Unassociated Document
As
filed
with the Securities and Exchange Commission on August 28,
2006
(Registration
No. 333-135855)
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SB-2
(Amendment
No. 1)
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
INNOFONE.COM,
INCORPORATED
(Name
of
small business issuer in its charter)
Nevada
|
7389
|
98-2020313
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
1431
Ocean Avenue, Suite 1100
Santa
Monica, CA 90401
(310)
458-3233
(Address
and telephone number of principal executive offices)
Mr.
Alex
Lightman
Chief
Executive Officer and President
1431
Ocean Avenue, Suite 1100
Santa
Monica, CA 90401
Phone
(310) 458-3233
Fax
(310)
458-2844
(Name,
address and telephone number of agent for service)
Copy
of
all communications to:
Arthur
Marcus, Esq.
Peter
J.
Gennuso, Esq.
Gersten
Savage LLP
600
Lexington Avenue
New
York,
NY 10022
Ph.
(212)
752-9700
Fax:
(212) 980-5192
Approximate
Date of Commencement of Proposed Sale to the Public: As soon as practicable
after the effective date of this Registration Statement.
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended, check the following box:
x
If
this
form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
o
If
this
form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
o
If
this
form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box.
o
CALCULATION
OF REGISTRATION FEE
Title
of Each
Class
of
Securities
to
be Registered
|
|
Amount
to Be
Registered(1)
|
|
Proposed
Maximum
Offering
Price
Per
Share
(1)(2)
|
|
Proposed
Maximum
Aggregate
Offering Price
(2)
|
|
Amount
of
Registration
Fee
|
|
Common
Stock, $0.001 par value, issuable upon conversion of Series A Convertible
Preferred Stock
|
|
|
41,300,000
|
(3)
|
$
|
1.12
|
|
$
|
46,256,000
|
|
$
|
4,949.39
|
|
Common
Stock, $0.001 par value
|
|
|
11,150,000
|
(4)
|
$
|
1.12
|
|
$
|
12,488,000
|
|
$
|
1,336.22
|
|
|
|
|
|
|
|
Previously
Paid*
|
|
|
|
|
$
|
1,540.16
|
|
|
|
|
|
|
|
Total
Fee
|
|
|
|
|
$
|
4,745.45
|
* |
*
Amount
was previously paid to the SEC on March 29, 2006.
**
Amount was previously paid to the SEC on July 19,
2006.
(1)
The
shares of our Common Stock being registered hereunder are being registered
for
resale by the selling stockholder named in the prospectus. In accordance with
Rule 416(a), the registrant is also registering hereunder an indeterminate
number of shares that may be issued and resold to prevent dilution resulting
from stock splits, stock dividends or similar transactions.
(2)
Estimated solely for the purpose of computing the amount of the registration
fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the closing
price of $1.12 on the OTC Bulletin Board on July 11, 2006.
(3)
Represents shares of our Common Stock issuable upon the conversion of our Series
A Convertible Preferred Stock. In accordance with Rule 416(a), the registrant
is
also registering hereunder an indeterminate number of shares that may be issued
and resold to prevent dilution resulting from stock splits, stock dividends
or
similar transactions. In addition, should a decrease in the exercise price
as a
result of an issuance or sale of shares below the then current market price
result in our having insufficient shares, we will not rely upon Rule 416, but
will file a new registration statement to cover the resale of such additional
shares should that become necessary.
(4)
Represents (i) 3,600,000 shares of common stock issued to Mr. Alex Lightman,
our
Chief Executive Officer, President and a Director; (ii) 200,000 shares of
common
stock issued to Mr. Gerard Casale, our General Counsel and Vice President
of
Business and Legal Affairs; (iii) 500,000 shares of common stock issued to
Mr.
Lawrence Hughes; (iv) 5,000,000 shares of common stock issued to Cogent
Capital Financial, LLC; (v) 1,850,000 shares of common stock issued to Cogent
Capital Investments, LLC.
The
registrant hereby amends this registration statement on such date or dates
as
may be necessary to delay its effective date until the registrant shall file
a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, 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. The selling
securityholders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer
to
buy these securities in any state where the offer or sale is not
permitted.
Subject
to Completion, August 28, 2006
PROSPECTUS
52,450,000
SHARES
INNOFONE.COM,
INCORPORATED
COMMON
STOCK
This
prospectus relates to the resale of up to 52,450,000 shares of our Common
Stock,
par value $0.001 per share (“Common Stock”), consisting of (i) 41,300,000 shares
issuable upon conversion of our Series A Convertible Preferred Stock, $0.01
par
value per share, issued to Cogent Capital Financial, LLC (“CCF”);
(ii) 5,000,000 shares issued to CCF; (iii) 1,850,000 shares issued to
Cogent Capital Investments, LLC, an affiliate of CCF (“CCI”); (iv)
3,600,000 shares issued to Mr. Alex Lightman, our Chief Executive Officer
and a
Director (“Lightman”); (v) 200,000 shares issued to Mr. Gerard Casale, our
General Counsel, Vice President of Business and Legal Affairs (“Casale”); and
(vi) 500,000 shares issued to Mr. Lawrence Hughes (“Hughes”) (Hughes, with CCF,
CCI, Lightman, Casale and Hughes, collectively the “selling securityholders”).
The Selling Securityholders may sell their common stock from time to time
at
prevailing market prices.
Our
Common Stock is registered under Section 12(g) of the Securities Exchange
Act of
1934, as amended, and is quoted on the over-the-counter market and prices
are
reported on the OTC Bulletin Board under the symbol “INFN.” On August 24,
2006, the closing price as reported was $.95 per share. Since our Common
Stock
trades below $5.00 per share, it is considered a "penny stock" and is subject
to
SEC rules and regulations that impose limitations on the manner in which
it can
be publicly traded.
The
selling securityholders, and any participating broker-dealers may be deemed
to
be “underwriters” within the meaning of the Securities Act of 1933, as amended,
and any commissions or discounts given to any such broker-dealer may be regarded
as underwriting commissions or discounts under the Securities Act of 1933.
The
selling securityholders have informed us that they do not have any agreement
or
understanding, directly or indirectly, with any person to distribute their
common stock. We agreed to pay the expenses of registering the foregoing
shares
of our Common Stock.
INVESTMENT
IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.
YOU MAY LOSE YOUR ENTIRE INVESTMENT. CONSIDER CAREFULLY THE “RISK FACTORS”
BEGINNING ON PAGE 7 OF THIS PROSPECTUS BEFORE INVESTING.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The
date
of this prospectus is August __, 2006
You
should rely only on the information contained in or incorporated by reference
in
this prospectus. We have not, and the selling securityholders have not,
authorized anyone, including any salesperson or broker, to give oral or written
information about this offering, Innofone.com, Incorporated, or the shares
of
common stock offered hereby that is different from the information included
in
this prospectus. If anyone provides you with different information, you should
not rely on it. We are not, and the selling securityholders are not, making
an
offer to sell these securities in any jurisdiction where the offer or sale
is
not permitted. You should assume that the information contained in this
prospectus is accurate only as of the date on the front cover of this
prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
This prospectus is not an offer to sell any securities other than the shares
of
common stock offered hereby. This prospectus is not an offer to sell securities
in any circumstances in which such an offer is unlawful.
TABLE
OF
CONTENTS
Prospectus
Summary
|
1
|
The
Offering
|
3
|
Cogent
Transaction Summary
|
4
|
Summary
Financial Information
|
5
|
Risk
Factors
|
6
|
Special
Note Regarding Forward-Looking Statements
|
11
|
Use
of Proceeds
|
11
|
Market
for Our Shares
|
12
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
13
|
Business
|
19
|
Description
of Property
|
23
|
Legal
Proceedings
|
23
|
Management
|
24
|
Executive Compensation
|
25
|
Security
Ownership of Certain Beneficial Owners and Management
|
26
|
Certain
Relationships and Related Transactions
|
27
|
Description
of Securities
|
28
|
Transfer
Agent
|
28
|
Shares
Eligible for Resale
|
28
|
Selling
Securityholders
|
29
|
Plan
of Distribution
|
31
|
Legal
Matters
|
32
|
Experts
|
32
|
Where
You Can find Additional Information
|
32
|
Index
to Financial Statements
|
F-1
|
PROSPECTUS
SUMMARY
This
summary highlights some information from this prospectus, and may not contain
all of the information that is important to you. You should read the entire
prospectus carefully, including the more detailed information regarding our
company, the risks of purchasing our common stock discussed under “risk
factors,” and our financial statements and the accompanying notes. In this
prospectus, “we”, “us,” “Company” and “our”, refer to Innofone.com,
Incorporated, unless the context otherwise requires. Unless otherwise indicated,
the term “year,” “fiscal year” or “fiscal” refers to our fiscal year ending June
30th. Unless we tell you otherwise, the term “common stock” as used in this
prospectus refers to our Common Stock.
History
On
August
8, 2005, Innofone.com, Incorporated (“Innofone,” “we,” “us” and “our”) entered
into a stock purchase agreement with Mr. Alex Lightman, our President and Chief
Executive Officer, to purchase 100% of the issued and outstanding shares of
IPv6
Summit Inc. (“IPv6 Summit”), an entity engaged in developing new technology
referred to as Internet Protocol version 6. At the time of the Agreement, Mr.
Lightman was the President, Treasurer, Director and sole shareholder of IPv6
Summit and was not an officer or director of Innofone. Pursuant to the
agreement, on October 12, 2005 we issued to Mr. Lightman a promissory note
in
the principal amount of $1,000,000 with interest at the rate of four percent
(4%) per annum. On October 17, 2005, we amended and restated Mr. Lightman's
promisory note to provide for a repayment schedule which will coincide with
our
receipt of funds under our current financing arrangement with four investors.
Further, we issued to Mr. Lightman approximately 33,333,000 shares of our
restricted common stock. As a result of the stock purchase agreement, IPv6
Summit became our wholly owned subsidiaryInnofone. Prior to this
acquisition, we operated as a holding company for companies involved in
technology and financial services.
Overview
The
Internet as we know it today is based on Internet Protocol version 4, more
commonly referred to as IPv4, a 32-year-old protocol. The IPv4 Internet is
beginning to receive a major upgrade, with a new format for packets of data
called Internet Protocol version 6, or IPv6. We believe that IPv6, sometimes
called the New Internet, presents many new business opportunities, in roughly
the same manner that the existing Internet did when it first hit the mainstream
in the mid-1990s.
We
offer three related services that are relevant to IPv6: consulting,
training and conference management; we are in the process of developing a fourth
service, testing. Our consulting and training is for businesses seeking
consulting and training services largely related to the creation of corporate
business plans defining the migration or transition from the current IPv4
environment to a future Ipv6 Internet environment. Conferences are those events
we host through our IPv6 Summit, Inc. subsidiary which tyipically occur one
per
calendar quarter and have typically 400-500 attendees mainly from corporations
seeking to gain current information on IPv6 and network with others regarding
the business of the Internet. Testing will be a service we hope to provide
by
year end 2006 in conjunction with Spirent Federal and will involve the testing
and certification of electronic equipment and appliances which will be capable
of being deployed in the Ipv6 environment. We believe that we have deep
expertise in these areas and hope to further expand these services. We are
also in the early stages of a developing IPv6-related technology and have hired
a Director of Product Development to assist in developing a strategy plan on
developing our own IPv6 products in the future. These products might include
secure email systems, wireless networks, mobile virtual networks and payment
systems all using IPv6 and other technologies. We envision our IPv6 technology
will be utilized in connection with our consulting, training and conference
management services. We currently derive 80% of our revenue from our conference
management services and 20% of our revenues from our consulting services. We
anticipate generating additional revenues from our consulting in 2006. Our
training services to date have not generated any revenues. However, we have
incurred losses since inception and our common stock is subject to certain
rules
and regulations pertaining to "penny stocks". We incurred net losses in fiscal
2005 of $681,000. In addition, we expect to increase our infrastructure and
operating expenses to fund our anticipated growth. We have a history of net
loss
and our net loss totaling $6,797,163 and $8,788,592 for the three and nine
months ended March 31, 2006, increased by $6,798,948 and $8,784,625 compared
to
the same periods of the prior year. Further, we have an accumulated deficit
of
$14,874,834 for the year ended June 30, 2005.
We
began
our conference services from our date of incorporation, July 2003 after our
Chief Executive Officer and a former employee successfully organized the first
IPv6 Summit in the United States that attracted over 300 people. Revenue comes
from charging individuals and corporations an admission fee of approximately
$200 to $500 per person for each event and from charging corporations from
$4,000 to $18,000 each for sponsorship that include an exhibit booth. There
are
slight variations to these charges depending on how many benefits are
included.
We
began
offering our training services with the US IPv6 Summit in December 2003 with
a
tutorial that preceded the three-day IPv6 Summit by adding a day of activity
for
people who needed initial training, and who wanted to know more about security
than could be described in the Summit format. We added a separate training
event, the Federal Chief Information Officer workshop, in October 2005. We
anticipate that revenues from training services will come from admission
fees to the events and are in the hundreds of dollars per person.
We
began
offering our consulting services in August 2005 with the sales of consulting
agreements by our Chief Executive Officer domestically to the US Department
of
Defense IPv6 Transition Office, as a subcontractor to SI International, and
Juniper Networks and internationally to North Atlantic Treaty Organization.
Revenues from consulting are based on man-days and/or negotiated fees typically
in the tens of thousands of dollars per engagement, with engagements in
discussion in the hundreds of thousands of dollars.
We
are in
the early phases of developing our testing services. No revenues have been
received, though we have received interest from a large public company to
provide free test equipment. Testing revenues will not be generated until our
test center is built and the first customers contracted. Revenues will come
from
a fixed price schedule with payments in the thousands to tens of thousands
of
dollars per product or service tested in our lab.
Transition
to IPv6
Simply
put, one of the limitations of today's Internet is a shortage of addresses,
so
that the hardware or software equivalents of “middle men” are put into the
system to let many people use one address, not unlike the old telephone party
lines, where many people had the same “number,” and everyone could listen in.
The party line system had the advantage that a lot of people could be connected
with few switched lines, but led to problems, such as lack of security. There
was no way to assure that one person would be speaking with only one person
at
the other end. When every phone user got his/her own address, it led to many
great new capabilities - such as privacy, the ability to deliver new services
such as telefax messages to a particular person, and the ability to go mobile
with cell phones, and caller ID, which enabled people to screen their calls,
accepting only those they wanted to at that moment.
Similarly,
the IPv6 will give everyone his or her personal address (or thousands of them,
as needed), which enables the potential for “end-to-end” connectivity. Each
individual can know for certain who the specific receiver at the other end
is,
and this allows the system to check for service quality, and allows much easier
mobile use and roaming. Furthermore, this connectivity facilitates multiple
layers of individual security measures rather than today's firewalls or network
address translation, which offer little protection once a hacker has broken
through the protective wall. The difference between the New Internet and the
existing one is thought by some to be as dramatic as the difference between
the
phones with individual numbers that we have today and the phones with party
lines of yesteryear.
The
first
major customers for the New Internet in the US were the Department of Defense,
which in June 2003 mandated a transition within the Department that would make
it “IPv6-capable” by 2008, and the Office of Management and Budget, on behalf of
the Federal Government, which recently also mandated transition to IPv6, and
the
hundreds of large companies that supply these two entities. Many, but not all,
major technology companies have appointed IPv6 points of contact and developed
IPv6-related marketing messages, including Microsoft, Cisco, Juniper, Nokia,
Hewlett-Packard and about fifty others in the US.
In
2005,
as in 1995, we believe that the IPv6 space was occupied by first movers that
both take advantage of the opportunities offered by the new technology and
have
a sound business plan to offer needed products and services to the United
States and global markets. It is forecast that IPv6 will see some of the
same rapid rise as the existing Internet did between 1995 and 2000, quickly
growing from millions to billions, and potentially trillions of dollars in
global revenues impacted by the Internet. The Japanese government, for instance,
which has done a great deal of research into the upcoming IPv6 market, estimates
the market size of IPv6-ready goods/services in the year 2010 to be 170 trillion
yen, or about $1.55 trillion in US currency.
We
are
facilitating this transition by offering our conference management, consulting
and training services to government entities and corporations. Specifically, we
offer a
full
range of services to help government organizations and Fortune 1000 companies
conduct the transition. Further, we intend to develop products to enable the
transition (including servers, routers, software and other network
infrastructure, estimated at hundreds of billions of dollars over the next
decade.
We
will
offer and manage our consulting, training and conference
management services from two corporate offices: our corporate headquarters
in Santa Monica, California, and our Eastern Office in Northern
Virginia.
Recent
Developments
On
August
4, 2006, Innofone completed the acquisition of Mobile Technology Group,
Inc.
(“MTG”) through the merger of MTG into a newly formed wholly-owned subsidiary
of
Innofone pursuant to an Agreement and Plan of Merger, dated July 1, 2006
(the
“Agreement”). In accordance with the terms and provisions of the Agreement, in
exchange for all for of the capital stock of MTG, Innofone paid (a) $7,500
in
cash; and (b) issued a total of 1,441,441 shares of its common stock valued
at
the time of the execution of the Agreement at $1,500,000.00 (the “Common
Stock”). All of the shares issued to pursuant to the Agreement carried a
restricted securities legend. The Company did not receive any proceeds
from the
sale of the shares. The Company did not use any underwriter or broker-dealer
in
connection with the issuance of the shares and except for certain legal
fees and
stock transfer agent fees, no other material costs or expenses were incurred
in
connection with the issuance of the shares. The shares issued to the MTG
Shareholders were issued under a claim of exemption pursuant to Section
4(2) of
the Securities Act of 1933.
Further,
upon the effective date of the merger, the officers and directors of MTG
became
the officers and directors of the surviving company. Specifically, Kirk
Anderson, James Tyner, and Ricardo Micheri, all former officers of MTG,
are now
officers and directors of the surviving company. Innofone has agreed to
enter
into employment agreements with Messrs. Anderson, Tyner, and Micheri. The
Company anticipates entering into these employment agreements in the near
future. Further, the parties to the Agreement acknowledged that potential
conflicts may arise by virtue of the fact that Gerard N. Casale Jr. is
a
shareholder of both MTG and Innofone and has also acted in the past as
corporate
counsel to MTG and is currently General Counsel and Vice President of Business
& Legal Affairs at Innofone. Accordingly, Gerard N. Casale Jr. abstained
from any affirmative vote or consent or approval of the Agreement or the
contemplated subject merger transaction.
On
August
8, 2006, we issued a promissory note to Keiran Gaffney-Weinroth and Paul
Weinroth (collectively the “Weinroths”) in the principal amount of $50,000, with
interest at 10% per annum. The Maturity Date of the note is the earlier
of: (a)
one (i) year from the date of issuance; or (b) December 1, 2007. We may,
at your
option, prepay any and all of the amounts owing under the note, in full
or the
part, without penalty. In connection with the issuance of the note, we
issued a
five-year warrant to the Weinroths for the right to purchase 75,000 shares
of
our common stock at $1.00 per share. We have granted certain piggyback
registration rights with respect to the shares underlying the warrant.
Moreover,
the note is secured by approximately $200,000 worth of our restricted common
stock and $200,000 worth restricted common stock owned by Mr. Alex Lightman,
our
Chief Executive Officer and President.
On
July
10, 2006, we issued a promissory note to 55 South Investments in the face
amount of $500,000, with interest at 12% per annum. The Maturity Date shall
be
the earlier of: (a) one (1) year from the commencement of that certain equity
swap transaction (“Swap”) whereby 30 days have expired thereafter the date in
which the Company is granted effectiveness by the Securities and Exchange
Commission on a registration statement filed pursuant to certain agreements
made
in connection with an equity swap made by and between the Company and Cogent
Capital Financial, LLC and its affiliates as of June 2, 2006 (defined herein
as
the “Swap Start Date”); or (b) December 1, 2007, whichever is earlier. Repayment
of the Principal by Innofone to the Holder shall commence within ten (10)
days
of the Swap Start Date and shall continue thereafter in equal pro rata monthly
installments on the same date of each subsequent month thereafter for the
successive eleven (11) months thereafter the Swap Start Date and continue
until
all principal payments are paid in full. The Principal shall be repaid in
full
no later than the Maturity Date. Should the Swap Start Date not occur prior
to
the Maturity Date, then the entirety of Principal shall be due and payable
to
Holder on the Maturity Date. Further Innofone may, at its option, prepay
all
amounts owing under this Note prior to the Maturity Date, in whole or in
part,
without payment of any premium or penalty, after giving written notice thereof
to the Holder at least one (1) day prior to the date selected for prepayment.
