Attached files
As filed with the Securities and Exchange Commission on September 14, 2011
Registration No. 333-174443
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
iSoft International Inc.
(Exact name of registrant as specified in its charter)
NEVADA 7372
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
1 Ahmed Kamal St., Sidi Gaber
Alexandria 21311, Egypt
Ph: +20 (10) 920-4278
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
State Agent and Transfer Syndicate, Inc.
112 North Curry Street
Carson City NV 89703-4934
Ph: 775-882-1013
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies of Communications to:
Thomas E. Puzzo
Law Offices of Thomas E. Puzzo, PLLC
4216 NE 70th Street
Seattle, Washington 98115
Fax: (206) 260-0111
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, 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, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
CALCULATION OF REGISTRATION FEE
======================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities To Amount To Be Offering Price Aggregate Offering Registration
Be Registered Registered Per Share Price (1) Fee
------------------------------------------------------------------------------------------------------
Common Stock,
par value $0.001 1,000,000 $0.05 $50,000 $5.80
======================================================================================================
(1) There is no current market for the securities. The price at which the
shares are being offered has been arbitrarily determined by the Company and
used for the purpose of computing the amount of the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
This Registration Statement shall also cover any additional shares of our common
stock which may become issuable by reason of any stock dividend, stock split,
recapitalization or other similar adjustments.
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 U.S. Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
================================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED. THE
REGISTRANT 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 DATED _________, 2011
PRELIMINARY PROSPECTUS
ISOFT INTERNATIONAL INC.
1,000,000 SHARES OF COMMON STOCK AT $0.05 PER SHARE
This Prospectus relates to the offer and sale of a maximum of 1,000,000 shares
(the "Maximum Offering") of common stock, $0.001 par value ("Common Shares") by
iSoft International Inc., a Nevada company ("we", "us", "our", "iSoft",
"Company" or similar terms). There is no minimum for this Offering. The Offering
will commence promptly on the date upon which this prospectus is declared
effective by the SEC and will continue for 180 days. At the discretion of our
board of directors, we may discontinue the Offering before expiration of the 180
day period or extend the Offering for up to 90 days following the expiration of
the 180-day Offering period. We will pay all expenses incurred in this Offering.
The offering of the 1,000,000 shares is a "best efforts" offering, which means
that our sole director and officer will use his best efforts to sell the common
stock and there is no commitment by any person to purchase any shares. The
shares will be offered at a fixed price of $0.05 per share for the duration of
the offering. There is no minimum number of shares required to be sold to close
the offering. Proceeds from the sale of the shares will be used to fund the
initial stages of our business development. We have not made any arrangements to
place funds received from share subscriptions in an escrow, trust or similar
account. Any funds raised from the offering will be immediately available to us
for our immediate use. Accordingly, if we file for bankruptcy protection or a
petition for involuntary bankruptcy is filed by creditors against us, your funds
will become part of the bankruptcy estate and administered according to the
bankruptcy laws. If a creditor sues us and obtains a judgment against us, the
creditor could garnish the bank account and take possession of the
subscriptions. As such, it is possible that a creditor could attach your
subscription which could preclude or delay the return of money to you. If that
happens, you will lose your investment and your funds will be used to pay
creditors.
This is a direct participation Offering since we are offering the stock directly
to the public without the participation of an underwriter. Our sole officer and
director will be solely responsible for selling shares under this Offering and
no commission will be paid on any sales.
Prior to this Offering, there has been no public market for our common stock and
we have not applied for the listing or quotation of our common stock on any
public market. We have arbitrarily determined the offering price of $0.05 per
share in relation to this Offering. The offering price bears no relationship to
our assets, book value, earnings or any other customary investment criteria.
After the effective date of the registration statement, we intend to seek a
market maker to file an application with the Financial Industry Regulatory
Authority ("FINRA") to have our common stock quoted on the OTC Bulletin Board.
We currently have no market maker who is willing to list quotations for our
stock. There is no assurance that an active trading market for our shares will
develop or will be sustained if developed.
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this Prospectus. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of our common shares.
BEFORE INVESTING, YOU SHOULD CAREFULLY READ THIS PROSPECTUS, PARTICULARLY, THE
RISK FACTORS SECTION BEGINNING ON PAGE 4.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION ("SEC"), NOR ANY
STATE SECURITIES COMMISSION, HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is _________, 2011
TABLE OF CONTENTS
Prospectus Summary ......................................................... 3
Risk Factors ............................................................... 4
Forward Looking Statements ................................................. 11
Plan of Distribution ....................................................... 12
Use of Proceeds ............................................................ 13
Determination of Offering Price ............................................ 14
Dilution ................................................................... 14
Capitalization ............................................................. 15
Description of Securities to be Registered ................................. 16
Interests of Named Experts and Counsel ..................................... 18
Information With Respect to the Registrant ................................. 18
Description of Property .................................................... 25
Legal Proceedings .......................................................... 26
Market for Common Equity and Related Stockholder Matters ................... 26
Where You Can Find More Information ........................................ 28
Financial Statements ....................................................... 28
Management's Discussion and Analysis of Financial Condition and Results
of Operations .............................................................. 28
Changes in Disagreements With Accountants On Accounting and
Financial Disclosures ...................................................... 34
Directors, Executive Officers, Promoters and Control Persons ............... 34
Executive Compensation ..................................................... 35
Security Ownership of Certain Beneficial Owners and Management ............. 36
Certain Relationships and Related Transactions ............................. 37
Indemnification ............................................................ 37
DEALER PROSPECTUS DELIVERY OBLIGATION
Securities offered through this prospectus will not be sold through dealers, but
will be sold on a direct participation basis only.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE
IN THIS PROSPECTUS. PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE
INFORMATION DISCUSSED UNDER "RISK FACTORS" AND "USE OF PROCEEDS" SECTIONS,
COMMENCING ON PAGE 4 AND PAGE 13, RESPECTIVELY. AN INVESTMENT IN OUR SECURITIES
PRESENTS SUBSTANTIAL RISKS, AND YOU COULD LOSE ALL OR SUBSTANTIALLY ALL OF YOUR
INVESTMENT.
CORPORATE BACKGROUND AND BUSINESS OVERVIEW
Our Company was incorporated in the State of Nevada on March 9, 2011 to engage
in the development and operation of online games for social networking websites.
Our principal executive offices are located at 1 Ahmed Kamal St., Sidi Gaber
Alexandria 21311, Egypt. Our phone number is+20 (10) 920-4278. We are a
development stage company, we only just completed our first fiscal year end on
March 31 and we have no subsidiaries.
We are in the early stages of developing our first game that we have named
"Curse of the Pharaohs". We currently have no revenues, operating history, and
no players or revenues for our game. Our plan of operations over the 12 month
period following successful completion of our offering is to gain support for
our concept to then raise additional financing to commence with the development
of our game (See "Business of the Company" and "Plan of Operations".) We
anticipate that we will not have a commercial product available for at least
24-30 months from the date hereof, assuming successful completion of this
offering and the successful raise of additional financing of $250-400,000 for
game development, and $200,000 for initial marketing and promotion for
commercial launch.
From inception until the date of this filing we have had limited operating
activities, primarily consisting of the incorporation of our company and the
initial equity funding by our officer and director. We received our initial
funding of $15,000 through the sale of common stock to our officer and director,
who purchased 5,000,000 shares at $0.003 per share. We have also recently
launched our corporate website which may be accessed at
www.isoftinternational.com
Our financial statements from inception on March 9, 2011 through June 30, 2011
report no revenues and a net loss of $(6,240). Our independent auditor has
issued an audit opinion for our Company which includes a statement expressing
substantial doubt as to our ability to continue as a going concern.
The following is a brief summary of this Offering:
Securities being offered: 1,000,000 shares of common stock, par value
$0.001
Offering price per share: $0.05
Offering period: The shares are being offered for a period not
to exceed 180 days from the effectiveness of
this Prospectus, unless extended by our Board
of Directors for an additional 90 days.
Net proceeds to us: $50,000 less estimated offering registration
costs of $10,300, assuming the maximum number
of shares are sold. For further information on
the Use of Proceeds, please to Page 13.
Number of shares outstanding
before the Offering: 5,000,000
Number of shares outstanding
after the Offering: 6,000,000 assuming the Maximum number of
shares are sold
Registration costs We estimate our total offering registration
costs to be $10,300.
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SUMMARY OF FINANCIAL INFORMATION
The summarized unaudited financial data presented below is derived from our
unaudited financial statements (Please refer to Page F-1 in this prospectus) and
related notes from March 9, 2011 to June 30, 2011. It should also be read in
conjunction with our audited financial statements and related notes from March
9, 2011 (date of inception) to March 31, 2011 (Please refer to Page F-8 in this
prospectus.)
As at June 30, 2011
-------------------
(unaudited)
Current Assets (1) $ 10,145
Current Liabilities 1,160
Shareholders' Equity $ 8,985
From March 9, 2011
(inception) to
June 30, 2011
-------------
(unaudited)
Revenue $ --
Net Loss $ (6,240)
----------
(1) Current assets includes $4,685 of costs related to this offering
registration, which are currently deferred and subsequently charged to
stockholder equity upon receipt of funding and issuance of shares.
We have just commenced our operations and are currently without revenue. Our
accumulated deficit at June 30, 2011 was $(6,240). We anticipate that we will
continue to incur net losses from our operations for the foreseeable future.
RISK FACTORS
An investment in our securities is considered to be highly speculative due to
various factors, including the nature of our business and the present stage of
our development. An investment in our securities should only be undertaken by
persons who have sufficient financial resources to afford the total loss of
their investment. In addition to the usual risks associated with investment in a
business, you should carefully consider the following known material risk
factors and all other information contained in this Prospectus before deciding
to invest in our Common Shares. If any of the following risks occur, our
business, financial condition and results of operations could be materially and
adversely affected. Additional risks and uncertainties we do not presently know
or that we currently deem immaterial may also impair our business, financial
condition or operating results.
RISKS RELATING TO OUR BUSINESS
WE HAVE NO OPERATING HISTORY AND HAVE MAINTAINED LOSSES SINCE INCEPTION, WHICH
WE EXPECT TO CONTINUE INTO THE FUTURE.
We were incorporated on March 9, 2011 and have very limited operations. We have
not realized any revenues to date. Our proposed game product is under
development and is not ready for commercial sale. We have no operating history
at all upon which an evaluation of our future success or failure can be made.
Our net loss from inception to June 30, 2011 is $(6,240). Based upon our
proposed plans, we expect to incur significant operating losses in future
periods. This will happen because there are substantial costs and expenses
associated with the development, marketing and distribution of our product. We
may fail to generate revenues in the future. If we cannot attract a significant
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number of players, we will not be able to generate any significant revenues or
income. Failure to generate revenues will cause us to go out of business because
we will not have the money to pay our ongoing expenses.
In particular, additional capital may be required in the event that:
- the actual expenditures required to be made are at or above the higher
range of our estimated expenditures;
- we incur unexpected costs in completing the development of our product
or encounter any unexpected difficulties;
- we incur delays and additional expenses related to the development of
our product or a commercial market for our product;
- we are unable to create a substantial market for our products; or
- we incur any significant unanticipated expenses.
The occurrence of any of the aforementioned events could adversely affect our
ability to meet our business plans and achieve a profitable level of operations.
IF WE ARE UNABLE TO OBTAIN THE NECESSARY FINANCING TO IMPLEMENT OUR BUSINESS
PLAN WE WILL NOT HAVE THE MONEY TO PAY OUR ONGOING EXPENSES AND WE MAY GO OUT OF
BUSINESS.
Because we have not generated any revenue from our business, and we are at least
24- 30 months (from the date hereof) away from being in a position to generate
revenues, we will need to raise significant, additional funds for the future
development of our business and to respond to unanticipated requirements or
expenses.
Our ability to successfully develop our product and to eventually produce and
use it to generate operating revenues also depends on our ability to obtain the
necessary financing to implement our business plan. Given that we have no
operating history, no revenues and only losses to date, we may not be able to
achieve this goal, and we may go out of business. We may need to issue
additional equity securities in the future to raise the necessary funds. We do
not currently have any arrangements for additional financing and we can provide
no assurance to investors we will be able to find such financing if further
funding is required. Obtaining additional financing would be subject to a number
of factors, including investor acceptance of our planned game and our business
model. The issuance of additional equity securities by us would result in a
significant dilution in the equity interests of our current stockholders.
Obtaining loans will increase our liabilities and future cash commitments, and
there can be no assurance that we will even have sufficient funds to repay our
future indebtedness or that we will not default on our future debts if we are
able to even obtain loans.
There can be no assurance that capital will continue to be available if
necessary to meet future funding needs or, if the capital is available, that it
will be on terms acceptable to us. If we are unable to obtain financing in the
amounts and on terms deemed acceptable to us, we may be forced to scale back or
cease operations, which might result in the loss of some or all of your
investment in our common stock.
IF OUR ESTIMATES RELATED TO EXPENDITURES ARE ERRONEOUS OUR BUSINESS WILL FAIL
AND YOU WILL LOSE YOUR ENTIRE INVESTMENT.
Our success is dependent in part upon the accuracy of our management's estimates
of expenditures, which includes an additional $450-600,000, which we will need
to raise in addition to this offering, to complete the development and launch
our game for mass use. If such estimates are erroneous or inaccurate we may not
be able to carry out our business plan, which could, in a worst-case scenario,
result in the failure of our business and you losing your entire investment.
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OUR BUSINESS MODEL MAY NOT BE SUFFICIENT TO ENSURE OUR SUCCESS IN OUR INTENDED
MARKET
Our survival is currently dependent upon the success of our efforts to gain
market acceptance of one online game that will ultimately represent a very small
segment in our targeted industry when it is completed. Should our target market
not be as responsive to our game as we anticipate, we may not have in place
alternate products or services that we can offer to ensure our survival.
While many new products such as the one that we are planning are regularly
introduced, only a relatively small number of "hit" titles account for a
significant portion of net revenue in our industry. Our product may not be a
"hit", or competitors may develop titles that imitate or compete with our "hit"
title, and take our targeted revenue stream away from us or reduce our ability
to command profitable revenue streams for our game. Hit products published by
our competitors may take a larger share of our target market than we anticipate,
which could cause our game revenue streams to fall below our expectations. If
our competitors develop more successful products or offer competitive products
at lower price, our revenue, margins, and profitability will decline.
PRODUCT DEVELOPMENT SCHEDULES ARE LONG AND FREQUENTLY UNPREDICTABLE, AND WE MAY
EXPERIENCE DELAYS IN INTRODUCING OUR PRODUCT, WHICH MAY ADVERSELY AFFECT OUR
REVENUES.
The development cycle for products such as that we are planning is long. We
currently believe that the total cycle for commercialization of the Curse of the
Pharaohs will take at 24-30 months from the date hereof. This cycle includes the
completion of our dvd trailer for which funds from this offering will be
utilized, successful closing of suitable additional financing for game
development and marketing, and 12-18 months needed to actually develop and test
the game. In addition, the creative process inherent in game development makes
the length of the development cycle difficult to predict. As a result we may
experience delays in introducing our product. If an unanticipated delay affects
the release of our online video game, we may not achieve anticipated revenues.
Revenues will also be adversely affected if market interest in the subject
matter of our game declines from what we believe it is at present. A delay in
introducing a new game could also require us to spend more development resources
to complete the game, which would increase our costs and lower our margins, or
cause us to experience losses.
