UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-KSB
x
ANNUAL REPORT UNDER
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT
OF 1934
FOR
THE FISCAL YEAR ENDED JUNE 30, 2005
o
TRANSITION REPORT UNDER
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT
OF 1934
FOR
THE TRANSITION PERIOD FROM ______________
TO________________
COMMISSION
FILE NO. 0-31949
INNOFONE.COM,
INCORPORATED
(NAME
OF
SMALL BUSINESS ISSUER IN ITS CHARTER)
|
Nevada
|
98-0202313
|
|
|
(STATE
OR OTHER JURISDICTION
|
(IRS
EMPLOYER
|
|
|
OF
INCORPORATION OR ORGANIZATION)
|
IDENTIFICATION
NUMBER)
|
3470
Onley-Laytonsville Road, Suite118
Olney,
Maryland 20832
(ADDRESS
OF PRINCIPAL EXECUTIVE OFFICES)
(310)
458-3233
(ISSUER'S
TELEPHONE NUMBER)
Securities
registered under Section 12(b) of the Securities Exchange Act
of
1934,
as amended ("Exchange Act"): NONE.
Title
of
each class name of each exchange on which registered Securities
registered
under Section 12(g) of the Exchange Act:
COMMON
STOCK, PAR VALUE $0.001 PER SHARE.
Check
whether the issuer (1) filed all reports required to be filed under Section
13
or 15(d) of the Exchange Act, during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. x Yes o
No
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o No x
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of Issuer's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. x Yes o No
The
Issuer had no revenues for the fiscal year ended June 30, 2005. The aggregate
market value of the voting stock held by non-affiliates of the Issuer based
upon
the last sale price of our common stock on October 12, 2005 was approximately
$32,263,560.50. Shares of common stock held by each executive officer and
director and by certain persons who own 5% or more of the outstanding common
stock have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes.
Number
of
shares outstanding of Issuer's common stock, $0.001 par value, outstanding
on
October 11, 2005: 61,388,270.
Documents
Incorporated by Reference: NONE
Transitional
Small Business Disclosure Format (Check one): Yes o; No x
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PART
I
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1
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6
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6
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6
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PART
II
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7
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8
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12
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12
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PART
III
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13
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14
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15
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16
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17
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18
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19
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PART
I
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. 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. As a result of the stock purchase agreement, IPv6 Summit
became a wholly owned subsidiary of the Company. Prior to this acquisition,
we
operated as a holding company for companies involved in technology and financial
services.
Overview
The
Internet as we know it today is based on Internet Protocol version 4, more
commonly referred to as IPv4, a 32-year-old protocol. The IPv4 Internet is
beginning to receive a major upgrade, with a new format for packets of data
called Internet Protocol version 6, or IPv6. IPv6, sometimes called The New
Internet, presents many new business opportunities, in roughly the same manner
that the existing Internet did when it first hit the mainstream in the
mid-1990s. The first major customers for the New Internet in the US are the
Department of Defense, which in June 2003 mandated transition that would make
it
“IPv6-capable” by 2008, and the Office of Management and Budget, on behalf of
the Federal Government, which recently also mandated transition to IPv6, and
the
hundreds of large companies that supply these two entities. Many, but not all,
major technology companies have appointed IPv6 points of contact and developed
IPv6-related marketing messages, including Microsoft, Cisco, Juniper, Nokia,
Hewlett-Packard and about fifty others in the US.
In
2005,
as in 1995, the new Internet market will be seized by first movers that both
take advantage of the opportunities offered by the new technology and have
a
sound business plan to offer needed products and services to the American and
global markets. It is forecast that the New Internet will see some of the same
rapid rise as the existing Internet did between 1995 and 2000, quickly growing
from millions to billions, and potentially trillions of dollars in global
revenues impacted by the Internet. The Japanese government, for instance, which
has done a great deal of research into the upcoming IPv6 market, estimates
the
market size of IPv6-ready goods/services in the year 2010 to be 170 trillion
yen, or about $1.55 trillion in US currency
The
advantages of IPv6 over the existing protocol are significant can be summarized
as “security, mobility, and ad hoc networking.” These advantages are described
in many articles and in over 244 presentations posted at http://www.usipv6.com,
one of
our company websites. In summary, some of the major new features
are:
| a) |
A
vast increase of trillions of trillions of Internet addresses, resulting
in what will seem to be almost unlimited Internet Protocol (IP) address
availability, which will enable each customer to have many such addresses,
inexpensively - for cell phones, game consoles, home appliances,
consumer
electronics and automobiles (getting such addresses with today’s Internet
is difficult, and costly in most parts of the
world);
|
| b) |
More
secure wired and wireless communications (this is one reason the
military
has mandated this protocol, to send top secret information) in
part
because greater identity is possible with more
addresses;
|
| c) |
Mobile
wireless online access (this is more difficult to do with
IPv4);
|
| d) |
Television
and voice over the Internet, or VoIP (very difficult and expensive
to do
well with IPv4 without multicast);
|
| e) |
The
online connection of many wireless devices, such as security cameras.
Some
forecasts estimate over one trillion Internet connected devices
by 2015,
an impossibility with only IPv4 platform;
and
|
| f) |
Online
connection of smart tags such as Radio Frequency Identification (RFID),
which could enable tracking inventory and products as an essential
part of
any Enterprise Resource Program
(ERP).
|
Simply
put, one of the limitations of today’s Internet is a shortage of addresses, so
that the hardware or software equivalents of “middle men” are put into the
system to let many people use one address, not unlike the old telephone party
lines, where many people had the same “number,” and everyone could listen in.
The party line system had the advantage that a lot of people could be connected
with few switched lines, but led to problems, such as lack of security. There
was no way to assure that one person would be speaking with only one person
at
the other end. When every phone user got his/her own address, it led to many
great new capabilities - such as privacy, the ability to deliver new services
such as telefax messages to a particular person, and the ability to go mobile
with cell phones, and caller ID, which enabled people to screen their calls,
accepting only those they wanted to at that moment.
Similarly,
the New Internet will give everyone his or her personal address (or thousands
of
them, as needed), which enables the potential for “end-to-end” connectivity.
Each individual can know for certain who the specific receiver at the other
end
is, and this allows the system to check for service quality, and allows much
easier mobile use and roaming, as well as multiple layers of individual security
measures rather than today’s “Maginot Line” style firewalls or Network Address
Translation, which offer little protection once a hacker has broken through
the
protective wall. The difference between the New Internet and the existing one
is
thought by some to be as dramatic as the difference between the phones with
individual numbers that we have today and the phones with party lines of
yesteryear.
The
Company offers three related services that are relevant to the New Internet:
consulting, training and conference management. The Company has deep expertise
in these three areas. The Company hopes to expand these services at a strategic
time, when they are badly needed, and before entrenched competition arises,
as
the Company believes it inevitably will.
The
Company will offer and manage these services from two corporate offices, the
Managing Office in Santa Monica, California (at the Company’s present location),
and the Eastern Office in Northern Virginia, which will be set up in the fourth
quarter of 2005.
Recent
Developments
We
entered into a Securities Purchase Agreement (the “Agreement”) with four
accredited investors on August 31, 2005 for the sale of (i) $4,500,000 in
callable secured convertible notes (the “Notes”) and (ii) warrants to buy
1,000,000 shares of our Common Stock (“Warrants”). Pursuant to the Agreement,
the investors are obligated to provide us with an aggregate of $4,500,000 as
follows: (a) $1,500,000 was disbursed on September 1, 2005; (b) $1,500,000
will
be disbursed upon the filing of a registration statement covering shares of
our
common stock underlying the Notes and Warrants; and (c) $1,500,000 will be
disbursed upon the effectiveness of the registration statement.
Consulting
Division
Our
consulting division, directed by our VP of Consulting Services, serves major
clients that need help with IPv6, especially executives of government agencies
that suddenly must come up with plans on how to switch to the New Internet,
and
have to come up with detailed budgets and plans for doing so. The Company will
also serve the executive management of the aerospace and IT companies that
do
business with the government.
Consulting
contracts will be either directly with the end client (usually the case with
public corporations) or, in the case of certain government offices, as
subcontractor to a company that has an existing “open ordering agreement” with
such an office, often called a Systems Engineering and Technology Assistance
(SETA) contract. Companies with broad SETA contracts for many branches of
government include SAIC, Northrop Grumman, SI International, Titan/L-3 and
Lockheed Martin. Working within an ongoing SETA contract with the government
has
the benefit that contracts can be let without the time consuming task of issuing
solicitations for required work (by the clients) and generating proposals (by
the Company). The Company and its officers are very familiar with this process,
and the Company has consulted to clients both directly and as a subcontractor
to
other companies. The Company will attempt to obtain its own open ordering
agreement contracts, both via SETAs and by getting onto the Government Services
Administration (GSA) schedule; the Company anticipates that both of these will
take 1-2 years to complete.
An
important part of the consulting process will be identifying potential clients
that need training, and recommending them to the Company’s Training Division.
Likewise, the consultants will promote the Company’s conferences and other
services, as will all of its employees.
In
addition to conducting presentations and briefings, both on-site at customer
facilities and off-site at hotels and other facilities the Company may rent
space in, the consultants will also recommend various products, such as
Panasonic IPv6-enabled video cameras for security, that may be available for
sale on the Company’s website. At present and subject to change, our plan is
that the Company’s role will be purely that of a pass-through; it will not
conduct the sale, shipping or customer support of these products. Although
it
will receive a commission on sales, the Company’s main interest for the products
available on its website will be the convenience of the customer. There will
usually be several brands of an IPv6 product available on the website, so that
the Company does not show favoritism to one supplier (and perhaps lose
competitors as sponsors for its conferences).