In
connection with the issuance of the note, we issued (i) a five-year warrant
to
55 South Investments for the right to purchase up to 2,000,000 shares of
common
stock at $1.00 per share; and (ii) a five year warrant to Millennium Investment
Services, Inc., an affiliate of 55 South, for the right to purchase 500,000
shares of common stock at $1.00 per share. We have granted certain piggyback
registration rights with respect only to the shares underlying the warrant
issued to 55 South. The note is secured with approximately $2,000,000 worth
of
our restricted common stock and $2,000,000 worth of restricted common stock
owned by Mr. Lightman, our Chief Executive Officer and President. On July
14,
2006, we issued an additional promissory note for $500,000 on the same terms.
In
connection with the issuance of the note, we issued 55 South Investments
a five
year warrant to purchase up to $2,000,000 shares of common stock at an exercise
price of $1.00 per share. The Company has the right to redeem 1,400,000 of
such
warrants for $250,000 until July 13, 2007 except for the right to redeem
a
portion of the warrants, the deal is on the same terms as the July 10th
transaction. We have granted certain demand registration rights with respect
to
all shares issued as security under the notes. Further, we have agreed to
pay to
55 South approximately $40,000 representing an origination fee and a due
diligence fee.
On
May
25, 2006, we entered into a Letter Agreement (“Agreement”) with the NIR Group
for the repayment (the “Repayment”) of certain notes (“Notes”) and cancellation
of certain warrants (“Warrants”) issued on or about August 31, 2005 and October
31, 2005 pursuant to
that
certain Securities Purchase Agreement (the “SPA”) by and between Innofone and
AJW Partners, LLC (“Partners”), New Millennium Capital Partners, II, LLC
(“Millennium”), AJW Offshore, Ltd. (“Offshore”) and AJW Qualified Partners, LLC
(“Qualified, with Partners, Millennium and Offshore, collectively, the “NIR
Group”). The Repayment was applied to the outstanding principal and interest
owing under the Notes and as consideration for the cancellation of the Warrants
issued to the NIR Group, and the termination of any and all UCC-1s filed in
favor of NIR. Further, in connection with the SPA, Notes and Warrants, the
following ancillary documents were executed and/or filed: (1) Guaranty and
Pledge Agreement, dated August 31, 2005, by and between Innofone, Mr. Alex
Lightman, Innofone’s President and Chief Executive Officer, and NIR (“Pledge
Agreement”); (2) Security Agreement by and between Innofone and NIR, dated
August 31, 2005 (“Security Agreement”); and (3) UCC-1 Financing Statements
(“UCC-1s”) filed by NIR in Nevada (the Notes, SPA, Warrants, Pledge Agreement
and Security Agreement are referred to collectively as “Original
Documents”).
In
connection with the Repayment, Innofone and NIR executed and delivered the
Agreement, a new promissory note (the “New Notes”), a new stock purchase warrant
(the “New Warrants”), and a new registration rights agreement (“New Registration
Agreement”) (the Agreement, New Notes, New Warrants and New Registration
Agreement and the UCC-3s shall be referred to collectively as the “New
Documents”, each of which is filed herewith as an Exhibit). Further, NIR is
required to file UCC-3 Termination Statements (“UCC-3s”) necessary to terminate
any perfected security interest they had obtained pursuant to the Security
Agreement.
The
terms
of the Repayment, as provided in the Agreement are as follows: (a) upon signing
of Agreement, Innofone made a cash Payment to NIR in the amount of $2,635,400
to
be applied to the repayment of all amounts of principal and interest owing
and
outstanding under the Notes; (b) upon signing of the Agreement, Innofone
issued
to NIR the New Notes in the aggregate amount of $1,200,000. The New Notes
are
self-amortizing over a one-year time period commencing on July 1, 2006, with
each installment payment, of $100,000 in the aggregate for all New
Notes, due on the twelve consecutive monthly anniversaries beginning July
1,
2006. The New Notes may be prepaid by Innofone at anytime without penalty;
(c)
upon signing of the Agreement, Innofone shall issued to NIR the New Warrants
exercisable into an aggregate of 750,000 shares of Innofone’s Common Stock (the
“Warrant Shares”). The New Warrants shall have a term of five years and an
exercise price equal to $1.79. The New Warrants may be exercised on a cashless
basis only in the event that there is no effective registration statement
covering the Warrant Shares. NIR may exercise the New Warrants by utilizing
any
amounts still owing under the New Notes. Innofone may buy back all of the
New
Warrants from NIR for an aggregate of $100,000 at any time prior to the New
Warrants being exercised; (d) upon signing of the Agreement, Innofone and
NIR
executed and delivered the New Registration Agreement providing for the
registration of the Warrant Shares with the Securities and Exchange Commission.
The New Registration Agreement provides for one piggyback registration right
no
sooner than six months from the date of hereof; (e) NIR
agrees not to sell Innofone's Common Stock short, either directly or indirectly
through its affiliates, principals or advisors; (f) the
Original Documents were terminated in all respects, and were rendered null
and
void and no longer binding NIR or Innofone to any obligations, duties and
responsibilities contained therein. Further, NIR and Innofone mutually agree
that the New Documents shall supersede the Original Documents in all respects;
(g) Innofone
filed a Form AW to withdraw the Registration Statement on Form SB-2 currently
on
file with the Securities and Exchange Commission covering the shares of common
stock underlying the Notes and the Warrants; (h) All security interests
perfected by NIR on the “Collateral” (as defined in the Security Agreement),
pursuant to the Original Documents, including the Security Agreement, shall
be
terminated. Accordingly, NIR agreed to file within (2) days of the Agreement,
UCC-3 Termination Statement.
On
April
27, 2006, Innofone entered into a term sheet with Mr. Lawrence Hughes providing
for an investment by Mr. Hughes in the aggregate amount of $4,000,000 in
exchange for approximately 3,478,260 shares of Innofone’s restricted common
stock at $1.15 per share. We have agreed to register 500,000 shares of common
stock, which are included in this prospectus. Further, pursuant to the term
sheet, Innofone is to issue a warrant to purchase 400,000 shares of Innofone’s
restricted common stock at an exercise price equal to eighty percent (80%)
of
the five (5) day trading average close price of Innofone’s common stock.
Definitive agreements between Innofone and Mr. Hughes are intended to be
executed as soon as possible.
On
October 18, 2005, we completed the relocation of our corporate headquarters
to
1431 Ocean Avenue, Suite 1100, Santa Monica, California 90401 from 3470
Olney-Laytonsville, Road, Suite 118, Olney, Maryland 20832.
On
March
20, 2006, we entered into a transaction with Digital Presence, Inc., a recently
formed Delaware corporation, whereby we agreed to purchase up to 66.67% of
the
total issued and outstanding common stock shares of Digital Presence, Inc.
in
return for cash investment of a total of $300,000 made in three (3)
installment payments commencing on execution and ending on or about June 15,
2006. Digital Presence, Inc. is an entity which was formed for the purpose
of creating a scalable and addressable IPv6 identity registry for application
in
various industries and government. Digital Presence, Inc. will be managed
by employees other than those of Innofone but Innofone has the ability to elect
one (1) member of the Board of Directors of Digital Presence, Inc. and maintains
other rights, preferences and privileges through the subject investment. We
have
paid $175,000 of the $300,000 and intend to pay the balance prior to August
31,
2006.
Our
headquarters are located at 1431 Ocean Ave., Suite 1100, Santa Monica, CA 90401
and our telephone number at that address is (310) 458-3233. We maintain five
web
sites at
www.usipv6.com
,
www.coalitionsummit.com
,
www.innofone.net
,
www.v6tranistion.com
and
www.v6training.com
.
Information on our web sites is not a part of this prospectus.
THE
OFFERING
SHARES
OUTSTANDING
|
|
|
PRIOR
TO OFFERING
|
|
|
|
|
|
Common
Stock, $0.001
|
|
|
par
value
|
|
74,435,328
|
|
|
|
Common
Stock Offered
|
|
|
by
Selling Securityholders
|
|
52,450,000
|
|
|
|
Use
of Proceeds
|
|
We
will not receive any proceeds from the sale by the selling
securityholders of shares in this offering
|
|
|
|
|
|
See
“Use of Proceeds.”
|
|
|
|
Risk
Factors
|
|
An
investment in our common stock involves a high degree of risk and
could
result in a loss of your entire investment.
|
|
|
|
OTC
Symbol
|
|
INFN
|
|
|
|
Executive
Offices
|
|
Our
executive offices are located at 1431 Ocean Avenue, Suite 1100,
Santa
Monica, California 90401. Our telephone number is (310) 458-3233
and our
five websites are: www.usipv6.com, www.coalitionsummit.com,
www.innofone.net, www.v6tranistion.com and www.v6training.com.The
information on our websites is not part of this
prospectus.
|
COGENT
TRANSACTION SUMMARY
As
more
fully described in this prospectus, on June 2, 2006, pursuant to a securities
purchase agreement, we sold in a private placement to Cogent Capital
Investments
LLC (“CCI”) (i) 1,850,000 shares of our common stock (“Common Stock”) and (ii)
4,815,000 shares of our Series A Convertible Preferred Stock (“Preferred Stock”)
for an aggregate purchase price of $50,000,000, which was paid in the
form of
U.S. Treasury Bonds (the “Bonds”). Pursuant to an Amended and Restated
Certificate of Designation filed by Innofone, the Preferred Stock issued
to
Cogent has no voting rights, no dividend rights (unless the Board of
Directors
elects otherwise) and each shares of Preferred Stock shall be convertible
into
ten (10) shares of Common Stock, subject to certain adjustments (“Conversion
Ratio”). Further, no sooner than two years after June 2, 2006, the issuance
date, Innofone has the option to redeem all (but not less than all) of
the
outstanding Preferred Stock by paying in cash the market price (the trailing
ten
(10) average of the Common Stock) multiplied by the Conversion Ratio.
The
Preferred Stock shall rank, with respect to the payment of dividends
and the
distribution of assets, senior to any other security issued by
Innofone.
Concurrently
with the consummation of the private placement to CCI, we entered into
an equity
swap transaction with Cogent Capital Financial LLC (“CCF”), an affiliate of CCI
(the “Equity Swap”). The Equity Swap is a fixed versus floating price swap with
respect to a notional amount of 37,500,000 shares of our Common Stock,
with CCF
being the floating equity price payor and Innofone being the fixed
equity price payor. The fixed price under the Equity Swap is $1.333 per
share. The Equity Swap has a maturity date of December 2, 2010, though
under
certain conditions this date can be extended, and provides for periodic
settlements and reductions of the notional amount of the Equity Swap
over a 30
month period, provided that Innofone has satisfied certain conditions.
Among
these conditions is a requirement that Innofone maintain an effective
registration statement with respect to specified portions of the Common
Stock
purchased by CCI and the Common Stock into which the Preferred Stock
purchased
by CCI is convertible. The portion of such Common Stock to be covered
by the
registration statement increases over a 30 month period to a maximum
of
55,000,000 shares. This registration statement is being provided by Innofone
to
satisfy, on an initial basis, this condition of the Equity Swap. Continued
satisfaction of this condition will depend on the maintenance of this
registration statement and the provision at later dates of one or more
additional registration statements. To secure Innofone’s performance of the
Equity Swap, Innofone has pledged to CCF, and deposited in a custodian
account
subject to a lien in favor of CCF, the Bonds. As the notional amount
of the
Equity Swap is reduced, a corresponding portion of the pledged Bonds
are to be
released to Innofone, subject to any required partial settlement of the
Equity
Swap resulting from the reduction in the notional amount.
In
connection with and as consideration for CCF's obligations under the Equity
Swap, Innofone paid to CCF an initial amount consisting of (i) $568,780
(out of
approximately $1,375,999 to be paid); (ii) 5,000,000 shares of Common
Stock; and
(iii) a warrant to purchase 5,000,000 shares of Common Stock, during
a 5-year
term, at an initial exercise price per share of $1.20. The remaining
approximately $831,250 (of the $1,375,000) due is accruing interest and
will be
deducted and paid from the first 3 collateral releases. Innofone and CCF
entered into a registration rights agreement granting CCF certain demand
and
piggyback registration rights with respect to these shares of Common
Stock.
SUMMARY
FINANCIAL INFORMATION
The
following tables set forth the summary financial information for our company
as
provided in the year end financial statements of IPv6 Summit and the nine
months ended March 31, 2006 on a condensed consolidated basis to
include Innofone.com. You should read this information together with the
financial statements and the notes thereto appearing elsewhere in this
prospectus and the information under “Management's Discussion and Analysis of
Financial Condition and Results of Operations.”
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS DATA
|
|
For
the
Nine
Months
Ended
March
31,
2006
(Unaudited)
|
|
For
the Year
Ended
June
30,
2005
(Audited)
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
467,693
|
|
$
|
545,588
|
|
|
|
|
|
|
|
|
|
Cost
of Revenues
|
|
$
|
85,592
|
|
$
|
118,164
|
|
|
|
|
|
|
|
|
|
Selling
General Administrative Expense
|
|
$
|
2,470,164
|
|
$
|
466,913
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(8,788,592
|
)
|
$
|
(55,469
|
)
|
|
|
|
|
|
|
|
|
Basic
Net loss per share
|
|
|
(0.16
|
)
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
56,193,242
|
|
|
2,000,000
|
|
Condensed
Consolidated Balance Sheet Data
|
|
As
of
March
31,
2006
(Unaudited)
|
|
As
of
June
30,
2005
(Audited)
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
$
|
873,704
|
|
$
|
82,389
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
$
|
730,966
|
|
$
|
60,782
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
$
|
10,288,653
|
|
$
|
60,782
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity (deficit)
|
|
$
|
(9,388,424
|
)
|
$
|
21,607
|
|
RISK
FACTORS
You
should carefully consider the risks described below before buying shares of
our
Common Stock in this offering. Additional risks and uncertainties not currently
known to us or that we currently deem immaterial may impair our business
operations. If any of the adverse events described in this risk factors section
actually occur, our business, results of operations and financial condition
could be materially adversely affected, the trading price of our common stock
could decline and you might lose all or part of your investment. We have had
operating losses to date and cannot assure that we will be profitable in the
foreseeable future. We make various statements in this section which constitute
“forward-looking” statements under Section 27A of the Securities
Act.
RISKS
RELATED TO OUR BUSINESS
WE
HAVE INCURRED HISTORICAL LOSSES AND WE MAY NOT BE ABLE TO GENERATE PROFITS,
SUPPORT OUR OPERATIONS, OR ESTABLISH A RETURN ON INVESTED
CAPITAL.
We
incurred net losses in fiscal 2005 of $681,000. In addition, we expect to
increase our infrastructure and operating expenses to fund our anticipated
growth. For the nine months ended March 31, 2006, we incurred net losses of
$8,788,592. We may not be able to generate profits in 2006 or thereafter and
may
not be able to support our operations, or otherwise establish a return on
invested capital. We cannot assure you that any of our business strategies
will
be successful or that significant revenues or profitability will ever be
achieved or, if they are achieved, that they can be consistently sustained
or
increased on a quarterly or annual basis.
WE
EXPECT OUR OPERATING LOSSES TO CONTINUE AND WE CAN NOT ASSURE YOU THAT WE WILL
EVER GENERATE SIGNIFICANT REVENUES.
Innofone
expects to incur increased operating expenses during the next year. The amount
of net losses and the time required for Innofone to reach and sustain
profitability are uncertain. The likelihood of Innofone's success must be
considered in light of the problems, expenses, difficulties, and delays
frequently encountered in connection with a new business, including, but not
limited to uncertainty as to development and acquisitions and the time required
for Innofone's planned production to become available in the marketplace. There
can be no assurance that Innofone will ever generate significant revenues
or achieve profitability at all or on any substantial basis which could cause
a
decrease in your entire investment in our shares.
WE
HAVE A LIMITED AMOUNT OF CASH AND ARE LIKELY TO REQUIRE ADDITIONAL CAPITAL
TO
CONTINUE OUR OPERATIONS.
THEREFORE, FAILURE TO OBTAIN ADDITIONAL CAPITAL MAY RESULT IN US HAVING TO
CURTAIL OUR BUSINESS.
We
have a
limited amount of available cash and will likely require additional capital
to
successfully implement our business plan. Although,
subject to our satisfying certain conditions under the Equity Swap (as defined
below), including the effectiveness and maintenance of this registration
statement, we will begin to have access to the $50 million in U.S. Treasury
Bonds pledged to secure our obligations under the Equity Swap, such pledged
bonds are to be released over a thirty (30) month period in specified
percentages and in exact amounts per month that depend on our stock price
and
will be sufficient to sustain our operations for such 30 month period only
if
our stock price remains stable. There can be no assurance that we will be
able
to obtain additional funding when needed if needed, or that such funding,
if
available, will be obtainable on terms acceptable to us. Moreover, we are
subject to certain restrictions in the Securities Purchase Agreement which
may
limit or prohibit us from raising additional funds through future equity
and
debt financings. In the event that our operations do not generate sufficient
cash flow, or we cannot obtain additional funds if and when needed, we may
be
forced to curtail or cease our activities, which would likely result in the
loss
to investors of all or a substantial portion of their investment.
WE
RELY HEAVILY ON OUR MANAGEMENT, THE LOSS OF WHICH COULDHURT OUR BUSINESS,
OPERATING RESULTS AND FINANCIAL CONDITION.
Our
future success is dependent on having capable seasoned executives with the
necessary business knowledge and relationships to execute our business plan.
Accordingly, the services of our management and our board of directors are
deemed essential to maintaining the continuity of our operations. If we were
to
lose their services, our business could beharmed. We have executed an employment
agreement with Mr. Alex Lightman, our Chief Executive Officer, President, and
Principal Accounting Officer, and with Mr. Gerard Casale, our
Corporate Counsel and Vice Prsident of Business Affairs. Our performance will
also depend on our ability to find, hire, train, motivate and retain other
executive officers and key employees. The Company currently does not have a
chief financial officer which requires that our chief executive officer, Alex
Lightman, to perform those duties. To the extent that Mr. Lightman will have
to
perform the duties of the principal accounting officer, he will not be able
to
perform his duties as the chief executive officer and vice versa. We are
currently searching for a chief financial officer.
We
must
continually implement and improve our services, operations, operating procedures
and quality controls on a timely basis, as well as expand, train, motivate
and
manage our work force in order to accommodate anticipated growth and compete
effectively in our market segment. Successful implementation of our strategy
also requires that we establish and manage a competent, dedicated work force
and
employ additional key employees. There can be no assurance that our personnel,
systems, procedures and controls will be adequate to support our existing and
future operations. Any failure to implement and improve such operations could
cause operating results and financial condition to worsen.
Further,
our future success depends on the continued services of executive management.
We
currently maintain key-man insurance on certain executives, including Mr.
Alex Lightman, our Chief Executive Officer, President, and Principal Accounting
Officer. Our future success is also dependent on our ability to identify, hire,
train and retain other qualified managerial and other employees. Competition
for
these individuals is intense and increasing. The loss of any of their services
would be detrimental to us and could have aharmful effect on our business
development
WE
OPERATE IN A HIGHLY COMPETITIVE ENVIRONMENT WHICH COULD SIGNIFICANTLY AFFECT
OUR
BUSINESS INITIATIVES WHICH COULD NEGATIVELY IMPACT YOUR INVESTMENT IN OUR
SHARES.
We
have
competitors in each of our three business divisions. Our conference division
competes with IPv6 Forum; our training division computers with Sunset Learning
and Nativ6, and our consulting division competes with Booz Allen Hamilton,
ST
International, SRI and Lockheed Martin. Our competitors are larger, have
substantially greater resources and better known brand and reputation. Our
competitors may be able to adapt more quickly to changes in customer needs
or to
devote greater resources than we can to developing and expanding our services.
Such competitors could also attempt to increase their presence in our markets
by
forming strategic alliances with other competitors, by offering new or improved
products or services by increasing their efforts to gain and retain market
share
through competitive pricing. As the market for our services matures, price
competition and penetration into the market will intensify. There can be no
assurance that we will be able to continue to compete successfully with existing
or new competitors. Such competition may hamper our ability to generate
profits.
RISK
FACTORS AFFECTING OUR FUTURE RESULTS OF OPERATIONS
Due
to
our limited operating history, it is difficult to predict accurately future
revenues. This may result in one or more future quarters where our financial
results may fall below the expectation of management and investors. However
firmly management may believe in its prospects, we could fail. Operating results
may vary, depending upon a number of factors, many of which are outside our
control. Material factors expected to impact our operating results include,
legal costs expansion activities, increased interest and expenses for borrowings
and possible hiring of additional full time employees. Every investor should
evaluate the risks, uncertainties, expenses and difficulties frequently
encountered by companies in the early stage of development.