TECHNOLOGY CHANGES RAPIDLY IN OUR BUSINESS AND IF WE FAIL TO ANTICIPATE OR
SUCCESSFULLY IMPLEMENT NEW TECHNOLOGIES OR THE MANNER IN WHICH PEOPLE PLAY OUR
GAME, THE QUALITY, TIMELINESS AND COMPETITIVENESS OF OUR PRODUCTS AND SERVICES
WILL SUFFER.
Rapid technology changes in our industry require us to anticipate, sometimes
years in advance, which technologies we must implement and take advantage of in
order to make our products and services competitive in the market. Therefore, we
must start our product development with a range of technical development goals
that we hope to be able to achieve. We may not be able to achieve these goals,
or our competition may be able to achieve them more quickly and effectively than
we can. In either case, our products and services may be technologically
inferior to our competitors', less appealing to consumers, or both. If we cannot
achieve our technology goals within the original development schedule of our
products and services, then we may delay their release until these technology
goals can be achieved, which may delay or reduce revenue and increase our
development expenses. Alternatively, we may increase the resources employed in
research and development in an attempt to accelerate our development of new
technologies, either to preserve our product or service launch schedule or to
keep up with our competition, which would increase our development expenses. Any
such failure to adapt to, and appropriately allocate resources among, emerging
technologies would harm our competitive position, reduce our market share and
significantly increase the time we take to bring our product to market.
WE WILL BE DEPENDENT ON THIRD PARTIES TO DEVELOP OUR ONLINE GAME. ANY INCREASE
IN THE AMOUNTS WE HAVE TO PAY TO HAVE OUR GAME DEVELOPED OR ANY DELAY OR
INTERRUPTION IN PRODUCTION WOULD NEGATIVELY AFFECT BOTH OUR ABILITY TO MAKE A
TIMELY INTRODUCTION, GENERATE REVENUES AND OUR RESULTS OF OPERATIONS.
We are planning to use third parties to develop our game. We will have less
control over third parties because we cannot control their personnel, schedule
or resources. It will be more difficult to detect design faults and software
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errors. Any such fault or error could cause delays in delivering our product or
require design modifications delays or defects would likely have a more
detrimental impact on our business than if we were a more established company.
Any of these factors could cause a game not to meet our quality standards or
expectations, or not to be completed on time or at all. If this happens, we
could lose anticipated revenues, or our entire investment in our game.
IF WE ARE UNABLE TO COMPLETE THE DEVELOPMENT OF OUR ONLINE GAME WE WILL NOT BE
ABLE TO GENERATE REVENUES AND YOU WILL LOSE YOUR INVESTMENT.
We have not completed development of our game and we have no revenues from the
sale or use of our game. The success of our proposed business will depend on the
completion and the acceptance of our game by the general public. Achieving such
acceptance will require significant marketing investment. Our game, once
developed and tested, may not be accepted by our players at sufficient levels to
support our operations and build our business. If our game is not accepted at
sufficient levels, our business will fail.
WE CURRENTLY HAVE NO PROTECTION BY ANY TRADEMARKS, PATENTS AND/OR OTHER
INTELLECTUAL PROPERTY REGISTRATIONS. IF WE ARE UNABLE TO PROTECT OUR
INTELLECTUAL PROPERTY RIGHTS, OUR PROPOSED BUSINESS WILL FAIL.
We have not applied for any trademark, patent or other intellectual property
registration with any governmental agency for our name or for our software
product. At present we are planning to enter into non-disclosure agreements with
employees to protect our technology. Despite our precautions taken to protect
our proposed software programs, unauthorized parties may attempt in the future
to reverse engineer, copy or obtain and use our game. If they are successful we
could lose our technology or they could develop similar programs, which could
create more competition for us and even cause our proposed business operations
to fail.
WE DEPEND TO A SIGNIFICANT EXTENT ON CERTAIN KEY PERSONNEL, THE LOSS OF ANY OF
WHOM MAY MATERIALLY AND ADVERSELY AFFECT OUR COMPANY.
Currently, we have only one employee who is also our sole officer and director.
We depend entirely on Mr. Ayad for all of our operations. The loss of Mr. Ayad
will have a substantial negative effect on our company and may cause our
business to fail. Mr. Ayad has not been compensated for his services since our
incorporation, and it is highly unlikely that he will receive any compensation
unless and until we generate substantial revenues. There is intense competition
for skilled personnel and there can be no assurance that we will be able to
attract and retain qualified personnel on acceptable terms. The loss of Mr.
Ayad's services could prevent us from completing the development of our product
and developing revenues. In the event of the loss of services of such personnel,
no assurance can be given that we will be able to obtain the services of
adequate replacement personnel.
We do not have any employment agreements or maintain key person life insurance
policies on our officer and director. We do not anticipate entering into
employment agreements with him or acquiring key man insurance in the foreseeable
future.
WE HAVE LIMITED BUSINESS, SALES AND MARKETING EXPERIENCE IN OUR INDUSTRY.
We have not completed the development of our product and have yet to generate
revenues. Our officer and director has no prior online game marketing or selling
industry experience. While we have plans for marketing and sales, there can be
no assurance that such efforts will be successful. There can be no assurance
that our proposed game will gain wide acceptance in its target market or that we
will be able to effectively market our product.
WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST OUR COMPETITORS.
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We believe that the main competitive factors in the interactive entertainment
software industry for play on social media websites include: desirability of
title characteristics, product features and playability; brand name recognition;
quality of products; ease of use; price; marketing support; and quality of
customer service. The barriers to entry in the social game entertainment
industry, in which we are planning to operate, are also much lower than more
traditional gaming products because there are no publishing agreements with or
royalties to be paid to the hardware manufacturers.
Many companies worldwide are dedicated to social gaming and similar services
related to social gaming. We expect more companies to enter this industry. Our
competitors vary in size from small companies with limited resources to very
large corporations with significantly greater financial, marketing, and product
development resources than we have. Our game, when completed, will be in
competition with these companies, such as Zynga, Playdom, Electronic Arts and
even Microsoft. We are to be considered as one of the smallest with no
commercial products at present.
As social games are relatively new and rapidly evolving, our current or future
competitors may compete more successfully as the industry matures. In
particular, any of our competitors may offer products and services that have
significant performance, price, creativity and/or other advantages over our game
and technology. These products and services may significantly affect the demand
for our services. If we are unable to compete successfully, we could lose sales
and market share. We also could experience difficulty hiring and retaining
qualified software developers and other employees. Any of these consequences
would significantly harm our business, results of operations and financial
condition. There can be no assurance that we will be able to effectively compete
with our competitors or that their present and future offerings would render our
product obsolete or noncompetitive. This intense competition may have a material
adverse effect on our results of operations and financial condition and prevent
us from achieving profitable revenue levels from our product.
FUTURE REGULATION OF THE INTERNET AND PRODUCT CONTENT COULD RESTRICT OUR
BUSINESS, PREVENT US FROM OFFERING SERVICE OR INCREASE OUR COST OF DOING
BUSINESS.
At present there are few laws, regulations or rulings that specifically address
access to or commerce on the Internet. We are unable to predict the impact, if
any, that future legislation, legal decisions or regulations concerning the
Internet may have on our business, financial condition, and results of
operations. Regulation may be targeted towards, among other things, assessing
access or settlement charges, imposing taxes related to internet communications,
restricting content, imposing tariffs or regulations based on encryption
concerns or the characteristics and quality of products and services, any of
which could restrict our business or increase our cost of doing business. The
increasing growth and popularity of the Internet and related services heighten
the risk that governments or other legislative bodies will seek to regulate the
service, which could have a material adverse effect on our business, financial
condition and operating results.
Legislation is continually being introduced that may affect both the content of
our product and its distribution. In the United States, the federal and several
state governments are continually considering content restrictions on products
such as our proposed product, as well as restrictions on distribution of such
products. For example, recent legislation has been adopted in several states,
and could be proposed at the federal level, that prohibits the sale of certain
games (e.g., violent games or those with "M (Mature)" or "AO (Adults Only)"
ratings) to minors. Any one or more of these factors could harm our business by
limiting the products we are able to offer to our customers, by limiting the
size of the potential market for our products, and by requiring costly
additional differentiation between products for different territories to address
varying regulations.
OUR SOLE OFFICER AND DIRECTOR IS ENGAGED IN OTHER ACTIVITIES AND MAY NOT DEVOTE
SUFFICIENT TIME TO OUR AFFAIRS, WHICH MAY AFFECT OUR ABILITY TO CONDUCT
OPERATIONS AND GENERATE REVENUES.
Our officer and director has existing responsibilities and has additional
responsibilities to provide management and services to other entities. We
initially expect Mr. Ayad to spend approximately 20 hours a week on the business
of our company. As a result, demands for the time and attention from Mr. Ayad
from our company and other entities may conflict from time to time. Because we
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rely primarily on Mr. Ayad to maintain our business contacts and to promote our
product, his limited devotion of time and attention to our business may hurt the
operation of our business.
OUR INDEPENDENT AUDITORS' REPORT STATES THAT THERE IS A SUBSTANTIAL DOUBT THAT
WE WILL BE ABLE TO CONTINUE AS A GOING CONCERN.
Our independent auditors, Silberstein Ungar PLLC, state in their audit report,
dated May 18, 2011 and included herein, that we are a development stage company,
have no established source of revenue and are dependent on our ability to raise
capital from shareholders or other sources to sustain operations. As a result,
there is a substantial doubt that we will be able to continue as a going
concern.
This qualification clearly highlights that we will, in all likelihood, continue
to incur expenses without significant revenues into the foreseeable future until
our product gains significant popularity. Our only source of funds to date has
been the sale of our common stock from Mr. Ayad. Because we cannot currently
assure anyone that we will be able to generate enough interest in our product,
or that we will be able to generate any significant revenues or income, the
identification of new sources equity financing becomes significantly more
difficult. If we are successful in closing on any new financing, existing
investors will experience substantial dilution. The ability to obtain debt
financing is also severely impacted, and likely not even feasible, given that we
do not have revenues or profits to pay interest or repay principal.
As a result, if we are unable to obtain additional financing at this stage in
our operations, our business will fail and you may lose some or all of your
investment in our common stock.
INVESTORS WILL HAVE LITTLE VOICE REGARDING THE MANAGEMENT OF ISOFT DUE TO THE
LARGE OWNERSHIP POSITION HELD BY OUR EXISTING MANAGEMENT AND THUS IT WOULD BE
DIFFICULT FOR NEW INVESTORS TO MAKE CHANGES IN OUR OPERATIONS OR MANAGEMENT, AND
THEREFORE, SHAREHOLDERS WOULD BE SUBJECT TO DECISIONS MADE BY MANAGEMENT AND THE
MAJORITY SHAREHOLDERS, INCLUDING THE ELECTION OF DIRECTORS.
Mr Ayad, our sole officer and director, currently owns 100% of ISoft's common
stock. If we are successful in completing the Maximum Offering he will own 83.3%
of the company's issued and outstanding common stock, and is still in a position
to continue to control ISoft. If we close our Offering with less than the
Maximum, his percentage ownership is even higher. Such control may be risky to
the investor because our company's operations are dependent on a very few people
who could lack ability, or interest in pursuing our operations. In such event,
our business may fail and you may lose your entire investment. Moreover,
investors will not be able to effect a change in the company's board of
directors, business or management.
WE INTEND TO BECOME SUBJECT TO THE PERIODIC REPORTING REQUIREMENTS OF THE
SECURITIES EXCHANGE ACT OF 1934, WHICH WILL REQUIRE US TO INCUR AUDIT FEES AND
LEGAL FEES IN CONNECTION WITH THE PREPARATION OF SUCH REPORTS. THESE ADDITIONAL
COSTS WILL NEGATIVELY AFFECT OUR ABILITY TO EARN A PROFIT.
Following the effective date of the registration statement in which this
prospectus is included, we will be required to file periodic reports with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 and the rules and regulations thereunder. In order to comply with such
requirements, our independent registered auditors will have to review our
financial statements on a quarterly basis and audit our financial statements on
an annual basis. Moreover, our legal counsel will have to review and assist in
the preparation of such reports. Although we believe (Please refer to "Use of
Proceeds" and Plan of Operations") that the $17,000 we have estimated for these
costs should be sufficient for the 12 month period following the completion of
our offering, the costs charged by these professionals for such services may
vary significantly. Factors such as the number and type of transactions that we
engage in and the complexity of our reports cannot accurately be determined at
this time and may have a major negative affect on the cost and amount of time to
be spent by our auditors and attorneys. However, the incurrence of such costs
will obviously be an expense to our operations and thus have a negative effect
on our ability to meet our overhead requirements and earn a profit.
9
THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY
IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES
LAWS.
Mr Ayad lacks public company experience, which could impair our ability to
comply with legal and regulatory requirements such as those imposed by
Sarbanes-Oxley Act of 2002. He has never been responsible for managing a
publicly traded company. Such responsibilities include complying with federal
securities laws and making required disclosures on a timely basis. Any such
deficiencies, weaknesses or lack of compliance could have a materially adverse
effect on our ability to comply with the reporting requirements of the
Securities Exchange Act of 1934 which is necessary to maintain our public
company status. If we were to fail to fulfill those obligations, our ability to
continue as a U.S. public company would be in jeopardy in which event you could
lose your entire investment in our company.
RISKS ASSOCIATED WITH OUR COMMON STOCK
DIFFICULTY FOR ISOFT STOCKHOLDERS TO RESELL THEIR STOCK DUE TO A LACK OF PUBLIC
TRADING MARKET
There is presently no public trading market for our common stock, we have not
applied for a trading symbol or quotation, and it is unlikely that an active
public trading market can be established or sustained in the foreseeable future.
We intend to seek out a market maker to apply to have our common stock quoted on
the OTC Bulletin Board upon completion of this Offering. However, there can be
no assurance that ISoft's shares will be quoted on the OTC Bulletin Board. Until
there is an established trading market, holders of our common stock may find it
difficult to sell their stock or to obtain accurate quotations for the price of
the common stock. If a market for our common stock does develop, our stock price
may be volatile.
BROKER-DEALERS MAY BE DISCOURAGED FROM EFFECTING TRANSACTIONS IN OUR SHARES
BECAUSE THEY ARE CONSIDERED PENNY STOCKS AND ARE SUBJECT TO THE PENNY STOCK
RULES.
Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934
impose sales practice and disclosure requirements on NASD broker-dealers who
make a market in "penny stocks". A penny stock generally includes any non-Nasdaq
equity security that has a market price of less than $5.00 per share. Our shares
currently are not traded on Nasdaq nor on any other exchange nor are they quoted
on the OTC/Bulletin Board or "OTC/BB". Following the date that the registration
statement, in which this prospectus is included, becomes effective we hope to
find a broker-dealer to act as a market maker for our stock and file on our
behalf with the NASD an application on Form 15c(2)(11) for approval for our
shares to be quoted on the OTC/BB. As of the date of this prospectus, we have
not attempted to find a market maker to file such application for us. If we are
successful in finding such a market maker and successful in applying for
quotation on the OTC/BB, it is very likely that our stock will be considered a
"penny stock". In that case, purchases and sales of our shares will be generally
facilitated by NASD broker-dealers who act as market makers for our shares. The
additional sales practice and disclosure requirements imposed upon
broker-dealers may discourage broker-dealers from effecting transactions in our
shares, which could severely limit the market liquidity of the shares and impede
the sale of our shares in the secondary market.
