Innofone.Com, Inc.
As
filed
with the Securities and Exchange Commission on October 27, 2005
(Registration
No. 333-____________)
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SB-2
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
INNOFONE.COM,
INCORPORATED
(Name
of
small business issuer in its charter)
Nevada
|
7389
|
98-2020313
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
1431
Ocean Ave., Suite 1100
Santa
Monica, CA 90401
(310)
458-3233
(Address
and telephone number of principal executive offices)
Mr.Alex
Lightman
Chief
Executive Officer and President
1431
Ocean Avenue, Suite 1100
Santa
Monica, CA 90401
Phone
(310) 458-3233
Fax
(310)
458-2844
(Name,
address and telephone number of agent for service)
Copy
of
all communications to:
Arthur
Marcus, Esq.
Gersten
Savage LLP
600
Lexington Avenue
New
York,
NY 10022
Ph.
(212)
752-9700
Fax:
(212) 980-5192
Approximate
Date of Commencement of Proposed Sale to the Public: As soon as practicable
after the effective date of this Registration Statement.
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended, check the following box: [X]
If
this
form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If
this
form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If
this
form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If
delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [_]
CALCULATION
OF REGISTRATION FEE
Title
of Each
Class
of
Securities
to
be Registered
|
Amount
to Be Registered(1)
|
Proposed
Maximum
Offering
Price
Per
Share
(1)(2)
|
Proposed
Maximum
Aggregate
Offering Price
(2)
|
Amount
of
Registration
Fee
|
Common
Stock, $0.001
par
value, issuable upon
conversion
of callable
secured
convertible notes
|
10,895,884(3)
|
$1.10
|
$11,985,472.40
|
$1,410.69
|
Common
Stock, $0.001
par
value issuable upon
exercise
of warrants
|
1,000,000(4)
|
$1.10
|
$1,100,000.00
|
$129.47
|
|
|
Total
Fee
|
|
$1,540.16
|
(1)
The
shares of our Common Stock being registered hereunder are being registered
for
resale by the selling stockholders named in the prospectus. In accordance with
Rule 416(a), the registrant is also registering hereunder an indeterminate
number of shares that may be issued and resold to prevent dilution resulting
from stock splits, stock dividends or similar transactions.
(2)
Estimated solely for the purpose of computing the amount of the registration
fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the closing
price of $1.10 on the OTC Bulletin Board on October 24, 2005.
(3)
Represents shares of our Common Stock issuable upon conversion of outstanding
callable secured convertible notes in the aggregate principal amount of
$4,500,000. The
number of shares of our Common Stock registered hereunder represents a good
faith estimate by us of the number of shares of our Common Stock issuable upon
the conversion of the callable secured convertible notes. For purposes of
estimating the number of shares of our Common Stock to be included in this
registration statement, we calculated a good faith estimate of the number of
shares that we believe will be issuable upon conversion of the callable secured
convertible notes to account for market fluctuations, anti-dilution and price
protection adjustments. Should the conversion ratio result in our having
insufficient shares, we will not rely upon Rule 416, but will file a new
registration statement to cover the resale of such additional shares should
that
become necessary.
(4)
Represents shares of our Common Stock issuable upon the exercise of outstanding
five-year warrants. The exercise price of the warrants is $5.00. In accordance
with Rule 416(a), the registrant is also registering hereunder an indeterminate
number of shares that may be issued and resold to prevent dilution resulting
from stock splits, stock dividends or similar transactions. In addition, should
a decrease in the exercise price as a result of an issuance or sale of shares
below the then current market price result in our having insufficient shares,
we
will not rely upon Rule 416, but will file a new registration statement to
cover
the resale of such additional shares should that become necessary.
The
information in this prospectus is not complete and may be changed. The selling
stockholders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer
to
buy these securities in any state where the offer or sale is not
permitted.
Subject
to Completion, October 27, 2005
PROSPECTUS
11,895,884
SHARES
INNOFONE.COM,
INCORPORATED
COMMON
STOCK
This
prospectus relates to the resale of up to 11,895,884 shares of our Common Stock,
par value $0.001 per share (“Common Stock”) of which: (i) 10,895,884 shares are
issuable upon conversion of outstanding
callable secured convertible notes in the aggregate principal amount of
$4,500,000 (the “Notes”); and (ii) 1,000,000 shares of Common Stock issuable
upon exercise of stock purchase warrants (the “Warrants”).
The
Notes and the Warrants were issued to AJW Partners, LLC (“Partners”), AJW
Offshore, Ltd.(“Offshore”), AJW Qualified Partners LLC (“Qualified”)and New
Millenium Capital Partners, II, LLC (“Millenium”) (Partners, Offshore, Qualified
and Millenium are referred to collectively as “Selling Securityholders”). The
Selling Securityholders may sell their common stock from time to time at
prevailing market prices.
Our
Common Stock is registered under Section 12(g) of the Securities Exchange Act
of
1934, as amended, and is quoted on the over-the-counter market and prices are
reported on the OTC Bulletin Board under the symbol “INFN.” On October 24, 2005,
the closing price as reported was $1.10 per share.
The
selling stockholders, and any participating broker-dealers may be deemed to
be
“underwriters” within the meaning of the Securities Act of 1933, as amended, and
any commissions or discounts given to any such broker-dealer may be regarded
as
underwriting commissions or discounts under the Securities Act of 1933. The
selling stockholders have informed us that they do not have any agreement or
understanding, directly or indirectly, with any person to distribute their
common stock. We agreed to pay the expenses of registering the foregoing shares
of our Common Stock.
INVESTMENT
IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.
YOU MAY LOSE YOUR ENTIRE INVESTMENT. CONSIDER CAREFULLY THE “RISK FACTORS”
BEGINNING ON PAGE 7 OF THIS PROSPECTUS BEFORE INVESTING.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The
date
of this prospectus is October__, 2005
You
should rely only on the information contained in or incorporated by reference
in
this prospectus. We have not, and the selling stockholders have not, authorized
anyone, including any salesperson or broker, to give oral or written information
about this offering, Innofone.com, Incorporated, or the shares of common stock
offered hereby that is different from the information included in this
prospectus. If anyone provides you with different information, you should not
rely on it. We are not, and the selling stockholders are not, making an offer
to
sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information contained in this prospectus
is accurate only as of the date on the front cover of this prospectus. Our
business, financial condition, results of operations and prospects may have
changed since that date.
This
prospectus is not an offer to sell any securities other than the shares of
common stock offered hereby. This prospectus is not an offer to sell securities
in any circumstances in which such an offer is unlawful.
TABLE
OF
CONTENTS
|
|
|
1
|
Innofone.com,
Incorporated
|
1 |
|
3
|
Terms
of Callable Secured Convertible Notes
|
4
|
|
7
|
|
6
|
|
7
|
|
12
|
|
13
|
Unaudited
Proforma Financial Statements
|
15
|
|
18
|
|
21
|
|
25
|
|
25
|
Submission
of Matters To A Vote of Security Holders |
25 |
|
26
|
|
27
|
|
28
|
|
29
|
|
30
|
Transfer
Agent |
30 |
|
30
|
|
31
|
|
34
|
|
35
|
|
35
|
|
35
|
Index
to Financial Statements
|
F-1
|
You
should rely only on the information contained or incorporated by reference
in
this prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any jurisdiction
where the offer is not permitted. The information in this prospectus is accurate
only as of the date of this prospectus regardless of the time of delivery of
this prospectus or of any sale of our securities.
Although
it contains all material information, this summary is not complete and may
not
contain all of the information that you should consider before investing in
our
Common Stock. You should read the entire prospectus carefully, including the
more detailed information regarding our company, the risks of purchasing our
common stock discussed under “risk factors,” and our financial statements and
the accompanying notes. In this prospectus, “we”, “us,”“Company” and “our”,
refer to Innofone.com, Incorporated, unless the context otherwise requires.
Unless otherwise indicated, the term “year,”“fiscal year” or “fiscal” refers to
our fiscal year ending December 31st. Unless we tell you otherwise, the term
“common stock” as used in this prospectus refers to our Common
Stock.
History
On
August
8, 2005, Innofone.com, Incorporated (“Innofone,” the “Company,”“we,”“us” and
“our”) entered into a stock purchase agreement with Mr. Alex Lightman, our
President and Chief Executive Officer, to purchase 100% of the issued and
outstanding shares of IPv6 Summit Inc. (“IPv6 Summit”), an entity engaged in
developing new technology referred to as Internet Protocol version 6. At the
time of the Agreement, Mr. Lightman was the President, Treasurer, Director
and
sole shareholder of IPv6 Summit and was not an officer or director of Innofone.
Pursuant to the agreement, on October 12, 2005 we issued to Mr. Lightman a
promissory note in the principal amount of $1,000,000 with interest at the
rate
of four percent (4%) per annum. Further, we issued to Mr. Lightman approximately
33,333,000 shares of our restricted common stock. As a result of the stock
purchase agreement, IPv6 Summit became a wholly owned subsidiary of the Company.
Prior to this acquisition, we operated as a holding company for companies
involved in technology and financial services.
Overview
The
Internet as we know it today is based on Internet Protocol version 4, more
commonly referred to as IPv4, a 32-year-old protocol. The IPv4 Internet is
beginning to receive a major upgrade, with a new format for packets of data
called Internet Protocol version 6, or IPv6. We believe that IPv6, sometimes
called the New Internet, presents many new business opportunities, in roughly
the same manner that the existing Internet did when it first hit the mainstream
in the mid-1990s. The first major customers for the New Internet in the US
were
the Department of Defense, which in June 2003 mandated a transition within
the
Department that would make it “IPv6-capable” by 2008, and the Office of
Management and Budget, on behalf of the Federal Government, which recently
also
mandated transition to IPv6, and the hundreds of large companies that supply
these two entities. Many, but not all, major technology companies have appointed
IPv6 points of contact and developed IPv6-related marketing messages, including
Microsoft, Cisco, Juniper, Nokia, Hewlett-Packard and about fifty others in
the
US.
In
2005,
as in 1995, the new Internet market will be seized by first movers that both
take advantage of the opportunities offered by the new technology and have
a
sound business plan to offer needed products and services to the American and
global markets. It is forecast that the New Internet will see some of the same
rapid rise as the existing Internet did between 1995 and 2000, quickly growing
from millions to billions, and potentially trillions of dollars in global
revenues impacted by the Internet. The Japanese government, for instance, which
has done a great deal of research into the upcoming IPv6 market, estimates
the
market size of IPv6-ready goods/services in the year 2010 to be 170 trillion
yen, or about $1.55 trillion in US currency
The
advantages of IPv6 over the existing protocol are significant and can be
summarized as “security, mobility, and ad hoc networking.” These advantages are
described in many articles and in over 244 presentations posted at http://www.usipv6.com,
one of
our company websites. In summary, some of the major new features
are:
|
a)
|
A
vast increase of trillions of Internet addresses, resulting in what
will
seem to be almost unlimited Internet Protocol (IP) address availability,
which will enable each customer to have many such addresses, inexpensively
- for cell phones, game consoles, home appliances, consumer electronics
and automobiles (getting such addresses with today’s Internet is
difficult, and costly in most parts of the
world);
|
|
b)
|
More
secure wired and wireless communications (this is one reason the
military
has mandated this protocol, to send top secret information) in part
because greater identity is possible with more
addresses;
|
|
c)
|
Mobile
wireless online access (this is more difficult to do with
IPv4);
|
|
d)
|
Television
and voice over the Internet, or VoIP (very difficult and expensive
to do
well with IPv4 without multicast);
|
|
e)
|
The
online connection of many wireless devices, such as security cameras.
Some
forecasts estimate over one trillion Internet connected devices by
2015,
an impossibility with only an IPv4 platform;
and
|
|
f)
|
Online
connection of smart tags such as Radio Frequency Identification (RFID),
which could enable tracking inventory and products as an essential
part of
any Enterprise Resource Program
(ERP).
|
Simply
put, one of the limitations of today’s Internet is a shortage of addresses, so
that the hardware or software equivalents of “middle men” are put into the
system to let many people use one address, not unlike the old telephone party
lines, where many people had the same “number,” and everyone could listen in.
The party line system had the advantage that a lot of people could be connected
with few switched lines, but led to problems, such as lack of security. There
was no way to assure that one person would be speaking with only one person
at
the other end. When every phone user got his/her own address, it led to many
great new capabilities - such as privacy, the ability to deliver new services
such as telefax messages to a particular person, and the ability to go mobile
with cell phones, and caller ID, which enabled people to screen their calls,
accepting only those they wanted to at that moment.
Similarly,
the New Internet will give everyone his or her personal address (or thousands
of
them, as needed), which enables the potential for “end-to-end” connectivity.
Each individual can know for certain who the specific receiver at the other
end
is, and this allows the system to check for service quality, and allows much
easier mobile use and roaming, as well as multiple layers of individual security
measures rather than today’s “Maginot Line” style firewalls or Network Address
Translation, which offer little protection once a hacker has broken through
the
protective wall. The difference between the New Internet and the existing one
is
thought by some to be as dramatic as the difference between the phones with
individual numbers that we have today and the phones with party lines of
yesteryear.
The
Company offers three related services that are relevant to the New Internet:
consulting, training and conference management. The Company believes that has
deep expertise in these three areas. The Company hopes to expand these services
at a strategic time, when they are badly needed, and before entrenched
competition arises, as the Company believes it inevitably will.
The
Company will offer and manage these services from two corporate offices: our
corporate headquarters in Santa Monica, California, and our Eastern Office
in
Northern Virginia, which we intend to set up in the fourth quarter of
2005.
Recent
Developments
We
entered into a Securities Purchase Agreement (the “Agreement”) with four
accredited investors on August 31, 2005 for the sale of (i) $4,500,000 in
callable secured convertible notes (the “Notes”) and (ii) warrants to buy
1,000,000 shares of our Common Stock (“Warrants”). Pursuant to the Agreement,
the investors are obligated to provide us with an aggregate of $4,500,000 as
follows: (a) $1,500,000 was disbursed on September 1, 2005; (b) $1,500,000
will
be disbursed upon the filing of a registration statement covering shares of
our
common stock underlying the Notes and Warrants; and (c) $1,500,000 will be
disbursed upon the effectiveness of the registration statement.
On
October 18, 2005, we completed the relocation of our corporate headquarters
to
1431 Ocean Avenue, Suite 1100, Santa Monica, California 90401 from 3470
Olney-Laytonsville, Road, SUITE 118, Olney, Maryland 20832.
Our
headquarters are located at 1431 Ocean Ave., Suite 1100, Santa Monica, CA 90401
and our telephone number at that address is (310) 458-3233. The Company’s
maintains five web sites at www.usipv6.com,
www.coalitionsummit.com,
www.innofone.net, www.v6tranistion.com
and
www.v6training.com.
Information on our web sites is not a part of this prospectus.
SHARES
OUTSTANDING
|
|
PRIOR
TO OFFERING
|
|
|
|
Common
Stock, $0.001
|
|
par
value
|
61,388,270
|
|
|
Common
Stock Offered
|
|
by
Selling Securityholders
|
11,895,884
|
|
|
Use
of Proceeds
|
We
will not receive any proceeds from the sale by the
|
|
selling
Stockholders of shares in this offering, except
|
|
upon
any exercise of the Warrants issued to the Selling
|
|
Stockholders.
See “Use
of Proceeds.”
|
|
|
Risk
Factors
|
An
investment in our common stock involves a high
|
|
degree
of risk and could result in a loss of your entire
|
|
investment.
|
|
|
OTC
Symbol
|
INFN
|
|
|
Executive
Offices
|
Our
executive offices are located at 1431 Ocean Avenue, Suite 1100, Santa
Monica, California 90401. Our telephone number is (310) 458-3233
and our
five websites are: www.usipv6.com,
www.coalitionsummit.com,
www.innofone.net,
www.v6tranistion.com
and www.v6training.com. The
information on our websites is not part of this
prospectus.
|
TERMS
OF CALLABLE SECURED CONVERTIBLE NOTES
To
obtain funding for our ongoing operations, we entered into a Securities Purchase
Agreement with four accredited investors on August 31, 2005 for the sale of
(i)
$4,500,000 in callable secured convertible notes and (ii) warrants to buy
1,000,000 shares of our Common Stock. This prospectus relates to the resale
of
our Common Stock underlying these callable secured convertible notes and
warrants. The investors are obligated to provide us with an aggregate of
$4,500,000 in three tranches as follows (the “Tranches”):
|
·
|
$1,500,000
was disbursed on September 1, 2005;
|
|
·
|
$1,500,000
will be disbursed upon the filing of this registration statement;
and
|
|
·
|
$1,500,000
will be disbursed upon this prospectus being declared
effective.
|
Accordingly,
upon filing of this registration statement, we will have received a total of
$3,000,000 pursuant to the Securities Purchase Agreement.
The
funds from the sale of the callable secured convertible notes will be primarily
used for working capital needs. The callable secured convertible notes bear
interest at 8% (unless our common stock is greater than $2.50 per share for
each
trading day of a month, in which event no interest is payable during such
month), mature within three years from the date of issuance, and are convertible
into our Class A Common Stock, at the investors' option, at a per share price
equal to the lesser of $3.50 or 30% discount to the average of the three lowest
trading prices of the Common Stock during the 20 day trading day period prior
to
conversion. The callable secured convertible notes become immediately due and
payable and we will pay an amount equal to 130%
times
the
sum
of (a) the then outstanding principal amount of the Note immediately following
the maximum conversion date (the date that we issue 19.99% of our issued and
outstanding shares),
plus
(b) accrued and unpaid interest on the unpaid principal amount of the Note
to
within fifteen (15) days of the maximum conversion date,
plus
(c) default interest, if any, on the amounts referred to in clause (a) and/or
(b) above,
plus
(d) any optional amounts that may be added thereto at the maximum conversion
date by the holder (the then outstanding principal amount of this Note
immediately following the maximum conversion date),
plus
the amounts referred to in clauses (b), (c) and (d) above shall collectively
be
referred to as the “Remaining
Convertible Amount”).