WE
ARE ATTEMPTING TO EXPAND OUR BUSINESS AND ANY FAILURE TO DO SO COULD HURT OUR
BUSINESS
We
expect
that expansion will be required to address potential growth. This need for
expansion will continue to place a significant strain on our management and
financial resources. Our business strategy includes entering into business
partnerships and acquiring future businesses. We may be unable to complete
suitable business partnerships and acquisitions on commercially reasonable
terms, if at all. Competition could impair our ability to successfully pursue
these aspects of this business strategy. Failure to manage growth or
successfully pursue aspects of our business strategy could prevent us from
generating revenues.
Business
partnerships or acquisitions could disrupt ongoing business, distract management
and employees and increase expenses. If we make an acquisition, we could
face difficulties assimilating that company's personnel and operations. Key
personnel of the acquired company may decide not to work for us. Acquisition
of
additional services or technologies also involves risk of incompatibility and
lack of integration into existing operations. If we finance the acquisitions
by
issuing equity securities, this could dilute existing stockholders positions.
Additionally, funding instruments may have rights, preferences or privileges
senior to those of our stockholders, which would impact an investment in our
shares.
WE
HAVE LIMITED HISTORICAL FINANCIAL DATA WHICH MAKE IT DIFFICULT TO EVALUATE
AN
INVESMENT IN OUR SHARES
As
a
result of its limited operating history, we have limited historical financial
data upon which to forecast revenues and results of operation. The actual effect
of these factors on the price of stock will be difficult to assess. Results
of
operation may fall well below the expectations of and the trading price of
our common stock may dropAs a result, any investment in our common stock could
result in losses to the investor.
RISKS
RELATED TO HOLDING OUR SECURITIES
THERE
ARE A LARGE NUMBER OF SHARES UNDERLYING OUR SERIES A PREFERRED STOCK THAT MAY
BE
AVAILABLE FOR FUTURE SALE AND THE SALE OF THESE SHARES MAY DEPRESS THE MARKET
PRICE OF OUR COMMON STOCK.
As
of
June 2006, we have 4,815,000 Series A Convertible Preferred Stock, $0.01
par
value per share, issued and outstanding which may be converted into an estimated
48,150,000 shares of our Common Stock at a conversion ratio of ten (10) shares
of common stock for each shares of Series A Convertible Preferred Stock.
Upon
the effectiveness of this registration statement, 41,300,000
shares may be sold without restriction upon conversion. Further, shares of
our common stock may be shorted which could depress the price of our stock.
The
sale of these shares may cause the market price of our Common Stock to
decrease.
THE
ISSUANCE OF SHARES UPON CONVERSION OF THE SERIES A CONVERTIBLE PREFERRED STOCK
MAY CAUSE IMMEDIATE AND SUBSTANTIAL DILUTION TO OUR EXISTING
STOCKHOLDERS
.
The
issuance of shares upon conversion of the Series A Convertible Preferred
Stock
may result in substantial dilution to the interests of other stockholders
since
the selling stockholders may ultimately convert and sell the full amount
issuable on conversion. The investors may convert their Series A shares at
a
conversion ratio equal to ten shares of common stock for each Series A share.
The conversion of the Series A shares will represent approximately 39.28%
of our
issued and outstanding common stock.
THE
PROCEEDS FROM THE PRIVATE PLACEMENT WITH COGENT CAPITAL INVESTMENTS LLC
HAVE
BEEN PLEDGED AS COLLATERAL FOR AN EQUITY SWAP AND THE AVAILABALITY OF THOSE
PROCEEDS IS SUBJECT TO THE CONDITIONS OF AND OUR OBLIGATIONS UNDER THE
EQUITY
SWAP
As
described more fully below under “Cogent Transaction”, concurrently with the
consummation of the private placement of shares of our common stock and
Series A
Convertible Preferred Stock to Cogent Capital Investments LLC, we entered
into
an equity swap with Cogent Capital Financial LLC relating to a notional
amount
of 37,500,000 shares of our common stock. To secure our performance under
this equity swap, we pledged the $50,000,000 of U.S. Treasury securities
we
received as the purchase price in the private placement. Our ability to
access the pledged U.S. Treasury securities will depend on the satisfaction
of
various conditions under the equity swap as well as the ultimate determination
of the fixed versus floating price settlement amounts due under the equity
swap
in connection with each reduction of the notional amount thereunder. As a
result, the portion of the pledged U.S. Treasury securities that we will
be able
to deploy for our operational needs is uncertain and may be reduced if
we fail
to satisfy the conditions under the equity swap or the settlement payments
under
the equity swap are not in our favor.
WE
ARE SUBJECT TO PENNY STOCK REGULATIONS AND RESTRICTIONS.
Our
common stock is approved for quotation on the NASD OTC Bulletin Board. Since
our
common stock trades below $5.00 per share (the last reported bid price for
our
common stock on July 11, 2006, was $1.12), it is considered a "penny stock"
and
is subject to SEC rules and regulations that impose limitations on the manner
in
which it can be publicly traded.
These
regulations require the delivery, prior to any transaction involving a penny
stock, of a disclosure schedule explaining the penny stock market and the
associated risks. Potential investors in our common stock are urged to obtain
and read this disclosure carefully before purchasing any shares that are deemed
to be "penny stock." Also under these regulations, certain brokers who recommend
a penny stock to persons other than established customers or certain accredited
investors must make a special written suitability determination regarding the
purchaser and receive the purchaser's written agreement to a transaction prior
to sale. These procedures require the broker-dealer to:
·
|
obtain
from the investor information concerning his or her financial situation,
investment experience and investment
objectives;
|
·
|
reasonably
determine, based on that information, that transactions in penny
stocks
are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating
the
risks of penny stock transactions;
|
·
|
provide
the investor with a written statement setting forth the basis on
which the
broker-dealer has made the determination of suitability;
and
|
·
|
receive
a signed and dated copy of the statement from the investor, confirming
that it accurately reflects the investor's financial situation, investment
experience and investment
objectives.
|
Stockholders
should be aware that, according to SEC Release No. 34-29093, the market for
penny stocks has suffered in recent years from patterns of fraud and
abuse.
Our
"penny stock" designation may adversely affect the development or continuation
of the public market for our common stock.
BROKER-DEALER
REQUIREMENTS MAY AFFECT TRADING AND LIQUIDITY.
Section
15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated thereunder by the SEC require broker-dealers dealing in penny stocks
to provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the document
before effecting any transaction in a penny stock for the investor's account.
Potential investors in our common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny
stocks." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve
the account of any investor for transactions in such stocks before selling
any
penny stock to that investor. This procedure requires the broker-dealer to
(i)
obtain from the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience
as to
be reasonably capable of evaluating the risks of penny stock transactions;
(iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that
it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for holders of our common stock to resell their shares to third
parties or to otherwise dispose of them in the market or otherwise.
OUR
COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT YOU
MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE PRICE THAT YOU MAY PAY
FOR
THE SHARES.
Because
of the limited trading market expected to develop for our common stock, and
because of the possible price volatility, you may not be able to sell your
shares of common stock when you desire to do so. The inability to sell your
shares in a rapidly declining market may substantially increase your risk of
loss because of such illiquidity and because the price for our common stock
may
suffer greater declines because of its price volatility.
The
price
of our common stock that will prevail in the market after this offering may
be
higher or lower than the price you may pay. Certain factors, some of which
are
beyond our control, that may cause our share price to fluctuate significantly
include, but are not limited to, the following:
· variations
in our quarterly operating results;
· loss
of a key relationship or failure to complete significant
transactions;
· additions
or departures of key personnel; and
· fluctuations
in stock market price and volume.
Additionally,
in recent years the stock market in general, and the over-the-counter markets
in
particular, have experienced extreme price and volume fluctuations. In some
cases, these fluctuations are unrelated or disproportionate to the operating
performance of the underlying company. These market and industry factors may
cause our stock price to decline, regardless of our operating
performance.
In
the
past, class action litigation often has been brought against companies following
periods of volatility in the market price of those companies' common stock.
If
we become involved in this type of litigation in the future, it could result
in
substantial costs and diversion of management attention and resources, which
could have a further negative effect on your investment in our
stock.
MANY
OF OUR SHARES OF COMMON STOCK WILL IN THE FUTURE BE AVAILABLE FOR RESALE. ANY
SALES OF OUR COMMON STOCK, IF IN SIGNIFICANT AMOUNTS, ARE LIKELY TO DEPRESS
THE
MARKET PRICE OF OUR SHARES.
Assuming
all of the 52,450,000 shares of common stock we are offering under this
prospectus are sold in our offering, we would have 53,417,098 shares that
are
freely tradable without the requirement of registration under the Securities
Act
of 1933. 69,168,230 shares of our common stock are “restricted securities”
as defined under Rule 144 of the Securities Act of 1933 and 5,586,224 remaining
shares are a part of the public float for a total of 122,585,328 shares. Of
these shares, approximately 46.28% of our shares are owned by our officers,
directors or other “affiliates.” These individuals may only sell their shares,
absent registration, in accordance with the provisions of Rule
144.
Restricted
securities may only be publicly sold pursuant to registration under the
Securities Act of 1933, or pursuant to Rule 144 or some other exemption that
may
be available from the registration requirements of the Securities Act of 1933.
Rule 144 entitles each person holding restricted securities for a period of
one
year, and affiliates who own non-restricted shares of our common stock, to
sell
every three months in ordinary brokerage transactions an amount of shares which
does not exceed the greater of 1% of the shares of our common stock outstanding
or, assuming the shares of common stock are then traded on Nasdaq, the average
weekly trading volume during the four calendar weeks prior to said sale. Any
substantial sales pursuant to Rule 144, including the potential sale of our
affiliates' shares of our common stock, may have an adverse effect on the market
price of shares of our common stock, and may hinder our ability to arrange
subsequent equity or debt financing or affect the terms and time of such
financing.
This
prospectus contains “forward-looking statements” and information relating to our
business that are based on our beliefs as well as assumptions made by us or
based upon information currently available to us. When used in this prospectus,
the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,”
“plan,” “project”, “should” and similar expressions are intended to identify
forward-looking statements. These forward-looking statements include, but are
not limited to, statements relating to our performance in “Business” and
“Management's Discussion and Analysis of Financial Condition and Results of
Operation”. These statements reflect our current views and assumptions with
respect to future events and are subject to risks and uncertainties. Actual
and
future results and trends could differ materially from those set forth in such
statements due to various factors. Such factors include, among others: general
economic and business conditions; industry capacity; industry trends;
competition; changes in business strategy or development plans; project
performance; the commercially viability of our products and offerings;
availability, terms, and deployment of capital; and availability of qualified
personnel. These forward-looking statements speak only as of the date of this
prospectus. Subject at all times to relevant federal and state securities law
disclosure requirements, we expressly disclaim any obligation or undertaking
to
disseminate any update or revisions to any forward-looking statement contained
herein to reflect any change in our expectations with regard thereto or any
changes in events, conditions or circumstances on which any such statement
is
based. In addition, we cannot assess the impact of each factor on our business
or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking
statements.
USE
OF PROCEEDS
We
will
not receive any proceeds from the sale of the shares of our common stock by
the
selling securityholders.
MARKET
FOR OUR SHARES
Our
common stock is currently quoted on the National Association of Securities
Dealers Over the Counter Bulletin Board under the symbol “INFN” ("OTC Bulletin
Board"). The common stock had previously been quoted on the OTC
Bulletin Board and was delisted on September 1, 1999. From September 1, 1999
until the re-listing on the OTC Bulletin Board on March 27, 2001, our
common stock was quoted in the over-the-counter Pink Sheets market in
the United States.
The
closing price of our common stock on the OTC Bulletin Board on August 23,
2006 was $.85 per share.
The
price
ranges of quotations in Innofone's common stock during the last two fiscal
years and the subsequent interim period are as follows:
2006
|
|
High
|
|
Low
|
|
|
|
|
|
|
|
1/1/06-3/31/06
|
|
|
.60
|
|
|
.24
|
|
4/1/06-8/23/06
|
|
|
1.89
|
|
|
.60
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
|
1/1/05
- 3/31/05
|
|
|
.85
|
|
|
.85
|
|
4/1/05
- 6/30/05
|
|
|
1.69
|
|
|
1.50
|
|
7/1/05
- 9/30/05
|
|
|
2.50
|
|
|
2.36
|
|
10/1/05
- 12/31/05
|
|
|
1.64
|
|
|
.42
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/1/04
- 3/31/04
|
|
|
2.50
|
|
|
2.35
|
|
4/1/04
- 6/30/04
|
|
|
2.50
|
|
|
2.35
|
|
7/1/04
- 9/30/04
|
|
|
2.50
|
|
|
2.35
|
|
As
of August 23, 2006, we had issued and outstanding 74,435,328
shares of common stock, held by approximately 145 holders of
record. There have been no cash dividends declared by us
since our inception.
The
source of these high and low prices was the OTC Bulletin Board. These quotations
reflect inter-dealer prices, without retail mark-up, markdown or commissions
and
may not represent actual transactions. The high and low prices listed have
been
rounded up to the next highest two decimal places.
The
market price of our common stock is subject to significant fluctuations in
response to variations in our quarterly operating results, general trends in
the
market for the products we distribute, and other factors, over many of which
we
have little or no control. In addition, broad market fluctuations, as well
as
general economic, business and political conditions, may adversely affect the
market for our common stock, regardless of our actual or projected
performance.
We
currently have no compensation plans.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
Forward-Looking
Statements
The
information set forth in this Management's Discussion and Analysis of Financial
Condition and Results of Operations (“MD&A”) contains certain
"forward-looking statements" including, among others (i) expected changes
in
Innofone's revenues and profitability, (ii) prospective business opportunities
and (iii) Innofone's strategy for financing its business. Forward-looking
statements are statements other than historical information or statements
of
current condition. Some forward-looking statements may be identified by
use of
terms such as "believes", "anticipates", "intends" or "expects". These
forward-looking statements relate to the plans, objectives and expectations
of
Innofone for future operations. Although Innofone believes that its expectations
with respect to the forward-looking statements are based upon reasonable
assumptions within the bounds of its knowledge of its business and operations,
in light of the risks and uncertainties inherent in all future projections,
the
inclusion of forward-looking statements in this report should not be regarded
as
a representation by Innofone or any other person that the objectives or
plans of
Innofone will be achieved.
You
should read the following MD&A in conjunction with the Consolidated
Financial Statements and Notes thereto, and the other financial data appearing
elsewhere in this Quarterly Report on Form 10-QSB.
Innofone's
revenues and results of operations could differ materially from those projected
in the forward-looking statements as a result of numerous factors, including,
but not limited to, the following: the risk of significant natural disaster,
the
inability of Innofone to insure against certain risks, inflationary and
deflationary conditions and cycles, currency exchange rates, changing government
regulations domestically and internationally affecting the Internet, including
various taxing authorities, VAT, OSHA, and general market conditions,
competition and pricing, changes in external competitive market factors,
termination of certain agreements, protocol, or inability to enter into
strategic agreements, inability to satisfy anticipated working capital
or other
cash shortage requirements, changes in or developments under domestic or
foreign
laws, regulations, governmental requirements or in the IT industry, changes
in
Innofone's business strategy or an inability to execute its strategy due
to
unanticipated changes in the market. In light of these risks and uncertainties,
there can be no assurance that actual results, performance or achievements
of
Innofone will not differ materially from any future results, performance
or
achievements expressed or implied by such forward-looking
statements.
The
Internet as we know it today is based on Internet Protocol version 4, more
commonly referred to as IPv4, a 32-year-old protocol. The IPv4 based Internet
is
beginning to receive a major upgrade, with a new format established in
computer
operating systems for packets of data called Internet Protocol version
6, or
IPv6 (also called the “New Internet” when referring to a fully implemented IPv6
network environment). Simply put, one of the limitations of today's Internet
is
a shortage of addresses, so that the hardware or software equivalents of
“middle
men” are put into the system to let many people use one address, not unlike
the
old telephone party lines, where many people had the same “number,” and everyone
could listen in. The party line system had the advantage that a lot of
people
could be connected with few switched lines, but led to problems, such as
lack of
security. There was no way to assure that one person would be speaking
with only
one person at the other end. When every phone user received their own address,
it led to many great new capabilities - such as enhanced privacy, the ability
to
deliver new services such as telefax messages to a particular person, and
the
ability to go mobile with cell phones, and caller ID, which enabled people
to
screen their calls, accepting only those they wanted to at that
moment.
The
advantages of IPv6 over the existing IPv4 are significant and can be summarized
as that which provides greater security, mobility, and
ad
hoc
networking capability which is a temporary network link initiated for a
particular purpose.. Specifically, IPv6 will give everyone his or her personal
address (or thousands of them, as needed), which enables the potential
for
“end-to-end” connectivity. Each individual can know for certain who the specific
receiver at the other end is which in turn allows the system to check for
service quality and much easier mobile use and roaming. Furthermore, this
connectivity facilitates multiple layers of individual security measures
rather
than today's firewalls or Network Address Translation, which offer little
protection once a hacker has broken through the protective wall.
One
new
feature of IPv6 is the vast increase of trillions of Internet addresses,
resulting in what will seem to be almost unlimited Internet Protocol (IP)
address availability and which will enable each customer to have many such
addresses for each cell phone, game console, home appliance, consumer
electronics and automobiles in the household and/or at the office. Doing
this
today in the IPv4 environment is difficult and costly.
IPv6
is
also more secure for wired and wireless communications in part because
greater
identity is possible with more addresses and in part because currently
there are
no known cases of spoofing an IPv6 address as occurs in IPv4. While being
more
secure, IPv6 will also provide greater access to mobile wireless online
service,
television and voice over Internet protocol (or “VoIP”) given its structure
resulting in more mobile online users with greater overall trust in a secure
network. Ultimately, even advanced online connections such as smart tags
which
utilize Radio Frequency Identification (RFID) to enable real-time inventory
tracking will be able to be deployed in IPv6 efficiently and broadly. To
do so
under an IPv4 system would not be practical from a cost
perspective.
We
believe that IPv6 will present many new business opportunities in roughly
the
same manner that the existing Internet did when it first reached the mainstream
in the mid-1990s. We intend to start addressing such business opportunities
by
initially focusing on training, consulting, testing and conference management,
all related specifically to IPv6. By developing expertise and leadership
in each
of these areas, Innofone will gain the credibility needed in a newly developing
IPv6 environment to allow later rapid growth in areas such as product
development, services and strategic acquisitions. We are currently filling
a
void in our areas of expertise related to IPv6 in the United States. There
are
few competitors providing services to American businesses seeking advice
on how
to transition from IPv4 to IPv6. There are few competitorswhich understand
the
U.S. government's role in supporting IPv6. There are few competitors providing
credible testing facilities for IPv6 enabled products. There are few competitors
providing training to employees in American businesses on the IPv6 environment
and its advantages, product possibilities and/or network solutions. By
doing
business in these areas with sparse competition and by holding regular
summit
conferences throughout the country, Innofone intends to take and maintain
the
lead in all business specifically related to IPv6.
Innofone
currently offers and manages these services from two corporate centers:
our
corporate headquarters offices in Santa Monica, California and virtually
through
our Eastern seaboard based employees located in Northern Virginia. We intend
to
launch a Virginia office in the first quarter of 2006.
2.
Business Combination
On
August 8, 2005, the Innofone.com entered into a stock purchase agreement
with
Mr. Alex Lightman, our Chief Executive Officer and President, to purchase
100%
of the issued and outstanding shares of IPv6 Summit Inc. (“IPv6 Summit”), an
entity engaged in providing conference management services related to Internet
Protocol version 6 or IPv6. At the time of the Agreement, Mr. Lightman
was the
President, Treasurer, Director and sole shareholder of IPv6 Summit, and
was
neither an officer nor a director of Innofone. Pursuant to the Agreement,
on
October 12, 2005, which was amended on October 17, 2005, we issued to Mr.
Lightman a promissory note in the principal face amount of $1,000,000 with
interest at the rate of 4% per annum. Further, we issued to Mr. Lightman
approximately 33,333,000 shares of our restricted common stock. As a result
of
the stock purchase agreement, IPv6 Summit became a wholly-owned subsidiary
of
Innofone. IPv6 has been accounted for as the accounting acquirer similar
to a
reverse merger transaction and the historical accounting information of
IPv6 is
now that of Innofone. As of March 31, 2006, we had made payments against
Mr.
Lightman's promissory note totaling $500,000 accordingly, our current balance
owed to him totals $500,000.
3.
Current Business Operations
We
currently employ nine individuals in our Santa Monica, California headquarters
offices located at 1431 Ocean Avenue, Suite 1100, Santa Monica, California
90401
and employ three individuals on the Eastern seaboard in and around the
Northern
Virginia area.