Under the penny stock regulations, a broker-dealer selling penny stock to anyone
other than an established customer or "accredited investor" (generally, an
individual with net worth in excess of $1,000,000 or an annual income exceeding
$200,000, or $300,000 together with his or her spouse) must make a special
suitability determination for the purchaser and must receive the purchaser's
written consent to the transaction prior to sale, unless the broker-dealer or
the transaction is otherwise exempt.
In addition, the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the Commission relating to the penny stock market, unless the broker-dealer
or the transaction is otherwise exempt. A broker-dealer is also required to
disclose commissions payable to the broker-dealer and the registered
representative and current quotations for the securities. Finally, a
broker-dealer is required to send monthly statements disclosing recent price
10
information with respect to the penny stock held in a customer's account and
information with respect to the limited market in penny stocks.
INVESTORS THAT NEED TO RELY ON DIVIDEND INCOME OR LIQUIDITY SHOULD NOT PURCHASE
SHARES OF OUR COMMON STOCK.
We have not declared or paid any dividends on our common stock since our
inception, and we do not anticipate paying any such dividends for the
foreseeable future. Investors that need to rely on dividend income should not
invest in our common stock, as any income would only come from any rise in the
market price of our common stock, which is uncertain and unpredictable.
Investors that require liquidity should also not invest in our common stock.
There is no established trading market and should one develop, it will likely be
volatile and subject to minimal trading volumes.
BECAUSE WE CAN ISSUE ADDITIONAL SHARES OF COMMON STOCK, PURCHASERS OF OUR COMMON
STOCK MAY INCUR IMMEDIATE DILUTION AND MAY EXPERIENCE FURTHER DILUTION.
We are authorized to issue up to 75,000,000 shares of common stock. At present,
there are 5,000,000 issued and outstanding common shares, and if we are
successful in completing the Maximum Offering there will be 6,000,000 shares
outstanding. Our Board of Directors has the authority to cause us to issue
additional shares of common stock without consent of any of our stockholders.
Consequently, the stockholders may experience more dilution in their ownership
of our Company in the future, which could have an adverse effect on the trading
market for our common shares.
OTHER RISKS
ALL OF OUR ASSETS AND OUR OFFICER AND DIRECTOR IS LOCATED OUTSIDE OF THE USA.
THIS MAY CAUSE ANY ATTEMPTS TO ENFORCE LIABILITIES UNDER THE U.S. SECURITIES AND
BANKRUPTCY LAWS TO BE VERY DIFFICULT.
Currently, all of our assets are either located or controlled in Egypt. Mr. Ayad
also resides in Egypt. This is likely to remain so for at least the next 12
months. Therefore, any investor that attempts to enforce against the company or
against Mr. Ayad liabilities that accrue under U.S. securities laws or
bankruptcy laws will face the difficulty of complying with local laws in these
countries, with regards to enforcement of foreign judgments. This could make it
impracticable or uneconomic to enforce such liabilities.
FORWARD LOOKING STATEMENTS
This registration statement contains forward-looking statements relating to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may", "should",
"intends", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential", or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors which may cause our or our
industry's actual results, levels of activity or performance to be materially
different from any future results, levels of activity or performance expressed
or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity or performance. You should not place undue reliance on these
statements, which speak only as of the date that they were made. Actual results
are most likely to differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced as
described in the "RISK FACTORS" section and elsewhere in this prospectus.
Factors which may cause the actual results or the actual plan of operations to
vary include, among other things, decisions of the board of directors not to
pursue a specific course of action based on its re-assessment of the facts or
new facts, or changes in general economic conditions and those other factors set
out in this prospectus.
11
PLAN OF DISTRIBUTION
OUR OFFERING WILL BE SOLD BY OUR SOLE OFFICER AND DIRECTOR
This is a self-underwritten offering, and Mr. Ayad, our sole officer and
director, will sell the shares directly to family, friends, business associates
and acquaintances, with no commission or other remuneration payable to him for
any shares he may sell. There are no plans or arrangements to enter into any
contracts or agreements to sell the shares with a broker or dealer. In offering
the securities on our behalf, they will rely on the safe harbor from broker
dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of
1934.
Our sole officer and director will not register as a broker-dealer pursuant to
Section 15 of the Securities Exchange Act of 1934, in reliance upon Rule 3a4-1,
which sets forth those conditions, as noted herein, under which a person
associated with an Issuer may participate in the offering of the Issuer's
securities and not be deemed to be a broker-dealer:
1. Our officer and director is not subject to a statutory
disqualification, as that term is defined in Section 3(a)(39) of the
Act, at the time of his participation; and,
2. Our officer and director will not be compensated in connection with
his participation by the payment of commissions or other remuneration
based either directly or indirectly on transactions in securities; and
3. Our officer and director is not, nor will he be at the time of their
participation in the offering, an associated person of a
broker-dealer; and
4. Our officer and director meets the conditions of paragraph (a)(4)(ii)
of Rule 3a4-1 of the Exchange Act, in that he (A) primarily perform,
or intend primarily to perform at the end of the offering, substantial
duties for or on behalf of our company, other than in connection with
transactions in securities; and (B) is not a broker or dealer, or been
an associated person of a broker or dealer, within the preceding
twelve months; and (C) has not participated in selling and offering
securities for any Issuer more than once every twelve months other
than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Our sole officer, director, control person and affiliate does not intend to
purchase any shares in this offering.
TERMS OF THE OFFERING
We are offering a total of 1,000,000 shares of our common stock in a
self-underwritten public offering, with no minimum purchase requirement. We do
not have an arrangement to place the proceeds from this offering in an escrow,
trust, or similar account. Any funds raised from the offering will be
immediately available to us for our immediate use. Accordingly, if we file for
bankruptcy protection or a petition for involuntary bankruptcy is filed by
creditors against us, your funds will become part of the bankruptcy estate and
administered according to the bankruptcy laws. If a creditor sues us and obtains
a judgment against us, the creditor could garnish the bank account and take
possession of the subscriptions. As such, it is possible that a creditor could
attach your subscription which could preclude or delay the return of money to
you. If that happens, you will lose your investment and your funds will be used
to pay creditors.
The shares will be sold at the fixed price of $0.05 per share until the
completion of this offering. There is no minimum amount of subscription required
per investor, and subscriptions, once received, are irrevocable.
12
This offering will commence on the date of this prospectus and continue for a
period of 180 days (the "Expiration Date"). At the discretion of our board of
directors, we may discontinue the Offering before expiration of the 180 day
period or extend the Offering for up to 90 days following the expiration of the
180-day Offering period. If the board of directors votes to extend the offering
for the additional 90 days, a post-effective amendment to the registration
statement will be filed to notify subscribers and potential subscribers of the
extended offering period.
PROCEDURES AND REQUIREMENTS FOR SUBSCRIPTION
If you decide to subscribe for any shares in this offering, you will be required
to execute a Subscription Agreement and tender it, together with a check, bank
draft, wire or cashier's check payable to the company. Subscriptions, once
received by the company, are irrevocable. All checks for subscriptions should be
made payable to ISoft International Inc.
USE OF PROCEEDS
The following table provides the use of proceeds based on the closing of the
Offering. If the Company is not successful in selling all 1,000,000 shares
within the prescribed 180 day period (which may be extended an additional 90
days in our sole discretion), then we will not be able to proceed with our
business plan unless additional funds are raised in some other manner.
If 10% of If 25% of If 50% of If 75% of If 100% of
Shares Sold Shares Sold Shares Sold Shares Sold Shares Sold
----------- ----------- ----------- ----------- -----------
SHARES SOLD 100,000 250,000 500,000 750,000 1,000,000
GROSS PROCEEDS $ 5,000 $ 12,500 $ 25,000 $ 37,500 $ 50,000
WORKING CAPITAL - JUNE 30, 2011 (1) 4,300 4,300 4,300 4,300 4,300
-------- -------- -------- -------- ----------
TOTAL BEFORE EXPENSES 9,300 16,800 29,300 41,800 54,300
-------- -------- -------- -------- ----------
OFFERING EXPENSES
Legal & Accounting 9,000 9,000 9,000 9,000 9,000
Edgar Agent Fees 800 800 800 800 800
Transfer Agent Fees 500 500 500 500 500
-------- -------- -------- -------- ----------
Total Offering Expenses 10,300 10,300 10,300 10,300 10,300
Less: Offering Expenses incured
at June 30, 2011 (8,935) (8,935) (8,935) (8,935) (8,935)
-------- -------- -------- -------- ----------
NET REMAINING OFFERING EXPENSES 1,365 1,365 1,365 1,365 1,365
-------- -------- -------- -------- ----------
NET AFTER OFFERING EXPENSES 7,935 15,435 27,935 40,435 52,935
-------- -------- -------- -------- ----------
EXPENDITURES (2)
Public Reporting Expenses 17,000 17,000 17,000 17,000 17,000
Storyline development 2,500 2,500 2,500
Storyboard development 2,500 2,500 2,500
Stage sketches and development 3,500 3,500 3,500
Character development 5,500 5,500
DVD trailer production 7,000 7,000
Press and investor materials (3) 10,000
Office & misc 1,500 1,500 1,500
-------- -------- -------- -------- ----------
17,000 17,000 27,000 39,500 49,500
-------- -------- -------- -------- ----------
Net remaining balance $ (9,065) $ (1,565) $ 935 $ 935 $ 3,435
----------
(1) Defined as $5,460 of cash on hand less accounts payable of $1,160 at as
June 30, 2011.
(2) Expenditures for the 12 months following the completion of this Offering.
The expenditures are categorized by significant area of activity.
(3) We budgeting this amount for press, printed and dvd materials and other
costs associated with planned activities required to raise sufficient
suitable funds to develop and market our game.
13
Please see a detailed description of the use of proceeds in the "Plan of
Operation" section of this Prospectus.
Our offering expenses of approximately $10,300 are comprised primarily of legal
and accounting expenses, Securities and Exchange Commission ("SEC") and EDGAR
filing fees and transfer agent fees. Our officer and director will not receive
any compensation for their efforts in selling our shares.
If we are able to sell 750,000 shares we can maintain our reporting requirements
with the SEC and complete the development of our dvd trailer and related
materials, but we will have insufficient funds to market our company to
prospective investors to secure financing to develop and market our game. If we
are not able to sell a minimum of 500,000 shares of our common stock in this
Offering, we will not implement our business plan at all, except maintaining our
reporting with the SEC and remain in good standing with the state of Nevada. If
we do not sell at least 250,000 shares of our common stock (25% of this
Offering) we will not be able to maintain our reporting status with the SEC and
remain in good standing with the state of Nevada without additional funds. These
funds may be raised through equity financing, debt financing, or other sources,
which may result in the dilution in the equity ownership of our shares. We will
also need more funds if the costs of developing our website are greater than we
have budgeted. We will also require additional financing to sustain our business
operations if we are not successful in earning revenues.
We currently do not have any arrangements regarding this Offering or following
this Offering for further financing and we may not be able to obtain financing
when required. Our future is dependent upon our ability to obtain further
financing, the successful development of our planned game, a successful
marketing and promotion program, and achieving a profitable level of operations.
The issuance of additional equity securities by us could result in a significant
dilution in the equity interests of our current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments. There are no assurances that we will be
able to obtain further funds required for our continued operations. Even if
additional financing is available, it may not be available on terms we find
favorable. At this time, there are no anticipated sources of additional funds in
place. Failure to secure the needed additional financing will have an adverse
effect on our ability to remain in business.
If we are successful in selling all 1,000,000 common shares under this Offering,
the net proceeds will be used for our business plan and general working capital,
during the twelve months following the successful completion of this Offering.
In all instances, after the effectiveness of the registration statement of which
this prospectus is a part, we will require some amount of working capital to
maintain our basic operations and comply with our public reporting obligations.
In addition to changing our allocation of cash because of the amount of proceeds
received, we may change the use of proceeds because of changes in our business
plan. Investors should understand that we have wide discretion over the use of
proceeds.
DETERMINATION OF OFFERING PRICE
The offering price of the shares has been determined arbitrarily by us. The
price does not bear any relationship to our assets, book value, earnings, or
other established criteria for valuing a privately held company. In determining
the number of shares to be offered and the offering price, we took into
consideration our cash on hand and the amount of money we would need to
implement our business plan. Accordingly, the offering price should not be
considered an indication of the actual value of the securities.
DILUTION
Dilution represents the difference between the Offering price and the net
tangible book value per share immediately after completion of this Offering. Net
tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
14
result of our arbitrary determination of the Offering price of the shares being
offered. Dilution of the value of the shares you purchase is also a result of
the lower book value of the shares held by our existing stockholder.
The historical net tangible book value as of June 30, 2011 was $8,985 or
approximately $0.0018 per share. Historical net tangible book value per share of
common stock is equal to our total tangible assets less total liabilities,
divided by the number of shares of common stock outstanding as of June 30, 2011.
The following table sets forth as of June 30, 2011, the number of shares of
common stock purchased from us and the total consideration paid by our existing
stockholders and by new investors in this offering if new investors purchase
10%, 25%, 50%, 75% or 100% of the offering, after deduction of offering expenses
payable by us, assuming a purchase price in this offering of $0.05 per share of
common stock.
Percent of Shares Sold from Maximum Offering Available
10% 25% 50% 75% 100%
--------- --------- --------- --------- ---------
Offering price per share 0.05 0.05 0.05 0.05 0.05
Post offering net tangible book value 7,935 15,435 27,935 40,435 52,935
Post offering net tangible book value per share 0.0016 0.0029 0.0051 0.0070 0.0088
Pre-offering net tangible book value per share 0.0018 0.0018 0.0018 0.0018 0.0018
Increase (Decrease) in net tangible book value
per share after offering (0.0002) 0.0011 0.0033 0.0052 0.0070
Dilution per share 0.0484 0.0471 0.0449 0.0430 0.0412
% dilution 97% 94% 90% 86% 82%
Capital contribution by purchasers of shares 5,000 12,500 25,000 37,500 50,000
Capital Contribution by existing stockholders 15,000 15,000 15,000 15,000 15,000
Percentage capital contributions by purchasers
of shares 25% 45% 63% 71% 77%
Percentage capital contributions by existing
stockholders 75% 55% 37% 29% 23%
Gross offering proceeds $ 5,000 $ 12,500 $ 25,000 $ 37,500 $ 50,000
Anticipated net offering proceeds $ (5,300) $ 2,200 $ 14,700 $ 27,200 $ 39,700
Number of shares after offering held by public
investors 100,000 250,000 500,000 750,000 1,000,000
Total shares issued and outstanding 5,100,000 5,250,000 5,500,000 5,750,000 6,000,000
Purchasers of shares percentage of ownership
after offering 2.0% 4.8% 9.1% 13.0% 16.7%
Existing stockholders percentage of ownership
after offering 98.0% 95.2% 90.9% 87.0% 83.3%
CAPITALIZATION
The following table sets forth, as of June 30, 2011, the capitalization of the
Company on an actual basis, and the capitalization of the Company as adjusted to
give effect to the sale of common stock being offered hereby at the initial
public offering price of $0.05 per share and the application of the estimated
offering costs as described in "Use of Proceeds." This table should be read in
conjunction with the more detailed financial statements and notes thereto
included elsewhere herein.