In the event that the sum of (x) the aggregate number of shares of Common Stock
issued upon conversion of the Notes issued pursuant to the Purchase
Agreement
plus
(y) the aggregate number of shares of Common Stock that remain issuable upon
conversion of the Notes and the other Notes issued pursuant to the Purchase
Agreement, represents at least one hundred percent (100%) of the maximum share
amount (the “Triggering
Event”),
the Borrower will use its best efforts to seek and obtain Shareholder Approval
(or obtain such other relief as will allow conversions hereunder in excess
of
the Maximum Share Amount) as soon as practicable following the Triggering Event
and before the maximum conversion date. As used herein, “Shareholder
Approval”
means approval by the shareholders of the Company to authorize the issuance
of
the full number of shares of Common Stock which would be issuable upon full
conversion of the then outstanding Notes but for the Maximum Share Amount.
In
connection with the issuance of the Notes, we agreed to register two times
the
number of shares of common stock issuable upon conversion of the
Notes.
The
warrants are exercisable until five years from the date of issuance. The
conversion price of the callable secured convertible notes and the exercise
price of the warrants will be adjusted in the event that we issue common stock
at a price below the fixed conversion price, below market price, with the
exception of any securities issued in connection with the Securities Purchase
Agreement. The conversion price of the callable secured convertible notes and
the exercise price of the warrants may be adjusted in certain circumstances,
such as, if we pay a stock dividend, subdivide or combine outstanding shares
of
common stock into a greater or lesser number of shares, or take such other
actions as would otherwise result in dilution of the selling stockholder's
position. The selling stockholders have contractually agreed to restrict their
ability to convert or exercise their warrants and receive shares of our common
stock such that the number of shares of common stock held by them and their
affiliates after such conversion or exercise does not exceed 4.99% of the then
issued and outstanding shares of common stock. In addition, we have granted
the
investors a security interest in substantially all of our assets and
intellectual property.
The
warrants have an exercise price of $5.00 per share. The selling stockholders
will be entitled to exercise the warrants on a cashless basis if the shares
of
common stock underlying the warrants are not then registered pursuant to an
effective registration statement. In the event that the selling stockholder
exercises the warrants on a cashless basis, then we will not receive any
proceeds. In addition, the exercise price of the warrants will be adjusted
in
the event we issue common stock at a price below market, with the exception
of
any securities issued as of the date of the warrants or issued in connection
with the callable secured convertible notes issued pursuant to the Securities
Purchase Agreement, dated August 8, 2005.
Upon
the issuance of shares of common stock below the market price, the exercise
price of the warrants will be reduced accordingly. The market price means:
(i)
the average of the last reported sale prices for our shares of our Common Stock
for the five trading days immediately preceding such issuance as set forth
on
our principal trading market; (ii) if the OTCBB is not the principal trading
market, the average of the last reported sale prices on the principal trading
market for the Common Stock during the same period or (iii) if the market value
cannot be calculated then the fair market value as reasonably determined in
good
faith by our board of directors, or at the option of a majority-in-interest
of
the holders of the outstanding warrants, by an independent investment bank.
The
exercise price shall be determined by multiplying the exercise price in effect
immediately prior to the dilutive issuance by a fraction. The numerator of
the
fraction is equal to the sum of the number of shares outstanding immediately
prior to the offering plus the quotient of the amount of consideration received
by us in connection with the issuance divided by the market price in effect
immediately prior to the issuance. The denominator of such issuance shall be
equal to the number of shares outstanding after the dilutive
issuance.
A
complete copy of the Securities Purchase Agreement and related documents are
filed with the SEC as exhibits to our Current Report on Form 8-K relating to
this prospectus or incorporated by reference therein.
The
following tables set forth the summary financial information for our company.
You should read this information together with the financial statements and
the
notes thereto appearing elsewhere in this prospectus and the information under
“Management's Discussion and Analysis of Financial Condition and Results of
Operations.”
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS DATA
|
|
|
For
the Year
Ended
June
30,
2005
(Audited)
|
|
|
|
|
|
|
Revenues
|
|
|
$545,588
|
|
|
|
|
|
|
Cost
of Revenues
|
|
|
$118,164
|
|
|
|
|
|
|
Selling
General Administrative Expense
|
|
|
$466,913
|
|
|
|
|
|
|
Net
loss
|
|
|
(55,469)
|
|
|
|
|
|
|
Basic
Net loss per share
|
|
|
(0.03)
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
2,000,000
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheet Data
|
|
|
As
of
June
30, 2005
(Audited)
|
|
|
|
|
|
|
Total
|
|
|
82,389
|
|
|
|
|
|
|
Current
liabilities
|
|
|
60,782
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
60,782
|
|
|
|
|
|
|
Stockholders’
deficit
|
|
|
21,607
|
|
You
should carefully consider the risks described below before buying shares of
our
Common Stock in this offering. The risks and uncertainties described below
are
not the only risks we face. Additional risks and uncertainties not currently
known to us or that we currently deem immaterial may impair our business
operations. If any of the adverse events described in this risk factors section
actually occur, our business, results of operations and financial condition
could be materially adversely affected, the trading price of our common stock
could decline and you might lose all or part of your investment. We have had
operating losses to date and cannot assure that we will be profitable in the
foreseeable future. We make various statements in this section which constitute
“forward-looking” statements under Section 27A of the Securities
Act.
RISKS
RELATED TO OUR BUSINESS
WE
INCURRED HISTORICAL LOSSES AND HAVE A WORKING CAPITAL DEFICIT. AS A RESULT,
WE
MAY NOT BE ABLE TO GENERATE PROFITS, SUPPORT OUR OPERATIONS, OR ESTABLISH A
RETURN ON INVESTED CAPITAL.
We
incurred net losses in fiscal 2004 of $55,469. In addition, we expect to
increase our infrastructure and operating expenses to fund our anticipated
growth. As a result, we may not be able to generate profits in 2005 or
thereafter and may not be able to support our operations, or otherwise establish
a return on invested capital. We cannot assure you that any of our business
strategies will be successful or that significant revenues or profitability
will
ever be achieved or, if they are achieved, that they can be consistently
sustained or increased on a quarterly or annual basis.
WE
EXPECT OUR OPERATING LOSSES TO CONTINUE
The
Company expects to incur increased operating expenses during the next year.
The
amount of net losses and the time required for the Company to reach and sustain
profitability are uncertain. The likelihood of the Company's success must be
considered in light of the problems, expenses, difficulties, and delays
frequently encountered in connection with a new business, including, but not
limited to uncertainty as to development and acquisitions and the time required
for the Company's planned production to become available in the marketplace.
There can be no assurance that the Company will ever generate product revenue
or
achieve profitability at all or on any substantial basis.
WE
HAVE A LIMITED AMOUNT OF CASH AND ARE LIKELY TO REQUIRE ADDITIONAL CAPITAL
TO
CONTINUE OUR OPERATIONS.
We
have a
limited amount of available cash and will likely require additional capital
to
successfully implement our business plan. Although we will raise aggregate
gross
proceeds of up to $4.5 million upon the effectiveness of this registration
statement, these funds will be sufficient to sustain our operations for only
twenty four months. There can be no assurance that we will be able to obtain
additional funding when needed, or that such funding, if available, will be
obtainable on terms acceptable to us. In the event that our operations do not
generate sufficient cash flow, or we cannot obtain additional funds if and
when
needed, we may be forced to curtail or cease our activities, which would likely
result in the loss to investors of all or a substantial portion of their
investment.
WE
MAY FAIL TO CONTINUE AS A GOING CONCERN, IN WHICH EVENT YOU MAY LOSE YOUR ENTIRE
INVESTMENT IN OUR SHARES.
Our
audited financial statements have been prepared on the assumption that we will
continue as a going concern. Our independent auditor has indicated that in
its
report on our 2004 financial statements that our recurring losses from
operations and our difficulties in generating sufficient cash flow to meet
our
obligations and sustain our operations raise substantial doubt about our ability
to continue as a going concern. If we fail to continue in business, you will
likely lose your investment in the shares you acquire in this
offering.
WE
RELY HEAVILY ON OUR MANAGEMENT, THE LOSS OF WHICH COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS, OPERATING RESULTS AND FINANCIAL
CONDITION.
Our
future success is dependent on having capable seasoned executives with the
necessary business knowledge and relationships to execute our business plan.
Accordingly, the services of our management and our board of directors are
deemed essential to maintaining the continuity of our operations. If we were
to
lose their services, our business could be materially adversely affected. We
have executed employment agreements with Mr. Alex Lightman, our Chief Executive
Officer and President, and Mr. Dale Geesey, our Vice President of Consulting.
We
also have executed employment agreements with Ms. Leah Thompson, our Manager
of
Administrative Operations and Mr. Gerard Casale, our Corporate Counsel. Our
performance will also depend on our ability to find, hire, train, motivate
and
retain other executive officers and key employees.
We
must
continually implement and improve our services, operations, operating procedures
and quality controls on a timely basis, as well as expand, train, motivate
and
manage our work force in order to accommodate anticipated growth and compete
effectively in our market segment. Successful implementation of our strategy
also requires that we establish and manage a competent, dedicated work force
and
employ additional key employees. There can be no assurance that our personnel,
systems, procedures and controls will be adequate to support our existing and
future operations. Any failure to implement and improve such operations could
have a material, adverse effect on our business, operating results and financial
condition.
Our
future results of operations involve a number of risks and uncertainties. With
any business undertaking and their inherent unforeseeable risk in conducting
business, the following paragraphs discuss a number of risks that could impact
the company's financial condition and results of operations.
OUR
FUTURE PERFORMANCE IS DEPENDENT ON OUR ABILITY TO RETAIN KEY
PERSONNEL
Our
future success depends on the continued services of executive management. We
do
not currently maintain key-man insurance on these executives. Our future success
is also dependent on our ability to identify, hire, train and retain other
qualified managerial and other employees. Competition for these individuals
is
intense and increasing. The loss of any of their services would be detrimental
to us and could have an adverse effect on our business development
WE
OPERATE IN A HIGHLY COMPETITIVE ENVIRONMENT
We
have
competitors in each of our three business divisions. Our competitors may be
able
to adapt more quickly to changes in customer needs or to devote greater
resources than we can to developing and expanding our services. Such competitors
could also attempt to increase their presence in our markets by forming
strategic alliances with other competitors, by offering new or improved products
or services by increasing their efforts to gain and retain market share through
competitive pricing. As the market for our services matures, price competition
and penetration into the market will intensify. Such competition may adversely
affect our gross profits, margins and results of operations. There can be no
assurance that we will be able to continue to compete successfully with existing
or new competitors.
RISK
FACTORS AFFECTING OUR FUTURE RESULTS OF OPERATIONS FOR THE COMPANY
Due
to
the Company's limited operating history, it is difficult to predict accurately
future revenues. This may result in one or more future quarters where the
Company's financial results may fall below the expectation of management and
investors. However firmly management may believe in its prospects, the Company
could fail. Operating results may vary, depending upon a number of factors,
many
of which are outside the Company's control. Material factors expected to impact
the Company's operating results include, legal costs expansion activities,
increased interest and expenses for borrowings and possible hiring of additional
full time employees. Every investor should evaluate the risks, uncertainties,
expenses and difficulties frequently encountered by companies in the early
stage
of development.
NEED
FOR EXPANSION
The
Company expects that expansion will be required to address potential growth.
This need for expansion will continue to place a significant strain on the
management and financial resources of the Company. Failure to manage growth
could disrupt the operations and ultimately prevent the Company from generating
expected revenues. The Company's business strategy includes entering into
business partnerships and acquiring future businesses. The Company may be unable
to complete suitable business partnerships and acquisitions on commercially
reasonable terms, if at all. Competition could impair the Company's ability
to
successfully pursue these aspects of this business strategy.
Business
partnerships or acquisitions could disrupt ongoing business, distract management
and employees and increase expenses. If the Company makes an acquisition, it
could face difficulties assimilating that company's personnel and operations.
Key personnel of the acquired company may decide not to work for the Company.
Acquisition of additional services or technologies also involves risk of
incompatibility and lack of integration into existing operations. If the Company
finances the acquisitions by issuing equity securities, this could dilute
existing stockholders positions. Additionally, funding instruments may have
rights, preferences or privileges senior to those of the Company's
stockholders.
WE
DO NOT HAVE HISTORICAL FINANCIAL DATA
As
a
result of its limited operating history, the Company does not have historical
financial data upon which to forecast revenues and results of operation. The
actual effect of these factors on the price of stock will be difficult to
assess. Results of operation may fall well below the expectations of securities
analysts and investors, and the trading price of our common stock may
drop.
OFFICERS
AND DIRECTORS BENEFICIALLY OWN APPROXIMATELY 54.3% MAJORITY OF SHARES
The
executive officers and directors of the Company currently beneficially own
approximately 54.3% of the outstanding Common Stock representing a majority.
Accordingly, such persons will effectively control the Board of Directors of
the
Company and will direct the affairs of the Company.
RISKS
RELATED TO HOLDING OUR SECURITIES
THERE
ARE A LARGE NUMBER OF SHARES UNDERLYING OUR CALLABLE SECURED CONVERTIBLE NOTES
AND WARRANTS THAT MAY BE AVAILABLE FOR FUTURE SALE AND THE SALE OF THESE SHARES
MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.
As
of
August 2005, we had callable secured convertible notes outstanding or an
obligation to issue callable secured convertible notes that may be converted
into an estimated 10,895,884 shares of our Common Stock at current market
prices, and outstanding warrants or an obligation to issue warrants to purchase
1,000,000 shares of our Common Stock. In addition, the number of shares of
our
Common Stock issuable upon conversion of the outstanding callable secured
convertible notes may increase if there is an event of default or if the market
price declines. All of the shares, including all warrants, may be sold without
restriction. The sale of these shares may adversely affect the market price
of
our Common Stock.
THE
ISSUANCE OF SHARES UPON CONVERSION OF THE CALLABLE SECURED CONVERTIBLE NOTES
AND
EXERCISE OF OUTSTANDING WARRANTS MAY CAUSE IMMEDIATE AND SUBSTANTIAL DILUTION
TO
OUR EXISTING STOCKHOLDERS.
The
issuance of shares upon conversion of the callable secured convertible notes
and
exercise of warrants may result in substantial dilution to the interests of
other stockholders since the selling stockholders may ultimately convert and
sell the full amount issuable on conversion. Although the selling stockholders
may not convert their callable secured convertible notes and/or exercise their
warrants if such conversion or exercise would cause them to own more than 4.99%
of our outstanding common stock, this restriction does not prevent the selling
stockholders from converting and/or exercising some of their holdings and then
subsequently converting the remainder of their holdings. In this way, the
selling stockholders may sell more than 4.99% while never holding more than
the
foregoing limit at any one time. There is no upper
limit on the number of shares that may be issued which may in effect further
dilute the proportionate equity interest and voting power of holders of our
common stock, including investors in this offering.
IF
WE ARE REQUIRED FOR ANY REASON TO REPAY OUR OUTSTANDING CALLABLE SECURED
CONVERTIBLE NOTES, WE WOULD BE REQUIRED TO DEPLETE OUR WORKING CAPITAL, IF
AVAILABLE, OR RAISE ADDITIONAL FUNDS. OUR FAILURE TO REPAY THE CALLABLE SECURED
CONVERTIBLE NOTES, IF REQUIRED, COULD RESULT IN LEGAL ACTION AGAINST US, WHICH
COULD REQUIRE THE SALE OF SUBSTANTIAL ASSETS.
On
August
31, 2005, we entered into a Security Purchase Agreement involving the sale
of an
aggregate of $4,500,000 principal amount of callable secured convertible notes
and stock purchase warrants to buy 1,000,000 shares of our Common Stock. The
callable secured convertible notes are due and payable, with 8% interest, on
August 31, 2008, unless sooner converted into shares of our common stock, but
in
no event sooner than 90 days from the date of issuance. In addition, any event
of default such as our failure to repay the principal or interest when due,
our
failure to issue shares of common stock upon conversion by the holder, our
failure to timely file a registration statement or have such registration
statement declared effective, breach of any covenant, representation or warranty
in the Securities Purchase Agreement or related convertible note, the assignment
or appointment of a receiver to control a substantial part of our property
or
business, the filing of a money judgment, writ or similar process against us
in
excess of $50,000, the commencement of a bankruptcy, insolvency, reorganization
or liquidation proceeding against us and the delisting of our common stock
could
require the early repayment of the callable secured convertible notes, including
a default interest rate of 15% on the outstanding principal balance of the
notes
if the default is not cured within the specified grace period. We anticipate
that the full amount of the callable secured convertible notes will be converted
into shares of our common stock, in accordance with the terms of the callable
secured convertible notes. If we are required to repay the callable secured
convertible notes, we would be required to use our limited working capital
and
raise additional funds. If we were unable to repay the notes when required,
the
note holders could commence legal action against us and foreclose on all of
our
assets to recover the amounts due. Any such action would require us to curtail
or cease operations.
OUR
COMMON STOCK COULD BE CONSIDERED A "PENNY STOCK."
Our
common stock could be considered to be a "penny stock" if it meets one or more
of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g)
of the Securities Exchange Act of 1934, as amended. These include but are not
limited to, the following: (i) the stock trades at a price less than $5.00
per
share; (ii) it is not traded on a "recognized" national exchange; (iii) it
is
not quoted on The Nasdaq Stock Market, or even if quoted, has a price less
than
$5.00 per share; and (iv) is issued by a company with net tangible assets less
than $2.0 million, if in business more than a continuous three years, or with
average revenues of less than $6.0 million for the past three years. The
principal result or effect of being designated a "penny stock" is that
securities broker-dealers cannot recommend the stock but must trade it on an
unsolicited basis.
BROKER-DEALER
REQUIREMENTS MAY AFFECT TRADING AND LIQUIDITY.
Section
15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated thereunder by the SEC require broker-dealers dealing in penny stocks
to provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the document
before effecting any transaction in a penny stock for the investor's account.
Potential investors in our common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny
stocks." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve
the account of any investor for transactions in such stocks before selling
any
penny stock to that investor. This procedure requires the broker-dealer to
(i)
obtain from the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience
as to
be reasonably capable of evaluating the risks of penny stock transactions;
(iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that
it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for holders of our common stock to resell their shares to third
parties or to otherwise dispose of them in the market or otherwise.
OUR
COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT YOU
MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE PRICE THAT YOU MAY PAY
FOR
THE SHARES.
