General Form for
Registration of Securities Under Section 12(g) of the Securities Exchange Act of 1934
DYNAMIC
APPLICATIONS CORP.
(Exact Name of Registrant
As Specified In Its Charter)
Delaware | 98-0573566 |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
c/o Eli Gonen, 14 Menachem Begin Street, Ramat Gan, Israel | 52700 |
(Address of Principal Executive Offices) | (ZIP Code) |
Registrant's Telephone Number, Including Area Code: (972) 3-7523922
Securities to be Registered Under Section 12(b) of
the Act:
None
(Title of Class)
Securities to be Registered Under Section 12(g) of the
Act:
Common Stock, $0.00001
(Title of Class)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company
Large accelerated filer ¨ | Accelerated filer ¨ | Non-Accelerated filer ¨ | Smaller reporting company x |
Item 1. |
Description of Business | 3 | |
Item 1A. |
Risk Factors | 6 | |
Item 2. |
Management's Discussion And Analysis of Financial Conditions And Plan of Operation | 9 | |
Item 3. |
Description of Properties | 10 | |
Item 4. |
Security Ownership of Certain Beneficial Owners and Management | 10 | |
Item 5. |
Directors, Executive Officers, Promotors and Control Persons | 11 | |
Item 6. |
Executive Compensation | 11 | |
Item 7. |
Certain Relationships and Related Transactions, and Director Independence | 11 | |
Item 8. |
Legal Proceedings | 12 | |
Item 9. |
Market Price of and Dividends on the Registrants Common Equity and Related Stockholder Matters | 12 | |
Item 10. |
Recent Sales of Unregistered Securities | 12 | |
Item 11. |
Description of Registrants Securities to be Registered | 12 | |
Item 12. |
Indemnification of Directors and Officers | 13 | |
Item 13. |
Financial Statements and Supplementary Data | 14 | |
Item 14. |
Changes and Disagreements with Accountants on Accounting and Financial Disclosure | 30 | |
Item 15. |
Exhibits | 30 |
PART I
ITEM 1. DESCRIPTION OF BUSINESS Back to Table of Contents
Some of the statements contained in this registration statement on Form 10-12G/A of Dynamic Applications Corp. (hereinafter the "Company", "We" or the "Registrant") discuss future expectations, contain projections of our plan of operation or financial condition or state other forward-looking information. In this registration statement, forward-looking statements are generally identified by the words such as "anticipate", "plan", "believe", "expect", "estimate", and the like. Forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results or plans to differ materially from those expressed or implied. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and is derived using numerous assumptions. A reader, whether investing in the Company's securities or not, should not place undue reliance on these forward-looking statements, which apply only as of the date of this Registration Statement. Important factors that may cause actual results to differ from projections include, for example:
- | the success or failure of management's efforts to implement the Registrant's plan of operation; |
- | the ability of the Registrant to fund its operating expenses; |
- | the ability of the Registrant to compete with other companies that have a similar plan of operation; |
- | the effect of changing economic conditions impacting our plan of operation; |
- | the ability of the Registrant to meet the other risks as may be described in future filings with the SEC. |
Our Filing Status as a "Smaller Reporting Company
We are a smaller reporting company, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. As a smaller reporting company, the disclosure we will be required to provide in our SEC filings areless than it would be if we were not considered a smaller reporting company. Specifically, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, being permitted to provide two years of audited financial statements in annual reports rather than three years. Decreased disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze the Companys results of operations and financial prospects.
General Background
We were incorporated in Delaware on March 7, 2008 and are a development stage company engaged in the business of developing equipment covered by a patent (Patent No. 5,497,555). We acquired the patent from Appelfeld Zer Fisher ("AZF"), an Israeli law firm that specializes in intellectual property law including among other things the filing, prosecuting and the commercialization of patents, in a patent transfer and sale agreement dated March 27, 2008 (the "Patent Agreement") for consideration of $17,000. The patent and related technology covers the design and development of an electromagnetic percussion device with a striking piston made of a single monolithic block (the "Patented Device"). Prior to the Patent Agreement with AZF, the Company had not been involved in any similar patent transactions and our management, while having significant business experience, did not have any meaningful experience in technological areas generally or in the field of electromagnets specifically. However, the Company's CFO, a CPA by training, had served as a consultant and/or as CFO to other reporting companies by principally providing SEC reporting and disclosure services. These included companies that had also acquired other patents pursuant to similar patent transfer and sale agreements with AZF, as follows: Crown Dynamics Corp., Dynamic Ventures Corp., Consumer Products Services Group (formerly Global Dynamics Corp.) and Advanced Ventures Corp., all companies with securities registered under Section 12 of the Exchange Act. In addition, we understand that another issuer, Santa Fe Petroleum, Inc. (formerly Baby All Corp.), filed an S-1 in 2011 with disclosure that it had acquired a patent from a party other than AZF. The foregoing information was provided to the Company by its CFO/Director, Mr. Asher Zwebner. We are not aware of other public companies that may have been involved in patent acquisition agreements with AZF.
On May 5, 2008, we filed a registration statement on Form S-1 pursuant to which we offered and sold to the public 2,000,000 shares of our common stock at $0.04 per share, resulting in gross proceeds of $80,000 and net proceeds of approximately $60,000. Notwithstanding our successful IPO and a subsequent raise of approximately $200,000 in December 2008, the Company cash resources were applied to a significant extent to executive compensation and consulting fees, without devoting resources to the development of the Patented Device. During the period from December 31, 2008 through September 30, 2009, the Company's cash position was reduced from approximately $130,000 to less that $100 and the Company announced that it had ceased efforts to pursue development of the patent.
The Company became delinquent in its reporting obligations under the Securities Exchange Act of 1934 (the "Exchange Act") by its failure to file its annual report on Form 10-K for its year-ended December 31, 2009, any quarterly reports in 2010 and its Form 10-K for the year-ended December 31, 2010 and quarterly reports for the periods ended March 31, 2011 and June 30, 2011. On July 26, 2011, the Company filed Form 15 to suspend it duty to file reports under Sections 13 and 15(d) of the Exchange Act.
Electromagnetic Percussion Devices
An electromagnetic percussion device is generally comprised of the following: (a) a housing; (b) an instrument connected to, and extending beyond, the housing; (c) a driving member reciprocal within the housing, the driving member including an intermediate region of a first diameter and an enlarged anterior head of a second diameter, the second diameter being larger than the first diameter; (d) a piston body reciprocal within the housing and adapted to impact the instrument, the piston body including a coupling element for slidably accommodating the head of the driving member, thereby coupling the driving member and the piston body together, the coupling element including a plurality of leaves which enclose and confine the head of the driving member when the coupling element is within the housing but which can be moved apart when the coupling element is outside the housing to allow the head of the driving member to be inserted into, or removed from, the coupling element; (e) an electromagnetically active body connected to the driving member; and (f) an electromagnetic coil connected to the housing, the coil operationally coupled to the electromagnetically active body so as to cause the reciprocation of the driving member.
Based upon the limited information that we received when we acquired the rights to the Patented Device we believed, and more importantly on the information that we have received from 2011 to the present, we continue to believe, that our Patented Device has unique design features because unlike traditional electromagnetic devices, the positions of the electromagnetic coil and electromagnetically active body are reversed. We believe that this design feature should porvide us with an advantage over other devices and should successfully address the shortcomings of the previously known configurations by providing an electromagnetic percussion device whose striking piston is made of a single monolithic block of material. As a result, our Patented Device should be more durable and rugged than heretofore comparable devices described above.
Further, in our Patented Device, our design provides that prior to impact between the anterior end of piston body and the posterior end of the instrument, the current in the electromagnetic coil switches direction. This is designed to decelerate the motion of driving member leaving the piston body unaffected by the switch in current direction, creating a small gap between itself and driving member so that at this moment piston body strikes the instrument there is no direct contact between piston body and the driving member. As a result, no impact shock is transmitted from piston body to driving member thereby reducing wear on driving member and its permanent magnet thereby significantly increasing its useful life and reliability.
Notwithstanding the foregoing, there can be no assurance that our Patented Device will result in a working Prototype much less be commercially accepted by the industry or that it will develop and sustain market acceptance at levels that will result in profitable operations.
Recent Development Efforts
From our inception through mid-2011, we were unable and, in fact, did not devote any significant efforts to develop, either alone or with third parties, a Prototype of our Patented Device. Notwithstanding the foregoing, our management, which has remained virtually unchanged since inception, continued to believe in the potential of our Patented Device.
During the latter half of 2011, we had discussions with a limited number of unaffiliated persons as well as shareholders for the purpose of raising funds through the sale of restricted shares as part of a plan to pursue the development of a Prototype of our Patented Device. In late 2011 through 2012, we had discussions together with our investors related to renewing our efforts to develop our Patented Device, which was the reason our investors had a renewed interest in our Company. As a result, we engaged the services of a chief scientific advisor with extensive experience in engineering and electromagentics and in April 2013 we entered into a Development/Manufacturing and Marketing Agreement with GUMI Tel Aviv Ltd.
Our management's position is that its belief in the Patented Device, notwithstanding the rather lengthy delay in development and its mistaken determination in July 2011 to cease development efforts, was justified based upon its ability to successfully conclude the agreement with GUMI. Reference is made to the Company's Forms 8-K filed with the SEC on March 7 and April 22, 2013.
As part of our management's renewed interest in pursuit of development of our Patented Device with view to its commercial exploitation, we determined to become current with the OTC Markets by filing all reports required by SEC Rule 15c2-11. We have continued to be current under the rules of the OTC Markets and then determined to file a Form 10/12G to again become a reporting company under the Exchange Act. We filed our Form 10 on November 21, 2012.
Third-Party Manufacturers/Relationship with GUMI Tel Aviv Ltd
Because of our limited financial and personnel resources, our plan since the acquisition of the Patent has been to rely on third parties to develop a Prototype of the Patented Device and thereafter to contract for the manufacture and marketing of commercial models of our Patented Device. To that end, on January 15, 2013, the Company entered into a consulting agreement with Gennady Nickelshur to serve as the Company's chief scientific advisor ("CSA"). The agreement with Mr. Nickelshpur provides for cash compensation based upon an hourly rate and the grant of options pursuant to an ESOP to be adopted by the board of directors. The terms of the ESOP have yet to be determined.
On March 5, 2013, the Company and GUMI Tel Aviv Ltd, a major, privately-held Israeli technology company ("GUMI"), entered into development/manufacturing/marketing agreement ("GUMI Agreement"). GUMI is engaged in the manufacture, import/export, marketing and install industrial equipment and designing technical solutions to major Israeli customers, including, among others, the Israeli Defense Forces (IDF), El-Al Airlines, major Israeli Aerospace companies, as well as foreign industrial customers. Further, GUMI recently entered into a Joint Venture with a large Indian industrial company to build a factory in India to manufacture specially designed pipes for the aviation industry. GUMI has eight operating subsidiaries, approximately 200 full-time employees, more than 100 sub-contractors, and is among Israel's largest manufacturers and distributors of industrial equipment.
Pursuant to the GUMI Agreement, GUMI agreed to: (i) complete the development of the Prototype of the Patented Device; (ii) manufacture the commercial model(s) of the Patented device; and (iii) market the commercial model(s) of the Patented Device.
In consideration for developing the Prototype and manufacturing and marketing/distributing commercial models of the Patented Device as well as incurring all related costs and expenses in connection therewith, the Company shall compensate GUMI as follows: (i) upon the execution of the GUMI Agreement, the Company granted GUMI warrants (the "Warrants") exercisable to purchase 200,000 shares of the Company's common stock ("Warrant Shares") at an exercise price of $0.05 per share (the "Exercise Price"); (ii) upon completion of the Prototype, granting GUMI additional Warrants to purchase 200,000 additional Warrant Shares at the Exercise Price; and (iii) upon completion of a Commercial Device ready for manufacture and sale, granting GUMI additional Warrants to purchase 200,000 additional Warrant Shares at the Exercise Price. The Warrants shall expire 3 years from the date of each grant and shall be subject to adjustment in the event of any recapitalization of the Company's capital stock.
In addition to the consideration represented by the grant of Warrants, the Agreement further provided that following commencement of sale of the Commercial Device and until such time that GUMI has recouped all costs and expenses that it has incurred and paid in connection with the completion of development of the Prototype and the manufacture of the Commercial Device ("Date of Recoupment"), one hundred (100%) percent of the net sales revenues shall be paid and distributed to GUMI. Further, on and after the Date of Recoupment, net sales revenues under the March 5 GUMI Agreement were to be paid sixty-five (65%) percent to GUMI and thirty-five (35%) percent to the Company.
On April 17, 2013, the Company entered into a Modification Agreement, pursuant to which the above referenced distribution agreement with GUMI was modified and amended as follows: (i) GUMI engaged the services of Mr. Ygal Chapo, a Tel Aviv university trained mechanical engineer, to lead GUMI's design and engineering team developing a working prototype (the "Prototype") of the Company's patented electromagnetic percussion device ("Patented Device") and commercial models of the Patented Device; (ii) the Company agreed to contribute $10,000 to the compensation GUMI is paying its newly designated mechanical engineer; and (iii) the revenue sharing arrangement between GUMI and the Company was changed to 60% to GUMI and 40% to the Company from 65% to GUMI and 35% to the Company.
We were informed by GUMI on May 1, 2013 that it has made significant progress toward completion of the development of the Prototype and that they expect that they will be able to present us with commercial models of our Patented Device within approximately 12 to 16 weeks. As a result, it is our hope and expectation that we will have commercial models available for sale during 2013. On May 5, 2013, GUMI sent a further update regarding their progress, informing us that they had completed phase one of the engineering process and expressing their belief that they have completed a full set of drawings that will enable them to manufacture the Prototype. We were further informed that as soon as the initial Prototype is manufactured, GUMI will undertake industrial testing leading to final drawings, which they stated will result in the manufacture of the Commercial Prototype
Intellectual Property
On March 27, 2008, we executed the Agreement with Appelfeld Zer Fisher, the original owners of the technology, pursuant to which we were granted all rights, title and interest in, the Patented Device and related technologies. The patent application was filed on December 19, 1994 with the United States Patent and Trademark Office. On April 13, 2008, the patent assignment was recorded in the United States Patent and Trademark Office. Our patent remains in full force and effect and will expire on December 18, 2014. In addition to our patent, we will continue to explore entering into negotiations with third parties for the acquisition of additional patents, as well as other intellectual property, to further our business development in the technology area. See the disclosure under "Risk Factors" regarding the limited time before the Company's Patent expires.