The
consultants will price their services by job or by time. They will deliver
white
papers (technical background documents) and reports, as well as videos and
multimedia presentations. In addition to face-to-face contact with customers,
the consultants will also generate video presentations of certain basic
technical materials, and will make these available to remote customer sites.
All
consultant work by the Company for the foreseeable future will be unclassified.
The Company will investigate applying for clearances if necessary for government
work, and if the additional costs of secured offices, locking safes, etc. can
be
justified.
Headquarters
in Southern California (Santa Monica, CA)
Although
the Company maintained an office in Maryland, we anticipate moving our
headquarters to Southern California. Our California headquarters shall be
responsible for the overall management of the Company as well as marketing
communications and support materials. The Company has an agreement with its
Corporate Counsel providing that he will, at his option, become the Vice
President of Business Development by December 31, 2005. It is anticipated that
the Vice President of Business Development will manage our Santa Monica office.
Further, the Vice President of Consulting, and when hired, the Vice President
of
Business Development will identify and secure consulting opportunities within
the different customer communities, by phone calls and other communications,
attending conferences, and advertisements. This office will also house
consultants for the Southern California customer area, including military bases
and major aerospace firms such as Northrop Grumman.
Eastern
Seaboard Offices (Northern Virginia)
The
Vice
President of Consulting is establishing our Washington, DC area offices. He
will
recruit and support appropriate expert consultants for the regional customer
community, and support them with promotional and other materials. The Eastern
Office is located nearby Washington, D.C., an area that has a heavy
concentration of targeted customers, both government offices and companies
that
supply Information Technology (IT) products and services to those offices (these
companies are informally called “Beltway Bandits,” because they tend to have
very close relationships with the government, and because they are located
around the highway that circles Washington, D.C., known as the
Beltway).
This
office will support the consultant staff for the Eastern United States, and
will
be used for meetings with customers. The office suite will have a conference
room capable of holding 20-30 people, with a projector and large screen, and
high speed IPv4 and IPv6 Internet connectivity, so that IPv6 capabilities such
as Television delivered over the Internet (IPTV) and IPv6-enabled video security
cameras can be demonstrated.
Training
Division
There
are
two basic types of training that the company will conduct—executive training
(including introductions to the technology and outlines of new business
opportunities) and business management training (including project management,
and conformance of proposals with IPv6 contractual requirements) and
technologist, system administration and engineer training (with certificates
similar to those awarded for Cisco or Microsoft system mastery).
The
Company estimates that the Eastern Office will eventually support a manager
and
up to ten training personnel, and the headquarters offices in Santa Monica
will
have a manager and up to eight trainers, a combination of employees and
independent contractors. The Santa Monica Headquarters will coordinate the
generation of courseware and other training materials, especially during the
beginning of Year 1 (when basic courseware for classes has to be generated)
and
at the beginning of Year 3 (when online courseware will be generated in order
to
leverage trainers for a wider audience).
Most
training courses will be of a one-week duration, but there will also be two-day
Boot Camps (typically on weekends), and one-day and part-day trainings for
management and executives.
Conference
Management Division
Conference
Management will be conducted mainly from the Santa Monica office, with the
assistance of consultants that are local to conference locations, such as Press
Relations managers for areas such as Washington, D.C. or Bonn, Germany. In
addition to expanding the two events in Reston, VA (by adding more materials
oriented towards upcoming military programs and toward the consumer electronics
market), the Company plans to add a yearly event in California, which should
attract the many aerospace and IT companies on the West Coast, as well as the
military bases in the area.
Additional
specialized conferences planned for the US will address the market areas of
NCO
(Network Centric Operations), RFIDs, Transition to IPv6, Contracts issues,
and
Consumer Electronics; they will be held in different cities, including New
York,
Chicago, San Jose, Las Vegas, and Washington, D.C.
The
Company will likely add two overseas events, one for Asia (to be held in Japan,
Korea, or Singapore), and one for Europe, to be held in Germany (either Bonn
or
Berlin are central to NATO, and are only driving distance away for the European
branches of US military units such as USAREUR, EUCOM, USAFE, for HQ German
Armed
Forces (in Bonn), and for major US corporations such as IBM, Hewlett Packard,
CSC, etc., many of which are in the Frankfurt or Bonn-Cologne area. It may
prove
wise to hold conferences in the United Kingdom as well, but this is not as
central a location for many of the known clients at this time.
Our
Corporate Strategy
The
strategy of the Company has five thrust areas:
Conduct
and publicize the major IPv6 conference.
The
goodwill that is being built up at these conferences is key to achieving
corporate goals. The government and corporate executives who are featured as
speakers build up goodwill because they have been invited to speak. The audience
sees the Company as an authority figure and one of the positive, constructive,
community building leaders in the IPv6 area. The Company gains deep knowledge
of
the status of organizations regarding IPv6, and who needs help (such as
consulting and training), as well as what best practices for IPv6 adoption
are
being developed and working in the field. The past conferences have also
incorporated training sessions, where the Company obtained experience in what
training was necessary and desired by the community. Finally, the list of
attendees at the conferences represent a unique database for the Company of
both
executives and working-level technologists, as well as marketing and other
staffers.
Support
completion of IPv6 standard.
The
Company has a relationship to the IPv6 Association; a neutral body that could
help formulate and provide input to the issues of what “IPv6-capable” means and
how it will be implemented, with respect to the IETF and other standards bodies.
The precise formulation of standards for IPv6 implementation in specific
applications (such as use in cellphones, wireless video cameras, home appliances
or video transmission) by an internationally accepted expert group that is
not
prone to favor a particular manufacturer is important to the Company in several
ways. First, such standards must exist and be unambiguous so that the Company’s
consultants are able to clearly define to clients what specific standards they
have to get their company to meet. Second, the Training arm of the Company
must
have such standards to relate to in order to train its clients to levels that
are universally understood and accepted, and in order to issue Certificates
of
Completion after students have achieved a defined level of
expertise.
Be
a
first mover.
The
Company is starting out early in its quest to become the premier
consulting/training/conference entity in the IPv6 space, in order to hit the
“golden hour” in 2-3 years when the Company believes IPv6 demand and
applications will start to really take off in the US (in part because the
government will be transitioning to IPv6 during this time on a massive basis).
The Company is seeking to establish a dominate foothold now because the IPv6
space is not, as of yet, overly populated with competitors. The Company believes
this prime time period where the market share is ripe for the taking will be
long gone by the 2010 time period.
Build
a solid base, and look for targets of opportunity.
The
Company will build a business base of steady growth in a strategic and
profitable area, and will then acquire a target of opportunity that offers
fast
leveraged growth in a related area. Part of this effort will be the support
of
the IPv6 industry by promotion (such as Conferences) and by garnering political
support (such as Congressional Hearings). In this way, the Company will not
help
the growth of IPv6, but will have its “hand on the pulse” of the Industry, to
know what related services will soon be sought very actively.
Seek
Growth through Acquisition.
The
Company is currently in discussions with parties to make strategic acquisitions
to augment its business. Current acquisition criteria include, among other
things: revenue (preferably over $1 million), earnings, and technology and/or
content related to the Internet that could potentially be enhanced by adding
IPv6 capabilities.
Competition
The
Company has three major business divisions, all of them related to IPv6
technology: Consulting (this includes consulting to corporate executives, as
well as offering IPv6-related equipment from 3rd
parties
on the Company website), training and conference management. The only other
company in the US that specializes in IPv6 consulting at present is Native6,
Inc. of Seattle, which is essentially a small two-man company that we believe
is
not financially structured for the sort of growth that the Company anticipates
(see: http://www.native6.com).
The
chief competitors in IPv6 training are Sunset Learning (which does not
specialize in IPv6; its main business is Cisco-related training - see:
http://www.sunsetlearning.com)
and
Native6, Inc. The competitors for IPv6 conferences are: IGI (Information
Gatekeepers, Inc. - see: http://www.igigroup.com),
which
has recently started to put on small IPv6 technical conferences in the US;
the
IPv6 Forum, a loosely organized group based in Luxembourg which supports small
technical conferences put on worldwide, usually by affiliated local groups
(for
instance, its California conference is organized by IGI, mentioned above);
and,
Consul Intel, a small company that conducts a yearly IPv6 conference in Spain
(see: http://www.consulintel.es
).
Intellectual
Property
The
Company has pending trademark applications with the United States Patent and
Trademark Office (“USPTO”) for the marks “IPv6 Summit”, “New Internet” and
“North American IPv6 Summit.” The USPTO had issued an office action as of
September 27, 2005 indicating certain requests for clarification and
deficiencies and need for amendment of the subject marks. Although the Company
is confident that such trademarks as filed will be awarded there is no certainty
that the USPTO will award any of the trademarks as applied for or as may be
requested in the future.
Employees
As
of the
date of this prospectus, we have 6 employees. Of these employees, 3 serve in
management positions as full time employees.
None
of
our employees are covered by a collective bargaining agreement. We have never
experienced a work stoppage and we believe that we have satisfactory working
relations with our employees.
The
Company does not own any real estate. The company currently rents approximately
2,000 square feet of space at 1431
Ocean Ave., Suite 1500, Santa Monica, California 90401. The lease is currently
on a month-to-month basis and the Company is paying approximately $2,468 for
four offices.
We
believe that the premises leased are adequate for our current and near term
requirements.
We
are
not currently involved in any real or threatened legal proceedings.
There
were no matters submitted for stockholders' vote during the fourth quarter
of
the fiscal year 2005.
