aggregate consideration paid for such shares was $50,000. All
investors in such private placement were non-US persons (as defined under SEC
Regulations). The Company provided all investors in the 2007 Private Placement
with a subscription agreement.
On
December 9, 2007, we raised $225,000 by selling 1,125,000 shares of our common
stock to two investors in a transaction that was exempt from registration
pursuant to the exemption from the registration requirements of the Securities
Act provided by Regulation S. Both investors in such private placement were
non-US persons (as defined under SEC Regulations) and were provided with
Subscription Agreements.
Regulation
S Compliance
Each
offer or sale was made in an offshore transaction;
Neither
we, a distributor, any respective affiliates, nor any person on behalf of any of
the foregoing made any directed selling efforts in the United
States;
Offering
restrictions were, and are, implemented;
No offer
or sale was made to a U.S. person or for the account or benefit of a U.S.
person;
Each
purchaser of the securities certifies that it was not a U.S. person and was not
acquiring the securities for the account or benefit of any U.S.
person;
Each
purchaser of the securities agreed to resell such securities only in accordance
with the provisions of Regulation S, pursuant to registration under the Act, or
pursuant to an available exemption from registration; and agreed not to engage
in hedging transactions with regard to such securities unless in compliance with
the Act;
The
securities contain a legend to the effect that transfer is prohibited except in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are
required, either by contract or a provision in its bylaws, articles, charter or
comparable document, to refuse to register any transfer of the securities not
made in accordance with the provisions of Regulation S pursuant to registration
under the Act, or pursuant to an available exemption from registration;
provided, however, that if any law of any Canadian province prevents us from
refusing to register securities transfers, other reasonable procedures, such as
a legend described in paragraph (b)(3)(iii)(B)(3) of Regulation S have been
implemented to prevent any transfer of the securities not made in accordance
with the provisions of Regulation S.
Exhibit
|
|
Description
|
*3.1
|
|
Our
Articles of Incorporation, incorporated by reference herein from Exhibit
3.1 to our Registration Statement on Form SB-2 (Registration No.
333-148346) filed with the Securities and Exchange Commission on December
26, 2007
|
|
|
|
*3.2
|
|
Our
By-Laws, incorporated by reference herein from Exhibit 3.2 to our
Registration Statement on Form SB-2 (Registration No. 333-148346) filed
with the Securities and Exchange Commission on December 26,
2007
|
|
|
|
*4.1
|
|
Specimen
of our common stock certificate, incorporated by reference herein from
Exhibit 4.1 to our Registration Statement on Form SB-2 (Registration No.
333-148346) filed with the Securities and Exchange Commission on December
26, 2007
|
|
|
|
*5.1 |
|
Legal
opinion of Carl M. Sherer, Esq. regarding the legality of the Securities
being registered. |
|
|
|
*10.1
|
|
Form
of our Regulation S Subscription Agreement, incorporated by reference
herein from Exhibit 10.2 to our Registration Statement on Form SB-2
(Registration No. 333-148346) filed with the Securities and Exchange
Commission on December 26, 2007
|
|
|
|
10. 4
|
|
Form
of renewable, non-transferable, sub-licensable license to make use of our
technology for the sole purpose of manufacturing, marketing, distributing
and selling the shoes and otherwise exploiting our technology in Israel
between Cherry Tankers Ltd., our wholly-owned subsidiary and Elya
Orthopedics (“Elya”). Elya is a sole proprietorship owned by Yael Alush,
our Secretary, Treasurer and Director.
|
|
|
|
23.1
|
|
Consent of Davis
Accounting Group, P.C. |
|
|
|
*23.2
|
|
Consent of Carl M.
Sherer, Esq. (included in Exhibit
5.1) |
*
Previously filed as Exhibits to our Registration Statement on Form
SB-2.
The
undersigned registrant hereby undertakes:
1.
|
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
|
|
|
|
|
(a)
|
To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
|
|
|
|
|
(b)
|
To
reflect in the prospectus any facts or events arising after the effective
date of this registration statement, or most recent post-effective
amendment, which, individually or in the aggregate, represent a
fundamental change in the information set forth in this registration
statement; Notwithstanding the forgoing, any increase or decrease in
Volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the commission pursuant to
Rule 424(b)if, in the aggregate, the changes in the volume and price
represent no more than 20% change in the maximum aggregate offering price
set forth in the “Calculation of Registration Fee” table in the effective
registration statement.
|
|
|
|
|
(c)
|
To
include any material information with respect to the plan of distribution
not previously disclosed in this registration statement or any material
change to such information in the registration
statement.
|
|
|
|
2.
|
That,
for the purpose of determining any liability under the
|
|
Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
|
|
|
3.
|
To
remove from registration by means of a post-effective amendment any of the
securities being registered hereby which remain unsold at the termination
of the offering.
|
|
|
4.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to officers, directors, and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities is asserted our director, officer, or other controlling person
in connection with the securities registered, we will, unless in the
opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against
public policy to a court of appropriate jurisdiction. We will then be
governed by the final adjudication of such issue.
|
|
|
5.
|
Each
prospectus filed pursuant to Rule 424(b) as part of a Registration
statement relating to an offering, other than registration statements
relying on Rule 430(B) or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided;
however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document
incorporated or deemed incorporated by referenced into the registration
statement or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first
use.
|
Signatures
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized at Herzeliya, Israel, on February 24,
2009 .
CHERRY
TANKERS, INC.
|
|
|
By:
|
/s/ Dr.
Reuven Gepstein |
Name:
Dr. Reuven
Gepstein
|
Dr.
Reuven Gepstein
Title:
President, Chief Executive Officer, Treasurer, and Director (Principle
Executive, Financial and Accounting Officer)
POWER
OF ATTORNEY
KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Dr. Reuven Gepstein, his true and lawful
attorneys-in-fact, with full power of substitution and resubstitution, for him
or her and in his or her name, place and stead, in any and all capacities to
sign any and all amendments (including post-effective amendments) to this
registration statement and to sign a registration statement pursuant to Section
462(b) of the Securities Act of 1933, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
Date:
February 24 , 2009
/s/ Dr.
Reuven Gepstein |
Name:
Dr. Reuven Gepstein
|
Title:
President, Chief Executive Officer and
Director
|
Date:
February 24 , 2009
/s/
Yael Alush |
|
Title:
Secretary, Treasurer and
Director
|