Innofone
currently operates one wholly owned subsidiary, IPv6 Summit, Inc., based
in
Santa Monica, California and one division styled as “v6 Transition” which is
based in Clifton, Virginia. V6 Transition will be managed by our Vice President
of Consulting, Dale Geesey, through August 14, 2006. Mr. Geesey provided
notice
of his resignation as of June 15, 2006 with an effective date of August
14,
2006. Thereafter, James Bacchus will preside as Vice President of Consulting
for
our v6 Transition division in place of Mr. Geesey.
Innofone
anticipates seeking certain other strategic acquisitions and investments
over
the next twelve months in an effort to increase overall operations. Our
ability
to execute this goal will be largely based upon whether we can raise adequate
capital to successfully close such acquisitions.
IPv6
Summit, Inc. is currently our primary source of revenue and focus of operations.
IPv6 Summit, Inc. organizes and produces conference events related to IPv6
technology and the transition from IPv4 to IPv6.
v6
Transition has begun organizing trainings, workshops, and consulting services
related to IPv6. v6 Transition has announced a three-year series of Federal
Chief Information Officer IPv6 Workshops with the first event having taken
place
in Arlington, Virginia on October 11, 2005 and our next event, the Federal
IPv6
Summit to take place May 17, 2006 through May 19, 2006 in Reston, Virginia.
v6
Transition completed the three consulting projects it initiated last quarter
and
has added an additional six consulting and/or training projects with Juniper
Networks, Microsoft and Avocent.
We hired
Michael Rousey as Director of Account Management for our v6 Transition
consulting division as of January 16, 2006. The employment agreement with
Mr.
Rousey was terminated effective July 30, 2006. We terminated an Employment
Agreement with Leah Thompson, VP of Operations for IPv6 Summit, Inc. and
entered
into a Settlement and Release Agreement with Ms. Thompson on or about March
3,
2006 whereby Ms. Thompson released any and all claims against Innofone
and
received 53,000 restricted common stock shares. Our Secretary, Paul Shephard,
has since agreed to serve as our VP of Operations for both IPv6 Summit,
Inc. and
for Innofone.com, Incorporated.
A
final
core activity of this quarter was planning and research related to further
development of our strategy for potential mergers and acquisitions of technology
companies. We made one substantial investment in the current quarter in
Digital
Presence, Inc., a Delaware start-up corporation, recently formed for the
purpose of creating a scalable addressable IPv6 identity registry. On March
7,
2006, Innofone entered into a Common Stock Purchase Agreement to purchase
a
total of 66.67% of the outstanding common stock of Digital Presence, Inc.
in
consideration of cash totaling $300,000 made in installment payments. The
payment terms for the purchase are as follow: (a) $50,000 which was due
on the
initial closing on March 7, 2006; (b) $125,000 due on second closing of
May 15,
2006; and (c) $125,000 due on third closing of June 15, 2006. As of June
30,
2006, Innofone has paid the initial closing payment of $50,000 and has
reflected
such amount as a deposit on the accompanying balance sheet and has made
the
second installment payment of $125,000. Innofone owes its final
installment of $125,000 no later than August 15, 2006 under its amendment
to the
Common Stock Purchase Agreement with Digital Presence.
4.
Future Business Operations
We
anticipate that our principal business activities for the coming months
will
include the refinement of our strategic approach to realizing the potential
of
the IPv6 industry and as such intend to focus on the following areas of
business
growth:
1. Organic
growth, via our existing business divisions:
A.
|
Conferences,
including the U.S. IPv6 Summit, Coalition Summit for IPv6, as
well as
anticipated events in Asia and/or Europe starting in
2006/2007.
|
B.
|
Training,
including the one day Federal Chief Information Officer IPv6
Transition
Workshops and anticipated five day and customized trainings for
both
technology and business aspects of
IPv6.
|
C.
|
Consulting,
including IPv6 Transition Plans, Project Plans and approximately
a dozen
other possible types of IPv6 related consulting
engagements.
|
D.
|
Testing,
including the proposed establishment of what could become the
first
for-profit IPv6 test business in the US, in association with
a leading
test equipment manufacturer.
|
2.
Product Development and new Organic Growth Areas. Innofone has initiated
the
development of an internal research and development capability that we
anticipate will generate a new product at regular intervals starting in
mid-2006. Innofone also intends to develop new centers for revenue in the
second
quarter of 2006 related to IPv6 for mobile applications and Internet
applications.
3.
Strategic Mergers and Acquisitions: Innofone is considering several potential
private companies which Management believes could lead to the consummation
of
certain transactions that could result in the positioning of Innofone for
accelerated growth in specific areas, such as secure Internet applications,
video-over-IPv6, search engine marketing and optimization, and mobile phone
applications that will be potentially enhanced by using IPv6.
5. Results
of Operations
On
August
8, 2005, Innofone.com purchased 100% of the issued and outstanding shares
of
IPv6 Summit, Inc. As a result, IPv6 has been accounted for as the accounting
acquirer similar to a reverse merger in that the historical accounting
information is that of IPv6. Accordingly, the results of operation discussion
for the three and nine months ended March 31, 2006 and 2005 and for the
year
ended June 30, 2005 are that of IPv6.
For
the
Three Month and Nine Month Ended March 31, 2006 and 2005
Revenues
and Cost of Revenues
Innofone
derives revenues primarily from attendance fees of summit conferences held,
corporate sponsorships related to such summits, and consulting fees. Attendance
fees are recognized when the conference has been held. Cost of revenues
primarily relate to summit conference room rentals, food accommodations
and
advertising. Additional contracts were signed for workshops and consulting
engagements. For the three and nine months ended March 31, 2006, the revenues
were $63,003 and $467,693 compared to the prior year's same periods of
$127,926
and $364,727. The decrease in revenues compared to the prior year for the
three
months ended March 31, 2005 related to the timing of the conferences in
the
prior year. The increase in revenues in the nine months ended March 31,
2006
primarily related to an increase of $104,000 in consulting
revenues.
Innofone
held a major conference in the second quarter of 2006. Innofone plans to
hold
approximately 3 summit conferences in the next 12 months. Additionally
in the
next 12 months, Innofone plans on holding four Federal CIO IPv6 transitional
workshops, training bootcamps for network engineers and provide IPv6 consulting
to private companies and federal government agencies.
Innofone
believes the IPv6 consulting services will become a significant part of
Innofone's overall revenues in the future, with revenues derived from corporate
and government clients. The revenues in the first quarter are from such
consulting contracts.
Selling,
General and Administrative Expenses
Selling,
general and administrative expenses totaled $945,648 and $2,470,164 for
the
three and nine months ended March 31, 2006, an increase of $852,517 and
$2,166,986 compared to the same periods in the prior year. The increase
primarily related to costs incurred during the nine months ended March
31, 2006
to secure new debt financing resulting in $392,000 in commissions, increased
legal fees associated with the acquisition, and SEC filings of $156,000,
increased salary consulting expense.
Net
Loss
Net
loss
totaling $6,797,163 and $8,788,592 for the three and nine months ended
March 31,
2006, increased by $6,798,948 and $8,784,625 compared to the same periods
of the
prior year as result of the factors previously mentioned above and the
costs
related to the convertible debt.
For
the
Years Ended June 30, 2005 and 2004
Revenues
and Cost of Revenues
Innofone
derives revenues primarily from attendance fees of summit conferences held,
corporate sponsorships related to such summits, and consulting fees. Attendance
fees are recognized when the conference has been held. Cost of revenues
primarily relate to summit conference room rentals, food accommodations
and
advertising. For the year ended June 30, 2005, revenues were $545,588 compared
to the prior year of $553,287. The decrease in revenues compared to the
prior
year related to the timing of the conferences in the prior year.
Selling,
General and Administrative Expenses
Selling,
general and administrative expenses totaled $455,913, an increase of $155,688
compared to the prior year. The increase was primarily related to increased
salaries of $112,000.
Net
Income (Loss)
Net
income (loss) totaling $(55,649) compared to the prior year of $75,076
was a
result of the factors previously mentioned above.
6.
Liquidity and Capital Resources
As
of
March 31, 2006, we had total current assets of approximately $873,704 and
total
current liabilities of $730,966, resulting in a working capital surplus
of
$142,728. Our cash balance as of March 31, 2006 totaled $707,277. Net Cash
used
in operating activities for the nine months ended March 31, 2006 resulted
in a
deficit of $2,257,278.
Innofone's
primary needs for liquidity and capital resources are the funding of salaries,
other administrative expenses related to the management of Innofone and
retirement of certain debts.
As
more fully described in this prospectus, on June
2, 2006, pursuant to a securities purchase agreement, we sold in a private
placement to Cogent Capital Investments LLC (“CCI”) (i) 1,850,000 shares of our
common stock (“Common Stock”) and (ii) 4,815,000 shares of our Series A
Convertible Preferred Stock (“Preferred Stock”) for an aggregate purchase price
of $50,000,000, which was paid in the form of U.S. Treasury Bonds (the
“Bonds”).
Pursuant to an Amended and Restated Certificate of Designation filed
by
Innofone, the Preferred Stock issued to CCI has no voting rights, no
dividend
rights (unless the Board of Directors elects otherwise) and each shares
of
Preferred Stock shall be convertible into ten (10) shares of Common Stock,
subject to certain adjustments (“Conversion Ratio”). Further, no sooner than two
years after June 2, 2006, the issuance date, Innofone has the option
to redeem
all (but not less than all) of the outstanding Preferred Stock by paying
in cash
the market price (the trailing ten (10) average of the Common Stock)
multiplied
by the Conversion Ratio. The Preferred Stock shall rank, with respect
to the
payment of dividends and the distribution of assets, senior to any other
security issued by Innofone.
On
May
25, 2006, we entered into a Letter Agreement (“Agreement”) with the NIR Group
for the repayment (the “Repayment”) of certain notes (“Notes”) and cancellation
of certain warrants (“Warrants”) issued on or about August 31, 2005 and October
31, 2005 pursuant to
that
certain Securities Purchase Agreement (the “SPA”) by and between Innofone and
AJW Partners, LLC (“Partners”), New Millennium Capital Partners, II, LLC
(“Millennium”), AJW Offshore, Ltd. (“Offshore”) and AJW Qualified Partners, LLC
(“Qualified, with Partners, Millennium and Offshore, collectively, the “NIR
Group”). The Repayment was applied to the outstanding principal and interest
owing under the Notes and as consideration for the cancellation of the
Warrants
issued to the NIR Group, and the termination of any and all UCC-1s filed
in
favor of NIR. Further, in connection with the SPA, Notes and Warrants,
the
following ancillary documents were executed and/or filed: (1) Guaranty
and
Pledge Agreement, dated August 31, 2005, by and between Innofone, Mr. Alex
Lightman, Innofone’s President and Chief Executive Officer, and NIR (“Pledge
Agreement”); (2) Security Agreement by and between Innofone and NIR, dated
August 31, 2005 (“Security Agreement”); and (3) UCC-1 Financing Statements
(“UCC-1s”) filed by NIR in Nevada (the Notes, SPA, Warrants, Pledge Agreement
and Security Agreement are referred to collectively as “Original
Documents”).
In
connection with the Repayment, Innofone and NIR executed and delivered
the
Agreement, a new promissory note (the “New Notes”), a new stock purchase warrant
(the “New Warrants”), and a new registration rights agreement (“New Registration
Agreement”) (the Agreement, New Notes, New Warrants and New Registration
Agreement and the UCC-3s shall be referred to collectively as the “New
Documents”, each of which is filed herewith as an Exhibit). Further, NIR is
required to file UCC-3 Termination Statements (“UCC-3s”) necessary to terminate
any perfected security interest they had obtained pursuant to the Security
Agreement.
The
terms
of the Repayment, as provided in the Agreement are as follows: (a) upon
signing
of Agreement, Innofone made a cash Payment to NIR in the amount of $2,635,400
to
be applied to the repayment of all amounts of principal and interest
owing and
outstanding under the Notes; (b) upon signing of the Agreement, Innofone
issued
to NIR the New Notes in the aggregate amount of $1,200,000. The New Notes
are
self-amortizing over a one-year time period commencing on July 1, 2006,
with
each installment payment $100,000 in the aggregate for all New Notes,
due on the
twelve consecutive monthly anniversaries beginning July 1, 2006. The New
Notes may be prepaid by Innofone at anytime without penalty; (c) upon
signing of
the Agreement, Innofone shall issued to NIR the New Warrants exercisable
into an
aggregate of 750,000 shares of Innofone’s Common Stock (the “Warrant Shares”).
The New Warrants shall have a term of five years and an exercise price
equal to
$1.79. The New Warrants may be exercised on a cashless basis only in
the event
that there is no effective registration statement covering the Warrant
Shares.
NIR may exercise the New Warrants by utilizing any amounts still owing
under the
New Notes. Innofone may buy back all of the New Warrants from NIR for
an
aggregate of $100,000 at any time prior to the New Warrants being exercised;
(d)
upon signing of the Agreement, Innofone and NIR executed and delivered
the New
Registration Agreement providing for the registration of the Warrant
Shares with
the Securities and Exchange Commission. The New Registration Agreement
provides
for one piggyback registration right no sooner than six months from the
date of
hereof; (e) NIR
agrees not to sell Innofone's Common Stock short, either directly or
indirectly
through its affiliates, principals or advisors; (f) the
Original Documents were terminated in all respects, and were rendered
null and
void and no longer binding NIR or Innofone to any obligations, duties
and
responsibilities contained therein. Further, NIR and Innofone mutually
agree
that the New Documents shall supersede the Original Documents in all
respects;
(g) Innofone
filed a Form AW to withdraw the Registration Statement on Form SB-2 currently
on
file with the Securities and Exchange Commission covering the shares
of common
stock underlying the Notes and the Warrants; (h) All security interests
perfected by NIR on the “Collateral” (as defined in the Security Agreement),
pursuant to the Original Documents, including the Security Agreement,
shall be
terminated. Accordingly, NIR agreed to file within (2) days of the Agreement,
UCC-3 Termination Statement.
On
April
27, 2006, Innofone entered into a term sheet with Mr. Lawrence Hughes providing
for an investment by Mr. Hughes in the aggregate amount of $4,000,000 in
exchange for approximately 3,478,260 shares of Innofone’s restricted common
stock at $1.15 per share. Further, pursuant to the term sheet, Innofone
is to
issue a warrant to purchase 400,000 shares of Innofone’s restricted common stock
at an exercise price equal to eighty percent (80%) of the five (5) day
trading
average close price of Innofone’s common stock. Definitive agreements between
Innofone and Mr. Hughes will be entered forthwith.
On
October 17, 2005 we amended and restated our promissory note issued to
Mr. Alex
Lightman, our Chief Executive Officer and President, dated October 12,
2005, in
connection with our Stock Purchase Agreement dated August 8, 2005 (“Acquisition
Note”). The principal face amount of the “Acquisition Note” is $1,000,000 and
bears interest at the rate of four percent (4%) per annum. The Acquisition
Note
was amended and restated to provide for a repayment schedule that is to
coincide
with the timing that Innofone receives the tranches. Specifically, we will
make
monthly installment payments equal to $83,333.33 for each successive month
starting on the date of execution of the note and ending January 17, 2006.
As of
March 31, 2006, the remaining balance related to the Acquisition Note with
Mr.
Lightman totaled $500,000. On or about April 1, 2006, Mr. Lightman agreed to a
forbearance of the Acquisition Note until further notice.
On
April
18, 2006, Company has entered a second Promissory Note with its CEO, Alex
Lightman, in connection with Mr. Lightman's loan of $400,000 (“Lightman Note”)
to Innofone. The Lightman Note principal is to be repaid at the earlier
of
either the next financing after the closing of the NIR final payment or
April
18, 2007 as is to be repaid with interest at the rate of 5% simple interest
per
annum plus the issuance of 800,000 restricted shares of common stock of
Innofone. The proceeds of the Lightman Note will assist us in our liquidity
needs and need for operating capital going forward.
On
July
10, 2006, the Company issued a promissory note to 55 South Investments
in the
face amount of $500,000, with interest at 12% per annum. The Maturity
Date shall
be the earlier of: (a) one (1) year from the commencement of that certain
equity
swap transaction (“Swap”) whereby 30 days have expired thereafter the date in
which the Company is granted effectiveness by the Securities and Exchange
Commission on a registration statement filed pursuant to certain agreements
made
in connection with an equity swap made by and between the Company and
Cogent
Capital Financial, LLC and its affiliates as of June 2, 2006 (defined
herein as
the “Swap Start Date”); or (b) December 1, 2007, whichever is earlier. Repayment
of the Principal by Innofone to the Holder shall commence within ten
(10) days
of the Swap Start Date and shall continue thereafter in equal pro rata
monthly
installments on the same date of each subsequent month thereafter for
the
successive eleven (11) months thereafter the Swap Start Date and continue
until
all principal payments are paid in full. The Principal shall be repaid
in full
no later than the Maturity Date. Should the Swap Start Date not occur
prior to
the Maturity Date, then the entirety of Principal shall be due and
payable to
Holder on the Maturity Date. Further Innofone may, at its option, prepay
all
amounts owing under this Note prior to the Maturity Date, in whole
or in part,
without payment of any premium or penalty, after giving written notice
thereof
to the Holder at least one (1) day prior to the date selected for prepayment.
In
connection with the issuance of the note, we issued (i) a five-year
warrant to
55 South Investments for the right to purchase up to 2,000,000 shares
of common
stock at $1.00 per share; and (ii) a five year warrant to Millennium
Investment
Services, Inc., an affiliate of 55 South, for the right to purchase
500,000
shares of common stock at $1.00 per share. We have granted certain
piggyback
registration rights with respect only to the shares underlying the
warrant
issued to 55 South. The note is secured with approximately $2,000,000
worth of
our restricted common stock and $2,000,000 worth of restricted common
stock
owned by Mr. Lightman, our Chief Executive Officer and President. On
July 14,
2006, we issued an additional promissory note for $500,000 on the same
terms. In
connection with the issuance of the note, we issued 55 South Investments
a five
year warrant to purchase up to $2,000,000 shares of common stock at
an exercise
price of $1.00 per share. The Company has the right to redeem 1,400,000
of such
warrants for $250,000 until July 13, 2007. Except for the right to
redeem a
portion of the warrants, the deal is on the same terms as the July
10th
transaction. We have granted certain demand registration rights with
respect to
all shares issued as security under the notes. Further, we have agreed
to pay to
55 South approximately $40,000 representing an origination fee and
a due
diligence fee.
On
August
8, 2006, we issued a promissory note to Keiran Gaffney-Weinroth and
Paul
Weinroth (collectively the “Weinroths”) in the principal amount of $50,000, with
interest at 10% per annum. The Maturity Date of the note is the earlier
of: (a)
one (i) year from the date of issuance; or (b) December 1, 2007.
We may, at your
option, prepay any and all of the amounts owing under the note, in
full or the
part, without penalty. In connection with the issuance of the note,
we issued a
five-year warrant to the Weinroths for the right to purchase 75,000
shares of
our common stock at $1.00 per share. We have granted certain piggyback
registration rights with respect to the shares underlying the warrant.
Moreover,
the note is secured by approximately $200,000 worth of our restricted
common
stock and $200,000 worth restricted common stock owned by Mr. Alex
Lightman, our
Chief Executive Officer and President.
7.
Critical Accounting Policies and Estimates
The
preparation of our financial statements requires our management to make
estimates and assumptions that affect the reported amounts on our financial
statements. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable
under
the circumstances. Actual results may differ from these estimates under
different assumptions or conditions.
The
Notes
to the consolidated financial statements included in this filing contain
a
discussion of our significant accounting policies and recent accounting
pronouncements applicable to us.
8.
Recent Accounting Pronouncements
In
April
2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities.” The Statement amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts entered into or modified after June 30, 2003.
The
guidance should be applied prospectively. The provisions of this Statement
that
relate to SFAS 133 Implementation Issues that have been effective for fiscal
quarters that began prior to June 15, 2003, should continue to be applied
in
accordance with respective effective dates. In addition, certain provisions
relating to forward purchases or sales of when-issued securities or other
securities that do not yet exist, should be applied to existing contracts
as
well as new contracts entered into after June 30, 2003. The adoption of
SFAS No.
149 is not expected to have an impact on Innofone's financial
statements.