PART
II
The
Company's common stock is currently traded on the National Association of
Securities Dealers Over the Counter Bulletin Board under the symbol “INFN” ("OTC
Bulletin Board"). The common stock had previously traded on the OTC Bulletin
Board and was delisted on September 1, 1999. From September 1, 1999 until the
Company's re-listing on the OTC Bulletin Board on March 27, 2001, its common
stock traded in the over-the-counter market in the United States.
The
closing price of The Company's common stock on the OTC Bulletin Board on October
12, 2005 was $1.15 per share.
The
price
ranges of trading in the Company's common stock during the last two fiscal
years
and the subsequent interim period are as follows:
|
2005
|
High
|
Low
|
|||||
|
1/1/05
- 3/31/05
|
.85
|
.85
|
|||||
|
4/1/05
- 6/30/05
|
1.69
|
1.50
|
|||||
|
7/1/05
- 9/30/05
|
2.50
|
2.36
|
|||||
|
2004
|
|||||||
|
1/1/04
- 3/31/04
|
2.50
|
2.35
|
|||||
|
4/1/04
- 6/30/04
|
2.50
|
2.35
|
|||||
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7/1/04
- 9/30/04
|
2.50
|
2.35
|
|||||
As
of
October 7, 2005, the Company had issued and outstanding 61,388,270
shares
of
common stock, held by approximately 143 holders of record.
There
have been no cash dividends declared by the Company since its inception.
Further, there are no restrictions that would limit the Company's ability to
pay
dividends on its common equity or that would be likely to do so in the
future.
The
source of these high and low prices was the OTC Bulletin Board. These quotations
reflect inter-dealer prices, without retail mark-up, markdown or commissions
and
may not represent actual transactions. The high and low prices listed have
been
rounded up to the next highest two decimal places.
The
market price of our common stock is subject to significant fluctuations in
response to variations in our quarterly operating results, general trends in
the
market for the products we distribute, and other factors, over many of which
we
have little or no control. In addition, broad market fluctuations, as well
as
general economic, business and political conditions, may adversely affect the
market for our common stock, regardless of our actual or projected performance.
The
Company currently has no compensation plans or employee benefit plans.
Recent
Sales of Unregistered Securities
On
August
31, 2005, the Company entered into a Securities Purchase Agreement, dated as
of
August 31, 2005 (“Agreement”), by and among the Company and AJW Partners, LLC.
(“Partners”), AJW Offshore, Ltd. (“Offshore”), AJW Qualified Partners
(“Qualified”) and New Millenium Capital Partners, II, LLC (“Millenium”).
Partners, Offshore, Qualified and Millenium are collectively referred to as
the
“Purchasers”. The Agreement provides for the sale by the Company to the
Purchasers of Secured Convertible Term Notes (the “Notes”) issued by the Company
in the aggregate principal amount of Four Million Dollars ($4,500,000)
(“Principal Amount”). The Principal Amount is to be funded by the Purchasers in
three tranches ($1.5 million on September 1, 2005, $1.5 million upon filing
the
Registration Statement and $1.5 million upon effectiveness of the Registration
Statement). The offering of Notes under the Agreement was made pursuant to
Section 4(2) of the Securities Act of 1933, as amended. The Notes bear interest
at 8% per annum, unless the common stock of the Company is greater than $3.50
per share for each trading day of a month, in which event no interest is payable
during such month. The Notes are convertible into common stock of the Company
at
the lesser of $3.50 or a 30% discount to the average of the three lowest trading
prices of the common stock during the 20 trading day period prior to conversion.
In connection with the subject offering, the Company issued an aggregate of
1,000,000 warrants (333,333 upon each tranche of financing) to purchase common
stock at a price of $5.00 per share. The warrants are exercisable for a period
of five years. The conversion of the Notes are subject to an effective
Registration Statement to be filed by the Company. The Company has the right
to
redeem the Notes under certain circumstances and the right to prevent
conversions in any month where the stock price is less than $3.50 per share.
The
Notes are secured by all of the Company’s assets. In connection with the loan,
Alex Lightman the Company’s President pledged 3,000,000 shares of his common
stock as additional security. The proceeds of the offering will be used
primarily for working capital and for repayment of the promissory note issued
to
Alex Lightman, our Chief Executive Officer and President. The purchases
represented to the Company that they are “accredited investors.” No commissions
were paid in connection with the transaction.
On
October 12, 2005, in connection with our Stock Purchase Agreement dated August
8, 2005 we issued securities to Mr. Alex Lightman in exchange for 100% of the
issued and outstanding shares of IPv6 Summit, Inc. Specifically, we issued
a
promissory note to Mr. Alex Lightman, our Chief Executive Officer and President,
in the principal face amount of $1,000,000. The note bears interest at the
rate
of four percent (4%) per annum. Further, we issued Mr. Lightman 33,333,000
shares of our restricted common stock (Please see the Item 12.
Certain Relationships and Related Transactions).
Forward-Looking
Statements
The
information set forth in Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934,
as
amended, and the Private Securities Litigation Reform Act of 1995, including,
among others (i) expected changes in the Company's revenues and profitability,
(ii) prospective business opportunities and (iii) the Company's strategy for
financing its business. Forward-looking statements are statements other than
historical information or statements of current condition. Some forward-looking
statements may be identified by use of terms such as "believes", "anticipates",
"intends" or "expects". These forward-looking statements relate to the plans,
objectives and expectations of the Company for future operations. Although
the
Company believes that its expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, in light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this report should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved.
Overview
You
should read the following discussion and analysis in conjunction with the
Financial Statements in this Form 10-KSB and Notes hereto, and the other
financial data appearing elsewhere in this Form 10-KSB Report.
The
Company's revenues and results of operations could differ materially from those
projected in the forward-looking statements as a result of numerous factors,
including, but not limited to, the following: the risk of significant natural
disaster, the inability of the Company to insure against certain risks,
inflationary and deflationary conditions and cycles, currency exchange rates,
changing government regulations domestically and internationally affecting
the
New Internet, including various taxing authorities, VAT, OSHA, and general
market conditions, competition and pricing, changes in external competitive
market factors, termination of certain agreements, protocol, or inability to
enter into strategic agreements, inability to satisfy anticipated working
capital or other cash shortage requirements, changes in or developments under
domestic or foreign laws, regulations, governmental requirements or in the
IT
industry, changes in the Company's business strategy or an inability to execute
its strategy due to unanticipated changes in the market. In light of these
risks
and uncertainties, there can be no assurance that actual results, performance
or
achievements of the Company will not differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
Innofone.com,
Incorporated currently maintains an office in Maryland at 3470
Olney-Laytonsville Rd., Suite 118, Olney, MD 20832. However, the Company is
in
the process of completing the relocation of its corporate headquarters to Santa
Monica, California which the Company anticipates will have been done by the
fourth quarter of 2005.
The
Company is currently reviewing and implementing new disclosure controls and
procedures to ensure that they fully comply with the new Securities Exchange
Act
Rules 13a-15 and 15d-15.
The
Company currently operates one wholly owned subsidiary, IPv6 Summit, Inc.,
based
in Santa Monica, California and anticipates seeking certain other strategic
acquisitions. The Company also anticipates organizing an additional subsidiary
to be located in Virginia, which will conduct trainings, workshops, and provide
consulting services.
Results
of Operations
As
reflected in the Company's statement of operations, the Company has recorded
some sales for the year from conference attendees, sponsorships, and consulting.
However, giving effect of the Company’s acquisition of IPv6 Summit, Inc., the
Company anticipates recognizing revenue of IPv6 Summit, Inc. of approximately
$1,605,506 year to date. The Company anticipates that revenue growth through
year-end 2005 of IPv6 as a subsidiary should yield approximately $200,000 in
total revenues.
Liquidity
and Capital Resources
The
Company’s primary needs for liquidity and capital resources are the funding of
salaries and other administrative expenses related to the management of the
Company.
We
entered into a Securities Purchase Agreement (the “Agreement”) with four
accredited investors on August 31, 2005 for the sale of (i) $4,500,000 in
callable secured convertible notes (the “Notes”) and (ii) warrants to buy
1,000,000 shares of our Common Stock (the “Warrants”). Pursuant to the
Agreement, the investors are obligated to provide us with an aggregate of
$4,500,000 as follows: (a) $1,500,000 was disbursed on September 1, 2005; (b)
$1,500,000 will be disbursed upon the filing of a registration statement
covering the shares of common stock underlying the Notes and Warrants; and
(c)
$1,500,000 will be disbursed upon the effectiveness of the registration
statement.
The
cash
received pursuant to the Agreement to date is sufficient to sustain our
operations for 12 months.
In
the
event that the Company receives the full amount under the Agreement, such funds
will sustain our operations for 24 months. The Company may be required to seek
additional financing regardless of the amount of funds received pursuant to
the
Agreement.
Recent
Accounting Pronouncements
In
April
2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities.” The Statement amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts entered into or modified after June 30, 2003. The
guidance should be applied prospectively. The provisions of this Statement
that
relate to SFAS 133 Implementation Issues that have been effective for fiscal
quarters that began prior to June 15, 2003, should continue to be applied in
accordance with respective effective dates. In addition, certain provisions
relating to forward purchases or sales of when-issued securities or other
securities that do not yet exist, should be applied to existing contracts as
well as new contracts entered into after June 30, 2003. The adoption of SFAS
No.
149 is not expected to have an impact on the Company's financial statements.