Because
of the limited trading market expected to develop for our common stock, and
because of the possible price volatility, you may not be able to sell your
shares of common stock when you desire to do so. The inability to sell your
shares in a rapidly declining market may substantially increase your risk of
loss because of such illiquidity and because the price for our common stock
may
suffer greater declines because of its price volatility.
The
price
of our common stock that will prevail in the market after this offering may
be
higher or lower than the price you may pay. Certain factors, some of which
are
beyond our control, that may cause our share price to fluctuate significantly
include, but are not limited to, the following:
· variations
in our quarterly operating results;
· loss
of a
key relationship or failure to complete significant transactions;
· additions
or departures of key personnel; and
· fluctuations
in stock market price and volume.
Additionally,
in recent years the stock market in general, and the over-the-counter markets
in
particular, have experienced extreme price and volume fluctuations. In some
cases, these fluctuations are unrelated or disproportionate to the operating
performance of the underlying company. These market and industry factors may
materially and adversely affect our stock price, regardless of our operating
performance.
In
the
past, class action litigation often has been brought against companies following
periods of volatility in the market price of those companies' common stock.
If
we become involved in this type of litigation in the future, it could result
in
substantial costs and diversion of management attention and resources, which
could have a further negative effect on your investment in our
stock.
MANY
OF OUR SHARES OF COMMON STOCK WILL IN THE FUTURE BE AVAILABLE FOR RESALE. ANY
SALES OF OUR COMMON STOCK, IF IN SIGNIFICANT AMOUNTS, ARE LIKELY TO DEPRESS
THE
MARKET PRICE OF OUR SHARES.
Assuming
all of the 11,895,884 shares of common stock we are offering under this
prospectus are sold in our offering, and all of the shares of common stock
issued and issuable to the selling stockholders are sold, we would have
13,207,108 shares that are freely tradable without the requirement of
registration under the Securities Act of 1933. 60,077,046 shares of our common
stock are “restricted securities” as defined under Rule 144 of the Securities
Act of 1933 and 1,311,224 remaining shares are a part of the public float for
a
total of 73,284,154 shares. Of these shares, approximately 54.3% of our shares
are owned by our officers, directors or other “affiliates.” These individuals
may only sell their shares, absent registration, in accordance with the
provisions of Rule 144.
Restricted
securities may only be publicly sold pursuant to registration under the
Securities Act of 1933, or pursuant to Rule 144 or some other exemption that
may
be available from the registration requirements of the Securities Act of 1933.
Rule 144 entitles each person holding restricted securities for a period of
one
year, and affiliates who own non-restricted shares of our common stock, to
sell
every three months in ordinary brokerage transactions an amount of shares which
does not exceed the greater of 1% of the shares of our common stock outstanding
or, assuming the shares of common stock are then traded on Nasdaq, the average
weekly trading volume during the four calendar weeks prior to said sale. Any
substantial sales pursuant to Rule 144, including the potential sale of our
affiliates’ shares of our common stock, may have an adverse effect on the market
price of shares of our common stock, and may hinder our ability to arrange
subsequent equity or debt financing or affect the terms and time of such
financing.
WE
HAVE NOT PAID, AND DO NOT INTEND TO PAY, CASH DIVIDENDS IN THE FORESEEABLE
FUTURE.
We
have
not paid any cash dividends on our common stock and
do
not intend to pay cash dividends in the foreseeable future. We intend to retain
future earnings, if any, for reinvestment in the development and expansion
of
our business. Dividend payments in the future may also be limited by other
loan
agreements or covenants contained in other securities which we may issue. Any
future determination to pay cash dividends will be at the discretion of our
board of directors and depend on our financial condition, results of operations,
capital and legal requirements and such other factors as our board of directors
deems relevant.
OTHER
RISK FACTORS
There
are
several risks and uncertainties, including those relating to the Company's
ability to raise money and grow its business and potential difficulties in
integrating new acquisitions with our current operations, especially as they
pertain to foreign markets and market conditions. These risks and uncertainties
can materially affect the results predicted. Other risks include the Company's
limited operating history, the limited financial resources, domestic or global
economic conditions, activities of competitors
and the presence of new or additional competition, and changes in Federal or
State laws and conditions of equity markets.
The
Company's future operating results over both the short and long term will be
subject to annual and quarterly fluctuations due to several factors, some of
which are outside the control of the Company. These factors include but are
not
limited to fluctuating market demand for our services, and general economic
conditions.
This
prospectus contains “forward-looking statements” and information relating to our
business that are based on our beliefs as well as assumptions made by us or
based upon information currently available to us. When used in this prospectus,
the words
“anticipate,”“believe,”“estimate,”“expect,”“intend,”“may,”“plan,”“project”,
“should” and similar expressions are intended to identify forward-looking
statements. These forward-looking statements include, but are not limited to,
statements relating to our performance in “Business” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operation”. These
statements reflect our current views and assumptions with respect to future
events and are subject to risks and uncertainties. Actual and future results
and
trends could differ materially from those set forth in such statements due
to
various factors. Such factors include, among others: general economic and
business conditions; industry capacity; industry trends; competition; changes
in
business strategy or development plans; project performance; the commercially
viability of our products and offerings; availability, terms, and deployment
of
capital; and availability of qualified personnel.
These forward-looking statements speak only as of the date of this prospectus.
Subject at all times to relevant federal and state securities law disclosure
requirements, we expressly disclaim any obligation or undertaking to disseminate
any update or revisions to any forward-looking statement contained herein to
reflect any change in our expectations with regard thereto or any changes in
events, conditions or circumstances on which any such statement is based. In
addition, we cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking
statements.
We
will
not receive any proceeds from the sale of the shares of our common stock by
the
selling stockholders. An aggregate of 1,000,000 shares of common stock offered
by this prospectus are issuable upon the exercise of warrants by the Selling
Securityholders. Any proceeds from the exercise of these warrants will be used
for working capital purposes. In addition, we have received gross proceeds
of
$1,500,000 from the sale of the callable secured convertible notes and will
receive an additional $1,500,000 upon filing of this registration statement
and
an additional $1,500,000 upon effectiveness of this registration statement.
The
proceeds received from the sale of the callable secured convertible notes will
be used for payment of general corporate and operating purposes, including
sales
and marketing efforts and payment of consulting and legal fees.
The
Company's common stock is currently traded on the National Association of
Securities Dealers Over the Counter Bulletin Board under the symbol “INFN” ("OTC
Bulletin Board"). The common stock had previously traded on the OTC Bulletin
Board and was delisted on September 1, 1999. From September 1, 1999 until the
Company's re-listing on the OTC Bulletin Board on March 27, 2001, its common
stock traded in the over-the-counter Pink Sheets market in the United
States.
The
closing price of the Company's common stock on the OTC Bulletin Board on October
24, 2005 was $1.10 per share.
The
price ranges of trading in the Company's common stock during the last two fiscal
years and the subsequent interim period are as follows:
2005
|
|
High
|
Low
|
|
|
|
|
1/1/05
- 3/31/05
|
|
.85
|
.85
|
4/1/05
- 6/30/05
|
|
1.69
|
1.50
|
7/1/05
- 9/30/05
|
|
2.50
|
2.36
|
10/1/05-10/24/05
|
|
1.64
|
1.10
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
1/1/04
- 3/31/04
|
|
2.50
|
2.35
|
4/1/04
- 6/30/04
|
|
2.50
|
2.35
|
7/1/04
- 9/30/04
|
|
2.50
|
2.35
|
|
|
|
|
As
of
October 24, 2005, the Company had issued and outstanding 61,388,270
shares
of
common stock, held by approximately 143 holders of record.
There
have been no cash dividends declared by the Company since its inception.
Further, there are no restrictions that would limit the Company's ability to
pay
dividends on its common equity or that would be likely to do so in the
future.
The
source of these high and low prices was the OTC Bulletin Board. These quotations
reflect inter-dealer prices, without retail mark-up, markdown or commissions
and
may not represent actual transactions. The high and low prices listed have
been
rounded up to the next highest two decimal places.
The
market price of our common stock is subject to significant fluctuations in
response to variations in our quarterly operating results, general trends in
the
market for the products we distribute, and other factors, over many of which
we
have little or no control. In addition, broad market fluctuations, as well
as
general economic, business and political conditions, may adversely affect the
market for our common stock, regardless of our actual or projected performance.
The
Company currently has no compensation plans or employee benefit plans.
On
August
31, 2005, the Company entered into a Securities Purchase Agreement, dated as
of
August 31, 2005 (“Agreement”), by and among the Company and AJW Partners, LLC.
(“Partners”), AJW Offshore, Ltd. (“Offshore”), AJW Qualified Partners
(“Qualified”) and New Millenium Capital Partners, II, LLC (“Millenium”).
Partners, Offshore, Qualified and Millenium are collectively referred to as
the
“Purchasers”. The Agreement provides for the sale by the Company to the
Purchasers of Secured Convertible Term Notes (the “Notes”) issued by the Company
in the aggregate principal amount of Four Million Dollars ($4,500,000)
(“Principal Amount”). The Principal Amount is to be funded by the Purchasers in
three tranches ($1.5 million was funded on September 1, 2005, $1.5 million
upon
filing the Registration Statement and $1.5 million upon effectiveness of the
Registration Statement). The offering of Notes under the Agreement was made
pursuant to Section 4(2) of the Securities Act of 1933, as amended. The Notes
bear interest at 8% per annum, unless the common stock of the Company is greater
than $2.50 per share for each trading day of a month, in which event no interest
is payable during such month. The Notes are convertible into common stock of
the
Company at the lesser of $3.50 or a 30% discount to the average of the three
lowest trading prices of the common stock during the 20 trading day period
prior
to conversion. In connection with the subject offering, the Company issued
an
aggregate of 1,000,000 warrants (333,333 upon each tranche of financing) to
purchase common stock at a price of $5.00 per share. The warrants are
exercisable for a period of five years. The conversion of the Notes are subject
to an effective Registration Statement to be filed by the Company. The Company
has the right to redeem the Notes under certain circumstances and the right
to
prevent conversions in any month where the stock price is less than $3.50 per
share. The Notes are secured by all of the Company’s assets. In connection with
the loan, Mr. Alex Lightman, our Chief Executive Officer and President, pledged
3,000,000 shares of his common stock as additional security. The proceeds of
the
offering will be used primarily for working capital and for repayment of the
promissory note issued to Mr. Alex Lightman. The purchasers represented to
the
Company that they are “accredited investors.” No commissions were paid in
connection with the transaction.
On
October 17, 2005, we amended and restated our promissory note originally issued
to Mr. Alex Lightman on October 12, 2005, in connection with our Stock Purchase
Agreement dated August 8, 2005. The principal face amount of the note is
$1,000,000 and bears interest at the rate of four percent (4%) per annum The
note was amended and restated to provide for a repayment schedule which is
to
coincide with the timing that the Company receives the Traunches.
Innofone.com,
Incorporated
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Proforma
Condensed Balance Sheet
|
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June
30, 2005
|
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(Unaudited)
|
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|
|
|
|
|
|
Adjustments
|
|
|
Proforma
|
|
|
Innofone.com
|
|
IPv6
Summit
|
|
Total
|
|
DR
(CR)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
17,840
|
|
17,840
|
|
|
|
|
17,840
|
Other
current assets
|
|
|
|
59,709
|
|
59,709
|
|
|
|
|
59,709
|
Fixed
assets, net
|
|
|
|
4,840
|
|
4,840
|
|
|
|
|
4,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
-
|
|
82,389
|
|
82,389
|
|
|
|
|
82,389
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
|
53,848
|
|
53,848
|
|
|
|
|
53,848
|
Note
payable-related party
|
|
|
|
|
|
-
|
|
(1,000,000
|
) |
(c)
|
1,000,000
|
Other
current liabilities
|
|
|
|
6,934
|
|
6,934
|
|
|
|
|
6,934
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
-
|
|
60,782
|
|
60,782
|
|
|
|
|
1,060,782
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
4,898,880
|
|
2,000
|
|
4,900,880
|
|
4,840,311
|
|
(a)
|
60,569
|
Additional
paid-in capital
|
|
9,659,382
|
|
|
|
9,659,382
|
|
9,659,382
|
|
(b)
|
-
|
Retained
(deficit) earnings
|
|
(14,558,262
|
) |
19,607
|
|
(14,538,655
|
) |
(13,499,693
|
) |
(d)
|
(1,038,962)
|
Total
stockholders' equity
|
|
-
|
|
21,607
|
|
21,607
|
|
|
|
|
(978,393)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
-
|
|
82,389
|
|
82,389
|
|
-
|
|
|
82,389
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Adjustment to reflect outstanding common shares post reverse
merger with
IPv6 Summit of 60,568,603 at $0.001 par value.
|
(b)
Eliminate additional paid-in capital of Innofone post reverse
merger with
IPv6 Summit.
|
|
|
|
|
(c)
Record $1,000,000 note payable to Alex Lightmann related to reverse
merger
with IPv6 Summit.
|
|
|
(d)
Eliminate deficit earnings of Innofone post reverse merger, record
$58,569
of expense reverse merger expense and
|
$1,000,000
consideration given to Alex Lightmann related to reverse merger
which has
been accounted for as a
distribution.
|
Innofone.com,
Incorporated
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
Condensed Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
June
30, 2005
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
Proforma
|
|
|
|
Innofone.com
|
|
IPv6
Summit
|
|
Total
|
|
DR
(CR)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
545,588
|
|
545,588
|
|
|
|
545,588
|
|
Cost
of revenues
|
|
|
|
118,164
|
|
118,164
|
|
|
|
118,164
|
|
Gross
profit
|
|
-
|
|
427,424
|
|
427,424
|
|
|
|
427,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
|
2,941
|
|
2,941
|
|
|
|
2,941
|
|
Selling,
general and administrative expenses
|
|
681,000
|
|
466,913
|
|
1,147,913
|
|
58,569
|
(a)
|
1,206,482
|
|
Total
operating expenses
|
|
681,000
|
|
469,854
|
|
1,150,854
|
|
|
|
1,209,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
(681,000
|
) |
(42,430
|
) |
(723,430
|
) |
|
|
(781,999
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
|
3
|
|
3
|
|
|
|
3
|
|
Loss
on disposal of asset
|
|
|
|
(2,756
|
) |
(2,756
|
) |
|
|
(2,756
|
) |
Total
other income (expense)
|
|
-
|
|
(2,753
|
) |
(2,753
|
) |
|
|
(2,753
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before provision for income taxes
|
|
(681,000
|
) |
(45,183
|
) |
(726,183
|
) |
|
|
(784,752
|
) |
Provision
for income taxes
|
|
|
|
10,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
(681,000)
|
|
(55,468
|
) |
(726,183
|
) |
58,569
|
|
(784,752
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Record reverse merger expense.
|
|
|
|
|
|
|
|
|
|
|
|
Innofone.com,
Incorporated
Notes
to
the Unaudited Proforma Financial Statements
June
30,
2005
On
August
8, 2005, Innofone.com, Incorporated (“Innofone,” the “Company”) entered into a
stock purchase agreement with Mr. Alex Lightman, President and Chief Executive
Officer of IPv6 Summit, inc., to purchase 100% of the issued and outstanding
shares of IPv6 Summit Inc. (“IPv6 Summit”), an entity engaged in developing new
technology referred to as Internet Protocol version 6. At the time of the
Agreement, Mr. Lightman was the President, Treasurer, Director and sole
shareholder of IPv6 Summit and was not an officer or director of Innofone.
Pursuant to the agreement, on October 12, 2005 the Company issued to Mr.
Lightman a promissory note in the principal amount of $1,000,000 with interest
at the rate of four percent (4%) per annum. Further, the Company issued
to Mr.
Lightman approximately 33,333,000 shares of the Company’s restricted common
stock. As a result of the stock purchase agreement, IPv6 Summit became
a wholly
owned subsidiary of the Company. Prior to this acquisition, the Company
had no
operations, assets or liabilities.
The
adjustments to the historical financial statements reflect the effect of
the
recording of the reverse merger of the Company and the previously privately-held
IPv6 Summit, Inc. The reported results of operations and financial condition
are
those of IPv6 Summit, Inc. since the Company has no operations or capital
transactions other than the above-described acquisitions which this transaction
has been accounted for as reverse acquisition. The adjustments eliminate
the
results of operations of the Company for the periods before the reverse
acquisition of the Company by IPv6 Summit, Inc., combine the balance sheets
of
both entities and reflect the stockholders' equity/deficit as if the transaction
had occurred at the date of the pro forma statements. Furthermore, the
$1,000,000 promissory note issued to Mr. Lightman has been accounted for
as a
distribution by IPv6 Summit, Inc. to its shareholder.
AND
RESULTS OF OPERATIONS
Forward-Looking
Statements
The
information set forth in Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934,
as
amended, and the Private Securities Litigation Reform Act of 1995, including,
among others (i) expected changes in the Company's revenues and profitability,
(ii) prospective business opportunities and (iii) the Company's strategy for
financing its business. Forward-looking statements are statements other than
historical information or statements of current condition. Some forward-looking
statements may be identified by use of terms such as "believes", "anticipates",
"intends" or "expects". These forward-looking statements relate to the plans,
objectives and expectations of the Company for future operations. Although
the
Company believes that its expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, in light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this report should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved.
Overview
You
should read the following discussion and analysis in conjunction with the
Financial Statements in this prospectus and Notes hereto, and the other
financial data appearing elsewhere in this prospectus.
The
Company's revenues and results of operations could differ materially from those
projected in the forward-looking statements as a result of numerous factors,
including, but not limited to, the following: the risk of significant natural
disaster, the inability of the Company to insure against certain risks,
inflationary and deflationary conditions and cycles, currency exchange rates,
changing government regulations domestically and internationally affecting
the
New Internet, including various taxing authorities, VAT, OSHA, and general
market conditions, competition and pricing, changes in external competitive
market factors, termination of certain agreements, protocol, or inability to
enter into strategic agreements, inability to satisfy anticipated working
capital or other cash shortage requirements, changes in or developments under
domestic or foreign laws, regulations, governmental requirements or in the
IT
industry, changes in the Company's business strategy or an inability to execute
its strategy due to unanticipated changes in the market. In light of these
risks
and uncertainties, there can be no assurance that actual results, performance
or
achievements of the Company will not differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
On
October 18, 2005, we completed the relocation of our corporate headquarters
to
1431 Ocean Avenue, Suite 1100, Santa Monica, California 90401 from 3470
Olney-Laytonsville, Road, Suite 118, Olney, Maryland 20832.