Competition
There are many companies in the electromagnetic percussion field, including major international manufacturers, having far greater financial and other resources, together with significantly greater operating histories, than the Company. We are not, however, aware of any other company that has developed, manufactured, and/or marketed a device of a similar nature that incorporates a design in which the positions of the electromagnetic coil and electromagnetically active body are reversed.
We believe our patented technology and design incorporated in our Patented Device, should permit us to successfully addresses certain shortcomings of the presently known configurations by providing an electromagnetic percussion machine whose striking piston is made of a single monolithic block of material. The Company believes that its technology is more durable and rugged than previous technologies and/or methods. In addition, as we develop and/or acquire rights to additional technologies, we also expect to face significant competition from other companies engaged in the manufacture and sale of such other technologies, virtually all of which will have far greater financial and other resources and longer operating histories.
Existing Or Potential Future Government Regulations
We may be subject to the provisions of the Federal Consumer Product Safety Act and the Federal Hazardous Substances Act, among other laws. These acts empower the CPSC to protect the public against unreasonable risks of injury associated with consumer products. The CPSC has the authority to exclude from the market articles that are found to be hazardous and can require a manufacturer to repair or repurchase such devices under certain circumstances. Any such determination by the CPSC is subject to court review. Violations of these acts may also result in civil and criminal penalties. Similar laws exist in some states and cities in the U.S. and in many jurisdictions throughout the world.
Employees
Other than our current officers and directors, and our recently retained chief scientific advisor, Gennady Nickelshpur, we have no other full-time or part-time employees. During the next twelve months, we believe that we may be required to hire a limited number of either full or part-time employees to further our business plan related to our Patented Device as well as retain one or more additional advisors to supplement the effors of Mr. Nickelshpur. Our hiring plan is dependent upon available financial resources. We expect that when we complete development of our Patented Device, principally with the efforts of Mr. Nickelshpur, the timing of which we cannot assure, and assuming that our resources are sufficient, that we will need to hire up both part-time and full-time employees and scientific advisors for our operations as they grow.
Recent Developments
On October 26, 2012, the Company's reverse stock split on a one-for-one hundred (1:100) basis ("Reverse Split") was implemented and approved by FINRA. In connection with the Reverse Split, the Company also amended its Articles of Incorporation to reduce its authorized shares of capital stock from 20 billion shares comprised of 19.8 billion shares of common stock and 20 million shares of preferred stock to 520 million authorized shares comprised of 500 million shares of common stock and 20 million shares of preferred stock.
On April 17, 2013, the Company entered into an agreement with Sensoil Ltd, an Israeli company, with an address at 27 Maskit St., Hertzliya 46733 Israel ("Sensoil") that is engaged in the design, development, manufacture, installation and service of their Vaduze Monitoring Systems (VMS), a system designed to detect and monitor soil contamination, floods, breaching of dams and Heap Leaching processes. Pursuant to the agreement (the "Representative Agreement"), the Company has been designated as Sensoil's sales representative, on a non-exclusive basis, for the United States. The Representative Agreement is for an initial term of one year with automatic renewal terms of one year each. The Company will receive a commission equal to 25% of the first $5 million in sales revenues and 20% of sales revenues in excess of 45 million generated by the Company for Sensoil's products and services in the United States.
The Representative Agreement with Sensoil Ltd is part of our plan to seek to enhance our revenue stream by entering into joint ventures or other business arrangements with third parties engaged in technology development, based upon our belief that there are many opportunities for us to develop relationships with technology companies in Israel that can generate revenues in the united States and elsewhere.
The Company is filing this Registration Statement on Form 10 under the Exchange Act to have its shares of common stock registered under the Exchange Act and become subject to the reporting obligations of the SEC. The Company believes that being a reporting company under the Exchange Act should enhance increases its ability to raise additional capital to expand its current business operations and enhance its ability to effectuate acquisitions and/or mergers with other technology companies in related fields of business, among others. As of the date of this Registration Statement, and until we raise additional capital, we have deferred taking more active steps related to pursuing and/or identifying acquisition and/or merger candidates. Nevertheless, our management team continues to evaluate opportunities related to its current business as well as related technologies. There is currently only a very limited trading market in our shares. There can be no assurance, that an active trading market for our common stock will commence. Further, in the event that an active trading market commences, there can be no assurance as to the market price of our shares of common stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained. Nevertheless, we believe that our recently implemented Reverse Split and the amendment to our capital structure, together with our ability to raise capital through loans from our directors, officers and affilated persons, should make investment in our shares more desirable to investors and to the financial community.
ITEM 1A. RISK FACTORS Back to Table of Contents
FORWARD-LOOKING STATEMENTS
This Registration Statement on Form 10-12G/A contains forward-looking statements that are
based on current expectations, estimates, forecasts and projections about us, our future
performance, the market in which we operate, our beliefs and our management's assumptions.
In addition, other written or oral statements that constitute forward-looking statements
may be made by us or on our behalf. Words such as "expects",
"anticipates", "targets", "goals", "projects",
"intends", "plans", "believes", "seeks",
"estimates", variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that are difficult to
predict or assess. Therefore, actual outcomes and results may differ materially from what
is expressed or forecast in such forward-looking statements.
We are a development stage company with only a limited operating history and may never be able to carry out our business plan or achieve any revenues or profitability; as a development stage company, potential investors have a high probability of losing their entire investment.
We are subject to all of the risks inherent in the establishment and growth of a development stage business. We were established on March 6, 2008, for the purpose of engaging in the development, manufacture, and sale of our Patented Device. While we have not generated any revenues nor have we realized a profit from our operations to date, we believe that our recent ability to raise capital from affiliated persons should enhance our ability to raise equity capital from potential third-party investors so as to permit us to complete development of our business plan, which includes completing a Prototype of our Patented Device. There can be no assurance that we will be able to generate any significant revenues or profitability, if at all, from our Patented Device. Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in growing a development stage business in our industry and, as a result, our Company is a highly speculative venture involving significant financial risk.
We expect to incur operating losses in the next twelve months because we have only a very limited ability to generate revenues from operations unless and until we successfully complete development of a commercially viable Prototype of our Patented Device.
To date we have not generated revenues from our Patented Device business. While our Patented Device is not currently available for sale, we intend to devote our limited financial resources to its continued development as well as to the acquisition of related technology assets. We expect to incur operating losses over the next twelve months and until we are successful in developing a workable Prototype of our Patented Device. We recognize that if we are unable to generate revenues, we may not be able to continue operations. There can be no assurance that we will generate any operating revenues or ever achieve profitable operations.
We expect that during the next twelve months, we will have to continue to rely on loans from and/or purchases of our capital stock by our affiliates to fund our operating expenses and may require additional funds through the sale of our common stock from third parties; this will be dependent upon favorable market conditions and interest in our business activities by investors.
We have limited cash resources to fund our administrative and operating expenses for the next twelve months. We will require additional capital following the development of a workable Prototype for our Patented Device in order to arrange for the manufacturing and marketing of our Patented Device. Because we do not expect to have any cash flow from operations within the next twelve months, we will need to raise additional capital, which may be in the form of loans from current stockholders and/or through the issuance of restricted shares to investors. Our ability to access capital will depend on our success in implementing our business plan. It will also depend upon the status of the capital markets at the time such capital is sought. Should sufficient capital not be available, the implementation of our business plan could be delayed and, accordingly, the implementation of our business strategy would be adversely affected. If we are unable to raise additional funds in the future, we may have to cease all substantive operations. In such event it would not be likely that investors would obtain a profitable return on their investment or a return of their investment at all.
Our auditors have expressed substantial doubt about our ability to continue as a going concern, we may have to suspend or cease operations within twelve months.
Our audited financial statements for the period from March 7, 2008 (inception) through December 31, 2012, were prepared using the assumption that we will continue our operations as a going concern. We were incorporated on March 7, 2008, and do not have a history of earnings. As a result, our independent accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt financing activities or to generate profitable operations. Such capital formation activities may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. There is not enough cash on hand to fund our administrative expenses and operating expenses or our proposed research and development program for the next twelve months. Therefore, we may be unable to continue operations in the future as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in the Company's shares of common stock.
We have no track record that would provide a basis for assessing our ability to conduct successful business activities. We may not be successful in carrying out our business objectives.
The revenue and income potential of our Patented Device as well as expanded business operations are unproven to date. We have only a very limited operating history makes it difficult to evaluate the future prospects of our business. While our management and principal shareholders have invested in our Company during 2012, there can be no assurance that management's assumption and belief that our business operations will prove to be successful is correct. We continue to be dependent upon funding from affiliated persons/principal shareholders and officers. Accordingly, there is only a limited basis upon which potential investors would be able to assess the likelihood that we will be successful in developing a commercially viable Prototype of our Patented Device and/or related technology products. is a substantial risk that we will not be successful in implementing our business plan, or if initially successful, in thereafter generating any operating revenues or in achieving profitable operations.
As a development stage company, we may experience cost overruns in developing our Patented Device in amounts not currently determinable, and we may not have sufficient capital to successfully complete the development and marketing of our Patented Device.
We may experience substantial cost overruns in manufacturing and marketing our Patented Device and may not have sufficient capital to successfully complete our project. We may not be able to manufacture or market our Patented Device or other products and technologies because of industry conditions, general economic conditions, and/or competition from potential manufacturers and distributors. In addition, the commercial success of our Patented Device or any product or technology is often dependent upon factors beyond the control of a development stage company attempting to market new technology, including, but not limited to, market acceptance and whether or not third parties promote the products through prominent marketing channels and/or other methods of promotion.
We must rely on third parties to develop a Prototype and to manufacture commercial models of our Patented Device.
Because of our limited financial and personnel resources, our plan is to rely on third parties to develop a viable Prototype of our Patented Device and, if successful, to manufacture commercial models of our electromagnetic percussion device. While we were able to negotiate an agreement with GUMI (see the disclosure under "Description of Busincess-Recent Development Efforts and Third Party Manufacturers/Relationship with GUMI Tel Aviv" above) to develop a Prototype and to manufacture and market commercial models of our Patented Device, there can be no assurance that GUMI will be successful in developing the Prototype, be able to manufacture commercial models or be successful in generating sufficient revenues from the sale and marketing of our Patented Device. We are a small development stage company with limited resources compared to some of our potential competitors and we may not be able to compete effectively and develop and thereafter increase market share.
The electromagnetic percussion system industry is very competitive and although we believe our technology offers unique development opportunities, we cannot guarantee that these features are enough to effectively capture a significant enough market share to successfully launch and sustain our product. Most of our current and potential competitors have longer operating histories, significantly greater resources and name recognition, and a larger base of distributors and customers than we have. As a result, these competitors have greater name credibility with our potential distributors and customers. Our competitors also may be able to adopt more aggressive pricing policies and devote greater resources to the development, promotion, and sale of their products and services than we can to ours. To be competitive, we must continue to invest significant resources in research and development, sales and marketing, and customer support. We may not have sufficient resources to make these investments or to develop the technological advances necessary to be competitive, which in turn will cause our business to suffer and restrict our profitability potential.
Our success will depend on third party distribution channels rather than our own marketing efforts.
We intend to sell our Patented Device utilizing the services of GUMI and any group of resellers and distributors GUMI may assemble. Our future revenue growth will depend in large part on sales of our product through this arrangment. We will be full dependent upon the success of GUMI's distribution efforts. Entities that distribute our products may also compete with us, by offering similar products and technologies. In addition, these distributors may not dedicate sufficient resources or give sufficient priority to selling our product. 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.
Our board of directors and executive officers have very limited experience in running a technology company; they may not be able to successfully operate such a business, which could cause you to lose your investment
We are a development stage company and we intend to manufacture, market, and sell our Patented Device, an electromagnetic percussion system, as well as other technology products. Our current directors and officers have effective control over all decisions regarding both policy and operations of our Company with no oversight from other management. As a result, our board of directors has recently entered into an agreement with Mr. Gennady Nickelshpur to serve as our chief scientific advisor, Mr. Nickelshpur holds a Masters Degree in Mechanical Engineering from the Institute of Railway Engineering, Gomel, Russia, has been Chief Engineer for S. V. SE. Ltd, Raanana, Israel from 1999 to 2006 prior to which he served as Project Engineer involved in the patent development, patent protection and managing patent application processes. From 2007 to 2008, Mr. Nickelshpur was employed at the patent law firm of Ehrlich & Fenster, Mr. Nickelshpur has specialized knowledge of hydraulic and pneumatic engineering. Our success is contingent upon the ability of Mr. Nickelshpur and other specialists to work with our management team to make appropriate business decisions in these areas. However, our directors and officers alone have no experience in operating a company that develops or sells electromagnetic percussion systems and otherwise have limited experience in technology. It is possible that this lack of relevant operational experience could prevent us from becoming a profitable business and hinder an investor from obtaining a return on his investment in us.
Our directors and officers have other outside business activities and will only be devoting up to 10% of their time to our operations; our operations may be sporadic which may result in periodic interruptions or suspensions of our business activities unless we are successful in engaging the services of a full advisory team.
Our directors and officers are only engaged in our business activities on a part-time basis. This could cause the officers a conflict of interest between the amount of time they devote to our business activities and the amount of time required to be devoted to their other activities. Our current directors and officers, intend to devote only approximately 5 hours per week to our business activities. Any increase in business activities may require that either our directors or officers engage in our business activities on a full-time basis or that we hire additional employees in addition to our chief scientific advisor; however, at this time, we have only limited resources to pursue these options.