In
May
2003, the FASB issued Statement of Accounting Standards No. 150 "Accounting
for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity" (SFAS No. 150). SFAS No. 150 establishes standards for classification
and measurement in the statement of financial position of certain financial
instruments with characteristics of both liabilities and equity. It requires
classification of a financial instrument that is within its scope as a liability
(or an asset in some circumstances). SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June
15,
2003. We have not yet determined the impact, if any, of the adoption of SFAS
on
its financial position or results of operations.
In
May
2003, the consensus on EITF Issue No. 01-08, "Determining Whether an Arrangement
Contains a Lease," was issued. The guidance in the consensus applies to the
purchase or sale of goods and services under various types of contracts,
including outsourcing arrangements. Based on the criteria in the consensus,
both
parties to an arrangement are required to determine whether the arrangement
includes a lease within the scope of SFAS No. 13, "Accounting for Leases.” The
new requirement applies prospectively to new or modified arrangements for
reporting periods beginning after May 28, 2003. Accordingly, as of August 1,
2003, the Company accounted for new or modified arrangements based on this
guidance. Adoption of this standard did not have an impact on our financial
statements.
In
December 2003, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities"
which was originally issued in January 2003. FIN 46 or revised provides guidance
on the consolidation of certain entities when control exists through other
entities created after January 31, 2003. The Company does not hold a variable
interest in any enterprise. Accordingly, we do not expect the provisions of
FIN
46 to have a material effect on future interim or annual financial
statements.
On
December 18, 2003 the SEC issued Staff Accounting Bulletin No. 104, Revenue
Recognition ("SAB 104"), which supersedes SAB 101, Revenue Recognition in
Financial Statements. SAB 104's primary purpose is to rescind accounting
guidance contained in SAB 101 related to multiple element revenue arrangements,
which was superseded as a result of the issuance of EITF 00-21, Accounting
for
Revenue Arrangements with Multiple Deliverables. The adoption of SAB 104 did
not
have a material impact on our financial position or results of operations.
In
December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment,
which is an amendment to SFAS No. 123, Accounting for Stock-Based Compensation
and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees.
This new standard eliminates the ability to account for share-based compensation
transactions using Accounting Principles Board (APB) No. 25, Accounting for
Stock Issued to Employees (APB 25) and requires such transactions to be
accounted for using a fair-valued-based method, with the resulting cost
recognized in the Company's financial statements. This new standard is effective
for annual periods beginning after June 15, 2005. The Company has not awarded
or
granted any share-based compensation to date and, therefore, the adoption of
this standard is not expected to have any effect on the Company's financial
position or results of operations until such time as share-based compensation
is
granted.
In
December 2004, the FASB issued SFAS No. 153, Exchange of Non-monetary Assets.
SFAS No. 153 amends APB Opinion No. 29, Accounting for Non-monetary
Transactions, to eliminate the exception for non-monetary exchanges of similar
productive assets. The Company will be required to apply this statement to
non-monetary exchanges after December 31, 2005. The adoption of this standard
is
not expected to have a material effect on the Company's financial position
or
results of operations.
The
Consolidated Financial Statements are included after the Exhibit Index.
|
Page
|
|
|
Number
|
|
| IPV6 SUMMIT, INC. FINANCIAL STATEMENTS | |
|
Report
of Independent Certified Public Accounting Firm
|
F-1
|
|
Balance
Sheets as of June 30, 2005 and 2004
|
F-2
|
|
Statements
of Operations for the Year Ended June 30, 2005, 2004 and
2003
|
F-3
|
|
Statements
of Shareholders' Deficit for the Year Ended June 30, 2005, 2004 and
2003
|
F-4
|
|
Statements
of Cash Flows for the Year Ended June 30, 2005, 2004 and
2003
|
F-5
|
|
Notes
to the Consolidated Financial Statements
|
F-7-15
|
INNOFONE.COM,
INCORPORATED
|
INDEPENDENT
AUDITORS’ REPORT
|
F-16
|
|
FINANCIAL
STATEMENTS
|
|
|
Balance
Sheet - Statement I
|
F-17
|
|
Statement
of Shareholders’ Deficit - Statement II
|
F-18
|
|
Statement
of Operations - Statement III
|
F-19
|
|
Statement
of Cash Flows - Statement IV
|
F-20
|
|
NOTES
TO FINANCIAL STATEMENTS
|
F-21
|
None.
The
Company's principal executive officer and principal financial officer, based
on
his evaluation of the Company's disclosure controls and procedures (as defined
in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934, as
amended) as of June 30, 2005 have concluded that the Company's disclosure
controls and procedures are adequate and effective to ensure that material
information relating to the Company are recorded, processed, summarized and
reported within the time periods in which this Annual Report has been prepared.
The
Company's principal executive officer, who is also our principal financial
officer, has concluded that there were no significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls for the year ended June 30, 2005, the date of his most recent
evaluation of such controls, and that there were no significant deficiencies
or
material weaknesses in the Company's internal controls.
PART
III
The
following table sets forth the name, age and position of each of the members
of
our board of directors, executive officers and promoters as of August 8,
2005:
|
Name
|
Age
|
Position
|
||
|
Alex
Lightman
|
43
|
Chief
Executive Officer, President, Director
|
||
|
Peter
Maddocks
|
49
|
Chief
Financial Officer and Director
|
||
|
Dale
Geesey
|
36
|
Vice
President of Consulting
|
||
|
Paul
Shephard
|
50
|
Secretary
|
The
principal occupations and brief summary of the background of each executive
officer and director of the Company is as follows:
Mr.
Alex
Lightman has been our President, CEO and a director since
August 2005. From June 2003 to July 2005 he was the founding CEO and Chairman
of
IPv6 Summit, Inc., the leading organizer of international IPv6 events and
consultants to government and industry on IPv6 applications, training, and
promotion. From May 1999 to Present Mr. Lightman has been the CEO of Charmed
Technology, (www.charmed.com)
He is
the founding director of The 4G Society and the first Cal- (IT)2 Scholar at
the
California Institute for Telecommunications and Information Technology, a joint
program of UCSD and UCI (www.calit2.net).
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 Brave
New Unwired World
(Wiley,
2002) and a 1983 graduate of the Massachusetts Institute of Technology. He
has
attended graduate school at the Kennedy School of Government (Harvard
University) and the University of Phoenix.
Mr.
Peter
Maddocks has been a Director and Chief Financial Officer since August 2005.
From
October 2001 to January 2004, Mr. Maddocks was a Management Consultant of Abbey
National Bank Italy. From May 1999 to September 2001, Mr. Maddocks was a
Management Consultant of Standard Chartered Grindlays Private Banking Group.
Mr.
Maddocks was a Vice President for leading financial services companies with
20+
years experience in finance, planning and control roles in the Retail, Corporate
and Private Banking industry segments (Citi, ANZ, Abbey). Mr. Maddocks has
significantly participated in the establishment and growth of new and re
engineered global businesses and functions with various banking groups.
Responsibilities have included heading the Global Financial Control function
for
a major new business launch, Regional Financial Controller SE Europe, design
and
implementation of financial and non-financial management control systems, budget
management and development of policies and procedures. Has maintained constant
interaction with Senior Executives (to CEO level) via participation in various
committees and matrix reporting structures. Maddocks has operated both in senior
management roles and as external consultant. He is a Chartered Accountant and
speaks fluent Italian. He is a resident of Kent, England.
Mr.
Dale
Geesey has been the Vice President of Consulting since September 2005. From
2004
to August 2005, Mr. Geesey was the Director of Army IPv6 Programs of SI
International, Inc. Dale
has
worked closely with the Department of Defense (“DoD”) in
their
IPv6 transition activities and recently supported the development of the DoD’s
IPv6 Transition Plan and response to congressional inquiries regarding the
DoD’s
transition to IPv6. He directly supported the DoD IPv6 Transition Office and
the
Army’s IPv6 transition team in the development of their overall IPv6 transition
strategy, program planning and technical solutions. Mr. Geesey has been a
participant of several DoD IPv6 technical working groups in the areas of network
infrastructure, Information Assurance and Testing. From
2003
to 2004, Mr. Geesey was the Director of Government Markets of Intrado,
Inc. From
2002
to 2003, Mr. Geesey was the President and COO of Auspex Technologies, LLC.
From
2000 to 2002, Mr. Geesey was the Senior Director, Product
Management/Engineering, Cambrian Communications, LLC. Mr. Geesey holds a
Bachelor’s degree in Electrical Engineering from Old Dominion University, a
Master’s degree in Electrical Engineering from George Mason University and a
Masters of Business Administration from California Coast
University.
Mr.
Paul
Shepherd has been our Secretary since August 2005. From June 2000 to
August, 2005 Mr. Shepherd has been a successful private marketing consultant
for
numerous private companies and individuals. Mr. Shepherd holds
an
Associate in Arts in Business Administration at Santa Monica
College.