15
Percent of Shares Sold from Maximum Offering Available
Actual as of
June 30, 2011 10% 25% 50% 75% 100%
------------- --------- --------- --------- --------- ---------
Short-term Debt -- -- -- -- -- --
Issued and Outstanding Common
Shares as Adjusted 5,000 5,100 5,250 5,500 5,750 6,000
Additional Paid in Capital 10,225 9,075 16,425 28,675 40,925 53,175
Accumulated Deficit (6,240) (6,240) (6,240) (6,240) (6,240) (6,240)
Shareholders Equity (Deficit) 8,985 7,935 15,435 27,935 40,435 52,935
Total Capitalization 8,985 7,935 15,435 27,935 40,435 52,935
Shares Issued and Outstanding 5,000,000 5,100,000 5,250,000 5,500,000 5,750,000 6,000,000
DESCRIPTION OF SECURITIES TO BE REGISTERED
COMMON STOCK
The authorized capital stock of the Company consists of 75,000,000 shares of
Common Stock, par value $.001. The holders of common stock currently:
(i) have equal ratable rights to dividends from funds legally available
therefore, when, as and if declared by the Board of Directors of the
Company;
(ii) are entitled to share ratably in all of the assets of the Company
available for distribution to holders of common stock upon
liquidation, dissolution or winding up of the affairs of the Company;
(iii)do not have preemptive, subscription or conversion rights and there
are no redemption or sinking fund provisions or rights applicable
thereto, and;
(iv) are entitled to one non-cumulative vote per share on all matters on
which stockholders may vote.
All shares of common stock now outstanding are fully paid for and
non-assessable. All shares of common stock which are the subject of this
Offering, when issued, will be fully paid for and non-assessable. Please refer
to the Company's Articles of Incorporation, Bylaws and the applicable statutes
of the State of Nevada for a more complete description of the rights and
liabilities of holders of the Company's securities.
The holders of shares of common stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose, and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors. Assuming the
Maximum Offering is completed, our officer and director will own 83.3% of the
outstanding shares. (See "Principal Stockholders".)
NEVADA ANTI-TAKEOVER LAWS
The Nevada Business Corporation Law contains a provision governing "Acquisition
of Controlling Interest." This law provides generally that any person or entity
that acquires 20% or more of the outstanding voting shares of a publicly-held
Nevada corporation in the secondary public or private market may be denied
voting rights with respect to the acquired shares, unless a majority of the
disinterested stockholders of the corporation elects to restore such voting
rights in whole or in part. The control share acquisition act provides that a
16
person or entity acquires "control shares" whenever it acquires shares that, but
for the operation of the control share acquisition act, would bring its voting
power within any of the following three ranges: (1) 20 to 33 1/3%, (2) 33 1/3 to
50%, or (3) more than 50%. A "control share acquisition" is generally defined as
the direct or indirect acquisition of either ownership or voting power
associated with issued and outstanding control shares. The stockholders or board
of directors of a corporation may elect to exempt the stock of the corporation
from the provisions of the control share acquisition act through adoption of a
provision to that effect in the Articles of Incorporation or Bylaws of the
corporation. Our Articles of Incorporation and Bylaws do not exempt our common
stock from the control share acquisition act. The control share acquisition act
is applicable only to shares of "Issuing Corporations" as defined by the act. An
Issuing Corporation is a Nevada corporation, which; (1) has 200 or more
stockholders, with at least 100 of such stockholders being both stockholders of
record and residents of Nevada; and (2) does business in Nevada directly or
through an affiliated corporation.
At this time, we do not have 100 stockholders of record resident of Nevada.
Therefore, the provisions of the control share acquisition act do not apply to
acquisitions of our shares and will not until such time as these requirements
have been met. At such time as they may apply to us, the provisions of the
control share acquisition act may discourage companies or persons interested in
acquiring a significant interest in or control of the Company, regardless of
whether such acquisition may be in the interest of our stockholders.
The Nevada "Combination with Interested Stockholders Statute" may also have an
effect of delaying or making it more difficult to effect a change in control of
the Company. This statute prevents an "interested stockholder" and a resident
domestic Nevada corporation from entering into a "combination," unless certain
conditions are met. The statute defines "combination" to include any merger or
consolidation with an "interested stockholder," or any sale, lease, exchange,
mortgage, pledge, transfer or other disposition, in one transaction or a series
of transactions with an "interested stockholder" having; (1) an aggregate market
value equal to 5 percent or more of the aggregate market value of the assets of
the corporation; (2) an aggregate market value equal to 5 percent or more of the
aggregate market value of all outstanding shares of the corporation; or (3)
representing 10 percent or more of the earning power or net income of the
corporation. An "interested stockholder" means the beneficial owner of 10
percent or more of the voting shares of a resident domestic corporation, or an
affiliate or associate thereof. A corporation affected by the statute may not
engage in a "combination" within three years after the interested stockholder
acquires its shares unless the combination or purchase is approved by the board
of directors before the interested stockholder acquired such shares. If approval
is not obtained, then after the expiration of the three-year period, the
business combination may be consummated with the approval of the board of
directors or a majority of the voting power held by disinterested stockholders,
or if the consideration to be paid by the interested stockholder is at least
equal to the highest of: (1) the highest price per share paid by the interested
stockholder within the three years immediately preceding the date of the
announcement of the combination or in the transaction in which he became an
interested stockholder, whichever is higher; (2) the market value per common
share on the date of announcement of the combination or the date the interested
stockholder acquired the shares, whichever is higher; or (3) if higher for the
holders of preferred stock, the highest liquidation value of the preferred
stock. The effect of Nevada's business combination law is to potentially
discourage parties interested in taking control of us from doing so if it cannot
obtain the approval of our board of directors.
DIVIDENDS
As of the date hereof, the Company has not declared or paid any cash dividends
to stockholders. The declaration or payment of any future cash dividend will be
at the discretion of the Board of Directors and will depend upon the earnings,
if any, capital requirements and financial position of the Company, general
economic conditions, and other pertinent factors. It is the present intention of
the Company not to declare or pay any cash dividends in the foreseeable future,
but rather to reinvest earnings, if any, in the Company's business operations.
17
INTERESTS OF NAMED EXPERTS AND COUNSEL
We have not hired or retained any experts or counsel on a contingent basis, who
would receive a direct or indirect interest in the Company, or who is, or was, a
promoter, underwriter, voting trustee, director, officer or employee of the
Company.
Our financial statements for the period from inception to the year ended March
31, 2011, included in this prospectus, have been audited by Silberstein Ungar,
PLLC. We include the financial statements in reliance on their reports, given
upon their authority as experts in accounting and auditing.
The Law Offices of Thomas E. Puzzo, PLLC, has acted as special counsel to ISoft
in connection with the registration and proposed sale of the 1,000,000 shares of
common stock at $0.05 per share.
INFORMATION WITH RESPECT TO THE REGISTRANT
DESCRIPTION OF BUSINESS
We were incorporated on March 9, 2011 in the State of Nevada. We have never
declared bankruptcy, have never been in receivership, and have never been
involved in any legal action or proceedings. Since incorporation, we have not
made any significant purchase or sale of assets. We are not a blank check
registrant as that term is defined in Rule 419(a)(2) of Regulation C of the
Securities Act of 1933, since we have a specific business plan or purpose. We
have not had preliminary contact or discussions with, nor do we have any present
plans, proposals, arrangements or understandings with any representatives of the
owners of any business or company regarding the possibility of an acquisition or
merger.
PRINCIPAL PRODUCTS AND SERVICES
Our company's business is focused on the development and sale of social media,
internet based, interactive entertainment games for use by the general public.
We are in the early stages of developing our first game that we have named Curse
of the Pharaohs ("COTP"). We currently have no revenues and no user
subscriptions for our game. We anticipate that we will not have a commercial
product for at least 12-18 months from the completion of our offering, or 24-30
months from the date hereof, and currently estimate that we will require in
approximately $250-400,000 to complete development and $200,000 to successfully
launch our game with an adequate marketing and promotional campaign.
We must complete 2 major milestones prior to having our game available for
future commercial use and revenue generation. First, we are planning to complete
a DVD based video trailer with the funds we receive from our offering. We plan
to complete the trailer within 6-9 months from the date of closing of the
offering, provided we raise a sufficient amount to so (Please refer to our "Plan
of Operations" herein). The trailer objective is to provide a visually engaging
and dynamic representation through motion graphics and special effects to
illustrate the key components and processes of the COTP game. The trailer will
contain summary representations of our proposed game, characters and stage or
realm development that we can use for presentations to the industry and
financial community to raise the additional financing we require to complete our
second milestone, develop and successfully launch COTP. It will also serve to
give us valuable feedback on our concept from our own website viewers.
To date, we have only developed the overall storyline along the logo for our
brand. Our website www.isoftinternational.com is functional and will ultimately
serve as the primary method to promote our company, our current and planned
products, and gain feedback on our commercial product offerings.
COTP is planned to provide an engaging online game experience, to be played on
social media websites such as Facebook. We are also designing our game to
capitalize on the interactive and social elements of gaming, appealing to
players of all ages and genders. Each player will primarily play against his or
her own programming directions or decisions, but will have the ability to draw
18
on assistance provided by their own social media "friends". It is being designed
as a fantasy quest in an engaging and intense environment, in which the player
will play a young and ambitious archeologist on a mission to discover the hidden
tombs and buried treasures of the Egyptian Pharaohs in the Valley of the Kings.
Using a combination of credits provided either by the game or cash purchase, the
player will assemble a crew of workers to assist in making discoveries. The
player will be responsible for the well being of the workers and will be
required to "pay" them for their services either by credits or proceeds earned
from discoveries. Discoveries of artifacts and tombs will provide currency that
can be traded for game money that may be used to purchase new exploration
licenses, new and more advanced tools or additional manpower. As the player
discovers more and more hidden treasures, they will continue to advance through
the game and receive new missions. All players will ultimately face the "Curse
of the Pharaohs" that requires special preparation.
We are also planning to add new characters, environments, story-line twists and
secrets on a regular basis to keep the game fresh for the players, and
interactive social chat rooms to avoid the downfalls of many previous on-line
games, which typically become redundant and stale for the users over time.
We are focusing on online internet based gaming because users can use their own
PC's with any form of internet connection, without the need for additional
hardware requirements such as a Play Station or Xbox. The internet is also
better suited to play social media based role playing games because gamers can
connect online with multiple people from multiple geographic regions in the
world either for assistance or camaraderie.
Our planned distribution and revenue models may undergo significant revisions,
as we get closer to launching our commercial game. At this stage in our
development, there can be no assurance that we will be successful in generating
revenues from our game, or that users will be receptive to playing COTP.
THE MARKET
We consider our proposed business to be part of the overall entertainment
industry. At the most fundamental level, our proposed product when completed,
will compete with many other forms of entertainment for the leisure time and
discretionary spending of consumers.
Since the initial introduction in the early 1980's, video/electronic games have
increasingly become mainstream entertainment choice for both children and
adults. New generations of console game systems, improved graphics and expanded
artificial intelligence capabilities of the new platforms have significantly
enhanced game play and enabled rapid significant industry growth. With
continuing growth in Internet subscribers, together with better networking
technology and multimedia encoding techniques, it is becoming increasingly
feasible to provide the same if not better quality entertainment through the
Internet than was previously seen, heard and/or felt only through other more
conventional distribution mediums such as game consoles.
Electronic video games are played by a large percentage of computer and game
console users throughout the world. Despite general conceptions that game
players are generally children and teens, the Entertainment Software Association
(www.esa.com) disclosed that 2010 user demographics for the USA, which directly
apply to our proposed business, reveal that (1):
* Seventy two percent of American households play computer and video
games.
* The average game player is 37 years old and has been playing games for
12 years.
* Sixty eight percent of parents believe that game play provides mental
stimulation or education and fifty seven percent feel that playing
games has brought their families closer together.
----------
(1) http://www.theesa.com/facts/gameplayer.asp
On January 13, 2011 the NPD Group, a global market research company, announced
that estimated US sales of game software and content (including console games,
full game downloads, downloadable game content and social media games) exceeded
$15.4 billion in 2010 (2). Social media based games are the newest industry
19
entrant. Their success has been commensurate with the huge success of social
media websites such as Facebook. Facebook currently enjoys more than 500 million
active users globally, of which over 50% log on in any given day. The average
user has 130 friends on Facebook and users collectively spend over 700 billion
minutes per month on the site. Software developers and entrepreneurs from 190
countries develop their games and products with the Facebook platform. More than
2.5 million websites have integrated with Facebook, including a large percentage
of the top global and US websites. (3)At a game event in late 2010, Facebook CEO
Mark Zuckerberg revealed that games are one of the primary reasons some people
visit Facebook. He confirmed that 40% of its userbase is using the site for
social gaming and that the top ten games on Facebook have more than 12 million
users each (4).
----------
(2) http://www.npd.com/press/releases/press_110113.html
(3) http://www.facebook.com/press/info.php?statistics
(4) http://techcrunch.com/2010/09/21/200-million-people-are-playing-facebook-
games/
We believe social media based games will continue to experience significant
growth and represent the next standard in electronic games for the following
reasons:
* The games offer regular content updates with changing story lines
through flexible architecture, keeping the game dynamic and fresh for
players
* The games extend the realism of game play, by offering cutting edge
technology, which makes the player feel they are actually part of the
environment
* The games create new opportunities to foster competition and mutual
aid, by engaging mutual friends or players in a team or support
situation
* The games present a compelling new social environment, and an
opportunity to meet new friends and share similar mind frames,
existence, and game survival techniques.
* The games offer an attractive new and recurring revenue source for
game companies, as evidenced by the top performers who attain many
subscribers in their compelling games (see "Competition and
Competitive Strategy" below)
COMPETITION AND COMPETITIVE STRATEGY
We do not yet have a commercial product available for sale. When complete, COTP
will be competing in the entertainment industry for the leisure time and
discretionary spending of consumers with all other forms of entertainment media.
Our competitors vary in size and cost structure from very small companies with
limited resources to very large, diversified corporations with greater financial
and marketing resources than ours. We are considered the smallest as we do not
currently have a commercial product yet available for sale or use. We will be
competing with well funded start-ups, traditional independent video game
publishers, hardware and software manufacturers, casual entertainment websites,
social networking websites, mobile games developers, foreign games developers
and large publicly held media companies. We face additional competition from the
entry of new companies into our market, including large diversified
entertainment companies that have begun to develop games based upon their own
highly recognizable brands, (such as Disney Interactive Studios) and, as a
result, stand to become more direct competitors.
Our competitors have significantly greater resources and are able to spend more
time and money on concept and focus testing, game development, product testing
and marketing. Our business is driven by hit titles, which will require us to
invest significantly in production and in marketing. It is also characterized by
the continuous introduction of innovative new titles and the development of new
technologies. Competition is also based on product quality and features, timing
of product releases, brand-name recognition, quality of in-game content, access
to distribution channels, effectiveness of marketing and price. In addition,
regardless of our competitor's financial resources or size, our success depends
on our ability to successfully execute our competitive strategies.
20
SOCIAL MEDIA ONLINE GAMES
Our direct competition in the social media based online games market segment is
also highly competitive and characterized by frequent product introductions, new
business models and new platforms. The barriers to entry are significantly less
onerous, due to the lack of the requirement for a specific hardware platform.
The game player's personal computer and an internet connection serve as the
platform. As the proportion of households with a broadband connection increases,
we expect new competitors to enter the market and existing competitors to
allocate more resources toward developing online games. As a result, we expect
competition in the online games market segment to intensify.