The
Company is currently reviewing and implementing new disclosure controls and
procedures to ensure that they fully comply with the new Securities Exchange
Act
Rules 13a-15 and 15d-15.
The
Company currently operates one wholly owned subsidiary, IPv6 Summit, Inc.,
based
in Santa Monica, California and anticipates seeking certain other strategic
acquisitions. The Company also anticipates organizing an additional subsidiary
to be located in Virginia, which will conduct trainings, workshops, and provide
consulting services.
Results
of Operations
The
following results of operations are that of IPv6 Summit, Inc. for the years
ended June 30, 2005 and 2004.
Revenues
and Cost of Revenues
The
Company derives revenues primarily from attendance fees of seminars held
and
corporate sponsorships related to such seminars. Cost of revenues primarily
relate to seminar room rentals, food accommodations and
advertising.
During
fiscal year 2005, the Company held __ seminars compared to __ seminars in
the
prior year. The Company’s revenues totaling $546,000 for the year ended June 30,
2005, decreased by $7,000 compared to the prior year. The decrease related
to
???? Cost of revenues totaling $118,000 for the year ended June 30, 2005
decreased by $48,000 compared to the prior year. The decrease in cost of
revenue
primarily relates to better pricing on seminar room rentals compared to the
prior year. Overall, gross profit of $427,000 for the year ended June 30,
2005
increased by $39,000 as result decreased cost of revenue compared to the
prior
year. The Company believes it will hold approximately __ seminars in the
next 12
months.
Selling,
General and Administrative Expenses
Selling,
general and administrative expenses totaled $467,000 for the year ended June
30,
2005, an increase of $156,000 compared to the prior year. The increase primarily
related to ?????
Net
Loss
Net
loss
totaling $45,000 for the year ended June 30, 2005, increased by $110,000
compared to the prior year as result of the factors previously mentioned
above.
Liquidity
and Capital Resources
The
Company’s primary needs for liquidity and capital resources are the funding of
salaries and other administrative expenses related to the management of the
Company.
We
entered into a Securities Purchase Agreement (the “Agreement”) with four
accredited investors on August 31, 2005 for the sale of (i) $4,500,000 in
callable secured convertible notes (the “Notes”) and (ii) warrants to buy
1,000,000 shares of our Common Stock (the “Warrants”). Pursuant to the
Agreement, the investors are obligated to provide us with an aggregate of
$4,500,000 in traunches as follows: (a) $1,500,000 was disbursed on September
1,
2005; (b) $1,500,000 will be disbursed upon the filing of a registration
statement covering the shares of common stock underlying the Notes and Warrants;
and (c) $1,500,000 will be disbursed upon the effectiveness of the registration
statement.
The
cash
received pursuant to the Agreement to date is sufficient to sustain our
operations for 12 months.
In
the
event that the Company receives the full amount under the Agreement, such funds
will sustain our operations for 24 months. The Company may be required to seek
additional financing regardless of the amount of funds received pursuant to
the
Agreement.
On
October 17, 2005 we amended and restated our promissory note issued to Mr.
Alex
Lightman, our Chief Executive Officer and President, on October 12, 2005, in
connection with our Stock Purchase Agreement dated August 8, 2005. The principal
face amount of the note is $1,000,000 and bears interest at the rate of four
percent (4%) per annum. The note was amended and restated to provide for a
repayment schedule that is to coincide with the timing that the Company receives
the Traunches. Specifically, we will make monthly installment payments equal
to
$83,333.33 for each successive month starting on the date of execution of the
note and ending January 17, 2006. Upon the filing of this registration statement
and receipt of the second Traunche, we will make monthly installment payments
of
$83,333.33 for the four (4) successive months thereafter. Further, upon the
effectiveness of this registration statement and receipt of the third Traunche,
we will make monthly installment payments of $83,333.33 for the four (4)
successive months thereafter.
Critical
Accounting Policies and Estimates
The
preparation of our financial statements requires our management to make
estimates and assumptions that affect the reported amounts on our financial
statements. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable
under
the circumstances. Actual results may differ from these estimates under
different assumptions or conditions.
The
Notes
to the financial statements included in this filing contain a discussion
of our
significant accounting policies and recent accounting pronouncements applicable
to us.
Recent
Accounting Pronouncements
In
April
2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities.” The Statement amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts entered into or modified after June 30, 2003. The
guidance should be applied prospectively. The provisions of this Statement
that
relate to SFAS 133 Implementation Issues that have been effective for fiscal
quarters that began prior to June 15, 2003, should continue to be applied in
accordance with respective effective dates. In addition, certain provisions
relating to forward purchases or sales of when-issued securities or other
securities that do not yet exist, should be applied to existing contracts as
well as new contracts entered into after June 30, 2003. The adoption of SFAS
No.
149 is not expected to have an impact on the Company's financial statements.
In
May
2003, the FASB issued Statement of Accounting Standards No. 150 "Accounting
for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity" (SFAS No. 150). SFAS No. 150 establishes standards for classification
and measurement in the statement of financial position of certain financial
instruments with characteristics of both liabilities and equity. It requires
classification of a financial instrument that is within its scope as a liability
(or an asset in some circumstances). SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June
15,
2003. We have not yet determined the impact, if any, of the adoption of SFAS
on
its financial position or results of operations.
In
May
2003, the consensus on EITF Issue No. 01-08, "Determining Whether an Arrangement
Contains a Lease," was issued. The guidance in the consensus applies to the
purchase or sale of goods and services under various types of contracts,
including outsourcing arrangements. Based on the criteria in the consensus,
both
parties to an arrangement are required to determine whether the arrangement
includes a lease within the scope of SFAS No. 13, "Accounting for Leases.” The
new requirement applies prospectively to new or modified arrangements for
reporting periods beginning after May 28, 2003. Accordingly, as of August 1,
2003, the Company accounted for new or modified arrangements based on this
guidance. Adoption of this standard did not have an impact on our financial
statements.
On
December 18, 2003 the SEC issued Staff Accounting Bulletin No. 104, Revenue
Recognition ("SAB 104"), which supersedes SAB 101, Revenue Recognition in
Financial Statements. SAB 104's primary purpose is to rescind accounting
guidance contained in SAB 101 related to multiple element revenue arrangements,
which was superseded as a result of the issuance of EITF 00-21, Accounting
for
Revenue Arrangements with Multiple Deliverables. The adoption of SAB 104 did
not
have a material impact on our financial position or results of operations.
In
December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment,
which is an amendment to SFAS No. 123, Accounting for Stock-Based Compensation
and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees.
This new standard eliminates the ability to account for share-based compensation
transactions using Accounting Principles Board (APB) No. 25, Accounting for
Stock Issued to Employees (APB 25) and requires such transactions to be
accounted for using a fair-valued-based method, with the resulting cost
recognized in the Company's financial statements. This new standard is effective
for annual periods beginning after June 15, 2005. The Company has not awarded
or
granted any share-based compensation to date and, therefore, the adoption of
this standard is not expected to have any effect on the Company's financial
position or results of operations until such time as share-based compensation
is
granted.
In
December 2004, the FASB issued SFAS No. 153, Exchange of Non-monetary Assets.
SFAS No. 153 amends APB Opinion No. 29, Accounting for Non-monetary
Transactions, to eliminate the exception for non-monetary exchanges of similar
productive assets. The Company will be required to apply this statement to
non-monetary exchanges after December 31, 2005. The adoption of this standard
is
not expected to have a material effect on the Company's financial position
or
results of operations.
History
On
August
8, 2005, Innofone.com, Incorporated (“Innofone,” the “Company,”“we,”“us” and
“our”) entered into a stock purchase agreement with Mr. Alex Lightman, our
President and Chief Executive Officer, to purchase the total issued and
outstanding shares of IPv6 Summit Inc. (“IPv6 Summit”), an entity engaged in
developing new technology referred to as Internet Protocol version 6. At the
time of the Agreement, Mr. Lightman was the President, Treasurer, Director
and
sole shareholder of IPv6 Summit and was not an officer or director of Innofone.
Pursuant to the agreement, on October 12, 2005 we issued to Mr. Lightman a
promissory note in the principal amount of $1,000,000 with interest at the
rate
of four percent (4%) per annum and issued to him approximately 33,333,000 shares
of our restricted common stock in exchange for 100% of the issued and
outstanding shares of IPv6 Summit. On October 17, 2005, we amended and restated
the note to provide for the repayment to coincide with the Company’s receipt of
the Traunches as indicated herein. As a result of the stock purchase agreement,
IPv6 Summit became a wholly owned subsidiary of the Company. Prior to this
acquisition, we operated as a holding company for companies involved in
technology and financial services.
Overview
The
Internet as we know it today is based on Internet Protocol version 4, more
commonly referred to as IPv4, a 32-year-old protocol. The IPv4 Internet is
beginning to receive a major upgrade, with a new format for packets of data
called Internet Protocol version 6, or IPv6. We believe that IPv6, sometimes
called the New Internet, presents many new business opportunities, in roughly
the same manner that the existing Internet did when it first hit the mainstream
in the mid-1990s. The first major customers for the New Internet in the US
were
the Department of Defense, which in June 2003 mandated a transition within
the
department that would make it “IPv6-capable” by 2008, and the Office of
Management and Budget, on behalf of the Federal Government, which recently
also
mandated transition to IPv6, and the hundreds of large companies that supply
these two entities. Many, but not all, major technology companies have appointed
IPv6 points of contact and developed IPv6-related marketing messages, including
Microsoft, Cisco, Juniper, Nokia, Hewlett-Packard and about fifty others in
the
US.
In
2005,
as in 1995, we believe that the new Internet market will be seized by first
movers that both take advantage of the opportunities offered by the new
technology and have a sound business plan to offer needed products and services
to the American and global markets. It is forecast that the New Internet will
see some of the same rapid rise as the existing Internet did between 1995 and
2000, quickly growing from millions to billions, and potentially trillions
of
dollars in global revenues impacted by the Internet. The Japanese government,
for instance, which has done a great deal of research into the upcoming IPv6
market, estimates the market size of IPv6-ready goods/services in the year
2010
to be 170 trillion yen, or about $1.55 trillion in US currency
The
advantages of IPv6 over the existing protocol are significant and can be
summarized as “security, mobility, and ad hoc networking.” These advantages are
described in many articles and in over 244 presentations posted at http://www.usipv6.com,
one of
our company websites. In summary, some of the major new features
are:
|
g)
|
A
vast increase of trillions of Internet addresses, resulting in what
will
seem to be almost unlimited Internet Protocol (IP) address availability,
which will enable each customer to have many such addresses, inexpensively
- for cell phones, game consoles, home appliances, consumer electronics
and automobiles (getting such addresses with today’s Internet is
difficult, and costly in most parts of the
world);
|
|
h)
|
More
secure wired and wireless communications (this is one reason the
military
has mandated this protocol, to send top secret information) in part
because greater identity is possible with more
addresses;
|
|
i)
|
Mobile
wireless online access (this is more difficult to do with
IPv4);
|
|
j)
|
Television
and voice over the Internet, or VoIP (very difficult and expensive
to do
well with IPv4 without multicast);
|
|
k)
|
The
online connection of many wireless devices, such as security cameras.
Some
forecasts estimate over one trillion Internet connected devices by
2015,
an impossibility with only an IPv4 platform;
and
|
|
l)
|
Online
connection of smart tags such as Radio Frequency Identification (RFID),
which could enable tracking inventory and products as an essential
part of
any Enterprise Resource Program
(ERP).
|
Simply
put, one of the limitations of today’s Internet is a shortage of addresses, so
that the hardware or software equivalents of “middle men” are put into the
system to let many people use one address, not unlike the old telephone party
lines, where many people had the same “number,” and everyone could listen in.
The party line system had the advantage that a lot of people could be connected
with few switched lines, but led to problems, such as lack of security. There
was no way to assure that one person would be speaking with only one person
at
the other end. When every phone user got his/her own address, it led to many
great new capabilities - such as privacy, the ability to deliver new services
such as telefax messages to a particular person, and the ability to go mobile
with cell phones, and caller ID, which enabled people to screen their calls,
accepting only those they wanted to at that moment.
Similarly,
the New Internet will give everyone his or her personal address (or thousands
of
them, as needed), which enables the potential for “end-to-end” connectivity.
Each individual can know for certain who the specific receiver at the other
end
is, and this allows the system to check for service quality, and allows much
easier mobile use and roaming, as well as multiple layers of individual security
measures rather than today’s “Maginot Line” style firewalls or Network Address
Translation, which offer little protection once a hacker has broken through
the
protective wall. The difference between the New Internet and the existing one
is
thought by some to be as dramatic as the difference between the phones with
individual numbers that we have today and the phones with party lines of
yesteryear.
The
Company offers three related services that are relevant to the New Internet:
consulting, training and conference management. The Company believes that it
has
deep expertise in these three areas. The Company hopes to expand these services
at a strategic time, when they are badly needed, and before entrenched
competition arises, as the Company believes it inevitably will.
The
Company will offer and manage these services from two corporate offices: our
corporate headquarters in Santa Monica, California, and our Eastern Office
in
Northern Virginia, which we intend to set up in the fourth quarter of
2005.
Consulting
Division
Our
consulting division, directed by our VP of Consulting Services, serves major
clients that need help with IPv6, especially executives of government agencies
that suddenly must come up with plans on how to switch to the New Internet,
and
have to come up with detailed budgets and plans for doing so. The Company will
also serve the executive management of the aerospace and IT companies that
do
business with the government.
Consulting
contracts will be either directly with the end client (usually the case with
public corporations) or, in the case of certain government offices, as a
subcontractor to a company that has an existing “open ordering agreement” with
such an office, often called a Systems Engineering and Technology Assistance
(SETA) contract. Companies with broad SETA contracts for many branches of
government include SAIC, Northrop Grumman, SI International, Titan/L-3 and
Lockheed Martin. Working within an ongoing SETA contract with the government
has
the benefit that contracts can be entered into without the time consuming task
of issuing solicitations for required work (by the clients) and generating
proposals (by the Company). The Company and its officers are very familiar
with
this process, and the Company has consulted to clients both directly and as
a
subcontractor to other companies. The Company will attempt to obtain its own
open ordering agreement contracts, both via SETAs and by getting onto the
Government Services Administration (GSA) schedule; the Company anticipates
that
both of these will take 1-2 years to complete.
An
important part of the consulting process will be identifying potential clients
that need training, and recommending them to the Company’s Training Division.
Likewise, the consultants will promote the Company’s conferences and other
services, as will all of its employees.
In
addition to conducting presentations and briefings, both on-site at customer
facilities and off-site at hotels and other facilities the Company may rent
space in, the consultants will also recommend various products, such as
Panasonic IPv6-enabled video cameras for security, that may be available for
sale on the Company’s website. At present and subject to change, our plan is
that the Company’s role will be purely that of a pass-through; it will not
conduct the sale, shipping or customer support of these products. Although
it
will receive a commission on sales, the Company’s main interest for the products
available on its website will be the convenience of the customer. There will
usually be several brands of an IPv6 product available on the website, so that
the Company does not show favoritism to one supplier (and perhaps lose
competitors as sponsors for its conferences).
The
consultants will price their services by job or by time. They will deliver
white
papers (technical background documents) and reports, as well as videos and
multimedia presentations. In addition to face-to-face contact with customers,
the consultants will also generate video presentations of certain basic
technical materials, and will make these available to remote customer sites.
All
consultant work by the Company for the foreseeable future will be unclassified.
The Company will investigate applying for clearances if necessary for government
work, and whether the additional costs of secured offices, locking safes, etc.
can be justified.
Corporate
Headquarters in Southern California (Santa Monica, CA)
Although
the Company maintained an office in Maryland, we moved our headquarters to
Southern California on or about October 18, 2005. Our California headquarters
is
responsible for the overall management of the Company as well as marketing
communications and support materials. It is anticipated that the Company will
hire a Vice President of Business Development who will manage our Santa Monica
office in the future. Further, the Vice President of Consulting, and when hired,
the Vice President of Business Development will identify and secure consulting
opportunities within the different customer communities, by phone calls and
other communications, attending conferences, and advertisements. This office
will also house consultants for the Southern California customer area, including
military bases and major aerospace firms such as Northrop Grumman.
Eastern
Seaboard Offices (Northern Virginia)
The
Vice
President of Consulting is establishing our Washington, DC area offices. He
will
recruit and support appropriate expert consultants for the regional customer
community, and support them with promotional and other materials. The Eastern
Office is located nearby Washington, D.C., an area that has a heavy
concentration of targeted customers, both government offices and companies
that
supply Information Technology (IT) products and services to those
offices.
This
office will support the consultant staff for the Eastern United States, and
will
be used for meetings with customers. The office suite will have a conference
room capable of holding 20-30 people, with a projector and large screen, and
high speed IPv4 and IPv6 Internet connectivity, so that IPv6 capabilities such
as Television delivered over the Internet (IPTV) and IPv6-enabled video security
cameras can be demonstrated.
Training
Division
The
Company will perform two types of training services - one in the form of
executive training (including introductions to the technology and outlines
of
new business opportunities) and the other in the form of business management
training (including project management, and conformance of proposals with IPv6
contractual requirements) and technologist, system administration and engineer
training (with certificates similar to those awarded for Cisco or Microsoft
system mastery).
The
Company estimates that the Eastern Office will eventually support a manager
and
up to ten training personnel, and the headquarters offices in Santa Monica
will
have a manager and up to eight trainers, a combination of employees and
independent contractors. The Santa Monica Headquarters will coordinate the
generation of courseware and other training materials, especially during the
beginning of Year 1 (when basic courseware for classes has to be generated)
and
at the beginning of Year 3 (when online courseware will be generated in order
to
leverage trainers for a wider audience).
Most
training courses will be of a one-week duration, but there will also be two-day
Boot Camps (typically on weekends), and one-day and part-day trainings for
management and executives.