The
following table sets forth the aggregate cash compensation paid by the Company
to: (i) its Chief Executive Officer, Chairman and Chief Financial Officer;
and
(ii) its most highly compensated officers whose cash compensation exceeded
$100,000 for services performed from August 8, 2005, the date we completed
our
acquisition of IPv6 Summit, through October 11, 2005.
|
ANNUAL
COMPENSATION*
|
LONG
TERM COMPENSATION*
|
||||||||||||||||||||||||
|
Awards
|
Payouts
|
||||||||||||||||||||||||
|
Restricted
|
Securities
|
||||||||||||||||||||||||
|
Other
Annual
|
Stock
|
Underlying
|
All
Other
|
||||||||||||||||||||||
|
Compensation
|
Award(s)
|
Options
|
LTIP
|
Compensation
|
|||||||||||||||||||||
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
($)
|
($)
|
SARs(#)
|
Payouts
($)
|
($)
|
|||||||||||||||||
|
Alex
Lightman (1)
|
2005
|
$
|
36,759.61
|
||||||||||||||||||||||
|
Peter
Maddocks (2)
|
2005
|
--
|
$
|
25,000(2
|
)
|
||||||||||||||||||||
|
Dale
Geesey (3)
|
2005
|
$
|
3,359.10
|
200,000(3
|
)
|
||||||||||||||||||||
|
Paul
Shephard
|
2005
|
--
|
|||||||||||||||||||||||
| * |
The
Company hired its executive officers on or about August 8, 2005 as
a
result of the Stock Purchase Agreement. Accordingly, none of the
executive
officers have earned full year annual compensation or long tem
compensation. This table reflects annual compensation paid to the
executive officers from August 8, 2005 to
date.
|
| (1) |
Mr.
Lightman is expected to earn an annual salary of approximately $400,000
during the next fiscal year.
|
| (2) |
Mr.
Maddocks has been paid a one-time advance payment of $25,000 for
his board
representation for the next fiscal year.
|
| (3) |
Mr.
Geesey is expected to earn an annual salary of $150,000 during the
next
fiscal year. Pursuant to Mr. Geesey’s employment agreement, he is eligible
to receive options to purchase 200,000 shares of the Company’s restricted
common stock commencing on the effective date that the Company initiates
any Stock Option Plan.
|
COMPENSATION
PLANS
We
do not
have any option, annuity, retirement, pension or deferred compensation plan
or
other arrangements under which an executive officer is entitled to participate
without similar participation by other employees.
DIRECTOR
COMPENSATION
We
do not
have any agreement to compensate our directors at this time, however we have
paid a one-time advance payment of $25,000 to Mr. Maddocks for his board
representation for the next fiscal year.
EMPLOYMENT
AGREEMENTS
On
September 22, 2005, the Company entered into an employment agreement with Dale
Geesey, our Vice President of Consulting. The term of the agreement is for
one
year and provides for an annual base salary of $150,000 with certain performance
based target bonuses. The agreement also provides for the issuance of options
to
purchase 200,000 shares of restricted common stock. The options vest over a
period of three years.
On
September 6, 2005, the Company entered into an employment agreement with Gerard
Casale, our Corporate Counsel. The agreement provides for an initial part time
term during which Mr. Casale shall be our Corporate General Counsel with an
annual salary of $142,500 and shall be issued 50,000 shares of restricted common
stock. Subject to Mr. Casale’s agreement, on or about December 1, 2005, Mr.
Casale may be become our Vice President of Business and Legal Affairs with
an
annual salary of $285,000 and shall be issued 100,000 shares of our restricted
common stock.
On
October 11, 2005, the Company entered into an employment agreement with Leah
Thompson, our Manager of Administrative Operations. The agreement provides
for a
one-year term with an annual base salary of $80,000 with certain
performance-based target bonuses. The agreement also provides for the issuance
of options to purchase 100,000 shares of restricted common stock. The options
vest over a period of two years.
The
Company currently has an understanding in principle with its, Alex Lightman
our
Chief Executive Officer and President, providing for terms of his employment.
Specifically, the Company and Mr. Lightman have agreed to a five-year employment
agreement with an annual salary of $400,000. The Company anticipates entering
a
formal written agreement with Mr. Lightman in the fourth quarter of
2005.
The
following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock by each person or group that is known
by
the Company to be the beneficial owner of more than five percent of its
outstanding Common Stock, each director of the Company, each person named in
the
Summary Compensation Table, and all directors and executive officers of the
Company as a group as of October 7, 2005. Unless otherwise indicated, the
company believes that the persons named in the table below, based on information
furnished by such owners, have sole voting and investment power with respect
to
the Common Stock beneficially owned by them, where applicable.
As
of
October 7, 2005, there were 61,388,270 shares of common stock issued and
outstanding
|
Amount
and Nature
|
||||||||||
|
of
Beneficial
|
||||||||||
|
Ownership
of Class
|
Percentage
of
|
|||||||||
|
Name/Address
of Beneficial Owner
|
Position
with Company
|
A
Common Stock (1)
|
Securities(1)
|
|||||||
|
Alexander
Lightman(2)/*
|
President
|
6,333,000
|
10.32
|
%
|
||||||
|
Peter
Maddocks*
|
CFO
|
0
|
0
|
|||||||
|
Dale
Geesey*
|
VP
of Consulting
|
0
|
0
|
|||||||
|
Paul
Shephard
|
Secretary
|
0
|
0
|
|||||||
|
Alliance
Housing Partners(3)
|
||||||||||
|
c/o
17 W Jefferson St., Suite 1
|
||||||||||
|
Rockville,
MD 20850
|
--
|
3,750,000
|
6.11
|
%
|
||||||
|
Equitocracy
Trust(2)
|
||||||||||
|
c/o
1431 Ocean Avenue, Suite 419
|
||||||||||
|
Santa
Monica, CA 90401
|
--
|
27,000,000
|
43.98
|
%
|
||||||
|
Frederic
Richardson(3)
|
--
|
17,180,000
|
27.99
|
%
|
||||||
|
All
executive officers and Directors as a group (4 persons)
|
54.3
|
%
|
||||||||
| * |
Address
of all holders is c/o Innofone.com, Incorporated, 3470 Olney-Laytonsville
Road, Suite 118, Olney, Maryland 20832.
|
| (1) |
Pursuant
to the rules of the Securities and Exchange Commission, a person
is deemed
to "beneficially own" shares of common stock over which the person
has or
shares investment or voting power, or has the right to acquire such
power
within 60 days. The percentage of common stock owned is calculated
based
on the number of shares of common stock outstanding, plus in the
case of
each person the number of shares of common stock issuable only to
such
person upon the exercise of options or warrants and the conversion
of
convertible debt securities
|
| (2) |
Mr.
Alex Lightman, our Chief Executive Officer and President, is the
trustee
of the Equitocracy Trust and is deemed to be the beneficial owner
of the
shares owned by that entity.
|
| (3) |
Mr.
Frederic Richardson was the President and CEO of the Company prior
to
consummation of our Stock Purchase Agreement entered into on August
8,
2005. Mr. Richardson does not hold any current positions with the
Company.
We have been advised that on August 19, 2005, Mr. Richardson entered
into
two Stock Purchase Agreements, each with Abbey International Holdings,
Ltd. providing for the sale to Abbey of an aggregate of 20,500,000
shares
of our common stock. Approximately 17,000,000 shares of common stock
were
to be sold by Mr. Richardson and the remaining 3,500,000 shares of
common
stock were to be sold by Alliance Housing Partners, an entity that
Mr.
Richardson controls. The sales were contingent upon certain conditions.
To
date, the transfers have not been reflected on the Company’s books by its
transfer agent.
|
On
August
8, 2005, we entered into a stock purchase agreement with Mr. Alex Lightman
to
purchase the total issued and outstanding shares of IPv6 Summit Inc., an entity
engaged in developing new technology referred to as Internet Protocol version
6.
Pursuant to the agreement, we agreed to pay Mr. Lightman $1,000,000 in the
form
of a promissory note and issue to him approximately 33,333,000 shares of our
restricted common stock in exchange for 100% of the issued and outstanding
shares of IPv6. As a result of the stock purchase agreement, IPv6 Summit Inc.
became a wholly owned subsidiary of the Company and Mr. Lightman became our
President and Chief Executive Officer. Prior to this acquisition, we operated
as
a holding company for companies involved in technology and financial
services.
On
August
31, 2005, Mr. Lightman pledged 3 million shares to support obligations under
the
Notes issued to various investors on August 31, 2005.
On
October 12, 2005, in connection with our Stock Purchase Agreement dated August
8, 2005, we issued a promissory note to Mr. Alex Lightman, our Chief Executive
Officer and President, in the principal face amount of $1,000,000. The note
bears interest at the rate of four percent (4%) per annum. The Company has
agreed to pay Mr. Lightman a sum equal to the Note plus interest over a twelve
(12) month period from date of inception with payments commencing no later
than
five (5) days subsequent to receipt by the Company of each and every investment
installment payment made under those certain investment agreements including
that certain Securities Purchase Agreement, Callable Secured Convertible Note
and Stock Purchase Warrant (“Investor Agreements”) entered by and between the
Company and NIR Group, AJW Qualified Partners, LLC, AJW Offshore, Ltd., New
Millenium Capital Partners II, LLC (“Investors”) on or about August 31, 2005,
Each such installment payment shall equal $333,333.33 representing each of
such
three (3) payments for a total aggregate payment of $1,000,000. The date upon
which all principal and interest is due hereunder shall be October 12, 2006,
and
unless paid in full prior to July 1, 2006, the Company shall have paid Mr.
Lightman the entire unpaid balance of the Note in full, including all accrued
unpaid interest by such date.
COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Under
the
securities laws of the United States, our directors, our executive (and certain
other) officers, and any persons holding ten percent or more of our shares
of
common stock must report on their ownership of our shares of common stock and
any changes in that ownership to the Securities and Exchange Commission.
