As filed with the Securities and Exchange Commission on December 9, 2011
Registration No. ___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
Arboretum Great Hills, 9600 Great Hills Trail, Austin, TX 78759
Phone: (512) 637-1330
(Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)
Business Filings Inc.
311 S. Division St.
Carson City, Nevada 89703
Phone: (800) 981-7183
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Oswald & Yapp, LLC
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 being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the Securities Act), check the following box. ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration 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, check the following box and list the Securities Act registration 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, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Smaller reporting company ü
If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. ¨
No. Shares Registered (1)
Proposed Maximum Offering Price (2)
Proposed Maximum Total Proceeds
Amount of Registration Fee (3)
(1) The Company may not sell all of the shares, in fact it may not sell any of the shares. For example, if only 50% of the shares are sold, there will be 5,000,000 shares sold and the gross proceeds will be $250,000.
(2) The offering price has been arbitrarily determined by the Company and bears no relationship to assets, earnings, or any other valuation criteria. No assurance can be given that the shares offered hereby will have a market value or that they may be sold at this, or at any price.
(3) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(0) of the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting any offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
(Subject to Completion)
10,000,000 Shares Common Stock
iVoiceIdeas, Inc., (formerly known as Earnest Einstein, Inc.), is offering 10,000,000 shares of common stock registered herein. This is our initial public offering and no public market currently exists for our shares.
Investing in our common stock involves significant risks. See Risk Factors beginning on page 8.
10,000,000 Common Shares
Price $ 0.05 per share
The price of the Shares as stated in this Offering has been arbitrarily determined by our Board of Directors without reference to market prices, comparables or competitors for the purpose of this Registration Statement.
The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
TABLE OF CONTENTS
Cash and Capitalization
Special Note Regarding Forward Looking Statements
Use of Proceeds
Determination of Offering Price
Description of Our Business
Managements Discussion and Analysis of Financial Condition and Results of Operations
Plan of Distribution
Certain Relationships and Related Party Transactions
Description of Capital Stock
Interests of Named Experts and Counsel/Legal Matters
Disclosure of Commissions Position on Indemnification for Securities Act Liabilities
Where You Can Find Additional Information
Report of Independent Registered Public Accountant
Other Expenses of Issuance and Distribution
Indemnification of Officers and Directors
Recent Sales of Unregistered Securities
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. The information in this prospectus is believed to be complete and accurate only as of the date of the front cover regardless of the time of delivery of this prospectus or of any sale of shares. Except where the context requires otherwise, in this prospectus, the Company, iVoiceIdeas, iVoiceIdeas.com, we, us and our refer to iVoiceIdeas, Inc. a Nevada corporation, and, where appropriate, its subsidiary.
This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider in making your investment decision. You should read this summary together with the more detailed information, including our financial statements and the related notes, elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in Risk Factors.
iVoiceIdeas, Inc., which operates the Internet site iVoiceIdeas.com is an emerging global social network focused on improving the ways people develop and communicate new ideas and solutions to problems. We have developed new ways for people to initiate and develop ideas and to collaboratively solve problems using our social network Internet site and software. Our collaborative idea site also serves as a social media site for users seeking social connections centered on ideas, policy and problems.
We are a development stage company and we are currently operating our Web site, iVoiceIdeas.com in our beta release. We expect to generate revenue by delivering advertising on our web pages alongside our content. We will generate revenue from pay-per-click advertising as well as from fee based advertising programs and promotions that we may offer to our advertisers.
Our mission is to serve as a platform for the development and communication of new innovations and solutions to local, national and world issues using our collaborative tools and idea pages that address the needs of business, communities and public institutions. We expect to provide a high quality user experience combined with innovative and important content that revolves around the most important issues of the day. We are building on three key promises to our users:
We strive to provide a positive and effective platform where your ideas can be heard and developed in a collaborative environment aimed at delivering real solutions to the issues you care about.
We will aim to deliver new ideas to important decision makers through the aggregation of many voices so that the voices of ordinary people can make their way from the grass-roots to the seat of power.
We will continue to work to improve the effectiveness of our experience so that user ideas can find the most effective path to implementation with the help of all of our users.
We believe that our focus on the democratization of innovation on an open collaborative platform controlled by our users is a foundational value to us. We also believe that this focus is critical for the creation of long-term value. We do not intend to compromise our user focus for short-term economic gain.
We were incorporated in Nevada on April 3, 2002. Our principal executive offices are located at Arboretum Great Hills, 9600 Great Hills Trail, Austin, Texas 78759, and our telephone number is (512) 637-1330. We maintain a web site: www.iVoiceIdeas.com. The information on our web sites is not part of this prospectus.
iVoiceIdeas.com® is a registered trademark in the U.S. and several other countries. All other trademarks, trade names and service marks appearing in this prospectus are the property of their respective holders.
Common Stock offered:
10,000,000 Common Shares
Shares Offered by Selling Shareholders
Common Stock Outstanding Before the Offering:
Common Stock to be outstanding after this offering
Use of proceeds
The proceeds of this offering are expected to be deployed by management for the development of the next generation of our core Web site, for operational and administrative costs and for the servicing of debt obligations
The number of shares of common stock that will be outstanding after this offering is based on the number of shares outstanding at the date of the filing of this Prospectus and includes 1.6 million shares issued to investors subsequent to September 30, 2011 at $0.05 per share and includes no warrants or options since none are outstanding. There are no contingent rights to common stock or other classes of securities convertible into common stock.
Summary Consolidated Financial Data
The following table summarizes financial data regarding our business and should be read together with Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes included elsewhere in this prospectus.
Inception to Date
Statement of Operations Data
Costs and Expenses
Design & Development
General and Administrative
Total Costs and Expenses
Loss from Operations
Net Other Income
Net Loss per Common Share
Number of Share Outstanding
The following table presents a summary of our balance sheet data at December 31, 2010 and September 30, 2011:
Summary Balance Sheet Data:
Years Ended December 31,
Nine Months Ended
Cash & Cash Equivalents & Short Term Investments
Share Capital - Common
Share Capital - Preferred
Paid in Capital
Stock Held in Treasury
Total Stockholder's Equity
We have never declared or paid any cash dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
CASH AND CAPITALIZATION
The following table sets forth our cash, cash equivalents, short-term investments and capitalization at September 30, 2011, as follows:
Cash and cash equivalents $37,846
We have no short-term investments
On a fully diluted basis including the number of shares into which the Class A Preferred Stock could potentially be converted in the future, we have 65,762,500 shares of common stock issued and outstanding on a fully diluted basis including and no stock options or warrants outstanding.
An investment in iVoiceIdeas.com involves significant risks. You should read these risk factors carefully before deciding whether to invest in our company. The following is a description of what we consider our key challenges and risks.
Risks Related to Our Business and Industry
We face significant competition from other social networks.
We face formidable competition in every aspect of our business, and particularly from other companies that seek to connect people using social networking tools on the internet. Our biggest competitors include facebook, MySpace, LinkedIn and Ning. We face significant risk that these better funded and established networks will copy the salient features of iVoiceIdeas.com and preempt our marketing efforts to their own users. This would reduce or eliminate the advantages of differentiation that are inherent in iVoiceIdeas.com. Other available social network options provided by other companies could also make it harder for us to obtain registered users because such users must choose between networks and may not wish to join an additional social network.
We face competition from traditional media companies, and we may not be included in the advertising budgets of large advertisers, which could harm our operating results.
In addition to Internet companies, we face competition for advertising dollars from companies that offer traditional media and content development as they expand their Internet presence. Most large advertisers have set advertising budgets, a portion of which is allocated to Internet advertising. We expect that large advertisers will continue to focus most of their advertising efforts on traditional media. If we fail to convince these companies to spend a portion of their advertising budgets with us, or if our existing advertisers reduce the amount they spend on our programs, our operating results would be harmed.
Our growth rate will be highly unpredictable and we dont know when we will become profitable, if ever.
We have currently introduced the BETA version of our web site along with its functions, interfaces and tools. It will need to be fully tested and we do not know how quickly it will be adopted by users in the market. We believe we will need to have a substantial number of regular users in order to generate enough advertising revenue to become profitable. This could take a long time and may never happen. As a result, there is a high degree of uncertainty as to our future value which can only be determined based upon our future success, which is unknown. To succeed our BETA site must successfully attract users and we must have sufficient funds to develop the next generation of our Web site.
We expect to generate revenue almost entirely from advertising. The Internet advertising business is extremely competitive and crowded with better funded and more established competitors.
We expect nearly all of our revenue to be generated from advertising. In order to generate advertising income, we must first procure a large number of users and establish a volume of traffic to our site that would interest advertisers. Since only a small percentage of visitors actually click on Internet ads will need large volumes of traffic before we can generate any substantial revenue. If we do not attract a large volume of users, we will not generate enough advertising revenue to be profitable.
We may encounter problems related to rapid growth. If we fail to effectively manage our growth, our business and operating results could be harmed and we may have to incur significant expenditures to address the additional operational and control requirements of this growth.
We hope to experience rapid growth in our users and operations. This would place significant demands on our management, operational and financial infrastructure. If we do not effectively manage our growth, the quality of our products and services could suffer, which could negatively affect our brand and operating results. To effectively manage this growth, we would need to continue to improve our operational, financial and management controls and our reporting systems and procedures. These systems enhancements and improvements will require significant capital expenditures and allocation of valuable management resources. If the improvements are not implemented successfully, our ability to manage our growth will be impaired and we may have to make significant additional expenditures to address these issues, which could harm our financial position.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our brand and operating results could be harmed. We are a small, development stage company and there are many areas of our internal controls that need improvement. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
Our business will depend on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our base of users, advertisers and iVoiceIdeas.com users will be impaired and our business and operating results will be harmed.
We believe that we must build a strong brand identity to succeed. If we fail to establish a brand that is widely recognized and respected by internet users, we will not succeed as a business. We also believe that maintaining and enhancing the iVoiceIdeas.com brand is critical to expanding our base of users and advertisers. Maintaining and enhancing our brand may require us to make substantial investments and these investments may not be successful. In addition, we may not have sufficient funds to invest in building our brand. If we fail to promote and maintain the iVoiceIdeas.com brand, or if we incur excessive expenses in this effort, our business, operating results and financial condition will be materially and adversely affected. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brand may become increasingly difficult and expensive. Maintaining and enhancing our brand will depend largely on our ability to be a technology leader and to continue to provide high quality products and services, which we may not do successfully. To date, we have engaged in relatively little direct brand promotion activities. This enhances the risk that we may not successfully implement brand enhancement efforts in the future.
If we lose key personnel or fail to attract new personnel capable of developing and marketing our social network, it will limit our ability to succeed in implementing our business plan.
Our future depends in large part on our ability to continue to develop software that users find attractive and to market our idea to interested users. To succeed in this task, we must have qualified personnel capable of implementing these two tasks. If we lose any of our current personnel and/or fail to attract additional personnel with the required talent as we grow, it will hinder our ability to succeed.
Our business may be adversely affected by malicious third-party applications that interfere with our receipt of information from, and provision of information to, our users, which may impair our users experience with our products and services.
Our business may be adversely affected by malicious applications that make changes to our users computers and interfere with the iVoiceIdeas.com experience. These applications have in the past attempted, and may in the future attempt, to change users Internet experience, including viruses, malware, trojan horses and other malicious software. These applications may be difficult or impossible to uninstall or disable, may reinstall themselves and may circumvent other applications efforts to block or remove them. The ability to reach users and provide them with a superior experience is critical to our success. This could result in a decline in user traffic and associated ad revenues, which would damage our business.
Our business is subject to a variety of U.S. and foreign laws, which could subject us to claims or other remedies based on the nature and content of the information searched or displayed by our products and services, and could limit our ability to provide information regarding regulated industries and products.
The laws relating to the liability of providers of online services for activities of their users are currently unsettled both within the U.S. and abroad. Claims have been threatened and filed under both U.S. and foreign law for defamation, libel, invasion of privacy and other data protection claims, tort, unlawful activity, patent, copyright or trademark infringement, or other theories based on the nature and content of the materials searched and the ads posted or the content generated by internet users. If complaints result in liability to us, it could be potentially costly, encourage similar lawsuits, distract management and harm our reputation and possibly our business. In addition, increased attention focused on these issues and legislative proposals could harm our reputation or otherwise affect the growth of our business.
The application to us of existing laws regulating or requiring licenses for certain businesses of our advertisers, including, for example, distribution of pharmaceuticals, adult content, financial services, alcohol or firearms, can be unclear. Internet companies have been found liable for allowing advertising by unlicensed pharmaceutical providers, for example. Existing or new legislation could expose us to substantial liability, restrict our ability to deliver services to our users, limit our ability to grow and cause us to incur significant expenses in order to comply with such laws and regulations.
Several other federal laws could have an impact on our business. Compliance with these laws and regulations is complex and may impose significant additional costs on us. For example, the Digital Millennium Copyright Act has provisions that limit, but do not eliminate, our liability for listing or linking to third-party web sites that include materials that infringe copyrights or other rights, so long as we comply with the statutory requirements of this act. The Childrens Online Protection Act and the Childrens Online Privacy Protection Act restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from
minors. In addition, the Protection of Children from Sexual Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances. Any failure on our part to comply with these regulations may subject us to additional liabilities.
We also face risks associated with international data protection. The interpretation and application of data protection laws in Europe and elsewhere are still uncertain and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our practices. If so, in addition to the possibility of fines, this could result in an order requiring that we change our practices, which in turn could have a material effect on our business.
The initial stock issued to investors and those providing services to us is fully vested. Because we do not use stock options to lock in employees they may not have sufficient financial incentive to stay with us, we may have to incur costs to replace key employees that leave, and our ability to execute our business model could be impaired if we cannot replace departing employees in a timely manner.
We have not issued stock options to any of our employees as a method of incentivizing them to remain with us based on the value of such options. We may provide an incentive stock option plan for our employees in the future but we do not have one at the present. If any members of our senior management team leave us, our ability to successfully operate our business could be impaired. We also may have to incur significant costs in identifying, hiring, training and retaining replacements for departing employees.
We have a short operating history and a relatively new business model in an emerging and rapidly evolving market. This makes it difficult to evaluate our future prospects and may increase the risk that we will not continue to be successful and increases the risk of your investment.
We are a development stage company that has not yet finished its product, launched its major web presence or generated significant revenue, our product is in the BETA stage. As a result, we have very little operating history for you to evaluate in assessing our future prospects. Also, we hope to derive nearly all of our revenues from online advertising, which is an immature industry that has undergone rapid and dramatic changes in its short history. You must consider our business and prospects in light of the risks and difficulties we will encounter as an early-stage company in a new and rapidly evolving market. We may not be able to successfully address these risks and difficulties, which could materially harm our business and operating results.
Our auditors have issued a going concern opinion because we need additional cash to continue operations.
We are not yet profitable and we will incur additional losses before we earn any profits. This means we will need additional investment from sources such as this offering to fund operations or we will not be able to continue as a going concern. If this offering is not successful or if we do not obtain additional investment to fund operations, we may not be able to continue our operations.
We have to keep up with rapid technological change to remain competitive in our rapidly evolving industry.
Our future success will depend on our ability to adapt to rapidly changing technologies, to adapt our services to evolving industry standards and to improve the performance and reliability of our services. Our failure to adapt to such changes would harm our business. New technologies and advertising media
could adversely affect us. In addition, the widespread adoption of new Internet, networking or telecommunications technologies or other technological changes could require substantial expenditures to modify or adapt our services or infrastructure.
Risks Related to Our Offering
Our stock price may be volatile, and you may not be able to resell shares of our common stock at or above the price you paid.
Prior to this offering, our common stock has not been traded in a public market. We cannot predict the extent to which a trading market will develop or how liquid that market might become. The initial trading price of our shares may not accurately reflect the value due to low liquidity and volatility in the market.
The trading price of our common stock following this offering is therefore likely to be highly volatile and could be subject to wide fluctuations in price in response to various factors, some of which are beyond our control.
These factors include:
Quarterly variations in our results of operations or those of our competitors.
Announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments.
Disruption to our operations or those of our iVoiceIdeas.com network operators.
The emergence of new sales channels in which we are unable to compete effectively.
Our ability to develop and market new and enhanced products on a timely basis.
Commencement of, or our involvement in, litigation.
Any major change in our board or management.
Changes in governmental regulations or in the status of our regulatory approvals.
Changes in earnings estimates or recommendations by securities analysts.
General economic conditions and slow or negative growth of related markets.
Future sales of shares by our stockholders could cause our stock price to decline.
We cannot predict the effect, if any, that market sales of shares or the availability of shares for sale will have on the market price prevailing from time to time. Sales of our common stock in the public market after the restrictions described in this prospectus lapse, or the perception that those sales may occur, could cause the trading price of our stock to decrease or to be lower than it might be in the absence of those sales or perceptions. None of our officers, directors, employees or stockholders have entered into contractual lock-up agreements.
Recipients of shares registered in this Offering may experience substantial dilution in the book value of their investment.
The value of shares purchased in this Offering may be significantly diluted by future actions of the Board such as issuing shares for investment activities, public or private offerings or acquisitions that may be entered into in the future. Any event that causes dilution in the value of the shares could impair the value of shares registered herein.
We do not intend to pay dividends on our common stock.
We have never declared or paid any cash dividend on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
The price of the shares Offered in this Prospectus has been arbitrarily determined without reference to any outside valuation benchmarks.
The offering price of the shares offered in this Prospectus was established arbitrarily with no reference to external benchmarks or appraisals. Consequently, the valuation of the shares does not necessarily bear any relationship to any objective measure of value nor can it be assumed to be indicative of any future value of the shares.
We will incur increased costs as a result of being a public company.
As a public company, we will incur additional legal, accounting and other expenses that we did not incur as a private company. We will incur costs associated with our public company reporting requirements. We also anticipate that we will incur costs associated with recently adopted corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the Securities and Exchange Commission and FINRA. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We also expect these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
The concentration of our capital stock ownership with our investors, executive officers, employees, and our directors and their affiliates will limit your ability to influence corporate matters.
We anticipate that our founders, executive officers, directors, beneficial owners (and their affiliates) and employees will together own approximately 22.7% of our common stock at the close of this Offering. We have issued 5 million shares of Class A Preferred Stock representing 76 % of our issued and outstanding equity on a fully diluted basis. Because this shareholder controls over 50% of our voting shares, they will hold voting control over matters submitted to the shareholders for a vote and will, therefore have significant influence over management and affairs and over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, for the foreseeable future. The Class A Preferred Stock will not be listed on any exchange or listing service and is not expected to have a market.
The future issuance of additional preferred stock could adversely affect the rights of purchasers of our common stock.
We have an additional five million shares of preferred stock authorized but not issued. The Board of Directors could issue these shares in the future and fix the rights and preferences of any new series of preferred stock in a manner that may dilute or adversely affect the rights and/or the value of the common shares without any vote of the shareholders. For example, such shares could have certain voting preferences, dividend preferences or liquidation rights superior to those of common shareholders. There are no agreements, understandings or plans to issue any new class of preferred stock, but there is a risk such shares could be issued in the future.
Provisions in our charter documents and under Nevada law could discourage a takeover that stockholders may consider favorable.
Our Bylaws and Nevada law allow the Board of Directors to issue additional shares of stock and to take other actions that might discourage a party attempting a hostile takeover of the company. These actions, if taken by the Board may reduce the opportunity for a shareholder to realize the value of the transaction that might occur and could reduce the value of the shares held by existing shareholders.
We expect our stock to be subject to penny stock regulations and restrictions which we expect to reduce liquidity and make it more difficult for you to sell your shares.