Currently Facebook is the major social media platform for our proposed game (5).
We believe Facebook is used by all of our competitors for their offerings.
Currently, the major competitors include major software and media companies like
Microsoft, traditional video game publishing companies such as Electronic Arts,
and companies that specialize in social media based online games such as Zynga,
Playdom and Mind Jolt. As of June 29, 2011, the top 3 specialists are currently
enjoying the largest user base on Facebook are Zynga, Pencake Limited and
Research in Motion Ltd. As with more traditional video game offerings, hits have
captured a significant percentage of overall users and this trend is expected to
continue. Zynga currently enjoys the largest monthly average user base which is
in excess of 208 million monthly users. Penkake is second with approximately 37
million and Research in Motion is third with 36 million. Microsoft is currently
fifth with 33 million monthly average users (6).
----------
(5) http://www.insidefacebook.com/2011/02/08/slower-december-facebook-growth/
(6) http://statistics.allfacebook.com/applications
KEY SUCCESS FACTORS
In order for our company and our game to be successful we must play close
attention to all of our direct and indirect competitors. We plan on carefully
investigating the competition and their respective games on a regular basis, and
carefully analyze the positive and negative elements of their games and possible
threats to us. If we fail to do so, our business will likely fail.
For game development to be successful, we must either build our own or contract
with a development team that is comprised of a creative, experienced group of
game designers and programmers that can set COTP apart from its potential
competition, with expertise in state of the art design and implementation
skills. Our research to-date suggests that COTP's fantasy environment represents
a desirable genre. In order for our game to be a success, it also must offer:
* Differentiated & Dynamic Quality Content - COTP is planned to offer a
visual experience like no other. Attention to detail will be essential
to ensure that the characters and environment look on par if not
superior to other games of its caliber. At the same time, the game
must continue to develop a story that is extremely interesting to its
players. The content will be dynamic with twists in the story and game
that will keep players engaged. This will become more important as
additional competitors enter the market with similar games.
* Empowering - The target audience must feel that they have a `say' in
what happens to the characters in the game, giving the player the
illusion and pleasure of taking action without having to deal with the
responsibility and repercussions of such actions. We plan on setting
up chat rooms on the COTP web site that will encourage the audience to
talk about their experiences and share thoughts on the game, thus
capturing their loyalty and making the site a part of their daily
lives so the characters become "real" to them.
* Entertaining - The target audience needs to be drawn to the
experience, and made to forget about the reality around them while
they focus on the new cyber-world that COTP presents to them. The
experience needs to be commanding so that it becomes a topic of
conversation among the consumers' friends and colleagues.
21
* Customer Focused - We plan to provide content updates to COTP to
provide an ongoing captive experience for the user and ensure that
they leave the game happy, keen to relate their entertainment
experience to all their friends and anxious to log-on to enjoy the
next competition, hopefully bringing friends to share the experience.
Customer complaints or suggestions will be dealt with to the best of
our ability to ensure customer satisfaction, thus encouraging positive
word of mouth recommendations of our product.
In order for the game and company to be successful, we will first need to alert
our target market about COTP among the vast selection of other titles in the
market. We believe this will require significant advertising and promotion. Our
initial plans are to use the Facebook platform and create a Twitter presence to
target interested game enthusiasts. We have already created both vehicles for
our proposed future launch at http://www.facebook.com/pages/curse-of-the-
pharaohs/205821226104970 and http://www.twitter.com/cotp_game. We believe our
marketing and promotion strategy will be subject to major revisions are we get
closer to actually launching COTP.
SALES STRATEGY
We are still in the planning and formulation stages with respect to the
development and commercialization of our product. As of the date hereof, we
believe we are at least 24-30 months away from being in a position to generate
revenues from our game.
Social media based games currently are not sold by subscription or for cash
through direct or retail distribution channels. Additionally advertising
revenues are not a common revenue stream for social media games unlike other
website based commercial activities, because the game is played through the
social media website rather than our own website. Games are provided for free to
all users through the social media website. New games/players are typically
provided a number of credits to use in the game. Additional free credits may be
earned through successful completion of tasks or quests.
In order to be successful and for Isoft to generate sufficient revenues, COTP
must captivate a very wide audience. The game's action and quest design and
function must be such that it will encourage the player to spend hard currency
on the game, through the purchase of additional credits. Currently, credit
purchases can be completed through direct credit card purchases, paypal, using
facebook credits, or purchase of game cards (distributed by us). When we
introduce COTP, we also plan to roll out our own game store, where players can
purchase credits. Facebook recently introduced out its own currency (Facebook
credits), which is intended to be a global currency for the Facebook community.
These credits may be purchased through Facebook and can be utilized to purchase
many Facebook sundry items, game credits or buy items from the game store
itself. Game developers then ultimately earn a portion of the currency used to
purchase these credits when they are used to play the game.
In order to successfully generate sufficient revenues for our business through a
large player base we must give careful consideration to the following:
- Develop our game concept so the player must attend on a regular basis
- The player must be able to upgrade to higher levels or expand the
resources of a certain level through purchase of game credits
- Players can earn more game credits by sharing and inviting their
friends to play the game
- The use of the credit system to expand credits for the player based on
any of the following scenarios:
* Renewable credit system that the player earns every few minutes,
which entices the player to regularly attend to the game
* Gifted credits from other players in the game which encourages
the user to invite his friends to play
* Enable the purchase of credits through all generally accepted
media
* Collection of credits through completion of tasks and selling
items in the game
- Build a game store where the players can purchase game credits using
their credit cards or PayPal accounts
22
In addition to our corporate information and other standard sections contained
on our company website at www.isoftinternational.com, we plan to use our website
and social media pages as a sales tool and a major `hub' for our game storyline,
character development, new character releases, current game trends, new game
capabilities and concepts. In the future when we commercialize the game, we also
plan to include an online `community' aspect, where forums, news rooms and
`chats' will be available for players and prospects to discuss the game, share
stories and playing techniques. By creating a `community' aspect around our
social media pages and WWW.ISOFTINTERNATIONAL.COM, our sites will become known
as a place to look not only for upcoming events, tours, and promotions/contests,
but also a domain for people to share strategy and techniques and exchange
ideas.
DISTRIBUTION OF PRODUCTS OR SERVICES
When COTP is completed, we plan to distribute it to users over the internet. We
do not anticipate any other form of distribution at this time. Game software
will be kept on our servers, which we will either own or lease, but it will be
hosted to players through the Facebook Platform or other potential social media
websites. For example, Facebook the most popular social media website at present
is, also a development platform that enables companies and engineers to deeply
integrate with the Facebook website and gain access to millions of users.
Currently, Facebook social media games are loaded into a Canvas Page, which is
literally a blank frame within Facebook on which to run our game. To set up our
Canvas Page and Canvas URL we must first register our game with Facebook or
other similar social media site and enter in our basic game information. We then
populate the Canvas Page by providing a CANVAS URL (an internet path leading to
our servers where the game software is hosted) that contains the HTML,
JavaScript and CSS programming and styling languages that define, create and
format the web pages the users see on the internet that make up our game. When a
user requests our game through Facebook, the Facebook website loads the Canvas
URL within an "iframe" (a method to include an external web page such as our
game as part of another main web page being part of the Facebook website) on
that page. Our game is then displayed and played on Facebook.
Internet based game distribution is rapidly becoming the method of choice for
smaller gaming companies, due to the proliferation of residential internet
access, inexpensive computer software and graphics packages, and the
proliferation of online gamers seeking fresh content. Online, internet based
platforms reduces significant costs associated with setting up and maintaining
conventional distribution channels such as retail sales. Under conventional
channels, revenue streams for the producing game title company are also reduced
by significant margins or markups given to the wholesaler and retail
distributors. Retail distributors generally also insist on implementation of
their own sales programs with little or no input from the producer, particularly
small produces such as our company. Online distribution directly to the game
player also allows for significantly greater flexibility in managing content
changes, sequels and/or second additions, without the permission of wholesale or
retail partners or distribution channel agreements.
SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
There are no constraints on the sources or availability of outsource software
developers and supplies related to our business. We are planning to hire local
third party contractors to develop our storyline for the DVD based game trailer
and the commercial game platform. The trailer will contain summary
representations of our proposed game, characters and realm development that we
can use for presentations to the industry and financial community. It will also
serve to give us valuable feedback on our concept from our own website viewers.
This trailer will consist of characters, game elements, realm & quest
environments, and the social chat room aspects associated with social media game
cultures. These elements will be edited into the storyline with audio
enhancements.
We are currently in the process of identifying several suitable firms to develop
the DVD trailer, which can also supply all of their own computer hardware and
development software. We have not yet entered into any contracts for these
services. We will select the successful firm based on evaluations on their
expertise in developing products in a specific category such as our planned
game, and we will enter into a contract that will specify milestones, work
requirements and cost. We will also ensure that we retain all rights to publish
and/or distribute sequels, conversions, enhancements, and add-ons to the product
23
initially being produced by the third party developer. We estimate the DVD
trailer development will be completed over the next 6-9 months following the
successful completion of our offering.
The next milestone is development and commercialization of COTP, if we are
successful in raising the additional $450-600,000 in financing required to do
so. In conjunction with these financing activities, our officer and director
plans to commence with several phases of this development within 6-12 months
following completion of this offering (See Plan of Operation"). The actual
development and commercialization of COTP is anticipated to take an additional
12-18 months from the date we complete the financing.
One of the first phases and the most important initial aspect of COTP game
development is selection of a suitable back-end flash game engine. A
cost-effective and robust flash game engine will be critical to the success of
the game and we must ensure it meets the complexities of our title in-game
graphics, and character/realm/quest complexities associated with our fantasy
game. Game engines are the core software component of all online games, and
provide the underlying technologies to run the COTP game on cross platform
internet browsers. The core functionality typically provided by a game engine
includes a rendering engine ("renderer") for graphics, a physics engine and
collision detection, sound, scripting, animation, artificial intelligence,
networking, streaming, memory management, threading, and a scene graph.
Collision detection involves algorithms for checking for collision, i.e.
intersection, of two given solids. A physics engine is a computer program that
simulates physics models, using variables such as mass, velocity, friction and
wind resistance. It can simulate and predict effects under different conditions
that would approximate what happens in real life or in a fantasy world. The
scene graph is a structure that arranges the logical and spatial representation
of a graphical scene. Each application is highly important as it relates to the
other, and to the overall game engine itself to ensure realistic player
interaction. The process of game development will be largely determined by the
correct decision in purchasing an exceptional engine for our title. Examples of
a few flash game engines researched to-date include: PushButton, Adobe's Flex,
Flixel, FlashPunk, TheoWorlds.
Successful completion of COTP is highly dependent on the third party we
ultimately choose to develop the game. The developer must include an experienced
group of creative, production, and technical professionals. Our officers and
directors will be responsible for the entire development and production process
including the supervision and coordination of internal and external resources.
The third party development team will assemble the necessary creative elements
to complete our game using, where appropriate, outside programmers, artists,
animators, scriptwriters, musicians and songwriters, sound effects and special
effects experts, and sound and video studios. The software contractors that we
choose must be highly experienced with:
- Internet and website software design and applications
- Facebook platform development, and application creation
- Adobe Flash development and design
- The use of Flash Action Script programming language
- The use of PhP programming languages
- Payment Gateway Integration and online payment processing and
programming.
- Coding, Compilation, Documentation, Integration, Software Testing
enablers.
- The use of MySQL and ER (Entity Relationship) Modelling database
programming language
In conjunction with the evaluation of the game engine, our officer and director
is also planning to formulate manpower needs and qualifications to choose a
suitable third party developer experienced with all of the above noted required
attributes. We are planning to identify the successful party prior to completion
of the financing round so that we can commence with development concurrent with
the closing.
We currently do not anticipate any supply or manpower availability constraints
with respect to identifying and choosing any of the contractors we require. We
also believe we have access to more abundant and cost effective software
development contractors in Egypt than in North America or Asia. Because we are
at least 12 months away from starting the development of the actual game, any
24
significant change in these circumstances could materially impact our ability to
complete the game, our cash requirements and our operations.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We plan on selling our products and services directly to end use consumers over
the internet. Our intended offering is also priced for mass market play and
revenue generation. Therefore, we do not anticipate dependence on one or a few
major customers.
PATENT, TRADEMARK, LICENSE & FRANCHISE RESTRICTIONS AND CONTRACTUAL OBLIGATIONS
& CONCESSIONS
We currently do not own any intellectual property have not obtained any
copyrights, patents or trademarks in respect of any intellectual property.
Interactive entertainment software is susceptible to piracy and unauthorized
copying. Our primary protection against unauthorized use, duplication and
distribution of our products is copyright and trademark protection of our game
and any related elements and enforcement to protect these interests. As we get
closer to developing our game, we plan to copyright and trademark the following:
* Trademarks associated with elements of the game, such as the game
logo;
* Trademarks under which the game is marketed;
* the copyrights for the game software, including the game's audiovisual
elements
We do not anticipate copyrighting or trademarking any assets over the next 12
months. We plan to register copyrights and trademarks in countries where we
distribute our game. We may seek other protection over these assets if we have
the cash resources to do so.
We have not entered into any franchise agreements or other contracts that have
given, or could give rise to obligations or concessions.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
Software development activities over the next 12 months are dependent on the
successful completion of an additional $450-600,000 financing to pay for the
development of the COTP game. Our current plan of operations over the next 12
months is to complete the DVD trailer with funding from our current offering
described herein, raise additional financing for actual COTP development and
commercialization, and prepare for development game development.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
In addition to being our sole officer and director, Mr. Ayad is currently our
only employee. He is currently planning to devote 20 hours per week to company
matters. Subsequent to successful completion of this Offering, he is planning to
devote as much time as the board of directors determines is necessary to manage
the affairs of the company. There is no formal employment agreement between the
Company and Mr. Ayad. We do not anticipate hiring any additional employees for
the next 12 months.
DESCRIPTION OF PROPERTY
We do not currently own any real property. Our corporate offices are located at
1 Ahmed Kamal St., Sidi Gaber Alexandria 21311, Egypt. Mr. Ayad is providing us
this office space free of charge. This location will serve as our primary
executive offices for the foreseeable future. Management believes the current
premises arrangements are sufficient for its needs for at least the next 12
months.
We currently have no investment policies as they pertain to real estate, real
estate interests or real estate mortgages.
25
LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings and we are not aware of
any pending or potential legal actions.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
We plan to contact a market maker immediately following the completion of the
offering and apply to have the shares quoted on the OTC Electronic Bulletin
Board ("OTCBB"). The OTCBB is a regulated quotation service that displays
real-time quotes, last sale prices and volume information in over-the-counter
(OTC) securities. The OTCBB is not an issuer listing service, market or
exchange. Although the OTCBB does not have any listing requirements to be
eligible for quotation on the OTCBB, issuers must remain current in their
filings with the SEC. Market makers are not permitted to begin quotation of a
security of an issuer that does not meet this requirement. Securities already
quoted on the OTCBB that become delinquent in their required filings will be
removed following a 30 or 60 day grace period if they do not make their required
filing during that time. We cannot guarantee that our application will be
accepted or approved and our stock listed and quoted for sale. As of the date of
this filing, there have been no discussions or understandings between ISoft with
any market maker regarding participation in a future trading market for our
securities.
As of the date of this filing, there is no public market for our securities.