Conference
Management Division
Conference
Management will be conducted mainly from the Santa Monica office, with the
assistance of consultants that are local to conference locations, such as Press
Relations managers for areas such as Washington, D.C. or Bonn, Germany. In
addition to expanding the two events in Reston, VA (by adding more materials
oriented towards upcoming military programs and toward the consumer electronics
market), the Company plans to add a yearly event in California, which should
attract the many aerospace and IT companies on the West Coast, as well as the
military bases in the area.
Additional
specialized conferences planned for the US will address the market areas of
NCO
(Network Centric Operations), RFIDs, Transition to IPv6, Contracts issues,
and
Consumer Electronics; they will be held in different cities, including New
York,
Chicago, San Jose, Las Vegas, and Washington, D.C.
The
Company will likely add two overseas events, one for Asia (to be held in Japan,
Korea, or Singapore), and one for Europe, to be held in Germany (either Bonn
or
Berlin are central to NATO, and are only driving distance away for the European
branches of US military units such as USAREUR, EUCOM, USAFE, for HQ German
Armed
Forces in Bonn, and for major US corporations such as IBM, Hewlett Packard,
CSC,
etc., many of which are in the Frankfurt or Bonn-Cologne area. It may prove
wise
to hold conferences in the United Kingdom as well, but this is not as central
a
location for many of the known clients at this time.
Our
Corporate Strategy
The
strategy of the Company has five thrust areas:
Conduct
and publicize the major IPv6 conference.
The
goodwill that is being built up at these conferences is key to achieving
corporate goals. The government and corporate executives who are featured as
speakers build up goodwill because they have been invited to speak. We believe
the conferences help the audience see the Company as an authority figure and
one
of the positive, constructive, community building leaders in the IPv6 area.
The
Company gains deep knowledge of the status of organizations regarding IPv6,
and
who needs help (such as consulting and training), as well as what best practices
for IPv6 adoption are being developed and working in the field. The past
conferences have also incorporated training sessions, where the Company obtained
experience in what training was necessary and desired by the community. Finally,
the list of attendees at the conferences represent a unique database for the
Company of both executives and working-level technologists, as well as marketing
and other staffers.
Support
completion of the IPv6 standard.
The
Company has a relationship to the IPv6 Association; a neutral body that could
help formulate and provide input to the issues of what “IPv6-capable” means and
how it will be implemented, with respect to the IETF and other standards bodies.
The precise formulation of standards for IPv6 implementation in specific
applications (such as use in cellphones, wireless video cameras, home appliances
or video transmission) by an internationally accepted expert group that is
not
prone to favor a particular manufacturer is important to the Company in several
ways. First, such standards must exist and be unambiguous so that the Company’s
consultants are able to clearly define to clients what specific standards they
have to get their company to meet. Second, the Training arm of the Company
must
have such standards to relate to in order to train its clients to levels that
are universally understood and accepted, and in order to issue Certificates
of
Completion after students have achieved a defined level of
expertise.
Be
a
first mover.
The
Company is starting out early in its quest to become the premier
consulting/training/conference entity in the IPv6 space, in order to hit the
“golden hour” in 2-3 years when the Company believes IPv6 demand and
applications will start to really take off in the US (in part because the
government will be transitioning to IPv6 during this time on a massive basis).
The Company is seeking to establish a dominate foothold now because the IPv6
space is not, as of yet, overly populated with competitors. The Company believes
this prime time period where the market share is ripe for the taking will be
long gone by the 2010 time period.
Build
a solid base, and look for targets of opportunity.
The
Company will build a business base of steady growth in a strategic and
profitable area, and will then acquire a target of opportunity that offers
fast
leveraged growth in a related area. Part of this effort will be the support
of
the IPv6 industry by promotion (such as Conferences) and by garnering political
support (such as Congressional Hearings). In this way, the Company believes
that
it will not just help the growth of IPv6, but will have its “hand on the pulse”
of the Industry, to know what related services will soon be sought very
actively.
Seek
Growth through Acquisition.
The
Company is currently in discussions with parties to make strategic acquisitions
to augment its business. Current acquisition criteria include, among other
things: revenue (preferably over $1 million), earnings, and technology and/or
content related to the Internet that could potentially be enhanced by adding
IPv6 capabilities. The Company intends to expand beyond being just a conference
and consulting business by seeking to acquire strong companies with similar
corporate cultures that each can either benefit directly from the implementation
of IPv6, having an existing subscriber base capable of leveraging IPv6, and/or
enable a broader usage of IPv6. The Company has not entered into any agreements
or binding letters of intent for any such acquisition.
Competition
The
Company has three major business divisions, all of them related to IPv6
technology: Consulting (this includes consulting to corporate executives, as
well as offering IPv6-related equipment from 3rd
parties
on the Company website), training and conference management. The only other
company in the US that specializes in IPv6 consulting at present is Native6,
Inc. of Seattle, which is essentially a small two-man company that we believe
is
not financially structured for the sort of growth that the Company anticipates
(see: http://www.native6.com).
The
Company believes that is chief competitors in IPv6 training are Sunset Learning
(which does not specialize in IPv6; its main business is Cisco-related training
- see: http://www.sunsetlearning.com)
and
Native6, Inc. The competitors for IPv6 conferences are: IGI (Information
Gatekeepers, Inc. - see: http://www.igigroup.com),
which
has recently started to put on small IPv6 technical conferences in the US;
the
IPv6 Forum, a loosely organized group based in Luxembourg which supports small
technical conferences put on worldwide, usually by affiliated local groups
(for
instance, its California conference is organized by IGI, mentioned above);
and,
Consul Intel, a small company that conducts a yearly IPv6 conference in Spain
(see: http://www.consulintel.es
).
Intellectual
Property
The
Company has pending trademark and servicemark applications with the United
States Patent and Trademark Office (“USPTO”) for the marks “IPv6 Summit”, “New
Internet” and “North American IPv6 Summit.” The USPTO had issued an office
action as of September 27, 2005 indicating certain requests for clarification
and deficiencies and need for amendment of the subject marks. Although the
Company is confident that such servicemarks will be awarded as filed, there
is
no certainty that the USPTO will award any of the trademarks as applied for
or
as may be requested in the future.
Employees
As
of the
date of this prospectus, we have 6 employees. Of these employees, 3 serve in
management positions as full time employees.
None
of
our employees are covered by a collective bargaining agreement. We have never
experienced a work stoppage and we believe that we have satisfactory working
relations with our employees.
The
Company does not own any real estate. The company currently rents approximately
2,000 square feet of space at 1431
Ocean Avenue, Suite 1100, Santa Monica, California 90401. The lease is currently
on a month-to-month basis and the Company is paying approximately $2,468 for
four offices.
We
believe that the premises leased are adequate for our current and near term
requirements.
We
are
not currently involved in any real or threatened legal proceedings.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There
were no matters submitted for stockholders' vote during the fourth quarter
of
the fiscal year 2005.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
16(A)
OF THE EXCHANGE ACT.
The
following table sets forth the name, age and position of each of the members
of
our board of directors, executive officers and promoters as of August 8,
2005:
Name
|
Age
|
Position
|
Alex
Lightman
|
43
|
Chief
Executive Officer, President, Director
|
Peter
Maddocks
|
49
|
Chief
Financial Officer and Director
|
Frederick
Dale Geesey
|
36
|
Vice
President of Consulting
|
Paul
Shephard
|
50
|
Secretary
|
The
principal occupations and brief summary of the background of each executive
officer and director of the Company is as follows:
Mr.
Alex
Lightman has been our President, CEO and a director since
August 2005. From June 2003 to July 2005 he was the founding CEO and Chairman
of
IPv6 Summit, Inc., the leading organizer of international IPv6 events and
consultants to government and industry on IPv6 applications, training, and
promotion. From May 1999 to Present Mr. Lightman has been the CEO of Charmed
Technology, (www.charmed.com)
He is
the founding director of The 4G Society and the first Cal- (IT)2 Scholar at
the
California Institute for Telecommunications and Information Technology, a joint
program of UCSD and UCI (www.calit2.net).
Mr.
Lightman has nearly 20 years of high technology management experience and,
in
addition, has experience in politics (including work for a US Senator),
consulting, the oil drilling industry, and the renewable energy industry. He
also produced the 100 Brave New Unwired World fashion shows, featuring wearable
and pervasive computing, which included many of Lightman’s own inventions and
designs, such as the patented Charmed Viewer display and the first Internet
jewelry. Harvard Business School featured Lightman and Charmed in a case study
that recognized Lightman’s pioneering innovation of presenting computers as
fashion. Both the show and Lightman’s designs are now copied worldwide. Mr.
Lightman is the author of Brave
New Unwired World
(Wiley,
2002) and a 1983 graduate of the Massachusetts Institute of Technology. He
has
attended graduate school at the Kennedy School of Government (Harvard
University) and the University of Phoenix.
Mr.
Peter
Maddocks has been a Director and Chief Financial Officer since August 2005.
From
October 2001 to January 2004, Mr. Maddocks was a Management Consultant of Abbey
National Bank Italy. From May 1999 to September 2001, Mr. Maddocks was a
Management Consultant of Standard Chartered Grindlays Private Banking Group.
Mr.
Maddocks was a Vice President for leading financial services companies with
20+
years experience in finance, planning and control roles in the Retail, Corporate
and Private Banking industry segments (Citi, ANZ, Abbey). Mr. Maddocks has
significantly participated in the establishment and growth of new and re
engineered global businesses and functions with various banking groups.
Responsibilities have included heading the Global Financial Control function
for
a major new business launch, Regional Financial Controller SE Europe, design
and
implementation of financial and non-financial management control systems, budget
management and development of policies and procedures. Mr. Maddocks has
maintained constant interaction with Senior Executives via participation in
various committees and matrix reporting structures. Maddocks has operated both
in senior management roles and as an external consultant. He is a Chartered
Accountant and speaks fluent Italian. He is a resident of Kent,
England.
Mr.
Frederick Dale Geesey has been the Vice President of Consulting since September
2005. From 2004 to August 2005, Mr. Geesey was the Director of Army IPv6
Programs of SI International, Inc. Dale
has
worked closely with the Department of Defense (“DoD”) in
their
IPv6 transition activities and recently supported the development of the DoD’s
IPv6 Transition Plan and response to congressional inquiries regarding the
DoD’s
transition to IPv6. He directly supported the DoD IPv6 Transition Office and
the
Army’s IPv6 transition team in the development of their overall IPv6 transition
strategy, program planning and technical solutions. Mr. Geesey has been a
participant of several DoD IPv6 technical working groups in the areas of network
infrastructure, Information Assurance and Testing. From
2003
to 2004, Mr. Geesey was the Director of Government Markets of Intrado,
Inc. From
2002
to 2003, Mr. Geesey was the President and COO of Auspex Technologies, LLC.
From
2000 to 2002, Mr. Geesey was the Senior Director, Product
Management/Engineering, of Cambrian Communications, LLC. Mr. Geesey holds a
Bachelor’s degree in Electrical Engineering from Old Dominion University, a
Master’s degree in Electrical Engineering from George Mason University and a
Masters of Business Administration from California Coast
University.
Mr.
Paul
Shepherd has been our Secretary since August 2005. From June 2000 to
August, 2005 Mr. Shepherd has been a successful private marketing consultant
for
numerous private companies and individuals. Mr. Shepherd holds
an
Associate in Arts in Business Administration at Santa Monica
College.
The
following table sets forth the aggregate cash compensation paid by the Company
to: (i) its Chief Executive Officer, Chairman and Chief Financial Officer;
and
(ii) its most highly compensated officers whose cash compensation exceeded
$100,000 for services performed from August 8, 2005, the date we completed
our
acquisition of IPv6 Summit, through October 18, 2005.
Name
and Principal Position
|
|
Year
|
|
Salary($)
|
|
Bonus($)
|
|
Other
Annual
Compensation
($)
|
|
Restricted
Stock
Award(s)
($)
|
|
Securities
Underlying
Options
SARs(#)
|
|
LTIP
Payouts($)
|
|
All
Other
Compensation
($)
|
|
Alex
Lightman (1)
|
|
|
2005
|
|
$
|
45,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
Maddocks (2)
|
|
|
2005
|
|
|
--
|
|
|
--
|
|
$
|
25,000(2
|
)
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Dale
Geesey (3)
|
|
|
2005
|
|
$
|
7,705
|
|
|
|
|
|
--
|
|
|
--
|
|
|
200,000(3
|
)
|
|
--
|
|
|
--
|
|
Paul
Shephard
|
|
|
2005
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________
*The
Company hired its executive officers on or about August 8, 2005 as a result
of
the Stock Purchase Agreement. Accordingly, none of the executive officers have
earned full year annual compensation or long tem compensation. This table
reflects annual compensation paid to the executive officers from August 8,
2005
to date.
|
(1)
|
Mr.
Lightman is expected to earn an annual salary of approximately $400,000
during the next fiscal year.
|
|
(2)
|
Mr.
Maddocks has been paid a one-time advance payment of $25,000 for
his board
representation for the next fiscal year.
|
|
(3)
|
Mr.
Geesey is expected to earn an annual salary of $150,000 during the
next
fiscal year. Pursuant to Mr. Geesey’s employment agreement, he is eligible
to receive options to purchase 200,000 shares of the Company’s restricted
common stock commencing on the effective date that the Company initiates
any Stock Option Plan.
|
COMPENSATION
PLANS
We
do not
have any option, annuity, retirement, pension or deferred compensation plan
or
other arrangements under which an executive officer is entitled to participate
without similar participation by other employees.
DIRECTOR
COMPENSATION
We
do not
have any agreement to compensate our directors at this time, however we have
paid a one-time advance payment of $25,000 to Mr. Maddocks for his board
representation for the next fiscal year.
EMPLOYMENT
AGREEMENTS
On
September 22, 2005, the Company entered into an employment agreement with
Frederick Dale Geesey, our Vice President of Consulting. The term of the
agreement is for one year and provides for an annual base salary of $150,000
with certain performance based target bonuses. The agreement also provides
for
the issuance of options to purchase 200,000 shares of restricted common stock.
The options vest over a period of three years.
On
September 6, 2005, the Company entered into an employment agreement with Gerard
Casale, Esq., our Corporate Counsel. The agreement provides for an initial
part
time term during which Mr. Casale shall be our Corporate General Counsel with
an
annual salary of $142,500 and shall be issued 50,000 shares of restricted common
stock. Subject to Mr. Casale’s agreement, on or about December 1, 2005, Mr.
Casale may be become our Vice President of Business and Legal Affairs with
an
annual salary of $285,000 and shall be issued 100,000 shares of our restricted
common stock.
On
October 11, 2005, the Company entered into an employment agreement with Leah
Thompson, our Manager of Administrative Operations. The agreement provides
for a
one-year term with an annual base salary of $80,000 with certain
performance-based target bonuses. The agreement also provides for the issuance
of options to purchase 100,000 shares of restricted common stock. The options
vest over a period of two years.
The
Company currently has an understanding in principle with Alex Lightman our
Chief
Executive Officer and President, providing for terms of his employment.
Specifically, the Company and Mr. Lightman have agreed to a five-year employment
agreement with an annual salary of $400,000. The Company anticipates entering
a
formal written agreement with Mr. Lightman in the fourth quarter of
2005.
The
following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock by each person or group that is known
by
the Company to be the beneficial owner of more than five percent of its
outstanding Common Stock, each director of the Company, each person named in
the
Summary Compensation Table, and all directors and executive officers of the
Company as a group as of October 7, 2005. Unless otherwise indicated, the
company believes that the persons named in the table below, based on information
furnished by such owners, have sole voting and investment power with respect
to
the Common Stock beneficially owned by them, where applicable. As of October
24,
2005, there were 61,388,270 shares of common stock issued and
outstanding.
Name/Address
of
Beneficial
Owner
|
Position
with
Company
|
Amount
and Nature
of
Beneficial
Ownership
of Class
A
common Stock (1)
|
Percentage
of
Securities
(1)
|
Alexander
Lightman(2)/*
|
President
|
6,333,000
|
10.32%
|
|
|
|
|
Peter
Maddocks*
|
CFO
|
0
|
0
|
|
|
|
|
Dale
Geesey*
|
VP
of Consulting
|
0
|
0
|
|
|
|
|
Paul
Shephard
|
Secretary
|
0
|
0
|
|
|
|
|
Alliance
Housing Partners(3)
|
|
|
|
c/o
17 W Jefferson St., Suite 1
|
|
|
|
Rockville,
MD 20850
|
--
|
3,750,000
|
6.11%
|
|
|
|
|
Equitocracy
Trust(2)
|
|
|
|
c/o
1431 Ocean Avenue, Suite 419
|
|
|
|
Santa
Monica, CA 90401
|
--
|
27,000,000
|
43.98%
|
|
|
|
|
Frederic
Richardson(3)
|
--
|
17,180,000
|
27.99%
|
|
|
|
|
All
executive officers and Directors as a group (4 persons)
|
|
|
54.3%
|
*
Address
of all holders is c/o Innofone.com, Incorporated, 1431 Ocean Avenue, Suite
1100,
Santa Monica, California 90401.
(1)
Pursuant to the rules of the Securities and Exchange Commission, a person is
deemed to "beneficially own" shares of common stock over which the person has
or
shares investment or voting power, or has the right to acquire such power within
60 days. The percentage of common stock owned is calculated based on the number
of shares of common stock outstanding, plus in the case of each person the
number of shares of common stock issuable only to such person upon the exercise
of options or warrants and the conversion of convertible debt
securities.
(2)
Mr.
Alex Lightman, our Chief Executive Officer and President, is the trustee of
the
Equitocracy Trust and is deemed to be the beneficial owner of the shares owned
by that entity.
(3)
Mr.
Frederic Richardson was the President and CEO of the Company prior to
consummation of our Stock Purchase Agreement entered into on August 8, 2005.
Mr.
Richardson does not hold any current positions with the Company. We have been
advised that on August 19, 2005, Mr. Richardson entered into two Stock Purchase
Agreements, each with Abbey International Holdings, Ltd. providing for the
sale
to Abbey of an aggregate of 20,500,000 shares of our common stock. Approximately
17,000,000 shares of common stock were to be sold by Mr. Richardson and the
remaining 3,500,000 shares of common stock were to be sold by Alliance Housing
Partners, an entity that Mr. Richardson controls. The sales were contingent
upon
certain conditions. To date, the transfers have not been reflected on the
Company’s books by its transfer agent.