The SEC has adopted regulations which generally define a penny stock as an equity security that has a market price of less than $5.00 per share or and exercise price of less than $5.00 per share, subject to certain exemptions. There is currently no market for our common stock. If and when our stock is listed by a listing service, our common stock may be deemed a penny stock and be subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and accredited investors (generally individuals with a net worth in excess of $1,000,000, excluding the value of the primary residence or an annual income exceeding $200,000). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received their purchasers written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market (if a market for our stock ever develops).
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in penny stock, of a disclosure schedule required by the SEC relating the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market for penny stocks.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words believe, may, estimate, continue, anticipate, intend, expect and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short term and long term business operations and objectives, and financial needs. In addition, a number of our objectives, intentions, expectations or goals described in Auction Process for qualification of bidders, the bidding process, the auction closing process, the pricing process and the allocation process are also forward-looking statements. These statements are based on current expectations or objectives of the auction process being used for our initial public offering that are inherently uncertain. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Risk Factors.
In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
USE OF PROCEEDS
We estimate that we will receive net proceeds of $500,000 from our sale of the Common Stock offered by us in this offering, based upon an assumed initial public offering price of $0.05 per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
The principal purposes of this offering are to obtain additional capital for Web site development, management, marketing and operating expenses and to create a public market for our common stock which we hope will facilitate our future access to the public equity markets.
We currently have no specific budget for the use of the net proceeds of this offering. We anticipate that we will use the net proceeds received by us from this offering for general corporate purposes, including working capital. If less than the full amount of the offering is received, we expect to prioritize the use of proceeds to complete the development of our Web site(s) and to grow our user base while maintaining corporate operations. In addition, we may use a portion of the proceeds of this offering for acquisitions of complementary businesses, technologies or other assets. We have no current agreements or commitments with respect to any material acquisitions and have not talked to any potential acquisition target.
Anticipated Use of Proceeds
Web site development
General overhead and operating expense
Pending such uses, we plan to invest the net proceeds in highly liquid, investment grade securities and deposit the balance in the Companys bank account.
DETERMINATION OF OFFERING PRICE
The offering price of the securities described in this Prospectus has been determined arbitrarily by our Board of Directors without reference to intrinsic value, market comparables or competitors which are already public companies.
If you invest in this Offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the adjusted net tangible book value per share into which the Units will convert subsequent to this Offering. Pro forma net tangible book value per share represents the amount of our total tangible assets less total liabilities divided by the number of shares issued and outstanding on a fully diluted basis.
Investors participating in this offering will incur immediate, substantial dilution. Our pro forma net tangible book value before the offering is: $0.0024, computed as total stockholders equity less goodwill and other intangible assets, or $37,846 per share as of September 30, 2011. Assuming the sale by us of 10 million shares of common stock at an initial public offering price of $0.05 per share, and after deducting estimated underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value at September 30, 2011, would have been $537,846, or $.0.024 per share of common stock. This represents an immediate increase in pro forma net tangible book value of $0.0163 per share of common stock to our existing stockholders and an immediate dilution of $0.076 per share to the new investors purchasing shares in this offering. The following table illustrates this per share dilution:
Assumed initial public offering price per Unit:
Pro forma net tangible book value per share as of September 30, 2011
Increase in pro forma net tangible book value per share attributable to this offering
Pro forma as adjusted net tangible book value per share after the offering
Dilution per share to new investors
Earnest Einstein, Inc. was incorporated on April 3, 2002 as a Nevada Corporation. We acquired the rights to the ideas, designs and intellectual property related to iVoiceIdeas.com on June 15, 2009 in exchange for five million shares of common stock. The Beta version of the iVoiceIdeas.com Web site was released to the public in early October 2011.
iVoiceIdeas.coms aim is to become a global technology leader focused on improving the ways people connect with information, develop new ideas and collaborate to solve global, national, business and local problems at all levels of society. We believe that we represent significant innovation and improvement that provides an efficient platform for users to collaborate on the development of solutions, ideas and intellectual property and to make the results of their efforts widely available to others through the iVoiceIdeas social network.
We believe that with proper promotion and sufficient capital, our collaboration platform can become a major influence center among people engaged in the development of ideas, intellectual property and social and political issues. We view our platform not only as a community of collaborative innovators, but as a major megaphone for the development of new, innovative ideas. We see this as important to community leaders, writers, politicians, news people and citizens concerned about contributing to better communities.
We have developed our Beta site but have not begun generating revenue from operations. We expect to generate revenue by delivering relevant, cost-effective online advertising. Businesses will be able to target advertising to potential customers based on key words and topics relevant to that businesss products and services. We expect to initially use existing advertising platforms as feeds to our Web site on a profit sharing basis, such as Google Adwords, Yahoo and MSN.
Our mission is to provide two important values through our Web sites:
First, we want to deliver efficient, user-friendly platforms for innovation and the development of ideas and solutions to important problems facing, nations, states and communities as well as individuals. By allowing people from all over the world to work together on forging new ideas, we believe better ideas will be available for implementation at all levels of society.
Second, we have integrated a voting and ranking system on our Web sites to allow users to identify the best ideas and solutions to problems that interest them. Users will be able to browse the highest vote getting ideas and innovations and as the size of an ideas support base grows through the voting system, the more important that idea will be to news organizations, decision makers, politicians and businesses. This is how we see the site developing significant social impact as its content grows.
We believe that the most effective, and ultimately the most profitable way to accomplish our mission is to put the needs of our users first. We believe that offering a high-quality user experience leads to increased traffic and more passionate users for any Web site. We believe that our user focus is the foundation of our future success. We also believe that this focus is critical for the creation of long-term value. We do not intend to compromise our user focus for short-term economic gain.
How We Provide Value to Users, Advertisers and Web Sites
We aim to serve our users by developing products that enable people to collaborate and develop new ideas, innovations and intellectual property while building a platform where those ideas can be heard and discovered. We expect to place a premium on products that matter to many people and have the potential to improve their lives, especially in areas in which our expertise enables us to excel.
We believe that millions of people around the globe have good ideas and solutions to problems that dont get heard because there is not a platform where their voice can be heard. We believe these individuals will welcome the opportunity to discuss their ideas and to collaborate with other people from around the world in improving those ideas and developing a voice for good ideas that can be heard by decision makers.
We also think that users will enjoy the creative experience of launching a new idea, a solution to a problem they care about or a new invention and seeing it grow as others participate in its development, vote on its merit and comment on it both on the Web site and, eventually beyond the scope of our own Web sites.
Some of the key benefits we offer to users include:
Problem, Issue, Idea Platform. The core value we offer to users is the ability to initiate and develop ideas, projects and inventions using a collaborative platform that allows multiple participants to actually contribute to the growth and development of a new idea or solutions. We believe this feature is critical to our business model because many good ideas originate from obscure locations or individuals and never find a voice and are never refined because they have no place where they can be developed and delivered to a broader public. This platform will provide individuals with good ideas and innovative solutions a place where they can turn those ideas into reality through interaction and collaboration with other, like-minded individuals, from around the world. We use the power of crowd sourcing to identify the ideas that have the most merit.
Relevant and Useful Information. Our technology is open to a vast number of topics and ideas for people who are interested in issues, ideas and solutions. This is an area of continual development for us.
Public Voice to Build Consensus. In addition to providing a collaborative innovation platform, we invite visitors and users to vote on the quality of ideas, projects, solutions and inventions. The number of votes for each project gives us a way to rank projects from our sites in popularity and to highlight the most popular sites. This increased visibility is important to getting an idea or solution heard by decision markers at all levels of government and business.
Objectivity. We believe it is very important that the user experience users have on iVoiceIdeas.com is produced with only their interests in mind. We do not accept money for search result ranking or inclusion. We do accept fees for advertising, but it does not influence how we generate our ranking of projects and ideas. The advertising is clearly marked and separated. This is similar to a newspaper, where the articles are independent of the advertising. Some of our competitors charge web sites for inclusion in their indices or for more frequent updating of pages. Inclusion and frequent updating on our site is open to all free of charge. We apply these principles to each of our products and services.
Global Access. We will strive to provide iVoiceIdeas.com worldwide through the Internet. Users can visit our sites from anywhere in the world subject to their access to the Internet and governmental regulations that may restrict access in some places like North Korea and China. When we have completed the BETA phase of our iVoiceIdeas site development, we expect to begin offering the site in other languages such as Korean and Spanish as soon as possible. In the near term, we do not expect to recover our costs related to providing our services in foreign countries because of a more limited advertising base but we feel that the input and ideas from these sources will enrich the user experience for everyone.
Ease of Use. We have devoted significant efforts to create a streamlined and easy-to-use interface. We have also created many features that enhance the user experience. Our products present these features when we believe they will be most useful, rather than promoting them unnecessarily.
Advertising Business Model
Most forms of media are supported by advertising. For example, radio, television, magazines, newspapers and most major Internet sites are supported by advertising revenue. This is the same model we expect to produce most of our future income as our user base grows. We believe success is about the quality of users and value to the advertiser. We initially expect to use advertising platforms with proven success such as Google, Yahoo and MSN to place ads on out site. We will pay them a percentage of the ad revenue and collect the rest as income for us. Internet advertising has grown in popularity in the last five years as more and more businesses elect to advertise online. We expect our user base to be highly educated, employed and in the target zone of most advertisers, making our site an attractive place for advertisers to place their ads.
Our current BETA site is www.iVoiceIdeas.com.
iVoiceIdeas.com is our primary brand and primary Web site. This site contains a social network core much like Facebook, LinkedIn, Orkut and others but it is distinct in some very important ways. The social network functions allow users to post personal information, find and communicate with other users, form groups, organize events and perform other social functions.
What is different about iVoiceIdeas.com is its insular focus on new ideas and solutions to problems people face at a global, national, state and local level. Here users can interact on issues of the economy, jobs, politics, poverty, security, family life, entertainment, travel, and the list can go on as far as the user wants to pursue new ideas. Layered on top of this idea-focused community are collaboration tools that allow a user to invite other participants from all over the world to collaborate and contribute to the development of their idea, problem or solution.
A major site that has used this crowd-sourcing approach to building valuable content is Wikipedia.com. This site has millions of entries in multiple languages all developed by users who provided the input, definitions and editing that have made this site a primary reference source around the world. The iVoiceIdeas collaboration tools are intended to have the same result with people actively participating in the development of world-class solutions through wide participation and crowd-sourcing.
Users are then invited to vote on the quality of each idea, discussion, project or invention on a 1-5 scale. The vote totals from user votes are used to rank ideas by popularity and quality through user input. The most popular ideas (those getting the most votes) will be featured on the home page and in search results of the Web site so that the best ideas will get the most exposure.
In addition, we provide a unique dashboard function that allows active users to which ideas or problems appear in which order on their personal page. It also allows users to determine who can see each idea or problem. For example an idea can be available only to a private group; to selected groups or to the public. The dashboard allows users the ability to control who sees what on their page and in what order the information appears. Different users will see different ideas and problems depending on the settings selected in the dashboard.
It is the goal of iVoiceIdeas to build enthusiasm for good ideas through this ranking system to the degree that decision makers, pundits, writers, news people and politicians will have to be knowledgeable about what ideas from the community have the most support. When voting reaches critical mass, the results of users opinions will become too important to ignore. At that point, iVoiceIdeas will be influential in influencing policy and decisions that affect peoples lives around the world.
Our product development philosophy is centered on rapid and continuous innovation, with frequent releases of improvements and new projects expected based upon our ability to finance continued development and to manage the growth of our present sites. We take technology innovation very seriously. We expect to compete aggressively for talent because we believe talented people drive innovation.
We believe that building a trusted, highly recognized brand begins with providing high-quality products and services that make a notable difference in peoples lives. Our Beta sites will be marketed primarily by word of mouth and through the development of relationships with technology bloggers. Because users will be promoting the development of their own ideas and projects, we expect a high level of loyalty from users who will want to encourage friends to contribute to their project and to vote for it so that it will receive a higher ranking. We expect this to work as a viral marketing strategy. This grass-roots strategy is expected to provide a low cost way to increase our user base as we grow.
One core component of our marketing strategy is to roll out iVoiceIdeas on a city-by-city basis much like Facebook rolled out on a college-by-college basis. We believe that, by focusing on one city at a time, we can build cohesion and enthusiasm for issues, problems and solutions that have emotional importance to the inhabitants of that city. This will allow us to generate publicity and news coverage that will assist us in procuring new users. As we add cities, we expect our user base to grow rapidly.
In addition, we expect to sponsor numerous contests with monetary prizes to incent users to participate in launching new ideas and new projects related to the topic of the incentive. For example, the U.S. needs the creation of new jobs. Users can launch projects and ideas related to how government can facilitate job growth with a prize going to the idea getting the most votes from users of the Web site.
We face formidable competition in every aspect of our business, and particularly from other social networks that are much better funded and much better established than iVoiceIdeas. The biggest competitors are Facebook, MySpace, Google+, LinkedIn, AOL and others. We also face competition
from many other social networks and collaboration sites, many of whom are not known to us at this time. We will also be competing for advertising dollars with the largest and most successful Web sites on the planet. In light of this competitive landscape, we must successful carve out a niche in which we can be a leader and attract a loyal base of passionate users. If we fail to achieve this, we will not generate enough revenue to survive as a going concern.
We compete to attract and retain relationships with users, advertisers and web sites. The bases on which we compete differ among the groups.
Users. We compete to attract and retain users of our collaborative idea and problem-solving platform. Most of the services we offer to users are free, so we do not compete on price. Instead, we compete in this area on the basis of the relevance and usefulness of our community and the collaboration tools we provide as well as upon the strength of our user generated content.
Advertisers. We compete to attract and retain advertisers. We expect to compete in this area principally on the basis of the return on investment realized by advertisers who want to reach our user base of idea driven, educated, engaged consumers.
We believe that we will compete favorably on the factors described above. However, we will need a successful marketing program in order to acquire enough users to be an attractive platform for advertisers. Our industry is evolving rapidly and is becoming increasingly competitive. Larger, more established companies than us are increasingly focusing on innovation and we may encounter new competitors with whom we cannot successfully compete.
We do not currently own any patents. We own several URLs and we rely upon a combination of trademark, copyright and trade secret laws in the U.S. and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. We also enter into confidentiality and invention assignment agreements with our employees and consultants and confidentiality agreements with other third parties, and we rigorously control access to proprietary technology.
Circumstances outside our control could pose a threat to our intellectual property rights. For example, effective intellectual property protection may not be available in every country in which our products and services are distributed. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. Also, protecting our intellectual property rights is costly and time consuming. Any increase in the unauthorized use of our intellectual property could make it more expensive to do business and harm our operating results.
Companies in the Internet, technology and media industries own large numbers of patents, copyrights and trademarks and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. As we face increasing competition, the possibility of intellectual property claims against us grows. Our technologies may not be able to withstand any third-party claims or rights against their use.
We are subject to a number of foreign and domestic laws that affect companies conducting business on the Internet. In addition, because of the increasing popularity of the Internet and the growth of online services, laws relating to user privacy, freedom of expression, content, advertising, information security and intellectual property rights are being debated and considered for adoption by many countries throughout the world.
In the U.S., laws relating to the liability of providers of online services for activities of their users are currently being tested by a number of claims, which include actions for defamation, libel, invasion of privacy and other data protection claims, tort, unlawful activity, copyright or trademark infringement, or other theories based on the nature and content of the materials searched and the ads posted or the content generated by users. In addition, several other federal laws could have an impact on our business. For example, the Digital Millennium Copyright Act has provisions that limit, but do not eliminate, our liability for listing or linking to third-party web sites that include materials that infringe copyrights or other rights, so long as we comply with the statutory requirements of this act. The Childrens Online Protection Act and the Childrens Online Privacy Protection Act restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors. In addition, the Protection of Children from Sexual Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances. Existing or new legislation could expose us to substantial liability and restrict our ability to deliver services to our users.
We are also subject to international laws associated with data protection in Europe and elsewhere and the interpretation and application of data protection laws is still uncertain and in flux. In addition, because our services are accessible worldwide, foreign jurisdictions may claim that we are required to comply with their laws.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled Risk Factors and elsewhere in this prospectus.
iVoiceIdeas delivers collaborative innovation and social networking tools for the development of new ideas. Our service is delivered on the Internet. We focus on the development of new ideas using social networking and collaboration plus crowd sourcing. Our goal is to find the best ideas and solutions available on any subject.
In addition to building a community of ideas, we believe in the creative use of crowdsourcing to solve problems of national and local importance to our users. We deliver unique collaboration tools to allow groups to develop projects and ideas together.
Our goal as a company is not only to create an interesting social environment for ideas, but to be an important place for new ideas to be developed and heard by policy makers at every level and within any organization.
Our primary URL is www.iVoiceIdeas.com.
We serve three primary constituencies:
Users. We provide users with tools that stimulate problem solving, innovation, collaboration and the development of solutions to problems of national, and local importance as well as ideas and solutions related to business and community.
Advertisers. We will provide advertisers a platform where they can reach our users with information regarding their products and services. Because we are a collaborative idea social network, we expect our user base to be well educated and economically capable users who represent an attractive target market for advertisers.
Readers. We provide casual readers as well as those seeking the latest trends and solutions to national and local problems a place where they can see what ideas are being rated most highly by our reader and users. Our design is aimed at making the Web site interesting to casual readers while encouraging them to vote on the ideas they feel have the most merit.
We were incorporated in Nevada in 2002.
Plan of Operations
We launched our BETA site in early October 2011. We are a social network, focused on collaborative development of ideas and solutions of interest to users. Content will be generated by users. These users will also be able to collaborate on ideas and solutions to problems as well as to vote on the ideas they like the best. Ideas with the most votes in each subject category are presented on the home page for greater exposure. We expect the site to focus on the needs of communities as well as on political, social, financial and personal issues of interest to our users.
We expect the proceeds of this offering to fund the costs of operations for more than the next twelve months.
During the next twelve months, we plan to improve the performance and functionality of our Web site during the BETA phase in preparation for a larger public launch of the Web site after it is redesigned to overcome any issues, problems or opportunities identified during the BETA phase. We have not defined a specific length of time during which we intend to operate in BETA format. We expect that time line to be determined by user response, available funding and the time needed to develop the post-BETA public release version of the Web site. We are seeking to attract a modest user base during BETA so we dont overload the system before confirming its capacity to handle the growth in traffic. The information we gain from this experience will assist us in developing the full version of the Web site for release in 2012.
Our Web site will be supported by advertising revenue. However, during the BETA phase and early development, we do not expect this income to be substantial because the amount of traffic to the Web site will be small. We estimate that we will need more than two million users in order to attract enough advertising to fully support us financially.
Marketing. We expect to market our functionality on a city-by-city basis as a way to give focus to the initial marketing and as a way to stimulate user interest. As we complete the development of our commercial web site during the BETA phase, we will complete the planning and strategies related to marketing its web sites and functions to key communities to whom we expect to provide the platform needed for rapid growth in users and content. By way of analogy, Facebook uses a marketing strategy of focusing on developing college campuses as cohesive user groups in order to grow its user base rapidly. In a similar way, we expect to use large municipalities as homogeneous groups with shared concerns about issues related to their communities in order to grow our user base. By using this method, we hope to see the same type of rapid growth that was experienced by facebook during its early roll out.