Our Patent expires in December 2014; If our Patent expires before we are able to successfully exploit our exclusive rights, competitors may gain access to our technology and undermine whatever competitive position we may have.
We regard our current intellectual property, represented by our Patent, which expires in December 2014, as important to our success, and we must rely on patent law to protect our proprietary rights. Even assuming that GUMI is successful in developing a working Prototype in a timely manner and thereafter manufactures commercial models of our Patented Device, there will only be a relatively limited amount of time before our patent expires. Despite our precautions, unauthorized third parties may copy certain portions of our product or reverse engineer or obtain and use information that we regard as proprietary. We have been granted one patent in the United States and we may seek additional patents in the future. We do not know if any future patent application will be issued with the scope of the claims we seek, if at all, or whether any patents we receive will be challenged or invalidated. Thus, we cannot assure you that our intellectual property rights can be successfully asserted in the future or that they will not be invalidated, circumvented or challenged. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United States. Our means of protecting our proprietary rights in the United States or abroad may not be adequate and competitors may independently develop similar technology. Any failure to protect our proprietary information and any successful intellectual property challenges or infringement proceedings against us could have a material adverse affect on our business, financial condition, or results of operations.
We may be subject to intellectual property litigation, such as patent infringement claims, which could adversely affect our business.
Our success will also depend in part on our ability to develop a commercially viable product without infringing the proprietary rights of others. Although we have not been notified of any infringement claims, other patents could exist or could be filed which would prohibit or limit our ability to develop and market our electromagnetic percussion system in the future. In the event of an intellectual property dispute, we may be forced to litigate. Intellectual property litigation would divert management's attention from developing our product and would force us to incur substantial costs regardless of whether or not we are successful. An adverse outcome could subject us to significant liabilities to third parties, and force us to cease operations.
If and when we sell our Patented Device and other technology products, we may be liable for product liability claims and we presently do not maintain product liability insurance.
The electromagnetic percussion product that we are developing may expose us to potential liability from personal injury or property damage claims by end-users of the product. We currently have no product liability insurance to protect us against the risk that in the future a product liability claim or product recall could materially and adversely affect our business. Inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the commercialization of our product. We cannot assure you that when we commence distribution of our product that we will be able to obtain or maintain adequate coverage on acceptable terms, or that such insurance will provide adequate coverage against all potential claims. Moreover, even if we maintain adequate insurance, any successful claim could materially and adversely affect our reputation and prospects, and divert managements time and attention. If we are sued for any injury allegedly caused by our future products our liability could exceed our total assets and our ability to pay the liability.
Risks Related to Our Common Stock
It may be expected that we may in the future issue additional shares of our common stock which would reduce investors ownership interests in the Company and which may dilute our share value. We do not need stockholder approval to issue additional shares.
Our certificate of incorporation authorizes the issuance of 500,000,000 shares of common stock, par value $0.00001 per share and 20,000,000 preferred shares. The future issuance of all or part of our remaining authorized common stock 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.
Our common stock is subject to the "penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The SEC 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: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) 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: (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and 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 Security and Exchange Commission relating to the penny stock market, which, in highlight form: (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) 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 stock and cause 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.
Our controlling shareholder owns 50.5% of the Company's common stock and thus may influence certain actions requiring stockholder vote without the requirement of any other shareholder vote or consent.
If there is a shareholder meeting, as a consequence of the controlling shareholders significant equity interest, the controlling shareholder has certain discretion regarding proposals submitted to a vote by shareholders. As a result, the controlling shareholder has the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets. In addition, the controlling shareholder has the ability to control the appointment of management and therefore the business affairs of the Company. Additionally, in the event that the controlling shareholder controls the Company at the time of his death, control may be transferred to a person or entity that he designates as his successor. As controlling stockholder, Mr. Shenker is entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders generally.
There is only a limited trading market for our common stock and to the extent that a trading market develops, it may not be sustained.
From August 20, 2008 through April 26, 2010, our common stock was subject to quotation on the FINRA BB under the symbol DYAP. As a result of our failure to remain current in filing our quarterly report for the period ended March 31, 2010 and subsequent delinquency in fulfilling our reporting requirements, our common stock became subject to quotation on the pinksheets of the OTC market. In April 2012, we began to get current by filing reports required by SEC Rule 15c2-11 with the OTC Markets. Commencing in November 2012, we began filing reports with the SEC under the Exchange Act and as a result, our shares are now subject to quotation on the OTCQB. There is currently only a limited trading market in our common stock on the OTCQB. There can be no assurance that there will be an active trading market for the common stock as a result of the Company becoming a reporting company under the Exchange Act. In the event that an active trading market commences, there can be no assurance as to the market price of the shares of common stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained.
Upon the effectiveness by lapse of time of this registration statement on Form 10, we have become subject to reporting requirements under the Exchange Act.
Pursuant to the requirements of Section 13 of the Exchange Act the Company is required to provide certain information about significant acquisitions and other material events. The Company will continue to be required to file quarterly reports on Form 10-Q and annual reports on Form 10-K, which annual report must contain our audited financial statements. As a reporting company under the Exchange Act, the Company are required to file a report on Form 8-K or other form appropriate under the Exchange Act. A Form 8-K must be generally filed with the SEC within 4 days.
Additional financing requirements associated with reporting obligations under the Exchange Act.
We have no revenues and are dependent upon the willingness of management and/or related parties to fund the costs associated with the reporting obligations under the Exchange Act, and other administrative costs associated with our corporate existence. We may not generate any revenues unless we enter into manufacturing or distribution agreements.
We believe that we will have sufficient funds available to pay accounting and professional fees and other expenses to fulfill our reporting obligations under the Exchange Act until we generate sufficient cash flow from operations. In the event that our available funds, from management and/or related parties, prove to be insufficient, we will be required to seek additional financing. Our failure to secure additional financing could have a material adverse affect on our ability to pay the accounting and other fees in order to continue to fulfill our reporting obligations and pursue our business plan. We do not have any arrangements with any bank or financial institution to secure additional financing and there can be no assurance that any such arrangement would be available on terms acceptable and in our best interests. While we are dependent upon interim funding provided management and/or related parties to pay professional fees and accounting fees and related expenses, we have neither a written nor oral agreement with such parties to provide any continued funding. Notwithstanding the foregoing, we anticipate that management and/or related parties will continue to fund the costs associated with being a reporting company until such time as the Company generates cash flow from operations.
State Blue Sky Registration, potential limitations on resale of the securities.
The holders of our shares of common stock and those persons, who desire to purchase them in any trading market that might develop, should be aware that there may be state blue-sky law restrictions upon the ability of investors to resell our securities. Accordingly, investors should consider the secondary market for the Registrant's securities to be a limited one.
It is the present intention of the Registrant's management to seek coverage and publication of information regarding the Registrant in an accepted publication manual, which permits a manual exemption. The manual exemption permits a security to be distributed in a particular state without being registered if the Registrant issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuer's officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. Furthermore, the manual exemption is a nonissuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities.
Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they "recognize securities manuals" but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
Because the Company has no revenues and has negative cash flow, no cash dividends have been paid nor are any dividends likely to be paid in the foreseeable future, it ever.
We do not expect to pay dividends for the foreseeable future because we have no revenues. The payment of dividends will be contingent upon our future revenues and earnings, if any, capital requirements and overall financial condition. The payment of any future dividends will be within the discretion of our board of directors. It is our expectation that management will determine to retain any earnings for use in business operations and accordingly, we do not anticipate declaring any dividends in the foreseeable future.
When we filed the Form 15 on July 27, 2011 for the purpose of suspending our duty to file reports under Sections 13 and 15(d) of the Exchange Act, we were not in compliance with Section 13(a) of the Exchange Act; there can be no assurance that we will be able to again remain in compliance with Section 13(a) of the Exchange Act in the future. Our past and any future failure to comply with Section 13(a) of the Exchange Act may be expected to have a material adverse affect on our stock price and the value of our business because, as a result of such non-compliance, the SEC may determine to revoke or suspend the registration of our common stock under Section 12(g) of the Exchange Act.
When we filed a Form 12b-25 notifying the SEC of our inability to timely file an annual report on Form 10-K for the fiscal year ended December 31, 2009, we made a representation that the Form 10-K would be filed no later than April 15, 2010, the date that was the fifteenth calendar day following the prescribed due date for our Form 10-K. Subsequent to filing the Form 12b-25, our management determined that due to the significant costs associated with being a public reporting company, to cease reporting under the Exchange Act by filing a Form 15 on July 27, 2011, in reliance upon Rule 12g-4(a)(1) and Rule 12g-4(a)(2). At the date of the filing of the Form 15, we were delinquent under the Exchange Act by not first filing our past due annual report on Form 10-K for the year ended December 31, 2009, our quarterly reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010, our annual report on Form 10-K for the year ended December 31, 2010, our quarterly reports on Form 10-Q for the quarters ended March 31, 2011 and June 30, 2011. As a result, when we filed the Form 15 for the purpose of suspending our duty to file reports under Sections 13 and 15(d) of the Exchange Act, we were not in compliance with Section 13(a) of the Exchange Act, which requires every issuer of a security registered pursuant to Section 12 of the Exchange Act to file periodical and other reports with the SEC in accordance with the SECs rules and regulations. There can be no assurance that we will not fall out of compliance with Section 13(a) of the Exchange Act again in the future. However, since our filing of this registration statement, we have filed our Form 10-K for the year ended December 31, 2012 and intend to file our Form 10-Q for the quarter ended March 31, 2013 in a timely manner, as well subsequent reports under the Exchange Act. To that end, the Company has engaged a firm specialized in providing securities compliance service to assist the Company in remaining current with its reporting obligations under the Exchange Act.
Our past and any future failure to be in compliance with Section 13(a) of the Exchange Act may have a material adverse affect on our stock price and the value of our business because, as a result of such non-compliance, the SEC may determine to revoke or suspend the registration of our common stock under Section 12(g) of the Exchange Act.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND PLAN OF OPERATION Back to Table of Contents
The following discussion contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use of words such as "anticipate", "estimate", "expect", "project", "intend", "plan", "believe", and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to time, we also may provide forward-looking statements in other materials we release to the public.
Plan of Operation
We are a development stage company that acquired the technology and received a patent for an electromagnetic percussion system, our Patented Device in 2008. From 2008 until 2011, we devote minimal resources and efforts to development of our Patented Device. During the later part of 2011 and into 2012, we renewed our interest in pursuing development of our Patented Device. Subsequent to our year-ended December 31, 2012, we entered into an agreement with GUMI Tel Aviv Ltd, a major, privately-held Israeli technology company engaged in the manufacture and sale of industrial equipment, to develop the Prototype and thereafter manufacture and distribute models of our Patented Device. We will continue to be dependent upon the ability of GUMI to successfully complete a fully-operational Prototype of our Patented Device and to manufacture and market commercial models. Our auditors have issued an opinion on our financial statements which includes a statement describing concern about our ability to continue as a going concern. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until GUMI is successful in generating sufficient sales revenues to recoup its costs and thereafter generate additional revenues that profits we will share with GUMI on a 65%/35% basis. Accordingly, we must raise capital from sources other than the actual sale of the product until such time, if ever, that GUMI is successful with our Patented Device. In 2008, the Company completed a capital formation activity in accordance with a Registration Statement on Form S-1 submitted to the SEC to register and sell in a self-directed offering 2,000,000 shares of newly issued common stock at an offering price of $0.04 per share for proceeds of $80,000. The Company had incurred $20,000 of deferred offering costs related to this capital formation activity. In December 2008, the Company was successful in raising an additional $200,000 in equity capital. These funds were not sufficient, given the relatively high costs of executive compensation and consulting expenses, to permit the Company to devote sufficient resources to development of its Patented Device.
Our plan also contemplates that as we begin to generate revenues from our Patented Device, together with our belief in our ability to raise either debt or equity funding from both affiliated persons and from third parties, neither of which can there be any assurance, we will seek to enhance our revenue stream by entering into joint ventures or other business arrangements with third parties engaged in technology development. While there can be no assurance that we will be successful in such efforts, we believe that in Israel alone there are many opportunities that have and will continue to be presented to us as well as to our shareholders.
Results of Operations during the year ended December 31, 2012 as compared to the year ended December 31, 2011
We have not generated any revenues since inception. We have operating expenses related to general and administrative expenses being a public company and interest expenses. During 2012, we incurred a net loss of $87,413 due to expenses consisting of general and administrative expenses of $41,350, interest expenses of $7,648 and amortization of debt discount of $38,415 during the year ended December 31, 2012 compared to a net loss of $78,496 due to general and administrative expenses of $64,633, interest expenses of $1,808 and amortization of debt discount of $12,055 during the year ended December 31, 2011.
Liquidity and Capital Resources
On December 31, 2012, we had total assets of $8,101, all of which was in cash as compared to total assets of $7,927 as of December 31, 2011, all of which was in cash. We had total current liabilities of $88,364 consisting of $9,458 in accrued expenses $28,436 in advances payable to related parties and $50,470 which is the current portion of long term debt, compared to current liabilities of $30,525, comprised of $280 in account payable-trade, $1,809 accrued interest, $28,436 in advances payable to related parties, on December 31, 2011. Our accumulated deficits as of December 31, 2012 and 2011 were $504,895 and $417,482, respectively.
We used $41,629 in our operating activities during the year 2012, which was mainly due to a net loss of $87,413 offset by increases in amortization of debt discount of $38,415 and accounts payable and accrued liabilities of $7,369. We used $67,457 in our operating activities during the year 2011, which was due to a net loss of $78,496 offset by an increase in amortization of debt discount of $12,055 less a decrease in accounts payable and accrued liabilities of $1,016.
We financed our negative cash flow from operations in 2012 through proceeds from issuance of common stock in the amount of $12,003 and proceeds of debt borrowings of $29,800, representing total cash generated by financing activities of $41,803. We financed our negative cash flow from operations in 2011 through proceeds of issuance of common stock of $35,380 and proceeds of debt borrowing of $40,000 representing total cash generated by financing activities of $75,380.