Specific due dates for these reports have been established. During the fiscal
year ended June 30, 2005, based solely on a review of filings made with the
SEC,
we believe that all reports required to be filed by Section 16(a) were filed
on
a timely basis. The Company’s current officers and directors are currently
working to make all appropriate filings in order to be compliant with Section
16(a)
All
references to the Company's Forms 8-K, 10-K, 10-QSB and 10-KSB include reference
to File No. 0-31949
|
(a) Exhibits
|
|
Exhibit
No.
|
Document
|
|
|
3.1
|
Articles
of Incorporation of Innofone.com, Incorporated, as
amended*
|
|
|
3.2
|
Bylaw,
as amended*
|
|
|
10.1
|
Employment
Agreement between the Company and Gerard Casale, Jr., dated September
6,
2005*
|
|
|
10.2
|
Employment
Agreement between the Company and Frederic D. Geesey, dated September
22,
2005*
|
|
|
10.3
|
Stock
Purchase Agreement between the Company and Alex Lightman, dated
August 8,
2005 (incorporated by reference to Exhibit 10.1 filed with the
Company's
Form 8-K on August 19, 2005 (“August 8-K”)).
|
|
|
10.4
|
Investment
Agreement between the Company and Alex Lightman, dated August 8,
2005
(incorporated by reference to Exhibit 10.2 filed with the Company’s August
8-K).
|
|
|
10.5
|
Form
of Callable Secured Convertible Note, dated August August 31, 2005
(incorporated by reference to Exhibit 10.1 filed with the Company's
Form
8-K on September 6, 2005 (“September 8-k”)).
|
|
|
10.6
|
Stock
Purchase Agreement between the Company and various investors, dated
August
31, 2005 (incorporated by reference to Exhibit 10.2 filed with
the
Company's September 8-K).
|
|
|
10.7
|
Security
Agreement between the Company and certain secured parties, dated
August
31, 2005 (incorporated by reference to Exhibit 10.3 filed with
the
Company's September 8-K).
|
|
|
10.8
|
Guaranty
and Pledge Agreement between the Company, Alex Lightman and certain
Pledgees, dated August 31, 2005 (incorporated by reference to Exhibit
10.4
filed with the Company's September 8-k).
|
|
|
10.9
|
Form
of Stock Purchase Warrant issued by the Company to various investors,
dated August 31, 2005 (incorporated by reference to Exhibit 10.4
filed
with the Company's September 8-k).
|
|
|
10.10
|
Commercial
Lease between the Company and Barrington Pacific, LLC, dated October
7,
2003*
|
|
|
10.11
|
Form
of Promissory Note, dated October 12, 2005 issued to Alex Lightman*
|
|
|
21
|
List
of Company's subsidiaries*
|
|
|
23.1
|
Consents
of Experts and Counsel*
|
|
|
23.2
|
Consents
of Experts and Counsel*
|
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification of the Chief Executive
Officer*
|
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification of the Chief Financial
Officer*
|
|
|
32.1
|
Section
1350 Certification *
|
|
| * |
Filed
herewith.
|
The
Company paid audit fees, including tax and related fees, of approximately $7,000
to Denzinger and Hochman for its June 30, 2005 audit.
The
Company paid the following fees to De Joya Griffith & Company LLC in
connection with the audit of IPv6 Summit, its wholly owned
subsidiary:
|
June
30, 2005
|
||||
|
Audit
Fees
|
$
|
15,000
|
||
|
Tax
Fees
|
$
|
1,000
|
||
|
Audit
Related Fees
|
$ | 0 | ||
|
Total
Fees
|
$
|
16,000
|
||
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Company has duly caused this amended report to be signed
on its behalf by the undersigned, thereunto duly authorized on the
14th
day of
October 2005.
| INNOFONE.COM, INCORPORATED | ||
| |
|
|
| By: | /s/ Alex Lightman | |
|
|
||
| Alex Lightman, Chief Executive Officer and President | ||
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
amended report has been signed by the following persons in the capacities and
on
the dates indicated.
|
Signature
|
Title
|
Date
|
||
|
/s/Alex
Lightman
|
Chief
Executive Officer, President and
Director
|
October
14, 2005
|
||
|
Alex
Lightman
|
||||
|
/s/
Peter Maddocks
|
Chief
Financial Officer and
Director
|
October
14, 2005
|
||
|
Peter
Maddocks
|
||||
|
/s/Federic
D. Geesey
|
Vice-President
of Consulting
|
October
14, 2005
|
||
|
Federic
D. Geesey
|
INDEX
TO FINANCIAL STATEMENTS
|
Page
|
|
|
Number
|
|
| IPV6 SUMMIT, INC. FINANCIAL STATEMENTS | |
|
F-2
|
|
|
F-3
|
|
|
F-4
|
|
|
F-5
|
|
|
F-6
|
|
|
F-7-9
|
|
| INNOFONE.COM, INCORPORATED | |
|
F-10
|
|
|
F-11
|
|
|
F-12
|
|
|
F-13
|
|
|
F-14
|
|
|
F-15
|
De
Joya Griffith & Company, LLC
Certified
Public Accountants & Consultants
2425
W. Horizon Ridge Parkway
Henderson,
Nevada 89052
To
the
Board of Directors
IPv6
Summit, Inc.
Santa
Monica, California
We
have
audited the balance sheet of IPv6 Summit, Inc. (the “Company”) as of June 30,
2005 and the related statements of operations, stockholder's equity and cash
flows for the year ended June 30, 2005 and for the period from July 9, 2003
(Date of Inception) through June 30, 2004. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We
conducted our audit in accordance with the auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosure in the financial statements.
An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In
our
opinion, the financial statement referred to above presently fairly, in all
material respects, the financial position of IPv6 Summit, Inc. as of June 30,
2005 and the results of their operations and their cash flows for the years
ended June 30, 2005 and 2004, in conformity with accounting principles generally
accepted in the United States.
/s/
De
Joya Griffith & Company, LLC
De
Joya
Griffith and Company, LLC
Henderson,
Nevada
September
9, 2005
|
June
30, 2005
|
||||
|
ASSETS
|
||||
|
Cash
|
$
|
17,840
|
||
|
Accounts
receivable
|
46,980
|
|||
|
Officers'
advances
|
12,729
|
|||
|
Total
current assets
|
77,550
|
|||
|
Fixed
assets, net
|
4,840
|
|||
|
Total
assets
|
$
|
82,389
|
||
|
LIABILITIES
AND STOCKHOLDER'S EQUITY
|
||||
|
Current
liabilities
|
||||
|
Accounts
payable and accrued liabilities
|
53,848
|
|||
|
Customer
deposits
|
--
|
|||
|
Other
current liabilities
|
6,934
|
|||
|
Total
current liabilities
|
60,782
|
|||
|
Long-term
liabilities
|
--
|
|||
|
Total
liabilities
|
60,782
|
|||
|
Commitments
and contingencies
|
--
|
|||
|
Stockholder's
equity
|
||||
|
Common
stock; $0.001 par value; 2,000,000 shares authorized, issued and
outstanding
|
2,000
|
|||
|
Additional
paid-in capital
|
--
|
|||
|
Retained
earnings
|
19,607
|
|||
|
Total
stockholder's equity
|
21,607
|
|||
|
Total
liabilities and stockholder's equity
|
$
|
82,389
|
||
|
For
the period from
|
|||||||
|
July
9, 2003
|
|||||||
|
(Date
of Inception)
|
|||||||
|
For
the year ended
|
through
|
||||||
|
June
30, 2005
|
June
30, 2004
|
||||||
|
Revenues
|
$
|
545,588
|
$
|
553,287
|
|||
|
Cost
of revenues
|
118,164
|
165,686
|
|||||
|
Gross
profit
|
427,424
|
387,601
|
|||||
|
Operating
expenses
|
|||||||
|
Depreciation
and amortization
|
2,941
|
1,302
|
|||||
|
Selling
general and administrative
|
466,913
|
311,225
|
|||||
|
Total
operating expenses
|
469,854
|
312,527
|
|||||
|
Income
(loss) from operations
|
(42,431
|
)
|
75,074
|
||||
|
Other
income (expense)
|
|||||||
|
Interest
income
|
3
|
2
|
|||||
|
Loss
on Disposal of Asset
|
(2,756
|
)
|
--
|
||||
|
Total
other income (expense)
|
(2,753
|
)
|
2
|
||||
|
Net
income (loss) before provision for income taxes
|
(45,184
|
)
|
75,076
|
||||
|
Provision
for income taxes
|
(10,285
|
)
|
--
|
||||
|
Net
income (loss)
|
$
|
(55,469
|
)
|
$
|
75,076
|
||
|
Net
income (loss) per common share - basic and diluted
|
$
|
(0.03
|
)
|
$
|
0.04
|
||
|
Weighted
average common shares outstanding - basic and
diluted
|
2,000,000
|
2,000,000
|
|||||
|
|
Total
|
|||||||||||||||
|
Common
Stock
|
Additional
|
Retained
|
Stockholders'
|
|||||||||||||
|
Shares
|
Amount
|
Paid-in
Capital
|
Earnings
|
Equity
|
||||||||||||
|
Balance,
July 9, 2003 (Date of Inception)
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
|||||||
|
Issuance
of stock for services to the founding shareholder, $0.001 per
share
|
2,000,000
|
2,000
|
--
|
--
|
2,000
|
|||||||||||
|
Net
income (loss)
|
--
|
--
|
--
|
75,076
|
75,076
|
|||||||||||
|
Balance,
June 30, 2004
|
2,000,000
|
2,000
|
--
|
75,076
|
77,076
|
|||||||||||
|
Net
income (loss)
|
--
|
--
|
--
|
(55,469
|
)
|
(55,469
|
)
|
|||||||||
|
Balance,
June 30, 2005
|
2,000,000
|
2,000
|
--
|
19,607
|
21,607
|
|||||||||||
IPV6
SUMMIT, INC.