Liquidity and Capital Resources
From inception to date, our only source of cash to fund operations has been from investors through the sale of our securities to them. When we launched the development of the iVoiceIdeas Web site in 2009, we received an initial contribution of share capital of $100,000 from an accredited investor who purchased 10 million shares of common stock at $0.01 per share. These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act. We paid five million shares of common stock to acquire the intellectual property, design and ideas related to our business in June of 2009. At the end of 2010, we received an additional investment from an investor of $20,000 for one million shares of common stock priced at $.02 per share. These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act. We later agreed to repurchase these shares from this investor so they are no longer issued and outstanding. In 2011, we agreed to issue five million shares of Class A preferred stock to an investor in exchange for $225,000. In December 2010, we issued 142,500 common shares at a value of $0.05 per share to an investor in exchange for $7,125. These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act. We have issued 20,000 shares for services to various persons who helped with our site design. In August 2011 we issued 600,000 shares of common stock to an investor at $0.05 per share ($30,000). These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act.
Stock-Based Compensation. We made stock grants totaling 20,000 shares at valuations determined by our Board of Directors to employees, developers, key personnel and consultants. See, Critical Accounting Policies and EstimatesStock-Based Compensation.
In 2011, we issued a total of 20,000 shares of common stock to seven individuals for services they had provided in helping us develop the concepts for iVoiceIdeas.com.
As of December 31, 2009, we had cash on hand of $94,822.
As of December 31, 2010, we had cash on hand of $44,922.
As of September 30, 2011, we had cash on hand of $37,846 and no debt or unpaid liabilities and no warrants or options outstanding.
We do not have any debt or long-term liabilities at this time. We have paid for our operating expenses as we progressed toward the BETA launch. We do not currently have any plans to use debt financing because we feel that it increases the financial risk related to the ownership of our common stock. Because social networks are viewed as a growing industry today, we have not had problems
raising the capital we needed thus far. However, this could change in the future if the public mood or attitude related to social networks changes in the future.
We expect the proceeds of this Offering, if fully subscribed, to be sufficient to fund our operations for at least the next 18 months. If this offering is not successful in raising the funds projected, we will need to seek other sources of financing which may or may not be less favorable to the current shareholders.
We expect the proceeds of this offering to be our primary source of liquidity for the next eighteen months. We expect to need a minimum of $500,000 for operating costs in order to continue to develop our product and deliver it to the market over the next 12 months. Beyond this, our growth will be affected by the amount of money we can invest in marketing our site to potential new users. If we do not have substantial capital for marketing, our growth will be slower. This is more cash than we have on hand and we expect to use the proceeds of this Offering for this purpose. In addition, we can accelerate the marketing of iVoiceIdeas with additional funds as well as develop additional product offerings we believe will be of interest to our users if we are successful in acquiring additional capital through this offering.
We expect it to be at least 18 months (and maybe longer) before we can grow advertising revenue to the level where we will be cash flow positive. That means we will need investment income from this offering and from other sources to establish ourselves as a successful business during this interim period. Although this is typical of Internet companies, we must continue to acquire capital through the sales of stock in order to sustain operations during this interim period. This may cause additional dilution to investors who purchase shares in this offering if we must sell shares at a lower price at a later date in order to obtain the capital we need to continue to execute on our business plan.
Long-term, we expect our primary source of revenue to be from our advertisers. We are just launching our initial BETA site, so we do not have any advertising revenue during the reporting periods since we were developing our business model and technology. This aspect of our business will need to be developed successfully over the next few years in order for us to succeed on a long-term basis. We do not have any long-term debt or contract obligations.
Trends in Our Business
Our business has currently launched the Beta version of our first primary Web site. We are accepting our first customers and garnering feedback from them on ways to improve the sites performance. We expect to incorporate much of this information into future versions of our site before our official launch.
We expect to take 18 to 24 months to grow our user base to where it will support advertising revenue sufficient to pay expenses. We anticipate that we will need to procure additional capital after we complete our Beta launch to cover operating expenses from the time we introduce the next version of the site to the public and when we reach profitability.
Growth and Valuation Model
Social networks have received publicly priced investment recently, which provide a contemporary benchmark on user valuation. The largest of these are Facebook and LinkedIn. These companies are much larger than we are, so it is not reliable to make direct comparisons as to user value. However, a valuation metric commonly used in valuing similar companies is the number of users.
Facebook is completing a financing in 2011 that is reported in the press to value the company at over $70 per user. Our growth targets are to reach 1,000,000 users within one year and 3,000,000 within two years. If we achieve these targets and if our social network users are viewed as having equivalent or greater value to advertisers, our valuation would be attractive at that time. This is, of course, speculative and based on assumptions, which can only be verified over time and, therefore, cannot be relied upon as a basis for current valuation since it consists of forward looking statements. We cannot predict accurately how fast we will grow nor how much our per user value multiple will be in future periods.
Because we are a social network focused on ideas, solving problems and collaboration, we expect our users to be more highly educated and financially secure than the average user on facebook and LinkdIn. If this is true, we believe our value per user should be higher because these are ideal users that advertisers will want to reach. This, of course, can only be determined by the response of the market to our business in the future, which we can neither control nor predict. As our user base grows past one million and approaches two million, we expect that there will be market participants who see us as a valuable acquisition target.
Provision for Income Taxes
We have incurred losses since our inception and therefore, has not been subject to payment of Federal income taxes. As of December 31, 2009 and December 31, 2010, we estimate an accumulated net operating loss (NOL) carryforward of approximately $5,678 and $21,401 respectively, resulting in deferred tax assets of approximately $1,987 and $7,490, respectively. The carryforwards, if not utilized, begin to expire in 2030. Because tax laws in the United States limit the time during which NOL and tax credit carryforwards may be applied against future taxable income and tax liabilities, we may not be able to take full advantage of NOL and tax credits for federal income tax purposes. Deferred tax assets are not recognized in the above financial statements since they are contingent.
A reconciliation of the federal statutory income tax rate to our effective tax rate is set forth in Note 2 of Notes to Consolidated Financial Statements included in this prospectus.
Off-Balance Sheet Entities
As of the date of this prospectus, we do not have any relationship with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S. In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. In many cases, we could reasonably have used different accounting policies and estimates. In some cases changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which we discuss
further below. Our management has reviewed our critical accounting policies and estimates with our board of directors. (See, Note 2 to our Financial Statements.)
Stock Issued and Stock-based Compensation
We have 15,762,500 shares of common stock issued and outstanding as of September 30, 2011 and five million shares of Class A Preferred Stock. We have no options or warrants issued or outstanding. We have 11 shareholders of record prior to the Offering. We are authorized to issue up to 190 million shares of common stock and up to 10 million shares of preferred stock by our articles of incorporation.
Accounting for Stock-Based Awards to Employees
We have not granted any stock options as of September 30, 2011. In the future, we may grant stock options at exercise prices equal to the value of the underlying stock as determined by our board of directors on the date of option grant. For purposes of financial accounting, we will apply hindsight to arrive at reassessed values for the shares underlying our options and issued under other transactions. There are two measures of value of our common stock that are relevant to our accounting for equity compensation relating to our compensatory equity grants:
The board-determined value is the per share value of our common stock determined by our board of directors at the time the board makes an equity grant, taking into account a variety of factors, including our historical and projected financial results, comparisons of comparable companies, risks facing us, as well as the liquidity of the common stock.
The reassessed value is the per share value of our common stock determined by us in hindsight solely for the purpose of financial accounting for employee stock-based compensation.
We will record deferred stock-based compensation to the extent that the reassessed value of the stock at the date of grant exceeds the exercise price of the option. The reassessed values for accounting purposes are determined based on a number of factors and methodologies. One of the significant methods we will use to determine the reassessed values for the shares underlying options is through a comparison of price multiples of our historical and forecasted earnings to certain public companies involved in the same or similar lines of business. The market capitalizations of these companies has increased significantly in recent years which would contribute significantly to the increase in the reassessed values of our shares. We also considered our financial performance and growth. If our revenue and earnings grow it will contributed significantly to the increase in the reassessed values of our shares. We may also retain third party advisors to provide contemporaneous valuation analyses. Please note that these reassessed values are inherently uncertain and highly subjective.
Accounting for Stock-Based Awards to Non-employees
We will measure the fair value of options to purchase our common stock granted to non-employees throughout the vesting period as they are earned, at which time we recognize a charge to stock-based compensation. The fair value is determined using the Black-Scholes option-pricing model, which considers the exercise price relative to the reassessed value of the underlying stock, the expected stock price volatility, the risk-free interest rate and the dividend yield. As there has been no public market for our stock, our assumptions about stock-price volatility are based on the volatility rates of comparable publicly held companies. These rates may or may not reflect our stock-price volatility should we become a publicly held company.
Effect of Recent Accounting Pronouncements
In November 2002, the EITF reached a consensus on Issue 00-21, Accounting for Multiple Element Revenue Arrangements, addressing how to account for arrangements that involve the delivery or performance of multiple products, services, and/or rights to use assets. Revenue arrangements with multiple deliverables are divided into separate units of accounting if the deliverables in the arrangement meet the following criteria: (1) the delivered item has value to the customer on a standalone basis; (2) there is objective and reliable evidence of the fair value of undelivered items; and (3) delivery of any undelivered item is probable. Arrangement consideration should be allocated among the separate units of accounting based on their relative fair values, with the amount allocated to the delivered item limited to the amount that is not contingent on the delivery of additional items or meeting other specified performance conditions. The guidance in Issue 00-21 is effective for revenue arrangements entered into in fiscal periods after June 15, 2003. The adoption of Issue 00-21 did not have an impact on our financial statements. See the further discussion in Note 1 of Notes to the Consolidated Financial Statements included as part of this prospectus.
During November 2002, the FASB issued Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34 (FIN 45). FIN 45 elaborates on the existing disclosure requirements for a guarantor in its interim and annual financial statements regarding its obligations under guarantees issued. It also clarifies that at the time a guarantee is issued, the guarantor must recognize an initial liability for the fair value of the obligations it assumes under the guarantee and must disclose that information in its financial statements. The initial recognition and measurement provisions apply on a prospective basis to guarantees of third party obligations issued or modified after December 31, 2002, and the disclosure requirements apply to such guarantees outstanding at December 31, 2002. We adopted the provisions of FIN 45 at January 1, 2003. The adoption of this Interpretation did not have an impact on our operating results. See further discussion regarding indemnifications in Note 7 to the Notes to the Consolidated Financial Statements included with this prospectus.
In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities. Interpretation No. 46 clarifies the application of Accounting Research Bulletin No. 51. This Interpretation requires variable interest entities to be consolidated if the equity investment at risk is not sufficient to permit an entity to finance its activities without support from other parties or the equity investors lack specified characteristics. We do not have any variable interest entities.
In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for how a company classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify certain financial instruments as a liability (or as 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. The adoption of SFAS No. 150 did not have an impact on our financial statements.
PLAN OF DISTRIBUTION
We are offering the shares on a "self-underwritten" basis solely through the officers and directors named in this Prospectus. Our officers and directors will not receive any commissions or other remuneration of any kind in connection with his participation in this offering based either directly or indirectly on transactions in securities.
This offering is a self-underwritten offering, which means that it does not involve the participation of an underwriter to market, distribute or sell the shares offered under this prospectus. This offering will terminate upon the earlier to occur of (i) 90 days after this registration statement becomes effective with the Securities and Exchange Commission, (ii) the date on which all 10,000,000 shares registered hereunder have been sold. We may, at our discretion, extend the offering for an additional 90 days.
We anticipate that we will be initially offering our securities in the State of Nevada. Once this Registration Statement is effective, and if our Board of Directors believes that there is sufficient interest in us to offer our securities in the state of Nevada, we will register with the state of Nevada under 'blue sky' laws. However, we have not yet applied for 'blue sky' registration in any state, and there can be no assurance that we will be able to apply, or that our application will be approved and our securities will be registered, in Nevada or any other state in the United States.
Our officers and directors will not register as a broker-dealer pursuant to Section 15 of the Securities Exchange Act of 1934, in reliance upon Rule 3a4-1, which sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer's securities and not be deemed to be a broker-dealer.
None of our officers or directors is subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Act, at the time of his participation;
None of our officers or directors will be compensated in connection with their participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;
None of our officers or directors will be at the time of participation in the offering, an associated person of a broker-dealer; and
Our officers and directors, meets the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that they (A) primarily perform, or intend primarily to perform at the end of the offering, substantial duties for or on our behalf, other than in connection with transactions in securities; and (B) is not a broker or dealer, or been an associated person of a broker or dealer, within the preceding twelve months; and (C) have not participated in selling and offering securities for any issuer more than once every twelve months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Our officers, directors, control persons and affiliates do not intend to purchase any shares in this offering.
If applicable, the shares may not be offered or sold in certain jurisdictions unless they are registered or otherwise comply with the applicable securities laws of such jurisdictions by exemption, qualification or otherwise. We intend to sell the shares only in those jurisdictions in which this offering has been qualified or an exemption from the registration requirements is available, and purchases of shares may be made only in those jurisdictions.
In addition and without limiting the foregoing, we will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to security transactions during the period of time when this Registration Statement is effective. We will not use public solicitation or general advertising in
connection with the offering. Once this registration statement is declared effective by the SEC, we anticipate inviting interested parties to review the registration statement. Initial introductions to interested parties will be made through verbal communications.
This offering will continue for the longer of: (i) 90 days after this registration statement becomes effective with the Securities and Exchange Commission, or (ii) the date on which all 10,000,000 shares registered hereunder have been sold. We may at our discretion extend the offering for an additional 90 days.
Each subscriber to this offering must execute and deliver to us a copy of the Subscription Agreement attached to this registration statement as exhibit 99.1. We will review the materials and, if the subscription is accepted, we will execute the Subscription Agreement and return a copy of the materials to the subscriber. We retain have the right to accept or reject any subscription, in whole or in part. An acknowledgment of the acceptance of a subscription will be returned to the subscriber promptly after acceptance.
Payment for the amount of the shares subscribed for shall be made at the time of delivery of the properly executed Subscription Agreement, or at such later date as we may specify by written notice to the subscriber (unless such date is deferred in our sole discretion), by check, bank draft or wire transfer of funds immediately available us at the address set forth in the Subscription Agreement or to an account specified by the Company. The date upon which the transaction contemplated by the Subscription Agreement shall become effective (the "Closing") will occur on such date or within such period as may be specified at our discretion with written notice to the Subscriber. There is no minimum aggregate amount of Shares which must be sold as a condition precedent to the Closing, and we may provide for one or more Closings while continuing to offer the Shares that constitute the unsold portion of the Offering.
We do not expect to incur selling expenses or commissions related to the sale of securities described in this Prospectus.
Estimated Costs Related to the Offering
Transfer Agent Fees
Qualitative and Quantitative Disclosures about Market Risk
Following the effective date of this Prospectus, we expect a market maker to request listing on the OTCBB and OTCQB listing services. We have no agreement with any market maker at this time. We do not expect to face quantitative risk related to changes in currency exchange rates in the next twelve months nor do we face significant risk from changes in interest rates since we do not have any debt instruments. As a publicly traded entity, we may face risks from qualitative and quantitative equity security prices since we will not have control over the price of our common stock as it is traded in the market. If our common equity price is volatile or if our equity is priced too low by the market, it could substantially affect how we are perceived and our ability to raise money in the future from the additional sale of securities either privately or to the public.
Interest Rate Risk
We expect to invest our excess cash in a variety of securities, consisting primarily of investments in interest-bearing demand deposit accounts with financial institutions, tax-exempt money market funds and highly liquid debt securities of corporations and municipalities. By policy, we limit the amount of credit exposure to any one issuer.
Investments in both fixed rate and floating rate interest earning products carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. Due in part to these factors, our income from investments may decrease in the future.
We have outsourced the software and Web development of most of our initial Beta sites using contracted programmers and have two full time contract employees at this time. We have found that, as a new company with limited resources, we can produce a better product by hiring a highly experienced developer on an hourly basis than by trying to hire in-house talent.
We will continue to try to minimize corporate hierarchy and rapid growth in our employee base in order to maintain greater control over budget and expenses. None of our current employees are compensated on a full-time basis and each is engaged in other activities at least part of the time.
We are not engaged in any legal proceedings or lawsuits and management is not aware of any claims or pending litigation related to the business.
We rent a corporate office at the Arboretum Great Hills, 9600 Great Hills Trail, in Austin, Texas. We do not own any real estate or office space. Since we are an Internet company, our employees are able to perform necessary tasks from remote locations. In addition, we outsource our primary programming and Web development functions.
Executive Officers and Directors
Our executive officers and directors, and their ages and positions as of September 30, 2011 are as follows:
Director, Chief Executive Officer and President
Director, Principal Accounting Officer and Secretary
Maurice Stone became a Director and the Chief Executive Officer and President on October 1, 2011.
Kathryn Gilchrist is the former President and has been a Director since 2009.
Angela Gilchrist was appointed as a Director on October 1, 2011. She is the sister of Kathryn Gilchrist.
Note: Kathryn Gilchrist and Angela Gilchrist are sisters.
Board of Directors
Our bylaws provide that the authorized size of our board of directors, which is currently three members, is to be determined from time to time by resolution of the board of directors. Our current directors were elected in the manner described in our certificate of incorporation and bylaws of the corporation. The holders of a majority of our preferred stock have sufficient votes to control the election of Directors.
Maurice Stone, 52, Chairman.
Maurice Stone is a senior management executive with over 30 years of extensive entrepreneurial and business management experience. He maintains an excellent background in business planning, financial planning, market analysis, media presentation, and the activities needed in structuring and implementing a medium to large scale multi-site business. He has served as a principal and/or senior manager within private and publicly-traded enterprises.
In addition to serving as the President, CEO and Chairman of iVoiceIdeas, Inc. Mr. Stone also serves on the Board of Directors of the National Black Chamber of Commerce and is the Chairman of its Energy Committee focused on obtaining Local, National, and International contracts for Chamber member companies. The Energy Committees purpose is to investigate energy-related topics and return summary issues and opportunities to the Chamber membership. In addition, the Committee can identify key issues and bring in appropriate expertise including consultants and vendors to assist member companies in their pursuit of contracts.
Presently, he serves on the Boards of Directors of several companies. He is a knowledgeable and sought after motivational and inspirational speaker on economic development, community development,
and other prominent socio-economic issues. In addition, he, along with the companies he has represented, has received a number of awards for high achievement and excellence in business and innovation.
Formerly, Mr. Stone was the President of National Clean Fuels, an emerging alternative energy company intent on commercializing and distributing cutting edge alternative energy technologies domestically, as well as internationally. From May 2002 to November 2007 Mr. Stone served as Chairman and Chief Executive Officer of Intrepid Holdings, Inc. From March 2005 to November 2007, he served as CEO of Cornerstone Services Group, Inc., Houston, TX. Mr. Stone experienced a personal bankruptcy in the last five years.
From January 2000 to April 2002, he was Chief Executive Officer of First Genesis, Inc. where he was responsible for the overall management and supervision of the companys information technology service offerings. During his tenure the companys revenue increased by 200%. From March 1996 to January 2000, Mr. Stone served as an Executive Officer with Intelligent Medicine, Inc. and Telemedicine Solutions International, Inc. where he negotiated and delivered the companys telemedicine contracts to the State of Texas, Howard University, and the US Virgin Islands. From 1983 to 1989, Mr. Stone served as General and Limited Partner of River City Broadcasting, Ltd. While there he participated in comparative hearings at the Federal Communications Commission, aided in creating the companys business and marketing planning documents for the operations of an ABC-TV affiliate, and successfully negotiated the purchase and subsequent sale of the companys rights to Gillette Broadcasting.