We do not have, at present, sufficient capital resources to fully implement our business plan. While we believe that we should be able to generate positive cash flow from operations during the 3rd or 4th quarters of 2013, there can be no assurance that this will prove to be correct or that revenues, if any, will be sufficient to fund our ongoing operating expenses. Accordingly, we plan to raise these funds through a private offering of our equity securities or through issuance of convertible debt instruments. 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.
Our auditors have issued an opinion on our financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing the product. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business. Even if we raise the maximum amount of money in this offering, we do not know how long the money will last, however, we do believe it will last at least twelve months.
There are no limitations in our articles of incorporation on our ability to borrow funds or raise funds through the issuance of restricted common stock. Our limited resources and lack of operating history may make it difficult to do borrow funds or raise capital. Our inability to borrow funds or raise funds through the issuance of restricted common stock required to facilitate our business plan may have a material adverse effect on our financial condition and future prospects. To the extent that debt financing ultimately proves to be available, any borrowing will subject us to various risks traditionally associated with indebtedness, including the risks of interest rate fluctuations and insufficiency of cash flow to pay principal and interest.
Off-Balance Sheet Arrangements
As of December 31, 2012, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.
Contractual Obligations and Commitments
As of December 31, 2012, we did not have any contractual obligations.
Critical Accounting Policies
Development Stage Enterprise and Going Concern : The Company has been in the development stage since inception. The accompanying 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. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of December 31, 2012, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of asset or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Use of Estimates : The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.
Cash and Cash Equivalents : For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents. There were no cash equivalents as of December 31, 2012 or 2011.
Property and Equipment : New property and equipment are recorded at cost. Property and equipment included in the bankruptcy proceedings and transferred to the Trustee had been valued at liquidation value. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.
Valuation of Long-Lived Assets : We review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.
Stock Based Compensation: Stock-based awards are accounted for using the fair value method in accordance with ASC 718, Share-Based Payments . Our primary type of share-based compensation consists of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs for the valuation analysis of the options include the market value of the Companys common stock, the estimated volatility of the Companys common stock, the exercise price of the warrants and the risk free interest rate.
Accounting For Obligations And Instruments Potentially To Be Settled In The Companys Own Stock : We account for obligations and instruments potentially to be settled in the Companys stock in accordance with FASB ASC 815, Accounting for Derivative Financial Instruments. This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Companys own stock.
Fair Value of Financial Instruments : As defined in ASC 820-10, Fair Value Measurements and Disclosures (ASC 820-10), fair value is based on the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, ASC 820-10 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Other inputs that are observable, directly or indirectly, such as quoted prices for similar assets and liabilities or market corroborated inputs.
Level 3: Unobservable inputs are used when little or no market data is available, which requires the Company to develop its own assumptions about how market participants would value the assets or liabilities. The fair value hierarchy gives the lowest priority to Level 3 inputs.
In determining fair value, the Company utilizes valuation techniques in its assessment that maximize the use of observable inputs and minimize the use of unobservable inputs.
Earnings per Common Share: We compute net income (loss) per share in accordance with ASC 260, Earning per Share . ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
Income Taxes : We have adopted ASC 740, Accounting for Income Taxes. Pursuant to ASC 740, we are required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.
Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities using the tax rates and laws in effect when the differences are expected to reverse. ASC 740 provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all of our net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.
In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.
ASC 740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized.
Uncertain Tax Positions
The Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109, Accounting for Income Taxes (FIN No. 48) which was effective for the Company on January 1, 2007. FIN No. 48 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN No. 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements.
Our federal and state income tax returns are open for fiscal years ending on or after December 31, 2007. We are not under examination by any jurisdiction for any tax year. At December 31, 2012 we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under FIN 48.
ITEM 3. DESCRIPTION OF PROPERTY Back to Table of Contents
The Companys corporate office is located at the offices of Terra Holdings, 14 Menachem Begin Street, Ramat Gan, Israel. Terra Holdings is a company owned and controlled by Mr. Gonen, the Companys chairman, and provides this office space, consisting of approximately 100 square feet, to the Company on a rent-free basis. The Company believes that these facilities are sufficient for the near future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Back to Table of Contents
The table below discloses any person (including any "group") who is known to the Registrant to be the beneficial owner of more than five (5%) percent of the Registrant's common stock securities and the beneficial ownership of Registrant's director and executive officer. As of March 31, 2013, the Registrant had ________________________ shares of common stock issued and outstanding.
Name of Beneficial Owner | Common Stock Beneficially Owned | Percentage of Common Stock Owned | ||
Jacky Shenker | 8,000,000 | 50.54% | ||
78 Uziel Street, Jerusalem, Israel | ||||
Levi Krasney | 1,300,000 | 8.21% | ||
8 Paamoni, Tel Aviv, Israel | ||||
Amir Uziel | 1,300,000 | 8.21% | ||
9 Hakormim Street, Misgav, Tel Aviv | ||||
Elimelech Krasney | 1,300,000 | 8.21% | ||
43 Yehuda Hamakabi Street, Tel Aviv, Israel | ||||
Ruth Katz | 1,300,000 | 8.21% | ||
26 Kadish Luz Street, Jerusalem, Israel | ||||
Guil Mediouni | 1,300,000 | 8.21% | ||
14 Netaaim Street, Rishon Letzion, Israel | ||||
Eli Gonen, Chairman | 80,000 | 0.51% | ||
16/2 Hazamir Street, Mevaseret Zion, Israel | ||||
Ori Goore, Ceo and Director | 80,000 | 0.51% | ||
36/1 Yaholom Street, Modi"In, Israel | ||||
Asher Zwebner, CFO and Director | 0 | 0.00% | ||
216 Jaffa Street, Jerusalem, Israel | ||||
Director and Officer (3 person) | 160,000 | 1.02% |
To the knowledge of the Registrant, there are no arrangements which may result in a change in control of the Registrant.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS Back to Table of Contents
Our directors was elected to serve until the next annual meeting of shareholders and until his respective successors will have been elected and will have qualified. The following table sets forth the name, age and position held with respect to our present director and executive officer:
Name |
Age |
Title | Date Became Executive Officer | |||
Eli Gonen |
62 |
Chairman | 02/02/2009 | |||
Ori Goore | 39 | CEO and Director | 02/02/2009 | |||
Asher Zwebner | 47 | CFO and Director | 11/01/2008 |
Eli Gonen, age 62, was the President and Chief Executive Officer of Azorim Tourism, f/k/a Sheraton Moriah Israel from 1999 through 2008. Previously between 1992-1996 Mr. Gonen served as the CEO for the Israeli ministry of tourism. Currently Mr. Gonen operates a business entrepreneurship company which he owns and as a director for Israel Discount Bank. Mr. Gonen has an Advanced Studies degree from the University of Berkley and an M.B.A. from Hebrew University.
Ori Goore , age 39, until recently the Deputy Chief Executive Officer at Carmel Beach Resort 89 Ltd. an affiliate of Delek Real Estate Group, where he has been in such position since July 2007. From October 2006 through July 2007 Mr. Goore was the senior economic advisor to the Chief Executive Officer at Delek Real Estate Group. From October 2002 through January 2006 he was the economic advisor to the Chief Financial Officer at Israeli Ports, Assets and Development Company Ltd. Mr. Goore has an L.L.M. from the Hebrew University and a M.B.A. from Arison School for Business Management.
Asher Zwebner, age 47, has been the Chief Financial Officer since November 2008. Since January 2010, Mr. Zwebner is the CFO of Adama Technologies Corp. (ADAC), a reporting company. Mr. Zwebner was CFO for Progaming Platforms Corp. (PPTF), a reporting company, from August 2012 to December 2012. He also served as the CFO of Suspect Detection Systems, Inc. (SDSS), formerly PCMT Corporation, from August 2007 to December 2010 and as its CEO from October 2007 until January 2010. From January 2008 to August 2010, he was the CFO for Computer Vision Systems Laboratories Corp. (CVSL), a reporting company. From August 2008 to January 2009, Mr. Zwebner was the CFO of PowerRaise Inc. (PORS), a reporting company. He was the CFO for Commodore Corp. from January 2007 to December 2007. Mr. Zwebner is a CPA in Israel and the United States, and received a BS Degree in Accounting and Finance from Touro College in 1988.
All executive officers are elected by the Board and hold office until the next annual meeting of stockholders and until their successors are elected and qualify.
The persons who serve as members of the Company's board of directors have many years of experience in business management and finance but do not have any significant experience in the technical, engineering, patent development, or related fields.
Messrs. Gonen, Goore and Zwebner, each of whom serve as members of the Company's board of directors, have many years of experience in business management and finance, as described more fully above. Notwithstanding the foregoing, none of our directors have any experience whatsoever in the technical, engineering, patent development, or related fields and may not be deemed to have sufficient qualifications to act as sole management as the Company proceeds with its plan of operation regarding developing, manufacturing and marketing our Patented Device. As a result, during 2013, the board of director has plans to expand its membership to add additional directors and/or executive officers with technical experience.
Chief Scientific Advisor
On January 15, 2013, as a result of the limited technical experience of the Company's board of directors and executive officers, the Company entered into an agreement with Gennady Nickelshpur to serve as its chief scientific advisor. Mr. Nickelshpur's services agreement is attached as exhibit 10.3 to this annual report. Mr. Nickelshpur holds a Masters Degree in Mechanical Engineering from the Institute of Railway Engineering, Gomel, Russia, has been Chief Engineer for S. V. SE. Ltd, Raanana, Israel from 1999 to 2006 prior to which he served as Project Engineer involved in the patent development, patent protection and managing patent application processes. From 2007 to 2008, Mr. Nickelshpur was employed at the patent law firm of Ehrlich & Fenster, Mr. Nickelshpur has specialized knowledge of hydraulic and pneumatic engineering. The Company expects that Mr. Nickelshpur will work closely with GUMI in its development and manufacturing efforts.
The Company intends to seek additional qualified personnel to support Mr. Nickelshpur as he pursues efforts to complete the prototype and thereafter commercially exploit the Company's Patented Device. The Company's plan includes forming a scientific advisory board composed of Mr. Nickelshpur and other specialists when and if its resources will permit.
Director Independence
In determining whether or not our directors are considered independent the Company used the definition of independence as defined in NASDAQ Rule 4200. Based on that definition we believe that our directors are independent.
NASDAQ Rule 4200
The NASDAQ Rule 4200, which sets forth several tests to determine whether a director of a listed company is independent. Rule 4200 provides that a director would not be considered independent if the director or an immediate family member accepted any compensation from the listed company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the determination of independence (excluding compensation for board or board committee service, compensation paid to an immediate family member as a non-executive employee, benefits paid under a tax-qualified retirement plan and non-discretionary compensation).
Directors Term of Office
Our director was elected to serve until the next annual meeting of shareholders and until his respective successors will have been elected and will have qualified.
Board Meetings
During the year ended December 31, 2012, the board of directors had six board meetings.
Audit Committee and Financial Expert, Compensation Committee, Nominations Committee
We do not have any of the above mentioned standing committees because our corporate financial affairs and corporate governance are simple in nature at this stage of development and each financial transaction is approved by our sole officer or director.
Board Leadership Structure
The Company does not combine the principal executive officer and board chairman positions. The Company believes that this board leadership structure is the most appropriate for the Company, notwithstanding its status as a development stage company with only limited operation. The challenges faced by the Company at this stage obtaining financing, securing arrangements for the development, manufacture and implementing a marketing and sales plan are most efficiently dealt with by having more than one person involved with both the operational aspects as well as the strategic aspects of the Companys business.
Code of Ethics
We do not currently have a Code of Ethics applicable to our principal executive officers; however, the Company plans to implement such a code in the fourth quarter of 2013.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent Directors, the functions that would have been performed by such committees are performed by our Board of Directors. Thus, there is a potential conflict of interest in that our Directors have the authority to determine issues concerning management compensation, in essence their own, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our Executives or Directors.
Boards Role in Risk Oversight
The Board assesses on an ongoing basis the risks faced by the Company. These risks include financial, technological, competitive, and operational risks. In addition, since the Company does not have an Audit Committee, the Board is also responsible for the assessment and oversight of the Companys financial risk exposures.
Involvement in Certain Legal Proceedings
We are not aware of any material legal proceedings that have occurred within the past ten years concerning any Director or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.
Section 16(a) Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires the Registrant's directors and executive officers, and persons who own beneficially more than ten percent (10%) of the Registrant's Common Stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission. Copies of all filed reports are required to be furnished to the Registrant pursuant to Section 16(a). Based solely on the reports received by the Registrant and on written representations from reporting persons, the Registrant was informed that its officers and directors and ten percent (10%) shareholders has not filed reports required to be filed under Section 16(a).
ITEM 6. EXECUTIVE COMPENSATION
Back to Table of ContentsThe following table sets forth information concerning the total compensation that we have paid or that has accrued on behalf of our chief executive officer and other executive officers with annual compensation exceeding $100,000 during the fiscal years ending December 31, 2012 and 2011.
The Company has no employment agreement with its CEO.
As of December 31, 2012, a total or $28,436 was owed to Asher Zwebner, CFO and a director, and represented accrued but unpaid compensation for services during the period from 2008 to 2009. The amount owed is not formalized by a written agreement, does not carry a specific due date and is non-interest bearing.
Director Independence
In determining whether or not our directors are considered independent the Company used the definition of independence as defined in NASDAQ Rule 4200. Based on that definition we believe that our directors are independent.
NASDAQ Rule 4200
The NASDAQ Rule 4200, which sets forth several tests to determine whether a director of a listed company is independent. Rule 4200 provides that a director would not be considered independent if the director or an immediate family member accepted any compensation from the listed company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the determination of independence (excluding compensation for board or board committee service, compensation paid to an immediate family member as a non-executive employee, benefits paid under a tax-qualified retirement plan and non-discretionary compensation).