On
August
8, 2005, we entered into a stock purchase agreement with Mr. Alex Lightman
to
purchase the total issued and outstanding shares of IPv6 Summit Inc., an entity
engaged in developing new technology referred to as Internet Protocol version
6.
Pursuant to the agreement, we agreed to pay Mr. Lightman $1,000,000 in the
form
of a promissory note and issue to him approximately 33,333,000 shares of our
restricted common stock in exchange for 100% of the issued and outstanding
shares of IPv6. As a result of the stock purchase agreement, IPv6 Summit Inc.
became a wholly owned subsidiary of the Company and Mr. Lightman became our
President and Chief Executive Officer. Prior to this acquisition, we operated
as
a holding company for companies involved in technology and financial
services.
On
August
31, 2005, Mr. Lightman pledged 3 million shares to support obligations under
the
Notes issued to various investors on August 31, 2005.
On
October 17, 2005 we amended and restated our promissory note issued to Mr.
Alex
Lightman, our Chief Executive Officer and President, on October 12, 2005, in
connection with our Stock Purchase Agreement dated August 8, 2005. The principal
face amount of the note is $1,000,000 and bears interest at the rate of four
percent (4%) per annum The note was amended and restated to provide for a
repayment schedule which is to coincide with the timing that the Company
receives the Traunches. Specifically, we will make monthly installment payments
equal to $83,333.33 for each successive month starting on the date of execution
of the note and ending January 17, 2006. Upon the filing of this registration
statement and receipt of the second Traunche, we will make monthly installment
payments of $83,333.33 for the four (4) successive months thereafter. Further,
upon the effectiveness of this registration statement and receipt of the third
Traunche, we will make monthly installment payments of $83,333.33 for the four
(4) successive months thereafter.
The
Company's authorized capital stock consists of 950,000,000 shares of common
stock, par value of $0.001 per share, of which 61,388,270
issued and outstanding as of October 18, 2005.
The
holders of shares of our common stock are entitled to elect all of the directors
and to one vote per share on all matters submitted to shareholder vote. Holders
of our common stock are entitled to receive ratably dividends, subject to the
rights of the holders of Preferred Stock (if any), as may be declared by our
Board of Directors out of funds legally available therefore.
All
of
the shares of our authorized capital stock, when issued for such consideration
as our board of directors may determine, shall be fully paid and non-assessable.
Our board of directors has the discretion and may, by adoption of a resolution,
designate one or more series of preferred stock and has the power to determine
the conversion and/or redemption rights, preferences and privileges of each
such
series of preferred stock provided that such conversion and/or redemption
rights, preferences and privileges of any series of preferred stock does not
subordinate or otherwise limit the conversion and/or redemption rights,
preferences and/or privileges of any previously issued series of preferred
stock.
The
Company’s transfer agent is Interwest Transfer Company, Inc.
Future
sales of a substantial number of shares of our common stock in the public market
could adversely affect market prices prevailing from time to time. Under the
terms of this offering, the shares of common stock offered may be resold without
restriction or further registration under the Securities Act of 1933, except
that any shares purchased by our "affiliates," as that term is defined under
the
Securities Act of 1933, may generally only be sold in compliance with Rule
144
under the Securities Act of 1933.
SALE
OF
RESTRICTED SHARES. Certain shares of our outstanding common stock were issued
and sold by us in private transactions in reliance upon exemptions from
registration under the Securities Act of 1933 and have not been registered
for
resale. There are 1,311,224 shares of our common stock that are not restricted
by Rule 144 because they are in the public float. Resales of the remainder
of
our issued and outstanding shares of common stock are restricted under Rule
144.
There are 60,077,046 shares of our common stock that are restricted, including
shares subject to outstanding warrants to purchase, or notes convertible into,
common stock (excluding any conversions of notes to date). Such shares may
be
sold only pursuant to an effective registration statement filed by us or an
applicable exemption, including the exemption contained in Rule 144 promulgated
under the Securities Act of 1933.
In
general, under Rule 144 as currently in effect, a shareholder, including one
of
our affiliates, may sell shares of common stock after at least one year has
elapsed since such shares were acquired from us or our affiliate. The number
of
shares of common stock which may be sold within any three-month period is
limited to the greater of: (i) one percent of our then outstanding common stock,
or (ii) the average weekly trading volume in our common stock during the four
calendar weeks preceding the date on which notice of such sale was filed under
Rule 144. Certain other requirements of Rule 144 concerning availability of
public information, manner of sale and notice of sale must also be satisfied.
In
addition, a shareholder who is not our affiliate, who has not been our affiliate
for 90 days prior to the sale, and who has beneficially owned shares acquired
from us or our affiliate for over two years may resell the shares of common
stock without compliance with many of the foregoing requirements under Rule
144.
We
agreed
to register for resale shares of common stock by the selling stockholders listed
below. The selling stockholders may from time to time offer and sell any or
all
of their shares that are registered under this prospectus. All expenses incurred
with respect to the registration of the common stock will be borne by us, but
we
will not be obligated to pay any underwriting fees, discounts, commissions
or
other expenses incurred by the selling stockholders in connection with the
sale
of such shares.
The
following table sets forth information with respect to the maximum number of
shares of common stock beneficially owned by the selling stockholders named
below and as adjusted to give effect to the sale of the shares offered hereby.
The shares beneficially owned have been determined in accordance with rules
promulgated by the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. The information in the table below
is current as of the date of this prospectus. All information contained in
the
table below is based upon information provided to us by the selling stockholders
and we have not independently verified this information. The selling
stockholders are not making any representation that any shares covered by the
prospectus will be offered for sale. The selling stockholders may from time
to
time offer and sell pursuant to this prospectus any or all of the common stock
being registered.
Except
as
indicated below, none of the selling stockholders has held any position or
office with us, nor are any of the selling stockholders associates or affiliates
of any of our officers or directors. Except as indicated below, no selling
stockholder is the beneficial owner of any additional shares of common stock
or
other equity securities issued by us or any securities convertible into, or
exercisable or exchangeable for, our equity securities. No selling stockholder
is a registered broker-dealer or an affiliate of a broker-dealer.
For
purposes of this table, beneficial ownership is determined in accordance with
SEC rules, and includes voting power and investment power with respect to shares
and shares owned pursuant to warrants exercisable within 60 days. The "Number
of
Shares Beneficially Owned After the Offering” column assumes the sale of all
shares offered.
As
explained below under “Plan of Distribution,” we have agreed with the selling
stockholders to bear certain expenses (other than broker discounts and
commissions, if any) in connection with the registration statement, which
includes this prospectus.
Name
|
Number
of
Shares
Beneficially
Owned
Prior to
Offering(1)(2)
|
Number
of
Shares
Offered
|
Number
of Shares
Beneficially
Owned
After
the
Offering
|
|
|
|
|
AJW
Partners, LLC (3)/(4)
|
1,427,506
|
1,427,506
|
0
|
AJW
Offshore, Ltd (3)/(5)
|
6,066,901
|
6,066,901
|
0
|
AJW
Qualified Partners LLC(3)/(6)
|
4,223,039
|
4,223,039
|
0
|
New
Millennium Capital Partners II LLC (3)/(7)
|
178,438
|
178,438
|
0
|
____________
(1) Unless
otherwise indicated, the selling stockholders have sole voting and investment
power with respect to their shares of common stock. The inclusion of any shares
in this table does not constitute an admission of beneficial ownership for
the
selling stockholders.
(2) The
actual number of shares of Common Stock offered in this prospectus, and included
in the registration statement of which this prospectus is a part, includes
such
additional number of shares of common stock as may be issued or issuable upon
conversion of the callable secured convertible notes and exercise of the related
warrants by reason of any stock split, stock dividend or similar transaction
involving the common stock, in accordance with Rule 416 under the Securities
Act
of 1933, as amended. However the selling stockholders have contractually agreed
to restrict their ability to convert their callable secured convertible notes
or
exercise their warrants and receive shares of our common stock such that the
number of shares of common stock held by them in the aggregate and their
affiliates after such conversion or exercise does not exceed 4.99% of the then
issued and outstanding shares of common stock as determined in accordance with
Section 13(d) of the Exchange Act. Accordingly, the number of shares of common
stock set forth in the table for the selling stockholders exceeds the number
of
shares of common stock that the selling stockholders could own beneficially
at
any given time through their ownership of the callable secured convertible
notes
and the warrants. In that regard, the beneficial ownership of the common stock
by the selling stockholder set forth in the table is not determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended.
(3) Some
of
the selling stockholders are affiliates of each other because they are under
common control. AJW Partners, LLC is a private investment fund that is owned
by
its investors and managed by SMS Group, LLC. SMS Group, LLC, of which Mr. Corey
is Ribotsky is the fund manager, has voting and investment control over the
shares listed bellow owned by AJW Partners, LLC. AJW Partners, LLC intends
to
transfer shares to certain of its affiliates. AJW Offshore, Ltd., formerly
known
as AJW/New Millennium Offshore, Ltd. and a designee of AJW Partners, LLC, is
a
private investment fund that is owned by its investors and managed by First
Street Manager II, LLC. First Street Manager II, LLC, of which Corey S. Ribotsky
is the fund manager, has voting and investment control over the shares owned
by
AJW Offshore, Ltd. AJW Qualified Partners, LLC, formerly known as Pegasus
Capital Partners, LLC and a designee of AJW Partners, LLC, is a private
investment fund that is owned by its investors and managed by AJW Manager,
LLC,
of which Corey S. Ribotsky and Lloyd A. Groveman are the fund managers, have
voting and investment control over the shares listed below owned by AJW
Qualified Partners, LLC. New Millennium Capital Partners II, LLC, a designee
of
AJW Partners, LLC, a private investment fund that is owned by its investors
and
managed by First Street Manager II, LLC. First Street Manager II, LLC, of which
Corey S. Ribotsky is the fund manager, has voting and investment control over
the shares owned by New Millennium Capital Partners II, LLC.
(4) Includes
1,307,506 shares of common stock issuable upon conversion of the Note and
120,000 shares of common stock issuable upon exercise of warrants.
(5)
Includes
5,556,901 shares of common stock issuable upon conversion of the Note and
510,000 shares of common stock issuable upon exercise of warrants.
(6)
Includes
3,868,039 shares of common stock issuable upon conversion of the Note and
355,000 shares of common stock issuable upon exercise of warrants.
(7)
Includes
163,438 shares of common stock issuable upon conversion of the Note and 15,000
shares of common stock issuable upon exercise of warrants.
TERMS
OF CALLABLE SECURED CONVERTIBLE NOTES
To
obtain funding for our ongoing operations, we entered into a Securities Purchase
Agreement with four accredited investors on August 31, 2005 for the sale of
(i)
$4,500,000 in callable secured convertible notes and (ii) warrants to buy
1,000,000 shares of our Common Stock. This prospectus relates to the resale
of
our Common Stock underlying these callable secured convertible notes and
warrants. The investors are obligated to provide us with an aggregate of
$4,500,000 in traunches as follows (the “Traunches”):
|
·
|
$1,500,000
was disbursed on September 1, 2005;
|
|
·
|
$1,500,000
will be disbursed upon the filing of this registration statement;
and
|
|
·
|
$1,500,000
will be disbursed upon this prospectus being declared
effective.
|
Accordingly,
upon filing of this registration statement, we will have received a total of
$3,000,000 pursuant to the Securities Purchase Agreement.
The
funds from the sale of the callable secured convertible notes will be primarily
used for working capital needs. The callable secured convertible notes bear
interest at 8% (unless our common stock is greater than $2.50 per share for
each
trading day of a month, in which event no interest is payable during such
month), mature within three years from the date of issuance, and are convertible
into our Class A Common Stock, at the investors' option, at a per share price
equal to the lesser of $3.50 or 30% discount to the average of the three lowest
trading prices of the Common Stock during the 20 day trading day period prior
to
conversion. The callable secured convertible notes become immediately due and
payable and we will pay an amount equal to 130%
times
the
sum
of (a) the then outstanding principal amount of the Note immediately following
the maximum conversion date (the date that we issue 19.99% of our issued and
outstanding shares),
plus
(b) accrued and unpaid interest on the unpaid principal amount of the Note
to
within fifteen (15) days of the maximum conversion date,
plus
(c) default interest, if any, on the amounts referred to in clause (a) and/or
(b) above,
plus
(d) any optional amounts that may be added thereto at the maximum conversion
date by the holder (the then outstanding principal amount of this Note
immediately following the maximum conversion date),
plus
the amounts referred to in clauses (b), (c) and (d) above shall collectively
be
referred to as the “Remaining
Convertible Amount”).
In the event that the sum of (x) the aggregate number of shares of Common Stock
issued upon conversion of the Notes issued pursuant to the Purchase
Agreement
plus
(y) the aggregate number of shares of Common Stock that remain issuable upon
conversion of the Notes and the other Notes issued pursuant to the Purchase
Agreement, represents at least one hundred percent (100%) of the maximum share
amount (the “Triggering
Event”),
the Borrower will use its best efforts to seek and obtain Shareholder Approval
(or obtain such other relief as will allow conversions hereunder in excess
of
the Maximum Share Amount) as soon as practicable following the Triggering Event
and before the maximum conversion date. As used herein, “Shareholder
Approval”
means approval by the shareholders of the Company to authorize the issuance
of
the full number of shares of Common Stock which would be issuable upon full
conversion of the then outstanding Notes but for the Maximum Share Amount.
In
connection with the issuance of the Notes, we agreed to register two times
the
number of shares of common stock issuable upon conversion of the
Notes.
The
warrants are exercisable until five years from the date of issuance. The
conversion price of the callable secured convertible notes and the exercise
price of the warrants will be adjusted in the event that we issue common stock
at a price below the fixed conversion price, below market price, with the
exception of any securities issued in connection with the Securities Purchase
Agreement. The conversion price of the callable secured convertible notes and
the exercise price of the warrants may be adjusted in certain circumstances,
such as, if we pay a stock dividend, subdivide or combine outstanding shares
of
common stock into a greater or lesser number of shares, or take such other
actions as would otherwise result in dilution of the selling stockholder's
position. The selling stockholders have contractually agreed to restrict their
ability to convert or exercise their warrants and receive shares of our common
stock such that the number of shares of common stock held by them and their
affiliates after such conversion or exercise does not exceed 4.99% of the then
issued and outstanding shares of common stock. In addition, we have granted
the
investors a security interest in substantially all of our assets and
intellectual property.
The
warrants have an exercise price of $5.00 per share. The selling stockholders
will be entitled to exercise the warrants on a cashless basis if the shares
of
common stock underlying the warrants are not then registered pursuant to an
effective registration statement. In the event that the selling stockholder
exercises the warrants on a cashless basis, then we will not receive any
proceeds. In addition, the exercise price of the warrants will be adjusted
in
the event we issue common stock at a price below market, with the exception
of
any securities issued as of the date of the warrants or issued in connection
with the callable secured convertible notes issued pursuant to the Securities
Purchase Agreement, dated August 8, 2005.
Upon
the issuance of shares of common stock below the market price, the exercise
price of the warrants will be reduced accordingly. The market price means:
(i)
the average of the last reported sale prices for our shares of our Common Stock
for the five trading days immediately preceding such issuance as set forth
on
our principal trading market; (ii) if the OTCBB is not the principal trading
market, the average of the last reported sale prices on the principal trading
market for the Common Stock during the same period or (iii) if the market value
cannot be calculated then the fair market value as reasonably determined in
good
faith by our board of directors, or at the option of a majority-in-interest
of
the holders of the outstanding warrants, by an independent investment bank.
The
exercise price shall be determined by multiplying the exercise price in effect
immediately prior to the dilutive issuance by a fraction. The numerator of
the
fraction is equal to the sum of the number of shares outstanding immediately
prior to the offering plus the quotient of the amount of consideration received
by us in connection with the issuance divided by the market price in effect
immediately prior to the issuance. The denominator of such issuance shall be
equal to the number of shares outstanding after the dilutive
issuance.
The
selling stockholders and any of their respective pledges, donees, assignees
and
other successors-in-interest may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be
at
fixed or negotiated prices. The selling stockholders may use any one or more
of
the following methods when selling shares:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as
agent, but may position and resell a portion of the block as principal
to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
short
sales after this registration statement becomes
effective;
|
|
·
|
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
|
·
|
through
the writing of options on the
shares;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, if available, rather than under this prospectus. The selling
stockholders will have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to
be
unsatisfactory at any particular time.
The
selling stockholders may also engage in short sales against the box after this
registration statement becomes effective, puts and calls and other transactions
in our securities or derivatives of our securities and may sell or deliver
shares in connection with these trades.
The
selling stockholders or their respective pledgees, donees, transferees or other
successors in interest, may also sell the shares directly to market makers
acting as principals and/or broker-dealers acting as agents for themselves
or
their customers. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or
the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and
at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to
market
makers or other purchasers at a price per share which may be below the then
market price. The selling stockholders cannot assure that all or any of the
shares offered in this prospectus will be issued to, or sold by, the selling
stockholders. The selling stockholders and any brokers, dealers or agents,
upon
effecting the sale of any of the shares offered in this prospectus, may be
deemed to be "underwriters" as that term is defined under the Securities Act
of
1933, as amended, or the Securities Exchange Act of 1934, as amended, or the
rules and regulations under such acts. In such event, any commissions received
by such broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
Discounts,
concessions, commissions and similar selling expenses, if any, attributable
to
the sale of shares will be borne by a selling stockholder. The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act of 1933.
The
selling stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgee or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or any other applicable provision of the Securities Act of 1933
amending the list of selling stockholders to include the pledgee, transferee
or
other successors in interest as selling stockholders under this
prospectus.
The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list
of
selling stockholders to include the pledgee, transferee or other successors
in
interest as selling stockholders under this prospectus.
We
are
required to pay all fees and expenses incident to the registration of the shares
of common stock. We have agreed to indemnify the selling stockholders against
certain losses, claims, damages and liabilities, including liabilities under
the
Securities Act of 1933.
Each
of
the selling stockholders acquired the securities offered hereby in the ordinary
course of business and have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed
sale
of shares of common stock by any selling stockholder. If we are notified by
any
selling stockholder that any material arrangement has been entered into with
a
broker-dealer for the sale of shares of common stock, if required, we will
file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act of 1933.