Mr. Stone began his business career in 1981 through 1984, as a Marketing Representative for IBM Corporation where he was responsible for the selling of large-scale computer systems and information technology services. He successfully represented the company to the Federal Express Account Team, Union Planters Bank, The Federal Reserve Bank, Hunter Fans, and Terminex Pest Control. In addition, he served as a college intern to the company from 1978 to 1980.
Mr. Stone earned his B.S. degree in electrical engineering, with a minor in Finance from Memphis State University in 1981. He also received training, certifications, and diplomas in Finance, Marketing, and Business Administration from IBMs Corporate Training School (Endicott, NY; Cambridge, MA; and Irving, TX) in 1982 and he attends multiple finance and business strategy seminars, classes, and training sessions.
Kathy Gilchrist, 35, Principal Accounting Officer, Secretary and Director
Kathy Gilchrist is the owner of online marketing firm, Online Results, LLC, which she founded in 2008. She is an Internet entrepreneur active in the development of Internet businesses and marketing. Prior to founding Online Results, Ms. Gilchrist was a Microsoft GP Consultant for Syvantis Technologies, LLC located in Brainerd, Minnesota form 2007 to 2008 where she performed accounting software conversions and system implementations as well as accounting functions. Prior to that, she was a Financial Accountant for HSBC/Metris Company in Minnetonka, Minnesota from 2004-2006 where she was responsible for validating a large volume of daily banking activity, monitoring fraud reports, project management and Sarbanes-Oxley compliance.
She has served on the Board of the Pine River-Backus Family Center, a non-profit organization dedicated to family issued for five years. She also served for three years on the Board of the Pequot Lakes Schools Parent Teacher Association. She earned a B.A. in Business in Accounting and Finance from Georgia State University in 2002 and is currently pursuing an M.B.A. in Accounting at the University of Phoenix.
Angela Gilchrist, 39, Director
Angela is currently an entrepreneur pursuing a variety of startup ventures.
Previously, Angela was the Director of Operations Project Management at Boston Scientifics Cardiac Rhythm Management (CRM) division from 2009-2010. In this role, Angela led major projects for all of the CRM global manufacturing plants, including the operations portion of a global SAP overhaul. She also created and drove the ten year vision for CRM Operations Information Systems.
Prior to that, Angela was the Director of Manufacturing Production for Boston Scientific CRMs St. Paul, Minnesota plant from 2008-2009. She was in charge of the manufacturing assembly lines, the product builders that work on the assembly lines, the Production Training department, the Industrial Engineering department, and the Lean processes and tools used in manufacturing.
Prior to that position, Angela worked as the Director of Operations in Boston Scientific CRMs Dorado, Puerto Rico plant from 2006-2008. In this role, Angela had responsibility for the same functions as in the St Paul plant, plus the manufacturing engineering and supply chain departments. Prior to her role in Puerto Rico, Angela served in various positions in Boston Scientific since 2002, including Software Engineering Manager and Operations Manager.
Before joining Boston Scientific, Angela was Executive Director for the Sexual Violence Center, a Minnesota nonprofit organization. Prior to that assignment, she worked at CyberOptics Corporation, an electronics inspection equipment company, where she gained six years of experience in various manager and director level roles, with responsibilities for mechanical, electrical, optical, and software engineering as well as project management functions.
Gilchrist earned a B.S. in Mechanical Engineering from Boston University, and is currently pursuing an M.B.A. at the University of Minnesotas Carlson School of Management.
Committees of the Board of Directors
Our board of directors acts as a whole in regard to the duties of the audit committee, compensation committee, nominating and corporate governance committee.
Our audit committees main function will be to oversee our accounting and financial reporting processes, internal systems of control, independent auditor relationships and the audits of our financial statements. This committees responsibilities will include the following:
Selecting and hiring our independent auditors.
Evaluating the qualifications, independence and performance of our independent auditors.
Approving the audit and non-audit services to be performed by our independent auditors.
Reviewing the design, implementation, adequacy and effectiveness of our internal controls and our critical accounting policies.
Overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters.
Reviewing with management and our auditors any earnings announcements and other public announcements regarding our results of operations.
We intend to comply with future audit committee requirements as they become applicable to us.
Leadership Development and Compensation Committee
Our leadership development and compensation committees purpose will be to assist our board of directors in determining the development plans and compensation of our senior management, directors, consultants and employees and recommend these plans to our board. This committees responsibilities will include:
Reviewing the employee wide compensation philosophy.
Reviewing the budget and structure of our employee wide variable cash compensation plans.
Reviewing the budget and structure of our employee wide equity based compensation plans.
Periodically reviewing the our leadership development plans.
Reviewing and recommending compensation and benefit plans for our executive officers and board members.
Reviewing the terms of offer letters and employment agreements and arrangements with our officers.
Setting performance goals for our officers and reviewing their performance against these goals.
Periodically reviewing executive succession plans and executive education and development plans.
Evaluating the competitiveness of our executive compensation plans.
Independently accessing externally provided market information on industry compensation practices.
Preparing the report that the SEC requires in our annual proxy statement.
Corporate Governance and Nominating Committee
Our corporate governance and nominating committees purpose will be to assist our board by identifying individuals qualified to become members of our board of directors consistent with criteria set by our board and to develop our corporate governance principles. This committees responsibilities will include:
Evaluating the composition, size and governance of our board of directors and its committees and make recommendations regarding future planning and the appointment of directors to our committees.
Establishing a policy for considering stockholder nominees for election to our board of directors.
Recommending ways to enhance communications and relations with our stockholders.
Evaluating and recommending candidates for election to our board of directors.
Overseeing our board of directors performance and self-evaluation process and developing continuing education programs for our directors.
Reviewing our corporate governance principles and providing recommendations to the board regarding possible changes.
Reviewing and monitoring compliance with our code of ethics and our insider trading policy.
Internal Controls. Because we are a small company that has just launched its BETA site and because we do not have sufficient staff in our accounting department to implement redundancy in the review of financial matters, our internal controls are inadequate and will need to be improved to meet corporate governance standards in the future.
We do not currently compensate our directors in cash for their service as members of our board of directors. We do reimburse our directors for reasonable expenses in connection with attendance at board and committee meetings. Our directors are eligible to receive stock grants.
Executive and Director Compensation
The following table sets forth information regarding the compensation that we paid to our Chief Executive Officer and each of our most highly compensated executive officers during the year ended December 31, 2010 and during the period ending September 30, 2011. We refer to these officers in this prospectus as the named executive officers.
Summary Compensation Table
Name and Principal Position
Mr. Stone assumed the duties of the CEO and Director of the Company on October 1, 2011. Therefore, he did not receive compensation during the periods reported herein. His compensation is $5,000 per month.
Kathy Gilchrist received compensation of 5,000 shares of common stock valued by the Board of Directors at $250.
Option Grants in Last Fiscal Year
No stock or options were granted to officers or directors in 2010.
Stock Grants to Employees, Management and Consultants
During 2011, a total of 20,000 shares were issued to seven individuals for services rendered to the corporation including the management shares described above.
Employee Benefit Plans
We do not currently have an employee stock incentive plan or benefit plan for employees. We may initiate such a plan in the future.
We do not currently have any employment agreements with any of our employees and each serves as an employee at will.
Limitation on Liability and Indemnification Matters
Our certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Nevada law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:
Any breach of their duty of loyalty to our company or our stockholders.
Acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law.
Unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Nevada General Corporation Law.
Any transaction from which the director derived an improper personal benefit.
Our bylaws provide that we are required to indemnify our directors and officers and may indemnify our employees and other agents to the fullest extent permitted by Nevada law. Our bylaws also provide that we shall advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity, regardless of whether our bylaws would otherwise permit indemnification. We have entered and expect to continue to enter into agreements to indemnify our directors, executive officers and other employees as determined by the board of directors. These agreements provide for indemnification for related expenses including attorneys fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors and officers liability insurance.
The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Furthermore, a stockholders investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees regarding which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
Insofar as the provisions of our certificate of incorporation or bylaws provide for indemnification of directors or officers for liabilities arising under the Securities Act of 1933, we have been informed that in the opinion of the Securities and Exchange Commission this indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since inception, we have not been a party to, and we have no plans to be a party to, any transaction or series of similar transactions in which the amount involved exceeded or will exceed $60,000 and in which any current director, executive officer, holder of more than 5% of our capital stock, or entities affiliated with them, had or will have a material interest, other than as described above in the section captioned Management and in the transactions described below.
Our certificate of incorporation and bylaws require us to indemnify our directors and officers to the fullest extent permitted by Nevada law.
Security Ownership of Beneficial Owners
The following table summarizes the holders of more than 5% of our issued and outstanding stock on a fully diluted basis plus all shares owned by our officers and directors.
Title of Class
Name & Address
Percent of Class
Empresas del Sur, Inc.
Online Results, LLC.
Total Common Shares Held by Beneficial Owners
Class A Preferred
DESCRIPTION OF CAPITAL STOCK
The following is a summary of the rights of our common stock and preferred stock and related provisions of our certificate of incorporation and bylaws, as they will be in effect upon the closing of this offering. For more detailed information, please see our certificate of incorporation and bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.
We have only one class of common stock. The rights of this class of common stock are discussed in greater detail below.
Immediately following the closing of this offering, our authorized capital stock will consist of 200,000,000 shares, each with a par value of $0.0001 per share, of which:
190,000,000 shares of common stock.
10,000,000 shares of preferred stock.
At September 30, 2011, we had outstanding 15,762,500 shares of common stock, held of record by 10 stockholders. At September 30, 2011 we had outstanding 5 million shares of Class A Preferred stock held of record by one shareholder. Subsequent to the end of that period, we issued an additional 1,600,000 to accredited investors in exchange for $80,000 in additional investment at $0.05 per share. We are offering up to ten million shares of common stock for sale in this Offering.
Holders of our common stock will have voting rights as to all matters submitted to the shareholders for approval by the Board of Directors. This includes the election of directors, the amendment of our charter, and all other matters submitted to shareholders for a vote including:
If we amended our certificate of incorporation to increase the authorized shares of a class of stock, or to increase or decrease the par value of a class of stock, then that class would be required to vote separately to approve the proposed amendment.
If we amended our certificate of incorporation in a manner that altered or changed the powers, preferences or special rights of a class of stock in a manner that affects them adversely then that class would be required to vote separately to approve the proposed amendment.
We have not provided for cumulative voting for the election of directors in our certificate of incorporation and common shareholders do not have preemptive rights.
Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of common stock shall be entitled to share equally in any dividends that our board of directors may determine to issue from time to time. In the event a dividend is paid in the form of shares of common stock or rights to acquire shares of common stock, the holders of common stock shall receive common stock.
Upon our liquidation, dissolution or winding-up, the holders of common stock holders shall be entitled to share equally all assets remaining after the payment of any liabilities and the liquidation preferences on any outstanding preferred stock.
We have 5 million shares of Class A Preferred Stock issued and outstanding as of September 30, 2011. The characteristics and rights of this class of preferred stock are as follows:
A total of 5,000,000 shares of preferred stock, par value $0.0001 per share, of the Corporation are designated as Series A Preferred Stock (the Series). Shares of the Series (Preferred Shares) were issued at a value of $0.042 per share to accredited investors investing in the Corporation for a total of $225,000. The Series ranks senior and prior to the Common Stock, par value $0.0001 per share, of the Corporation (the Common Stock), and any additional series of preferred stock which may in the future be issued by the Corporation and are designated in the amendment to the Certificate of Incorporation or the certificate of designation establishing such additional preferred stock as ranking junior to the Class A Preferred Shares. Dividends may be declared and paid on the Preferred Shares from funds legally available therefor as and when determined by the Board of Directors. The Series shall, with respect to the payment of dividends, rank pari passu with the Common Stock. The liquidation value per Preferred Share, in case of the voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, shall be an amount equal to (i) $7.50 per share (the Purchase Price), subject to adjustment in the event of a stock split, stock dividend or similar event applicable to the Series. Each Holder shall have the right to convert, at any time and from time to time, all or any part of the Preferred Shares held by such Holder into such number of fully paid and non-assessable shares of Common Stock (the Conversion Shares). The number of Conversion Shares to be delivered by the Corporation to a Holder for each Preferred Share pursuant to a Conversion shall be ten common shares for each preferred share held by the Holder of Class A Preferred Shares provided, however, that the number of Conversion Shares issued shall never, when combined with all other then outstanding shares of Common Stock and shares of Common Stock which have been subscribed for or otherwise committed to be issued, exceed the number of shares of Common Stock then authorized to be issued by the Corporation, and in the event that there are insufficient shares of Common Stock authorized to permit the full Conversion contemplated by any Conversion Notice, the Corporation will promptly take all such actions necessary so as to permit the full Conversion contemplated by such Conversion Notice as soon as practicable after receipt by the Corporation of such Conversion Notice. Each share of the Series shall entitle the holder thereof to that number of votes into which the Class A Preferred Shares into which such share of the Series is then Convertible. Class A Preferred Shares shall have the right to vote on all matters submitted to the common shareholders for a vote at any time at special or annual meetings of the Corporation. Fractional votes shall not, however, be permitted, and any fractional voting rights (after aggregating all shares into which shares of the Series held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward).
So long as any Preferred Shares remain outstanding, the Corporation shall not, without the vote or written consent by the holders of at least a majority of the outstanding Preferred Shares, voting together as a single class:
Redeem, purchase or otherwise acquire for value (or pay into or set aside for a sinking or other analogous fund for such purpose) any share or shares of its Capital Stock, except for (a) a transaction in which all outstanding shares of Preferred Stock are concurrently redeemed, purchased or otherwise acquired, (b) conversion into or exchange for shares of Capital Stock of the Corporation that are both (x) Junior Liquidation Shares, and (y) no greater than pari passu with the Preferred Shares with respect to the payment of dividends, or at a lower than cost, at fair market value, upon the occurrence of certain events, such as the termination of employment;
create (whether by merger or otherwise) any new series or class of Capital Stock ranking pari passu with or having a preference over the Series as to redemption or distribution of assets upon a Liquidation Event;
increase (whether by merger or otherwise) the authorized number of shares of the Series;
issue (whether by merger or otherwise) any securities of the Corporation ranking pari passu with or senior to Preferred Shares as to rights upon a Liquidation Event;
enter into any definitive agreement or commitment with respect to any of the foregoing; or
cause or permit any Subsidiary to engage in or enter into any definitive agreement or commitment with respect to any of the foregoing.
At September 30, 2011, we had no options or warrants for common stock outstanding.
Anti-Takeover Effects of Nevada Law and Our Certificate of Incorporation and Bylaws
Certain provisions of Nevada law, our certificate of incorporation and our bylaws contain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. In particular, our dual class common stock structure will concentrate ownership of our voting stock in the hands of our founders, board members, and employees. These provisions, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquiror outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.
Limits on Ability of Stockholders to Act by Written Consent
Under Nevada law, shareholders owning in the aggregate a controlling percentage of our outstanding voting stock may take action by consent. This means that they can take certain actions without formally calling a shareholders meeting. This may discourage any hostile takeover event.
Undesignated Preferred Stock
The ability to issue the remaining unissued and undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company.
Requirements for Advance Notification of Stockholder Nominations and Proposals
Our bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors. The bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding business to be conducted at a special or annual meeting of the stockholders. However, our bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquirers own slate of directors or otherwise attempting to obtain control of our company.
Nevada Anti-Takeover Statute
We are subject to the provisions of Section 203 of the Nevada General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly held Nevada corporation from engaging under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:
Prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction, which resulted in the stockholder becoming an interested stockholder.
Upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer.
On or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock, which is not owned by the interested stockholder.
Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporations outstanding voting securities. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may also discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.
The provisions of Nevada law, our certificate of incorporation and our bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock Island Stock Transfer, 15500 Roosevelt Boulevard, Suite 301 Clearwater, FL. 33760.
Upon the effectiveness of this registration statement, we expect request a market maker to apply to have our common stock quoted on the OTCBB and the OTC Markets: OTCQB. In order for this listing to be effective it must be approved by these markets subsequent to the effective date of this Prospectus.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our stock. We cannot predict the effect, if any, that market sales of shares or the availability of shares for sale will have on the market price prevailing from time to time
Sale of Restricted Shares
Upon completion of this offering, we will have outstanding 25,762,500 shares of common stock. The shares of common stock being sold in this offering will be freely tradable, other than by any of our affiliates as defined in Rule 144(a) under the Securities Act, without restriction or registration under the Securities Act. All remaining shares, and all shares subject to outstanding options and warrants, were issued and sold by us in private transactions and are eligible for public sale if registered under the Securities Act or sold in accordance with Rule 144 under the Securities Act. These remaining shares are restricted securities within the meaning of Rule 144 under the Securities Act.
In general, under Rule 144, as currently in effect, a person who owns shares that were acquired from us or an affiliate of us at least one year prior to the proposed sale is entitled to sell upon expiration of the selling restrictions described above, within any three-month period six months after our registration, a number of shares that does not exceed the greater of:
1% of the number of shares of common stock then outstanding; or
The average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.
Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Rule 144 also provides that our affiliates
who sell shares of our common stock that are not restricted shares must nonetheless comply with the same restrictions applicable to restricted shares with the exception of the holding period requirement.
Under Rule 144(k), a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. Therefore, unless otherwise restricted, 144(k) shares may be sold immediately upon the completion of this offering.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Named experts and counsel for the registrant do not own any shares of the Corporation. The validity of the shares to be issued in this offering will be passed upon for us by the law firm of Oswald & Yap, LLP, 16148 Sand Canyon, Irvine, California 92618; Phone (949)788-8080.
Clay Thomas, CPA, independent registered public accounting firm, have audited our consolidated financial statements (and schedule) at September 30, 2011 and for each of the two years in the period ended December 31, as set forth in their report.
DISCLOSURE OF COMMISSION'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by Nevada law.
The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making us responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or control persons pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further information about us and the common stock offered hereby, reference is made to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules filed therewith may be inspected without charge at the public reference room maintained by the SEC, located at 450 Fifth Street, N.W., Room 1200, Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is www.sec.gov.
Following the effective date of this Prospectus, we will make available its annual and quarterly reports free of charge on its Web site. In addition, we will provide its shareholders with a copy of its annual report prior to each annual meeting.
Dealer Prospectus Delivery Obligation
Until 90 days after the later of (i) the effective date of the registration statement or (2) the first date on which the securities are offered publicly, all dealers that effect transactions in these securities, whether or not participating in this Offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Statements of Income
Statement of Cash Flows
Statement of Changes In Shareholders Equity
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Management of
I have audited the accompanying balance sheets of iVoiceIdeas, Inc. as of December 31, 2010 and 2009 and September 30, 2011 and 2010, the related statements of operations, stockholders' equity (deficit) and cash flows for the years ended December 31, 2010 and 2009 and the nine month periods ending September 30, 2011 and 2010. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I 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 disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of iVoiceIdeas, Inc. as of December 31, 2010 and 2009 and September 30, 2011 and 2010, and the results of its operations and its cash flows for the period then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered significant losses and will require additional capital to develop its business until the Company either (1) achieves a level of revenues adequate to generate sufficient cash flows from operations; or (2) obtains additional financing necessary to support its working capital requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also
described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Clay Thomas, P.C.
December 8, 2011
(A Development Stage Company)
For the Years Ended December 31, 2010 and 2009
and Nine Months ending September 30, 2011
Years Ending December 31
Total Current Assets
Less Accumulated Depreciation
Total Other Assets
Liabilities and Stockholders' Equity
Series A Preferred Stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding at 12/31/09 and 12/31/10, respectively.
Common Stock, $0.0001 par value, 190,000,000 shares authorized, 15,000,000 and 16,142,500 issued and outstanding at 12/31/09 and 12/31/10, respectively.