In
May
2003, the FASB issued Statement of Accounting Standards No. 150 "Accounting
for
Certain Financial Instruments with Characteristics of both Liabilities
and
Equity" (SFAS No. 150). SFAS No. 150 establishes standards for classification
and measurement in the statement of financial position of certain financial
instruments with characteristics of both liabilities and equity. It requires
classification of a financial instrument that is within its scope as a
liability
(or an asset in some circumstances). SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise
is
effective at the beginning of the first interim period beginning after
June 15,
2003. Innofone's adoption of SFAS 150 did not have a material effect on
the
results of operations or financial position.
In
May
2003, the consensus on EITF Issue No. 01-08, "Determining Whether an Arrangement
Contains a Lease," was issued. The guidance in the consensus applies to
the
purchase or sale of goods and services under various types of contracts,
including outsourcing arrangements. Based on the criteria in the consensus,
both
parties to an arrangement are required to determine whether the arrangement
includes a lease within the scope of SFAS No. 13, "Accounting for Leases.” The
new requirement applies prospectively to new or modified arrangements for
reporting periods beginning after May 28, 2003. Accordingly, as of August
1,
2003, Innofone accounted for new or modified arrangements based on this
guidance. Adoption of this standard did not have an impact on our financial
statements.
On
December 18, 2003 the SEC issued Staff Accounting Bulletin No. 104, Revenue
Recognition ("SAB 104"), which supersedes SAB 101, Revenue Recognition
in
Financial Statements. SAB 104's primary purpose is to rescind accounting
guidance contained in SAB 101 related to multiple element revenue arrangements,
which was superseded as a result of the issuance of EITF 00-21, Accounting
for
Revenue Arrangements with Multiple Deliverables. The adoption of SAB 104
did not
have a material impact on our financial position or results of
operations.
In
December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based
Payment,
which is an amendment to SFAS No. 123, Accounting for Stock-Based Compensation
and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees.
SFAS 123(R) requires the measurement of the cost of employee services
received in exchange for an award of equity instruments based on the grant-date
fair value of the award. No compensation cost is recognized for equity
instruments for which employees do not render service. We will adopt SFAS
123(R) effective on July 1, 2005, requiring compensation cost to be
recognized as expense for the portion of outstanding unvested awards, and
any
new awards made thereafter, based on the grant-date fair value of those
awards.
In
December 2004, the FASB issued SFAS No. 153, Exchange of Non-monetary Assets.
SFAS No. 153 amends APB Opinion No. 29, Accounting for Non-monetary
Transactions, to eliminate the exception for non-monetary exchanges of
similar
productive assets. Innofone will be required to apply this statement to
non-monetary exchanges after December 31, 2005. The adoption of this standard
is
not expected to have a material effect on Innofone's financial position
or
results of operations.
BUSINESS
History
On
August
8, 2005, Innofone.com, Incorporated (“Innofone,” the “Company,” “we,” “us” and
“our”) entered into a stock purchase agreement with Mr. Alex Lightman, our
President and Chief Executive Officer, to purchase the total issued and
outstanding shares of IPv6 Summit Inc. (“IPv6 Summit”), an entity engaged in
developing new technology referred to as Internet Protocol version 6. At
the
time of the Agreement, Mr. Lightman was the President, Treasurer, Director
and
sole shareholder of IPv6 Summit and was not an officer or director of Innofone.
Pursuant to the agreement, on October 12, 2005 we issued to Mr. Lightman
a
promissory note in the principal amount of $1,000,000 with interest at
the rate
of four percent (4%) per annum and issued to him approximately 33,333,000
shares
of our restricted common stock in exchange for 100% of the issued and
outstanding shares of IPv6 Summit. On October 17, 2005, we amended and
restated
the note to provide for the repayment to coincide with our receipt of the
traunches as indicated herein. As a result of the stock purchase agreement,
IPv6
Summit became our wholly owned subsidiary. Prior to this acquisition, we
operated as a holding company for companies involved in technology and
financial
services.
Overview
The
Internet as we know it today is based on Internet Protocol version 4, more
commonly referred to as IPv4, a 32-year-old protocol. The IPv4 Internet
is
beginning to receive a major upgrade, with a new format for packets of
data
called Internet Protocol version 6, or IPv6. We believe that IPv6, sometimes
called the New Internet, presents many new business opportunities, in roughly
the same manner that the existing Internet did when it first hit the mainstream
in the mid-1990s.
We
offer
three related services that are relevant to IPv6; conference management,
consulting and training. We are in the process of developing a fourth service,
testing. We believe that we have deep expertise in these areas and hope
to
further expand these services at a strategic time. We are also in the early
stages of developing IPv6-related technology and have hired a Director
of
Product Development. We envision our IPv6 technology will be utilized in
connection with our consulting, training and conference management services.
We
currently derive 80% of our revenues from our conference management services
and
20% of our revenues from our consulting services. We anticipate generating
additional revenues from our consulting in 2006. Our training services
to date
have not generated any revenues.
Our
Services
We
began
our conference services from our date of incorporation, July 2003 after
our
Chief Executive Officer and a former employee successfully organized the
first
Ipv6 Summit in the United States that attracted over 300 people. Revenue
comes
from charging individuals and corporations an admission fee of approximately
$200 to $500 per person for each event and from charging corporations from
$4,000 to $18,000 each for sponsorship that include an exhibit booth. There
are
slight variations in these charges depending on how many benefits are included.
We currently have three conferences scheduled over the next 12 months:
(i)
Coalition Summit booked for October 3-5, 2006 at the RAI Conference Center
in
Amsterdam with projected attendees of 500 people; (ii) Asia Ipv6 Summit
booked
for November 7-8, 2006 at the Makati Shangri-la Hotel with projected attendees
of 500 people; and (iii) US Ipv6 Summit booked for March 27-29, 2007at
the Hyatt
Reston in Virginia with projected attendees of 700 people.
We
began
offering our training services with the US IPv6 Summit in December 2003
with the
tutorial that preceded the three-day IPv6 Summit by adding a day of activity
for
people who needed initial training, and who wanted to know more about security
than could be described in the Summit format. We added a separate training
event, the Federal Chief Information Officer workshop, in October 2005.
We
anticipate that revenues from training services will come from admission
fees to the events and are in the hundreds of dollars per person.
We
began
offering our consulting services in August 2005 with the sales of consulting
agreements by our Chief Executive Officer domestically to the US Department
of
Defense IPv6 Transition Office, as a subcontractor to SI International
and to Juniper Networks and internationally to North Atlantic Treaty
Organization. Revenues from consulting are based on man-days and/or negotiated
fees typically in the tens of thousands of dollars per engagement.
New
Services in Development
We
are in
the early phases of developing our testing service. No revenues have been
received, though we have received interest from a large public company
to
provide free test equipment. Testing revenues will not be generated until
our
test center is built and the first customers contracted. Revenues will
come
from, a fixed price schedule with payments in the thousands to tens of
thousands
of dollars per product or service tested in our lab.
IPv6:
The New Internet
The
first
major customers for the New Internet in the US were the Department of Defense,
which in June 2003 mandated a transition within the department that would
make
it “IPv6-capable” by 2008, and the Office of Management and Budget, on behalf of
the Federal Government, which recently also mandated transition to IPv6,
and the
hundreds of large companies that supply these two entities. Many, but not
all,
major technology companies have appointed IPv6 points of contact and developed
IPv6-related marketing messages, including Microsoft, Cisco, Juniper, Nokia,
Hewlett-Packard and about fifty others in the US.
In
2005,
as in 1995, we believe that the IPv6 will be seized by first movers that
both
take advantage of the opportunities offered by the new technology and have
a
sound business plan to offer needed products and services to the U.S. and
global markets. It is forecast that the IPv6 will see some of the same
rapid
rise as the existing Internet did between 1995 and 2000, quickly growing
from
millions to billions, and potentially trillions of dollars in global revenues
impacted by the Internet. The Japanese government, for instance, which
has done
a great deal of research into the upcoming IPv6 market, estimates the market
size of IPv6-ready goods/services in the year 2010 to be 170 trillion yen,
or
about $1.55 trillion in US currency.
The
advantages of IPv6 over the existing protocol are significant and can be
summarized as “security, mobility, and ad hoc networking.” These advantages are
described in many articles and in over 244 presentations. In summary, some
of
the major new features are:
|
a)
|
A
vast increase of trillions of Internet addresses, resulting in
what will
seem to be almost unlimited Internet Protocol (IP) address availability,
which will enable each customer to have many such addresses,
inexpensively
- for cell phones, game consoles, home appliances, consumer electronics
and automobiles (getting such addresses with today's Internet
is
difficult, and costly in most parts of the
world);
|
|
b)
|
More
secure wired and wireless communications (this is one reason
the military
has mandated this protocol, to send top secret information) in
part
because greater identity is possible with more
addresses;
|
|
c)
|
Mobile
wireless online access (this is more difficult to do with
IPv4);
|
|
d)
|
Television
and voice over the Internet Protocol, or VoIP (very difficult
and
expensive to do well with IPv4 without
multicast);
|
|
e)
|
The
online connection of many wireless devices, such as security
cameras. Some
forecasts estimate over one trillion Internet connected devices
by 2015,
an impossibility with only an IPv4 platform;
and
|
|
f)
|
Online
connection of smart tags such as Radio Frequency Identification
(RFID),
which could enable tracking inventory and products as an essential
part of
any Enterprise Resource Program
(ERP).
|
Simply
put, one of the limitations of today's Internet is a shortage of addresses,
so
that the hardware or software equivalents of “middle men” are put into the
system to let many people use one address, not unlike the old telephone
party
lines, where many people had the same “number,” and everyone could listen in.
The party line system had the advantage that a lot of people could be connected
with few switched lines, but led to problems, such as lack of security.
There
was no way to assure that one person would be speaking with only one person
at
the other end. When every phone user got his/her own address, it led to
many
great new capabilities - such as privacy, the ability to deliver new services
such as telefax messages to a particular person, and the ability to go
mobile
with cell phones, and caller ID, which enabled people to screen their calls,
accepting only those they wanted to at that moment.
Similarly,
the New Internet will give everyone his or her personal address (or thousands
of
them, as needed), which enables the potential for “end-to-end” connectivity.
Each individual can know for certain who the specific receiver at the other
end
is, and this allows the system to check for service quality, and allows
much
easier mobile use and roaming. The difference between IPv6 and IPv4 is
thought by some to be as dramatic as the difference between the phones
with
individual numbers that we have today and the phones with party lines of
yesteryear.
Corporate
Headquarters in Southern California (Santa Monica, CA)
Although
we maintained an office in Maryland, we moved our headquarters to Southern
California on or about October 18, 2005. Our California headquarters is
responsible for our overall management as well as marketing communications
and support materials. It is anticipated that we will hire a Vice President
of
Business Development who will manage our Santa Monica office in the future.
Further, the Vice President of Consulting, and when hired, the Vice President
of
Business Development will identify and secure consulting opportunities
within
the different customer communities, by phone calls and other communications,
attending conferences, and advertisements. This office will also house
consultants for the Southern California customer area, including military
bases
and major aerospace firms such as Northrop Grumman.
Eastern
Seaboard Offices (Northern Virginia)
The
Vice
President of Consulting has established our Washington, DC area offices.
The
Vice President of Consulting shall continue to recruit and support appropriate
expert consultants for the regional customer community, and support them
with
promotional and other materials. The Eastern Office is located nearby
Washington, D.C., an area that has a heavy concentration of targeted customers,
both government offices and companies that supply Information Technology
(IT)
products and services to those offices.
This
office will support the consultant staff for the Eastern United States,
and will
be used for meetings with customers. The office suite will have a conference
room capable of holding 20-30 people, with a projector and large screen,
and
high speed IPv4 and IPv6 Internet connectivity, so that IPv6 capabilities
such
as Television delivered over the Internet (IPTV) and IPv6-enabled video
security
cameras can be demonstrated.
We
will
offer and manage our consulting, training, and conference management
services from two corporate offices: our corporate headquarters in Santa
Monica,
California, and our Eastern Office in Northern Virginia.
Consulting
Division
Our
consulting division, directed by our VP of Consulting Services, serves
major
clients that need help with IPv6, especially executives of government agencies
that suddenly must come up with plans on how to switch to the New Internet,
and
have to come up with detailed budgets and plans for doing so. Innofone
will also
serve the executive management of the aerospace and IT companies that do
business with the government.
Our
Consulting Division seeks to provide consulting services aimed at assisting
with
the transition from IPv4 to IPv6. However, we do not currently have consulting
agreements with any third parties but we anticipate that such consulting
contracts will be either directly with the end client (usually the case
with
public corporations) or, in the case of certain government offices, as
a
subcontractor to a company that has an existing “open ordering agreement” with
such an offices. We are very familiar with this process and have consulted
to clients both directly and as a subcontractor to other companies. We
will
attempt to obtain our own open ordering agreement contracts, both via SETAs
and by getting onto the Government Services Administration (GSA) schedule;
we
anticipate that both of these will take 1-2 years to complete. Our Consulting
Division has year-to-date revenues of $204,000.
An
important part of the consulting process will be identifying potential
clients
that need training, and recommending them to our Training Division. Likewise,
the consultants will promote our conferences and other services, as will
all of
its employees.
In
addition to conducting presentations and briefings, both on-site at customer
facilities and off-site at hotels and other facilities, we may rent space
from
certain consultants. Also, the consultants will recommend various products,
such as Panasonic IPv6-enabled video cameras for security, that may be
available
for sale on our website. At present and subject to change, our role will
be
purely that of a pass-through; we will not conduct the sale, shipping or
customer support of these products. Although we will receive a commission
on sales, our main interest for the products available on our website will
be the convenience of the customer. There will usually be several brands
of an
IPv6 product available on the website, so that we do not show favoritism
to one
supplier (and perhaps lose competitors as sponsors for its
conferences).
The
consultants will price their services by job or by time. They will deliver
white
papers (technical background documents) and reports, as well as videos
and
multimedia presentations. In addition to face-to-face contact with customers,
the consultants will also generate video presentations of certain basic
technical materials, and will make these available to remote customer sites.
All
consultant work by us for the foreseeable future will be unclassified.
We will
investigate applying for clearances if necessary for government work, and
whether the additional costs of secured offices, locking safes, etc. can
be
justified.
Training
Division
Our
Training Division performs two types of training services - one in the form
of executive training (including introductions to the technology and outlines
of
new business opportunities) and the other in the form of business management
training (including project management, and conformance of proposals with
IPv6
contractual requirements) and technologist, system administration and engineer
training (with certificates similar to those awarded for Cisco or Microsoft
system mastery).
We
estimate that the Eastern Office will eventually support a manager and
up to ten
training personnel, and the headquarters offices in Santa Monica will have
a
manager and up to eight trainers, a combination of employees and independent
contractors. The Santa Monica Headquarters will coordinate the generation
of
courseware and other training materials, especially during the beginning
of Year
1 (when basic courseware for classes has to be generated) and at the beginning
of Year 3 (when online courseware will be generated in order to leverage
trainers for a wider audience).
Most
training courses will be of a one-week duration, but there will also be
two-day
Boot Camps (typically on weekends), and one-day and part-day trainings
for
management and executives.
Conference
Management Division
Our
Conference Management Division focuses on establishing conferences related
to
IPv6.
Conference
Management will be conducted mainly from the Santa Monica office, with
the
assistance of consultants that are local to conference locations, such
as Press
Relations managers for areas such as Washington, D.C. or Bonn, Germany. We
do not currently have any agreements with any local consultants but typically
retain them around the time of our conference to assist in aspects of conference
including temporary workers to work the conferences. In addition to expanding
the two events in Reston, VA (by adding more materials oriented towards
upcoming
military programs and toward the consumer electronics market), we plan
to add a
yearly event in California, which should attract the many aerospace and
IT
companies on the West Coast, as well as the military bases in the
area.
Additional
specialized conferences planned for the US will address the market areas
of NCO
(Network Centric Operations), RFIDs, Transition to IPv6, Contracts issues,
and
Consumer Electronics; they will be held in different cities, including
New York,
Chicago, San Jose, Las Vegas, and Washington, D.C.
We
have
booked a conference in Amsterdam scheduled for October 2006 at the
Amsterdam RMI Center between October 3, 2006 and October 5, 2006. We will
likely
add two overseas events, one for Asia (to be held in Japan, Korea, or
Singapore), and one for Europe, to be held in Germany (either Bonn or Berlin
are
central to NATO, and are only driving distance away for the European branches
of
certain US military units, many of which are in the Frankfurt or Bonn-Cologne
area. It may prove wise to hold conferences in the United Kingdom as well,
but
this is not as central a location for many of the known clients, or actual
payment customers, at this time.
Testing
Division
Through
our v6 Transition division, we are in the process of establishing a world-class
IPv6 Test and Certification Center in the Northern Virginia area. Once
fully
operational, the Test Center will provide numerous services to Federal,
Department of Defense and commercial entities. The services provided will
include:
·
|
Product
testing and certification;
|
·
|
Interoperability
testing;
|
·
|
Performance
testing; and
|
·
|
Demonstration
and proof-of-concept.
|
The
Test
Center will provide a neutral facility where customers and vendors can
identify
and demonstrate solutions required to support the transition to IPv6. Through
its partnership with Spirent Federal, the Test Center will have the broad
range
of equipment necessary to support a full range of testing services.
We
have
entered a Teaming Agreement with Spirent Federal to provide for the development
of an electronic device testing center which is intended to provide a place
in
which companies can contract to have their devices tested and approved
for
capability in an IPv6 Internet environment. We are in negotiations with
Spirent Federal to amend our Teaming Agreement to state that a physical
testing
center location shall be launched and operating no later than December
31, 2006
or the Teaming Agreement shall expire. Spirent Federal has allocated
and reserved and stored over $1M in testing equipment dedicated for such
a
center. It is intended that such a center be leased or owned by Innofone
on the Eastern seaboard and potentially near the government beltway in
the
Washington D.C. area. Such a testing center, if launched, would
provide a forum for discussion on IPv6 devices, creation of a standard
for IPv6
capability, a place for IPv6 authentication of devices and any company,
government, person or other entity could pay under contract to have such
a
center test and approve its devices.
Our
Corporate Strategy
Our
corporate strategy has five thrust areas:
Conduct
and publicize the major IPv6 conference.
The
goodwill that is being built up at these conferences is key to achieving
corporate goals. The government and corporate executives who are featured
as
speakers build up goodwill because they have been invited to speak. We
believe
the conferences help the audience see us as an authority figure and one
of the
positive, constructive, community building leaders in the IPv6 area. We
gain
deep knowledge of the status of organizations regarding IPv6, and who needs
help
(such as consulting and training), as well as what best practices for IPv6
adoption are being developed and working in the field. The past conferences
have
also incorporated training sessions, where we obtained experience in what
training was necessary and desired by the community. Finally, the list
of
attendees at the conferences represent a unique database for us of both
executives and working-level technologists, as well as marketing and other
staffers.
Support
completion of the IPv6 standard.
We
have a relationship to the IPv6 Association; a neutral body that could help
formulate and provide input to the issues of what “IPv6-capable” means and how
it will be implemented, with respect to the IETF and other standards bodies.
The
precise formulation of standards for IPv6 implementation in specific
applications (such as use in cellphones, wireless video cameras, home appliances
or video transmission) by an internationally accepted expert group that
is not
prone to favor a particular manufacturer is important to us in several
ways.
First, such standards must exist and be unambiguous so that our consultants
are
able to clearly define to clients what specific standards they have to
get their
company to meet. Second, our Training arm must have such standards to
relate to in order to train its clients to levels that are universally
understood and accepted, and in order to issue Certificates of Completion
after
students have achieved a defined level of expertise.
Be
a
first mover.
We
are
seeking to establish a dominate foothold now because the IPv6 space is
not, as
of yet, overly populated with competitors. We believe this prime time period
where the market share is ripe for the taking will be long gone by the
2010 time
period.
Build
a solid base, and look for targets of opportunity.
We
will
build a business base of steady growth in a strategic and profitable area,
and
will then acquire a target of opportunity that offers fast leveraged growth
in a
related area. Part of this effort will be the support of the IPv6 industry
by
promotion (such as Conferences) and by garnering political support (such
as
Congressional Hearings). In this way, we believe that we will not just help
the growth of IPv6, but will have our “hand on the pulse” of the Industry,
to know what related services will soon be sought very actively.
Seek
Growth through Acquisition.
We
intend
to expand beyond being just a conference and consulting business by seeking
to
acquire strong companies with similar corporate cultures that each can
either
benefit directly from the implementation of IPv6, having an existing subscriber
base capable of leveraging IPv6, and/or enable a broader usage of IPv6.