The
anti-manipulation rules of Regulation M under the Securities Exchange Act of
1934 may apply to sales of our common stock and activities of the selling
stockholders.
The
validity of the issuance of the common stock offered hereby will be passed
upon
for us by Gersten Savage LLP, New York, New York.
The
financial statements of Innofone.com, Incorporated as of and for the period
from
June 30, 2005 appearing in this prospectus have been audited by Hochman &
Denzinger and the financial statements of IPv6 Summit, Inc. appearing in this
prospectus have been audited by DeJoya Griffith & Company, LLC, as set forth
in their reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firms as experts
in
accounting and auditing.
We
have
filed with the SEC under the Securities Act of 1933 a registration statement
on
Form SB-2 with respect to the shares being offered in this offering. This
prospectus does not contain all of the information set forth in the registration
statement, certain items of which are omitted in accordance with the rules
and
regulations of the SEC. The omitted information may be inspected and copied
at
the Public Reference Room maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. You can obtain information about operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
also
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov. Copies of such material can be obtained
from
the public reference section of the SEC at prescribed rates. Statements
contained in this prospectus as to the contents of any contract or other
document filed as an exhibit to the registration statement are not necessarily
complete and in each instance reference is made to the copy of the document
filed as an exhibit to the registration statement, each statement made in this
prospectus relating to such documents being qualified in all respect by such
reference.
For
further information with respect to us and the securities being offered hereby,
reference is hereby made to the registration statement, including the exhibits
thereto and the financial statements, notes, and schedules filed as a part
thereof.
INDEX
TO FINANCIAL STATEMENTS
|
Page
|
|
Number
|
IPV6
SUMMIT, INC. FINANCIAL STATEMENTS |
|
|
|
|
F-2
|
|
|
|
F-3
|
|
|
|
F-4
|
|
|
|
F-5
|
|
|
|
F-6
|
|
|
|
F-7-9
|
|
|
INNOFONE.COM,
INCORPORATED |
|
|
|
|
F-10
|
|
|
|
F-11
|
|
|
|
F-12
|
|
|
|
F-13
|
|
|
|
F-14
|
|
|
|
F-15
|
De
Joya Griffith & Company, LLC
Certified
Public Accountants & Consultants
2425
W. Horizon Ridge Parkway
To
the
Board of Directors
IPv6
Summit, Inc.
Santa
Monica, California
We
have
audited the balance sheet of IPv6 Summit, Inc. (the “Company”) as of June 30,
2005 and the related statements of operations, stockholder's equity and cash
flows for the year ended June 30, 2005 and for the period from July 9, 2003
(Date of Inception) through June 30, 2004. These financial statements are
the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We
conducted our audit in accordance with the auditing standards generally
accepted in the 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. An audit includes examining, on a test
basis,
evidence supporting the amounts and disclosure 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 statement referred to above presently fairly, in all
material respects, the financial position of IPv6 Summit, Inc. as of June
30,
2005 and the results of their operations and their cash flows for the years
ended June 30, 2005 and 2004, in conformity with accounting principles generally
accepted in the United States.
/s/
De
Joya Griffith & Company, LLC
De
Joya
Griffith and Company, LLC
Henderson,
Nevada
September
9, 2005
|
|
June
30, 2005
|
|
ASSETS
|
Cash
|
|
$
|
17,840
|
|
Accounts
receivable
|
|
|
46,980
|
|
Officers'
advances
|
|
|
12,729
|
|
Total
current assets
|
|
|
77,550
|
|
|
|
|
|
|
Fixed
assets, net
|
|
|
4,840
|
|
Total
assets
|
|
$
|
82,389
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDER'S EQUITY
|
Current
liabilities
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
53,848
|
|
Customer
deposits
|
|
|
--
|
|
Other
current liabilities
|
|
|
6,934
|
|
Total
current liabilities
|
|
|
60,782
|
|
|
|
|
|
|
Long-term
liabilities
|
|
|
--
|
|
Total
liabilities
|
|
|
60,782
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
--
|
|
|
|
|
|
|
Stockholder's
equity
|
|
|
|
|
Common
stock; $0.001 par value; 2,000,000 shares authorized, issued and
outstanding
|
|
|
2,000
|
|
Additional
paid-in capital
|
|
|
--
|
|
Retained
earnings
|
|
|
19,607
|
|
Total
stockholder's equity
|
|
|
21,607
|
|
Total
liabilities and stockholder's equity
|
|
$
|
82,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the period from
|
|
|
|
|
|
July
9, 2003
|
|
|
|
|
|
(Date
of Inception)
|
|
|
|
For
the year ended
|
|
through
|
|
|
|
June
30, 2005
|
|
June
30, 2004
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
545,588
|
|
$
|
553,287
|
|
|
|
|
|
|
|
|
|
Cost
of revenues
|
|
|
118,164
|
|
|
165,686
|
|
Gross
profit
|
|
|
427,424
|
|
|
387,601
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,941
|
|
|
1,302
|
|
Selling
general and administrative
|
|
|
466,913
|
|
|
311,225
|
|
Total
operating expenses
|
|
|
469,854
|
|
|
312,527
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
|
|
(42,431
|
)
|
|
75,074
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
Interest
income
|
|
|
3
|
|
|
2
|
|
Loss
on Disposal of Asset
|
|
|
(2,756
|
)
|
|
--
|
|
Total
other income (expense)
|
|
|
(2,753
|
)
|
|
2
|
|
|
|
|
|
|
|
|
|
Net
income (loss) before provision for income taxes
|
|
|
(45,184
|
)
|
|
75,076
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
(10,285
|
)
|
|
--
|
|
Net
income (loss)
|
|
$
|
(55,469
|
)
|
$
|
75,076
|
|
Net
income (loss) per common share - basic and diluted
|
|
$
|
(0.03
|
)
|
$
|
0.04
|
|
Weighted
average common shares outstanding - basic and
diluted
|
|
|
2,000,000
|
|
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Common
Stock
|
|
Additional
|
|
Retained
|
|
Stockholders'
|
|
|
|
Shares
|
|
Amount
|
|
Paid-in
Capital
|
|
Earnings
|
|
Equity
|
|
Balance,
July 9, 2003 (Date of Inception)
|
|
|
--
|
|
$
|
--
|
|
$
|
--
|
|
$
|
--
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for services to the founding shareholder, $0.001 per
share
|
|
|
2,000,000
|
|
|
2,000
|
|
|
--
|
|
|
--
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
75,076
|
|
|
75,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2004
|
|
|
2,000,000
|
|
|
2,000
|
|
|
--
|
|
|
75,076
|
|
|
77,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(55,469
|
)
|
|
(55,469
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2005
|
|
|
2,000,000
|
|
|
2,000
|
|
|
--
|
|
|
19,607
|
|
|
21,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPV6
SUMMIT, INC.
|
|
|
For
the year ended June 30,
2005
|
|
|
For
the period
July
9, 2003 (Date of Inception) through
June
30, 2004
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(55,469
|
)
|
$
|
75,076
|
|
Adjustments
to reconcile net income (loss) to net cash used by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,941
|
|
|
1,302
|
|
Loss
on disposal of fixed assets
|
|
|
2,756
|
|
|
--
|
|
Stock
issued for services
|
|
|
--
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
Change
in accounts receivable
|
|
|
69,548
|
|
|
(116,529
|
)
|
Change
in officers' advances
|
|
|
(12,729
|
)
|
|
--
|
|
Change
in prepaid expenses
|
|
|
3,050
|
|
|
(3,050
|
|
Change
in other assets
|
|
|
11,810
|
|
|
(11,810
|
|
Change
in accounts payable and accrued liabilities
|
|
|
(29,448
|
)
|
|
83,296
|
|
Change
in advances from related parties
|
|
|
(39,139
|
)
|
|
39,139
|
|
Change
in accrued income taxes
|
|
|
6,934
|
|
|
--
|
|
Net
cash provided (used) by operating activities
|
|
|
(39,745
|
)
|
|
69,425
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Purchase
of fixed assets
|
|
|
(2,165
|
)
|
|
(9,675
|
)
|
Net
cash used by investing activities
|
|
|
(2,165
|
)
|
|
(9,675
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock
|
|
|
--
|
|
|
--
|
|
Net
cash provided by financing activities
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Net
change in cash
|
|
|
(41,910
|
)
|
|
59,750
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
59,750
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Cash,
end of period
|
|
$
|
17,840
|
|
$
|
59,750
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
--
|
|
$
|
--
|
|
Schedule
of non-cash financing and investing activities:
|
|
|
|
|
|
|
|
Issuance
of 2,000,000 shares of common stock for services
|
|
$
|
--
|
|
$
|
2,000
|
|
IPV6
SUMMIT, INC. FINANCIAL
STATEMENTS
1. |
DESCRIPTION
OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
Description
of business
- IPv6
Summit, Inc., a Nevada corporation (hereinafter referred to as the “Company”)
located in Santa Monica, California was incorporated on July 9, 2003. The
Company is among the leading organizers of IPv6 conference events in the
world.
IPv6 stands for Internet Protocol version 6 and is the successor protocol
to the
current Internet, Internet Protocol version 4, which was introduced in June
1973
and turned 32 years old this summer. IPv4 is a 32-bit protocol, while IPv6
is a
128-bit protocol allowing for 3.4 x 10 to the 38th power new IP addresses,
and
thus allowing for a vast increase in connecting people, places, and things
to
the Internet.
The
Company derives revenue from Sponsorships, Conference Attendee Fees, Training
Fees, and Consulting to Governments. New sources of revenue during the 2005-2007
will be derived from Consulting to Corporations, Software Revenue, Subscription
Revenue and Information Revenue. Subscription revenue will be derived from
offering broadband IPv6 wireline and wireless services, as an IPv6-centric
ISP
and WISP, including Voice over IPv6 and Video over IPv6. Information Revenue
will be derived from setting up one of the largest IPv6 information portals,
building on the existing multiple gigabytes of IPv6 related information on
http://www.usipv6.com
Year-end
- The
Company’s year-end is June 30.
Use
of
estimates
- The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and
the reported amounts of revenue and expenses during the reporting period.
Actual
results could differ from those estimates.
Revenue
and expense recognition
-
The
Company recognizes revenue from services provided once all of the following
criteria for revenue recognition have been met: 1) pervasive evidence
of an
agreement exists, 2) the services have been delivered, 3) the
price is
fixed and determinable and not subject to refund or adjustment and
4) collection of the amounts due is reasonably. Overhead and administrative
costs are recognized when incurred and direct event costs
and
expenses are recognized during the period in which the event they are associated
with occurs.
Inventory-
The
Company has no inventory as of June 30, 2005.
Fixed
assets
- Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
provided principally on the straight-line method over the estimated useful
lives
of the assets, which are generally 3 years. The cost of repairs and maintenance
is charged to expense as incurred. Expenditures for property betterments
and
renewals are capitalized. Upon sale or other disposition of a depreciable
asset,
cost and accumulated depreciation are removed from the accounts and any gain
or
loss is reflected in other income (expense).
The
Company periodically evaluates whether events and circumstances have occurred
that may warrant revision of the estimated useful life of fixed assets or
whether the remaining balance of fixed assets should be evaluated for possible
impairment. The Company uses an estimate of the related undiscounted cash
flows
over the remaining life of the fixed assets in measuring their
recoverability.
Goodwill
and intangible assets
-
In
July 2001, the Financial Accounting Standards Board issued Statement
of
Financial Accounting Standards (SFAS) No. 141, “Business Combinations” and No.
142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method. Under SFAS No. 142, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed annually (or more
frequently if impairment indicators arise) for impairment.
According
to this statement, goodwill and intangible assets with indefinite lives are
no
longer subject to amortization, but rather an annual assessment of impairment
by
applying a fair-value based test. Fair value for goodwill is based on discounted
cash flows, market multiples and/or appraised values as appropriate. Under
SFAS
No. 142, the carrying value of assets are calculated at the lowest level
for
which there are identifiable cash flows.
The
Company has no Goodwill or Intangible Assets and thus the Company did not
record
any amortization expense related to goodwill or intangibles for the years
ended
June 30, 2005 and 2004.
SFAS
142
requires the Company to compare the fair value of the reporting unit to its
carrying amount on an annual basis to determine if there is potential
impairment. If the fair value of the reporting unit is less than its carrying
value, an impairment loss is recorded to the extent that the fair value of
the
goodwill within the reporting unit is less than its carrying value.
Recent
Accounting Pronouncements
In
December 2004, the Financial Accounting Standards Board issued SFAS
123
(R), “Share-Based Payment.” This Statement is a revision to SFAS 123,
“Accounting for Stock-Based Compensation”, and supersedes APB Opinion
No. 25, “Accounting for Stock Issued to Employees.” SFAS
123(R) requires the measurement of the cost of employee services received
in exchange for an award of equity instruments based on the grant-date fair
value of the award. No compensation cost is recognized for equity instruments
for which employees do not render service. We will adopt SFAS
123(R) effective on July 1, 2005, requiring compensation cost
to be
recognized as expense for the portion of outstanding unvested awards, and
any
new awards made thereafter, based on the grant-date fair value of those awards.
Income
taxes
- The
Company accounts for its income taxes in accordance with Statement of Financial
Accounting Standards No. 109, which requires recognition of deferred tax
assets
and liabilities for future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and
their respective tax bases and tax credit carry-forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to
be recovered or settled. The effect on deferred tax assets and liabilities
of a
change in tax rates is recognized in operations in the period that includes
the
enactment date.
Advertising
costs
- The
Company recognizes advertising expenses in accordance with Statement of Position
93-7 “Reporting on Advertising Costs.” Accordingly, the Company expenses the
costs of producing advertisements at the time production occurs, and expenses
the costs of communicating advertisements in the period in which the advertising
space or airtime is used. The Company has recorded no significant advertising
costs for the years ended June 30, 2005 and 2004.
Research
and development costs
-
Research and development costs are charged to expense as incurred.
Fixed
assets consist of the following as of June 30, 2005:
|
|
|
|
Equipment
|
|
$
|
9,004
|
|
Less:
accumulated depreciation
|
|
|
4,164
|
|
Fixed
assets, net
|
|
$
|
4,840
|
|
|
|
|
|
|
3. |
COMMITMENTS
AND CONTINGENCIES
|
Office
lease
- The
Company lease three office suites at 1431 Ocean Avenue in Santa Monica,
California on a month-to-month basis. The current monthly lease payment for
the
four suites total $2,468 per month. Lease payments for the year ended June
30,
2005 and 2004 totaled $20,300 and $11,425, respectively.
On
August
08, 2005, Alex Lightman, the sole shareholder of IPv6 Summit, Inc., entered
into
a Stock Purchase Agreement with Innofone.com, for the sale of 100 % of the
issued outstanding and shares of IPv6 Summit, Inc. to Innofone.com. The
fundamental terms of the purchase agreement provide for the Innofone.com
to
deliver a promissory note in the sum of $1,000,000 (One Million Dollars)
as
partial consideration of the purchase price and to issue 33,333,000 (Thirty
Three Million Three Hundred and Thirty Three Thousand) shares of restricted
common stock of Innofone.com to satisfy the balance of the purchase price
in
full. As a result, IPv6 Summit, Inc. will become a wholly owned subsidiary
of
the Innofone.com. Alexander Lightman will become the Chairman and Chief
Executive officer of the company. He will be awarded a five-year employment
agreement at an annual salary of $400,000.00 per year. This Agreement is
pending
subject to completion and delivery of audit.
To
the Board of Directors and Shareholders of:
INNOFONE.COM,
INCORPORATED
We
have
audited the accompanying balance sheets of INNOFONE.COM,
INCORPORATED as
at
June 30, 2005 and 2004, and the statements of operations, shareholders’ deficit
and cash flows for each of the years in the three-year period ended June
30,
2005. These financial statements are the responsibility of the company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). These standards require that
we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In
our
opinion, these financial statements present fairly, in all material respects,
the financial position of the company as at June 30, 2005 and 2004, and the
results of its operations and their cash flows for each of the years in the
three-year period ended June 30, 2005, in conformity with accounting principles
generally accepted in the United States of America.