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE Back to Table of Contents
During the two most recent fiscal years and to date, the Company and its officers, directors and related parties were engaged in the following related party transactions as defined under Regulation S-K 404(d)(1), as applicable for small business issuer.
Related Party Common Stock Transactions During the Most Recent Two Fiscal Years
9/29/2011 |
Common Stock |
40,000 |
Gonen, Eli - related party - Chairman | $0.00317 per share in cash pursuant to Section 4(2) |
9/29/2011 |
Common Stock |
40,000 |
Goore, Ori - related party - CEO, Director | $0.00317 per share in cash pursuant to Section 4(2) |
1/10/2012 |
Common Stock |
40,000 |
Goore, Ori - related party - CEO, Director |
$0.00317 per share in cash pursuant to Section 4(2) |
1/10/2012 |
Common Stock |
40,000 |
Gonen, Eli - related party - Chairman |
$0.00317 per share in cash pursuant to Section 4(2) |
Related Party Debt Transactions During the Most Recent Two Fiscal Years
As of December 31, 2012, a total of $28,436 was owed to Asher Zwebner, CFO and a director, and represented accrued but unpaid compensation for services during the period from 2008 to 2009. The amount owed is not formalized by a written agreement, does not carry a specific due date and is non-interest bearing.
ITEM 8. LEGAL PROCEEDINGS Back to Table of Contents
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company's property is not the subject of any pending legal proceedings.
PRICE OF FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTER Back to Table of ContentsMarket Information
From August 20, 2008 through April 26, 2010, our common stock was trading on the FINRA BB under the symbol DYAP. In connection with not filing its quarterly report for the period ended March 31, 2010 and subsequent delinquency in our reporting requirements, our common stock became subject to quotation on the OTC market. There is currently no active trading market in the common stock on the OTC market. There can be no assurance that there will be an active trading market for the common stock once the Company becomes a reporting company under the Exchange Act. In the event that an active trading market commences, there can be no assurance as to the market price of the shares of common stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained.
For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. The below prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.
Fiscal 2012 |
Fiscal 2011 |
Fiscal 2010 |
||||||||||||||||
High |
Low |
High |
Low |
High |
Low |
|||||||||||||
First Quarter ended March 31 |
$ |
0.0037 |
$ |
0.0016 |
$ |
0.011 |
$ |
0.005 |
$ |
0.25 |
$ |
0.00 |
||||||
Second Quarter ended June 30 |
$ |
0.0030 |
$ |
0.0014 |
$ |
0.025 |
$ |
0.0025 |
$ |
0.22 |
$ |
0.05 |
||||||
Third Quarter ended September 30 |
$ |
0.0160 |
$ |
0.0013 |
$ |
0.0052 |
$ |
0.0018 |
$ |
0.11 |
$ |
0.05 |
||||||
Fourth Quarter ended December 31 |
$ |
0.0050 |
$ |
0.0020 |
$ |
0.0054 |
$ |
0.0014 |
$ |
0.09 |
$ |
0.02 |
As of November 15, 2012, our shares of common stock were held by approximately 80 stockholders. The transfer agent of our common stock is Nevada Agency and Transfer Company, 50 W. Liberty Street, Suite 880, Reno, NV 89501; Phone: (775) 322-0626. Nevada Agency and Transfer Company is registered under the Exchange Act.
Dividends
Holders of common stock are entitled to dividends when, as, and if declared by the Board of Directors, out of funds legally available therefore. We have never declared cash dividends on its common stock and our Board of Directors does not anticipate paying cash dividends in the foreseeable future as it intends to retain future earnings to finance the growth of our businesses. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES Back to Table of Contents
Date | Title |
Shares Issued |
Persons | Consideration |
8/24/2011 |
Common Stock |
1,100,000 |
Shenker, Jacky | $0.00317 per share in cash pursuant to Regulation S |
9/29/2011 |
Common Stock |
40,000 |
Gonen, Eli - related party - Chairman | $0.00317 per share in cash pursuant to Section 4(2) |
9/29/2011 |
Common Stock |
40,000 |
Goore, Ori - related party - CEO, Director | $0.00317 per share in cash pursuant to Section 4(2) |
9/29/2011 |
Common Stock |
900,000 |
Uziel, Amir | $0.00317 per share in cash pursuant to Regulation S |
9/29/2011 |
Common Stock |
900,000 |
Mediouni, Guil | $0.00317 per share in cash pursuant to Regulation S |
9/29/2011 |
Common Stock |
900,000 |
Katz, Ruth | $0.00317 per share in cash pursuant to Regulation S |
9/29/2011 |
Common Stock |
900,000 |
Krasney, Lavi | $0.00317 per share in cash pursuant to Regulation S |
9/29/2011 |
Common Stock |
900,000 |
Krasney, Elimelech | $0.00317 per share in cash pursuant to Regulation S |
9/29/2011 |
Common Stock |
3,900,000 |
Shenker, Jacky | $0.00317 per share in cash pursuant to Regulation S |
12/23/2011 |
Common Stock |
3,000,000 |
Shenker, Jacky | $0.00317 per share in cash pursuant to Regulation S |
12/23/2011 |
Common Stock |
400,000 |
Uziel, Amir | $0.00317 per share in cash pursuant to Regulation S |
12/23/2011 |
Common Stock |
400,000 |
Guil, Mediouni | $0.00317 per share in cash pursuant to Regulation S |
12/23/2011 |
Common Stock |
400,000 |
Katz, Ruth | $0.00317 per share in cash pursuant to Regulation S |
12/23/2011 |
Common Stock |
400,000 |
Krasney, Lavi | $0.00317 per share in cash pursuant to Regulation S |
12/23/2011 |
Common Stock |
400,000 |
Krasney, Elimelech | $0.00317 per share in cash pursuant to Regulation S |
1/10/2012 |
Common Stock |
180,000 |
Fruchter, Lazar |
$0.00317 per share in cash pursuant to Regulation S |
1/10/2012 |
Common Stock |
120,000 |
Ehud Barzilay Holding |
$0.00317 per share in cash pursuant to Regulation S |
1/10/2012 |
Common Stock |
40,000 |
Goore, Ori - related party - CEO, Director | $0.00317 per share in cash pursuant to Section 4(2) |
1/10/2012 |
Common Stock |
40,000 |
Gonen, Eli - related party - Chairman | $0.00317 per share in cash pursuant to Section 4(2) |
The Company, in a series of private placement transactions with investors who are not "U.S. Persons," as that term is defined in Rule 902 of Regulation S under the Act ("Regulation S"), issued and sold a total of 14,960,000 restricted shares during the period from August 2011 through December 2012. The aggregate consideration received by the Company from the sale of restricted shares was approximately $46,000. The shares were not registered under the Act or "blue sky" laws of any state in reliance upon the exemption provided by Regulation S promulgated by the SEC under the Act, which provides that the shares may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons and may not be resold except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Act. With respect to the issuance and sale to persons who were officers and/or directors of the Company, these sales of these sales were also exempt under either Section 4(2) of the Act. In addition, the Company did not use any form of public solicitation or general advertising in connection with the offering and sale of the restricted shares.
On September 13, 2011, the Company issued a $40,000 promissory note in connection with a loan from an unaffiliated third party. On December 22, 2011, the promissory note was converted to a convertible promissory note that bears interest at 15% per annum and is due on December 31, 2013. The note has conversion rights that allow the note holder, at the lender's sole discretion, to convert the principal balance into the Companys common stock at any time after June 30, 2013 at $0.01 at the lender's sole discretion.
In July and September 2012, the Company issued six a $40,000 promissory convertible notes to unrelated third parties for an aggregate of $27,800. The notes bears interest at 15% per annum and are due July 31, 2013 and September 30, 2013. The notes have conversion rights that allow the holder of the note to convert the principal balance into the Companys common stock at any time after June 30, 2013 at $0.01 at the lender's sole discretion.
ITEM 11. DESCRIPTION OF SECURITIES TO BE REGISTERED Back to Table of Contents
Capital Stock
The Corporations authorized shares of common stock is 500,000,000 shares, par value $0.00001, and 20,000,000 shares of preferred stock, par value $0.00001. Each share of common stock entitles a stockholder to one vote on all matters upon which stockholders are permitted to vote. No stockholder has any preemptive right or other similar right to purchase or subscribe for any additional securities issued by us, and no stockholder has any right to convert the common stock into other securities. No shares of common stock are subject to redemption or any sinking fund provisions. All the outstanding shares of our common stock are fully paid and non-assessable. Our stockholders of common stock are entitled to dividends when, as and if declared by our board from funds legally available therefore and, upon liquidation, to a pro-rata share in any distribution to stockholders. We do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future.
(a) As of December 31, 2012, there were no shares of common stock subject to outstanding options and warrants. As of December 31, 2012, the Company's balance of convertible notes was $50,470, which balance can be converted into 6,980,000 shares of common stock after June 30, 2013.
(b) As of December 31, 2012, all 15,829,450 issued and outstanding shares of common stock can be sold pursuant to Section 144 of the Securities Act. At present, there is no agreement in between the Company and any security holders pursuant to which the Company has agreed to register shares under the Securities Act for sale by such security holders.
(c) At present, the Company has no intention offer any shares to the public in an offering that could have a material effect on the market price of the Company's common equity.
Provisions Having A Possible Anti-Takeover Effect
Since our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to change our management. In addition, the authorization of undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change our control.
These provisions may have the effect of deterring hostile takeovers or delaying changes in our control or management. These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and in the policies they implement, and to discourage certain types of transactions that may involve an actual or threatened change of our control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, these provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts. These provisions may also have the effect of preventing changes in our management.
Furthermore, our board of directors may implement certain additional measures that would discourage a takeover of our company. These could include one or a combination of the following, among others:
- adoption of a stockholder rights plan, commonly called a poison pill.
- amending our bylaws, or proposing that our stockholders to amend our certificate of
incorporation or bylaws or adopt amendments to our certificate of incorporation, with
respect to the following:
(a) increasing the vote required by our stockholders to amend our
certificate of incorporation or bylaws or to remove directors, or
(b) increasing the vote required by our stockholders to consummate a
business combination if our board of directors does not recommend it.
Our board is authorized to adopt, alter, amend and repeal our bylaws or to adopt new bylaws without approval of our stockholders. It can amend our certificate of incorporation to create the type of preferred stock that is used for a poison pill. It can also amend the terms of any preferred stock without the approval of holders of the common stock. Other amendments to our certificate of incorporation cannot be adopted unless our stockholders approve them.
ITEM 12. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Back to Table of ContentsThe Companys certificate of incorporation provide that the liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under Delaware law and provides for indemnification to the extent permitted by Delaware law.
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 for any breach of the directors duty of loyalty to the corporation or its stockholders; acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; payments of unlawful dividends or unlawful stock repurchases or redemptions, or any transaction from which the director derived an improper personal benefit.
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 in connection with various actions, suits or proceedings, whether civil, criminal, administrative or investigative other than an action by or in the right of the corporation, a derivative action, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses including attorneys fees incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporations certificate of incorporation, bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, offices or controlling persons of the Company, pursuant to the foregoing provisions, or otherwise, the Company has 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 (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Back to Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Back to Table of Contents
To the Board of Directors
Dynamic Applications Corp.
Ramat Gan, Israel
We have audited the accompanying balance sheet of Dynamic Applications Corp. (A Development Stage Company) as of December 31, 2012 and the related statements of operations, stockholders deficit and cash flows for the year then ended and for the period from inception (March 7, 2008) until December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Dynamic Applications Corp. as of December 31, 2011, were audited by other auditors whose report dated November 16, 2012 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Dynamic Applications Corp. as of December 31, 2012 and the results of its operations and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Managements plans regarding those matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
April 15, 2013
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Back to Table of Contents
Michael F. Cronin
Certified Public Accountant
Orlando, FL 32708
Board of Directors and Shareholders
Dynamic Applications Corp.