We
have
announced the binding term sheets for the acquisition of both Mobile Technology
Group, Inc., a mobile messaging and electronic payment provider based in
Las
Vegas, Nevada and InfoWeapon, Inc. an Atlanta Georgia Internet appliance
maker
with operations in the Phillipines. Each of the acquisitions are
strategic in that they both intend to produce or do currently produce IPv6
capable products. Mobile Technology Group satisfies Innofones need
to function and produce mobile devices and operations and InfoWeapons gives
Innofone the ability to actually produce IPv6 products upon acquisition
closing. Both acquisitions should close within the pendency of this
registration statement.
Competition
We
have
three business divisions, all of them related to IPv6 technology: Consulting
(this includes consulting to corporate executives, as well as offering
IPv6-related equipment from 3
rd
parties
on our website), training and conference management. The only other company
in
the US that specializes in IPv6 consulting at present is Native6, Inc.
of
Seattle, which is essentially a small two-man company that we believe is
not
financially structured for the sort of growth that we anticipate
(see:
http://www.native6.com
).
Some of our other competitors in IPv6 consulting are SI International,
Book
Allen Hamilton, SRI and Lockheed Martin and we believe we are ranked fifth
in
terms of revenues. We believe that our chief competitors in IPv6
training are Sunset Learning (which does not specialize in IPv6; its main
business is Cisco-related training - see:
http://www.sunsetlearning.com
) and
Native6, Inc. and is ranked third among these competitors in terms of
revenues. The competitors for IPv6 conferences are: IGI (Information
Gatekeepers, Inc. - see:
http://www.igigroup.com
), which
has recently started to put on small IPv6 technical conferences in the
US; the
IPv6 Forum, a loosely organized group based in Luxembourg which supports
small
technical conferences put on worldwide, usually by affiliated local groups
(for
instance, its California conference is organized by IGI, mentioned above);
and,
Consul Intel, a small company that conducts a yearly IPv6 conference in
Spain
(see:
http://www.consulintel.es
). We
believe that we are one of the top ranked conference providers in terms
of
revenues.
Intellectual
Property
We
have
pending trademark and servicemark applications with the United States Patent
and
Trademark Office (“USPTO”) for the marks “IPv6 Summit”, “New Internet” and
“North American IPv6 Summit.” The USPTO had issued an office action as of
September 27, 2005 indicating certain requests for clarification and
deficiencies and need for amendment of the subject marks. Although we are
confident that such servicemarks will be awarded as filed, there is no
certainty
that the USPTO will award any of the trademarks as applied for or as may
be
requested in the future.
Employees
As
of the
date of this prospectus, we have 8 employees in the Santa Monica office and
three employees in the Virginia office.
None
of
our employees are covered by a collective bargaining agreement. We have
never
experienced a work stoppage and we believe that we have satisfactory working
relations with our employees.
Innofone
does not own any real estate. Innofone currently rents approximately 2,400
square feet of space at 1431 Ocean Avenue, Suite 1100, Santa Monica, California
90401. The lease is currently on a month-to-month basis and Innofone is
paying
approximately $5,000 per month for four offices. The current arrangement
for our Virginia office is based on “seat space” and not square footage. We rent
four seat spaces, including amenities (i.e. phone, furniture, printer/office
supply space, meeting room access, kitchen) for $3,000 per month.
We
believe that the premises leased are adequate for our current and near
term
requirements.
We
are
not currently involved in any real or threatened legal proceedings.
MANAGEMENT
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
16(A)
OF THE EXCHANGE ACT.
The
following table sets forth the name, age and position of each of the members
of
our board of directors, executive officers and promoters as of July 11,
2006:
Name
|
|
Age
|
|
Position
|
Alex
Lightman
|
|
43
|
|
Chief
Executive Officer, President, Principal Accounting Officer
and
Director
|
Peter
Maddocks
|
|
49
|
|
Director
|
Jim
Bacchus(1)
|
|
44
|
|
Vice
President of Consulting
|
Paul
Shephard
|
|
50
|
|
Chief
Operating Officer and
Secretary
|
(1)
Mr.
Jim Bacchus shall assume full responsibility as our Vice President of Consulting
on August 14, 2006.
The
principal occupations and brief summary of the background of each executive
officer and director of Innofone is as follows:
Mr.
Alex
Lightman has been our President, CEO and a director since August 2005. Upon
the resignation of Ms. Karen Rosotowski in January 2006, Mr. Lightman took
on
the position of Principal Accounting Officer until such time as a suitable
replacement can be found. From June 2003 to July 2005 he was the founding
CEO
and Chairman of IPv6 Summit, Inc., a leading organizer of international
IPv6 events and consultants to government and industry on IPv6 applications,
training, and promotion. From May 1999 to Present Mr. Lightman has been
the CEO
of Charmed Technology, (www.charmed.com). He is the founding director of
The 4G
Society and the first Cal- (IT)2 Scholar at the California Institute for
Telecommunications and Information Technology, a joint program of UCSD
and UCI
(www.calit2.net). Mr. Lightman has nearly 20 years of high technology management
experience and, in addition, has experience in politics (including work
for a US
Senator), consulting, the oil drilling industry, and the renewable energy
industry. He also produced the 100 Brave New Unwired World fashion shows,
featuring wearable and pervasive computing, which included many of Lightman's
own inventions and designs, such as the patented Charmed Viewer display
and the
first Internet jewelry. Harvard Business School featured Lightman and Charmed
in
a case study that recognized Lightman's pioneering innovation of presenting
computers as fashion. Both the show and Lightman's designs are now copied
worldwide. Mr. Lightman is the author of Brave New Unwired World (Wiley,
2002)
and a 1983 graduate of the Massachusetts Institute of Technology. He has
attended graduate school at the Kennedy School of Government (Harvard
University) and the University of Phoenix.
Mr.
Lightman devotes approximately ninety percent (90%) of his time to us and
the remaining ten percent (10%) on outside endeavors, including Charmed
Technology and 4G Society. Mr. Lightman's term of office is for two
years.
Mr.
Peter
Maddocks has been a Director and Chief Financial Officer since August 2005.
In
October 2005, Mr. Maddocks resigned as Chief Financial Officer. From October
2001 to January 2004, Mr. Maddocks was a Management Consultant of Abbey
National
Bank Italy. From May 1999 to September 2001, Mr. Maddocks was a Management
Consultant of Standard Chartered Grindlays Private Banking Group. Mr. Maddocks
was a Vice President for leading financial services companies with 20+
years
experience in finance, planning and control roles in the Retail, Corporate
and
Private Banking industry segments (Citi, ANZ, Abbey). Mr. Maddocks has
significantly participated in the establishment and growth of new and re
engineered global businesses and functions with various banking groups.
Responsibilities have included heading the Global Financial Control function
for
a major new business launch, Regional Financial Controller SE Europe, design
and
implementation of financial and non-financial management control systems,
budget
management and development of policies and procedures. Mr. Maddocks has
maintained constant interaction with Senior Executives via participation
in
various committees and matrix reporting structures. Maddocks has operated
both
in senior management roles and as an external consultant. He is a Chartered
Accountant and speaks fluent Italian. He is a resident of Kent,
England.
Mr.Jim
Bacchus was hired as the Vice President of Consulting in June 2006 for
an
effective date of employment as of August 14, 2006 coinciding with the
resignation effective date of Dale Geesey. Mr.
Jim
Bacchus has over 20 years experience in technology programs ranging from
advanced communications to space craft. He has held executive positions
at GE,
Lockheed Martin and Ingersoll Rand. In addition to his corporate experience
he
has worked in several high tech capacities for the armed services and is
currently a Colonel in the Marine Corps Reserve. Most recently he was
recalled to active duty for service in Iraq and with the Joint Chiefs of
Staff
at the Pentagon. Bacchus holds a JD from Widener University School of Law,
MS
from the University of Southern California, and a BA from Drew
University.
Mr.
Paul
Shepherd has been our Secretary and Chief Operating Officer and since August
2005. From July 2003 to August 2005, Mr. Shephard was the secretary
of IPv6 Summit, Inc. From October 2002 to July 2003, Mr. Shephard was a
marketing consultant for Charmed Technology. From October 2000 to October
2002,
Mr. Shepherd was the secretary of Pacific Goldstar, Inc. Mr. Shepherd
holds an Associate in Arts in Business Administration at Santa Monica College.
Mr. Shepherd is an “at will” employee.
The
following table sets forth the aggregate cash compensation paid by Innofone
to:
(i) its Chief Executive Officer, Chairman; and (ii) its most highly compensated
officers whose cash compensation exceeded $100,000 for services performed
from
August 8, 2005, the date we completed our acquisition of IPv6 Summit,
through July 11, 2006.
Name
and Principal Position |
|
Year
|
|
Salary($)
|
|
Bonus($)
|
|
Other
Annual
Compensation($)
|
|
Restricted
Stock
Award(s)
($)
|
|
Securities
Underlying
Options
SARs(#)
|
|
|
|
All
Other
Compensation
($)
|
|
Alex
Lightman (1)
|
|
|
2005
|
|
$
|
131,606
|
|
$
|
43,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
Maddocks (2)
|
|
|
2005
|
|
$
|
--
|
|
|
--
|
|
$
|
25,000(2
|
)
|
|
--
|
|
|
200,000(3
|
)
|
|
--
|
|
|
--
|
|
Dale
Geesey (3)
|
|
|
2005
|
|
$
|
42,205
|
|
$
|
12,468
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Paul
Shephard (4)
|
|
|
2005
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim
Bacchus(5)
|
|
|
2006
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Innofone
hired its executive officers on or about August 8, 2005 as a result of
the Stock
Purchase Agreement. Accordingly, none of the executive officers have earned
full
year annual compensation or long tem compensation. This table reflects
annual
compensation paid to the executive officers from August 8, 2005 to
date.
(1)
|
Mr.
Lightman is expected to earn an annual salary of approximately
$295,000
during the next fiscal year.
|
(2)
|
Mr.
Maddocks has been paid a one-time advance payment of $25,000
for his board
representation for the next fiscal year.
|
(3)
|
Mr.
Geesey resigned from Innofone in June 2006 effective August
14, 2006.
|
(4)
|
Mr.
Shephard is expected to earn an annual salary of approximately
$80,000 for
the next fiscal year.
|
(5)
|
Mr.
Jim Bacchus joined Innofone in June 2006 to replace Mr. Dale
Geesey
effective August 14, 2006. Mr. Bacchus salary and compensation
are to be
determined.
|
COMPENSATION
PLANS
We
do not
have any option, annuity, retirement, pension or deferred compensation
plan or
other arrangements under which an executive officer is entitled to participate
without similar participation by other employees.
DIRECTOR
COMPENSATION
We
do not
have any agreement to compensate our directors at this time, however we
have
paid a one-time advance payment of $25,000 to Mr. Maddocks for his board
representation for the next fiscal year.
EMPLOYMENT
AGREEMENTS
On
September 22, 2005, Innofone entered into an employment agreement with
Frederick
Dale Geesey, our Vice President of Consulting. The term of the agreement
is for
one year and provides for an annual base salary of $150,000 with certain
performance based target bonuses consisting of (a) a cash target bonus
equal to
35% of total annual salary, as determined by the Board of Directors and
(b) a
performance bonus paid in cash equal to 35% of total annual salary for
each and
every merger and/or acquisition made by us. The target bonus and the performance
bonus may not exceed 100% of annual salary. The agreement also provides for
the issuance of options to purchase 200,000 shares of restricted common
stock.
The options vest over a period of three years.
On
September 6, 2005, Innofone entered into an employment agreement with Gerard
Casale, Esq., our Corporate Counsel. The agreement provides for an initial
part
time term during which Mr. Casale shall be our Corporate General Counsel
with an
annual salary of $142,500 and shall be issued 50,000 shares of restricted
common
stock. On December 1, 2005, Mr. Casale became our General Counsel, Vice
President of Business and Legal Affairs with an annual salary of $285,000
and
was issued 100,000 shares of our restricted common stock.
On
October 31, 2005, we entered into an employment agreement (the “Agreement”) with
Mr. Alex Lightman, our Chief Executive Officer, President and Principal
Accounting Officer. Pursuant to the Agreement, Mr. Lightman will serve
as Chief
Executive Officer and Chairman of the Board and will receive annual base
compensation of $295,000. Mr. Lightman will also be eligible for executive
bonus
compensation as follows: (a) a Target Bonus paid in cash equal to 35% of
the
total cash value of his annual salary, as determined by the Board of Directors,
50% of which may be paid in shares of Innofone's common stock; and (b)
a
Performance Bonus paid in cash equal to 35% of the total cash value of
his
annual salary for each and every merger and/or acquisition made by Innofone
of a
non-affiliated third party entity (such potential target must provide no
less
than $1,000,000 of estimated annual accretive EBITDA to Innofone). The
total
amount of the Target Bonus and Performance Bonus paid to Mr. Lightman shall
not
exceed 100% of his annual compensation in any 12 month period. Mr. Lightman
is
also eligible to participate in any other bonus or incentive programs
established by Innofone. The term of the Agreement is for two years and
may
renew for additional two year periods thereafter unless notice of non-renewal
is
given within six months of the end of the then current term.
The
following table sets forth certain information regarding the beneficial
ownership of Innofone's Common Stock by each person or group that is
known by
Innofone to be the beneficial owner of more than five percent of its
outstanding
Common Stock, each director of Innofone, each person named in the Summary
Compensation Table, and all directors and executive officers of Innofone
as a
group as of March 24, 2006. Unless otherwise indicated, Innofone believes
that the persons named in the table below, based on information furnished
by
such owners, have sole voting and investment power with respect to the
Common
Stock beneficially owned by them, where applicable. As of August 24, 2006,
there were 74,435,328 shares of common stock issued and
outstanding.
Name/Address
of
Beneficial
Owner
|
|
Position
with
Company
|
|
Amount
and Nature
of
Beneficial
Ownership
of Class
A
common Stock (1)
|
|
Percentage
of
Securities
(1)
|
Alexander
Lightman(2)/*
|
|
Chief
Executive Officer and President
|
|
34,448,108
|
|
46.28%
|
|
|
|
|
|
|
|
Peter
Maddocks*
|
|
Director
|
|
0
|
|
0
|
|
|
|
|
|
|
|
Dale
Geesey*/(3)
|
|
VP
of Consulting(3)
|
|
45,314
|
|
**
|
|
|
|
|
|
|
|
Paul
Shephard*
|
|
Secretary
|
|
0
|
|
0
|
|
|
|
|
|
|
|
Jim
Bacchus*/(4)
|
|
VP
of Consulting
|
|
0
|
|
0
|
|
|
|
|
|
|
|
Abby
International Holdings, Ltd.(5)
c/o
UK Administration Office, Suite 363
78
Marylebone High Street
London,
W1U5AP United Kingdome
|
|
--
|
|
20,500,000
|
|
27.54%
|
|
|
|
|
|
|
|
Cogent
Capital Investments, LLC (6)(7)
11444
South 1780 East
Sandy,
Utah 84092
|
|
--
|
|
1,850,000
|
|
2.49%
|
|
|
|
|
|
|
|
Cogent
Capital Financial LLC (7) |
|
|
|
5,000,000
|
|
6.72%
|
|
|
|
|
|
|
|
All
executive officers and Directors as a group
(4
persons)
|
|
|
|
34,448,108
|
|
46.28%
|
*
Address
of all holders is c/o Innofone.com, Incorporated, 1431 Ocean Avenue, Suite
1100,
Santa Monica, California 90401.
**
Less
than one percent.
(1)
Pursuant to the rules of the Securities and Exchange Commission, a person
is
deemed to "beneficially own" shares of common stock over which the person
has or
shares investment or voting power, or has the right to acquire such power
within
60 days. The percentage of common stock owned is calculated based on the
number
of shares of common stock outstanding, plus in the case of each person
the
number of shares of common stock issuable only to such person upon the
exercise
of options or warrants and the conversion of convertible debt
securities.
(2)
Includes 27,000,000 shares owned by Equitocracy Trust. Mr. Lightman is
the
trustee of Equitocracy Trust and is deemed the beneficial owner of such
shares.
(3)
Mr.
Dale Geesey resigned as the Vice President of Consulting in June 2006,
which
will become effective as of August 14, 2006.
(4)
Mr.
Jim Bacchus was hired in June 2006 to replace Mr. Dale Geesey effective
August
14, 2006
(5)
Mr.
Irving Aronson has the voting and dispositive power over the shares beneficially
owned by Abbey International, an entity formed under the laws of Belize,
by
virtue of being a director of that entity.
(6) Cogent
Capital Investments and Cogent Capital Financial are affiliated entities
and
Greg Kofford and Mark W. Holden have the voting and dispositive power
of all
6,850,000 shares of common stock. The address of CCI and CCF is 11444
South 1780 East, Sandy, Utah 84092.
(7) CCI
owns approximately 4,815,000 shares of
our Series A Convertible Preferred Stock which is convertible into 48,150,000
shares of our Common Stock, subject to certain limitations on convertibility
as
more fully described in this prospectus. CCF holds a warrant exercisable
unto 5,000,000 shares of our Common Stock; the exercise of this warrant
is
subject to certain limitations pertaining to the amount of shares CCF
may
beneficially own.
On
August
8, 2005, we entered into a stock purchase agreement with Mr. Alex Lightman
to
purchase the total issued and outstanding shares of IPv6 Summit Inc., an
entity
engaged in developing new technology referred to as Internet Protocol version
6.
Pursuant to the agreement, we agreed to pay Mr. Lightman $1,000,000 in
the form
of a promissory note and issue to him approximately 33,333,000 shares of
our
restricted common stock in exchange for 100% of the issued and outstanding
shares of IPv6. As a result of the stock purchase agreement, IPv6 Summit
Inc.
became a wholly owned subsidiary of Innofone and Mr. Lightman became our
President and Chief Executive Officer. Prior to this acquisition, we operated
as
a holding company for companies involved in technology and financial services.
Pursuant to the Repayment of NIR, Mr. Lightman’s pledged shares were released
and he no longer guarantees Innofone’s obligation to NIR.
On
August
31, 2005, Mr. Lightman pledged 3 million shares to support obligations
under the
Notes issued to AJW Partners, LLC, AJW Offshore Ltd., AJW Qualified Partners
and
New Millenium Capital Partners, II, LLC on August 31, 2005. Specifically,
pursuant to a Guaranty and Pledge Agreement, Mr. Lightman has agreed to
unconditionally guarantee the timely and full satisfaction of all of our
obligations, whether matured or unmatured, now or hereafter existing or
created
and becoming due and payable to the investors under the Notes.
On
October 17, 2005, we amended and restated our promissory note issued to
Mr. Alex
Lightman, our Chief Executive Officer, President, and Principal Accounting
Officer, on October 12, 2005, in connection with our Stock Purchase Agreement
dated August 8, 2005. The principal face amount of the note is $1,000,000
and
bears interest at the rate of four percent (4%) per annum. The note was
amended
and restated to provide for a repayment schedule which was to coincide
with the
timing that Innofone receives the Traunches. Specifically, we will make
monthly
installment payments equal to $83,333.33 for each successive month starting
on
the date of execution of the note and ending January 17, 2006. We agreed
that
upon the filing of this registration statement and receipt of the second
Traunche, we would make monthly installment payments of $83,333.33 for
the four
(4) successive months thereafter. Further, upon the effectiveness of this
registration statement and receipt of the third Traunche, we would make
monthly installment payments of $83,333.33 for the four (4) successive
months
thereafter. As of March 2006, we have repaid approximately $500,000 of
Mr.
Lightman's note. Mr. Lightman has agreed to defer any additional payments
until
our financial condition allows for the continuation of such
payments.
On
July
10, 2006, we issued a promissory note to 55 South Investments in the
face amount
of $500,000. The note is secured by approximately $2,000,000 worth of our
restricted common stock and $2,000,000 worth of restricted common stock
owned by
Mr. Lightman, our Chief Executive Officer and President. Pursuant to
a Guaranty
and Pledge Agreement, Mr. Lightman has agreed to unconditionally guarantee the
timely and full satisfaction of all of our obligations, whether matured
or
unmatured, now or hereafter existing or created and becoming due and
payable to
the investors under the note.
On
August
8, 2006, we issued a promissory note to Keiran
Gaffney-Weinroth and Paul Weinroth in the face amount of
$50,000. The Note is secured by approximately $200,000 worth of our
restricted common stock and $200,000 worth of restricted common stock
owned by
Mr. Alex Lightman, our Chief Executive Officer and President. Pursuant to
a Guaranty and Pledge Agreement, Mr. Lightman has agreed to unconditionally
guarantee the timely and full satisfaction of all of our obligations,
whether
matured or unmatured, now or hereafter existing or created and becoming
due and
payable to the investors under the note.