Additional Paid-In Capital
Deficit accumulated during the development stage
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
The accompanying notes are an integral part of the financial statements.
(A Development Stage Company)
Statements of Operations
For the Years Ended December 310, 2010 and 2009,
and Nine Months ending September 30, 2011 and 2010
and the Period from April 3, 2002 (Inception) to September 30, 2011
Years Ending December 31,
Nine Months Ending September 30,
April 3, 2002 (Inception) to
Design and Development
General and Administrative
Total Operating Expense
Operating Income (Loss)
Operating Income (Loss) before tax provision (Benefit)
Tax Provision (Benefit)
Net Operating Loss
Other Comprehensive Income
Loss on Option
Total Comprehensive Income (Loss)
Net Loss per Common Share
The accompanying notes are an integral part of the financial statements.
(A Development Stage Company)
Statements of Cash Flows
For the Years Ended December 31, 2010 and 2009,
and the Nine Months ending September 30, 2011 and 2010
and the Period from April 3, 2002 (Inception) to September 30, 2011
Years Ending December 31,
Nine Months Ending September 30,
April 3, 2002 (Inception) to September 30,
Cash Flows from Operating Activities
Net income (loss) from operations
Net gain (loss)
Net cash used by operating activities
Cash Flows from Investing Activities
Purchase of investment option
Capitalized intangible property
Net cash provided (used) by investing activities
Cash Flows From Financing Activities
Common Stock Repurchase
Paid in Capital
Net proceeds from stock issuance for IP acquisition
Net proceeds from sale of common stock
Net proceeds from sale of Series A Preferred Stock
Net cash provided from financing activities
Net increase (decrease) in cash
Cash, beginning of period
Cash, end of period
Income taxes paid
Cash interest paid
The accompanying notes are an integral part of the financial statements.
(A Development Stage Company)
Statement of Changes in Stockholders Equity
For the Period of April 3, 2002 (Inception) through September 30, 2011
Series A Preferred
Additional Paid-In Capital
Accumulated Deficit Development Stage
Common Stock Issued in Consideration for Acquisition on 06/15/09 ($0.0001 per share)
Sale of Common Stock 12/01/09 (S0.01 per share)
Additional Paid in Capital
Balance at 12/31/09
Additional Paid in Capital
Issuance of Common Stock on 12/08/10 and 12/22/10 for Consideration ($0.05 per share)
Sale of Common Stock 12/28/10 ($0.02 per share)
Additional Paid in Capital
Balance at 12/31/10
Sale of Series A Preferred Stock on 01/16/11 ($0.045 per share)
Common Stock repurchase on 01/28/11 ($0.21 per share
Stock-based compensation on 06/15/11 for services rendered ($0.05 per share)
Sale of common stock on 08/10/11 ($0.05 per share)
Additional Paid in Capital
Balance at 09/30/11
The accompanying notes are an integral part of the financial statements.
(A Development Stage Company)
Notes to Financial Statements
Note 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
iVoiceIdeas, Incorporated, formerly Ernest Einstein, Inc.; (the Company), a Nevada Corporation, was formed on April 3, 2002. The Company, a development stage entity, is headquartered in Austin, Texas at Arboretum Great Hills, 9600 Great Hills Trail, Austin, TX 78759. The company currently operates iVoiceIdeas.com. On June 15, 2009, the company acquired the rights to the ideas, designs, and intellectual property related to iVoiceIdeas.com. iVoiceIdeas.com is an emerging global social network focused on improving the ways people develop and communicate new ideas and solutions to problems. We have developed new ways for people to initiate and develop ideas and to collaboratively solve problems using our social network internet site and software. Our collaborative idea site also serves as a social media site for users seeking social connections centered on ideas, policy, and problems. The Companys fiscal year end is December 31.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. We have not generated any income as to date as our BETA version of the website released October 1, 2011. The Company has incurred losses since inception of $68,279. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern as noted by our independent auditor in its opinion letter. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. In view of these matters, the Companys ability to continue as a going concern is dependent upon the Companys ability to raise capital and generate revenue and profits in the future.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Basis. The Company is currently a development stage enterprise reporting under the provisions of Accounting Standards Codification (ASC) 915 Development Stage Entities, which was previously Statement of Financial Accounting Standards (SFAS) Number 7.
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions per regulation S-X. Accordingly, financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such statements are of a normal recurring nature. These financial statements should be read in conjunction with other pertinent information contained in our Form S-1 the Company has filed with the Securities and Exchange Commission.
Use of Estimates. The preparation of the Companys financial statements in accordance with generally accepted accounting principles (GAAP) 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 income and expense during the reporting period. These estimates are based on information available as of the date of the financial statements. Therefore, actual results could differ from managements estimates.
Audited Interim Financial Information. The accompanying financial statements, for the periods ended December 31, 2009 and 2010 and the nine months ended September 30, 2010 and 2011, are audited. The audited interim financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Companys financial position and results of operations and cash flows for the nine months ended September 30, 2010 and 2011. The financial data and other information disclosed in these notes to the financial statements related to the nine-month periods are audited. The results of the nine months ended September 30, 2011 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2011 or for any other interim period or for any other future year.
Concentrations of Credit Risk. Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with FDIC insured financial institutions in the United States, which management assesses to be of high quality in order to limit exposure of each investment. As of December 31, 2010 and September 30, 2011, all of the Companys cash has been invested in depository accounts. Credit risk with respect to accounts receivable is as of September 30, 2011, minimal. No funds are due the Company as of the interim date of September 30, 2011.
Cash and Cash Equivalents. Cash equivalents consist of highly liquid short-term instruments with original maturities of three months or less at the time of purchase. As of December 31, 2009 and 2010, and September 30, 2011, cash equivalents consisted of depository accounts.
Dividends. The Company, for the nine months ending September 30, 2011 has not adopted any policy regarding the payment of dividends. No dividends have been paid during the periods shown and none are contemplated in the near future.
Earnings per Share. Earnings per share are calculated by dividing the net income available to shareholders by the weighted average of outstanding number of common shares (basic computation). FASB 128, paragraph 16 states, no potential common shares shall be included in the computation of any diluted per share amount when a loss from continuing operations exists, even if the entity reports net income. Per FASB 128, no preferred stock was used to dilute the earnings per share. Since the company experienced a
loss, the weighted average of the number of common shares outstanding at the end of each period was used to calculate earnings per share.
Deferred Offering Costs. Deferred offering costs consist primarily of direct incremental accounting fees related to the Companys proposed initial public offering of its common stock. Upon completion of the initial public offering contemplated herein, incurred amounts will be offset against the proceeds of the offering. If the offering is terminated, the deferred offering costs will be expensed. There were no amounts capitalized as of September 30, 2011.
Revenue Recognition. In general, the Company will recognize revenue when (1) concrete evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the customer, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.
The company plans to generate revenue primarily from sale of online advertising presented on its web site. Ads may be either text ads or display ads and are expected to use pay-per-click revenue model.
Advertising Costs. The Company expenses advertising costs as incurred. From the period of inception to date, advertising costs were not material.
Marketing Research Costs. Marketing research costs are expensed when incurred and are included in marketing expense in the accompanying statements of operations.
Property, Plant and Equipment. The Company does not own any real estate or other properties. From June 15, 2009, office space was provided at no cost to the company by Goldbridge Energy Partners, LLC. We have used an imputed value of $600 per month and in the statement of operations and statement of changes in stockholders equity. For the periods ending December 31, 2009 and 2010, imputed rent was $3,900 and $7,200, respectively. For the nine months period ending September 30, 2010 and 2011, imputed was $5,400 and $5,400, respectively.
Website and Software Development Costs. The company capitalizes its costs to develop its website and internal use software and when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. Such costs are amortized on a straight-line basis over the estimated use of the useful life of the related asset, which approximates two to three years. Costs incurred prior to meeting these criteria, together with the costs incurred for training and maintenance, are expensed as incurred. Costs incurred for enhancements that are expected to result in additional material functionality are capitalized and expensed over the estimated use of the life of the upgrades.
Stock-Based Compensation. Stock-based compensation expense is measured at the grant date based on the fair value of the award.
Income Taxes. The Company has incurred losses since inception and therefore, has not been subject to payment of federal income taxes. As of December 31, 2009 and December 31, 2010, the Company estimates an accumulated net operating loss (NOL) carryforward of approximately $5,678 and $21,401 respectively, resulting in deferred tax assets of approximately $1,987 and $7,490, respectively. The carryforwards, if not utilized, begin to expire in 2030. Because tax laws in the United States limit the time during which an NOL and tax credit carryforwards may be applied against future taxable income and tax liabilities, the Company may not be able to take full advantage of NOL and tax credits for federal income tax purposes. Deferred tax assets are not recognized in the above financial statements since they are contingent.
Recently Issued Accounting Pronouncements. The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect of the financial position or results of operations of the Company.
Note 3. SUBSEQUENT EVENTS.
Subsequent to the period ending September 30, 2011, the Company sold common stock in the amount of $80,000 at a valuation of $0.05 per share to an investor.
Management has reviewed and evaluated subsequent events through the consolidated financial statement date of December 8, 2011.
INFORMATION NOT REQUIRED IN PROSPECTUS
Other Expenses of Issuance and Distribution.
The following table sets forth all expenses to be paid by the registrant, other than estimated underwriting discounts and commissions, in connection with this offering. All amounts shown are estimates except for the registration fee.
Listing costs (estimated)
Printing and engraving (estimated)
Legal fees and expenses
Accounting fees and expenses
Blue sky fees and expenses (estimated)
Transfer agent and registrar fees (estimated)
Indemnification of Officers and Directors.
Section 145 of the Nevada General Corporation Law authorizes a court to award, or a corporations board of directors to grant, indemnity to officers, directors and other corporate agents in terms sufficiently broad to permit such indemnification under certain circumstances and subject to certain limitations.
As permitted by Section 145 of the Nevada General Corporation Law, the registrants amended and restated certificate of incorporation includes a provision that eliminates the personal liability of its directors for monetary damages for breach of their fiduciary duty as directors.
In addition, as permitted by Section 145 of the Nevada General Corporation Law, the bylaws of the registrant provide that:
The registrant shall indemnify its directors and officers for serving the registrant in those capacities or for serving other business enterprises at the registrants request, to the fullest extent permitted by Nevada law, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant, and, with respect to any criminal proceeding, had no reasonable cause to believe such persons conduct was unlawful.
The registrant may, in its discretion, indemnify employees and agents in those circumstances where indemnification is not required by law.
The registrant is required to advance expenses, as incurred, to its directors and officers in connection with defending a proceeding, except that such director or officer shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.
The registrant will not be obligated pursuant to the bylaws to indemnify a person with respect to proceedings initiated by that person, except with respect to proceedings authorized by the registrants board of directors or brought to enforce a right to indemnification.
The rights conferred in the bylaws are not exclusive, and the registrant is authorized to enter into indemnification agreements with its directors, officers, employees and agents and to obtain insurance to indemnify such persons.
The registrant may not retroactively amend the bylaw provisions to reduce its indemnification obligations to directors, officers, employees and agents.
The registrants policy is to enter into separate indemnification agreements with each of its directors and executive officers that provide the maximum indemnity allowed to directors and executive officers by Section 145 of the Nevada General Corporation Law and which allow for certain additional procedural protections. The registrant also maintains directors and officers insurance to insure such persons against certain liabilities.
The Investor Rights Agreement between the registrant and certain investors provides for cross-indemnification in connection with registration of the registrants common stock on behalf of such investors.
These indemnification provisions and the indemnification agreements entered into between the registrant and its officers and directors may be sufficiently broad to permit indemnification of the registrants officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act.
Recent Sales of Unregistered Securities.
The following sets forth information regarding securities sold by the registrant since its date of inception.
On June 15, 2009 we issued 5 million shares of common stock to Empresas del Sur, Inc., an accredited investor, as consideration for the acquisition of the iVoiceIdeas intellectual property, initial site layouts and core concepts upon which we have constructed our business. These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act.
On December 1, 2009, we entered into a stock sale agreement to sell 10 million shares of common stock to Online Results, LLC, an accredited investor, in exchange for $100,000. These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act.
On December 22, 2010 we issued 142,500 shares to Empresas Blakley SA de CV, Inc., an accredited investor, in exchange for $7,125 ($0.05 per share). These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act.
On December 28, 2009, we entered into an agreement to sell one million shares of common stock for $20,000 ($0.02 per share) to Empresas Blakley SA de CV, Inc., an accredited investor. These shares were later repurchased by us as discussed in the prospectus and the Notes to the financial statements and are no longer outstanding. These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act.
On January 15, 2011 we agreed to sell five million shares of Class A Preferred stock to Bensata Corporation, an accredited investor, for $225,000. These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act.
On June 15, 2011 we issued 20,000 shares to seven individuals for services rendered in assisting us with the development of its Web site.
On August 8, 2011 we issued 600,000 shares to Empresas Blakley SA de CV, Inc., accredited investor, in exchange for $30,000 ($0.05 per share). These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act.
On both October 11, 2011 we received an investment of $40,000 from Bensata Corporation, an accredited investor, for a total of $80,000 in exchange for $800,000 shares of common stock at $0.05 per share. These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act.
On December 5, 2011 we received an investment of $40,000 from Alpha Power Services, Inc., accredited investor, in exchange for $800,000 shares of common stock at $0.05 per share. These funds were raised under an exemption from registration set forth in Regulation D, 506 and Section 4(2) of the Securities Act.
Except as noted below, the issuance of securities described above were deemed to be exempt from registration under the Securities Act in reliance on Reg. D and Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. The sale of these securities where made without general solicitation or advertising.
Exhibits and Financial Statement Schedules.
Exhibits. The following exhibits are included herein or incorporated herein by reference:
Articles of Incorporation
Amended and Restated Articles of Incorporation
Certification of Class A Preferred Stock
Specimen common stock certificate
Opinion of counsel
Code of Ethics
Consent of independent registered public firm accountants
Form of subscription agreement
All other schedules have been omitted because they are either inapplicable or the required information has been given in the consolidated financial statements or the notes thereto.
Insofar as indemnification by the registrant for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 14 above 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, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of 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 will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
For purposes of determining any liability under the Securities Act, 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 registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof.
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this amendment to the registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Austin, Texas, on the 9th day of December, 2011.
Chairman of the Executive Committee
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated:
/s/ Maurice Stone
Chairman and Chief Executive Officer
/s/ Kathy Gilchrist
Secretary and Principal Financial and Accounting Officer
//s// Angela Gilchrist
//s// Kathy Gilchrist
CODE OF BUSINESS CONDUCT AND ETHICS
(ADOPTED BY THE BOARD OF DIRECTORS ON SEPTEMBER 6, 2011
This Code of Business Conduct and Ethics (the "CODE") covers a wide range of business practices and procedures. It does not cover every issue that may arise but it sets out basic principles to guide all employees of the Company. All of our officers, directors and employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. The Code should also be provided to and followed by the Company's agents and representatives, including consultants.
If a law conflicts with a policy in this Code, you must comply with the law. If you have any questions about these conflicts, you should ask your supervisor or an officer of the company.
Those who violate standards in this Code will be subject to disciplinary action, up to and including termination of employment.
1. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Obey the law, both in letter and in spirit, is the foundation on which our ethical standards are built. All employees must respect and obey the laws of the cities, states and countries in which we operate. Although not all employees are expected to know the details of these laws, it is important to know enough about them to determine when to seek advice from supervisors, managers or other appropriate personnel.
2. CONFLICTS OF INTEREST
A "conflict of interest" exists when a person's private interests differ or conflict with the interests of the Company. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and efficiently. Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company. Loans to, or guarantees of obligations of, employees and their family members may create conflicts of interest.
It is generally a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf. If you perceive a conflict of interest, you should immediately bring it to the attention of management. Any employee, officer or director who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager or other appropriate personnel or consult with the procedures described in Section 14 of this Code.
3. INSIDER TRADING
Employees who have access to confidential information may never use or share that information for stock trading purposes. All non-public information about the Company should be considered confidential information. To use non-public information for persona financial benefit or to "tip" others who might make an investment decision on the basis of this information is not only unethical but also illegal.
4. CORPORATE OPPORTUNITIES
Employees, officer and directors are prohibited from taking for themselves personally, opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors. No employee may use corporate property, information or position for improper personal gain, and no employee may compete with the Company, directly or indirectly.
5. COMPETITION AND FAIR DEALING
We seek to outperform our competition fairly and honestly. Stealing proprietary information, possessing trade secret information that was obtained without the owner's consent, or inducing such disclosures by past or present employees of other companies is prohibited. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.
The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. Please discuss with your supervisor any gifts or proposed gifts that you are not certain are appropriate.
6. DISCRIMINATION AND HARASSMENT
The diversity of the Company's employees is an asset. We are firmly committed to providing equal opportunity in all respects aspects of employment and will not tolerate illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.
7. HEALTH AND SAFETY
The Company strives to provide each employee with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.
Violence and threatening behavior are not permitted. Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of alcohol and/or illegal drugs in the workplace will not be tolerated.
The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. For example, only the true and actual number of hours worked should be reported.
Many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or the Company's controller or chief financial officer ("CFO").
All of the Company's books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company's transactions and must conform to both applicable legal requirements and to the Company's systems of accounting and internal controls. Unrecorded or "off the books" funds or assets should not be maintained unless permitted by applicable laws or regulations.
Employees must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, except when disclosure is required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us. The obligation to preserve confidential information continues even after employment ends. In connection with this obligation, employees, officers and directors may be required to execute confidentiality agreements confirming their agreement to be bound not to disclose confidential information. If you are uncertain whether particular information is confidential or non-public, please consult your supervisor.
10. PROTECTION AND PROPER USE OF COMPANY ASSETS
All officers, directors and employees should endeavor to protect the Company's assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company's profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company equipment should not be used for non-Company business.
11. PAYMENTS TO GOVERNMENT PERSONNEL
The Unites States Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.
In addition, the U. S. government has a number of laws and regulations regarding business gratuities that may be accepted by U.S. government personnel. The promise, offer or delivery to an official or employee of the U.S. government of a gist, favor or other gratuity in violation of these rules would not only violate Company policy, but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules.
12. WAIVERS OF THE CODE OF BUSINESS CONDUCT AND ETHICS
Any waiver of the provisions of this Code may be made only by the Board of Directors and will be promptly disclosed as required by law or stock exchange rule or regulation.
13. REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR
Employees are encouraged to talk with supervisors, managers or Company officials about observed illegal or unethical behavior, and when in doubt about the best course of action in an particular situation. It is the Company's policy not to allow retaliation for reports of misconduct by others made in good faith by employees. Employees are expected to cooperate in internal investigations of misconduct, and the failure to do so could serve as grounds for termination.
14. COMPLIANCE PROCEDURES
We must all work to ensure prompt and consistent action against violations of this Code. However, in some situations, it is difficult to know if a violation has occurred. Since we cannot anticipate every situation that may arise, it is important that we have a way to approach a new question or problem. These are steps to keep in mind:
MAKE SURE YOU HAVE ALL THE FACTS. In order to reach the rights solutions, we must be as fully informed as possible.
ASK YOURSELF, WHAT SPECIFICALLY AM I BEING ASKED TO DO DOES IT SEEM UNETHICAL OR IMPROPER? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense; if something seems unethical or improper, it probably is.
CLARIFY YOUR RESPONSIBILITY AND ROLE. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.