|
|
For
the year ended
June 30, 2005 |
For
the period
July
9, 2003
(Date of Inception) through June
30, 2004
|
|||||
|
Cash
flows from operating activities:
|
|||||||
|
Net
income (loss)
|
$
|
(55,469
|
)
|
$
|
75,076
|
|
|
|
Adjustments
to reconcile net income (loss) to net cash used by operating
activities:
|
|||||||
|
Depreciation
and amortization
|
2,941
|
1,302
|
|||||
|
Loss
on disposal of fixed assets
|
2,756
|
--
|
|||||
|
Stock
issued for services
|
--
|
||||||
|
Changes
in operating assets and liabilities:
|
|||||||
|
Change
in accounts receivable
|
69,548
|
(116,529
|
)
|
||||
|
Change
in officers' advances
|
(12,729
|
)
|
--
|
||||
|
Change
in prepaid expenses
|
3,050
|
(3,050
|
|||||
|
Change
in other assets
|
11,810
|
(11,810
|
|||||
|
Change
in accounts payable and accrued liabilities
|
(29,448
|
)
|
83,296
|
||||
|
Change
in advances from related parties
|
(39,139
|
)
|
39,139
|
||||
|
Change
in accrued income taxes
|
6,934
|
--
|
|||||
|
Net
cash provided (used) by operating activities
|
(39,745
|
)
|
69,425
|
||||
|
Cash
flows from investing activities:
|
|||||||
|
Purchase
of fixed assets
|
(2,165
|
)
|
(9,675
|
)
|
|||
|
Net
cash used by investing activities
|
(2,165
|
)
|
(9,675
|
)
|
|||
|
Cash
flows from financing activities:
|
|||||||
|
Proceeds
from issuance of common stock
|
--
|
--
|
|||||
|
Net
cash provided by financing activities
|
--
|
--
|
|||||
|
Net
change in cash
|
(41,910
|
)
|
59,750
|
||||
|
Cash,
beginning of period
|
59,750
|
--
|
|||||
|
Cash,
end of period
|
$
|
17,840
|
$
|
59,750
|
|
||
|
Supplemental
disclosure of cash flow information:
|
|||||||
|
Cash
paid for interest
|
$
|
--
|
$
|
--
|
|
||
|
Schedule
of non-cash financing and investing activities:
|
|||||||
|
Issuance
of 2,000,000 shares of common stock for services
|
$
|
--
|
$
|
2,000
|
|
IPV6
SUMMIT, INC. FINANCIAL
STATEMENTS
| 1. |
DESCRIPTION
OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
Description
of business
- IPv6
Summit, Inc., a Nevada corporation (hereinafter referred to as the “Company”)
located in Santa Monica, California was incorporated on July 9, 2003. The
Company is among the leading organizers of IPv6 conference events in the world.
IPv6 stands for Internet Protocol version 6 and is the successor protocol to
the
current Internet, Internet Protocol version 4, which was introduced in June
1973
and turned 32 years old this summer. IPv4 is a 32-bit protocol, while IPv6
is a
128-bit protocol allowing for 3.4 x 10 to the 38th power new IP addresses,
and
thus allowing for a vast increase in connecting people, places, and things
to
the Internet.
The
Company derives revenue from Sponsorships, Conference Attendee Fees, Training
Fees, and Consulting to Governments. New sources of revenue during the 2005-2007
will be derived from Consulting to Corporations, Software Revenue, Subscription
Revenue and Information Revenue. Subscription revenue will be derived from
offering broadband IPv6 wireline and wireless services, as an IPv6-centric
ISP
and WISP, including Voice over IPv6 and Video over IPv6. Information Revenue
will be derived from setting up one of the largest IPv6 information portals,
building on the existing multiple gigabytes of IPv6 related information on
http://www.usipv6.com
Year-end
- The
Company’s year-end is June 30.
Use
of
estimates
- The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Revenue
and expense recognition
-
The
Company recognizes revenue from services provided once all of the following
criteria for revenue recognition have been met: 1) pervasive evidence
of an
agreement exists, 2) the services have been delivered, 3) the
price is
fixed and determinable and not subject to refund or adjustment and
4) collection of the amounts due is reasonably. Overhead and administrative
costs are recognized when incurred and direct event costs
and
expenses are recognized during the period in which the event they are associated
with occurs.
Inventory-
The
Company has no inventory as of June 30, 2005.
Fixed
assets
- Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
provided principally on the straight-line method over the estimated useful
lives
of the assets, which are generally 3 years. The cost of repairs and maintenance
is charged to expense as incurred. Expenditures for property betterments and
renewals are capitalized. Upon sale or other disposition of a depreciable asset,
cost and accumulated depreciation are removed from the accounts and any gain
or
loss is reflected in other income (expense).
The
Company periodically evaluates whether events and circumstances have occurred
that may warrant revision of the estimated useful life of fixed assets or
whether the remaining balance of fixed assets should be evaluated for possible
impairment. The Company uses an estimate of the related undiscounted cash flows
over the remaining life of the fixed assets in measuring their
recoverability.
Goodwill
and intangible assets
-
In
July 2001, the Financial Accounting Standards Board issued Statement
of
Financial Accounting Standards (SFAS) No. 141, “Business Combinations” and No.
142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method. Under SFAS No. 142, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed annually (or more
frequently if impairment indicators arise) for impairment.
According
to this statement, goodwill and intangible assets with indefinite lives are
no
longer subject to amortization, but rather an annual assessment of impairment
by
applying a fair-value based test. Fair value for goodwill is based on discounted
cash flows, market multiples and/or appraised values as appropriate. Under
SFAS
No. 142, the carrying value of assets are calculated at the lowest level for
which there are identifiable cash flows.
The
Company has no Goodwill or Intangible Assets and thus the Company did not record
any amortization expense related to goodwill or intangibles for the years ended
June 30, 2005 and 2004.
SFAS
142
requires the Company to compare the fair value of the reporting unit to its
carrying amount on an annual basis to determine if there is potential
impairment. If the fair value of the reporting unit is less than its carrying
value, an impairment loss is recorded to the extent that the fair value of
the
goodwill within the reporting unit is less than its carrying value.
Recent
Accounting Pronouncements
In
December 2004, the Financial Accounting Standards Board issued SFAS
123
(R), “Share-Based Payment.” This Statement is a revision to SFAS 123,
“Accounting for Stock-Based Compensation”, and supersedes APB Opinion
No. 25, “Accounting for Stock Issued to Employees.” SFAS
123(R) requires the measurement of the cost of employee services received
in exchange for an award of equity instruments based on the grant-date fair
value of the award. No compensation cost is recognized for equity instruments
for which employees do not render service. We will adopt SFAS
123(R) effective on July 1, 2005, requiring compensation cost
to be
recognized as expense for the portion of outstanding unvested awards, and any
new awards made thereafter, based on the grant-date fair value of those awards.
Income
taxes
- The
Company accounts for its income taxes in accordance with Statement of Financial
Accounting Standards No. 109, which requires recognition of deferred tax assets
and liabilities for future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and
their respective tax bases and tax credit carry-forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to
be recovered or settled. The effect on deferred tax assets and liabilities
of a
change in tax rates is recognized in operations in the period that includes
the
enactment date.
Advertising
costs
- The
Company recognizes advertising expenses in accordance with Statement of Position
93-7 “Reporting on Advertising Costs.” Accordingly, the Company expenses the
costs of producing advertisements at the time production occurs, and expenses
the costs of communicating advertisements in the period in which the advertising
space or airtime is used. The Company has recorded no significant advertising
costs for the years ended June 30, 2005 and 2004.
Research
and development costs
-
Research and development costs are charged to expense as incurred.
| 2. |
FIXED
ASSETS
|
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.
| 4. |
SUBSEQUENT
EVENTS
|
On
August
08, 2005, Alex Lightman, the sole shareholder of IPv6 Summit, Inc., entered
into
a Stock Purchase Agreement with Innofone.com, for the sale of 100 % of the
issued outstanding and shares of IPv6 Summit, Inc. to Innofone.com. The
fundamental terms of the purchase agreement provide for the Innofone.com to
deliver a promissory note in the sum of $1,000,000 (One Million Dollars) as
partial consideration of the purchase price and to issue 33,333,000 (Thirty
Three Million Three Hundred and Thirty Three Thousand) shares of restricted
common stock of Innofone.com to satisfy the balance of the purchase price in
full. As a result, IPv6 Summit, Inc. will become a wholly owned subsidiary
of
the Innofone.com. Alexander Lightman will become the Chairman and Chief
Executive officer of the company. He will be awarded a five-year employment
agreement at an annual salary of $400,000.00 per year. This Agreement is pending
subject to completion and delivery of audit.
To
the Board of Directors and Shareholders of:
INNOFONE.COM,
INCORPORATED
We
have
audited the accompanying balance sheets of INNOFONE.COM,
INCORPORATED as
at
June 30, 2005 and 2004, and the statements of operations, shareholders’ deficit
and cash flows for each of the years in the three-year period ended June 30,
2005. These financial statements are the responsibility of the company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). These standards require that we
plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In
our
opinion, these financial statements present fairly, in all material respects,
the financial position of the company as at June 30, 2005 and 2004, and the
results of its operations and their cash flows for each of the years in the
three-year period ended June 30, 2005, in conformity with accounting principles
generally accepted in the United States of America.