DESCRIPTION
OF SECURITIES
Innofone's
authorized capital stock consists of 950,000,000 shares of common stock,
par
value of $0.001 per share, of which 74,435,328 issued and outstanding as
of August 24, 2006. The holders of shares of our common stock are entitled
to elect all of the directors and to one vote per share on all matters
submitted
to shareholder vote. Holders of our common stock are entitled to receive
ratably
dividends, subject to the rights of the holders of Preferred Stock (if
any), as
may be declared by our Board of Directors out of funds legally available
therefore.
On
May
31, 2006, we filed an Amended and Restated Certificate of Designation
of Series
A Convertible Preferred Stock establishing the rights and preferences
of
4,185,000 such shares (“Series A Shares”). The Series A Shares have no voting
rights and may be converted into shares of our common stock based on
a
conversion ratio initially equal to ten shares of common stock, subject
to
certain adjustments. Any holder of the Series A Shares may convert its
shares
into common stock upon the earlier of (i) sixty days after the date on
which
this registration statement has been declared effective; or (ii) June
3, 2008.
The holders of the Series A Shares shall not be entitled to any dividends
in
respect thereof unless and until our board of directors so elects. We
may redeem
all (but not less than all) of the outstanding Series A Shares two years
after
the issuance date. The redemption price per share is equal to the market
price
of our common stock at the time of redemption multiplied by the conversion
ratio
plus any unpaid amounts due. The market price shall be the trailing ten
day
average of the common stock as quoted on the OTC Bulletin Board or, if
applicable, as listed on one of the following markets or exchanges: the
Nasdaq
SmallCap Market, the American Stock Exchange, the New York Stock Exchange
or the
Nasdaq National Market. The Series A Shares shall rank senior to our
other
securities with respect to the payment of dividends and the distribution
of
assets. Further,
no holder of the Series A shares shall have the right to receive, and
the
Company shall not issue to any holder of the Series A shares, any securities
as
a dividend or distribution, or upon conversion or redemption of the Series
A
Shares, to the extent that, upon giving effect to such issuance, the
aggregate
number of shares of Common Stock beneficially owned by such holder (and
its
affiliates) would exceed 9.5% of the total issued and outstanding shares
of
Common Stock following such issuance.
All
of
the shares of our authorized capital stock, when issued for such consideration
as our board of directors may determine, shall be fully paid and non-assessable.
Our board of directors has the discretion and may, by adoption of a resolution,
designate one or more series of preferred stock and has the power to determine
the conversion and/or redemption rights, preferences and privileges of
each such
series of preferred stock provided that such conversion and/or redemption
rights, preferences and privileges of any series of preferred stock does
not
subordinate or otherwise limit the conversion and/or redemption rights,
preferences and/or privileges of any previously issued series of preferred
stock. Our Certificate of Incorporation and bylaw's currently do not provide
for
the delaying, deferring or preventing of a change.
Disclosure
of Commission Position of Indemnification for Securities Act
Liabilities
Our
articles of incorporation provide that we will indemnify an officer, director,
or former officer or director, to the full extent permitted by law. We
have been
advised that in the opinion of the Securities and Exchange Commission
indemnification for liabilities arising under the Securities Act of 1933
is
against public policy as expressed in the Securities Act of 1933, and is,
therefore, unenforceable. In the event that a claim for indemnification
against
such liabilities is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless
in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against
public
policy to a court of appropriate jurisdiction. We will then be governed
by the
court's decision.
TRANSFER
AGENT
Innofone's
transfer agent is Interwest Transfer Company, Inc.
SHARES
ELIGIBLE FOR RESALE
Future
sales of a substantial number of shares of our common stock in the public
market
could adversely affect market prices prevailing from time to time. Under
the
terms of this offering, the shares of common stock offered may be resold
without
restriction or further registration under the Securities Act of 1933, except
that any shares purchased by our "affiliates," as that term is defined
under the
Securities Act of 1933, may generally only be sold in compliance with Rule
144
under the Securities Act of 1933.
SALE
OF
RESTRICTED SHARES. Certain shares of our outstanding common stock were
issued
and sold by us in private transactions in reliance upon exemptions from
registration under the Securities Act of 1933 and have not been registered
for
resale. There are 5,267,098 shares of our common stock that are not
restricted by Rule 144 because they are in the public float. Resales
of the
remainder of our issued and outstanding shares of common stock are restricted
under Rule 144. There are 69,168,230 shares of our common stock that are
restricted, including shares subject to outstanding warrants to purchase,
or
notes convertible into, common stock (excluding any conversions of notes
to
date). Such shares may be sold only pursuant to an effective registration
statement filed by us or an applicable exemption, including the exemption
contained in Rule 144 promulgated under the Securities Act of
1933.
In
general, under Rule 144 as currently in effect, a shareholder, including
one of
our affiliates, may sell shares of common stock after at least one year
has
elapsed since such shares were acquired from us or our affiliate. The number
of
shares of common stock which may be sold within any three-month period
is
limited to the greater of: (i) one percent of our then outstanding common
stock,
or (ii) the average weekly trading volume in our common stock during the
four
calendar weeks preceding the date on which notice of such sale was filed
under
Rule 144. Certain other requirements of Rule 144 concerning availability
of
public information, manner of sale and notice of sale must also be satisfied.
In
addition, a shareholder who is not our affiliate, who has not been our
affiliate
for 90 days prior to the sale, and who has beneficially owned shares acquired
from us or our affiliate for over two years may resell the shares of common
stock without compliance with many of the foregoing requirements under
Rule
144.
SELLING
SECURITYHOLDERS
We
agreed
to register for resale shares of common stock by the selling securityholders
listed below. The selling securityholders may from time to time offer and
sell
any or all of their shares that are registered under this prospectus. All
expenses incurred with respect to the registration of the common stock
will be
borne by us, but we will not be obligated to pay any underwriting fees,
discounts, commissions or other expenses incurred by the selling securityholders
in connection with the sale of such shares.
The
following table sets forth information with respect to the maximum number
of
shares of common stock beneficially owned by the selling securityholders
named
below and as adjusted to give effect to the sale of the shares offered
hereby.
The shares beneficially owned have been determined in accordance with rules
promulgated by the SEC, and the information is not necessarily indicative
of
beneficial ownership for any other purpose. The information in the table
below
is current as of the date of this prospectus. All information contained
in the
table below is based upon information provided to us by the selling
securityholders and we have not independently verified this information.
The
selling securityholders are not making any representation that any shares
covered by the prospectus will be offered for sale. The selling securityholders
may from time to time offer and sell pursuant to this prospectus any or
all of
the common stock being registered.
Except
as
indicated below, none of the selling securityholders has held any position
or
office with us, nor are any of the selling securityholders associates or
affiliates of any of our officers or directors. Except as indicated below,
no
selling stockholder is the beneficial owner of any additional shares of
common
stock or other equity securities issued by us or any securities convertible
into, or exercisable or exchangeable for, our equity securities. No selling
stockholder is a registered broker-dealer or an affiliate of a
broker-dealer.
For
purposes of this table, beneficial ownership is determined in accordance
with
SEC rules, and includes voting power and investment power with respect
to shares
and shares owned pursuant to warrants exercisable within 60 days. The "Number
of
Shares Beneficially Owned After the Offering” column assumes the sale of all
shares offered.
As
explained below under “Plan of Distribution,” we have agreed with the selling
securityholders to bear certain expenses (other than broker discounts and
commissions, if any) in connection with the registration statement, which
includes this prospectus.
Name
|
|
Number
of
Shares
Beneficially
Owned
Prior to
Offering(1)(2)
|
|
Number
of
Shares
Offered
|
|
Number
of Shares
Beneficially
Owned
After
the
Offering
|
|
|
|
|
|
|
|
|
|
Cogent
Capital Investments, LLC(3)(4)
|
|
|
1,850,000
|
(5) |
|
1,850,000
|
(5) |
|
0
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
Cogent
Capital Financial, LLC (3)(4) |
|
|
5,000,000 |
(6) |
|
5,000,000 |
(6) |
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
Alex
Lightman(7)
C/o
Innofone.com, Incorporated
1431
Ocean Avenue, Suite 1500
Santa
Monica, CA 90401
|
|
|
32,126,608
|
|
|
3,600,000
|
|
|
28,526,608
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerard
Casale(8)
C/o
Innofone.com, Incorporated
1431
Ocean Avenue, Suite 1500
Santa
Monica, CA 90401
|
|
|
750,000
|
|
|
200,000
|
|
|
550,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence
Hughes
C/o
Innofone.com, Incorporated
1431
Ocean Avenue, Suite 1500
Santa
Monica, CA 90401
|
|
|
3,539,511
|
|
|
500,000
|
|
|
3,039,511
|
|
(1) Unless
otherwise indicated, the selling securityholders have sole voting and investment
power with respect to their shares of common stock. The inclusion of any
shares
in this table does not constitute an admission of beneficial ownership
for the
selling securityholders.
(2) The
actual number of shares of Common Stock offered in this prospectus, and
included
in the registration statement of which this prospectus is a part, includes
such
additional number of shares of common stock as may be issued or issuable
upon
conversion of the Series A Convertible Preferred Stock, in accordance with
Rule
416 under the Securities Act of 1933, as amended.
(3)
Greg Kofford and Mark W. Holden have the voting and investment power with
respect to the shares of common stock beneficially owned by Cogent Capital
Financial LLC and Cogent Capital Investments LLC.
(4)
Cogent’s address is 11444 South 1780 East, Sandy, Utah 84092.
(5)
Does not include 48,150,000 shares of common
stock issuable upon conversion of Series A Convertible Preferred Stock
which are
convertible subject to certain limitations as more fully described in
this
prospectus
(6)
Does not include 5,000,000 shares of common stock
underlying a warrant; the exercise of this warrant is subject to certain
limitations pertaining to the amount of shares CCF may beneficially
own.
(7)
Mr.
Alex Lightman is Innofone’s Chief Executive Officer, President, Principal
Accounting Officer, and a Director.
(8)
Mr.
Gerard Casale is Innofone’s General Counsel and Vice President of Business and
Legal Affairs.
As
more
fully described in this prospectus, on June 2, 2006, pursuant to a
securities
purchase agreement, we sold in a private placement to Cogent Capital
Investments
LLC (“CCI”) (i) 1,850,000 shares of our common stock (“Common Stock”) and (ii)
4,815,000 shares of our Series A Convertible Preferred Stock (“Preferred Stock”)
for an aggregate purchase price of $50,000,000, which was paid in the
form of
U.S. Treasury Bonds (the “Bonds”). Pursuant to an Amended and Restated
Certificate of Designation filed by Innofone, the Preferred Stock issued
to
Cogent has no voting rights, no dividend rights (unless the Board of
Directors
elects otherwise) and each shares of Preferred Stock shall be convertible
into
ten (10) shares of Common Stock, subject to certain adjustments (“Conversion
Ratio”). Further, no sooner than two years after June 2, 2006, the issuance
date, Innofone has the option to redeem all (but not less than all)
of the
outstanding Preferred Stock by paying in cash the market price (the
trailing ten
(10) average of the Common Stock) multiplied by the Conversion Ratio.
The
Preferred Stock shall rank, with respect to the payment of dividends
and the
distribution of assets, senior to any other security issued by
Innofone.
Concurrently
with the consummation of the private placement to CCI, we entered into
an equity
swap transaction with Cogent Capital Financial LLC (“CCF”), an affiliate of CCI
(the “Equity Swap”). The Equity Swap is a fixed versus floating price swap with
respect to a notional amount of 37,500,000 shares of our Common Stock,
with CCF
being the floating equity payor and Innofone being the fixed equity
price payor. The fixed price under the Equity Swap is $1.333 per share.
The
Equity Swap has a maturity date of December 2, 2010, though under certain
conditions this date can be extended, and provides for periodic settlements
and
reductions of the notional amount of the Equity Swap over a 30 month
period,
provided that Innofone has satisfied certain conditions. Among these
conditions
is a requirement that Innofone maintain an effective registration statement
with
respect to specified portions of the Common Stock purchased by CCI
and the
Common Stock into which the Preferred Stock purchased by CCI is convertible.
The
portion of such Common Stock to be covered by the registration statement
increases over a 30 month period to a maximum of 55,000,000 shares.
This
registration statement is being provided by Innofone to satisfy, on
an initial
basis, this condition of the Equity Swap. Continued satisfaction of
this
condition will depend on the maintenance of this registration statement
and the
provision at later dates of one or more additional registration statements.
To
secure Innofone’s performance of the Equity Swap, Innofone has pledged to CCF,
and deposited in a custodian account subject to a lien in favor of
CCF, the
Bonds. As the notional amount of the Equity Swap is reduced, a corresponding
portion of the pledged Bonds are to be released to Innofone, subject
to any
required partial settlement of the Equity Swap resulting from the reduction
in
the notional amount.
In
connection with and as consideration for CCF's obligations under the
Equity
Swap, Innofone paid to CCF an initial amount consisting of: (i) $568,750
(out of approximately $1,375,000 to be paid); (ii) 5,000,000 shares of
Common Stock; and (iii) a warrant to purchase 5,000,000 shares of Common
Stock, during a 5-year term, at an initial exercise price per share
of $1.20.
The remaining approximately $831,250 (of the $1,375,000) due is accruing
interest and will be deducted and paid from the first 3 collateral
releases. Innofone and CCF entered into a registration rights agreement
granting CCF certain demand and piggyback registration rights with
respect to
these shares of Common Stock.
PLAN
OF DISTRIBUTION
The
selling securityholders and any of their respective pledges, donees, assignees
and other successors-in-interest may, from time to time, sell any or all
of
their shares of common stock on any stock exchange, market or trading facility
on which the shares are traded or in private transactions. These sales
may be at
fixed or negotiated prices. The selling securityholders may use any one
or more
of the following methods when selling shares:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the
shares as
agent, but may position and resell a portion of the block
as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer
for its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of
the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
short
sales after this registration statement becomes
effective;
|
|
·
|
broker-dealers
may agree with the selling securityholders to sell a specified
number of
such shares at a stipulated price per
share;
|
|
·
|
through
the writing of options on the
shares;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling securityholders may also sell shares under Rule 144 under the Securities
Act of 1933, if available, rather than under this prospectus. The selling
securityholders will have the sole and absolute discretion not to accept
any
purchase offer or make any sale of shares if they deem the purchase price
to be
unsatisfactory at any particular time.
The
selling securityholders may also engage in short sales against the box
after
this registration statement becomes effective, puts and calls and other
transactions in our securities or derivatives of our securities and may
sell or
deliver shares in connection with these trades.
The
selling securityholders or their respective pledgees, donees, transferees
or
other successors in interest, may also sell the shares directly to market
makers
acting as principals and/or broker-dealers acting as agents for themselves
or
their customers. Such broker-dealers may receive compensation in the form
of
discounts, concessions or commissions from the selling securityholders
and/or
the purchasers of shares for whom such broker-dealers may act as agents
or to
whom they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers
and
block purchasers purchasing the shares will do so for their own account
and at
their own risk. It is possible that a selling stockholder will attempt
to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price.
The
selling securityholders cannot assure that all or any of the shares offered
in
this prospectus will be issued to, or sold by, the selling securityholders.
The
selling securityholders and any brokers, dealers or agents, upon effecting
the
sale of any of the shares offered in this prospectus, may be deemed to
be
"underwriters" as that term is defined under the Securities Act of 1933,
as
amended, or the Securities Exchange Act of 1934, as amended, or the rules
and
regulations under such acts. In such event, any commissions received by
such
broker-dealers or agents and any profit on the resale of the shares purchased
by
them may be deemed to be underwriting commissions or discounts under the
Securities Act.
Discounts,
concessions, commissions and similar selling expenses, if any, attributable
to
the sale of shares will be borne by a selling stockholder. The selling
securityholders may agree to indemnify any agent, dealer or broker-dealer
that
participates in transactions involving sales of the shares if liabilities
are
imposed on that person under the Securities Act of 1933.
The
selling securityholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and,
if they
default in the performance of their secured obligations, the pledgee or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under
Rule
424(b)(3) or any other applicable provision of the Securities Act of 1933
amending the list of selling securityholders to include the pledgee, transferee
or other successors in interest as selling securityholders under this
prospectus.
The
selling securityholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3)
or
other applicable provision of the Securities Act of 1933 amending the list
of
selling securityholders to include the pledgee, transferee or other successors
in interest as selling securityholders under this prospectus.
We
are
required to pay all fees and expenses incident to the registration of the
shares
of common stock. We have agreed to indemnify the selling securityholders
against
certain losses, claims, damages and liabilities, including liabilities under
the
Securities Act of 1933.
Each
of
the selling securityholders acquired the securities offered hereby in the
ordinary course of business and have advised us that they have not entered
into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is
there
an underwriter or coordinating broker acting in connection with a proposed
sale
of shares of common stock by any selling stockholder. If we are notified
by any
selling stockholder that any material arrangement has been entered into with
a
broker-dealer for the sale of shares of common stock, if required, we will
file
a supplement to this prospectus. If the selling securityholders use this
prospectus for any sale of the shares of common stock, they will be subject
to
the prospectus delivery requirements of the Securities Act of 1933.
The
anti-manipulation rules of Regulation M under the Securities Exchange Act
of
1934 may apply to sales of our common stock and activities of the selling
securityholders.
LEGAL
MATTERS
The
validity of the issuance of the common stock offered hereby will be passed
upon
for us by Gersten Savage LLP, New York, New York.
EXPERTS
The
financial statements of Innofone.com, Incorporated as of and for the period
from
June 30, 2005 appearing in this prospectus have been audited by Hochman &
Danziger and the financial statements of IPv6 Summit, Inc. appearing in this
prospectus have been audited by DeJoya Griffith & Company, LLC, as set forth
in their reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firms as experts
in
accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
have
filed with the SEC under the Securities Act of 1933 a registration statement
on
Form SB-2 with respect to the shares being offered in this offering. This
prospectus does not contain all of the information set forth in the registration
statement, certain items of which are omitted in accordance with the rules
and
regulations of the SEC. The omitted information may be inspected and copied
at
the Public Reference Room maintained by the SEC at Room 1580, 100 F Street
N.E.,
Washington, D.C. 20549. You can obtain information about operation of the
Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains
an
Internet site that contains reports, proxy and information statements, and
other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov. Copies of such material can be obtained from the public
reference section of the SEC at prescribed rates. Statements contained in
this
prospectus as to the contents of any contract or other document filed as
an
exhibit to the registration statement are not necessarily complete and in
each
instance reference is made to the copy of the document filed as an exhibit
to
the registration statement, each statement made in this prospectus relating
to
such documents being qualified in all respect by such reference.
For
further information with respect to us and the securities being offered hereby,
reference is hereby made to the registration statement, including the exhibits
thereto and the financial statements, notes, and schedules filed as a part
thereof.
INDEX
TO FINANCIAL STATEMENTS
|
Page
Number
|
IPV6
SUMMIT, INC. FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE
30,
2005
|
|
|
|
Report
of Independent Certified Public Accounting Firm
|
F-2
|
|
|
Balance
Sheets as of June 30, 2005
|
F-3
|
|
|
Statements
of Operations for the Periods Ended June 30, 2005 and 2004
|
F-4
|
|
|
Statements
of Shareholders' Deficit for the Year Ended June 30, 2005 and
2004
|
F-5
|
|
|
Statements
of Cash Flows for the Year Ended June 30, 2005 and 2004
|
F-6
|
|
|
Notes
to the Consolidated Financial Statements
|
F-7-9
|
|
|
INNOFONE.COM,
INCORPORATED FOR FISCAL YEAR ENDED JUNE 30, 2005
|
|
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-10
|
|
|
Balance
Sheets - Statement I
|
F-11
|
|
|
Statement
of Shareholders_ Deficit - Statement II
|
F-12
|
|
|
Statement
of Operations - Statement III
|
F-13
|
|
|
Statement
of Cash Flows - Statement IV
|
F-14
|
|
|
NOTES
TO FINANCIAL STATEMENTS
|
F-15
|
|
|
INNOFONE.COM
INCORPORATED FOR QUARTER ENDED MARCH 31, 2006
|
|
|
|
Balance
Sheet for Quarter Ended March 31, 2006
|
F-19
|
|
|
Statement
of Operations for Quarter Ended March 31, 2006
|
F-20
|
|
|
Statement
of Shareholders' Equity
|
F-21
|
|
|
Statement
of Cash Flows
|
F-22
|
|
|
Notes
to Consolidated Financial Statements
|
F-23
|
De
Joya Griffith & Company, LLC
Certified
Public Accountants & Consultants
2425
W. Horizon Ridge Parkway
Henderson,
Nevada 89052
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors
IPv6
Summit, Inc.