Ramat Gan, Israel
I have audited the accompanying balance sheets of Dynamic Applications Corp. (a development stage company) as of December 31, 2011 and 2010 and the related statements of operations, stockholders' deficiency and cash flows from inception (March 7, 2008) and for the years then ended. The financial statements are the responsibility of management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with the standards of the Public
Company Accounting Oversight Board
(United States)
. Those standards require
that I plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The company is not required to
have, nor was I engaged to perform, an audit of its internal control over financial
reporting. My audit included consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, I express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audits provide a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Dynamic Applications Corp. (a development stage
company) as of December 31, 2011 and 2010 and the results of its operations, its cash
flows and changes in stockholders' deficiency from inception (March 7, 2008) and for the
years then ended in conformity with accounting principles generally accepted in the United
States.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred a $78,000 loss from operations. The Company may not have adequate readily available resources to fund operations through 2012. This raises substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
November 16, 2012
/s/ Michael F. Cronin |
Michael F. Cronin |
Certified Public Accountant, NY, FL |
Dynamic Applications Corp. | ||||
(A Development Stage Company) | ||||
Balance Sheets | ||||
December 31, 2012 |
December 31, 2011 |
|||
ASSETS |
||||
Current assets: | ||||
Cash | $ | 8,101 | $ | 7,927 |
Total current assets | 8,101 | 7,927 | ||
Total Assets | $ | 8,101 | $ | 7,927 |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
||||
Current liabilities: | ||||
Accounts payable - trade | $ | - | $ | 280 |
Accrued interest | 9,458 | 1,809 | ||
Advances payable to related parties | 28,436 | 28,436 | ||
Current portion of convertible notes payable net of discount | 50,470 | - | ||
Total current liabilities | 88,364 | 30,525 | ||
Long-term debt | ||||
Convertible notes payable, net of discount | - | 12,055 | ||
Stockholders' deficit: | ||||
Preferred stock, $0.00001 par value; 20,000,000 shares authorized; no shares issued and outstanding | - | - | ||
Common stock, $0.00001 par value; 500,000,000 shares authorized; and | ||||
15,829,450 and 15,449,450 issued and outstanding at December 31, 2012 and 2011, respectively | 158 | 154 | ||
Additional paid in capital | 424,474 | 393,476 | ||
Common stock subscriptions receivable | - | (10,801) | ||
Deficit accumulated during development stage | (504,895) | (417,482) | ||
Total stockholders' deficit | (80,263) | (34,653) | ||
Total Liabilities and Stockholders' Deficit | $ | 8,101 |
$ |
7,927 |
The accompanying notes to the financial statements are integral part of these financial statements. |
Dynamic Applications Corp. | |||||||||||
(A Development Stage Company) | |||||||||||
Statement of Changes in Stockholders' Equity (Deficit) | |||||||||||
For the Years Ended December 31, 2012 and 2011 and From Inception (March 7, 2008) to December 31, 2012 | |||||||||||
Back to Table of Contents | |||||||||||
Additional |
Deficit |
Total |
|||||||||
Common |
Paid-in |
Subscription |
Accumulated During |
Stockholders' |
|||||||
Shares |
Amount |
Capital |
Receivable |
Development Stage |
Equity (Deficit) |
||||||
Inception (March 7, 2008) |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
Stock issued for cash | 750,000 | 8 | 240,292 | - | - | 240,300 | |||||
Net loss | - | - | - | - | (89,785) | (89,785) | |||||
Balance at December 31, 2008 |
750,000 |
$ |
8 |
$ |
240,292 |
$ |
- |
$ |
(89,785) |
$ |
(150,515) |
Stock issued for cash |
114,450 |
1 |
52,149 |
- |
- |
52,150 |
|||||
Stock issued for services | 5,000 | - |
15,000 |
- |
- |
15,000 |
|||||
Net loss |
- |
- |
- |
- |
(246,097) |
(246,097) |
|||||
Balance at December 31, 2009 |
869,450 |
$ |
9 |
$ |
307,441 |
- |
$ |
(335,882) |
$ |
(28,432) |
|
Net loss | - | - | - | - | (3,100) | (3,100) | |||||
Balance at December 31, 2010 |
869,450 |
$ |
9 |
$ |
307,441 |
$ |
- |
$ |
(338,985) |
$ |
(31,535) |
Stock issued for cash |
14,580,000 |
146 |
46,035 |
(10,801) |
- |
35,380 |
|||||
Impact of beneficial conversion feature | - | - |
40,000 |
- |
- |
40,000 |
|||||
Net loss |
- |
- |
- |
- |
(78,497) |
(78,497) |
|||||
Balance at December 31, 2011 |
15,449,450 |
$ |
154 |
$ |
393,476 |
(10,801) |
$ |
(417,482) |
$ |
(34,653) |
|
Stock issued for cash |
380,000 |
4 |
1,198 |
10,801 |
- |
12,003 |
|||||
Impact of beneficial conversion feature | - | - |
29,800 |
- |
- |
29,800 |
|||||
Net loss |
- |
- |
- |
- |
(87,413) |
(87,413) |
|||||
Balance at December 31, 2012 |
15,829,450 |
$ |
158 |
$ |
424,474 |
$ |
- |
$ |
(504,895) |
$ |
(80,263) |
The accompanying notes to the financial statements are integral part of these financial statements. |
Dynamic Applications Corp.
Notes to Financial Statements
December 31, 2012
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The Company
Organizational Background: Dynamic Applications Corp. (Dynamic Applications 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 7, 2008. The business plan of the Company is to develop a commercial application of the design in a patent of a Electromagnetic percussion device which is a device intended to provide an electromagnetic percussion hammer. The Company also intends to enhance the existing prototype, obtain approval of its patent application, and manufacture and market the product and/or seek third party entities interested in licensing the rights to manufacture and market the device. The accompanying financial statements of Dynamic Applications were prepared from the accounts of the Company under the accrual basis of accounting.
Basis of Presentation: The accompanying 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. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of December 31, 2012, the cash resources of the Company were insufficient to meet its current business plan, and the Company had negative working capital. These and other factors raise substantial doubt about the Companys ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Significant Accounting Policies
Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.
Cash and Cash Equivalents: For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents. There were no cash or cash equivalents as of December 31, 2012 or 2011.
Property and Equipment New property and equipment are recorded at cost. Property and equipment included in the bankruptcy proceedings and transferred to the Trustee had been valued at liquidation value. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 years.
Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.
Development Stage Enterprise The Company has been in the development stage since inception.
Valuation of Long-Lived Assets: We review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.
Stock Based Compensation: Stock-based awards are accounted for using the fair value method in accordance with ASC 718, Share-Based Payments. Our primary type of share-based compensation consists of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs for the valuation analysis of the options include the market value of the Companys common stock, the estimated volatility of the Companys common stock, the exercise price of the warrants and the risk free interest rate.
Accounting For Obligations And Instruments Potentially To Be Settled In The Companys Own Stock: We account for obligations and instruments potentially to be settled in the Companys stock in accordance with FASB ASC 815, Accounting for Derivative Financial Instruments. This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Companys own stock.
Fair Value of Financial Instruments : FASB ASC 825, Financial Instruments, requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC 825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. At December 31, 2012 and 2011, the carrying value of certain financial instruments (cash and cash equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments or interest rates, which are comparable with current rates.
Fair value measurements: The Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of inputs which prioritize the inputs used in measuring fair value are:
Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2: Inputs to the valuation methodology include:
- Quoted prices for similar assets or liabilities in active markets;
- Quoted prices for identical or similar assets or liabilities in inactive markets;
- Inputs other than quoted prices that are observable for the asset or liability;
- Inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The assets or liabilitys fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
The following table presents assets that were measured and recognize at fair value on December 31, 2012 and the year then ended on a recurring basis:
December 31, 2012 |
||||||||
Description of asset; |
(Level 1) |
(Level 2) |
(Level 3) |
Realized Loss |
||||
None |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
December 31, 2011 |
||||||||
Description of asset; |
(Level 1) |
(Level 2) |
(Level 3) |
Realized Loss |
||||
None |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
When the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the fiscal periods ended December 31, 2011 and 2011, there were no significant transfers of financial assets or financial liabilities between the hierarchy levels.
Earnings per Common Share: We compute net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. All per share disclosures retroactively reflect shares outstanding or issuable as though the reverse split had occurred January 1, 2010.
Income Taxes: We have adopted ASC 740, Accounting for Income Taxes. Pursuant to ASC 740, we are required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.
Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities using the tax rates and laws in effect when the differences are expected to reverse. ASC 740 provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all of our net deferred tax asset.
Management will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.
In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.
ASC 740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized.
Uncertain Tax Positions
The Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109, Accounting for Income Taxes (FIN No. 48) which was effective for the Company on January 1, 2007. FIN No. 48 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN No. 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements.
Our federal and state income tax returns are open for fiscal years ending on or after December 31, 2007. We are not under examination by any jurisdiction for any tax year. At December 31, 2012 we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under FIN 48.
Recent Accounting Pronouncements
We qualify as an emerging growth company under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, Technical Corrections and Improvements in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update) in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In July 2012, the FASB issued ASU 2012-02, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entitys financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.
In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 is not expected to have a material impact on our financial position or results of operations.
In December 2011, the FASB issued ASU No. 2011-11 Balance Sheet: Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.
Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.
1. Stockholders Equity
Common Stock
On February 5, 2009, the Company implemented a 3 for 1 forward stock split on its issued and outstanding shares of common stock to the holders of record as of February 5, 2009. As a result of the split, each holder of record on the record date automatically received two additional shares of the Companys common stock. After the split, the number of shares of common stock issued and outstanding were 86,145,000 (861,450 post most recent 1 for 100 reverse stock split) shares.
On October 19, 2012, we filed a Certificate of Amendment to our Certificate of Incorporation with the State of Delaware to change the authorized capital stock to 520,000,000 shares consisting of 500,000,000 shares of common stock, par value $0.00001 and 20,000,000 shares of preferred stock, par value $0.00001. The certificate of amendment also authorized a reverse split of common stock at the ratio of 1:100. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this forward stock split and the reverse split in 2012. All per share disclosures retroactively reflect shares outstanding or issuable as though the reverse split had occurred at inception.
On March 17, 2008, the Company issued 9,000,000 (90,000 post most recent 1 for 100 reverse stock split) shares of its common stock to two individuals who are Directors and officers for proceeds of $300.
The Company has completed a capital formation activity in accordance with a Registration Statement on Form S-1 submitted to the SEC to register and sell in a self-directed offering 6,000,000 (60,000 post most recent 1 for 100 reverse stock split) shares of newly issued common stock at an offering price of $0.04 per share ($4.00 adjusted for most recent 1 for 100 reverse stock split) for proceeds of $80,000. The Registration Statement on Form S-1 was filed with the SEC on May 6, 2008 and declared effective on May 15, 2008. The Company had incurred $20,000 of deferred offering costs related to this capital formation activity.
As of December 10, 2008 the Company raised $200,000 and issued 60,000,000 (600,000 post most recent 1 for 100 reverse stock split) shares of its common stock pursuant to a private placement offering of 84,000,000 (840,000 post most recent 1 for 100 reverse stock split) shares, at a purchase price of $0.01 per share ($1.00 adjusted for most recent 1 for 100 reverse stock split). The Company received proceeds of $200,000. The Company incurred $20,000 of deferred offering costs related to this capital formation activity.
On January 28, 2009 the Company raised $37,150 and issued 111,450 shares of its common stock pursuant to a private placement offering.
On September 16, 2009, the Company raised $15,000 and issued 3,000 shares of its common stock pursuant to a private placement offering, at a purchase price of $5.00 per share.
On October 13, 2009, Dynamic Applications Corp. entered into an amendment to the Executive Employment Agreement between the Company and Mr. Asher Zwebner, the Company's chief financial officer. Under the Amendment, Mr. Zwebner's term of employment was extended until October 31, 2010 and in lieu of the existing employment compensation set forth in the employment agreement, Mr. Zwebner received 5,000 shares of common stock in the Company. The shares were valued at the trading price on the day that the shares were issued less 40% discount for restricted trading.
On August 23, 2011, the Company raised $3,487 and issued 1,100,000 shares of its common stock pursuant to a private placement offering, at a purchase price of $0.00317 per share.
On September 8, 2011, the Company amended its Certificate of Incorporation to increase the authorized share and to change the par value to $0.00001.
On September 27, 2011, the Company raised $26,844 and issued 8,480,000 shares of its common stock pursuant to a private placement offering, at a purchase price of $0.00317 per share .
On December 21, 2011, the Company raised $15,850 (of which $10,801 was receivable at December 31, 2011) and issued 5,000,000 shares of its common stock pursuant to a private placement offering, at a purchase price of $0.00317 per share.
On January 9, 2012, the Company raised $1,202 and issued 380,000 shares of its common stock pursuant to a private placement offering, at a purchase price of $0.00317 per share.
On October 19, 2012, we filed a Certificate of Amendment to our Certificate of Incorporation with the State of Delaware to change the authorized capital stock to 520,000,000 shares consisting of 500,000,000 shares of common stock, par value $0.00001 and 20,000,000 shares of preferred stock, par value $0.00001. The certificate of amendment also authorized a reverse split of common stock at the ration of 1:100. All per share disclosures retroactively reflect shares outstanding or issuable as though the reverse split had occurred January 1, 2008.
2. Related Party transactions not disclosed elsewhere
Due Related Parties: As of December 31, 2012, a total or $28,436 was owed to Asher Zwebner, CFO and a director, and represented accrued but unpaid compensation for services during the period from 2008 to 2009. The amount owed is not formalized by a written agreement, does not carry a specific due date and is non-interest bearing.
3. Convertible Notes
In August, 2011 we issued a $40,000 convertible promissory note. The note, which has a maturity date of December 31, 2013, bears interest at 15% per annum until paid or converted. The note is convertible at the option of the holder at any time and from time to time, on or after June 30, 2013, into our common stock at a fixed conversion price of $0.01 per share.
The convertible debt security was issued with a non-detachable conversion feature. We evaluate and account for such securities in accordance with ASC 470-20, Debt Debt with Conversion and Other Options . The note was considered to have an embedded beneficial conversion feature because the effective conversion price was less than the quoted market price at the time of the issuance. This resulted in a discount to the carrying amount of the note equal to:
- the difference between the effective conversion rate and the market price of our common stock on the date of issuance; multiplied by
- the number of shares into which the notes are convertible.
The initial beneficial conversion feature of $40,000 was recorded separately based on the intrinsic value method.
The value of the beneficial conversion feature was recorded as a discount to the note which was amortized over the term of the note using the effective interest method. Amortization of $12,055 of the discount arising from the beneficial conversion feature of was included in interest expense during the fiscal period ended December 31, 2011 and $27,945 in 2012.
During 2012 the Company signed a series of seven promissory notes with unrelated parties for an aggregate of $29,800. The notes bear interest at 15% per annum and are due approximately one year from the date of issuance. The notes have conversion rights that allow the holder of the note to convert the principal balance into the Companys common stock at any time after June 30, 2013 at the lender's sole discretion at $0.01 per share.
In accordance with ASC 470, the Company has analyzed the beneficial nature of the conversion terms and determined that a beneficial conversion feature (BCF) exists. The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470. The BCF has been recorded as a discount to the notes payable and to Additional Paid-in Capital. As of December 31, 2012, the aggregate balance of convertible notes payable is $10,470 net of unamortized discounts of $19,330.
For the period ended December 31, 2012 the Company has recognized $1,632 in interest expense related to these notes and has amortized $10,470 of the beneficial conversion features which has also been recorded as interest expense. The aggregate carrying value of these notes is as follows:
December 31, 2012 |
|
Face amount of the notes |
$29,800 |
Less unamortized discount |
(19,330) |
Carrying Value |
$10,470 |
As of December 31, 2012, the Company is not in default on any of its debt covenants.
4. Income Taxes
We have adopted ASC 740 which provides for the recognition of a deferred tax asset based upon the value the loss carry-forwards will have to reduce future income taxes and management's estimate of the probability of the realization of these tax benefits. Our net operating loss carryovers incurred prior to 2008 considered available to reduce future income taxes were reduced or eliminated through our recent change of control (I.R.C. Section 382(a)) and the continuity of business limitation of I.R.C. Section 382(c).