DISCUSS THE PROBLEM WITH YOUR SUPERVISOR. This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Keep in mind that it is your supervisor's responsibility to help solve problems. If your supervisor does not or cannot remedy the situation, or you are uncomfortable binging the problem to the attention of your supervisor, bring the issue to the attention of the human resources supervisor, or to an officer of the Company.
YOU MAY REPORT ETHICAL VIOLATIONS IN CONFIDENCE AND WITHOUT FEAR OF RETALIATION. If your situation requires that your identity be kept secret, your anonymity will be protected. The Company does not permit retaliation of any kind for good faith reports of ethical violations.
ALWAYS ASK FIRST - ACT LATER. If you are unsure of what to do in any situation, seek guidance BEFORE YOUR ACT.
CODE OF ETHICS FOR THE CHIEF EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS
The Company has a Code of Business Conduct and Ethics applicable to all employees, officers and directors of the Company. The Chief Executive Officer ("CEO") and senior financial officers of the Company, including its CFO and principal accounting officer, are bound by the provisions set forth therein relating to ethical conduct, conflicts of interest and compliance with law. In addition to the Code of Business Conduct and Ethics, the CEO and senior financial officers of the Company are also subject to the following specific policies:
1. The CEO and senior financial officers are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports and other filings required to be made by the Company with the Securities and Exchange Commission. Accordingly, it is the responsibility of the CEO and each senior financial officer promptly to bring to the attention of the Board of Directors any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings or otherwise impairs the ability of the Company to make full, fair, accurate, timely and understandable public disclosures.
2. The CEO and each senior financial officer shall promptly bring to the attention of the Company's Audit Committee any information he or she may have concerning (a) significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's financial reporting, disclosures or internal controls.
3. The CEO and each senior financial officer shall promptly bring to the attention of the Board of Directors and the Audit Committee any information he or she may have concerning any violation of the Company's Code of Business Conduct and Ethics, including any actual or apparent conflicts of interest between personal and processional relationships, involving management or other employees who have a significant rule in the Company's financial reporting, disclosures or internal controls.
4. The CEO and each senior financial officer shall promptly bring to the attention of the Board of Directors and Audit Committee any information he or she may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or of violation of the Code of Business Conduct and Ethics or of these additional procedure.
5. The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of the Code of Business Conduct and Ethics of these additional procedures by the CEO and the Company's senior financial officers. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to the Code of Business Conduct and Ethics and to these additional procedures, and shall include written notices to the individual involved that the Board has determined that there has been a violation, censure by the Board, demotion or reassignment of the individual involved, suspension with or without pay or benefits (as determined by the Board) and termination of the individual's employment. In determining what action is appropriate in a particular case, the Board of Directors or such designee shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past.
ARTICLES OF INCORPORATION
(Pursuant to NRS 78)
STATE OF NEVADA
Secretary of State
Name of Corporation
Earnest Einstein, Inc.
Name of Resident Agent: Business Filings Incorporated
Street Address: 7583 Water View Way, Reno, Nevada 89511
Located in the County of Washoe
The corporation is authorized to issue fifty million (50,000,000) shares of stock. The par value of each share is ($0.0001).
The initial governing board shall be one (1) director.
Jonathan Gilchrist, 6524 San Felipe, Ste. 252, Houston, Texas 77057
Signature of the Incorporator:
Richard A. Oster, 8025 Excelsior Dr., Suite 200, Madison, WI 53717
__//s// Richard A. Oster____
State of Wisconsin County of Dane
This instrument was acknowledged before me on April 3, 2002 by Richard A. Oster as Incorporator
__//s// Steven R. McClelland_____________
Certificate of Acceptance of Appointment of Registered Agent
Business Filings Incorporated hereby accepts appointment as registered agent for the above named corporation.
April 3, 2002
__//s// Richard A. Oster___
Business Filings Incorporated
Richard A. Oster, President
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Earnest Einstein, Inc.
The name of this Corporation is iVoiceIdeas, Inc. (formerly known as Earnest Einstein, Inc.)
REGISTERED OFFICE AND AGENT FOR SERVICE
The registered office of the Corporation in the State of Nevada is
Business Filings Incorporated
311 S. Division St.
Carson City, Nevada 89703
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Nevada.
(1) Shares, Classes and Series Authorized.
(a) The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 200,000,000. The classes and the aggregate number of shares of stock of each class which the Corporation shall have authority to issue are as follows:
(i) 190,000,000 shares of Common Stock, $0.0001 par value ("Class A Common Stock").
(ii) 10,000,000 shares of Preferred Stock, $0.0001 par value ("Preferred Stock"). Subject to of this Amended and Restated Certificate of Incorporation, the Preferred Stock may be issued from time to time in one or more series, with such distinctive serial
designations as may be stated or expressed in the resolution or resolutions providing for the issue of such stock adopted from time to time by the Board of Directors; and in such resolution or resolutions providing for the issuance of shares of each particular series, the Board of Directors is also expressly authorized to fix: the right to vote, if any; the consideration for which the shares of such series are to be issued; the number of shares constituting such series, which number may be increased (except as otherwise fixed by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by action of the Board of Directors; the rate of dividends upon which and the times at which dividends on shares of such series shall be payable and the preference, if any, which such dividends shall have relative to dividends on shares of any other class or classes or any other series of stock of the Corporation; whether such dividends shall be cumulative or noncumulative, and, if cumulative, the date or dates from which dividends on shares of such series shall be cumulative; the rights, if any, which the holders of shares of such series shall have in the event of any voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding up of the affairs of the Corporation; the rights, if any, which the holders of shares of such series shall have to convert such shares into or exchange such shares for shares of any other class or classes or any other series of stock of the Corporation or for any debt securities of the Corporation and the terms and conditions, including, without limitation, price and rate of exchange, of such conversion or exchange; whether shares of such series shall be subject to redemption, and the redemption price or prices and other terms of redemption, if any, for the shares; the terms and amounts of any sinking fund for the purchase or redemption of shares of such series; and any and all other powers, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof pertaining to shares of such series permitted by law.
(b) The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) from time to time by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote.
(2) Powers and Rights of the Common Stock.
Except as otherwise expressly provided in this Amended and Restated Certificate of Incorporation, all issued and outstanding shares of Common Stock shall be identical and shall entitle the holders thereof to the same rights and privileges.
A. Voting Rights and Powers. Except as otherwise provided in this Amended and Restated Certificate of Incorporation or required by law, with respect to all matters upon which stockholders are entitled to vote, the holders of the outstanding shares of Common Stock shall vote together with the holders of any other outstanding shares of capital stock of the Corporation entitled to vote, without regard to class, and every holder of outstanding shares of Common Stock shall be entitled to cast thereon one
vote in person or by proxy for each share of Common Stock standing in his name. The holders of shares of Common Stock shall have the relevant class voting rights set forth in Article IX.
B. Dividends. Subject to the rights and preferences of the Preferred Stock set forth in this Article IV and in any resolution or resolutions providing for the issuance of such stock as set forth in Section (3) of this Article IV, the holders of Common Stock shall be entitled to receive ratably such dividends as may from time to time be declared by the Board of Directors out of funds legally available therefor.
C. Distribution of Assets Upon Liquidation. In the event the Corporation shall be liquidated, dissolved or wound up, whether voluntarily or involuntarily, after there shall have been paid or set aside for the holders of all shares of the Preferred Stock then outstanding the full preferential amounts to which they are entitled under this Article IV or the resolutions, as the case may be, authorizing the issuance of such Preferred Stock, the net assets of the Corporation remaining thereafter shall be divided ratably among the holders of Common Stock.
(3) Issuance of Common Stock and Preferred Stock.
Subject to this Amended and Restated Certificate of Incorporation, the Board of Directors of the Corporation may from time to time authorize by resolution the issuance of any or all shares of Common Stock and Preferred Stock herein authorized in accordance with the terms and conditions set forth in this Amended and Restated Certificate of Incorporation for such purposes, in such amounts, to such persons, corporations, or entities, for such consideration, and in the case of the Preferred Stock, in one or more series, all as the Board of Directors in its discretion may determine and without any vote or other action by any of the stockholders of the Corporation, except as otherwise required by law.
(1) Power of the Board of Directors. Subject to this Amended and Restated Certificate of Incorporation, the property and business of the Corporation shall be controlled and managed by or under the direction of its Board of Directors. In furtherance, and not in limitation of the powers conferred by the laws of the State of Nevada, the Board of Directors is expressly authorized , subject in all cases to this Amended and Restated Certificate of Incorporation :
(a) To make, alter, amend or repeal the By-Laws of the Corporation; provided that no By-Laws hereafter adopted shall invalidate any prior act of the Directors that would have been valid if such By-Laws had not been adopted;
(b) To determine the rights, powers, duties, rules and procedures that affect the power of the Board of Directors to manage and direct the property, business and affairs of the Corporation, including, without limitation, the power to designate and empower committees of the Board of Directors, to elect, appoint and empower the officers and other agents of the Corporation, and to determine the time and place of, and the notice requirements for Board meetings, as well as the manner of taking Board action; and
(c) To exercise all such powers and do all such acts as may be exercised by the Corporation, subject to the provisions of the laws of the State of Nevada, this Restated Certificate of Incorporation, and the By-Laws of the Corporation.
(2) Number and Qualifications of Directors . The number of directors constituting the entire Board of Directors shall be fixed from time to time by resolution of the Board of Directors but shall not be less than one nor more than ten. Directors shall be elected to hold office for a term of one year. As used in this Restated Certificate of Incorporation, the term "entire Board of Directors" means the total number of Directors fixed in the manner provided in this Article V Section (2) and in the By-Laws.
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
Action Not By or on Behalf of Corporation and Right to Indemnification.
The Corporation shall indemnify any person who was or is a party involved in or is threatened to be made a party to involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than 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 (including, without limitation, a trustee) of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent authorized by the Nevada General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment and unless applicable law otherwise requires, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against judgments, fines, amounts paid in settlement and expenses (including, without limitation, attorneys' fees), actually and reasonably incurred by him in connection with such action, suit or proceeding. If he acted in good faith and in a manner reasonably believed to be. Notwithstanding the foregoing, except as provided in or not opposed to the best interests of the Corporation, with respect to any criminal action or proceedings to enforce rights to indemnification and advancement of expenses, the Corporation shall indemnify an indemnitee in connection with a proceeding. The termination (or part
thereof) initiated by the indemnitee, if and only if the Board of any Directors authorized the bringing of the action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, (or part thereof) in advance of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests the commencement of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful proceeding.
(2) Action By or on Behalf of Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor 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, without limitation, attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability and in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.
(3) Successful Defense. To the extent that a present or former Director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1 or 2 of this Article VI, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including, without limitation, attorneys' fees) actually and reasonably incurred by him in connection therewith.
(4) Determination of Right to Indemnification in Certain Circumstances. Any indemnification under Section 1 or 2 of this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former Director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 or 2 of this Article VI. Such determination shall be made, with respect to a person who is a Director or officer at the time of such determination, (1) by a majority vote of the Directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such Directors designated by a majority vote of such Directors, even though less than a quorum, or (3) if there are no such Directors, or if such Directors so direct, by independent legal
counsel in a written opinion, or (4) by the stockholders of the Corporation entitled to vote thereon.
(5) Advance Payment of Expenses.
(a) Expenses (including attorneys' fees) incurred by a Director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt.
(b) Expenses (including attorneys' fees) incurred by any other employee or agent in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon such terms and conditions, if any, as the Corporation deems appropriate.
(6) Not Exclusive. The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this Article VI shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any statute, by-law, agreement, vote of stockholders or disinterested Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Without limiting the foregoing, the Corporation is authorized to enter into an agreement with any Director, officer, employee or agent of the Corporation providing indemnification for such person against expenses, including, without limitation, attorneys' fees, judgments, fines and amounts paid in settlement that result from any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, including, without limitation, any action by or in the right of the Corporation, that arises by reason of the fact that such person 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.
(7) Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a Director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, limited liability company, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VI.
(8) Certain Definitions. For the purposes of this Article VI, (a) any Director, officer or employee of the Corporation who shall serve or has served as a director or officer of any other corporation, limited liability company, partnership, joint venture, trust or other enterprise of which the Corporation, directly or indirectly, is or was a stockholder or creditor, or in which the Corporation is or was in any way interested, or (b) any current or former director or officer of any subsidiary corporation, limited liability company, partnership, joint venture, trust or other enterprise wholly owned by the Corporation, shall be deemed to be serving as such director or officer at the request of the Corporation, unless the Board of Directors of the Corporation shall determine otherwise. In all other instances where any person shall serve or has served as a director or officer of another corporation, limited liability company, partnership, joint venture, trust or other enterprise of which the Corporation is or was a stockholder or creditor, or in which it is or was otherwise interested, if it is not otherwise established that such person is or was serving as such director or officer at the request of the Corporation, the Board of Directors of the Corporation may determine whether such service is or was at the request of the Corporation, and it shall not be necessary to show any actual or prior request for such service. For purposes of this Article VI, references to a corporation include all constituent corporations absorbed in a consolidation or merger (including any constituent of a constituent) as well as the resulting or surviving corporation so that any person who is or was a director or officer of such a constituent corporation, or is or was serving at the request of such constituent corporation as a director or officer of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as he would if he had served the resulting or surviving corporation in the same capacity. For purposes of this Article VI, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a Director or officer of the Corporation which imposes duties on, or involves services by, such Director or officer with respect to an employee benefit plan, its participants, or beneficiaries, and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article VI.
(9) Proceedings to Enforce Rights to Indemnification.
(a) If a claim under Section (1) of this Article VI is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, or a claim under Section (3) of this Article VI is not paid in full by the Corporation within 30 days after a written claim has been received by the Corporation, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. Any such written claim under Section (1) of this Article VI shall include such documentation and information as is reasonably available to the indemnitee and reasonably necessary to determine whether and to what extent the indemnitee is entitled to indemnification. Any written claim under Sections (1), (2) and (3) of this Article VI shall include reasonable documentation of the expenses incurred by the indemnitee.
(b) If successful in whole or in part in any suit brought pursuant to Section (7)(a) of this Article VI, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be paid and indemnified for the expense of prosecuting or defending such suit.
(c) In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the General Corporation Law of the State of Nevada. Neither the failure of the Corporation (including its Directors who are not parties to such action, a committee of such Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the General Corporation Law of the State of Nevada, nor an actual determination by the Corporation (including its Directors who are not parties to such action, a committee of such Directors, independent legal counsel or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VI or otherwise shall be on the Corporation.
(10) Preservation of Rights. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Director or officer of the Corporation, or has ceased to serve at the request of the Corporation as a director or officer of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, and shall inure to the benefit of the heirs, executors and administrators of such a person. Any repeal or modification of this Article VI by the stockholders of the Corporation entitled to vote thereon shall not adversely affect any right or protection of a Director or officer of the Corporation, or any person serving at the request of the Corporation as a director or officer of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, existing at the time of such repeal or modification.
DIRECTOR LIABILITY TO THE CORPORATION
(1) Limitation on Liability. A Director's liability to the Corporation for breach of duty to the Corporation or its stockholders shall be limited to the fullest extent permitted by Nevada law. In particular, no Director of the Corporation shall be liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (a) for any breach of the Director's duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) for any transaction from which the Director derived an improper personal benefit.
(2) Repeal or Modification. Any repeal or modification of the foregoing Section (1) by the stockholders of the Corporation entitled to vote thereon shall not adversely affect any right or protection of a Director of the Corporation existing at the time of such repeal or modification.
(3) Amendment. If the General Corporation Law of the State of Nevada is amended to authorize corporate action further eliminating or limiting the liability of directors, then a Director of the Corporation shall be free of liability to the fullest extent permitted by the General Corporation Law of the State of Nevada, as so amended.
RESERVATION OF RIGHT TO AMEND CERTIFICATE OF INCORPORATION
(1) Reservation of Right to Amend. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed by law, and all the provisions of this Amended and Restated Certificate of Incorporation and all rights and powers conferred in this Amended and Restated Certificate of Incorporation on stockholders, directors and officers are subject to this reserved power.
(2) Construction. Each reference in this Amended and Restated Certificate of Incorporation to "the Amended and Restated Certificate of Incorporation," "hereunder," "hereof," or words of like import and each reference to the Amended and Restated Certificate of Incorporation set forth in any amendment to the Amended and Restated Certificate of Incorporation shall mean and be a reference to the Amended and Restated Certificate of Incorporation, as supplemented and amended through such amendment to the Amended and Restated Certificate of Incorporation.
In addition to any other approval required by law or by this Amended and Restated Certificate of Incorporation, the affirmative vote of a majority of the then outstanding shares of Common Stock and any class of preferred stock then issued be necessary to approve any consolidation of the Corporation with another corporation, any merger of the Corporation into another corporation or any merger of any other corporation into the Corporation pursuant to which shares of Common Stock are converted into or exchanged for any securities or any other consideration.
COMPROMISE AND REORGANIZATION
Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Nevada may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of the Nevada Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of the Nevada Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agrees to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of the Certificate of Incorporation of the Corporation, and which has been duly adopted in accordance with the Nevada General Corporation Law, to be executed by Kathy Gilchrist, Its President on this 23rd day of September, 2011.
By: __//s// Kathy Gilchrist_________
Kathy Gilchrist, Chairman
ARTICLE I. PRINCIPAL OFFICE
1.1 Office: The address of the principal office of the Corporation shall be determined by the Board of Directors based upon the location of the offices leased for the operation of the business and recorded in the records of the Corporation.
ARTICLE II. SHAREHOLDERS
2.1 Place of Meetings: The meetings of the Shareholders of the Corporation (Shareholders) shall be held at such place, as may be fixed by the Board of Directors.
2.2 Annual Meetings: The annual meeting of the Shareholders shall be held each year at the corporate offices or at any other place within or outside of the State of Texas, as may be determined by the Directors and as may be designated in the notice of that meeting, for the purpose of electing Directors and transacting any other business that may come before the meeting. If that date is a legal holiday, the annual meeting shall be held on the next succeeding day that is not a legal holiday.
2.3 Special Meetings: A special meeting, other than those regulated by statute, of the Shareholders for any purpose or purposes may be called at any time by the President, by a majority of the Board of Directors, by designated Officers of the Corporation, or by Shareholders together holding at least 50% of the number of shares of the Corporation on a fully diluted basis at the time outstanding and entitled to vote with respect to the business to be transacted at such meeting. At a special meeting no other business shall be transacted and no corporate action shall be taken other than that stated in the notice of the meeting.
2.4 Notice of Meetings: Written or printed notice stating the place, day, and hour of every meeting of the Shareholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be mailed not less than five nor more than ninety days before the date of the meeting to each Shareholder of record entitled to vote at such meeting, to his or her address as it appears in the share transfer books of the Corporation. If mailed, notice shall be deemed to be delivered when deposited in the United States mail. Such further notice shall be given as may be required by law, but meetings may be held without notice if all the Shareholders entitled to vote at the meeting are present in person or by proxy or if notice is waived in writing by those not present, either before or after the meeting.
Notice of special meetings shall also state the purpose or purposes for which the meeting is called, and indicate that it is being issued by, or at the direction of, the person(s) calling the meeting.
2.5 Quorum: Any number of Shareholders together holding at least a simple majority of the outstanding shares of capital stock entitled to vote with respect to the business to be transacted, who shall be present in person or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of business. If less than a quorum shall be in attendance at the time for which a meeting shall have been called, the meeting may be adjourned by a majority of the Shareholders present or represented by proxy without notice other than by announcement at the meeting. Action may be taken by consent of the shareholders without the necessity of calling a Special Meeting if such consent shall be signed by more than 50% of the holders of the issued and outstanding common stock of the corporation.