Santa
Monica, California
We
have
audited the balance sheet of IPv6 Summit, Inc. (the “Company”) as of June 30,
2005 and the related statements of operations, stockholders’ deficit and cash
flows for the years ended June 30, 2005 and 2004. These financial statements
are
the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public
Company
Accounting Oversight Board (United States). Those standards require
that we plan
and perform the audit to obtain reasonable assurance about whether
the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosure in the financial
statements. An audit also includes assessing the accounting principles
used and
significant estimates made by management, as well as evaluating the
overall
financial statement presentation. We believe that our audit provides
a
reasonable basis for our opinion.
In
our
opinion, the financial statement referred to above presently fairly,
in all
material respects, the financial position of IPv6 Summit, Inc. as of
June 30,
2005 and the results of their operations and their cash flows for the
years
ended June 30, 2005 and 2004, in conformity with accounting principles
generally
accepted in the United States.
/s/ De
Joya
Griffith & Company, LLC
De
Joya Griffith and Company, LLC
Henderson,
Nevada
September
9, 2005
|
|
|
|
|
|
June
30, 2005
|
|
ASSETS
|
Cash
|
|
$
|
17,840
|
|
Accounts
receivable
|
|
|
46,980
|
|
Officers'
advances
|
|
|
12,729
|
|
Total
current assets
|
|
|
77,550
|
|
|
|
|
|
|
Fixed
assets, net
|
|
|
4,840
|
|
Total
assets
|
|
$
|
82,389
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDER'S EQUITY
|
Current
liabilities
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
53,848
|
|
Customer
deposits
|
|
|
--
|
|
Other
current liabilities
|
|
|
6,934
|
|
Total
current liabilities
|
|
|
60,782
|
|
|
|
|
|
|
Long-term
liabilities
|
|
|
--
|
|
Total
liabilities
|
|
|
60,782
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
--
|
|
|
|
|
|
|
Stockholder's
equity
|
|
|
|
|
Common
stock; $0.001 par value; 2,000,000 shares authorized, issued and
outstanding
|
|
|
2,000
|
|
Additional
paid-in capital
|
|
|
--
|
|
Retained
earnings
|
|
|
19,607
|
|
Total
stockholder's equity
|
|
|
21,607
|
|
Total
liabilities and stockholder's equity
|
|
$
|
82,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the period from
|
|
|
|
|
|
July
9, 2003
|
|
|
|
For
the year ended
|
|
(Date
of
Inception)
through
|
|
|
|
June
30, 2005
|
|
June
30, 2004
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
545,588
|
|
$
|
553,287
|
|
|
|
|
|
|
|
|
|
Cost
of revenues
|
|
|
118,164
|
|
|
165,686
|
|
Gross
profit
|
|
|
427,424
|
|
|
387,601
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,941
|
|
|
1,302
|
|
Selling
general and administrative
|
|
|
466,913
|
|
|
311,225
|
|
Total
operating expenses
|
|
|
469,854
|
|
|
312,527
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
|
|
(42,431
|
)
|
|
75,074
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
Interest
income
|
|
|
3
|
|
|
2
|
|
Loss
on Disposal of Asset
|
|
|
(2,756
|
)
|
|
--
|
|
Total
other income (expense)
|
|
|
(2,753
|
)
|
|
2
|
|
|
|
|
|
|
|
|
|
Net
income (loss) before provision for income taxes
|
|
|
(45,184
|
)
|
|
75,076
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
(10,285
|
)
|
|
--
|
|
Net
income (loss)
|
|
$
|
(55,469
|
)
|
$
|
75,076
|
|
Net
income (loss) per common share - basic and diluted
|
|
$
|
(0.03
|
)
|
$
|
0.04
|
|
Weighted
average common shares outstanding - basic and
diluted
|
|
|
2,000,000
|
|
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Additional
Paid-in Capital
|
|
Retained
Earnings
|
|
Stockholders'
Equity
|
|
Balance,
July 9, 2003 (Date of Inception)
|
|
|
--
|
|
$
|
--
|
|
$
|
--
|
|
$
|
--
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock for services to the founding shareholder, $0.001 per
share
|
|
|
2,000,000
|
|
|
2,000
|
|
|
--
|
|
|
--
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
75,076
|
|
|
75,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2004
|
|
|
2,000,000
|
|
|
2,000
|
|
|
--
|
|
|
75,076
|
|
|
77,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
(55,469
|
)
|
|
(55,469
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2005
|
|
|
2,000,000
|
|
|
2,000
|
|
|
--
|
|
|
19,607
|
|
|
21,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPV6
SUMMIT, INC.
|
|
|
For
the year ended June 30,
2005
|
|
|
For
the period
July
9, 2003 (Date of Inception) through
June
30, 2004
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(55,469
|
)
|
$
|
75,076
|
|
Adjustments
to reconcile net income (loss) to net cash used by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,941
|
|
|
1,302
|
|
Loss
on disposal of fixed assets
|
|
|
2,756
|
|
|
--
|
|
Stock
issued for services
|
|
|
--
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
Change
in accounts receivable
|
|
|
69,548
|
|
|
(116,529
|
)
|
Change
in officers' advances
|
|
|
(12,729
|
)
|
|
--
|
|
Change
in prepaid expenses
|
|
|
3,050
|
|
|
(3,050
|
) |
Change
in other assets
|
|
|
11,810
|
|
|
(11,810
|
) |
Change
in accounts payable and accrued liabilities
|
|
|
(29,448
|
)
|
|
83,296
|
|
Change
in advances from related parties
|
|
|
(39,139
|
)
|
|
39,139
|
|
Change
in accrued income taxes
|
|
|
6,934
|
|
|
--
|
|
Net
cash provided (used) by operating activities
|
|
|
(39,745
|
)
|
|
69,425
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Purchase
of fixed assets
|
|
|
(2,165
|
)
|
|
(9,675
|
)
|
Net
cash used by investing activities
|
|
|
(2,165
|
)
|
|
(9,675
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock
|
|
|
--
|
|
|
--
|
|
Net
cash provided by financing activities
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Net
change in cash
|
|
|
(41,910
|
)
|
|
59,750
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
59,750
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Cash,
end of period
|
|
$
|
17,840
|
|
$
|
59,750
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
--
|
|
$
|
--
|
|
Schedule
of non-cash financing and investing activities:
|
|
|
|
|
|
|
|
Issuance
of 2,000,000 shares of common stock for services
|
|
$
|
--
|
|
$
|
2,000
|
|
IPV6
SUMMIT, INC. FINANCIAL
STATEMENTS
1. |
DESCRIPTION
OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
Description
of business
- IPv6
Summit, Inc., a Nevada corporation (hereinafter referred to as the “Company”)
located in Santa Monica, California was incorporated on July 9, 2003.
IPv6
stands for Internet Protocol version 6 and is the successor protocol
to the
current Internet, Internet Protocol version 4, which was introduced in
June 1973
and turned 32 years old this summer. IPv4 is a 32-bit protocol, while
IPv6 is a
128-bit protocol allowing for 3.4 x 10 to the 38th power new IP addresses,
and
thus allowing for a vast increase in connecting people, places, and things
to
the Internet.
The
Company is among the leading organizers of IPv6
conference events in the world by virtue of being the only company to
have
successfully organized six IPv6 Summits, with an average of over 500
attendees
each. In Japan and China, the only countries with comparable IPv6 markets,
the
event organizers are subsidized by their national governments, and their
events
are free to most attendees. Our sponsorship revenue can be compared with
that of
other organizers by counting the number of sponsors in each category
and
multiplying it by published prices. By our own estimates, we generate
more
sponsorship revenue, and more attendee revenues, than any other IPv6
organizer.
The
Company derives revenue from Sponsorships, Conference Attendee Fees, Training
Fees, and Consulting to Governments. New sources of revenue during the
2005-2007
will be derived from Consulting to Corporations, Software Revenue, Subscription
Revenue and Information Revenue. Subscription revenue will be derived from
offering broadband IPv6 wireline and wireless services, as an IPv6-centric
ISP
and WISP, including Voice over IPv6 and Video over IPv6. Information Revenue
will be derived from setting up one of the largest IPv6 information portals,
building on the existing multiple gigabytes of IPv6 related information
on
http://www.usipv6.com
Year-end
- The
Company’s year-end is June 30.
Use
of
estimates
- The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and
the reported amounts of revenue and expenses during the reporting period.
Actual
results could differ from those estimates.
Revenue
and expense recognition
-
The
Company recognizes revenue from services provided once all of the following
criteria for revenue recognition have been met: 1) pervasive evidence of an
agreement exists, 2) the services have been delivered, 3) the price is
fixed and determinable and not subject to refund or adjustment and
4) collection of the amounts due is reasonably. Overhead and administrative
costs are recognized when incurred and direct event costs
and
expenses are recognized during the period in which the event they are associated
with occurs.
Inventory-
The
Company has no inventory as of June 30, 2005.
Fixed
assets
- Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
provided principally on the straight-line method over the estimated useful
lives
of the assets, which are generally 3 years. The cost of repairs and maintenance
is charged to expense as incurred. Expenditures for property betterments
and
renewals are capitalized. Upon sale or other disposition of a depreciable
asset,
cost and accumulated depreciation are removed from the accounts and any
gain or
loss is reflected in other income (expense).
The
Company periodically evaluates whether events and circumstances have occurred
that may warrant revision of the estimated useful life of fixed assets
or
whether the remaining balance of fixed assets should be evaluated for possible
impairment. The Company uses an estimate of the related undiscounted cash
flows
over the remaining life of the fixed assets in measuring their
recoverability.
Goodwill
and intangible assets
-
In
July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 141, “Business Combinations” and No.
142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method. Under SFAS No. 142, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed annually (or
more
frequently if impairment indicators arise) for impairment.
According
to this statement, goodwill and intangible assets with indefinite lives
are no
longer subject to amortization, but rather an annual assessment of impairment
by
applying a fair-value based test. Fair value for goodwill is based on discounted
cash flows, market multiples and/or appraised values as appropriate. Under
SFAS
No. 142, the carrying value of assets are calculated at the lowest level
for
which there are identifiable cash flows.
The
Company has no Goodwill or Intangible Assets and thus the Company did not
record
any amortization expense related to goodwill or intangibles for the years
ended
June 30, 2005 and 2004.
SFAS
142
requires the Company to compare the fair value of the reporting unit to
its
carrying amount on an annual basis to determine if there is potential
impairment. If the fair value of the reporting unit is less than its carrying
value, an impairment loss is recorded to the extent that the fair value
of the
goodwill within the reporting unit is less than its carrying value.
Recent
Accounting Pronouncements
In
December 2004, the Financial Accounting Standards Board issued SFAS 123
(R), “Share-Based Payment.” This Statement is a revision to SFAS 123,
“Accounting for Stock-Based Compensation”, and supersedes APB Opinion
No. 25, “Accounting for Stock Issued to Employees.” SFAS
123(R) requires the measurement of the cost of employee services received
in exchange for an award of equity instruments based on the grant-date
fair
value of the award. No compensation cost is recognized for equity instruments
for which employees do not render service. We will adopt SFAS
123(R) effective on July 1, 2005, requiring compensation cost to be
recognized as expense for the portion of outstanding unvested awards, and
any
new awards made thereafter, based on the grant-date fair value of those
awards.
Income
taxes
- The
Company accounts for its income taxes in accordance with Statement of Financial
Accounting Standards No. 109, which requires recognition of deferred tax
assets
and liabilities for future tax consequences attributable to differences
between
the financial statement carrying amounts of existing assets and liabilities
and
their respective tax bases and tax credit carry-forwards. Deferred tax
assets
and liabilities are measured using enacted tax rates expected to apply
to
taxable income in the years in which those temporary differences are expected
to
be recovered or settled. The effect on deferred tax assets and liabilities
of a
change in tax rates is recognized in operations in the period that includes
the
enactment date.
Advertising
costs
- The
Company recognizes advertising expenses in accordance with Statement of
Position
93-7 “Reporting on Advertising Costs.” Accordingly, the Company expenses the
costs of producing advertisements at the time production occurs, and expenses
the costs of communicating advertisements in the period in which the advertising
space or airtime is used. The Company has recorded no significant advertising
costs for the years ended June 30, 2005 and 2004.
Research
and development costs
-
Research and development costs are charged to expense as incurred.
Fixed
assets consist of the following as of June 30, 2005:
|
|
|
|
Equipment
|
|
$
|
9,004
|
|
Less:
accumulated depreciation
|
|
|
4,164
|
|
Fixed
assets, net
|
|
$
|
4,840
|
|
|
|
|
|
|
3. |
COMMITMENTS
AND CONTINGENCIES
|
Office
lease
- The
Company lease three office suites at 1431 Ocean Avenue in Santa Monica,
California on a month-to-month basis. The current monthly lease payment
for the
four suites total $2,468 per month. Lease payments for the year ended June
30,
2005 and 2004 totaled $20,300 and $11,425, respectively.
On
August
08, 2005, Alex Lightman, the sole shareholder of IPv6 Summit, Inc., entered
into
a Stock Purchase Agreement with Innofone.com, for the sale of 100 % of
the
issued outstanding and shares of IPv6 Summit, Inc. to Innofone.com. The
fundamental terms of the purchase agreement provide for the Innofone.com
to
deliver a promissory note in the sum of $1,000,000 (One Million Dollars)
as
partial consideration of the purchase price and to issue 33,333,000 (Thirty
Three Million Three Hundred and Thirty Three Thousand) shares of restricted
common stock of Innofone.com to satisfy the balance of the purchase price
in
full. As a result, IPv6 Summit, Inc. will become a wholly owned subsidiary
of
the Innofone.com. Alexander Lightman will become the Chairman and Chief
Executive officer of the company. He will be awarded a five-year employment
agreement at an annual salary of $400,000.00 per year. This Agreement is
pending
subject to completion and delivery of audit.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of:
INNOFONE.COM,
INCORPORATED
We
have
audited the accompanying balance sheets of
INNOFONE.COM, INCORPORATED
as at
June 30, 2005 and 2004, and the related statements of operations, shareholders'
deficit and cash flows for each of the three years in the period ended June
30,
2005. These financial statements are the responsibility of Innofone's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). These standards require that
we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In
our
opinion, these financial statements referred to above present fairly, in
all
material respects, the financial position of Innofone as at June 30, 2005
and
2004, and the results of its operations and their cash flows for each of
the
three years in the period ended June 30, 2005, in conformity with United
States
generally accepted accounting principles.
As
more
fully described in note 6, the 2004 financial statements have been
restated.
|
/s/
Danziger & Hochman
|
Toronto,
Ontario
July
25, 2005 except note 6 for which the date is
January
10, 2006.
|
Chartered
Accountants
|
INNOFONE.COM,
INCORPORATED
Balance
Sheets
As
at June 30, 2005 and 2004
(Stated
in United States Dollars)
|
|
|
|
Statement
I
|
|
|
2005
(Restated)
|
|
2004
(Restated)
|
|
|
|
|
|
|
|
ASSETS
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
STOCK(note
3)
|
|
|
|
|
|
|
|
Common
shares
|
|
|
4,898,880
|
|
|
4,879,010
|
|
Additional
paid-in capital
|
|
|
9,975,954
|
|
|
9,314,824
|
|
|
|
|
14,874,834
|
|
|
14,193,834
|
|
|
|
|
|
|
|
|
|
(DEFICIT)
-
Statement II
|
|
|
(14,874,834
|
)
|
|
(14,193,834
|
)
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
$ |
—
|
|
$
|
—
|
|
INNOFONE.COM,
INCORPORATED
Statement
of Shareholders' Deficit
For
The Years Ended June 30, 2005, 2004 and 2003
(Stated
in United States Dollars)
|
|
|
|
|
|
Statement
II
|
|
|
Common Shares
|
|
Additional
Paid-In Capital (Restated)
|
|
Deficit
(Restated)
|
|
Total
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
June 30, 2002
|
|
$
|
4,842,772
|
|
$
|
7,719,593
|
|
|
($13,318,937
|
)
|
|
($
756,572
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
note converted to stock
|
|
|
2,300
|
|
|
647,700
|
|
|
—
|
|
|
650,000
|
|
Issuance
of shares for legal services
|
|
|
500
|
|
|
1,887
|
|
|
—
|
|
|
2,387
|
|
Issuance
of shares for consulting services
|
|
|
26,378
|
|
|
180,932
|
|
|
—
|
|
|
207,310
|
|
Net
loss
|
|
|
—
|
|
|
—
|
|
|
(209,697
|
)
|
|
(209,697
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
June 30, 2003
|
|
|
4,871,950
|
|
|
8,550,112
|
|
|
(13,528,634
|
)
|
|
(106,572
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for selling, general and administrative services
|
|
|
7,060
|
|
|
448,140
|
|
|
—
|
|
|
455,200
|
|
Forgiveness
of debt from related party
|
|
|
—
|
|
|
316,572
|
|
|
—
|
|
|
316,572
|
|
Net
loss
|
|
|
—
|
|
|
—
|
|
|
(665,200
|
)
|
|
(665,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
June 30, 2004
|
|
|
4,879,010
|
|
|
9,314,824
|
|
|
(14,193,834
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for selling, general and administrative services (note
4)
|
|
|
19,870
|
|
|
661,130
|
|
|
—
|
|
|
681,000
|
|
Net
loss
|
|
|
—
|
|
|
—
|
|
|
(681,000
|
)
|
|
(681,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
June 30, 2005
|
|
$
|
4,898,880
|
|
$
|
9,975,954
|
|
|
($14,874,834
|
)
|
$
|
—
|
|
INNOFONE.COM,
INCORPORATED
Statement
of Operations
For
The Years Ended June 30, 2005, 2004 and 2003
(Stated
in United States Dollars)
|
|
|
|
|
|
Statement
III
|
|
|
2005
|
|
2004
|
|
2003
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative services
(note 4)
|
|
|
681,000
|
|
|
455,200
|
|
|
209,697
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off
of investment
|
|
|
—
|
|
|
210,000
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Loss) from Operations
|
|
|
(681,000
|
)
|
|
(665,200
|
)
|
|
(209,697
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
(LOSS) FOR THE YEAR
|
|
|
($681,000
|
)
|
|
($665,200
|
)
|
|
($209,967
|
)
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
NET (LOSS) PER SHARE
|
|
|
|
|
|
|
|
|
|
|
(Note
5)
|
|
|
($
0.03
|
)
|
|
($
0.14
|
)
|
|
($
1.37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
|
|
|
20,098,984
|
|
|
4,740,817
|
|
|
152,682
|
|
INNOFONE.COM,
INCORPORATED
Statement
of Cash Flows
For
The Years Ended June 30, 2005, 2004 and 2003
(Stated
in United States Dollars)
|
|
|
|
|
|
Statement
IV
|
|
|
2005
|
|
2004
|
|
2003
|
|
|
|
|
|
(Restated)
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING
|
|
|
|
|
|
|
|
ACTIVITIES
|
|
|
|
|
|
|
|
Net
(loss) for year - (Statement III)
|
|
|
($681,000
|
)
|
|
($665,200
|
)
|
|
($209,697
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of shares for sales, general
|
|
|
|
|
|
|
|
|
|
|
and
administrative services (note 4)
|
|
|
681,000
|
|
|
455,200
|
|
|
209,697
|
|
Write-off
of investment
|
|
|
–
|
|
|
210,000
|
|
|
–
|
|
Accounts
payable and accrued
|
|
|
|
|
|
|
|
|
|
|
liabilities
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Due
to officers and directors
|
|
|
–
|
|
|
–
|
|
|
–
|
|
Issuance
of capital stock
|
|
|
–
|
|
|
–
|
|
|
–
|
|
Convertible
debt
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) financing activities
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE
IN CASH
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH,
BEGINNING OF YEAR
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH,
END OF YEAR
|
|
$
|
–
|
|
$
|
–
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
Non
cash transactions:
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
–
|
|
|
($316,572
|
)
|
|
($104,000
|
)
|
Due
to officers and directors
|
|
|
–
|
|
|
–
|
|
|
104,000
|
|
Issuance
of capital stock for debt
|
|
|
–
|
|
|
–
|
|
|
650,000
|
|
Convertible
debt
|
|
|
–
|
|
|
–
|
|
|
(
500,000
|
)
|
Note
payable
|
|
|
–
|
|
|
–
|
|
|
(
150,000
|
)
|
INNOFONE.COM,
INCORPORATED
Notes
to Financial Statements
June
30,
2005 and 2004
(Stated
in United States Dollars)
Innofone
was incorporated in Nevada on December 19, 1995 and is in the process of
attempting to raise capital for future operations. As Innofone does not have
any
assets, it would require new capital to fund any future ventures.
2. |
SIGNIFICANT
ACCOUNTING
POLICIES
|