/s
/
Danziger & Hochman
Toronto,
Ontario
| July 25, 2005 |
Chartered
Accountants
|
| INNOFONE.COM, INCORPORATED |
Statement
I
|
As
at
June 30, 2005 and 2004
(Stated
in United States Dollars)
|
2005
|
2004
|
||||||
|
ASSETS
|
$
|
--
|
$
|
--
|
|||
|
LIABILITIES
|
$
|
--
|
$
|
--
|
|||
|
SHAREHOLDERS’
DEFICIENCY
|
|||||||
|
CAPITAL
STOCK (note
3)
|
|||||||
|
Common
shares
|
4,898,880
|
4,879,010
|
|||||
|
Additional
paid-in capital
|
9,659,382
|
8,998,252
|
|||||
|
14,558,262
|
13,877,262
|
||||||
|
(DEFICIT)
-
Statement II
|
(
14,558,262
|
)
|
(
13,877,262
|
)
|
|||
|
|
--
|
(--
|
)
|
||||
|
|
$ | -- |
$
|
--
|
|||
{See
accompanying notes.}
| INNOFONE.COM, INCORPORATED |
Statement
II
|
For
The
Years Ended June 30, 2005, 2004 and 2003
(Stated
in United States Dollars)
|
Additional
|
|||||||||||||
|
Common
|
Paid-In
|
||||||||||||
|
Shares
|
Capital
|
Deficit
|
Total
|
||||||||||
|
BALANCE,
June 30, 2002
|
$
|
4,842,772
|
$
|
7,719,593
|
($13,318,937
|
)
|
($
756,572
|
)
|
|||||
|
Convertible
note converted to stock
|
2,300
|
647,700
|
--
|
650,000
|
|||||||||
|
Issuance
of shares for legal services
|
500
|
1,887
|
--
|
2,387
|
|||||||||
|
Issuance
of shares for consulting services
|
26,378
|
180,932
|
--
|
207,310
|
|||||||||
|
Net
loss
|
--
|
--
|
--
|
(
209,697
|
)
|
||||||||
|
BALANCE,
June 30, 2003
|
4,871,950
|
8,550,112
|
(
13,528,634
|
)
|
(
106,572
|
)
|
|||||||
|
Issuance
of shares for selling, general and administrative services
|
7,060
|
448,140
|
--
|
455,200
|
|||||||||
|
Net
loss
|
--
|
--
|
--
|
(
348,628
|
)
|
||||||||
|
BALANCE,
June 30, 2004
|
4,879,010
|
8,998,252
|
(
13,877,262
|
)
|
(--
|
)
|
|||||||
|
Issuance
of shares for selling, general and administrative services (note
4)
|
19,870
|
661,130
|
--
|
681,000
|
|||||||||
|
Net
loss
|
--
|
--
|
--
|
(
681,000
|
)
|
||||||||
|
BALANCE,
June 30, 2005
|
$
|
4,898,880
|
$
|
9,659,382
|
($14,558,262
|
)
|
$
|
--
|
|||||
{See
accompanying notes.}
| INNOFONE.COM, INCORPORATED |
Statement
III
|
For
The
Years Ended June 30, 2005, 2004 and 2003
(Stated
in United States Dollars)
|
2005
|
2004
|
2003
|
||||||||
|
REVENUE
|
$
|
--
|
$
|
--
|
$
|
--
|
||||
|
EXPENSES
|
||||||||||
|
Selling,
general and administrative services (note 4)
|
681,000
|
455,200
|
209,697
|
|||||||
|
Write-off
of investment
|
--
|
210,000
|
--
|
|||||||
|
Foregiveness
of debt (recovery)
|
--
|
(
316,572
|
)
|
--
|
||||||
|
Net
(Loss) from Operations
|
(
681,000
|
)
|
(
348,628
|
)
|
(
209,697
|
)
|
||||
|
NET
(LOSS) FOR THE YEAR
|
($681,000
|
)
|
($348,628
|
)
|
($209,967
|
)
|
||||
|
BASIC
NET (LOSS) PER SHARE (Note 5)
|
($
0.03
|
)
|
($
.07
|
)
|
($
1.37
|
)
|
||||
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
20,098,984
|
4,740,817
|
152,682
|
|||||||
{See
accompanying notes.}
|
INNOFONE.COM,
INCORPORATED
|
Statement
IV
|
For
The
Years Ended June 30, 2005, 2004 and 2003
(Stated
in United States Dollars)
|
2005
|
2004
|
2003
|
||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||
|
Net
(loss) for year - (Statement III)
|
($681,000
|
)
|
($348,628
|
)
|
($209,697
|
)
|
||||
|
Issuance
of shares for sales, general and administrative services (note
4)
|
681,000
|
455,200
|
209,697
|
|||||||
|
Write-off
of investment
|
--
|
210,000
|
--
|
|||||||
|
Accounts
payable and accrued liabilities
|
--
|
(
316,572
|
)
|
(
104,000
|
)
|
|||||
|
Net
cash provided by (used in) operating activities
|
--
|
--
|
(
104,000
|
)
|
||||||
|
FINANCING
ACTIVITIES
|
||||||||||
|
Due
to officers and directors
|
--
|
--
|
104,000
|
|||||||
|
Issuance
of capital stock
|
--
|
--
|
650,000
|
|||||||
|
Convertible
debt
|
--
|
--
|
(
650,000
|
)
|
||||||
|
Net
cash provided by (used in) financing activities
|
--
|
--
|
104,000
|
|||||||
|
INCREASE
IN CASH
|
--
|
|
--
|
--
|
||||||
|
CASH,
BEGINNING OF YEAR
|
--
|
--
|
--
|
|||||||
|
CASH,
END OF YEAR
|
$
|
--
|
$
|
--
|
|
$
|
--
|
|||
|
Non-cash
transactions:
|
||||||||||
|
Issuance
of shares for sales, general and administrative services (note
4)
|
$
|
681,000
|
$
|
425,200
|
$
|
209,697
|
||||
|
Write
off of investment
|
--
|
210,000
|
--
|
|||||||
|
Accounts
payable
|
--
|
(
316,572
|
)
|
(
104,000
|
)
|
|||||
|
Due
to officers and directors
|
--
|
--
|
104,000
|
|||||||
|
Issuance
of capital stock for debt
|
--
|
--
|
650,000
|
|||||||
|
Convertible
debt
|
--
|
--
|
(
650,000
|
)
|
||||||
{See
accompanying notes.}
INNOFONE.COM, INCORPORATED
June
30,
2005 and 2004
(Stated
in United States Dollars)
| 1. |
NATURE
OF OPERATIONS
|
The
Company was incorporated in Nevada on December 19, 1995 and is in the process
of
attempting to raise capital for future operations. As the Company does not
have
any assets, it would require new capital to fund any future
ventures.
| 2. |
SIGNIFICANT
ACCOUNTING POLICIES
|
These
financial statements have been prepared by management in conformity with
accounting principles generally accepted in the United States of America and
include the following significant accounting policies:
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of
the financial statements and the reported amount of revenues and expenses during
the reporting period. Actual results could differ from these estimates. These
estimates are reviewed periodically and, as adjustments become necessary, they
are reported in earnings in the period in which they become known.
Income
Taxes
The
Company accounts for its income taxes under the liability method specified
by
Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes. Deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities as measured by the enacted tax rates which will be in effect when
these differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities.
In
assessing the realizability of future tax assets, management considers whether
it is more likely than not that some portion or all of the future tax assets
will not be realized. The ultimate realization of future tax assets is dependent
upon the generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled
reversal of future tax liabilities, projected future taxable income and tax
planning strategies in making this assessment. As the Company does not currently
have any operations or assets, they are not anticipating the recovery of any
tax
assets and therefore, have not reflected any future tax asset.
INNOFONE.COM, INCORPORATED
Notes
to Financial Statements
June
30,
2005 and 2004
(Stated
in United States Dollars)
| 3. |
CAPITAL
STOCK
|
The
number of outstanding shares of the Company as at June 30, 2005 is computed
as
follows:
|
Common
|
||||
|
Outstanding
Shares as at June 30, 2002
|
100,022,505
|
|||
|
Shares
issued in exchange for consulting fees
|
23,357,826
|
|||
|
Shares
issued in exchange for legal fees
|
500,000
|
|||
|
Reverse
stock split: 175 shares for one share
|
(123,172,444
|
)
|
||
|
Share
issuance on conversion of debt
|
2,300,000
|
|||
|
Share
issuance on exchange for consulting fees
|
3,021,800
|
|||
|
Reverse
stock split: 20 shares for one share
|
(5,728,203
|
)
|
||
|
Outstanding
shares as at June 30, 2003
|
301,484
|
|||
|
Shares
issuance on exchange for sales, general and administrative
services
|
7,060,000
|
|||
|
Outstanding
shares as at June 30, 2004
|
7,361,484
|
|||
|
Shares
previously issued that were cancelled in the year
|
(
126,214
|
)
|
||
|
Shares
issuance in exchange for sales, general
|
||||
|
and
administrative services (note 4)
|
20,000,000
|
|||
|
Outstanding
shares as at June 30, 2005
|
27,235,270
|
|||
The
Company's authorized capital stock consists of 950,000,000 shares of common
stock and 25,000,000 shares of preferred stock each with a par value of $0.001
per share. There are no outstanding preferred shares at year-end.
| 4. |
RELATED
PARTY TRANSACTIONS
|
During
the year the Company issued 13,750,000 restricted shares and 6,250,000
regular
shares to the sole director and majority shareholder for services and
reimbursement of costs.
|
5.
|
BASIC
NET LOSS PER SHARE
|
Basic
net
loss per share figures are calculated using the weighted average number of
common shares outstanding computed on a daily basis. The effect of the
conversion of the preferred shares on an if-converted basis and stock options
has an anti-dilutive effect.
F-16