/s
/
Danziger & Hochman
Toronto,
Ontario
|
|
July
25, 2005 |
Chartered
Accountants
|
|
|
INNOFONE.COM,
INCORPORATED |
Statement
I
|
As
at
June 30, 2005 and 2004
(Stated
in United States Dollars)
|
|
|
|
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
$
|
--
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
$
|
--
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’
DEFICIENCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
STOCK (note
3)
|
|
|
|
|
|
|
|
Common
shares
|
|
|
4,898,880
|
|
|
4,879,010
|
|
Additional
paid-in capital
|
|
|
9,659,382
|
|
|
8,998,252
|
|
|
|
|
14,558,262
|
|
|
13,877,262
|
|
|
|
|
|
|
|
|
|
(DEFICIT)
-
Statement II
|
|
|
(
14,558,262
|
)
|
|
(
13,877,262
|
)
|
|
|
|
|
|
|
|
|
|
|
|
--
|
|
|
(--
|
)
|
|
|
|
|
|
|
|
|
|
|
$ |
-- |
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
{See
accompanying notes.}
INNOFONE.COM,
INCORPORATED |
Statement
II
|
For
The
Years Ended June 30, 2005, 2004 and 2003
(Stated
in United States Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
Common
|
|
Paid-In
|
|
|
|
|
|
|
|
Shares
|
|
Capital
|
|
Deficit
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
June 30, 2002
|
|
$
|
4,842,772
|
|
$
|
7,719,593
|
|
|
($13,318,937
|
)
|
|
($
756,572
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
note converted to stock
|
|
|
2,300
|
|
|
647,700
|
|
|
--
|
|
|
650,000
|
|
Issuance
of shares for legal services
|
|
|
500
|
|
|
1,887
|
|
|
--
|
|
|
2,387
|
|
Issuance
of shares for consulting services
|
|
|
26,378
|
|
|
180,932
|
|
|
--
|
|
|
207,310
|
|
Net
loss
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(
209,697
|
)
|
BALANCE,
June 30, 2003
|
|
|
4,871,950
|
|
|
8,550,112
|
|
|
(
13,528,634
|
)
|
|
(
106,572
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for selling, general and administrative services
|
|
|
7,060
|
|
|
448,140
|
|
|
--
|
|
|
455,200
|
|
Net
loss
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(
348,628
|
)
|
BALANCE,
June 30, 2004
|
|
|
4,879,010
|
|
|
8,998,252
|
|
|
(
13,877,262
|
)
|
|
(--
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for selling, general and administrative services (note
4)
|
|
|
19,870
|
|
|
661,130
|
|
|
--
|
|
|
681,000
|
|
Net
loss
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(
681,000
|
)
|
BALANCE,
June 30, 2005
|
|
$
|
4,898,880
|
|
$
|
9,659,382
|
|
|
($14,558,262
|
)
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
{See
accompanying notes.}
INNOFONE.COM,
INCORPORATED |
Statement
III
|
For
The
Years Ended June 30, 2005, 2004 and 2003
(Stated
in United States Dollars)
|
|
|
|
|
|
|
|
|
|
2005
|
|
2004
|
|
2003
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
--
|
|
$
|
--
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative services (note 4)
|
|
|
681,000
|
|
|
455,200
|
|
|
209,697
|
|
Write-off
of investment
|
|
|
--
|
|
|
210,000
|
|
|
--
|
|
Foregiveness
of debt (recovery)
|
|
|
--
|
|
|
(
316,572
|
)
|
|
--
|
|
Net
(Loss) from Operations
|
|
|
(
681,000
|
)
|
|
(
348,628
|
)
|
|
(
209,697
|
)
|
|
|
|
|
|
|
|
|
|
|
|
NET
(LOSS) FOR THE YEAR
|
|
|
($681,000
|
)
|
|
($348,628
|
)
|
|
($209,967
|
)
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
NET (LOSS) PER SHARE (Note 5)
|
|
|
($
0.03
|
)
|
|
($
.07
|
)
|
|
($
1.37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
20,098,984
|
|
|
4,740,817
|
|
|
152,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
{See
accompanying notes.}
INNOFONE.COM,
INCORPORATED
|
Statement
IV
|
For
The
Years Ended June 30, 2005, 2004 and 2003
(Stated
in United States Dollars)
|
|
|
|
|
|
|
|
|
|
2005
|
|
2004
|
|
2003
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net
(loss) for year - (Statement III)
|
|
|
($681,000
|
)
|
|
($348,628
|
)
|
|
($209,697
|
)
|
Issuance
of shares for sales, general and administrative services (note
4)
|
|
|
681,000
|
|
|
455,200
|
|
|
209,697
|
|
Write-off
of investment
|
|
|
--
|
|
|
210,000
|
|
|
--
|
|
Accounts
payable and accrued liabilities
|
|
|
--
|
|
|
(
316,572
|
)
|
|
(
104,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
--
|
|
|
--
|
|
|
(
104,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Due
to officers and directors
|
|
|
--
|
|
|
--
|
|
|
104,000
|
|
Issuance
of capital stock
|
|
|
--
|
|
|
--
|
|
|
650,000
|
|
Convertible
debt
|
|
|
--
|
|
|
--
|
|
|
(
650,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) financing activities
|
|
|
--
|
|
|
--
|
|
|
104,000
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE
IN CASH
|
|
|
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH,
BEGINNING OF YEAR
|
|
|
|
|
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH,
END OF YEAR
|
|
|
|
|
$
|
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
transactions:
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for sales, general and administrative services (note
4)
|
|
$
|
681,000
|
|
$
|
425,200
|
|
$
|
209,697
|
|
Write
off of investment
|
|
|
--
|
|
|
210,000
|
|
|
--
|
|
Accounts
payable
|
|
|
--
|
|
|
(
316,572
|
)
|
|
(
104,000
|
)
|
Due
to officers and directors
|
|
|
--
|
|
|
--
|
|
|
104,000
|
|
Issuance
of capital stock for debt
|
|
|
--
|
|
|
--
|
|
|
650,000
|
|
Convertible
debt
|
|
|
--
|
|
|
--
|
|
|
(
650,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
{See
accompanying notes.}
INNOFONE.COM,
INCORPORATED
June
30,
2005 and 2004
(Stated
in United States Dollars)
The
Company was incorporated in Nevada on December 19, 1995 and is in the process
of
attempting to raise capital for future operations. As the Company does not
have
any assets, it would require new capital to fund any future
ventures.
2. |
SIGNIFICANT
ACCOUNTING POLICIES
|
These
financial statements have been prepared by management in conformity with
accounting principles generally accepted in the United States of America
and
include the following significant accounting policies:
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to
make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of
the financial statements and the reported amount of revenues and expenses
during
the reporting period. Actual results could differ from these estimates. These
estimates are reviewed periodically and, as adjustments become necessary,
they
are reported in earnings in the period in which they become known.
Income
Taxes
The
Company accounts for its income taxes under the liability method specified
by
Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes. Deferred tax assets and liabilities are determined based on
the
difference between the financial statement and tax bases of assets and
liabilities as measured by the enacted tax rates which will be in effect
when
these differences reverse. Deferred tax expense is the result of changes
in
deferred tax assets and liabilities.
In
assessing the realizability of future tax assets, management considers whether
it is more likely than not that some portion or all of the future tax assets
will not be realized. The ultimate realization of future tax assets is dependent
upon the generation of future taxable income during the periods in which
those
temporary differences become deductible. Management considers the scheduled
reversal of future tax liabilities, projected future taxable income and tax
planning strategies in making this assessment. As the Company does not currently
have any operations or assets, they are not anticipating the recovery of
any tax
assets and therefore, have not reflected any future tax asset.
INNOFONE.COM,
INCORPORATED
Notes
to Financial Statements
June
30,
2005 and 2004
(Stated
in United States Dollars)
The
number of outstanding shares of the Company as at June 30, 2005 is computed
as
follows:
Common
|
|
|
|
|
|
|
|
Outstanding
Shares as at June 30, 2002
|
|
|
100,022,505
|
|
|
|
|
|
|
Shares
issued in exchange for consulting fees
|
|
|
23,357,826
|
|
Shares
issued in exchange for legal fees
|
|
|
500,000
|
|
Reverse
stock split: 175 shares for one share
|
|
|
(123,172,444
|
)
|
Share
issuance on conversion of debt
|
|
|
2,300,000
|
|
Share
issuance on exchange for consulting fees
|
|
|
3,021,800
|
|
Reverse
stock split: 20 shares for one share
|
|
|
(5,728,203
|
)
|
Outstanding
shares as at June 30, 2003
|
|
|
301,484
|
|
|
|
|
|
|
Shares
issuance on exchange for sales, general and administrative
services
|
|
|
7,060,000
|
|
Outstanding
shares as at June 30, 2004
|
|
|
7,361,484
|
|
|
|
|
|
|
Shares
previously issued that were cancelled in the year
|
|
|
(
126,214
|
)
|
Shares
issuance in exchange for sales, general
|
|
|
|
|
and
administrative services (note 4)
|
|
|
20,000,000
|
|
Outstanding
shares as at June 30, 2005
|
|
|
27,235,270
|
|
The
Company's authorized capital stock consists of 950,000,000 shares of common
stock and 25,000,000 shares of preferred stock each with a par value of $0.001
per share. There are no outstanding preferred shares at year-end.
4. |
RELATED
PARTY TRANSACTIONS
|
During
the year the Company issued 13,750,000 restricted shares and 6,250,000
regular
shares to the sole director and majority shareholder for services and
reimbursement of costs.
5.
|
BASIC
NET LOSS PER SHARE
|
Basic
net
loss per share figures are calculated using the weighted average number of
common shares outstanding computed on a daily basis. The effect of the
conversion of the preferred shares on an if-converted basis and stock options
has an anti-dilutive effect.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under
Nevada law, a corporation may indemnify any person who was or is a party or
is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he:
(a) Is
not
liable pursuant to NRS 78.138; or
(b) Acted
in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person is liable pursuant to NRS 78.1.38
or did not act in good faith and in a manner which he reasonably believed to
be
in or not opposed to the best interests of the corporation, or that, with
respect to any criminal action or proceeding, he had reasonable cause to believe
that his conduct was unlawful.
Under
our
Articles of Incorporation and Bylaws, the corporation shall indemnify any
individual made a party to a proceeding because he is or was an officer,
director, employee or agent of the corporation against liability incurred in
the
proceeding, all pursuant to and consistent with the provisions of NRS 78.751,
as
amended from time to time.
The
expenses of officers and directors incurred in defending a civil or criminal
action, suit or proceeding shall be paid by the corporation as they are incurred
and in advance of the final deposition of the action, suit or proceeding, but
only after receipt by the corporation of an undertaking by or on behalf of
the
officer or director on terms set by the Board of Directors, to repay the
expenses advanced if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation.
The
indemnification permitted herein is intended to be to the fullest extent
permissible under the laws of the State of Nevada, and any amendments
thereto.
Insofar
as indemnification for liabilities arising under the Securities Act might be
permitted to directors, officers or persons controlling our company under the
provisions described above, we have been informed 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.
ITEM
25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table sets forth an estimate of the costs and expenses, other than
the
underwriting discounts and commissions, payable by the registrant in connection
with the issuance and distribution of the common stock being
registered.
|
|
|
|
SEC
registration fee
|
|
$
|
1,540.16
|
|
Legal
fees and expenses
|
|
|
30,000.00
|
|
Accountants’
fees and expenses
|
|
|
--
|
|
Printing
expenses
|
|
|
1,500.00
|
|
Total
|
|
$
|
33,040.16
|
|
___________
All
amounts except the SEC registration fee are estimated. All of the expenses
set
forth above are being paid by us.
ITEM
26. RECENT SALES OF UNREGISTERED SECURITIES
On
August
31, 2005, the Company entered into a Securities Purchase Agreement, dated as
of
August 31, 2005 (“Agreement”), by and among the Company and AJW Partners, LLC.
(“Partners”), AJW Offshore, Ltd. (“Offshore”), AJW Qualified Partners
(“Qualified”) and New Millenium Capital Partners, II, LLC (“Millenium”).
Partners, Offshore, Qualified and Millenium are collectively referred to as
the
“Purchasers”. The Agreement provides for the sale by the Company to the
Purchasers of Secured Convertible Term Notes (the “Notes”) issued by the Company
in the aggregate principal amount of Four Million Dollars ($4,500,000)
(“Principal Amount”). The Principal Amount is to be funded by the Purchasers in
three tranches ($1.5 million on September 1, 2005, $1.5 million upon filing
the
Registration Statement and $1.5 million upon effectiveness of the Registration
Statement). The offering of Notes under the Agreement was made pursuant to
Section 4(2) of the Securities Act of 1933, as amended. The Notes bear interest
at 8% per annum, unless the common stock of the Company is greater than $3.50
per share for each trading day of a month, in which event no interest is payable
during such month. The Notes are convertible into common stock of the Company
at
the lesser of $3.50 or a 30% discount to the average of the three lowest trading
prices of the common stock during the 20 trading day period prior to conversion.
In connection with the subject offering, the Company issued an aggregate of
1,000,000 warrants (333,333 upon each tranche of financing) to purchase common
stock at a price of $5.00 per share. The warrants are exercisable for a period
of five years. The conversion of the Notes are subject to an effective
Registration Statement to be filed by the Company. The Company has the right
to
redeem the Notes under certain circumstances and the right to prevent
conversions in any month where the stock price is less than $3.50 per share.
The
Notes are secured by all of the Company’s assets. In connection with the loan,
Mr. Alex Lightman, our Chief Executive Officer and President, pledged 3,000,000
shares of his common stock as additional security. The proceeds of the offering
will be used primarily for working capital and for repayment of the promissory
note issued to Mr. Alex Lightman. The purchases represented to the Company
that
they are “accredited investors.” No commissions were paid in connection with the
transaction.
In
connection with our Stock Purchase Agreement, dated August 8, 2005, we issued
securities to Mr. Alex Lightman in exchange for 100% of the issued and
outstanding shares of IPv6 Summit, Inc. Specifically, we issued a promissory
note in the principal face amount of $1,000,000 and issued 33,333,000 shares
of
our restricted common stock. On October 17, 2005, we amended and restated our
promissory note originally issued to Mr. Alex Lightman on October 12, 2005.
The
principal face amount of the note is $1,000,000 and bears interest at the rate
of four percent (4%) per annum The note was amended and restated to provide
for
a repayment schedule which is to coincide with the timing that the Company
receives the Traunches.
ITEM
27. EXHIBITS
(a)
Exhibits
All
references to the Company's Forms 8-K, 10-K, 10-QSB and 10-KSB include reference
to File No. 0-31949
(a)
Exhibits
Exhibit
No.
|
Document
|
3.1
|
Articles
of Incorporation of Innofone.com, Incorporated,as amended (incorporated
by
reference to Exhibit 3.1 filed with the Company’s Form 10-KSB on October
14, 2005)*
|
|
|
3.2
|
Bylaw,
as amended (incorporated by reference to Exhibit 3.1 filed with
the
Company’s Form 10-KSB on October 14, 2005)*
|
|
|
5.1
|
Consent
of Gersten, Savage, LLP (1)
|
|
|
10.1
|
Employment
Agreement between the Company and Gerard Casale, Jr., dated September
6,
2005 (incorporated by reference to Exhibit 3.1 filed with the
Company’s
Form 10-KSB on October 14, 2005)*
|
|
|
10.2
|
Employment
Agreement between the Company and Frederic D. Geesey, dated September
22,
2005 (incorporated by reference to Exhibit 3.1 filed with the
Company’s
Form 10-KSB on October 14, 2005)*
|
|
|
10.3
|
Stock
Purchase Agreement between the Company and Alex Lightman, dated
August 8,
2005 (incorporated by reference to Exhibit 10.1 filed with the
Company's
Form 8-K on August 19, 2005 (“August 8-K”)*
|
|
|
10.4
|
Investment
Agreement between the Company and Alex Lightman, dated August
8, 2005
(incorporated by reference to Exhibit 10.2 filed with the Company’s August
8-K)*
|
|
|
10.5
|
Form
of Callable Secured Convertible Note, dated August August 31,
2005
(incorporated by reference to Exhibit 10.1 filed with the Company's
Form
8-K on September 6, 2005 (“September 8-k”) *
|
|
|
10.6
|
Stock
Purchase Agreement between the Company and various investors,
dated August
31, 2005 (incorporated by reference to Exhibit 10.2 filed with
the
Company's September 8-K)*
|
|
|
10.7
|
Security
Agreement between the Company and certain secured parties, dated
August
31, 2005 (incorporated by reference to Exhibit 10.3 filed with
the
Company's September 8-K)*
|
|
|
10.8
|
Guaranty
and Pledge Agreement between the Company, Alex Lightman and certain
Pledgees, dated August 31, 2005 (incorporated by reference to
Exhibit 10.4
filed with the Company's September 8-k)*
|
|
|
10.9
|
Form
of Stock Purchase Warrant issued by the Company to various investors,
dated August 31, 2005 (incorporated by reference to Exhibit 10.4
filed
with the Company's September 8-k)*
|
|
|
10.10
|
Commercial
Lease between the Company and Barrington Pacific, LLC, dated
October 7,
2003 (incorporated by reference to Exhibit 3.1 filed with the
Company’s
Form 10-KSB on October 14, 2005)*
|
|
|
10.11
|
Form
of Promissory Note, dated October 12, 2005 issued to Alex Lightman
(incorporated by reference to Exhibit 3.1 filed with the Company’s Form
10-KSB on October 14, 2005)*
|
|
|
10.12
|
Amended
and Restated Promissory Note, dated October 17, 2005 issued to
Alex
Lightman (1)
|
|
|
10.13
|
Intellectual
Property Security Agreement (filed as Exhibit 99.4 to Current
Report on
Form 8-K, filed August 31, 2005 and incorporated herein by
reference)*
|
|
|
10.14
|
Registration
Rights Agreement between the Company and various investors, dated
August
31, 2005(1)
|
|
|
21
|
List
of Company's subsidiaries (incorporated by reference to Exhibit
3.1 filed
with the Company’s Form 10-KSB on October 14, 2005)*
|
|
|
23.1
|
Consent
of Gersten Savage LLP (included in Exhibit 5.1 hereto)
(1)
|
|
|
23.2
|
Consents
of DeJoya Griffith & Company, LLC(1)
|
|
|
23.3
|
Consents
of Denzinger and
Hochman(1)
|
________________________
*
Incorporated by reference as stated therein
(1)
Filed
herewith
ITEM
28. UNDERTAKINGS
Insofar
as indemnification for liabilities arising under the Securities Act of 1933,
as
amended, may be permitted to directors, officers and controlling persons of
the
registrant pursuant to any provision of the certificate of incorporation,
bylaws, contract arrangements, statute, or otherwise, the registrant 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
of
1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the
securities being registered, the registrant issuer 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 of 1933, and
will
be governed by the final adjudication of such issue.
The
undersigned registrant hereby undertakes that:
(1)
It
will file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i)
Include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii)
Reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii)
Include any additional or changed material information on the plan of
distribution;
(2)
For
determining liability under the Securities Act of 1933, it will treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona
fide offering; and
(3)
It
will file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4)
For
determining any liability under the Securities Act of 1933, it will treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933, as part of this registration statement
as of the time the Commission declared it effective.
(5)
For
determining any liability under the Securities Act of 1933, it will treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, as amended,
the
registrant certifies that it has reasonable grounds to believe that it meets
all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Santa
Monica, California, on October 27, 2005.
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INNOFONE.COM,
INCORPORATED
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By:
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/s/ Alex
Lightman
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Alex
Lightman, Chief Executive Officer and President
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Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
amended report has been signed by the following persons in the capacities and
on
the dates indicated.
Signature
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Title
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Date
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/s/Alex
Lightman
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Chief
Executive Officer, President and Director
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October
27, 2005
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Alex
Lightman
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/s/
Peter Maddocks
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Chief
Financial Officer and Director
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October
27, 2005
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Peter
Maddocks
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/s/Federic
D. Geesey
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Vice-President
of Consulting
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October
27, 2005
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Federic
D. Geesey
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/s/
Paul Shephard |
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Secretary |
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October
27, 2005
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Paul
Shephard |
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II-6