There has been no public trading of our securities, and, therefore, no high and
low bid pricing. As of the date of this prospectus, we have one shareholder of
record.
RULE 144 SHARES
As of the date of this prospectus, our Officer and Director (affiliate)
beneficially owns all of the 5,000,000 total outstanding shares. These shares
are currently restricted from trading under Rule 144. They will only be
available for resale, within the limitations of Rule 144, to the public if:
* We are no longer a shell company as defined under section 12b-2 of the
Exchange Act. A "shell company" is defined as a company with no or
nominal operations, and with no or nominal assets or assets consisting
solely of cash and cash equivalents.
* We have filed all Exchange Act reports required for at least 12
consecutive months; and
* If applicable, at least one year has elapsed from the time that we
file current Form 10-type of information on Form 8-K or other report
changing our status from a shell company to an entity that is not a
shell company.
At present, we are considered to be a shell company under the Regulations. If we
subsequently meet these requirements, our officer and director would be entitled
to sell within any three month period a number of shares that does not exceed
the greater of: 1% of the number of shares of our common stock then outstanding,
or the average weekly trading volume of ISoft common stock during the four
calendar weeks, preceding the filing of a notice on Form 144 with respect to the
sale for sales exceeding 5,000 shares or an aggregate sale price in excess of
$50,000. If fewer shares at lesser value are sold, no Form 144 is required.
DIVIDENDS.
As of the filing of this prospectus, we have not paid any dividends to our
shareholders. There are no restrictions which would limit our ability to pay
dividends on common equity or that are likely to do so in the future. The Nevada
Revised Statutes, however, do prohibit us from declaring dividends where, after
giving effect to the distribution of the dividend, ISoft would not be able to
pay its debts as they become due in the usual course of business, or its total
assets would be less than the sum of the total liabilities plus the amount that
would be needed to satisfy the rights of shareholders who have preferential
rights superior to those receiving the distribution.
26
STOCK OPTIONS AND WARRANTS
There are no outstanding stock options or warrants
PENNY STOCK RULES
The Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
A purchaser is purchasing penny stock which limits the ability to sell the
stock. The shares offered by this prospectus constitute penny stock under the
Securities and Exchange Act. The shares will remain penny stocks for the
foreseeable future. The classification of penny stock makes it more difficult
for a broker-dealer to sell the stock into a secondary market, which makes it
more difficult for a purchaser to liquidate his/her investment. Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and
Exchange Act. Rather than creating a need to comply with those rules, some
broker-dealers will refuse to attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk
disclosure document, which:
* contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
* contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation of such duties or other requirements of the
Securities Act of 1934, as amended;
* contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" price for the penny stock and the
significance of the spread between the bid and ask price;
* contains a toll-free telephone number for inquiries on disciplinary
actions;
* defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
* contains such other information and is in such form (including
language, type, size and format) as the Securities and Exchange
Commission shall require by rule or regulation;
The broker-dealer also must provide the following to the customer, prior to
effecting any transaction in a penny stock:
- the bid and offer quotations for the penny stock;
- the compensation of the broker-dealer and its salesperson in the
transaction;
- the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
- monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
27
REGULATION M
Our sole officer and director, who will offer and sell the shares, is aware that
he is required to comply with the provisions of Regulation M, promulgated under
the Securities Exchange Act of 1934, as amended. With certain exceptions,
Regulation M precludes officers and directors, sales agents, any broker-dealer
or other person who participates in the distribution of shares in this offering
from bidding for or purchasing, or attempting to induce any person to bid for or
purchase any security which is the subject of the distribution until the entire
distribution is complete.
WHERE YOU CAN FIND MORE INFORMATION
We have not registered our common shares pursuant to Section 12 of the Act,
which means we are considered a "voluntary filer" under SEC regulations. We are,
therefore, not currently obligated to file any periodic reports under the
Exchange Act, to follow the SEC's proxy rules or to distribute an annual report
to our securities holders. However, we intend to file annual, quarterly and
special reports, and other information with the SEC, even though we are not
required to do so. You may read or obtain a copy of the registration statement
to be filed or any other information we file with the SEC at the SEC's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain
information regarding the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. Our SEC filings are also available to the public from the
SEC web site at www.sec.gov, which contains all of our reports, and other
information we file electronically with the SEC.
FINANCIAL STATEMENTS
The financial statements and related notes of ISoft for our first fiscal year
ended March 31, 2011 included in this prospectus have been audited by
Silberstein Ungar, PLLC and start on Page F-8. The unaudited financial
statements as of June 30, 2011, and for the period then ended and cumulative
from inception (March 9, 2011), appearing in this prospectus have been reviewed
by Silberstein Ungar, PLLC and start on Page F-1.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIMITED OPERATING HISTORY AND NEED FOR ADDITIONAL CAPITAL
Our Company was incorporated in the State of Nevada on March 9, 2011 to engage
in the development of online games for social networking websites. We are a
development stage company with very limited financial backing and assets. We are
only in the early stages of developing our first game. We currently have no
revenues or operating history, and no users for our game. We anticipate that we
will not have a commercial product for at least 24-30 months from the date
hereof, which is dependent on completion of a financing (in addition to this
offering) of $450-600,000 to complete development and then commercially launch
our game. From inception until the date of this filing we have had limited
operating activities, primarily consisting of the incorporation of our company
and the initial equity funding by our officer and director. We received our
initial funding of $15,000 through the sale of common stock to our officer and
director, who purchased 5,000,000 shares at $0.003 per share. We have also
recently launched our initial corporate website, Facebook page and Twitter
account.
We currently have no employees. During the first stages of our company's growth,
our officer and director will provide his time free of charge to execute our
business plan at no charge. Since we intend to operate with very limited
administrative support, the officer and director will continue to be responsible
for administering the company for at least the first year of operations.
Management has no intention at this time to hire additional employees during the
first year of operations. Due to limited financial resources, he is planning to
dedicate between 20 hours per week, to ensure all operations are executed.
We cannot guarantee we will be successful in our business operations. Our
business is subject to all of the risks inherent in the establishment of a new
business enterprise and we are at least 24 months away from generating any
28
revenue. We believe that the funds from this offering will allow us to operate
for one year, only if we are successful in raising the Maximum Offering.
12 MONTH PLAN OF OPERATION
Our plan of operations over the 12 month period following successful completion
of our offering is to gain support for our concept and then raise sufficient
suitable additional financing to commence with the development of the COTP
social media game (please refer to the section below entitled "Milestones" for a
detailed description of our 12 month Plan of Operation). In order to achieve our
plan, we have established the following goals for this initial 12 month period:
* Create and execute a video trailer which illustrates our game concept
within 6-9 months
* Upload our trailer on our company website after completion
* Secure additional suitable financing to develop our game
* Research & select of most effective game engine for COTP requirements
* Upon selection of game engine, interview programming specialists who
have experience with specific coding languages to develop and support
the game engine
Our long term business objectives are:
* Complete our game, achieve ongoing profitability and create value for
our stockholders and our subscribers.
* Become a well-recognized brand & entertaining game destination for
social media game players
* Develop a leadership role over time in pioneering mixed-genre social
media games.
Our ability to achieve our business objectives and goals is entirely dependent
upon the amount of shares sold in this Offering.
If we are not able to sell 750,000 shares we can maintain our reporting
requirements with the SEC and complete the development of our dvd and related
materials, but we will have insufficient funds to market our company to
prospective investors to secure financing to develop and market our game. If we
are not able to sell a minimum of 500,000 shares of our common stock in this
Offering, we will not implement our business plan at all, except maintaining our
reporting with the SEC and remain in good standing with the state of Nevada. If
we do not sell at least 250,000 shares of our common stock (25% of this
Offering) we will not be able to maintain our reporting status with the SEC and
remain in good standing with the state of Nevada without additional funds. These
funds may be raised through equity financing, debt financing, or other sources,
which may result in the dilution in the equity ownership of our shares. We will
also need more funds if the costs of developing our website are greater than we
have budgeted. We will also require additional financing to sustain our business
operations if we are not successful in earning revenues.
We currently do not have any arrangements regarding this Offering or following
this Offering for further financing and we may not be able to obtain financing
when required. Our future is dependent upon our ability to obtain further
financing, the successful development of our planned game, a successful
marketing and promotion program, and achieving a profitable level of operations.
The issuance of additional equity securities by us could result in a significant
dilution in the equity interests of our current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments. There are no assurances that we will be
able to obtain further funds required for our continued operations. Even if
additional financing is available, it may not be available on terms we find
favorable. At this time, there are no anticipated sources of additional funds in
place. Failure to secure the needed additional financing will have an adverse
effect on our ability to remain in business.
If we are successful in selling all 1,000,000 common shares under this Offering,
the net proceeds will be used for the development of our dvd trailer and general
working capital, during the twelve months following the successful completion of
this Offering. In all instances, after the effectiveness of the registration
statement of which this prospectus is a part, we will require some amount of
29
working capital to maintain our basic operations and comply with our public
reporting obligations. In addition to changing our allocation of cash because of
the amount of proceeds received, we may change the use of proceeds because of
changes in our business plan. Investors should understand that we have wide
discretion over the use of proceeds.
PROPOSED ACTIVITIES
EXPENDITURES
The following chart provides an overview of our budgeted expenditures for the 12
months following the completion of this Offering. The expenditures are
categorized by significant area of activity.
If 10% of If 25% of If 50% of If 75% of If 100% of
Shares Sold Shares Sold Shares Sold Shares Sold Shares Sold
----------- ----------- ----------- ----------- -----------
SHARES SOLD 100,000 250,000 500,000 750,000 1,000,000
GROSS PROCEEDS $ 5,000 $ 12,500 $ 25,000 $ 37,500 $ 50,000
WORKING CAPITAL - JUNE 30, 2011 (1) 4,300 4,300 4,300 4,300 4,300
-------- -------- -------- -------- ----------
TOTAL BEFORE EXPENSES 9,300 16,800 29,300 41,800 54,300
-------- -------- -------- -------- ----------
OFFERING EXPENSES
Legal & Accounting 9,000 9,000 9,000 9,000 9,000
Edgar Agent Fees 800 800 800 800 800
Transfer Agent Fees 500 500 500 500 500
-------- -------- -------- -------- ----------
Total Offering Expenses 10,300 10,300 10,300 10,300 10,300
Less: Offering Expenses incurred
at June 30, 2011 (8,935) (8,935) (8,935) (8,935) (8,935)
-------- -------- -------- -------- ----------
NET REMAINING OFFERING EXPENSES 1,365 1,365 1,365 1,365 1,365
-------- -------- -------- -------- ----------
NET AFTER OFFERING EXPENSES 7,935 15,435 27,935 40,435 52,935
-------- -------- -------- -------- ----------
EXPENDITURES
Public Reporting Expenses 17,000 17,000 17,000 17,000 17,000
Storyline development 2,500 2,500 2,500
Storyboard development 2,500 2,500 2,500
Stage sketches and development 3,500 3,500 3,500
Character development 5,500 5,500
DVD trailer production 7,000 7,000
Press and investor materials 10,000
Office & misc 1,500 1,500 1,500
-------- -------- -------- -------- ----------
17,000 17,000 27,000 39,500 49,500
-------- -------- -------- -------- ----------
Net remaining balance $ (9,065) $ (1,565) $ 935 $ 935 $ 3,435
----------
(1) Defined as $5,460 of cash on hand less accounts payable of $1,160 at as
June 30, 2011
MILESTONES
Below is a brief description of our planned activities which we expect to
commence immediately after the Offering is completed, assuming that we were able
to sell 1,000,000 shares of our common stock.
MONTHS 1 TO 6 FOLLOWING COMPLETION OF THIS OFFERING
We are planning the following game development tasks:
30
* Obtain quotes from companies to produce our DVD trailer, based on our
budget, timeline and creative expectations.
* Work with the successful contractor to complete a detailed storyline
based on our COTP business & game development outline, which has
already developed by our officer and director. We are budgeting $2,500
of this process. The outcome will encompass a detailed storyline,
completed game elements, our unique game features, stylistic in-game
movement patterns, and game development strategy. It will also detail
how the game player will interact with the game, character feature
sets, and the circumstances of why special character powers are
deployed in the game.
* On completion of the storyline, create a story board identifying each
of the actions to be included in each frame of Storyline. This story
board is a series of sketches showing each shot of the DVD Trailer.
This is used to plot the sequence of the DVD. We are budgeting $2,500
for this milestone.
* Identification of suitable COTP realm descriptions with our selected
DVD Trailer Company. We plan to develop two major stage/realm
descriptions, which will include detailed sketches of each realm.
Sketches will include an overall introduction, landscape and terrain
features. The process/outlines of sketch schematics includes:
* Thumbnail Sketches: These are created first to confirm stylistic
direction between our company and the contractor. The COTP realms
will be thumbnail sketched first before moving on to more
detailed sketching phase for all the realms
* COTP Realm Sketches: Once we have reached agreement on stylistic
attributes through creation of the thumbnail sketches, we will
then work with the contractor to develop detailed sketches of all
COTP realms incorporating textures, shapes and overall scale.
This stage does not include character development.
* COTP Realm Illustrations: Full Color schemes will be created and
approved based on the sketches, for all COTP realms,
incorporating both wide angle and close up views. These two
angles will ultimately be showcased on the DVD Trailer.
We are budgeting $3,500 for creation, modifications and approval of all
stage/realm descriptions and sketches.
We then plan to focus on character development, which will encompass in-game &
character features. We will work closely with a creative development firm, which
we will have to select. The major milestones include 2 phases:
* Phase 1 character development. Develop 4 character descriptions,
including character introduction, look, strengths, weaknesses, special
effects/abilities. The development firm will then create two stylistic
thumbnail sketch versions for our company.
* Phase 2 will include detailed character sketches, which will
incorporate textures, shapes, scale, and color schemes for the
characters:
We are budgeting $5,500 for the third party costs for the creative development
firm for character sketches and development.
MONTHS 6 TO 12 FOLLOWING COMPLETION OF THIS OFFERING
We plan to produce the DVD Trailer within 6-9 months of completion of the
offering. The objective is to provide a visually engaging and dynamic
representation through motion graphics and special effects to illustrate the key
components and processes of the COTP game. We also believe the trailer will give
us the equivalent of a beta and editing analysis of our proposed game,
characters and realm development through critique by industry members, the
financial community and our own website viewers. The process includes:
* apply our character and realm illustrations to a stimulating and
interesting visual presentation
* describe the storyline with voice-overs in conjunction with the
sketched visuals
* describe the technical and organizational aspects of the planned COTP
game through organizational charts, and still images
* sound design and post-production optics with voiceovers. This step
will require the selection of a "voice", preferably someone with radio
or announcement experience. The audio file will then be uploaded into
post-production editing suite, and timed accordingly with the
31
character and realm movements in order that the audio (voice)
storyline is accurately timed with the visual DVD. This is achieved
with our creative development firm.
We are budgeting $7,000 for the production and completion of DVD Trailer. This
will include all final renderings, and the upload to our website.
On completion of the DVD trailer, our Officer and Director will focus his
efforts on securing suitable additional financing to complete development and
promote our game. We currently estimate that we will require $10,000 for
completion of this milestone. In conjunction with this task we plan to:
* Identify and present to financial/investment contacts
* Create a "press package" including our trailer, Director Bio's,
financing requirements and plan and the COTP Overview.
* Upload the DVD trailer to our website and to our Facebook page and
ensure we have sufficient bandwidth to manage streaming video (DVD)
content for potential investors and interested viewers.