We have a current operating loss carry-forward of $ 453,999 resulting in deferred tax assets of $158,900. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all our net deferred tax asset.
Future utilization of currently generated federal and state NOL and tax credit carry forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitation may result in the expiration of NOL and tax credit carry forwards before full utilization.
The Company is not under examination by any jurisdiction for any tax year. Our federal and state income tax returns are open for fiscal years ending on or after December 31, 2008.
5. Commitments
The Company is not a party to any leases and does not have any commitments.
6. Development Stage Activities and Going Concern
The Company has been in the development stage since inception. The accompanying 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. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of December 31, 2012, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of asset or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
7. Subsequent Events
On January 15, 2013, the Company entered into a consulting agreement with Gennady Nickelshur to serve as the Company's chief scientific advisor ("CSO"). The agreement with Mr. Nickelshpur provides for cash compensation based upon an hourly rate and the grant to the CSO of options pursuant to an ESOP to be adopted by the board of directors. The terms of the ESOP have yet to be determined.
On March 5, 2013, the Company and GUMI Tel Aviv Ltd, a major, privately-held Israeli technology company ("GUMI"), entered into development/manufacturing/marketing agreement ("GUMI Agreement"). GUMI is engaged in the manufacture, import/export, marketing and install industrial equipment and designing technical solutions to major Israeli customers, including, among others, the Israeli Defense Forces (IDF), El-Al Airlines, major Israeli Aerospace companies, as well as foreign industrial customers. Further, GUMI recently entered into a Joint Venture with a large Indian industrial company to build a factory in India to manufacture specially designed pipes for the aviation industry. GUMI has eight operating subsidiaries, approximately 200 full-time employees, more than 100 sub-contractors, and is among Israel's largest manufacturers and distributors of industrial equipment.
Pursuant to the GUMI Agreement, GUMI agreed to: (i) complete the development of the Prototype of the Patented Device; (ii) manufacture the commercial model(s) of the Patented device; and (iii) market the commercial model(s) of the Patented Device.
In consideration for developing the Prototype and manufacturing and marketing/distributing commercial models of the Patented Device as well as incurring all related costs and expenses in connection therewith, the Company shall compensate GUMI as follows: (i) upon the execution of the GUMI Agreement, the Company granted GUMI warrants (the "Warrants") exercisable to purchase 200,000 shares of the Company's common stock ("Warrant Shares") at an exercise price of USD$0.05 per share (the "Exercise Price"); (ii) upon completion of the Prototype, granting GUMI additional Warrants to purchase 200,000 additional Warrant Shares at the Exercise Price; and (iii) upon completion of a Commercial Device ready for manufacture and sale, granting GUMI additional Warrants to purchase 200,000 additional Warrant Shares at the Exercise Price. The Warrants shall expire 3 years from the date of each grant and shall be subject to adjustment in the event of any recapitalization of the Company's capital stock.
In addition to the consideration represented by the grant of Warrants, the Agreement further provides that following commencement of sale of the Commercial Device and until such time that GUMI has recouped all costs and expenses that it has incurred and paid in connection with the completion of development of the Prototype and the manufacture of the Commercial Device ("Date of Recoupment"), one hundred (100%) percent of the net sales revenues shall be paid and distributed to GUMI. On and after the Date of Recoupment, net sales revenues shall be paid sixty-five (65%) percent to GUMI and thirty-five (35%) percent to the Company.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Back to Table of Contents
Not Applicable.
ITEM 15. EXHIBITS Back to Table of Contents
(a) See the index to financial statements.
(b) Exhibits. The following documents are filed as exhibits to this registration statement:
Exhibit | Description of Exhibit |
3.1a | Articles of Incorporation, filed with the Company's Form 10 on November 21, 2012. |
3.1b | Articles of Incorporation, as amended, filed with the Company's Form 10 on November 21, 2012. |
3.1c | Articles of Incorporation, as amended, filed herewith |
3.2 | Bylaws, filed with the Company's Form 10 on November 21, 2012. |
10.1 | Patent Transfer and Sale Agreement with Appelfeld Zer Fisher, filed herewith |
10.2(a) | Convertible Note, as amended, between the Company and Sheer Trust, filed with the Company's Form 10-12G on February 28, 2013. |
10.2(b)(a)1 | Convertible Note, as amended, between the Company and Mediouni, filed herewith. |
10.2(c)(a) | Convertible Note, as amended, between the Company and Shonfeld, filed herewith. |
10.2(d)(a)1 | Convertible Note, as amended, between the Company and Silverman, filed herewith. |
10.2(e)(a) | Convertible Note, as amended, between the Company and Ofliam LLC, filed herewith. |
10.2(f)(a)2 | Convertible Note, as amended, between the Company and Mediouni, filed herewith. |
10.2(g)(a)2 | Convertible Note, as amended, between the Company and Silverman, filed herewith. |
10.3 | Agreement between the Company and Nickelshpur and CV, filed with the Company's Form 10-12G on February 28, 2013. |
23.1 | Consent of Independent Registered Public Accounting Firm, filed herewith. |
23.2 | Consent of Independent Registered Public Accounting Firm, filed herewith. |
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this amended registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 13, 2013
Dynamic Applications Corp. |
By: Ori Goore, CEO and Director |
/s/ Ori Goore |
Dynamic Applications Corp. |
By: Asher Zwebner, CFO and Director |
/s/ Asher Zwebner |
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
DYNAMIC APPLICATIONS CORP.
The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:
FIRST: That at a meeting of the Board of Directors of DYNAMIC APPLICATIONS CORP. (the "Corporation") resolutions were duly adopted setting forth a proposed amendment to the Certificate of Incorporation of said Corporation, declaring said amendment to be advisable. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this Corporation be amended by changing Article FOUR so that, as amended, said Article shall be and read as follows:
The Corporation shall be authorized to issue twenty billion (20,000,000,000) shares of capital stock, of which nineteen billion nine hundred and eighty million (19,980,000,000) shares shall be shares of common stock, $0.00001 par value ("Common Stock") and twenty million (20,000,000) shares shall be shares of preferred stock, $0.00001 par value, which may be issued in one or more series ("Preferred Stock"). The Board of Directors of the Corporation is authorized to fix the powers, preferences, rights, qualifications, limitations or restrictions of the Preferred Stock and any series thereof pursuant to Section 151 of the Delaware General Corporation Law.
FURTHER RESOLVED: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate to be 21st day of July, 2011.
By: /s/ Asher Zwebner
Authorized Officer
Title: ___ Chief Financial Officer _____
Name: __ Asher Zwebner ___________
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DYNAMIC APPLICATIONS CORP.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: US$8,000 Dated: July 2, 2012
FOR VALUE RECEIVED , Dynamic Applications Corp., a Delaware corporation with offices at 7 Menachem Begin Street, Ramat Gan, Israel 52521 (the "Corporation") promises to pay to Gil Mediouni (the "Lender"), at the offices of the Corporation, the sum of US$8,000 in lawful money of the United States of America, (the "Principal"), together with interest at the rate of fifteen (15%) percent per annum (the Interest) in consideration for the loan (the "Loan) by the Lender of the principal amount of $8,000, in connection with the Note Subscription Agreement dated July 2, 2012 (the Agreement), evidenced by this convertible promissory note (the Convertible Note).
NOW THEREFORE , the Corporation and the Lender agree as follows:
1. INTEREST RATE AND PAYMENTS. The Principal and Interest shall be due and payable at the offices of Corporation on July 31, 2013, unless Lender shall agree to extend the maturity date of such obligation, or Lender elects to convert the Principal and all accrued Interest into shares of the Corporations common stock, par value $0.00001 per share (the Common Stock), as provided in the Agreement and in Section 2 below.
2. COVERSION RIGHTS. This Convertible Note is convertible into shares of the Corporations Common Ctock ("Shares"), at any time and at the Lenders sole discretion, on or after July 1, 2013 , at a price of $0.01 per Share (the Conversion Price).
3. LENDERS ACKNOWLEDGEMENTS. Lender acknowledges and agrees that:
(A) Lender is not a U.S. Person, as that term is defined in Rule 902 promulgated by the United States Securities and Exchange Commission (the SEC) pursuant to Regulation S under the Securities Act of 1933, as amended (the Act); and
(B) Neither this Convertible Note nor any shares of Common Stock issuable upon conversion of this Conertible Note have been or will be registered under the Act and as a result, this Convertible Note and any certificates evidencing the shares of Common Stock will bear a restrictive legend reflecting that the certificates evidencing such shares have not been registered under the Securities Act of 1933, as amended (the "Act") as follows:
NEITHER THE SECURITIES REPRESENTED BY THIS CONVERTIBLE NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS CONVERTIBLE NOTE (THE SHARES) HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
NONE OF THE SECURITIES REPRESENTED THIS CONVERTIBLE NOTE OR ANY OF THE SHARES ISSUABLE UPON CONVERSION OF THE CONVERTIBLE NOTE HAVE BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE ACT.
4. GOVERNING LAW . This Convertible Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
5. SEVERABILITY. Any provision of this Convertible Note which is prohibited or unenforceable in any jurisdiction shall be, as to such jurisdiction only, ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
6. MISCELANEOUS.
(A) This Convertible Note may be prepaid in whole or in part at any time without penalty and
(B) The term "Lender" shall be deemed to include any subsequent Lender(s) of this Convertible Note, including any successors or assigns of Lender; and
(C) Whenever used in this Convertible Note and unless the context otherwise requires, words in the singular include the plural, words in the plural include the singular, and pronouns of any gender include the other genders; and
(D) Captions and paragraph headings in this Convertible Note are for convenience only and shall not affect its interpretation.
7. BINDING EFFECT. All of the terms of this Convertible Note shall be binding upon the Corporation and the Corporation's successors and assigns and the Lender and the Lenders successors and assigns.
DYNAMIC APPLICATIONS CORP. GIL MEDIOUNI (LENDER)
By: /s/ Asher Zwebner, CFO
By : /s/ Gil Mediouni
DYNAMIC APPLICATIONS CORP.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: US$1,000 Dated: July 1, 2012
FOR VALUE RECEIVED , Dynamic Applications Corp., a Delaware corporation with offices at 7 Menachem Begin Street, Ramat Gan, Israel 52521(the "Corporation") promises to pay to Akiva Shonfeld (the "Lender"), at the offices of the Corporation, the sum of US$800 in lawful money of the United States of America, (the "Principal"), together with interest at the rate of fifteen (15%) percent per annum (the Interest) in consideration for the loan (the "Loan) by the Lender of the principal amount of $1,000, in connection with the Note Subscription Agreement dated July 1, 2012 (the Agreement), evidenced by this convertible promissory note (the Convertible Note).
NOW THEREFORE , the Corporation and the Lender agree as follows:
1. INTEREST RATE AND PAYMENTS. The Principal and Interest shall be due and payable at the offices of Corporation on July 31, 2013, unless Lender shall agree to extend the maturity date of such obligation, or Lender elects to convert the Principal and all accrued Interest into shares of the Corporations common stock, par value $0.00001 per share (the Common Stock), as provided in the Agreement and in Section 2 below.
2. COVERSION RIGHTS. This Convertible Note is convertible into shares of the Corporations Common Ctock ("Shares"), at any time and at the Lenders sole discretion, on or after July 1, 2013, at a price of $0.01 per Share (the Conversion Price).
3. LENDERS ACKNOWLEDGEMENTS. Lender acknowledges and agrees that:
(A) Lender is not a U.S. Person, as that term is defined in Rule 902 promulgated by the United States Securities and Exchange Commission (the SEC) pursuant to Regulation S under the Securities Act of 1933, as amended (the Act); and
(B) Neither this Convertible Note nor any shares of Common Stock issuable upon conversion of this Conertible Note have been or will be registered under the Act and as a result, this Convertible Note and any certificates evidencing the shares of Common Stock will bear a restrictive legend reflecting that the certificates evidencing such shares have not been registered under the Securities Act of 1933, as amended (the "Act") as follows:
NEITHER THE SECURITIES REPRESENTED BY THIS CONVERTIBLE NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS CONVERTIBLE NOTE (THE SHARES) HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
NONE OF THE SECURITIES REPRESENTED THIS CONVERTIBLE NOTE OR ANY OF THE SHARES ISSUABLE UPON CONVERSION OF THE CONVERTIBLE NOTE HAVE BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE ACT.
4. GOVERNING LAW . This Convertible Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
5. SEVERABILITY. Any provision of this Convertible Note which is prohibited or unenforceable in any jurisdiction shall be, as to such jurisdiction only, ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
6. MISCELANEOUS.
(A) This Convertible Note may be prepaid in whole or in part at any time without penalty and
(B) The term "Lender" shall be deemed to include any subsequent Lender(s) of this Convertible Note, including any successors or assigns of Lender; and
(C) Whenever used in this Convertible Note and unless the context otherwise requires, words in the singular include the plural, words in the plural include the singular, and pronouns of any gender include the other genders; and
(D) Captions and paragraph headings in this Convertible Note are for convenience only and shall not affect its interpretation.
7. BINDING EFFECT. All of the terms of this Convertible Note shall be binding upon the Corporation and the Corporation's successors and assigns and the Lender and the Lenders successors and assigns.
DYNAMIC APPLICATIONS CORP. AKIVA SHONFELD (LENDER)
By: /s/ Asher Zwebner, CFO
By : /s/ Akiva Shonfeld
DYNAMIC APPLICATIONS CORP.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: US$800 Dated: July 5, 2012
FOR VALUE RECEIVED , Dynamic Applications Corp., a Delaware corporation with offices at 7 Menachem Begin Street, Ramat Gan, Israel 52521(the "Corporation") promises to pay to Kfir Silberman (the "Lender"), at the offices of the Corporation, the sum of US$800 in lawful money of the United States of America, (the "Principal"), together with interest at the rate of fifteen (15%) percent per annum (the Interest) in consideration for the loan (the "Loan) by the Lender of the principal amount of $800, in connection with the Note Subscription Agreement dated July 1, 2012 (the Agreement), evidenced by this convertible promissory note (the Convertible Note).