2.6 Voting: At any meeting of the Shareholders, each Shareholder of a class entitled to vote on any matter coming before the meeting shall have one vote in person or by proxy for each share of capital stock of such class standing in his or her name on the books of the Corporation on the date, at least ninety days prior to such meeting, fixed by the Board of Directors as the record date for the purpose of determining Shareholders entitled to vote pursuant to Section 5.5 below. Every proxy shall be in writing, dated, and signed by the Shareholder entitled to vote or his or her duly authorized attorney-in-fact. The proxy shall be exhibited to the Secretary at the meeting and shall be filed with the records of the Corporation.
2.7 Order of Business: The order of business at all meetings of Shareholders shall be as follows, unless otherwise adopted by the Board:
Proof of notice of meeting or waiver of notice
Reading of minutes and acceptance of preceding meeting
Reports of Officers
Reports of committees
Election of Directors, if required
2.8 Informal Action by Shareholders: Unless otherwise provided by law, any action required to be taken at a meeting of Shareholders, or other action which may be taken at a meeting of the Shareholders, may be taken without a meeting if the Shareholders holding over 50% of the issued and outstanding common stock give written consent setting forth the action to be taken and signed by all Shareholders entitled to vote on the action. Any written resolution signed by the consenting shareholders under this paragraph shall be to the effect therein expressed, with the same force and effect as if the same had been duly passed by unanimous vote at a duly called meeting of Shareholders. The signed resolution shall be kept with the meeting minutes under the proper date.
ARTICLE III. BOARD OF DIRECTORS
3.1 General Powers: The property, business, and affairs of the Corporation shall be managed and controlled under the direction of its Board of Directors (the Board and the members of which are referred to herein as Directors), and, except as otherwise expressly provided by law, the Articles of Incorporation or these Bylaws, all of the powers of the Corporation shall be vested in such Board. Such management and general control will be by majority vote of the Board, with each Director having equal vote.
3.2 Number of Directors: The number of Directors constituting the Board shall be no less than one and no more than nine.
3.3 Election and Removal of Directors: Directors shall be elected at each annual meeting of Shareholders to succeed those Directors whose terms have expired, and to fill any existing vacancies.
Directors shall hold their offices a term of two years or until their successors are elected, or their prior death, resignation, or removal. Any Director may be removed from office at a meeting called expressly for that purpose by the vote of Shareholders holding not less than a majority of the shares entitled to vote at an election of Directors.
Any vacancy occurring in the Board may be filled by the affirmative vote of the majority of the remaining Directors, though less than a quorum of the Board, and the term of office of any Director so elected shall expire at the next Shareholders meeting at which Directors are elected.
3.4 Quorum: A majority of the number of Directors fixed in accordance with Section 3.2 of these Bylaws shall constitute a quorum for the transaction of business. The act of a majority of Directors present at a meeting at which a quorum is present shall be the act of the Board. If less than a majority is present at a meeting, the majority of those present may adjourn the meeting without further notice.
3.5 Annual Meetings of Directors: An annual meeting of the Board shall be held without notice, other than this Bylaw, immediately after, and at the same place as, the annual meeting of Shareholders.
3.6 Special Meetings of Directors: Special meetings of Directors may be called at the request of the President, other duly authorized Officer, or any two Directors. The person or persons authorized to call special meetings of Directors may designate the place and time for holding any special meeting of Directors.
3.7 Notice of Special Meeting: Notice of any special meeting shall be given at least one day before the date of the meeting by written notice delivered personally or mailed to each Director at his or her address of record with the Corporation. If mailed, notice is deemed to be delivered when deposited in the United States mail. The attendance of a Director at a meeting shall be deemed to be a waiver of notice of such meeting unless the Director attends the meeting for the express purpose of objecting to the transaction of business at the meeting because the meeting is not properly called or convened. Meetings may be held at any time without notice if all of the Directors are present, or if those not present waive notice in writing either before or after the meeting.
3.8 Compensation: By resolution of the Board, Directors may be allowed a fee and expenses for attendance at all meetings, but nothing herein shall preclude Directors from serving the Corporation in other capacities and receiving compensation for such other services.
3.9 Manner of Acting: The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Directors.
3.10 Electronic Meetings: Members of the Board may participate in regular or special meetings by, or through the use of, any means of communication allowing all participants to simultaneously hear each other, such as teleconference or videoconference. If a meeting is conducted by such means, the presiding Officer shall inform all participating Directors at the commencement of such meeting that a meeting is taking place at which official business may be transacted. Any participant in a meeting by such means shall be deemed present in person at such meeting.
3.11 Executive and Other Committees: The Board may designate committees made up of Directors from time to time as the Directors see fit. The purpose for which the committees are formed are to be designated by the Board. The committees may be dissolved by affirmative vote of the Board. A committee may be authorized to exercise the authority of the Board, except that a committee may not do the following:
Fill vacancies on the Board
Amend the Corporations Articles of Incorporation
Adopt, amend, or repeal these Bylaws
Approve a plan of a merger not requiring Shareholder approval
Authorize or approve issuance or reacquisition of shares, except according to a method already prescribed by the Board
3.12 Informal Action by Directors: Unless otherwise provided by law, any action required to be taken at a meeting of Directors, or other action which may be taken at a meeting of the Directors, may be taken without a meeting if the Directors give unanimous written consent setting forth the action to be taken and signed by all Directors entitled to vote on the action.
ARTICLE IV. OFFICERS
4.1 Election of Officers; Terms: The Officers of the Corporation shall consist of a President, a Secretary, and a Treasurer. Other Officers, including a Chairman of the Board, Chief Executive Officer, Chief Operating Officer, one or more Vice Presidents, and assistant and subordinate Officers, may from time to time be elected by the Board. All Officers shall hold office until the next annual meeting of the Board and until their successors are elected. Unless prohibited by State law, any two or more offices may be combined in the same person as the Board may determine.
4.2 Removal of Officers; Vacancies: Any Officer of the Corporation may be removed summarily with or without cause, at any time, by the Board. Vacancies may be filled by the Board.
4.3 Resignations: Any Officer may resign at any time by delivering notice to the Corporation that complies with State law. The resignation shall be effective when the notice is delivered, unless the notice specifies a later effective date and the Corporation accepts the later effective date.
4.4 Duties: The Officers of the Corporation shall have such duties as generally pertain to their respective offices as well as such powers and duties as are prescribed by law or are hereinafter provided or as shall be conferred by the Board.
4.4.1 Duties of the President: Unless otherwise defined by the Board, the President shall be the Chief Executive Officer of the Corporation and shall be primarily responsible for the implementation of policies of the Board and shall have authority over the general management and direction of the business and operations of the Corporation and its divisions, if any, subject only to the ultimate authority of the Board. In the absence of the Chairman and the Vice Chairman of the Board, or if there are no such Officers, the President shall preside at all corporate meetings. The President may sign and execute, in the name of the Corporation, share certificates, deeds, mortgages, bonds, contracts, or other instruments, except in cases where the signing and the execution thereof shall be expressly delegated by the Board or by these Bylaws to some other Officer or agent of the Corporation or shall be required by law otherwise to be signed or executed. In addition, the President shall perform all duties incident to the office of the President and such other duties as may be assigned by the Board.
4.4.2 Duties of the Vice President(s): Each Vice President, if any, shall have such powers and duties as may be assigned to him or her by the President or the Board. Any Vice President may sign and execute, in the name of the Corporation, deeds, mortgages, bonds, contracts, or other instruments authorized by the Board, except where the signing and execution thereof shall be expressly delegated by the Board or the President to some other Officer or agent of the Corporation, or shall be required by law or otherwise to be signed or executed.
4.4.3 Duties of the Treasurer: The Treasurer shall have charge of and be responsible for all funds, securities, receipts, and disbursements of the Corporation, and shall deposit all monies and securities of the Corporation in such banks and depositories as shall be designated by the Board. The Treasurer shall be responsible for maintaining adequate financial accounts and records in accordance with generally accepted accounting practices; preparing appropriate operating budgets and financial statements; preparing and filing all tax returns required by law; and performing all duties incident to the office of Treasurer, and such other duties as may be assigned to him or her by the Board, the Finance Committee, or the President. The Treasurer may sign and execute in the name of the Corporation share certificates, deeds, mortgages, bonds, contracts, or other instruments, except in cases where the signing and the execution thereof shall be expressly delegated by the Board or by these Bylaws to some other Officer or agent of the Corporation or shall be required by law or otherwise to be signed or executed.
4.4.4 Duties of the Secretary: The Secretary shall act as Secretary of all meetings of the Shareholders of the Corporation and, when requested, shall also act as Secretary of the meetings of the committees of the Board. The Secretary shall keep and preserve the minutes of all such meetings in permanent books; see that all notices required to be given by the Corporation are duly given and served; have custody of the seal of the Corporation and shall affix the seal or cause it to be affixed to all share certificates of the Corporation and to all documents the execution of which on behalf of the Corporation under its corporate seal is duly authorized in accordance with law or the provisions of these Bylaws. The Secretary shall have custody of all deeds, leases, contracts, and other important corporate documents; have charge of the books, records, and papers of the Corporation relating to its organization and management as a Corporation; see that all reports, statements, and other documents required by law (except tax returns) are properly filed; and in general perform all the duties incident to the office of Secretary, and such other duties as may be assigned by the Board or the President. The Secretary may designate such subordinate Officers or administrative personnel as desirable, including Assistant Secretary, with the consent of the Board to carry out the duties of the office.
4.5 Compensation: The Board shall have authority to fix the compensation of all Officers of the Corporation.
ARTICLE V. CAPITAL STOCK
5.1 Certificates: Certificates shall represent the interest of each Shareholder of the Corporation. They shall be numbered and entered in the books of the Corporation as they are issued. They shall exhibit the holder's name and the number of shares, and shall be signed by the President or a Vice President, and the Treasurer or the Secretary, and shall bear the corporate seal. The Corporation may elect to record and deliver its shares electronically in lieu of using paper certificates.
5.2 Lost, Destroyed, and Mutilated Certificates: Holders of the shares of the Corporation shall immediately notify the Corporation of any loss, destruction, or mutilation of the certificate thereof, and the Board may in its discretion cause new certificates for the same number of shares to be issued to such Shareholder upon the surrender of the mutilated certificate or upon satisfactory proof of such loss or destruction.
5.3 Transfer of Shares: The shares of the Corporation shall be transferable or assignable only on the books of the Corporation by the holder in person or by attorney on surrender of the certificate for such shares duly endorsed and, if sought to be transferred by attorney, accompanied by a written power of attorney to have the same transferred on the books of the Corporation. The Corporation will recognize, however, the exclusive right of the person registered on its books as the owner of shares to receive dividends and to vote as such owner.
5.4 Consideration for Shares: The Board may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the Corporation, including cash, promissory notes, services performed, contracts for services to be performed or other securities of the Corporation. Before the Corporation issues shares, the Board shall determine that the consideration received or to be received for the shares is adequate.
5.5 Fixing Record Date: For the purpose of determining Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or entitled to receive a dividend payment, or in order to make a determination of Shareholders for any other proper purpose, the Board may fix in advance a date as the record date for any such determination of Shareholders. Such date may not be more than <Number> days prior to the date on which the particular action, requiring the determination of Shareholders, is to be taken. If no record date is designated for the determination of Shareholders entitled to notice of a meeting of Shareholders or to vote at a meeting of Shareholders, or Shareholders entitled to receive payment of a dividend, the date on which notices of the meeting are mailed or the date on which the resolution of the declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof.
ARTICLE VI. INDEMNIFICATION
6.1 Indemnification: The Corporation shall indemnify each of its Directors, Officers, and employees whether or not then in service as such, against all reasonable expenses actually and necessarily incurred by him or her in connection with the defense or any litigation to which the individual may have been made a party because he or she is or was a Director, Officer, or employee of the Corporation to the full extent permitted by law.
ARTICLE VII. MISCELLANEOUS PROVISIONS
7.1 Seal: The seal of the Corporation shall consist of a flat-faced circular die or embossed mark, of which there may be any number of counterparts, on which there shall be engraved the word "Seal" and the name of the Corporation.
7.2 Fiscal Year: The fiscal year of the Corporation shall end on such date and shall consist of such accounting periods as may be fixed by the Board.
7.3 Checks, Notes, and Drafts: Checks, notes, drafts, and other orders for the payment of money shall be signed by persons authorized by the Board. When the Board of Directors so authorizes, however, the signature of any such person may be a facsimile.
7.4 Dividends: The Directors may declare, and the Corporation pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law.
7.5 Amendment of Bylaws:
Unless restricted by the Articles of Incorporation, these Bylaws may be amended or changed at any meeting of the Board by affirmative vote of a majority of the number of Directors fixed by these Bylaws.
THE UNDERSIGNED, being all of the Directors of <Company Name>, evidence their adoption and ratification of the foregoing Bylaws of the Corporation.
Dated: April 18, 2002
__//s// Jonathan Gilchrist_________
Jonathan Gilchrist, Chairman
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
CUSIP NO. [sample]
AUTHORIZED COMMON STOCK: 190,000,000 SHARES PAR VALUE: $0.0001 PER SHARE
THIS CERTIFIES THAT _________ [Name]
IS THE RECORD HOLDER OF _________ [number of shares]
Shares of iVoiceIdeas, Inc. Common Stock transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
[iVoiceIdeas, Inc. Corporate Seal]
Signature must be guaranteed by a firm which is a member of a registered national stock exchange, or by a bank (other than a savings bank), or a trust company. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations.
Additional abbreviations may also be used though not on the above list.
For Value Received, _______hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(Please print or typewrite name and address, including zip code or assignee)
of the capital stock represented by the within certificate, and do hereby irrevocably constitute and appoint
to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration or enlargement.
Austin, Texas, USA
Telephone: (512) 637-1330
Each person considering subscribing for common shares of the Company should review the following instructions:
Subscription Agreement: Please complete, execute, and deliver to the Company the enclosed copy of the Subscription Agreement. The Company will review the materials and, if the subscription is accepted, the Company will execute the Subscription Agreement and return one copy of the materials to you for your records.
The Company shall have the right to accept or reject any subscription, in whole or in part.
An acknowledgment of the acceptance of your subscription will be returned to you promptly after acceptance.
Payment: Payment for the amount of the Shares subscribed for shall be made at the time of delivery of the properly executed Subscription Agreement, or such date as the Company shall specify by written notice to subscribers (unless such period is extended in the sole discretion of the President of the Company), by check, bank draft or wire transfer of immediately available funds to the Company at the address set forth below or an account specified by the Company. The closing of the transactions contemplated hereby (the "Closing") will be held on such date specified in such notice (unless the closing date is extended in the sole discretion of the President of the Company). There is no minimum aggregate amount of Shares which must be sold as a condition precedent to
the Closing, and the Company may provide for one or more Closings while continuing to offer the Shares that constitute the unsold portion of the Offering.
All documents and check should be forwarded to:
Arboretum Great Hills
9600 Great Hills Trail
Austin, TX 78759
Attention: Mr. Maurice Stone
THE PURCHASE OF SHARES OF IVOICEIDEAS, INC. INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE INVESTMENT.
EVERY POTENTIAL INVESTOR PRIOR TO ANY INVESTMENT OR PURCHASE OF IVOICE IDEAS, INC.S SHARES SHOULD READ THE PROSPECTUS RELATING TO THIS OFFERING. BY SIGNING BELOW, THE INVESTOR CONFIRMS RECEIPT OF THE PROSPECTUS.
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned (the "Subscriber") hereby subscribes for that number of shares (the "Shares") of the Company set forth below, upon and subject to the terms and conditions set forth in the Company's final prospectus filed on Form 424A and dated _________, 201__ (the "Prospectus").
The Subscriber acknowledges, represents and warrants as of the date of this Subscription Agreement that:
no person has made to the Subscriber any written or oral representations:
(a) that any person will resell or repurchase the Shares,
(b) that any person will refund the purchase price of the Shares, or
(c) as to the future price or value of the Shares;
the Company has provided to the Subscriber a copy of the Prospectus and has made available a copy of the Company's Registration Statement on Form S-1 filed on ________________, 2011; and
the representations, warranties and acknowledgements of the Subscriber contained in this Section will survive the closing of this Agreement.
The Subscriber acknowledges that the Subscriber has a two day cancellation right and can cancel this Subscription Agreement by sending notice to the Company by midnight on the 2nd business day after the Subscriber signs this Subscription Agreement.
Total Number of Shares to be Acquired:
Amount to be paid (price of $0.0125 USD per Share):
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement this ______ day of ____________________, 2012.
(PRINT) as it should appear on the Certificate:
If Joint Ownership, check one (all parties must sign above):
[ ] Joint Tenants with Right of Survivorship
[ ] Tenants in Common
[ ] Community Property
If Fiduciary or a Business or an Organization, check one:
[ ] Trust
[ ] Estate
[ ] Power of Attorney
Name and Type of Business Organization:
IDENTIFICATION AUTHENTICATION REQUIRED [ATTACH PHOTOCOPY OF ID]
Below is my (check one)
[ ] Government ID# - [ ] Social Security# - [ ] Passport# - [ ] Tax ID# -
[ ] Drivers License# - [ ] Other _________________: #__________________________
ACCEPTANCE OF SUBSCRIPTION
The foregoing Subscription is hereby accepted for and on behalf of iVoiceIdeas, Inc. this ______ day of ____________________, 2012.
MAURICE STONE, PRESIDENT
Clay Thomas, P.C.
Certified Public Accountant
8302 Hausman Road West
San Antonio, Texas 78249
(210) 908-9536 (office)
(210) 908-9344 (fax)
December 8, 2011
To the Board of Directors
iVoice Ideas, Inc.
Pursuant to this firms audit of the financial statements of iVoice Ideas, Inc., for the periods ending December 31, 2009, December 31, 2010, and September 30, 2011, you have this firms consent to release the result of the audit and of the financial statement information contained within those audits to third parties.
/s/ Clay Thomas, P.C.
December 8, 2011
CERTIFICATE OF DESIGNATION OF CLASS A PREFERRED STOCK
OF EARNEST EINSTIEN, INC.
To Be Designated Series A Preferred Stock
Pursuant to the General Corporation Law of the State of Nevada
The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted by the Board of Directors (the Board of Directors) of Earnest Einstien, Inc., a Nevada corporation (the Corporation), at a meeting duly convened and held, at which a quorum was present and acting throughout:
RESOLVED, that pursuant to the authority conferred on the Board of Directors by the Corporations Certificate of Incorporation, the issuance of a series of preferred stock, par value $0.0001 per share, of the Corporation which shall consist of 5,000,000 shares of convertible preferred stock be, and the same hereby is, authorized; and the Chairman and Chief Executive Officer of the Corporation be, and he hereby is, authorized and directed to execute and file with the Secretary of State of the State of Nevada a Certificate of Designation of Preferred Stock of the Corporation fixing the designations, powers, preferences and rights of the shares of such series, and the qualifications, limitations or restrictions thereof (in addition to the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation which may be applicable to the Corporations preferred stock), as follows:
Number of Shares; Designation. A total of 5,000,000 shares of preferred stock, par value $0.0001 per share, of the Corporation are hereby designated as Series A Preferred Stock (the Series). Shares of the Series (Preferred Shares) will be issued at a value of $0.045 per share to accredited investors investing in the Corporation for a total of $225,000.