* Create an "online community" button on our company website and
facebook page for gaming enthusiasts to post their comments, and
insights on our trailer and game concept.
Mr. Ayad is also planning to complete the following preliminary activities
related to game development:
* Develop job specifications for software programmers/concept
developers/graphics specialist, 3D animators, tools designer,
production specialist, artificial intelligence specialist and editors
for game development.
* Begin technical research on software elements within game engine -
including all source codes and rendering parameters to ensure smooth
in-game visuals for Game Title.
* Develop preliminary plan for game modeling, lighting, texturizing, and
interfacing.
* Confirm all realms and characters to be used in the game. Modify
realm/character attributes if required.
* Pre-production game analysis and elements. This includes unique
in-game features, quests, character & player abilities, in-game
socials and virtual chat rooms, virtual merchandising identification.
GOING CONCERN
Our auditor has issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated revenues and no revenues are anticipated within
the next 12 months. There is no assurance we will ever reach that point.
RESULTS OF OPERATIONS
From the inception of our company on March 9, 2011 to March 31, 2011 (our first
fiscal year end) we incurred a loss of $440. This loss includes $280 for the
incorporation of our company and $160 for the acquisition of our
isoftinternational.com domain and hosting costs. During the first quarter ended
June 30, 2011 we incurred an additional loss of $5,800. This loss includes
$5,250 for professional fees, $225 for our office and $325 for organization
related costs. During the first quarter ended June 30, 2011, we also incurred
costs of $4,685 related to our public offering, which we have classified as
deferred offering costs on our balance sheet. Deferred offering costs consist of
legal, accounting and filing fees incurred through June 30, 2011 that are
related to our public offering and that will be charged to capital upon the
receipt of funding and issuance of shares.
From inception on March 9, 2011 to June 30, 2011 we have incurred cumulative
losses of $6,240. We believe we will continue to incur losses into the
foreseeable future as we develop our business.
PURCHASE OR SALE OF EQUIPMENT
We have not purchased or sold any plants or significant equipment, and have no
plans to do so over the next 12 months.
32
REVENUES
We did not generate any revenues from March 9, 2011 (inception) to June 30,
2011. We will not be in a position to generate revenues for at least 24 months.
Future revenue generation is dependent on the successful development and launch
of our game.
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have financed our cash flow and operations solely from the sale
of $15,000 of common stock to our director. Of the $15,000 we raised, $9,540 was
used either for operating activities or for costs related to our offering since
our inception on March 9, 2011. As of June 30, 2011, our resultant cash balance
at June 30, 2011 was $5,460 and we have outstanding accounts payable of $1,160.
Our net cash working capital balance (net of deferred offering costs classified
as current assets on our balance sheet), was therefore $4,300..
As of the date hereof, our net cash working capital balance (net of deferred
offering costs) is $3,935, which includes a cash balance of $5,095. We believe
our current cash and net working capital balance is only sufficient to cover our
expenses for the next 3-4 months. If we cannot raise any additional financing
prior to the expiry of this timeframe, we will be forced to cease operations and
our business will fail.
Even under a limited operations scenario to maintain our corporate existence, we
believe we will require a minimum of $14,000 in additional cash over the next 12
months to pay for the remainder of our total offering costs, and to maintain our
regulatory reporting and filings. Other than our planned offering, we currently
have no arrangement in place to cover this shortfall.
In order to achieve our stated business plan goals, we require the funding from
this offering. We are a development stage company and have generated no revenue
to date. We cannot guarantee that we will be able to sell all the shares
required. If we are successful, any money raised will be applied to the items
set forth in the Use of Proceeds section of this prospectus.
Even if we are successful in raising all of the funding under this offering, we
will still not be in a position to generate revenues or become profitable. We
still must raise significant additional funding to continue with our business.
The offering is only sufficient to enable us to develop our concept for use to
raise these additional funds. We currently estimate that we will require a
minimum of 24-30 months from the date hereof and $450-600,000 to complete the
development of our COTP game and promote it commercially.
These funds will have to be raised through equity financing, debt financing, or
other sources, which may result in the dilution in the equity ownership of our
shares. We will also need more funds if the costs of the development of our
concept and actual game are greater than we have budgeted. We will also require
additional financing to sustain our business operations if we are ultimately not
successful in earning revenues. We currently do not have any arrangements
regarding this Offering or following this Offering for further financing and we
may not be able to obtain financing when required. Obtaining commercial loans,
assuming those loans would be available, will increase our liabilities and
future cash commitments.
There are no assurances that we will be able to obtain further funds required
for our continued operations. Even if additional financing is available, it may
not be available on terms we find favorable. At this time, there are no
anticipated sources of additional funds in place. Failure to secure the needed
additional financing will have an adverse effect on our ability to remain in
business.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We do not expect the adoption of recently issued accounting pronouncements to
have a significant impact on our results of operations, financial position or
cash flow.
33
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
There have been no changes in and/or disagreements with Silberstein Ungar, PLLC
on accounting and financial disclosure matters.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
All directors of our company hold office until the next annual meeting of the
stockholders or until their successors have been elected and qualified. The
officers of our company are appointed by our board of directors and hold office
until their death, resignation or removal from office. Our directors and
executive officers, their ages, positions held, and duration as such, are as
follows:
Date First Elected
Name Position Held with the Company Age or Appointed
---- ------------------------------ --- ------------
Mohamed Ayad President, CEO Secretary 27 March 9, 2011
Treasurer and Director
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience of
each director and executive officer during at least the past five years,
indicating each person's business experience, principal occupation during the
period, and the name and principal business of the organization by which he was
employed.
MR. MOHAMED AYAD, SECRETARY TREASURER AND MEMBER OF THE BOARD OF DIRECTORS
Mr. Ayad has been serving as our President, CEO, Secretary Treasurer and a
Director since March 9, 2011. The term of his office is for one year and is
renewable on an annual basis.
He received his B.Sc in Computer Sciences and Management Information Systems
from the MIS Department of the Egyptian Institute of Alexandria Egypt in 2006.
From June 2008 to the date hereof he is a Technical Support Engineer for the
Egypt Air Holding Company in Alexandria Egypt. He is responsible for the
companies MIS and database systems used in its operations. Subsequent to his
graduation in 2006, he acted as the website systems designer and coordinator for
the Pharaoh Design Group in Alexandria. These experiences, qualifications and
attributes have led to our conclusion that Mr. Ayad should be serving as a
member of our Board of Directors in light of our business and structure.
He is currently devoting approximately 20 hours a week of his time to our
company, and is planning to devote 40 hours per week if necessary during the
next 12 months of operation.
He is not an officer or director of any reporting company that files annual,
quarterly, or periodic reports with the United States Securities and Exchange
Commission.
COMMITTEES OF THE BOARD
We do not have an audit or compensation committee at this time.
FAMILY RELATIONSHIPS
None.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Our sole director, executive officer and control person has not been involved in
any of the following events during the past five years:
34
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
3. being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
CONFLICT OF INTEREST
Our sole officer or director is not subject to a conflict of interest.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation paid by
us to our sole officer from our date of incorporation on March 9, 2011 to March
31, 2011, our first completed fiscal year end.
SUMMARY COMPENSATION TABLE
Change in
Pension
Value &
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary($) Bonus($) Awards($) Awards($) sation($) Earnings($) sation($) Totals($)
------------ ---- --------- -------- --------- --------- --------- ----------- --------- ---------
Mohamed Ayad 2011 0 0 0 0 0 0 0 0
President, CEO
Secretary Treasurer
Since our date of incorporation to the date of this prospectus, our executive
officer has not received and are not accruing any compensation. He anticipates
this arrangement will remain in effect for the next 12 months. We have not
entered into any employment or consulting agreements with our sole director and
executive officer.
The following table sets forth information with respect to compensation paid by
us to our director from our date of incorporation on March 9, 2011 to March 31,
2011, our first completed fiscal year end.
35
DIRECTOR COMPENSATION TABLE
Change in
Pension
Fees Value and
Earned Non-Equity Nonqualified All
or Incentive Deferred Other
Paid in Stock Option Plan Compensation Compen-
Name Cash($) Awards($) Awards($) Compensation($) Earnings($) sation($) Total($)
---- ------- --------- --------- --------------- ----------- --------- --------
Mohamed Ayad 0 0 0 0 0 0 0
All compensation received by our sole officer and director has been disclosed.
OPTION/SAR GRANTS
There are no stock option, retirement, pension, or profit sharing plans for the
benefit of our sole officer and director.
LONG-TERM INCENTIVE PLAN AWARDS
We do not have any long-term incentive plans.
DIRECTORS COMPENSATION
We have no formal plan for compensating our director for his services in his
capacity as director. Our director is entitled to reimbursement for reasonable
travel and other out-of-pocket expenses incurred in connection with attendance
at meetings of our board of directors. The board of directors may award special
remuneration to any director undertaking any special services on behalf of ISoft
other than services ordinarily required of a director. Since inception to the
date hereof, no director received and/or accrued any compensation for his
services as a director, including committee participation and/or special
assignments.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following is a table detailing the current shareholders of ISoft owning 5%
or more of the common stock, and shares owned by our directors and officers as
September 9, 2011:
Amount and Amount and
Nature of Nature of
Beneficial Beneficial
Ownership Ownership
Title of Name and Address of Prior to Subsequent to Percent of Class
Class Beneficial Owner Offering Offering Prior to Offering (2)
----- ---------------- -------- -------- --------------------
Common Mohamed Ayad 5,000,000 5,000,000 100.00%
1 Ahmed Kamal
St.,Sidi Gaber
Alexandria 21311,
Egypt
Common Directors and
officers as a group (1) 5,000,000 5,000,000 100.00%
----------
1. Represents beneficial ownership
2. Based on the total of 5,000,000 outstanding common shares as of the date
hereof
36
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Ayad will not be paid for any underwriting services that they perform on our
behalf with respect to this offering. He will not receive any interest on any
funds that he may advance to us for expenses incurred prior to the offering
being closed. Any funds that he may loan to our company will be repaid from the
proceeds of the offering.
Mr. Ayad purchased 5,000,000 shares of our common stock for $0.003 per share.
All of these shares are restricted securities, and are held by the sole officer
and director of our Company. (See "Principal Stockholders".)
INDEMNIFICATION
Pursuant to the Articles of Incorporation and By-Laws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his position, if he acted in good faith and in
a manner he reasonably believed to be in our best interest. In certain cases, we
may advance expenses incurred in defending any such proceeding. To the extent
that the officer or director is successful on the merits in any such proceeding
as to which such person is to be indemnified, we must indemnify him against all
expenses incurred, including attorney's fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Nevada.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
person sin connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
37
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
BALANCE SHEETS
June 30, March 31,
2011 2011
-------- --------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and bank accounts $ 5,460 $ 14,720
Deferred offering costs (Note 4) 4,685 --
-------- --------
TOTAL CURRENT ASSETS 10,145 14,720
-------- --------
TOTAL ASSETS $ 10,145 $ 14,720
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 1,160 $ 160
-------- --------
TOTAL CURRENT LIABILITIES 1,160 160
-------- --------
STOCKHOLDERS' EQUITY (NOTE 5,6)
Authorized:
7,000,000 common shares Par value $0.001
Issued and outstanding:
5,000,000 common shares 5,000 5,000
Additional paid-in capital 10,225 10,000
Deficit accumulated during the development stage (6,240) (440)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 8,985 14,560
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,145 $ 14,720
======== ========
The accompanying notes are an integral part of these financial statements.
F-1
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
Date of
Three Months Incorporation on
Ended March 9, 2011 to
June 30, June 30,
2011 2011
---------- ----------
REVENUE $ -- $ --
---------- ----------
OPERATING EXPENSES
General & administrative 225 385
Organization 325 605
Professional fees 5,250 5,250
---------- ----------
Loss before income taxes (5,800) (6,240)
Provision for income taxes -- --
---------- ----------
Net loss $ (5,800) $ (6,240)
========== ==========
Basic and diluted loss per
Common share (1)
==========
Weighted average number of common shares
outstanding (Note 5) 5,000,000
==========
----------
(1) less than $0.01
The accompanying notes are an integral part of these financial statements.
F-2
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
Deficit
Accumulated
Common Stock Additional During the Total
--------------------- Paid in Development Stockholders'
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Inception, March 9, 2011 -- $ -- $ -- $ -- $ --
Initial capitalization, sale of
common stock to Director on
March 9, 2011 5,000,000 5,000 10,000 -- 15,000
Net loss for the period -- -- -- (440) (440)
---------- ---------- ---------- ---------- ----------
Balance March 31, 2011 5,000,000 5,000 10,000 (440) 14,560
Net loss for the period -- -- 225 (5,800) (5,575)
---------- ---------- ---------- ---------- ----------
Balance June 30, 2011 5,000,000 $ 5,000 $ 10,225 $ (6,240) $ 8,985
========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-3
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(unaudited)
Date of
Three Months Incorporation on
Ended March 9, 2011 to
June 30, June 30,
2011 2011
-------- --------
OPERATING ACTIVITIES
Net loss for the period $ (5,800) $ (6,240)
Adjustments To Reconcile Net Loss To Net
Cash Used In Operating Activities
Additional paid in capital 225 225
Changes in operating assets and liabilities:
Accounts payable 1,000 1,160
-------- --------
NET CASH USED FOR OPERATING ACTIVITIES (4,575) (4,855)
-------- --------
INVESTING ACTIVITIES
NET CASH USED FOR INVESTING ACTIVITIES -- --
-------- --------
FINANCING ACTIVITIES
Deferred offering costs (4,685) (4,685)
Proceeds from issuance of common stock -- 15,000
-------- --------
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (4,685) 10,315
-------- --------
(Decrease) increase in cash during the period (9,260) 5,460
Cash, beginning of the period 14,720 --
-------- --------
Cash, end of the period $ 5,460 $ 5,460
======== ========
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS:
Cash paid for income taxes $ -- $ --
Cash paid for interest $ -- $ --
The accompanying notes are an integral part of these financial statements.
F-4
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
(unaudited)
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
The Company was originally incorporated under the laws of the state of Nevada on
March 9, 2011. The Company is devoting substantially all of its present efforts
to establish a new business. It is considered a development stage company, and
has had no revenues from operations to date.
Initial operations have included organization and capital formation. Management
is planning to develop and then market an internet based, social media online
video game to prospective users.
NOTE 2. BASIS OF PRESENTATION
These unaudited interim financial statements have been prepared in accordance
with United States generally accepted accounting principles for interim
reporting, and in accordance with rules of the Securities and Exchange
Commission. The balance sheet as of March 31, 2011 presented in these financial
statements, has been derived from the Company's audited balance sheet for the
fiscal year ended March 31, 2011. In the opinion of management, all known
adjustments have been made (which consist primarily of normal, recurring
accruals and estimates, and assumptions that impact the financial statements)
for fair presentation of the financial position and operating results as of and
for the period March 9, 2011 (date of inception) to June 30, 2011.
These unaudited interim financial statements should be read in conjunction with
the audited financial statements and related footnotes for the fiscal year ended
March 31, 2011. Notes to the financial statements, which would substantially
duplicate the disclosures contained in the audited financial statements, have
been omitted. Operating results for the three months ended June 30, 2011 are not
necessarily indicative of the results that may be expected for the year ending
March 31, 2012.
F-5
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
(unaudited)
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the normal
course of business. The Company has net losses for the period from inception to
June 30, 2011 of $(6,240). The Company intends to fund its expenditures through
equity financing arrangements, which may be insufficient to fund its proposed
development expenditures, working capital and other cash requirements through
the next fiscal year ending March 31, 2012.
The ability of the Company to emerge from the development stage is dependent
upon the Company's successful efforts to raise sufficient capital for its
business plans and then attaining profitable operations. In response to these
issues, management has planned the following actions:
* The Company has filed and is in the process of clearing a Registration
Statement with the SEC to raise additional equity funds through a
public offering.
* Management is currently formulating plans to develop an internet based
social media online video game to generate future revenues. There can
be no assurances, however, that management's expectations of future
revenues will be realized.
These factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 4. DEFERRED OFFERING COSTS
Deferred offering costs consist of legal, accounting and filing fees, incurred
to the balance sheet date, that are related to company's planned public offering
of a maximum of 1,000,000 common shares. The costs will be charged to
stockholders' equity upon the issuance of shares under the public offering.
F-6
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011
(unaudited)
NOTE 5. STOCKHOLDERS' EQUITY
AUTHORIZED
The Company is authorized to issue 75,000,000 shares of $0.001 par value common
stock. All common stock shares have equal voting rights, are non-assessable and
have one vote per share. Voting rights are not cumulative and, therefore, the
holders of more than 50% of the common stock could, if they choose to do so,
elect all of the directors of the Company.
ISSUED AND OUTSTANDING
On March 9, 2011 (inception), the Company issued 5,000,000 common shares to its
President, Secretary Treasurer and Director for cash of $15,000. See Note 6.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company's officer and director provides office space free of charge. The
Company has recorded the estimated value of the office space of $75 per month as
a contribution to capital.
The Company's officer and director is involved in other business activities and
may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of such conflicts.
On March 9, 2011, the Company issued 5,000,000 shares of its common stock to its
President, Secretary Treasurer and Director for cash of $15,000. See Note 5.
NOTE 7. SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations
subsequent to June 30, 2011 to September 7, 2011, the date these financial
statements were issued, and has determined that it does not have any material
subsequent events to disclose in these financial statements.
F-7
Silberstein Ungar, PLLC CPAs and Business Advisors
--------------------------------------------------------------------------------
Phone (248) 203-0080
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
www.sucpas.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Isoft International, Inc.
Carson City, Nevada
We have audited the accompanying balance sheet of Isoft International, Inc. (the
"Company") as of March 31, 2011, and the related statements of operations,
stockholder's deficit, and cash flows for the period from March 9, 2011 (Date of
Inception) through March 31, 2011. 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. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Isoft International, Inc. as of
March 31, 2011 and the results of its operations and its cash flows for the
period from March 9, 2011 (Date of Inception) through March 31, 2011 in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has limited working capital, has not yet
received revenue from sales of products or services, and has incurred losses
from operations. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans with regard to these
matters are described in Note 3. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Silberstein Ungar, PLLC
-----------------------------------
Bingham Farms, Michigan
May 18, 2011
F-8
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
BALANCE SHEET
March 31, 2011
--------------
ASSETS
Current assets
Cash and bank accounts $ 14,720
--------
Total current assets 14,720
--------
Total assets $ 14,720
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 160
--------
Total current liabilities 160
--------
Stockholders' equity (Note 4,5)
Authorized:
75,000,000 common shares
Par value $0.001
Issued and outstanding:
5,000,000 common shares 5,000
Additional paid-in capital 10,000
Deficit accumulated during the development stage (440)
--------
Total stockholders' equity 14,560
--------
Total liabilities and stockholders' equity $ 14,720
========
The accompanying notes are an integral part of these financial statements.
F-9
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Date of
Incorporation on
March 9, 2011 to
March 31, 2011
--------------
REVENUE $ --
OPERATING EXPENSES
General & administrative 160
Organization 280
-----------
Loss before income taxes (440)
Provision for income taxes --
-----------
Net loss $ (440)
===========
Basic and diluted loss per Common share (1)
===========
Weighted average number of common shares
outstanding (Note 4) 5,000,000
===========
----------
(1) less than $0.01
The accompanying notes are an integral part of these financial statements.
F-10
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional During the Total
------------------------ Paid in Development Stockholders'
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Inception, March 9, 2011 -- $ -- $ -- $ -- $ --
Initial capitalization, sale of
common stock to Director on
March 9, 2011 5,000,000 5,000 10,000 -- 15,000
Net loss for the period -- -- -- (440) (440)
--------- ------- -------- -------- --------
Balance March 31, 2011 5,000,000 $ 5,000 $ 10,000 $ (440) $ 14,560
========= ======= ======== ======== ========
The accompanying notes are an integral part of these financial statements.
F-11
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Date of
Incorporation on
March 9, 2011 to
March 31, 2011
--------------
OPERATING ACTIVITIES
Net loss for the period $ (440)
Adjustments To Reconcile Net Loss To Net
Cash Used In Operating Activities
Changes in operating assets and liabilities:
Accounts payable 160
--------
Net cash used for operating activities (280)
INVESTING ACTIVITIES
Net cash used for investing activities --
FINANCING ACTIVITIES
Proceeds from issuance of common stock 15,000
--------
Net cash provided by financing activities 15,000
Increase in cash during the period 14,720
Cash, beginning of the period --
--------
Cash, end of the period $ 14,720
========
Supplemental disclosure with respect to cash flows:
Cash paid for income taxes $ --
========
Cash paid for interest $ --
========
The accompanying notes are an integral part of these financial statements.
F-12
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
The Company was originally incorporated under the laws of the state of Nevada on
March 9, 2011. The Company is devoting substantially all of its present efforts
to establish a new business. It is considered a development stage company, and
has had no revenues from operations to date.
Initial operations have included organization and capital formation. Management
is planning to develop and then market an internet based, social media online
video game to prospective users.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
The relevant accounting policies and procedures are listed below. The company
has adopted a March 31 fiscal year end.
ACCOUNTING BASIS
The accounting and reporting policies of the Company conform to U.S. generally
accepted accounting principles applicable to development stage enterprises. In
the opinion of management, all adjustments considered necessary for fair
presentation have been included in the financial statements. All losses
accumulated since inception has been considered as part of the Company's
development stage activities.
EARNINGS PER SHARE
The basic earnings (loss) per share is calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares during the year. The diluted earnings (loss) per share is calculated by
dividing the Company's net income (loss) available to common shareholders by the
diluted weighted average number of shares outstanding during the year. The
diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted as of the first of the year for any potentially
dilutive debt or equity.
The Company has not issued any options or warrants or similar securities since
inception.
DIVIDENDS
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
F-13
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
NOTE 2. (continued)
CASH AND BANK ACCOUNTS
The Company's cash consists of funds deposited with its lawyer into the law
firm's trust account.
FOREIGN CURRENCY TRANSLATION
The Company has adopted the US dollar as its functional and reporting currency
because most of its transactions are denominated in US currency.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates the fair value of financial instruments using the
available market information and valuation methods. Considerable judgment is
required in estimating fair value. Accordingly, the estimates of fair value may
not be indicative of the amounts the Company could realize in a current market
exchange. As of March 31, 2011, the carrying value of accrued liabilities
approximated fair value due to the short-term nature and maturity of these
instruments.
INCOME TAXES
A deferred tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss carryforwards.
Deferred tax expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion, or all of the deferred
tax assets, will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.
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 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.
F-14
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the normal
course of business. The Company has net losses for the period from inception to
March 31, 2011 of $(440). The Company intends to fund its expenditures through
equity financing arrangements, which may be insufficient to fund its proposed
development expenditures, working capital and other cash requirements through
the next fiscal year ending March 31, 2012.
The ability of the Company to emerge from the development stage is dependent
upon the Company's successful efforts to raise sufficient capital for its
business plans and then attaining profitable operations. In response to these
issues, management has planned the following actions:
- The Company is planning to file and clear a Registration Statement
with the SEC to raise additional equity funds through a public
offering.
- Management is currently formulating plans to develop an internet based
social media online video game to generate future revenues. There can
be no assurances, however, that management's expectations of future
revenues will be realized.
These factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 4. STOCKHOLDERS' EQUITY
AUTHORIZED
The Company is authorized to issue 75,000,000 shares of $0.001 par value common
stock. All common stock shares have equal voting rights, are non-assessable and
have one vote per share. Voting rights are not cumulative and, therefore, the
holders of more than 50% of the common stock could, if they choose to do so,
elect all of the directors of the Company.
F-15
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
NOTE 4. (continued)
ISSUED AND OUTSTANDING
On March 9, 2011 (inception), the Company issued 5,000,000 common shares to its
President, Secretary Treasurer and Director for cash of $15,000. See Note 5.
NOTE 5. RELATED PARTY TRANSACTIONS
The Company's officers and directors provide office space free of charge. They
are involved in other business activities and may, in the future, become
involved in other business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict in selecting between the
Company and their other business interests. The Company has not formulated a
policy for the resolution of such conflicts.
On March 9, 2011, the Company issued 5,000,000 shares of its common stock to its
President, Secretary Treasurer and Director for cash of $15,000. See Note 4.
NOTE 6. INCOME TAXES
Net deferred tax assets are $nil. Realization of deferred tax assets is
dependent upon sufficient future taxable income during the period that
deductible temporary differences and carry-forwards are expected to be available
to reduce taxable income. As the achievement of required future taxable income
is uncertain, the Company recorded a 100% valuation allowance. Management
believes it is likely that any deferred tax assets will not be realized.
The Company has a net operating loss carry forward of approximately $440 which
will expire by March 31, 2031.
NOTE 7. RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flow.
F-16
ISOFT INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2011
NOTE 8. SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations
subsequent to March 31, 2011 to May 18, 2011, the date these financial
statements were issued, and has determined that it does not have any material
subsequent events to disclose in these financial statements.
F-17
INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of the offering are denoted below. Please note that all
costs are currently estimates.
Expenditure Item Amount
---------------- ------
Legal Review and Opinion $ 3,500
Audit and review Fees 5,500
Edgar conversion fees and printing 800
Transfer agent 500
-------
TOTAL $10,300
=======
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-Laws of ISoft allow for the indemnification of our officers and directors
in regard to their carrying out the duties of their offices. The board of
directors will make determination regarding the indemnification of the director,
officer or employee as is proper under the circumstances if he/she has met the
applicable standard of conduct set forth in the Nevada General Corporation Law.
Section 78.751 of the Nevada Business Corporation Act provides that each
corporation shall have the following powers:
"1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of any fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a pleas of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had a reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals there from, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction, determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
II-1
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in sections 1 and 2, or in defense of any claim, issue or
matter therein, he must be indemnified by the corporation against expenses,
including attorneys fees, actually and reasonably incurred by him in connection
with the defense.
4. Any indemnification under sections 1 and 2, unless ordered by a court or
advanced pursuant to section 5, must be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances. The
determination must be made:
a. By the stockholders;
b. By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the act, suit or proceeding;
c. If a majority vote of a quorum consisting of directors who were not
parties to the act, suit or proceeding so orders, by independent legal
counsel, in a written opinion; or
d. If a quorum consisting of directors who were not parties to the act,
suit or proceeding cannot be obtained, by independent legal counsel in
a written opinion.
5. The certificate of articles of incorporation, the bylaws or an agreement made
by the corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be
paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be
indemnified by the corporation. The provisions of this section do not affect any
rights to advancement of expenses to which corporate personnel other than
director or officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered by a
court pursuant to this section:
a. Does not include any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, for either an
action in his official capacity or an action in another capacity while
holding his office, except that indemnification, unless ordered by a
court pursuant to section 2 or for the advancement of expenses made
pursuant to section 5, may not be made to or on behalf of any director
or officer if a final adjudication establishes that his acts or
omission involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
b. Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors
and administrators of such a person.
c. The Articles of Incorporation provides that "the Corporation shall
indemnify its officers, directors, employees and agents to the fullest
extent permitted by the General Corporation Law of Nevada, as amended
from time to time."
As to indemnification for liabilities arising under the Securities Act of 1933
for directors, officers or persons controlling Impact Explorations, we have been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy and unenforceable.
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RECENT SALES OF UNREGISTERED SECURITIES
We have sold securities within the past three years without registering the
securities under the Securities Act of 1933 on one occasion.
On March 9, 2011 Mr. Mohamed Ayad, our sole officer and Director, purchased
5,000,000 shares of our common stock for $0.003 per share or an aggregate of
$15,000. No underwriters were used, and no commissions or other remuneration was
paid except to ISoft. The securities were sold in an offshore transaction
relying on Rule 903 of Regulation S of the Securities Act of 1933. Mr. Ayad is
not a U.S. person as that term is defined in Regulation S. No directed selling
efforts were made in the United States by ISoft, any distributor, any of their
respective affiliates or any person acting on behalf of any of the foregoing. We
are subject to Category 3 of Rule 903 of Regulation S and accordingly we
implemented the offering restrictions required by Category 3 of Rule 903 of
Regulation S by including a legend on all offering materials and documents which
stated that the shares have not been registered under the Securities Act of 1933
and may not be offered or sold in the United States or to US persons unless the
shares are registered under the Securities Act of 1933, or an exemption from the
registration requirements of the Securities Act of 1933 is available. The
offering materials and documents also contained a statement that hedging
transactions involving the shares may not be conducted unless in compliance with
the Securities Act of 1933. The shares continue to be subject to Rule 144 of the
Securities Act of 1933.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Number Description
------ -----------
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
5.1 Legal Opinion & Consent of Attorney
23.1 Consent of Independent Auditor
----------
(1) Incorporated by reference to Form S-1 (File No. 333-174443), filed with the
SEC on May 24, 2011.
UNDERTAKINGS
a. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
ii. To reflect in the prospectus any facts or events arising after The
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
iii. To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
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2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
4. That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser:
i. If the registrant is relying on Rule 430B (230.430B of this chapter):
A. Each prospectus filed by the registrant pursuant to Rule
424(b)(3)shall be deemed to be part of the registration statement
as of the date the filed prospectus was deemed part of and
included in the registration statement; and
B. Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the
information required by section 10(a) of the Securities Act of
1933 shall be deemed to be Part of and included in the
registration statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the
first contract of sale of securities in the offering described in
the prospectus. As provided in Rule 430B, for liability purposes
of the issuer and any person that is at that date an underwriter,
such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the
registration statement to which that prospectus relates, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof. Provided, however, that
no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made
in any such document immediately prior to such effective date; or
ii. If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule
430B or other than prospectuses filed in reliance on Rule 430A, shall
be deemed to be part of and included in the registration statement as
of the date it is first used after effectiveness. Provided, however,
that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date
of first use.
5. That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
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i. Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
ii. Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
iii. The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
iv. Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
Insofar as indemnification for liabilities arising under the 1933 Act may be
permitted to our director, officer and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act, and is,
therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act, and will be governed by the
final adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing Form S-1, as amended, and authorized this
registration statement to be signed on its behalf by the undersigned, in the
city of Alexandria, Egypt on September 14, 2011.
/s/ Mohamed Ayad
-----------------------------------
Mohamed Ayad
President, CEO Secretary/Treasurer,
Principal Executive, Financial and
Accounting Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
/s/ Mohamed Ayad September 14, 2011
-----------------------------------
Mohamed Ayad
Director
Principal Executive, Financial and
Accounting Officer
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