NOW THEREFORE , the Corporation and the Lender agree as follows:
1. INTEREST RATE AND PAYMENTS. The Principal and Interest shall be due and payable at the offices of Corporation on July 31, 2013, unless Lender shall agree to extend the maturity date of such obligation, or Lender elects to convert the Principal and all accrued Interest into shares of the Corporations common stock, par value $0.00001 per share (the Common Stock), as provided in the Agreement and in Section 2 below.
2. COVERSION RIGHTS. This Convertible Note is convertible into shares of the Corporations Common Ctock ("Shares"), at any time and at the Lenders sole discretion, on or after July 1. 2013, at a price of $0.01 per Share (the Conversion Price).
3. LENDERS ACKNOWLEDGEMENTS. Lender acknowledges and agrees that:
(A) Lender is not a U.S. Person, as that term is defined in Rule 902 promulgated by the United States Securities and Exchange Commission (the SEC) pursuant to Regulation S under the Securities Act of 1933, as amended (the Act); and
(B) Neither this Convertible Note nor any shares of Common Stock issuable upon conversion of this Conertible Note have been or will be registered under the Act and as a result, this Convertible Note and any certificates evidencing the shares of Common Stock will bear a restrictive legend reflecting that the certificates evidencing such shares have not been registered under the Securities Act of 1933, as amended (the "Act") as follows:
NEITHER THE SECURITIES REPRESENTED BY THIS CONVERTIBLE NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS CONVERTIBLE NOTE (THE SHARES) HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
NONE OF THE SECURITIES REPRESENTED THIS CONVERTIBLE NOTE OR ANY OF THE SHARES ISSUABLE UPON CONVERSION OF THE CONVERTIBLE NOTE HAVE BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE ACT.
4. GOVERNING LAW . This Convertible Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
5. SEVERABILITY. Any provision of this Convertible Note which is prohibited or unenforceable in any jurisdiction shall be, as to such jurisdiction only, ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
6. MISCELANEOUS.
(A) This Convertible Note may be prepaid in whole or in part at any time without penalty and
(B) The term "Lender" shall be deemed to include any subsequent Lender(s) of this Convertible Note, including any successors or assigns of Lender; and
(C) Whenever used in this Convertible Note and unless the context otherwise requires, words in the singular include the plural, words in the plural include the singular, and pronouns of any gender include the other genders; and
(D) Captions and paragraph headings in this Convertible Note are for convenience only and shall not affect its interpretation.
7. BINDING EFFECT. All of the terms of this Convertible Note shall be binding upon the Corporation and the Corporation's successors and assigns and the Lender and the Lenders successors and assigns.
DYNAMIC APPLICATIONS CORP. KFIR SILBERMAN (LENDER)
By: /s/ Asher Zwebner, CFO
By :/s/ Kfir Silberman
DYNAMIC APPLICATIONS CORP.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: US$5,000 Dated: September 5, 2012
FOR VALUE RECEIVED , Dynamic Applications Corp., a Delaware corporation with offices at 7 Menachem Begin Street, Ramat Gan, Israel 52521(the "Corporation") promises to pay to Ofliam LLC (the "Lender"), at the offices of the Corporation, the sum of US$5,000 in lawful money of the United States of America, (the "Principal"), together with interest at the rate of fifteen (15%) percent per annum (the Interest) in consideration for the loan (the "Loan) by the Lender of the principal amount of $5,000, in connection with the Note Subscription Agreement dated September 5, 2012 (the Agreement), evidenced by this convertible promissory note (the Convertible Note).
NOW THEREFORE , the Corporation and the Lender agree as follows:
1. INTEREST RATE AND PAYMENTS. The Principal and Interest shall be due and payable at the offices of Corporation on September 30, 2013, unless Lender shall agree to extend the maturity date of such obligation, or Lender elects to convert the Principal and all accrued Interest into shares of the Corporations common stock, par value $0.00001 per share (the Common Stock), as provided in the Agreement and in Section 2 below.
2. COVERSION RIGHTS. This Convertible Note is convertible into shares of the Corporations Common Ctock ("Shares"), at any time and at the Lenders sole discretion, on or after July 1, 2013, at a price of $0.01 per Share (the Conversion Price).
3. LENDERS ACKNOWLEDGEMENTS. Lender acknowledges and agrees that:
(A) Lender is not a U.S. Person, as that term is defined in Rule 902 promulgated by the United States Securities and Exchange Commission (the SEC) pursuant to Regulation S under the Securities Act of 1933, as amended (the Act); and
(B) Neither this Convertible Note nor any shares of Common Stock issuable upon conversion of this Conertible Note have been or will be registered under the Act and as a result, this Convertible Note and any certificates evidencing the shares of Common Stock will bear a restrictive legend reflecting that the certificates evidencing such shares have not been registered under the Securities Act of 1933, as amended (the "Act") as follows:
NEITHER THE SECURITIES REPRESENTED BY THIS CONVERTIBLE NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS CONVERTIBLE NOTE (THE SHARES) HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
NONE OF THE SECURITIES REPRESENTED THIS CONVERTIBLE NOTE OR ANY OF THE SHARES ISSUABLE UPON CONVERSION OF THE CONVERTIBLE NOTE HAVE BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE ACT.
4. GOVERNING LAW . This Convertible Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
5. SEVERABILITY. Any provision of this Convertible Note which is prohibited or unenforceable in any jurisdiction shall be, as to such jurisdiction only, ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
6. MISCELANEOUS.
(A) This Convertible Note may be prepaid in whole or in part at any time without penalty and
(B) The term "Lender" shall be deemed to include any subsequent Lender(s) of this Convertible Note, including any successors or assigns of Lender; and
(C) Whenever used in this Convertible Note and unless the context otherwise requires, words in the singular include the plural, words in the plural include the singular, and pronouns of any gender include the other genders; and
(D) Captions and paragraph headings in this Convertible Note are for convenience only and shall not affect its interpretation.
7. BINDING EFFECT. All of the terms of this Convertible Note shall be binding upon the Corporation and the Corporation's successors and assigns and the Lender and the Lenders successors and assigns.
DYNAMIC APPLICATIONS CORP. OFLIAM LLC (LENDER)
By: /s/ Asher Zwebner, CFO
By : /s/ Ofliam LLC
DYNAMIC APPLICATIONS CORP.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: US$11,400 Dated: September 12, 2012
FOR VALUE RECEIVED , Dynamic Applications Corp., a Delaware corporation with offices at 7 Menachem Begin Street, Ramat Gan, Israel 52521(the "Corporation") promises to pay to Gil Mediouni (the "Lender"), at the offices of the Corporation, the sum of US$11,400 in lawful money of the United States of America, (the "Principal"), together with interest at the rate of fifteen (15%) percent per annum (the Interest) in consideration for the loan (the "Loan) by the Lender of the principal amount of $11,400, in connection with the Note Subscription Agreement dated September 12, 2012 (the Agreement), evidenced by this convertible promissory note (the Convertible Note).
NOW THEREFORE , the Corporation and the Lender agree as follows:
1. INTEREST RATE AND PAYMENTS. The Principal and Interest shall be due and payable at the offices of Corporation on September 30, 2013 , unless Lender shall agree to extend the maturity date of such obligation, or Lender elects to convert the Principal and all accrued Interest into shares of the Corporations common stock, par value $0.00001 per share (the Common Stock), as provided in the Agreement and in Section 2 below.
2. COVERSION RIGHTS. This Convertible Note is convertible into shares of the Corporations Common Ctock ("Shares"), at any time and at the Lenders sole discretion, on or after July 1, 2013, at a price of $0.01 per Share (the Conversion Price).
3. LENDERS ACKNOWLEDGEMENTS. Lender acknowledges and agrees that:
(A) Lender is not a U.S. Person, as that term is defined in Rule 902 promulgated by the United States Securities and Exchange Commission (the SEC) pursuant to Regulation S under the Securities Act of 1933, as amended (the Act); and
(B) Neither this Convertible Note nor any shares of Common Stock issuable upon conversion of this Conertible Note have been or will be registered under the Act and as a result, this Convertible Note and any certificates evidencing the shares of Common Stock will bear a restrictive legend reflecting that the certificates evidencing such shares have not been registered under the Securities Act of 1933, as amended (the "Act") as follows:
NEITHER THE SECURITIES REPRESENTED BY THIS CONVERTIBLE NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS CONVERTIBLE NOTE (THE SHARES) HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
NONE OF THE SECURITIES REPRESENTED THIS CONVERTIBLE NOTE OR ANY OF THE SHARES ISSUABLE UPON CONVERSION OF THE CONVERTIBLE NOTE HAVE BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE ACT.
4. GOVERNING LAW . This Convertible Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
5. SEVERABILITY. Any provision of this Convertible Note which is prohibited or unenforceable in any jurisdiction shall be, as to such jurisdiction only, ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
6. MISCELANEOUS.
(A) This Convertible Note may be prepaid in whole or in part at any time without penalty and
(B) The term "Lender" shall be deemed to include any subsequent Lender(s) of this Convertible Note, including any successors or assigns of Lender; and
(C) Whenever used in this Convertible Note and unless the context otherwise requires, words in the singular include the plural, words in the plural include the singular, and pronouns of any gender include the other genders; and
(D) Captions and paragraph headings in this Convertible Note are for convenience only and shall not affect its interpretation.
7. BINDING EFFECT. All of the terms of this Convertible Note shall be binding upon the Corporation and the Corporation's successors and assigns and the Lender and the Lenders successors and assigns.
DYNAMIC APPLICATIONS CORP. GIL MEDIOUNI (LENDER)
By: /s/ Asher Zwebner, CFO
By : /s/ Gil Mediouni
DYNAMIC APPLICATIONS CORP.
CONVERTIBLE PROMISSORY NOTE
Principal Amount: US$1,600 Dated: September 9, 2012
FOR VALUE RECEIVED , Dynamic Applications Corp., a Delaware corporation with offices at 7 Menachem Begin Street, Ramat Gan, Israel 52521(the "Corporation") promises to pay to Kfir Silberman (the "Lender"), at the offices of the Corporation, the sum of US$1,600 in lawful money of the United States of America, (the "Principal"), together with interest at the rate of fifteen (15%) percent per annum (the Interest) in consideration for the loan (the "Loan) by the Lender of the principal amount of $1,600, in connection with the Note Subscription Agreement dated September 9, 2012 (the Agreement), evidenced by this convertible promissory note (the Convertible Note).
NOW THEREFORE , the Corporation and the Lender agree as follows:
1. INTEREST RATE AND PAYMENTS. The Principal and Interest shall be due and payable at the offices of Corporation on September 30, 2013, unless Lender shall agree to extend the maturity date of such obligation, or Lender elects to convert the Principal and all accrued Interest into shares of the Corporations common stock, par value $0.00001 per share (the Common Stock), as provided in the Agreement and in Section 2 below.
2. COVERSION RIGHTS. This Convertible Note is convertible into shares of the Corporations Common Ctock ("Shares"), at any time and at the Lenders sole discretion, on or after July 1, 2013, at a price of $0.01 per Share (the Conversion Price).
3. LENDERS ACKNOWLEDGEMENTS. Lender acknowledges and agrees that:
(A) Lender is not a U.S. Person, as that term is defined in Rule 902 promulgated by the United States Securities and Exchange Commission (the SEC) pursuant to Regulation S under the Securities Act of 1933, as amended (the Act); and
(B) Neither this Convertible Note nor any shares of Common Stock issuable upon conversion of this Conertible Note have been or will be registered under the Act and as a result, this Convertible Note and any certificates evidencing the shares of Common Stock will bear a restrictive legend reflecting that the certificates evidencing such shares have not been registered under the Securities Act of 1933, as amended (the "Act") as follows:
NEITHER THE SECURITIES REPRESENTED BY THIS CONVERTIBLE NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS CONVERTIBLE NOTE (THE SHARES) HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
NONE OF THE SECURITIES REPRESENTED THIS CONVERTIBLE NOTE OR ANY OF THE SHARES ISSUABLE UPON CONVERSION OF THE CONVERTIBLE NOTE HAVE BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE ACT.
4. GOVERNING LAW . This Convertible Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
5. SEVERABILITY. Any provision of this Convertible Note which is prohibited or unenforceable in any jurisdiction shall be, as to such jurisdiction only, ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
6. MISCELANEOUS.
(A) This Convertible Note may be prepaid in whole or in part at any time without penalty and
(B) The term "Lender" shall be deemed to include any subsequent Lender(s) of this Convertible Note, including any successors or assigns of Lender; and
(C) Whenever used in this Convertible Note and unless the context otherwise requires, words in the singular include the plural, words in the plural include the singular, and pronouns of any gender include the other genders; and
(D) Captions and paragraph headings in this Convertible Note are for convenience only and shall not affect its interpretation.
7. BINDING EFFECT. All of the terms of this Convertible Note shall be binding upon the Corporation and the Corporation's successors and assigns and the Lender and the Lenders successors and assigns.
DYNAMIC APPLICATIONS CORP. KFIR SILBERMAN (LENDER)
By: /s/ Asher Zwebner, CFO
By : /s/ Kfir Silberman
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Dynamic Applications Corp.
Ramat Gan, Israel
We hereby consent to the incorporation in this
Registration Statement on Form 10-12G/A, of our report dated April 15, 2013, of Dynamic
Applications Corp. (A Development Stage Company) relating to the financial statements as
of December 31, 2012, and the reference to our firm under the caption Experts
in the Registration Statement.
/s/M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
May 13, 2013
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Dynamic Applications Corp.
Ramat Gan, Israel
I hereby consent to the incorporation in this Registration Statement on Form 10/A my report dated November 16, 2012, relating to the Financial Statements for the fiscal years ended December 31, 2011 and 2010.
/S/ Michael F. Cronin
Michael F. Cronin
Certified Public Accountant
May 13, 2013