Rank. The Series shall, with respect to rights (including to redemption payments) upon liquidation, dissolution or winding-up of the affairs of the Corporation, rank:
Senior and prior to the Common Stock, par value $0.0001 per share, of the Corporation (the Common Stock), and any additional series of preferred stock which may in the future be issued by the Corporation and are designated in the amendment to the Certificate of Incorporation or the certificate of designation establishing such additional preferred stock as ranking junior to the Class A Preferred Shares. Any shares of the Corporations Capital Stock which are junior to the Preferred Shares with respect to rights (including to redemption payments) upon liquidation, dissolution or winding-up of the affairs of the Corporation are hereinafter referred to as Junior Liquidation Shares.
Dividends. Dividends may be declared and paid on the Preferred Shares from funds legally available therefore as and when determined by the Board of Directors. The Series shall, with respect to the payment of dividends, rank pari passu with the Common Stock.
The liquidation value per Preferred Share, in case of the voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, shall be an amount equal to (i) $7.50 per share (the Purchase Price), subject to adjustment in the event of a stock split, stock dividend or similar event applicable to the Series.
For purposes of this paragraph 4, a Change of Control shall be treated as a Liquidation Event and shall entitle each Holder to receive, upon the consummation of such Change of Control, and at such Holders option, cash in an amount equal to the Liquidation Value of such Holders Preferred Shares.
The Corporation shall, no later than the date on which a Liquidation Event occurs, deliver in accordance with the notice provisions of the Exchange and Contribution Agreement written notice of any Liquidation Event, stating the payment date or dates when and the place or places where the amounts distributable in such circumstances shall be payable, not less than 30 days prior to any payment date stated therein, to each Holder.
Right to Convert. Each Holder shall have the right to convert, at any time and from time to time, all or any part of the Preferred Shares held by such Holder into such number of fully paid and non-assessable shares of Common Stock (the Conversion Shares) as is determined in accordance with the terms hereof (a Conversion).
Conversion Notice. In order to convert Preferred Shares, a Holder shall send to the Corporation by facsimile transmission, at any time prior to 3:00 p.m., central time, on the Business Day (as used herein, the term Business Day shall mean any day except a Saturday, Sunday or day on which the Federal Reserve Bank of Dallas, Texas is closed in the ordinary course of business) on which such Holder wishes to effect such Conversion (the Conversion Date), a notice of conversion in substantially the form attached as Annex I hereto (a Conversion Notice), stating the number of Preferred Shares to be converted, and a calculation of the number of shares of Common Stock issuable upon such Conversion in accordance with the formula set forth in paragraph 5(c) below setting forth the basis for each component thereof, including the details relating to any adjustments made to the Conversion Price. The Holder shall promptly thereafter send the Conversion Notice and the certificate or certificates being converted to the Corporation. The Corporation shall issue a new certificate for Preferred Shares to the Holder in the event that less than all of the Preferred Shares represented by a certificate are converted; provided, however, that the failure of the Corporation to deliver such new certificate shall not affect the right of the Holder to submit a further Conversion Notice with respect to such Preferred Shares and, in any such case, the Holder shall be deemed to have submitted the original of such new certificate at the time that it submits such further Conversion Notice. Except as otherwise provided herein, upon delivery of a Conversion Notice by a Holder in accordance with the terms hereof, such Holder shall, as of the applicable Conversion Date, be deemed for all purposes to be the record owner of the Common Stock to which such Conversion Notice relates. In the case of a dispute between
the Corporation and a Holder as to the calculation of the Conversion Price or the number of Conversion Shares issuable upon a Conversion (including, without limitation, the calculation of any adjustment to the Conversion Price following any adjustment thereof), the Corporation shall issue to such Holder the number of Conversion Shares that are not disputed within the time periods specified in paragraph 5(d) below and shall submit the disputed calculations to a certified public accounting firm of national reputation (other than the Corporations regularly retained accountants) within two (2) Business Days following the Corporations receipt of such Holders Conversion Notice. The Corporation shall cause such accountant to calculate the Conversion Price as provided herein and to notify the Corporation and such Holder of the results in writing no later than three (3) Business Days following the day on which such accountant received the disputed calculations (the Dispute Procedure). Such accountants calculation shall be deemed conclusive absent manifest error. The fees of any such accountant shall be borne by the party whose calculations were most at variance with those of such accountant.
Number of Conversion Shares. The number of Conversion Shares to be delivered by the Corporation to a Holder for each Preferred Share pursuant to a Conversion shall be ten common shares for each preferred share held by the Holder of Class A Preferred Shares provided, however, that the number of Conversion Shares issued shall never, when combined with all other then outstanding shares of Common Stock and shares of Common Stock which have been subscribed for or otherwise committed to be issued, exceed the number of shares of Common Stock then authorized to be issued by the Corporation, and in the event that there are insufficient shares of Common Stock authorized to permit the full Conversion contemplated by any Conversion Notice, the Corporation will promptly take all such actions necessary so as to permit the full Conversion contemplated by such Conversion Notice as soon as practicable after receipt by the Corporation of such Conversion Notice.
Delivery of Conversion Shares. The Corporation shall, no later than the close of business on the third (3rd) Business Day following the later of the date on which the Corporation receives a Conversion Notice from a Holder by facsimile transmission pursuant to paragraph 5(b), above, and the date on which the Corporation receives the related Preferred Shares certificate (such third Business Day, the Delivery Date), issue and deliver or cause to be delivered to such Holder the number of Conversion Shares determined pursuant to paragraph 5(c) above. The holding period for common stock issued under the exemption from the requirement of registration under Rule 144 and Section 4(2) of the securities act for the underlying shares into which the Series A Preferred Shares may be converted shall begin on the date on which the Class A Preferred Shares are fully paid and fully issued to the Holder.
In the event that the Corporation shall issue or distribute New Securities pursuant to an issuance or distribution approved by a majority of the directors nominated by stockholders other than the Holders, in any such case at a price per share less than the Current Market Price or that would entitle the holders of the New Securities to subscribe for or purchase shares of Common Stock at less than Current Market Price per share (provided that the issuance of Common Stock upon the exercise of New Securities that
are rights, warrants, options or convertible or exchangeable securities (New Derivative Securities) will not cause an adjustment in the Conversion Price if no such adjustment would have been required at the time such New Derivative Security was issued), then the Conversion Price in effect immediately prior thereto shall be adjusted so that the Conversion Price shall equal the price at which the Corporation issues or distributes such New Securities (or the price at which the holders of the New Securities are entitled to subscribe for or purchase shares of Common Stock). Each such adjustment shall be made successively whenever any such New Securities are issued. In determining whether any New Derivative Securities entitle the holders to subscribe for or purchase shares of Common Stock at less than the Current Market Price per share, there shall be taken into account any consideration received by the Corporation for such New Derivative Securities, the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a certificate filed with the records of corporate proceedings of the Corporation. Notwithstanding the foregoing, in no event shall an adjustment be made under this clause (ii) if such adjustment would result in raising the then-effective Conversion Price.
No adjustment in the Conversion Price shall be required unless the adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided, however, that any adjustments that by reason of this paragraph 5(e)(iii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph 5(e) shall be made to the nearest cent or nearest 1/100th of a share.
In the event that, at any time as a result of an adjustment made pursuant to paragraph 5 above, the holder of any share of the Series thereafter surrendered for conversion shall become entitled to receive any shares of Capital Stock of the Corporation other than shares of the Common Stock, thereafter the number of such other shares so receivable upon conversion of any share of the Series shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in paragraphs 5(e)(i) through 5(e)(iii) above, and the other provisions of this paragraph 5(e) with respect to the Common Stock shall apply on like terms to any such other shares.
(f) which paragraph 5(e)(i) applies), any consolidation of the Corporation with, or merger of the Corporation into, any other entity, any merger of another entity into the Corporation (other than a merger that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock of the Corporation), any sale or transfer of all or substantially all of the assets of the Corporation or any compulsory share exchange, pursuant to which share exchange the Common Stock is converted into other securities, cash or other property, then lawful provision shall be made as part of the terms of such transaction whereby the holder of each share of the Series then outstanding shall have the right thereafter, during the period such share shall be convertible, to convert such share only into the kind and amount of securities, cash and other property receivable upon the reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Common Stock of the
Corporation into which a share of the Series might have been converted immediately prior to the reclassification. In case of any reclassification of the Common Stock (other than in a transaction to consolidation, merger, sale, transfer or share exchange assuming that such holder of Common Stock failed to exercise rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon consummation of such transaction, subject to adjustment as provided in paragraph 5(e) above following the date of consummation of such transaction. As a condition to any such transaction, the Corporation or the person formed by the consolidation or resulting from the merger or which acquires such assets or which acquires the Corporations shares, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to (i) establish such right and (ii) ensure that any such transaction does not, in and of itself, effect the holders rights to the Liquidation Value. The certificate or articles of incorporation or other constituent document shall provide for adjustments which, for events subsequent to the effective date of the certificate or articles of incorporation or other constituent document, shall be as nearly equivalent as may be practicable to the adjustments provided for in this paragraph 5. The provisions of this paragraph 5(f) shall similarly apply to successive reclassifications, consolidations, mergers, sales, transfers or share exchanges.
the Corporation shall take any action which would require an adjustment in the Conversion Price pursuant to paragraph 5(e); or
the Corporation shall authorize the granting to the holders of its Common Stock generally of rights, warrants or options to subscribe for or purchase any shares of any class or any other rights, warrants or options; or
there shall be any reclassification or change of the Common Stock (other than a subdivision or combination of its outstanding Common Stock or a change in par value) or any consolidation, merger or statutory share exchange to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or the sale or transfer of all or substantially all of the assets of the Corporation; or
there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Corporation; then, the Corporation shall cause to be delivered to each Holder in accordance with the notice provisions of the Exchange and Contribution Agreement, as promptly as possible, but at least 20 days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights, warrants or options or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights, warrants or options are to be determined, or (B) the date on which such reclassification, change, consolidation, merger, statutory share exchange, sale, transfer, dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, change, consolidation, merger, statutory share exchange, sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this paragraph 5(g).
The Corporation shall promptly cause a notice of the adjusted Conversion Price to be delivered to each Holder.
In any case in which paragraph 5(e) provides that an adjustment shall become effective immediately after a record date for an event and the date fixed for such adjustment pursuant to paragraph 5(e) occurs after such record date but before the occurrence of such event, the Corporation may defer until the actual occurrence of such event issuing to the holder of any Preferred Shares converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment.
Subject to the proviso set forth in paragraph 5(c) hereof, the Corporation shall at all times reserve and keep available for issuance upon the conversion of the shares of the Series the maximum number of each of its authorized but unissued shares of Common Stock as is reasonably anticipated to be sufficient to permit the conversion of all outstanding shares of the Series, and shall take all action required to increase the authorized number of shares of Common Stock, or any other actions necessary or desirable, if at any time there shall be insufficient authorized but unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of the Series.
Status of Shares. All Preferred Shares that are at any time converted pursuant to paragraph 5 above, and all Preferred Shares that are otherwise reacquired by the Corporation and subsequently canceled by the Board of Directors, shall be retired and shall not be subject to reissuance. Class A Preferred Shares shall have the right to non-dilution and shall at no time be diluted by the issuance of other shares of common stock or additional classes of preferred shares to a percentage of voting control less than 51% of the issued and outstanding shares of the Corporation on a fully diluted basis.
Voting Rights. Each share of the Series shall entitle the holder thereof to that number of votes into which the Class A Preferred Shares into which such share of the Series is then Convertible. Class A Preferred Shares shall have the right to vote on all matters submitted to the common shareholders for a vote at any time at special or annual meetings of the Corporation. Fractional votes shall not, however, be permitted, and any fractional voting rights (after aggregating all shares into which shares of the Series held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward).
Restrictions and Limitations.
So long as any Preferred Shares remain outstanding, the Corporation shall not, without the vote or written consent by the holders of at least a majority of the outstanding Preferred Shares, voting together as a single class:
Redeem, purchase or otherwise acquire for value (or pay into or set aside for a sinking or other analogous fund for such purpose) any share or shares of its Capital Stock, except for (a) a transaction in which all outstanding shares of Preferred Stock are concurrently redeemed, purchased or otherwise acquired, (b) conversion into or exchange for shares of Capital Stock of the Corporation that are both (x) Junior Liquidation Shares, and (y) no greater than pari passu with the Preferred Shares with respect to the payment of dividends, or at a lower than cost, at fair market value, upon the occurrence of certain events, such as the termination of employment;
(ii) create (whether by merger or otherwise) any new series or class of Capital Stock ranking pari passu with or having a preference over the Series as to redemption or distribution of assets upon a Liquidation Event;
increase (whether by merger or otherwise) the authorized number of shares of the Series;
issue (whether by merger or otherwise) any securities of the Corporation ranking pari passu with or senior to Preferred Shares as to rights upon a Liquidation Event;
enter into any definitive agreement or commitment with respect to any of the foregoing; or
cause or permit any Subsidiary to engage in or enter into any definitive agreement or commitment with respect to any of the foregoing.
In the event that the Holders of at least a majority of the outstanding Preferred Shares agree to allow the Corporation to alter or change the rights, preferences or privileges of the Series pursuant to applicable law, no such change shall be effective to the extent that, by its terms, such change applies to less than all of the Preferred Shares then outstanding.
Certain Definitions. As used in this Certificate, the following terms shall have the following respective meanings:
Affiliate of any specified person means any other person directly or indirectly controlling or controlled by or under common control with such specified person. For purposes of this definition, control when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities or otherwise; and the term controlling and controlled having meanings correlative to the foregoing.
Capital Stock of any person or entity means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in the common stock or preferred stock of such person or entity, including, without limitation, partnership and membership interests.
Change of Control means the existence or occurrence of any of the following: (a) the sale, conveyance or disposition of all or substantially all of the assets of the Corporation; (b) the effectuation of a transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is disposed of (other than as a direct result of normal, uncoordinated trading activities in the Common Stock generally); (c) the consolidation, merger or other business combination of the Corporation with or into any other entity, immediately following which the prior stockholders of the Corporation fail to own, directly or indirectly, at least fifty percent (50%) of the voting equity of the surviving entity; (d) a transaction or series of transactions in which any Person or group (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) acquires more than fifty percent (50%) of the voting equity of the Corporation; (e) the replacement of a majority of the Board of Directors with individuals who were not nominated or elected by at least a majority of the directors at the time of such replacement; or (f) a transaction or series of transactions that constitutes or results in a going private transaction (as defined in Section 13(e) of the Exchange Act and the regulations of the Commission issued thereunder).
Current Market Price means, when used with respect to any security as of any date, the volume weighted average price of such security on the ten (10) consecutive trading days immediately preceding (but not including) such date as reported for consolidated transactions with respect to securities listed on the principal national securities exchange on which such security is listed or admitted to trading or, if such security is not listed or admitted to trading on any national securities exchange, the volume weighted average price of such security on the ten (10) consecutive trading days immediately preceding (but not including) such date in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System or such other system then in use or, if such security is not quoted by any such organization, the volume weighted average price of such security as of the ten (10) consecutive trading days immediately preceding (but not including) such date furnished by a New York Stock Exchange member firm selected by the Corporation, or if such security is not quoted by any such organization and no such New York Stock Exchange member firm is able to provide such prices, such price as is determined by the Board of Directors in good faith.
Holder means any holder of Preferred Shares, all of such holders being the Holders.
New Securities means any Common Stock or preferred stock, whether or not authorized on the date hereof, and rights, options or warrants to purchase Common Stock or preferred stock and securities of any type whatsoever that are, or may become, convertible into Common Stock or preferred stock; provided, however, that New Securities does not include the following:
(i) shares of Capital Stock of the Corporation issued or issuable upon conversion or exercise of any currently outstanding securities;
(ii) shares or options or warrants for Common Stock granted to officers, directors and employees of, and consultants to, the Corporation pursuant to stock option or purchase plans or other compensatory agreements approved by the Board of Directors;
(iii) shares of Common Stock or preferred stock issued in connection with any pro rata stock split, stock dividend or recapitalization by the Corporation;
(iv) shares of Capital Stock issued to a strategic investor in connection with a strategic commercial agreement as determined by the Board of Directors;
(v) shares of Capital Stock issued to an investor in connection with a joint venture arrangement where the Corporation is a participant;
(vi) shares of Capital Stock issued pursuant to the acquisition of another corporation or entity by the Corporation by consolidation, merger, purchase of all or substantially all of the assets, or other reorganization in which the Corporation acquires, in a single transaction or series of related transactions, all or substantially all of the assets of such other corporation or entity or fifty percent (50%) or more of the voting power of such other corporation or entity or fifty percent (50%) or more of the equity ownership of such other corporation or entity;
(vii) shares of Capital Stock issued in an underwritten public securities offering pursuant to a registration statement filed under the Securities Act of 1933, as amended;
(viii) shares of Capital Stock issued to current or prospective customers or suppliers of the Corporation approved by the Board of Directors as compensation or accommodation in lieu of other payment, compensation or accommodation to such customer or supplier;
(ix) shares of Capital Stock issued to any person that provides services to the Corporation as compensation therefore pursuant to an agreement approved by the Board of Directors;
(x) shares of Common Stock issued pursuant to paragraph 9; and
(xi) securities issuable upon conversion or exercise of the securities set forth in paragraphs (i) (x) above.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed on its behalf by its undersigned Chairman and Chief Executive Officer as of
Date: October 19, 2011
__//s// Kathy Godfrey___________
Kathy Godfrey, President
Arboretum Great Hills
9600 Great Hills Trail
Austin, TX 78759
Registration Statement 333-
; 10,000,000 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to iVoiceIdeas, Inc., a Nevada corporation (the Company) in connection with the Company's Registration Statement on Form S-1 as filed with the U.S. Securities and Exchange Commission (the SEC) under the Securities Act of 1933 (the Act) (the Registration Statement), which relates to the registration of 10,000,000 shares of common stock (the Registered Securities). This opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no other opinions are expressed herein nor should they be inferred as to any matter pertaining to the contents of the Registration Statement or related Prospectus of the Company (the Prospectus), other than as expressly stated herein with respect to the issuance of the Registered Securities.
We have examined originals or copies, certified of otherwise identified to our satisfaction, of: (i) the Registration Statement; (ii) the Prospectus included in the Registration Statement; and (iii) such corporate documents and records of the Company and such other instruments, certificates and documents as we have deemed necessary or appropriate as a basis for the opinions hereinafter expressed. In such examinations, we have assumed the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents, submitted to us as copies or drafts of documents to be executed, the genuineness of all signatures and the legal competence or capacity of persons or entities to complete the execution of documents. As to various questions of fact which are material to the opinions hereinafter expressed, we have relied upon statements or certificates of public officials, directors of the Company and others as to factual matters without having independently verified such factual matters.
We have further assumed for the purposes of this opinion, without investigation, that (i) all documents contemplated by the Prospectus to be executed in connection with the Registered Securities have been duly authorized, executed and delivered by each of the parties thereto other than the Company, and (ii) the terms of the offering of Registered Securities comply in all respects with the terms, conditions and restrictions set forth in the Prospectus and all of the
Re: iVoiceIdeas, Inc.
instruments, agreements and other documents relating thereto or executed in connection therewith.
Based upon and subject to the foregoing, and having regard to such other legal considerations which we deem relevant, we are of the opinion that as of the date hereof, the Registered Securities have been duly authorized by all necessary corporate action of the Company, and are validly issued, and are fully paid and non-assessable.
This opinion is limited to the laws of the State of Nevada and the Federal laws of the United States as currently in effect, and we render no opinion as to the laws of any other state or foreign jurisdiction. This opinion is given as of the effective date of the Registration Statement, and we assume no obligation to update or supplement the opinions contained herein to reflect any facts or circumstances which may hereafter come to our attention or any changes in laws which may hereafter occur.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement.