Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - GAMERICA HOLDINGS & ACQUISITIONS CORP.Financial_Report.xls
EX-31.2 - CERTIFICATION - GAMERICA HOLDINGS & ACQUISITIONS CORP.v241929_ex31-2.htm
EX-32.2 - CERTIFICATION - GAMERICA HOLDINGS & ACQUISITIONS CORP.v241929_ex32-2.htm
EX-31.1 - CERTIFICATION - GAMERICA HOLDINGS & ACQUISITIONS CORP.v241929_ex31-1.htm
EX-32.1 - CERTIFICATION - GAMERICA HOLDINGS & ACQUISITIONS CORP.v241929_ex32-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
(Mark One)
Form 10-K

x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended September 30, 2011

or

¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________________

Commission file number: 000-33053

VOIS INC.
(Exact name of registrant as specified in its charter)

Florida
95-4855709
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

22900 Shaw Road, Suite 111, Sterling, Virginia
20166
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code:
(571) 287-2380

Securities registered under Section 12(b) of the Act:

Title of each class
  
Name of each exchange on which registered
None
  
Not applicable

Securities registered under Section 12(g) of the Act:

Common Stock
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
¨ Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
¨ Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large accelerated filer
¨
 
Accelerated filer
¨
Non-accelerated filer
¨
 
Smaller reporting company
x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes ¨ No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. Approximately $4,301,125 on March 31, 2011.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.  17,106,045 shares of common stock are issued and outstanding as of December 5, 2011.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).  None.

 
 

 

TABLE OF CONTENTS

   
Page No.
Part I
Item 1.
Business.
3
Item 1A.
Risk Factors
6
Item 1B.
Unresolved Staff Comments.
9
Item 2.
Properties.
9
Item 3.
Legal Proceedings.
10
Item 4.
(Removed and Reserved).
10
Part II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
11
Item 6.
Selected Financial Data.
11
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operation.
12
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
15
Item 8.
Financial Statements and Supplementary Data.
15
Item 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
15
Item 9A.
Controls and Procedures.
15
Item 9B.
Other Information.
15
Part III
Item 10.
Directors, Executive Officers and Corporate Governance.
16
Item 11.
Executive Compensation.
19
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
23
Item 13.
Certain Relationships and Related Transactions, and Director Independence.
24
Item 14.
Principal Accountant Fees and Services.
25
Part IV
Item 15.
Exhibits, Financial Statement Schedules.
25

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements.  These factors include, but are not limited to, our ability to implement our business plan and generate revenues, risks associated with pending litigation, our ability to raise capital as necessary, economic, political and market conditions and fluctuations, government and industry regulation, U.S. and global competition, and other factors.  Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this in its entirety, including but not limited to our financial statements and the notes thereto. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER PERTINENT INFORMATION

When used in this report, the terms “VOIS,” "we," "our," and "us" refers to VOIS Inc., a Florida corporation.  All share and per share information herein gives retroactive effect to the one hundred for one (100:1) forward stock split of our common stock effective at the close of business on July 8, 2009, a change in the par value of our common stock from $0.001 per share to $0.00001 per share effective October 29, 2009, and to the one for two hundred (1:200) reverse stock split of our common stock effective at the close of business on November 23, 2010, a change in the par value of our common stock from $0.00001 per share to $0.001 per share effective November 23, 2010.  When used in this report, “fiscal 2011” means the year ended September 30, 2011 and "fiscal 2010" means the year ended September 30, 2010.  The information which appears on our website at www.vois.com is not part of this report.

 
2

 

PART I

ITEM 1.             BUSINESS.

Overview

Founded in 2006, VOIS (pronounced Voice) is a social commerce website where people can easily find and do business with buyers and sellers of on-demand work or manufacturing around the world.  We make doing business simple, using our online social networking platform. This innovative platform works to liberate individuals and businesses by allowing work and manufacturing opportunities to become globally borderless. With VOIS, business can be done anywhere, anytime removing boundaries such as location, socio-economic status, pedigree, race, age, gender or qualification.

Anyone can quickly sign up for VOIS at www.VOIS.com and start relationships with members within our trusted, reputation-based community. At VOIS, members are judged on their feedback rating, quality of their work, credibility and merit.

VOIS is an acronym which stands for Virtual Outsourcing Is Social.  We introduce the powerful business tool of outsourcing to the individual and small business owner on a worldwide scale for the first time.  We combine personal outsourcing with social networking to form “social sourcing”. With social sourcing, our aim is to promote the concept that work can be done virtually from anywhere, anytime. We believe that work or manufacturing can be more cost effective and efficient when sourced from a greater global talent pool.

In addition to our social commerce website business model, we have been actively seeking opportunities to develop cloud-based services and develop products and services that will generate additional revenue, as well as seeking potential opportunities to acquire or merge with other companies that have product offerings that complement our business activities.

We currently operate with a small staff in Sterling, Virginia and outsource as much as possible to third parties, including our technology development team in Asia.  We direct and manage our product development and maintenance internally, while our outsourced team provides creative, Website development, maintenance and hosting services as well as customer support functions.

The evolution of our business model

VOIS has adopted a business model whereby we can generate revenue using a credit-based purchasing model that permits members to buy virtual credits which can be applied towards the purchase of various services. We incorporated a “freemium” component in our revenue model.  "Freemium" is a term used to describe a free version supported by a paid premium version.  This model uses free as a form of marketing to put the product in the hands of the maximum number of people, converting a small fraction to paying customers. We are currently utilizing the freemium services as a way to build our user base.

Our ability to become profitable and grow will depend in large part on our ability to:

 
Sell online credits
 
Attract new users;
 
Keep existing users;
 
Increase the activity levels of our active users;
 
Maintain sufficient transaction volume to attract buyers and sellers;
 
Develop new sources of monetization for some of our services;
 
Manage the costs of our business, including the costs associated with maintaining and developing our website, and international expansion;
 
Increase the awareness of our brands; and
 
Provide our customers with superior community experiences.

How VOIS Works

The VOIS social network is a structured, member-generated, easy-to-use online service. Visitors to VOIS may become free members by completing the registration process, providing their name, age, and a valid, confirmed email address.  Our goal is to leverage the power of the internet to foster unparalleled levels of collaboration and meaningful exchanges between people from every imaginable background in every imaginable geographical location.  We seek to create global opportunities for all by lowering business barriers to entry — be it by location, socio-economic status, pedigree, race, age, gender or qualification — leaving our members to be judged solely on the quality of their work, credibility, reputation and merit.

Our services are designed to create an entirely new way of doing business globally, by providing our members an online environment which encourages them to interact, be creative and conduct commerce socially. Through the VOIS website, we enable our members to locate and interact with buyers and sellers of wide varieties of services anywhere in the world.

We seek to attract buyers and sellers of services to our community by offering:

  
Buyers
Sellers
  
  
  
  
Access to a global pool of talent
Access to a large group of buyers
Exceptional value
Cost effective marketing
Ease of use
Ease of use
Benefit of crowdsourcing
Valuable contacts

Typically services offered to buyers can include a wide variety of specialized freelance services, including:

Advertising campaign
IT project management
Article/news/press release
Photography
Bookkeeping and accounting
Videos
Comic strip cartoon animation
Logos and business cards
Copywriting and editing
Programming
Legal
Project management
Creative writing
Search engine optimization
Data entry
Secretarial support
Database design and administration
Web content
Flash presentation
Web development
Internet marketing
Web graphics

We have introduced a variety of features and services, such as announcements and bulletin boards, customer support boards and personal pages, as well as other topical or category-specific information exchanges, which are designed to strengthen this sense of community among VOIS members, encourage consumer loyalty and repeat usage.

The social commerce or “sCommerce” features of our site are what set us apart from a typical social networking site.  Within minutes of joining as a member, a buyer can post projects for hire on the site, and sellers can submit bids for projects quickly and easily. Sellers who provide certain keywords are automatically emailed when a buyer posts a project which meets their skill. Sellers may also easily search projects listed by category or project. During the course of the transaction, buyers are notified by email immediately whenever they receive additional bids.  Accepting a project on VOIS requires buyers and sellers to pay a nominal acceptance fee but only after a seller has been selected and both sides accept the engagement. Buyers and sellers who pay the acceptance fee are rewarded simultaneously by us with virtual items in the form of credits that can be applied towards additional bids, posts and other virtual objects. This practice is used to encourage continued loyal use of VOIS and discourage circumvention.

 
3

 

Perhaps the most important feature of our site is our feedback feature which encourages members to provide feedback ratings and comments on other members with whom they do business with.  Member profiles, including these feedback comments, can be viewed by any of our users.  Every registered member has a feedback rating that may contain compliments, criticisms and/or other comments by members who have conducted business with that member. The feedback feature requires feedback to be related to specific transactions and provides an easy tool for members to match specific transactions with the member names of their trading partners. This information is recorded in the member’s profile that includes a feedback rating for the member, with feedback sorted accordingly. The feedback feature is designed to detect and prevent certain forms of abuse, such as a member leaving positive feedback about his or herself through multiple accounts, also known as “gaming”.

By empowering the community, we shift the policing from our company, in sharp contrast to other freelance sites, to the members leading to buyers wanting to buy from sellers with positive ratings while giving sellers a huge incentive to stay honest and trustworthy.  We believe that we benefit from the network effect which comes with each feedback rating.  As the network grows, the more valuable it becomes and the more likely members will return.  In addition, we provide guidelines as well as tips for commerce, help by providing real time information to assist in disputes, responses to reports of misuse of the service and, if necessary, warnings or suspensions of members who violate the terms of the member agreement.  To further dissuade both buyers and sellers from circumventing the acceptance fee, members who circumvent the acceptance fee are not permitted to accept or leave feedback.  We believe that our ongoing trust and safety initiatives will help keep previously suspended members from re-registering on VOIS, and are intended to assist us in establishing a reputation as a safe and comfortable place to do business.

Marketing

Our objective is to build a position as a leading social commerce network. The key elements of our strategy are expanding the VOIS community and strengthening the VOIS brand.  We believe that building greater awareness of the VOIS brand within and beyond the VOIS social network is critical to expanding our member base and maintaining the vitality of the VOIS social network.  We plan to market our company through various channels including Internet advertising and search engine optimization.  The amount of funding which will be allocated to marketing and advertising efforts in fiscal 2012 will be determined based upon our available working capital.

Competition

Our market is rapidly evolving to respond to growing consumer demand for compelling social networking services and functionality. As our market continues to evolve, we believe that demand will be supplemented by a number of new social networking companies. We believe the factors that drive long term success are the ability to build a large and active member base and the ability to monetize that member base. By far, the largest and most dominant social networking site worldwide according to Alexa.com is Facebook.com.  We also compete with a wide variety of websites that provide freelancers with alternative networks and ways of locating and interacting with providers of services from various affiliations, including Craigslist, iFreelance, ODesk, Elance, GetAFreelancer and Guru. Most of our competitors are well-established networks and have substantially greater financial resources than we have.  There are no assurances we will ever effectively compete in our target market.

 
4

 

Intellectual property

We regard our domain names, trademarks, trade secrets and similar intellectual property as valuable to our business, and will rely on trademark and copyright law, trade secret protection and confidentiality or license agreements with our employees, partners and others to protect our proprietary rights.  We have received a federal registration of the mark “VOIS” as our trademark.

In addition to www.VOIS.com, we own multiple domain names that we may or may not operate in the future.  However, as with phone numbers, we do not have and cannot acquire any property rights in an Internet address.  The regulation of domain names in the United States and in other countries is also subject to change.  Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we might not be able to maintain our domain names or obtain comparable domain names, which could harm our business.

There can be no assurance that the steps taken by us will be adequate to prevent misappropriation or infringement of our proprietary property.

Government Regulation

There are currently few laws or regulations that specifically regulate commerce on the Internet.  Moreover, it may take years to determine the extent to which existing laws relating to issues such as property ownership, defamation, taxation and personal privacy are applicable to the Internet.  The application of existing laws, the adoption of new laws and regulations in the future, or increased regulatory scrutiny with respect to issues such as member privacy, pricing, taxation and the characteristics and quality of products and services, could create uncertainty in the Internet marketplace.

The CAN-SPAM Act of 2003, a federal law that impacts the way certain commercial e-mails are sent over the Internet, took effect January 1, 2004 and preempted most state commercial e-mail laws.  Penalties for failure to comply with the CAN-SPAM Act include significant fines, forfeiture of property and imprisonment.

The Children’s Online Protection Act and the Children’s Online Privacy Protection Act restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors.  In addition, the Protection of Children from Sexual Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances.  Any failure on our part to comply with these regulations may subject us to additional liabilities.

Network neutrality is the principle that Internet members should be in control of what content they view and what applications they use on the Internet.  The Internet has operated according to this neutrality principle since its earliest days.  There is ongoing legal and political wrangling in the U.S. regarding net neutrality. In the meantime the Federal Communications Commission (FCC) has claimed some jurisdiction over the issue and has laid down guideline rules that it expects the telecommunications industry to follow.  Our proposed business operations could be materially impacted by legislation that does not safeguard net neutrality as it has been in effect, and our costs of operation could increase substantially in an environment where net neutrality was not required to be observed by telecommunications carriers in their pricing.

In our business activities as a social commerce network, the Internal Revenue Service may take the position that we are a “broker” and required to report members’ sales to the IRS, if a certain sales volume is surpassed. A requirement such as this could have adversely affected the growth of e-commerce in our network and have an adverse impact on our members and on our business.

The application of indirect taxes, such as sales and use tax, value-added tax (VAT), goods and services tax, business tax, and gross receipt tax, to e-commerce businesses and to our potential members is a complex and evolving issue.  Many of the fundamental statutes and regulations that impose these taxes were established before the growth of the Internet and e-commerce.  In many cases, it is not clear how existing statutes apply to the Internet or electronic commerce or communications conducted over the Internet.  In addition, some jurisdictions have implemented or may implement laws specifically addressing the Internet or some aspect of electronic commerce or communications on the Internet.  The application of existing, new, or future laws could have adverse effects on our business.

 
5

 

Our History

We are a development stage company. We were incorporated in the State of Delaware on May 19, 2000 initially under the name Medical Records by Net, Inc.  In October 2000, we changed our name to Lifelink Online, Inc., and in January 2001, we changed our name to MedStrong Corporation.  In March 2001, the company name was changed to MedStrong International Corporation. Prior management's efforts had been directed toward the development and implementation of a plan to generate sufficient revenues in the medical information storage industry to cover all of its present and future costs and expenses.  We remained a development stage company, generating approximately $1,700 in cumulative revenues from our operations from inception through December 31, 2006 and an accumulated deficit of approximately $3.7 million.  We were considered a “shell” company under Federal securities laws.

In February 2007, we acquired various assets from VOIS Networking, Inc., a privately-held Florida corporation controlled by two of our former directors and officers, Messrs. Gary Schultheis and Herbert Tabin, including furniture, fixtures and equipment as well as intangible assets comprised of several website domain names (URLs), website and software development and applicable contracts relating thereto, for a total purchase price of $24,044.  Thereafter, we began developing a new line of business in connection with a Web 2.0 Internet social commerce networking site.  We believe that the acquisition of such assets was congruent with our business direction and intentions to expand an online social commerce networking community with the adoption of a Web 2.0 business platform.  Our revenues during fiscal 2007 and for the first six months of fiscal 2008 were mostly the result of advertising revenues derived through our relationship with Google AdSense. During February 2008, this relationship terminated and we subsequently entered into similar relationships with three other advertising partners. We have since discontinued our advertising revenue-based model. In conjunction with this acquisition, we began developing a new line of business in connection with a Web 2.0 Internet social commerce networking site and are no longer considered to be a “shell company.”  In March 2007, the company’s name was changed to VOIS Inc.

In June 2009 we formed VOIS Interactive Inc. under the laws of the State of Florida.  This company has not yet been organized and is inactive.

Employees

As of December 5, 2011, we have no full time and three part time employees.  We currently operate with a small staff in Sterling, Virginia and outsource as much as possible to third parties. We direct and manage our product development and maintenance internally, while our outsourced team provides creative, website development, maintenance and hosting services.  We also intend to outsource our branding and marketing programs to specialized industry professionals.  Accordingly, we do not anticipate that we will significantly expand our staff during fiscal 2012.

ITEM 1A.              RISK FACTORS

An investment in our common stock involves a significant degree of risk. You should not invest in our common stock unless you can afford to lose your entire investment. You should consider carefully the following risk factors and other information in this annual report before deciding to invest in our common stock.  If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected and you could lose your entire investment in our company.

We have only a limited operating history, did not generate any revenues in fiscal 2011 and have not operated profitably since inception.  There are no assurances we will ever generate revenues or profits.

Our operations have never been profitable, and it is expected that we will continue to incur operating losses in the future.  In fiscal 2007, we commenced our current operations and since then we have reported only nominal revenues.  For fiscal 2011 our operating loss was $686,518 and we reported a net loss of $718,735.  During fiscal 2011 cash used in operations was approximately $52,902, and at September 30, 2011 we had a working capital deficit of $1,403,437 and an accumulated deficit of approximately $29,578,434.  For fiscal 2010 our operating loss was $16,073,818 and our net loss was $16,106,006.  During fiscal 2010 cash used in operations was approximately $203,622, and at September 30, 2010 we had a working capital deficit of $823,263 and an accumulated deficit of $28,859,700.  We did not generate any revenues in fiscal 2011.  There is no assurance that we will be able to fully implement our business model, generate any meaningful revenues or operate profitably in the future. Our failure to generate substantial revenues and achieve profitable operations in future periods will adversely affect our ability to continue as a going concern.  If we should be unable to continue as a going concern, you could lose all of your investment in our company.

 
6

 

We will need additional financing which we may not be able to obtain on acceptable terms.  If we cannot raise additional capital as needed, our ability to execute our business plan and grow our company will be in jeopardy.

Capital is needed not only to fund our ongoing operations and to pay our existing obligations, but capital is also necessary for the effective implementation of our business plan.  Our future capital requirements, however, depend on a number of factors, including our ability to internally grow our revenues, manage our business and control our expenses.  On September 30, 2011, we had cash on hand of $667.  We will need to raise significant additional capital to fund the future growth of our company, including advertising and marketing, continued investment in growing our user base and product development.  We do not have any firm commitments to provide capital and we anticipate that we will have certain difficulties raising capital given the development stage of our company and the current uncertainties in the capital markets.  Accordingly, we cannot assure you that additional working capital will be available to us upon terms acceptable to us.  If we do not raise funds as needed, our ability to continue to implement our business model is in jeopardy and we may never be able to achieve profitable operations.  In that event, our ability to continue as a going concern is in jeopardy and you could lose all of your investment in our company.

Our auditors have raised substantial doubts about our ability to continue as a going concern.

The report of our independent registered public accounting firm on our financial statements at September 30, 2011 and for the year then ended raises substantial doubts about our ability to continue as a going concern based on our losses since inception, available working capital and shareholders’ deficiencyOur financial statements do not include any adjustments that might result from the outcome of this uncertainty. As described above, while we believe our current working capital is sufficient to sustain our current operations for approximately two to three months, we will need to raise additional working capital for marketing expenses as well as product development in order to continue to implement our business model.  If our estimates as to the sufficiency of these funds is incorrect, in addition to raising capital to fund the continued implementation of our business model we will also need to raise funds to pay our operating expenses.  If such funds are not available to us as needed, we may be forced to curtail our growth plans and our ability to grow our company will be in jeopardy.  In such event, we may not be able to continue as a going concern.

We face increasing competition that could result in a loss of users and reduced revenues or decreased profits.

The market for our products and services is competitive, and we expect competition to significantly increase in the future.  As a result of the growth of the social networking market, in addition to the existing competitors we anticipate that a number of additional companies will attempt to enter our market, either directly or indirectly, some of which may become significant competitors in the future. In addition, many existing social networking services are broadening their offerings to become more competitive.  As we broaden our services and evolve into a service used for meeting new people with similar interests or affiliations, we may compete with the increasing number of social networking websites for special niches and areas of interest.  Most of our competitors have longer operating histories, greater name and brand recognition, larger customer bases, significantly greater financial, technical, sales and marketing resources, and engage in more extensive research and development than we do.  If our competitors are more successful than we are in attracting users, our ability to attain a large and growing user base will be adversely affected.  If our competitors provide similar services for free, we may not be able to charge for any of our services.  Competition could have a material adverse affect on our subscription revenues from social networking services, as well as on advertising revenues from our social networking and loyalty marketing services.  As a result of the highly competitive market in which we seek to operate and our limited resources, we may never become competitive and our ability to substantially grow our revenues in future periods is not assured.

Historically we have engaged in a number of related party transactions and our Board is not controlled by independent directors.

From time to time we have engaged in a number of material related party transactions with companies owned or controlled by our executive officers and directors, including the purchase of assets believed on favorable terms to the company, which comprise our business, payment of expenses on behalf of these entities and the sale of securities to these entities.  These affiliated transactions may from time to time result in a conflict of interest for our management.  Because these transactions are not subject to the approval of our shareholders, investors in our company are wholly reliant upon the judgment of our management in these related party transactions.

We have approximately $145,000 principal amount in debt which we have not repaid and which is in default.

At September 30, 2011 we owed an aggregate of $145,000 principal amount under the terms of unsecured promissory notes which were due between December 2002 and February 2003, together with accrued but unpaid interest of approximately $185,766. The outstanding notes due to Messrs. Edward Spindel and Michael Spindel, which were issued at the time they were members of our

 
7

 

Board of Directors, remain past due.  Messrs. Edward Spindel and Michael Spindel elected not to participate with the holders of other promissory notes, including our executive officers, in the exchange of those notes for equity which occurred during January 2008.  In April 2008 we filed a complaint against Messrs. Edward Spindel and Michael Spindel alleging, in part, that during 2002 and 2003 while our company, which at that time known as Medstrong International, was under significant financial distress the defendants caused the company to issue demand promissory notes charging excessive and/or usurious interest rates with the knowledge that the company would be unable to repay the notes upon any demand.  Subsequently, in February 2009 the defendants filed a counterclaim.  We have attended both a settlement conference with a magistrate judge and mediation which resulted in an impasse.  Although we initially continued to discuss a possible settlement these discussions did not result in a settlement.  We were originally set to begin trial on this matter on December 12, 2009.  On November 13, 2009, the parties attended a pretrial hearing to address legal issues related to our complaint and the defendants’ counterclaim.  Based upon questions posed by the Court and the argument of counsel, the Court struck the defense of usury and additionally dismissed our complaint without prejudice, providing us 10 days to file an amended complaint.  The defendants were also provided 10 days to file an Amended counterclaim.  Based upon the rulings, the matter was then removed from the Court’s December 2009 trial docket.  We have decided that it is not cost effective or beneficial to pursue our affirmative claims in this matter and have, accordingly, elected not to file an amended complaint.  On July 19, 2010, the counter–plaintiffs, Edward and Michael Spindel filed a motion for summary judgment.  Vois Inc. filed a response in opposition on August 5, 2010.  The Spindels filed a reply on September 9, 2010.  The court held a hearing on September 16, 2010 and at the hearing granted summary judgment in favor of the Spindels.  Final judgment was ordered on November 16, 2010 in the amount of $287,266 plus post judgment interest.  Attorney’s fees amounted to $172,304.  On December 6, 2010 we filed an appeal to the judgment. On July 13, 2011 the United States Court of Appeals for the Eleventh Circuit issued an opinion in favor of VOIS Inc.  This Opinion was made final when the Court issued its mandate on August 15th, 2011.This ruling effectively reversed the Summary Judgment previously granted to the Spindels by the District Court on November 4, 2010 in the amount of $287,266.

The outstanding notes due to the defendants in the aggregate amount of $145,000, which are unsecured and were issued at the time they were members of our Board of Directors, remain past due.  The defendants elected not to participate with the holders of other promissory notes, including our then executive officers, in the exchange of those notes for equity which occurred during January 2009.  At September 30, 2011 our liabilities as reported in our financial statements contained elsewhere in this report reflect the principal amount of the notes together with $185,766 in accrued interest and penalties.

Because our operating history is limited and the revenue and income potential of our business and markets are unproven, we cannot predict whether we will meet internal or external expectations of future performance.

We believe that our future success depends on our ability to develop revenue from our operations, of which we have a very limited history.  Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies with a limited operating history.  These risks include our ability to:

 
attract a large audience to our community;
 
increase awareness of our brand and attempt to build member loyalty;
 
attract buyers and sellers;
 
maintain and develop new, strategic relationships;
 
derive revenue from our members from premium based services;
 
respond effectively to competitive pressures and address the effects of strategic relationships or corporate combinations among our competitors; and
 
attract and retain qualified management and employees.

Our future success and our ability to generate revenues depend on our ability to successfully deal with these risks, expenses and difficulties.  Our management has no experience in operating a company such as ours.  There are no assurances we will be able to successfully overcome any of these risks.

We intend to rely on fees as a significant part of our future revenue.  The market is subject to many uncertainties, and we may never generate any significant revenues from fees.

Initially, our revenue model was an advertising based model.  In the first quarter of fiscal 2011 in connection with the launch of our new website we changed our revenue model to a primarily fee based revenue model, but we failed to generate any significant revenues under this new revenue modelAccording, we intend to rely on various fees from the sale of services on our network.  Our ability to generate revenue will depend on a number of factors, many of which are beyond our control, including but not limited to:

 
the development and retention of a large base of members;
 
the attractiveness of product and service offerings to prospective buyers and sellers;
 
increased competition; and
 
U.S. and global economic conditions.

If we are unable to generate significant revenues from the fees, our business model may not succeed.  In that event, we could be forced to cease our operations and you could lose your entire investment in our company.

 
8

 

We could be subjected to claims and incur compliance costs related to improper conduct by users.

We operate a website that facilitates social interaction among users, which can facilitate unlawful behavior by these users.  The terms of use of our websites will prohibit a broad range of unlawful or undesirable conduct.  While we have put in place a variety of measures to enforce these terms of use, the nature of online social interaction poses enforcement challenges.  We may be unable to block access in all instances to users who are determined to gain access to our sites for improper motives.  Although we do not believe that current law subjects us to liability for the activities of such users, this area of law is unsettled.  Claims may be threatened or brought against us using various legal theories based on the nature and content of information that may be posted online or generated by our users. Investigating and defending any of these types of claims could be expensive, even to the extent that the claims do not ultimately result in liability.

Our common stock is currently quoted on the OTC Pink Sheets, but trading in the securities is limited, and trading in these securities is, or could be, subject to the penny stock rules.

Currently, our common stock and certain of our warrants are quoted on the OTC Pink Sheet.  The market for these securities is extremely limited and there are no assurances an active market for either security will ever develop.  Additionally, securities which trade at less than $5.00 per share, such as our securities, are considered a “penny stock,” and subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934.  Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements.  SEC regulations also require additional disclosure in connection with any trades involving a “penny stock,” including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements would severely limit the liquidity of our securities in the secondary market because few broker or dealers are likely to undertake these compliance activities.

Provisions of our Articles of Incorporation and Bylaws may delay or prevent a take-over which may not be in the best interests of our shareholders.

Provisions of our Articles of Incorporation and Bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our shareholders may be called, and may delay, defer or prevent a takeover attempt.  In addition, certain provisions of the Florida Business Corporations Act also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested shareholders.

Further, our Articles of Incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our Board of Directors in their sole discretion.  Our Board of Directors may, without shareholder approval, issue series of preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock.

ITEM 1B.              UNRESOLVED STAFF COMMENTS.

Not applicable to a smaller reporting company.

ITEM 2.                 PROPERTIES.

We presently do not own or lease any property.  We currently occupy space rent free in Sterling, Virginia at the offices of our Chief Executive Officer.

 
9

 

ITEM 3.                 LEGAL PROCEEDINGS

On April 30, 2008 we filed a complaint against two former members of our Board of Directors alleging breach of fiduciary duty, waste of corporate assets and unjust enrichment.  The complaint, styled VOIS Inc., Plaintiff, vs. Edward Spindel and Michael Spindel, Defendants, Case No. CA012201XXXXMB, in the Circuit Court for the 15th Judicial District in and for Palm Beach County, Florida, alleges that during 2002 and 2003 while the company, which at that time known as Medstrong International, was under significant financial distress the defendants caused the company to issue demand promissory notes charging excessive and/or usurious interest rates with the knowledge that the company would be unable to repay the notes upon any demand.  The defendants, who are brothers, were members of the Medstrong International Board of Directors until their resignations in April 2006.

The complaint further alleges that the defendants engaged in a repeated systematic scheme to defraud our company by continuing to restructure the promissory notes while they were members of the prior Board of Directors at such excessive and usurious interest rates that the defendants violated their fiduciary duties and responsibilities and approved debt obligations that benefited them and not the company and that their wrongful actions and omissions resulted in their unjust enrichment.  We sought damages in excess of $968,000.

On June 18, 2009, the defendants removed the lawsuit from Palm Beach Circuit Court (State) to the United States District Court for the Southern District of Florida (Federal).  Thereafter, the defendants sought to have the case transferred to the United States District Court in New York.  On October 27, 2009, the judge denied the defendant’s Motion to Transfer.  On October 28, 2009 the defendants filed their Answer and Defenses to the Complaint.  The defendants did not file a counterclaim at that time.  On November 12, 2009, the Court entered a Scheduling Order and a Notice of Trial for December 2009.  On December 4, 2009, the Court selected a mediator.  In February 2010, the defendants changed law firms and sought leave from the Court to file a counterclaim.  At that time, the defendants also served discovery in the form of interrogatories, request for production and request for admission.  The defendant’s counterclaim was filed on February 17, 2010 and we filed our Answer on March 13, 2010.  Over the course of the next several months we responded to the discovery requests.

On November 13, 2009, the parties attended a pretrial hearing to address legal issues related to our complaint and the defendants’ counterclaim.  Based upon questions posed by the Court and the argument of counsel, the Court struck the defense of usury and additionally dismissed our complaint without prejudice, providing us 10 days to file an amended complaint.  The defendants were also provided 10 days to file an Amended counterclaim.  Based upon the rulings, the matter was then removed from the Court’s December 2009 trial docket.  We have decided that it is not cost effective or beneficial to pursue our affirmative claims in this matter and have, accordingly, elected not to file an amended complaint.

On July 19, 2010, the counter–plaintiffs, Edward and Michael Spindel filed a motion for summary judgment.  Vois Inc. filed a response in opposition on August 5, 2010.  The Spindels filed a reply on September 9, 2010. The court held a hearing on September 16, 2010 and at the hearing granted summary judgment in favor of the Spindels.  Final judgment was ordered on November 16, 2010 in the amount of $287,266 plus post judgment interest.   Attorney’s fees of $172,304 were also awarded.  

On December 6, 2010 we filed an appeal to the judgment.

On July 13, 2011 the United States Court of Appeals for the Eleventh Circuit issued an opinion in favor of VOIS Inc.  This Opinion was made final when the Court issued the mandate on August 15th, 2011.This ruling effectively reversed the Summary Judgment previously granted to the Spindels by the District Court on November 4, 2010 in the amount of $287,266.

The outstanding notes due to the defendants in the aggregate amount of $145,000, which are unsecured and were issued at the time they were members of our Board of Directors, remain past due.  The defendants elected not to participate with the holders of other promissory notes, including our then executive officers, in the exchange of those notes for equity which occurred during January 2009.  At September 30, 2011 our liabilities as reported in our financial statements contained elsewhere in this report reflect the principal amount of the notes together with $185,766 in accrued interest and penalties.

We were a defendant in two actions, each entitled 951 Yamato Acquisition Company, LLC versus VOIS Inc. both as filed in December 2009 the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida under case numbers 502010CA040121XXXXMB and 502010CC19027XXXXBBRS, which are related to the lease agreements for our former office space.  A combined summary judgment was entered in April, 2010 against VOIS in the amount of $106,231.  At September 30, 2011 our liabilities as reported in our financial statements contained elsewhere in this report reflect the principal amount of the judgment together with $3,187 in accrued interest.

ITEM 4.               (REMOVED AND RESERVED).

 
10

 

PART II

ITEM 5.
STOCKHOLDER MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the OTC Bulletin Board under the symbol "VOIS."  The following table sets forth the reported high and low closing bid prices for our common stock as reported on the OTC Bulletin Board for the following periods.  These prices do not include retail mark-ups, markdowns or commissions, and may not necessarily represent actual transactions.

   
High
   
Low
 
             
Fiscal 2010
           
October 1, 2009 - December 31, 2009
  $ 4.00     $ 0.50  
January 1, 2010 - March 31, 2010
  $ 3.00     $ 1.60  
April 1, 2010 - June 30, 2010
  $ 2.80     $ 0.62  
July 1, 2010 - September 30, 2010
  $ 1.98     $ 0.30  
                 
Fiscal 2011
               
October 1, 2010 - December 31, 2011
  $ 1.01     $ 0.02  
January 1, 2011 - March 31, 2011
  $ 0.45     $ 0.25  
April 1, 2011 - June 30, 2011
  $ 0.45     $ 0.22  
July 1, 2011 - September 30, 2011
  $ 0.23     $ 0.15  

As of December 5, 2011 the last reported sale price of the common stock on OTC Bulletin Board was $0.15.  As of December 5, 2011 there were approximately 100 shareholders of record of our common stock.

Dividends

We have never paid cash dividends on our common stock.  Payment of dividends will be within the sole discretion of our Board of Directors and will depend, among other factors, upon our earnings, capital requirements and our operating and financial condition.  In addition under Florida law, we may declare and pay dividends on our capital stock either out of our surplus, as defined in the relevant Florida statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.  If, however, the capital of our company, computed in accordance with the relevant Florida statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits any dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired.

Recent Sales of Unregistered Securities

On November 3, 2010 we issued 50,000 shares of restricted common stock at a per share price of $0.36, valued at $18,000 to James Thomas for serving as Chief Financial Officer.  The issuance was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

On November 23, 2010 we sold 1,500,000 shares of restricted common stock at a per share price of $0.02, valued at $30,000, to four accredited investors.  The issuance was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

On December 7, 2010 we issued 125,000 shares of restricted common stock at a per share price of $0.15, valued at $18,750 to members of our Board of Directors as Director compensation.  The issuance was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

On February 2, 2011 we sold 2,010,000 shares of restricted common stock at a per share price of $0.01, valued at $20,100, to five accredited investors.  The issuance was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

ITEM 6.
SELECTED FINANCIAL DATA.

Not applicable to a smaller reporting company.

 
11

 

ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a social commerce website where people can easily find and do business with buyers and sellers of on-demand work or manufacturing around the world. We make doing business simple, using our online social networking platform. This innovative platform works to liberate individuals and businesses by allowing work and manufacturing opportunities to become globally borderless. With VOIS, business can be done anywhere, anytime removing other boundaries such as location, socio-economic status, pedigree, race, age, gender or qualification.

We are a development stage company.  During fiscal 2008 and continuing through fiscal 2011 we completed certain technology milestones which were necessary to the full launch of our business, including our new User Interface Design, Usability Testing and Site Evaluation. We believe that designing an effective User Interface Design, which determines how easily users can complete their tasks and accomplish their goals, is critical to product success. Usability Testing puts a prototype or application in the hands of potential users in order to gain their direct feedback on how a design can be improved and Site Evaluation identifies where a site succeeds and how it can be improved. In December 2009, as a result of these efforts, we soft launched the new social sourcing version of VOIS launch of the Alpha version of the website was launched in February 2010We are incorporating a “freemium” component in our revenue model.  "Freemium" is a term used to describe a free version supported by a paid premium version.  This model uses free as a form of marketing to put the product in the hands of the maximum number of people, converting just a small fraction to paying customers. We are currently utilizing the freemium services as a way to build our user base while the Alpha version of the website is active.

We plan to also generate revenue by offering a limited number of virtual credits to members for free to represent sponsors or special occasions as well as online advertising. Just for joining each member is given a free set of credits to introduce the member to the credit system. Following that, the member will receive loyalty credits for each day the member logs into VOIS.  We intend to generate revenue by introducing a credit-based purchasing model whereby members buy virtual credits to be applied towards the purchase of various services including but not limited to:

 
Match-maker fees
 
Sponsored listings
 
Sponsored bidding
 
Virtual gifts
 
Icons
 
Additional bids
 
Additional posts
 
Additional categories

Credits may be purchased individually or in multiples. Larger credit purchases provide members with discounts. Credits may contain different values and express different levels of significance. Members may choose between these credit amounts in the credit purchasing interface. Because our business model is essentially a decentralized system with a centralized host, we have been able to maximize our available resources. We currently operate with a small staff in Sterling, Virginia and outsource as much as possible to third parties. We direct and manage our product development and maintenance internally, while our outsourced team provides creative, website development, maintenance and hosting services as well as customer service.  As a result of our strategies, we anticipate our operating costs will remain relatively stable for the foreseeable future.

In order to accomplish the foregoing, we will need to implement an effective marketing program designed to build brand awareness and expand our membership base and we will need to raise additional capital to fund these costs.  Initially, it was our intent to raise between $3 million and $5 million of additional capital through a private placement and utilize the proceeds of this offering to undertake a comprehensive marketing program.  However, like many small, early stage companies, during fiscal 2010 and 2011 we encountered difficulties in our efforts to raise capital.  As an alternative, we have chosen to complete the development of our website with the strategy of undertaking a private placement during fiscal 2011 when the capital markets might be more receptive to our company.

We do not have any firm commitments to provide capital. Accordingly, we cannot assure you that additional working capital will be available to us upon terms acceptable to us. If we do not raise funds as needed, our ability to market our company will be limited and we may never be able to achieve profitable operations. In that event, our ability to continue as a going concern is in jeopardy and you could lose all of your investment in our company.

Going Concern

We have generated minimal revenues since inception. Our revenues alone are insufficient to pay our operating expenses and our ability to continue as a going concern is dependent upon our ability to obtain the necessary financing to meet our obligations and repay our current and future liabilities when they become due until such time, if ever, that we are able to generate sufficient revenues to attain profitable operations. We have experienced losses and negative cash flows from operations since inception and at September 30, 2011 we had a working capital deficit of $1,403,437 and an accumulated deficit of $29,578,435.  The report of our independent registered public accounting firm on our financial statements for fiscal 2011 contained an explanatory paragraph regarding our ability to continue as a going concern. There can be no assurance that acceptable financing to fund our ongoing operations can be obtained on suitable terms, if at all. If we are unable to obtain the financing necessary to support our operations, we may be unable to continue as a going concern. In that event, we may be forced to cease operations and our stockholders could lose their entire investment in our company.

Results of Operations

Year ended September 30, 2011

During the years ended September 30, 2011 and 2010 we had no revenue.  We are aggressively looking for ways to leverage our technology and develop strategic partnerships to develop revenue streams.

Selling, general and administrative expense. For the year ended September 30, 2011, selling, general and administrative expenses decreased approximately 97.2% as compared to the year ended September 30, 2010.  For the year ended September 30, 2011 and 2010 general and administrative expenses consisted of the following:

 
12

 

   
2011
   
2010
 
             
Occupancy
  $ -     $ 35,602  
Consulting
    393,290       2,242,500  
Employee compensation
    132,750       13,160,668  
Professional fees
    98,198       435,176  
Internet/Phone
    -       3,409  
Travel/Entertainment
    -       11  
Product development
    9,617       8,353  
Depreciation and amortization
    51,711       174,935  
Other
    952       13,164  
    $ 686,518     $ 16,073,818  

 
·
For the year ended September 30, 2011, occupancy expense decreased to $0 as compared to $35,602.  We vacated our offices in December, 2009 and presently our principal offices are located in space provided by our CEO at no costs to us.

 
·
For the year ended September 30, 2011, consulting expense decreased to $393,290 as compared to $2,242,500, primarily as a result of restricted stock issued to consultants in the prior year.  No similar issuance occurred in fiscal year 2011.

 
·
For the year ended September 30, 2011, salaries and related expenses decreased to $132,750 as compared to $13,160,668.  Employee compensation is lower due to a decrease in expense related to the issuance of restricted stock to senior management and the board of directors of $11,780,620, and stock option expense of $1,232,688 which is primarily due to the issuance of employee stock options, in the prior year.  No similar issuance occurred in fiscal year 2011.

 
·
For the year ended September 30, 2011, professional fee expense decreased to $98,198 as compared to $435,176. Professional fee expense decreased primarily due to decreased legal fees from on-going litigation, as compared to the prior year.

 
·
For the year ended September 30, 2011, internet and telephone expense decreased to $0 as compared to $3,409.  Internet and telephone expense decreased as a result of general cost-cutting measures put in place by the Company.

 
·
For the year ended September 30, 2011, travel and entertainment expense decreased to $0 as compared to $11.  Travel and entertainment expense decreased as a result of limited travel and general cost-cutting measures put in place by the Company.

 
·
For the year ended September 30, 2011, product development expense amounted to $9,617 as compared to $8,353 for the year ended September 30, 2010, an increase of $1,264, or 15%.  We continue limited product development activities.

 
·
For the year ended September 30, 2011, depreciation and amortization expense amounted to $51,711 as compared to $174,935 for the year ended September 30, 2010, a decrease of $123,224, or 70%.  The decrease is due primarily to portions of capitalized web development costs which were fully amortized during fiscal 2011.

 
·
For the year ended September 30, 2011, Other expense which includes repairs and maintenance, postage, dues and subscriptions, and supplies, amounted to $952 as compared to $13,164 for the year ended September 30, 2010.

For fiscal 2012 we anticipate that our operating expenses will be substantially lower as we do not anticipate incurring additional stock based compensation, professional fees, and consulting expense.

Interest expense. For the year ended September 30, 2011, interest expense increased to $32,217 as compared to $32,188 for the year ended September 30, 2010.  The increase was due to additional interest expense incurred related to the amount owed on legal judgments which occurred during fiscal 2010.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate adequate amounts of cash to meet its needs for cash.  The following table provides certain selected balance sheet comparisons between September 30, 2011 and September 30, 2010: 

 
13

 

   
September 30,
   
September 30,
   
$
   
%
 
   
2011
   
2010
   
Change
   
Change
 
                         
Working Capital
  $ (1,403,437 )   $ (823,262 )   $ (580,174 )     70.5 %
Cash
    667       3,469       (2,802 )     (80.8 )%
Total current assets
    667       3,469       (2,802 )     (80.8 )%
Total assets
    14,237       68,750       (54,513 )     (79.3 )%
Accounts payable and accrued liabilities
    1,073,338       524,965       548,373       104.5 %
Notes payable and accrued interest
    330,766       301,766       29,000       9.6 %
Total current liabilities
    1,404,104       826,761       577,373       69.8 %
Total liabilities
    1,404,104       826,761       577,373       69.8 %

At September 30, 2011 our working capital deficit increased as compared to September 30, 2010 primarily as a result of an increase in current liabilities of $548,373, and a decrease in cash resulting from operational losses.  Our executive officers have accrued a portion of their salaries which were not otherwise paid in stock so that we might maximize our cash resources and at September 30, 2011 we owed these executive officers approximately $96,000 in salaries. 

Operating activities

Net cash used for continuing operating activities during fiscal 2011 was $52,902 as compared to $203,622 for fiscal 2010. Non-cash items totaling approximately $665,833 contributing to the net cash used in continuing operating activities for fiscal 2011 include:

 
$36,750 representing the value of shares issued to officers and employees,
 
an increase in accrued interest payable of $36,967
 
an increase in accounts payable and accrued liabilities of $540,405, and
 
$51,711 of depreciation and amortization, which included approximately $47,137 in amortization of web development costs.

 Net cash used for continuing operating activities during fiscal 2010 was $203,622. Non-cash items totaling approximately $15,902,383 contributing to the net cash used in continuing operating activities for fiscal 2010 include:

 
$1,232,688 recognized in compensation for common stock options granted during the year,
 
$2,128,000 representing the value of shares issued to third parties for services,
 
$11,780,620 representing the value of shares issued to officers and employees,
 
an increase of $16,340 in other assets,
 
an increase in accounts payable and accrued liabilities of $540,801,
 
an increase in accrued interest payable of $29,000, and
 
$174,935 of depreciation and amortization, which included approximately $168,013 in amortization of web development costs

Investing activities

Net cash used in investing activities for fiscal 2011 totaled $0, as compared to $16,800 for fiscal 2010, in Web site development costs.

Financing activities

Net cash provided by financing activities was $50,100 during fiscal 2011 as compared to $132,944 for fiscal 2010. During the fiscal 2011 period we generated $50,100 from the sale of our common stock.

During the fiscal 2010 period we generated $48,000 from the sale of 800,000 shares of our common stock, and collected $84,944 from the exercise of stock options.

 
14

 

Critical Accounting Policies

Website Development Costs 

We account for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development, FASB ASC 350-40, Internal-Use Software, FASB ASC 985-20, Costs of Computer Software to be Sold, Leased, or Marketed and FASB ASC 350-50, Website Development Costs. As of September 30, 2011, we have capitalized certain internal use software and website development costs amounting to approximately $507,560. The estimated useful life of costs capitalized is evaluated for each specific project and is currently being amortized over two years.

Share-based Payment

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123(R), "Share-Based Payment," which replaced SFAS No. 123 and superseded Accounting Principles Board ("APB") Opinion No. 25. Under SFAS No. 123(R) now FASB ASC 718, Compensation-Stock Compensation, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005 the SEC issued Staff Accounting Bulletin No. 107, or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction between FASB ASC 718 and certain SEC rules and regulations and provides the staff's views regarding the valuation of share-based payment arrangements for public companies. FASB ASC 718 permitted public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule amending the compliance dates for FASB ASC 718. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS 123.  Effective with its fiscal 2006 year, we adopted the provisions of FASB ASC 718 and related interpretations as provided by SAB 107 prospectively. As such, compensation cost is measured on the date of grant as its fair value.   Such compensation amounts are amortized over the respective vesting periods of the options granted.

Accounting Pronouncements Recently Adopted

In February 2010, the FASB issued ASU No. 2010-09, “Subsequent Events (Topic 855)” (“ASU 2010-09”) which provides an update to Topic 855, “Subsequent Events”. This update clarifies that an SEC filer is required to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for SEC filers to disclose the date through which subsequent events have been evaluated. This guidance became effective upon issuance and has been adopted by the Company.

ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable to a smaller reporting company.

ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our financial statements are contained in pages F-1 through F-20, which appear at the end of this annual report.

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.
CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934.  In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met.  Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.  The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Based on his evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.  Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2011.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.  Our management has concluded that, as of September 30, 2011 our internal control over financial reporting is effective based on these criteria.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with our evaluation that occurred during our last fiscal quarter (our fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.
OTHER INFORMATION.

None.

 
15

 

PART III

ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Executive Officers and Directors

The following individuals serve as our executive officers and members of our Board of Directors:

Name
 
Age
 
Positions
John R. Signorello
  
45
  
Chairman of the Board
Hal Compton, Sr.
  
64
  
Director
Mark B. Lucky
 
53
 
Director, Chief Executive Officer
William Marginson
 
64
 
Director

Biographical Information

John R. Signorello. Mr. Signorello has been Chairman of our Board of Directors since October, 2011.  He has served as Chairman of the Board and CEO of IceWEB, Inc. since March 2000.  From 1991 until September 1997, Mr. Signorello served as the Chief Executive Officer of STMS -”Solutions That Make Sense” - a private technology company he founded that specialized in computer networks, systems integration and information technology.  In 1996, STMS was ranked the 17th fastest growing technology company in America by The National Technology Council’s “The Fast Five Hundred”.  In September 1997, they were acquired by Steelcloud (Nasdaq: OTCBB), and Mr. Signorello remained as Vice President of Sales and Marketing until November 1998.  Mr. Signorello is an accomplished musician, and serves as a principal in New York City Lights Entertainment.  Mr. Signorello received a B.B.A. in Marketing from Radford University in 1989.

We believe that as a result of his years of managerial and operational experience, Mr. Signorello brings to the board of directors a demonstrated management ability at senior levels. In addition, his experience with a variety of technology companies brings valuable insight to his role on our board of directors. These experiences, qualifications and attributes have led to our conclusion that Mr. Signorello should be serving as a member of our Board of Directors in light of our business and structure.
  
Harold F. Compton, Sr.  Mr. Compton has been a member of our Board of Directors since March 2010. Mr. Compton has been a retailer for more than 30 years. Mr. Compton joined CompUSA Inc. in 1994 as Executive Vice President-Operations, becoming Executive Vice President and Chief Operating Officer in 1995, President of CompUSA Stores in 1996 and Chief Executive Officer of CompUSA Inc. in 2000, a position he held until his retirement in 2004. Prior to joining CompUSA, Inc., from 1993 until 1994 he served as President and COO of Central Electric Inc., Executive Vice President Operations and Human Resources, and Director of Stores for HomeBase (1989 to 1993), Senior Vice President Operations and Director of Stores for Roses Discount Department Stores (1986 to 1989), and held various management positions including Store Manager, District Manager, Regional Vice President and Zone Vice President for Zayre Corporation from 1965 to 1986. Mr. Compton currently serves as lead director on the Board of Directors of IceWEB, Inc., and is also currently a member of the Board of Directors of Maidenform Brands, Inc. and is a member of its Compensation Committee and Audit Committee of the Board of Directors of that company.

We believe that as a result of his years of managerial and operational experience, Mr. Compton brings to the board of directors demonstrated management ability at senior levels. In addition, his experience as a director of a variety of companies, and his more than 30 years of experience as a retailer brings valuable insight to our board of directors.  These experiences, qualifications and attributes have led to our conclusion that Mr. Compton should be serving as a member of our Board of Directors in light of our business and structure.

Mark B. Lucky.  Mark B. Lucky has been our Chief Executive Officer since October, 2011.  He has served as Chief Financial Officer of IceWEB, Inc. since March 2007.  He has over 20 years professional experience in high growth/start-up ventures and established companies with multi-industry experience including financial services, technology, software, real estate, biotech and entertainment and media. Prior to joining IceWEB, he consulted at Bearing Point on their financial restatement project. From 2004 to 2005 he was Vice President of Finance and Administration at Galt Associates, Inc., a Sterling, Virginia informatics/ technology and medical research services company and from 2001 to 2004 he was Vice President of Finance and Administration of MindShare Design, Inc., a San Francisco, California based internet technology company. While at both Galt Associates, Inc. and MindShare Design, Inc. Mr. Lucky was the senior financial officer for the Company, providing strategic and tactical analysis and managing day to day finance, accounting, cash management, reporting and human resource responsibilities. During his career Mr. Lucky has also been employed by Axys Pharmaceuticals, Inc., a NASDAQ-listed South San Francisco, California-based early stage drug discovery biotech company (acting CFO and Senior Director of Finance), PriceWaterhouseCoopers, LLC, COMPASS Management and Leasing, Inc. (Vice President - Finance 1997 to 1998), Mindscape, Inc. (Director of Financial Planning and Analysis 1995 to 1996), The Walt Disney Company (Manager, Operations Planning & Analysis, Manager of Corporate Planning 1991 to 1995), and KPMG. Mr. Lucky is a member of the Board of Directors of VOIS Inc. and HASCO Medical, Inc. Mr. Lucky is a CPA and received his B.A., Economics, from the University of California.

We believe that as a result of his years of managerial and financial experience, Mr. Lucky brings to the board of directors a demonstrated management ability at senior levels. In addition, his experience with a variety of technology companies brings valuable insight to his role on our board of directors. These experiences, qualifications and attributes have led to our conclusion that Mr. Lucky should be serving as a member of our Board of Directors.

Bill Marginson.  Mr. Marginson served as our Chairman of the Board, President and Chief Executive Officer from March 2010 until October, 2011.  Mr. Marginson is currently the vice president of Retail Services at Solutions Management, LLC. He was also a founding partner of LSM Mortgage, Inc./Sandcastle Title, Inc. of Tampa, Florida. Prior to founding LSM Mortgage, he served in senior management positions in the retail industry for 27 years, including serving as president of Clearwater Mattress Company and serving as CEO of The Wiz electronics retailer. In addition, Mr. Marginson was the co-founder of Yes Appliances and Furniture Co. Inc. and has also held senior positions with The Garr Consulting Group, Montgomery Ward, and Zayre Discount Department Stores. Mr. Marginson was an officer in the U.S. Army, and holds an MBA in Management and Finance, with distinction, from Babson College, and a B.S. in Business Economics from the University of Rhode Island.

With his years of managerial and operational experience, Mr. Marginson brings to the board of directors demonstrated management ability at senior levels and his insight and direction will assist the company in achieving its objectives. We believe that these experiences, qualifications and attributes have led to our conclusion that Mr. Marginson should be serving as our chief executive officer and as a member of our Board of Directors in light of our business and structure.

There are no family relationships between our officers and directors.  Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his successor is elected and qualified.

Code of Ethics

In December 2003 we adopted a Code of Business Conduct and Ethics which applies to our officers, directors, employees and consultants.  This Code outlines the broad principles of ethical business conduct we adopted, covering subject areas such as:

 
compliance with applicable laws and regulations,
 
handling of books and records,
 
public disclosure reporting,
 
insider trading,
 
discrimination and harassment,
 
health and safety,
 
conflicts of interest,
 
competition and fair dealing, and
 
protection of company assets.

 
16

 

A copy of our Code of Business Conduct and Ethics is filed as an exhibit to this report.  In addition, we will provide a copy, without charge, to any person desiring a copy of the Code of Business Conduct and Ethics, by written request to us at our principal offices at 22900 Shaw Road, Suite 111, Sterling, Virginia 20166, Attention: Corporate Secretary.

Committees of the Board of Directors

Our Board of Directors has created both an Audit Committee and a Compensation Committee. We do not have a Nominating Committee or any committee performing a similar function. The functions that such a committee would undertake are being undertaken by the entire board as a whole. We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors or any inquiry as to what the procedures may be if a stockholder wished to make such a recommendation.  While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.

Audit Committee . The Audit Committee of our Board of Directors was formed to assist the Board of Directors in fulfilling its oversight responsibilities for the integrity of our consolidated financial statements, compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, and the performance of our internal audit function and independent auditors. The Audit Committee will also prepare the report that SEC rules require be included in our annual proxy statement. The Audit Committee has adopted a charter which sets forth the parameters of its authority The Audit Committee Charter provides that the Audit Committee is empowered to:
 
Appoint, compensate, and oversee the work of the independent registered public accounting firm employed by our company to conduct the annual audit. This firm will report directly to the audit committee;
Resolve any disagreements between management and the auditor regarding financial reporting;
Pre-approve all auditing and permitted non-audit services performed by our external audit firm;
Retain independent counsel, accountants, or others to advise the committee or assist in the conduct of an investigation;
Seek any information it requires from employees - all of whom are directed to cooperate with the committee’s requests - or external parties;
Meet with our officers, external auditors, or outside counsel, as necessary; and
The committee may delegate authority to subcommittees, including the authority to pre-approve all auditing and permitted non-audit services, provided that such decisions are presented to the full committee at its next scheduled meeting.

Each Audit Committee member is required to:

satisfy the independence requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934, and all rules and regulations promulgated by the SEC as well as the rules imposed by the stock exchange or other marketplace on which our securities may be listed from time to time, and
meet the definitions of “non-employee director” for purposes of SEC Rule 16b-3 and “outside director” for purposes of Section 162(m) of the Internal Revenue Code.

Each committee member is required to be financially literate and at least one member is to be designated as the “financial expert,” as defined by applicable legislation and regulation. No committee member is permitted to simultaneously serve on the audit committees of more than two other public companies. Mr. Lucky is considered an “audit committee financial expert” under the definition under Item 407 of Regulation S-K. As we expand our Board of Directors with additional independent directors the number of directors serving on the Audit Committee will also increase.

Compensation Committee. The Compensation Committee was appointed by the Board to discharge the Board’s responsibilities relating to:
 
compensation of our executives,
equity-based compensation plans, including, without limitation, stock option and restricted stock plans, in which officers or employees may participate, and
arrangements with executive officers relating to their employment relationships with our company, including employment agreements, severance agreements, supplemental pension or savings arrangements, change in control agreements and restrictive covenants.

 
17

 

Each Compensation Committee member is required to:
 
satisfy the independence requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934, and all rules and regulations promulgated by the SEC as well as the rules imposed by the stock exchange or other marketplace on which our securities may be listed from time to time, and
meet the definitions of “non-employee director” for purposes of SEC Rule 16b-3 and “outside director” for purposes of Section 162(m) of the Internal Revenue Code.

Pursuant to our Compensation Committee Charter, the Compensation Committee is charged with evaluating and recommending for approval by the Board of Directors the compensation of our executive officers. In addition, the Compensation Committee also evaluates and makes recommendations to the entire Board of Directors regarding grants of options which may be made as director compensation. The Compensation Committee does not delegate these authorities to any other persons nor does it use the services of any compensation consultants.

Messrs. Compton and Marginson are the members of our Compensation Committee. As we expand our Board of Directors with additional independent directors the number of directors serving on the Compensation Committee will also increase.

We do not have a policy regarding the consideration of any director candidates which may be recommended by our shareholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees.  We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our shareholders, including the procedures to be followed.  Our Board has not considered or adopted any of these policies as we have never received a recommendation from any shareholder for any candidate to serve on our Board of Directors.  Given the early stage operations of our company and our lack of directors and officers insurance coverage, we do not anticipate that any of our shareholders will make such a recommendation in the near future.  While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.

Mr. Mark Lucky, a member of our Board of Directors, is an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K.  In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:

 
understands generally accepted accounting principles and financial statements,
 
is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
 
has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
 
understands internal controls over financial reporting, and
 
understands audit committee functions.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively.  Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.  Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during fiscal 2011.

 
18

 

ITEM 11.
EXECUTIVE COMPENSATION.

The following table summarizes all compensation recorded by us in each of the last two completed fiscal years for our principal executive officer, each other executive officer serving as such whose annual compensation exceeded $100,000 and up to two additional individuals for whom disclosure would have been made in this table but for the fact that the individual was not serving as an executive officer of our company at September 30, 2011.  The value attributable to any option awards is computed in accordance with FASB ASC 718.

SUMMARY COMPENSATION TABLE
 
                                           
Non-
       
                                     
Nonequity
   
qualified
   
All
 
                                     
incentive
   
deferred
   
other
 
                         
Stock
   
Option
   
plan
   
Compen-
   
compen-
 
Name and principal
     
Salary
   
Bonus
   
Awards
   
Awards
   
compen-
   
earnings
   
sation
   
Total
 
Position
 
Year
 
($)
   
($)
   
($)
   
($)
   
sation ($)
   
($)
   
($)
   
($)
 
(a)
 
(b)
 
(c)
   
(d)
   
(e)
   
(f)
   
(g)
   
(h)
   
(i)
   
(j)
 
                                                     
William Marginson1
 
2011
    48,000                                           48,000  
   
2010
    48,000                       500,000                               548,000  
James Thomas2
 
2011
                      18,000                         18,0000  
   
2010
                                               
Mark B. Lucky3
 
2011
                                               
   
2010
    63,000                   1,720,000       94,500                   1,877,500  
Robert Druzak4
 
2011
                                               
   
2010
    24,000                   4,300,000       94,500                   4,418,500  

1
Mr. Marginson served as our Chief Executive Officer from March, 2010 to November 2011. His 2010 and 2011salary has been accrued but not paid. Mr. Marginson received a restricted stock option award of 500,000 shares of our common stock, valued at $500,000, in June, 2010 for serving as chief executive officer.

2
Mr. Thomas served as our Chief Financial Officer from October, 2010 until October, 2011. Mr. Thomas received a restricted stock option award of 50,000 shares of our common stock, valued at $18,000, in November, 2010 for serving as chief financial officer.

3
Mr. Lucky served as our Chief Financial Officer from January until October, 2010.  After consulting for the Company, Mr. Lucky was named Chief Executive Officer in October, 2011.   His 2010 salary has been accrued but not paid.  Mr. Lucky received a restricted stock option award of 1,000,000 shares of our common stock, valued at $1,720,000, in March, 2010 for serving as chief financial officer and for consulting services rendered to the company.

4
 Mr. Druzak served as our Chief Executive Officer from January until March, 2010, and continues to consult for the Company. His 2010 salary has been accrued but not paid.  Mr. Druzak received a restricted stock option award of 2,500,000 shares of our common stock, valued at $4,300,000, in March, 2010 for serving as chief executive officer and for consulting services rendered to the company.

 
19

 

Employment Agreements and narrative regarding executive compensation

How Mr. Marginson‘s compensation is determined

Mr.Marginson, who has served as our CEO since March 2010, is not a party to an employment agreement with our company. His compensation is determined by the Compensation Committee of our Board of Directors. The Compensation Committee considered a number of factors in determining Mr. Marginson’s compensation including the scope of his duties and responsibilities to our company and the time he devotes to our business. The Compensation Committee did not consult with any experts or other third parties in fixing the amount of Mr. Marginson’s compensation.  Mr. Marginson’s compensation excludes option grants he received as a member of the Board of Directors.

How Mr. Druzak ‘s compensation was determined

Mr.Druzak, who served as our CEO from January to  March 2010, was not a party to an employment agreement with our company. His compensation was determined by the Compensation Committee of our Board of Directors. The Compensation Committee considered a number of factors in determining Mr. Druzak’s compensation including the scope of his duties and responsibilities to our company and the time he devotes to our business. The Compensation Committee did not consult with any experts or other third parties in fixing the amount of Mr. Druzak’s compensation.  Mr. Druzak’s compensation excluded option grants he received as a member of the Board of Directors.

In addition, following his resignation as an officer and director of our company in March 2010, Mr. Druzak continues to provide consulting services to us related to investor relations and business development.

How Mr. Lucky’s compensation was determined

Mr. Lucky, who served as a member of our board of directors, and as our CFO from November, 2009 to September 2010, was not a party to an employment agreement with our company. His compensation was determined by the Compensation Committee of our Board of Directors. The Compensation Committee considered a number of factors in determining Mr. Lucky’s compensation including the scope of his duties and responsibilities to our company and the time he devotes to our business. The Compensation Committee did not consult with any experts or other third parties in fixing the amount of Mr. Lucky’s compensation.  Mr. Lucky’s compensation excluded option grants he received as a member of the Board of Directors.

In addition, following his resignation as an officer and director of our company in September 2010, Mr. Lucky continues to provide consulting services to us related to finance and accounting services.

Outstanding Equity Awards at Fiscal Year End

The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of September 30, 2011:

OPTION AWARDS
 
STOCK AWARDS
 
                                   
Equity
 
                                   
incentive
 
                               
Equity
 
plan
 
                           
Market
 
incentive
 
awards:
 
                           
value
 
plan
 
market or
 
           
Equity
             
of
 
awards:
 
payout
 
           
incentive
         
Number
 
shares
 
number
 
value of
 
           
plan
         
of
 
or
 
of
 
unearned
 
           
awards:
         
shares
 
units
 
unearned
 
shares,
 
   
Number of
 
Number of
 
Number of
         
or units
 
of
 
shares,
 
units or
 
   
securities
 
securities
 
securities
         
of stock
 
stock
 
units or
 
other
 
   
underlying
 
underlying
 
underlying
         
that
 
that
 
other rights
 
rights
 
   
unexercised
 
unexercised
 
unexercised
 
Option
     
have
 
have
 
that have
 
that have
 
   
options
 
options
 
unearned
 
exercise
 
Option
 
not
 
not
 
not
 
not
 
   
(#)
 
(#)
 
options
 
price
 
expiration
 
vested
 
vested
 
vested
 
vested
 
Name
 
exercisable
 
unexercisable
 
(#)
 
($)
 
date
 
(#)
 
($)
 
(#)
 
(#)
 
(a)
 
(b)
 
(c)
 
(d)
 
(e)
 
(f)
 
(g)
 
(h)
 
(i)
 
(j)
 
William Marginson
 
 
 
 
 
 
 
 
 
 
Mark Lucky
  
75,000
 
 
 
0.70
 
2/23/2015
 
 
 
 
 

 
20

 

Director Compensation

We have not established standard compensation arrangements for our directors and the compensation payable to each individual for their service on our Board is determined from time to time by our Board of Directors based upon the amount of time expended by each of the directors on our behalf The following table provides information concerning the compensation of our directors for their services as a member of our Board of Directors for fiscal 2011.  Executive officers do not receive compensation for their services as Board members and, accordingly, are not listed in the following table.  The value attributable to any option awards is computed in accordance with FASB ASC 718.

Director Compensation
 
Name
 
Fees
Earned or
Paid in
Cash ($)
   
Stock
Awards
($)
   
Option
Awards
($)
   
Non-Equity
Incentive Plan
Compensation
($)
   
Non-Qualified
Deferred
Compensation
Earnings ($)
   
All Other
Compensation
($)
   
Total ($)
 
Hal Compton Sr.
   
     
3,750
     
     
     
     
     
3,750
 
Sam Crowley
   
     
3,750
     
     
     
     
     
3,750
 
Oliver McGonigle
   
     
3,750
     
     
     
     
     
3,750
 
James Thomas
   
     
3,750
     
     
     
     
     
3,750
 
William Marginson
   
     
3,750
     
     
     
     
     
3,750
 

Stock Option Plans

We currently have three stock option plans, our 2002 Stock Option Plan, as amended (the "2002 Plan"), our 2007 Equity Compensation Plan (the "2007 Plan") and our 2010 Equity Compensation Plan (the “2010 Plan”).  The purpose of each of these plans is to enable us to offer to our employees, officers, directors and consultants whose past, present and/or potential contributions to our company have been, or will be important to our success, an opportunity to acquire a proprietary interest in our company.  All of these plans are administered by our Board of Directors.

2002 Plan

The effective date of the 2002 Plan was August 9, 2002 and the maximum number of shares which could be initially issued over the term of the 2002 Plan was 1,000,000 shares.  The 2002 Plan was amended on August 12, 2003 to increase the number of shares available for issuance thereunder to 3,000,000 shares. While the shares underlying outstanding options and the exercise price automatically adjust for all stock splits, the actual number of shares reserved under the 2002 Plan does not adjust.  As of September 30, 2011, options and stock rights covering an aggregate of 225,034 shares of our common stock have been granted (giving effect to the 100:1 stock split in July 2009 and the 1:200 reverse split in November, 2010) and 12,717 shares remain available for issuance under the 2002 Plan.  At September 30, 2011 we have outstanding options to purchase an aggregate of 225,034 shares of our common stock with an exercise price of $10.50 per share.  The 2002 Plan will terminate on August 8, 2012, unless earlier terminated by our Board of Directors.

The 2002 Plan authorizes the grant of:

 
options which qualify as "incentive stock options" ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code");
 
options which do not qualify as ISOs ("Non-Qualified Options" or "NSOs");
 
awards of our common stock; and
 
rights to make direct purchases of our common stock which may be subject to certain restrictions.

The stock rights granted under the 2002 Plan will be authorized but unissued shares of our common stock or shares of common stock reacquired by us in any manner.  If any stock rights granted under the 2002 Plan should expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the shares of common stock subject to such stock rights will again be available for grants of stock rights under the 2002 Plan.

The exercise price per share for each Non-Qualified Option granted, and the purchase price per share of stock granted in any award or authorized as a purchase, cannot be less than the minimum legal consideration required therefore under the laws of any jurisdiction in which we or our successors in interest may be organized. The exercise price per share for each ISO granted cannot be less than the fair market value per share of common stock on the date of such grant.  In the case of an ISO to be granted to an employee owning stock possessing more than 10% of the total combined voting power of all classes of our company, the price per share cannot be less than 110% of the fair market value per share of common stock on the date of grant.

Subject to earlier termination, each option will expire on the date specified by the Board of Directors, but not more than 10 years from the date of grant in the case of options generally and five years from the date of grant in the case of ISOs granted to an employee owning stock possessing more than 10% of the total combined voting power of all classes of our stock.  Unless otherwise specified in the agreements relating to such ISOs, if an ISO optionee ceases to be employed by us other than by reason of death, disability, voluntary termination or a breach of his or her employment agreement, no further of his or her ISOs will become exercisable, and his or her ISOs shall terminate on the earlier of 90 days after the date of termination of his or her employment, or their specified expiration dates.  Stock rights granted to members of the Board of Directors will be identical to those granted to other eligible persons.  Members of the Board of Directors who either are eligible to receive grants of stock rights pursuant to the 2002 Plan or have been granted stock rights may vote on any matters affecting the administration of the 2002 Plan or the grant of any stock rights pursuant to the 2002 Plan, except that no such member can act upon the granting to himself or herself.  The shares of common stock which a recipient of an authorization to make a purchase may be subject to specified restrictions, to be determined by the Board, and may include the requirement of continued employment with our company or a subsidiary or achievement of certain performance objectives, among other conditions.  Awards of the common stock may be made to a recipient as a bonus or as additional compensation, as determined by the Board of Directors.

 
21

 

On October 30, 2009 our Board of Directors approved amendments to the outstanding options to purchase 200,000 shares of our common stock with an exercise price of $10.50 per share granted under our 2002 Stock Option Plan which are held by members of our management and an employee to provide that these options are exercisable until the earlier of the original expiration date of June 7, 2012, or the first anniversary following the date the holder is no longer a member of the Board of Directors or employee of our company.

2007 Plan

On October 3, 2007, our Board of Directors authorized the 2007 Plan covering 1,500,000 shares of common stock, which such shares were increased to 150,000,000 shares as a result of the 100:1 forward stock split of our common stock in July 2010, and then down to 750,000 shares as a result of the 1:200 reverse stock split of our common stock in November, 2010.  The 2007 Plan was required to be approved by our shareholders prior to October 3, 2009.  As we did not submit the 2007 Plan to our shareholders for approval prior to that date, incentive stock options may not be awarded under the 2007 Plan and any incentive stock options previously awarded under the 2007 Plan have been converted into non-qualified options upon terms and conditions determined by the Board, as nearly as is reasonably practicable in its sole determination, the terms and conditions of the incentive stock options being so converted.  As of September 30, 2011, options and stock rights covering an aggregate of 600,000 shares of our common stock have been granted and 150,000 shares remain available for issuance under the 2007 Plan.  At September 30, 2011 we have outstanding options to purchase an aggregate of 600,000 shares of our common stock with an exercise price of $5.00 per share. The 2007 Plan will terminate on October 3, 2017, unless earlier terminated by our Board of Directors.

In the event of any stock split of our outstanding common stock, the Board of Directors in its discretion may elect to maintain the stated amount of shares reserved under the 2007 Plan without giving effect to such stock split.  Subject to the limitation on the aggregate number of shares issuable under the 2007 Plan, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.  Plan options may either be ISOs or NSOs.  In addition, the 2007 Plan allows for the inclusion of a reload option provision, which permits an eligible person to pay the exercise price of the option with shares of common stock owned by the eligible person and receive a new option to purchase shares of common stock equal in number to the tendered shares.  Any ISO granted under the 2007 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant.  The 2007 Plan further provides that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000.  Any NSO granted under the 2007 Plan must provide for an exercise price of not less than the par value of our common stock.  The term of each plan option and the manner in which it may be exercised is determined by the Board of Directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant.

On October 30, 2009 our Board of Directors amended options to purchase an aggregate of 600,000 shares of our common stock with an exercise price of $5.0 per share granted under our 2007 Equity Compensation Plan which are held by members of our management and an employee to provide that these options are exercisable until the earlier of the original expiration date of October 3, 2012, or the first anniversary following the date the holder is no longer a member of the Board of Directors or employee.

2009 Plan

On April 17, 2009, our Board of Directors authorized the 2009 Plan covering 5,000,000 shares of common stock, which such shares were increased to 500,000,000 shares as a result of the 100:1 forward stock split of our common stock in July 2009 and then decreased to 2,500,000 shares as a result of the 1:200 reverse stock split of our common stock in November, 2010. The 2009 Plan is required to be approved by our shareholders prior to April 17, 2010 or any incentive stock options we may award under the 2009 Plan will automatically convert into non-qualified options upon terms and conditions determined by the Board, as nearly as is reasonably practicable in its sole determination, the terms and conditions of the incentive stock options being so converted.  Following the adoption of the 2009 Plan our Board granted options to purchase an aggregate of 2,320,000 shares of our common stock with exercise prices ranging from $0.70 to $1.40 per share and 180,000 shares remain available for issuance under the 2009 Plan.

 
22

 

In the event of any stock split of our outstanding common stock, the Board of Directors in its discretion may elect to maintain the stated amount of shares reserved under the 2009 Plan without giving effect to such stock split.  Subject to the limitation on the aggregate number of shares issuable under the 2009 Plan, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.  Plan options may either be (i) ISOs, (ii) NSOs (iii) awards of our common stock or (iv) rights to make direct purchases of our common stock which may be subject to certain restrictions.  Any option granted under the 2009 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant.  The 2009 Plan further provides that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000.  The term of each plan option and the manner in which it may be exercised is determined by the Board of Directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant.

On October 30, 2009 our Board of Directors amended options to purchase an aggregate of 832,500 shares of our common stock with exercise prices ranging from $0.70 to $1.40 per share granted under our 2009 Equity Compensation Plan which are held by members of management, an employee and a consultant to accelerate the vesting of all previously unvested portions to October 29, 2009 and to provide that all such options are exercisable for the earlier of three years from the vesting date or one year after the date the holder is no longer an officer, director or employee of our company or, as to the consultant, no longer renders services to us.

ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

At December 5, 2011 we had 17,106,045 shares of common stock issued and outstanding.  The following table sets forth information known to us as of December 5, 2011 relating to the beneficial ownership of shares of our common stock by:

 
each person who is known by us to be the beneficial owner of more than 5% of our outstanding common stock;
 
each director;
 
each named executive officer; and
 
all named executive officers and directors as a group.

Unless otherwise indicated, the business address of each person listed is in care of 8709 Hunters Green Drive, Suite 300, Tampa, Florida  33647.  The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.

Name of Beneficial Owner
 
Amount of
Beneficial
Ownership
   
% of Class
 
John Signorello1, 2
    5,035,000       24.76
Mark Lucky3
    1,125,000       6.55 %
William Marginson4
    525,000       3.07 %
Hal Compton5
    525,000       3.07 %
All officers and directors as a group
    7,210,000       42.12 %
Robert Druzak
    3,700,000       21.54 %
Morgan Consulting Group
    1,025,000       5.99 %
      11,935,000       69.65 %

 
23

 
 
1
Mr. Signorello is the Chairman of our Board of Directors.  The number of shares beneficially owned by Mr. Signorello includes:

 
800,000 shares of our common stock owned of record by Cloud Storage Holdings, Inc. a wholly-owned subsidiary of IceWEB, Inc.  By virtue of his position as Chief Executive Officer of IceWEB, Inc. Mr. Signorello has voting and dispositive control over securities held of record by IceWEB, Inc., and

 
4,235,000 shares of our common stock owned beneficially and of record by Mr. Signorello.

2
IceWEB, Inc.’s address is 22900 Shaw Road, Suite 111, Sterling, VA  20166.  By virtue of his position as Chief Executive Officer of IceWEB, Inc. Mr. Signorello has voting and dispositive control over securities held of record by IceWEB, Inc.

3
Mr. Lucky is a member of our Board of Directors and Chief Executive Officer.  The number of shares beneficially owned by Mr. Lucky includes 75,000 shares of our common stock underlying options granted under our 2009 Plan with an exercise price of $0.70 per share.

4
Mr. Marginson is our former Chief Executive Officer and a current member of our Board of Directors.
5
Mr. Compton is a member of our Board of Directors.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth securities authorized for issuance under any equity compensation plans approved by our shareholders as well as any equity compensation plans not approved by our shareholders as of September 30, 2011.

  
 
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights (a)
   
Weighted
average exercise
price of
outstanding
options, warrants
and rights (b)
   
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a)) (c)
 
Plan category
                 
  
                 
Plans approved by our shareholders:
   
-
     
n/a
     
n/a
 
  
                       
Plans not approved by shareholders:
                       
2002 Stock Option Plan
   
-
   
$
-
     
2,774,966
 
2007 Equity Compensation Plan
   
-
   
$
-
     
718,750
 
2009 Equity Compensation Plan
   
266,667
   
$
0.97
     
2,067,179
 
 
A description of each of these plans is contained earlier in this report under Part III, Item 11. Executive Compensation - Stock Option Plans.

ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Director Independence

We are not a party to any transactions since the beginning of fiscal year 2010 or which are currently proposed with any “related person” as that term is described in Regulation S-K in an amount which exceeds $120,000.

 
24

 

Director Independence

Messrs. Compton and Marginson, members of our Board of Directors, are “independent” within the meaning of Rule 5605 of the NASDAQ Marketplace Rules.

ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Sherb & Co., LLP served as our independent registered public accounting firm for 2010 and 2009.  The following table shows the fees that were billed for the audit and other services provided by such firm for 2010 and 2009.

  
 
2011
   
2010
 
  
           
Audit Fees
  $ 17,500     $ 25,000  
Audit-Related Fees
           
Tax Fees
    2,000       2,000  
All Other Fees
           
Total
  $ 19,500     $ 27,000  

Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Form 10-Q quarterly reports and services that are normally provided by the independent auditors in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

Audit-Related Fees — This category consists of assurance and related services by the independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC and other accounting consulting.

Tax Fees — This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

All Other Fees — This category consists of fees for other miscellaneous items.

Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent auditors.  Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services.  Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board.  Any such approval by the designated member is disclosed to the entire Board at the next meeting.  The audit and tax fees paid to the auditors with respect to 2010 were pre-approved by the entire Board of Directors.
 
PART IV

ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

Exhibit No.
  
Description of Exhibit
  
  
  
3.1
  
Certificate of Incorporation (1)
3.2
  
Certificate of Amendment to the Certificate of Incorporation (2)
3.3
  
Form of Restated Certificate of Incorporation (2)
3.4
  
Certificate of Amendment to Certificate of Incorporation (3)
3.5
  
Form of Restated Certificate of Incorporation (3)
3.6
  
Certificate of Amendment to the Certificate of Incorporation (4)

 
25

 

3.7
  
Form of Restated Certificate of Incorporation (4)
3.9
  
Bylaws (1)
3.10
  
Certificate of Domestication and Articles of Incorporation as filed with the Secretary of State of Florida on March 18, 2010 (15)
3.11
  
Articles of Amendment to the Articles of Incorporation as filed with the Secretary of State of Florida on June 18, 2010 (17)
3.12
  
Articles of Amendment to the Articles of Incorporation as filed with the Secretary of State on October 29, 2010 (18)
10.1
  
Asset Purchase and Assignment Agreement dated February 1, 2007 by and between Vois Networking, Inc. and Medstrong International Corporation (5)
10.2
  
2002 Stock Option Plan (8)
10.3
  
2007 Equity Compensation Plan (6)
10.4
  
Amendment No. 1 to the 2002 Stock Option Plan (9)
10.5
  
Form of Loan Restructuring Agreement between the company and the note holders (10)
10.6
  
Employment letter agreement dated January 8, 2007 with Mr. Schultheis (11)
10.7
  
Employment letter agreement dated January 8, 2007 with Mr. Tabin (11)
10.8
  
Form of Stock Purchase Agreement by and among Trackside Brothers LLC , VOIS Partners LLC, VOIS Inc. and Schneider Weinberger & Beilly LLP (12)
10.9
  
Form of Stock Purchase Agreement by and among Carrera Capital Management, Inc. , VOIS Partners LLC, VOIS Inc. and Schneider Weinberger & Beilly LLP (12)
10.10
  
Form of Stock Purchase Agreement by and among JAB Interactive LLC, VOIS Partners LLC, VOIS Inc. and Schneider Weinberger & Beilly LLP (12)
10.11
  
Lease for principal executive offices (13)
10.12
  
Form of Agreement dated December 19, 2009 between VOIS Inc. and Gary Schultheis and Herb Tabin (14)
10.13
  
2010 Equity Compensation Plan (16)
10.14
  
Subscription Agreement dated as of November 3, 2010 between VOIS Inc. and IceWEB, Inc. (19)
14.1
  
Code of Business Conduct and Ethics (7)
23.1
  
Consent of Sherb & Co., LLP*
31.1
  
Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer *
31.2
  
Rule 13a-14(a)/15d-14(a) certification of principal financial and accounting officer *
32.1
  
Section 1350 certification of Chief Executive Officer *
32.2
  
Section 1350 certification of principal financial and accounting officer *

*           filed herewith

(1)
Incorporated by reference to the registration statement on Form SB-1, SEC File No. 333-57468, as amended.
(2)
Incorporated by reference to the Quarterly Report on Form 10-QSB for the period ended June 30, 2006.
(3)
Incorporated by reference to the Annual Report on Form 10-KSB for the period ended December 31, 2006.
(4)
Incorporated by reference to the Quarterly Report on Form 10-QSB for the period ended March 31, 2007.
(5)
Incorporated by reference to the Current Report on Form 8-K as filed on February 12, 2007.
(6)
Incorporated by reference to the Current Report on Form 8-K as filed on October 25, 2007.
(7)
Incorporated by reference to the Annual Report on Form 10-KSB for the period ended December 31, 2003.
(8)
Incorporated by reference to the definitive proxy on Schedule 14A as filed on July 10, 2002.
(9)
Incorporated by reference to the definitive proxy on Schedule 14A as filed on July 11, 2003.
(10)
Incorporated by reference to Annual Report on Form 10-KSB/A for the period ended December 31, 2003.
(11)
Incorporated by reference to the Current Report on Form 8-K as filed on February 5, 2007.
(12)
Incorporated by reference to the Current Report on Form 8-K as filed on November 1, 2007.
(13)
Incorporated by reference to the Quarterly Report on Form 10-QSB for the period ended March 31, 2009.
(14)
Incorporated by reference to the Current Report on Form 8-K as filed on December 23, 2009.
(15)
Incorporated by reference to the Current Report on Form 8-K as filed on March 24, 2010.
(16)
Incorporated by reference to the Current Report on Form 8-K as filed on April 23, 2010.
(17)
Incorporated by reference to the Current Report on Form 8-K as filed on June 23, 2010.
(18)
Incorporated by reference to the Current Report on Form 8-K as filed on October 30, 2010.
(19)
Incorporated by reference to the Current Report on Form 8-K as filed on November 6, 2010.

 
26

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  
VOIS Inc.
  
  
December 6, 2011
By: /s/ Mark B. Lucky
  
Mark B. Lucky, Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature
  
Title
  
Date
  
  
  
  
  
/s/ John R. Signorello
  
Chairman
  
December 6, 2011
John R. Signorello
  
 
  
 
  
  
  
  
 
/s/ Mark B. Lucky
  
Chief Executive Officer, Director and principal accounting
  
December 6, 2011
Mark B. Lucky
  
officer
  
 
         
/s/ Hal Compton, Sr.
  
Director
  
December 6, 2011
Hal Compton, Sr.
  
 
  
 
         
/s/ William Marginson
  
Director
  
December 6, 2011
William Marginson
  
 
  
 

 
27

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
VOIS Inc.

We have audited the accompanying balance sheets of VOIS Inc. (a development stage company) as of September 30, 2011 and 2010 and the related statements of operations, changes in stockholders' deficit and cash flows for the years then ended. We did not audit the period beginning May 19, 2000 through September 30, 2007 which were audited by the predecessor accounting firms and as such is considered unaudited.  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 audits.

We conducted our audits 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 purposes of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of VOIS Inc. (a development stage company) as of September 30, 2011 and 2010 and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company had net losses of $718,735 and $16,106,006 respectively, for the years ended September 30, 2011 and 2010. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regards to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 
/s/ Sherb & Co., LLP
 
Certified Public Accountants

Boca Raton, Florida
November 22, 2011

 
F-1

 

VOIS INC.
(A Development Stage Company)
BALANCE SHEETS

   
September 30,
 
   
2011
   
2010
 
ASSETS
           
CURRENT ASSETS:
           
Cash
  $ 667     $ 3,469  
Total Current Assets
    667       3,469  
                 
OTHER ASSETS:
               
Property and equipment, net of accumulated depreciation of $28,762 and $24,187 at September 30, 2011 and 2010, respectively
    4,818       9,393  
Website development costs, net of accumulated amortization of $504,892 and $457,755 at September 30, 2011 and 2010, respectively
    2,668       49,805  
Other assets
    6,084       6,084  
Total Assets
  $ 14,237     $ 68,751  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
CURRENT LIABILITIES:
               
Accounts payable and accrued expenses
  $ 1,073,338     $ 524,965  
Notes payable and accrued interest
    330,766       301,766  
Total current liabilities
    1,404,104       826,731  
                 
STOCKHOLDERS' DEFICIT:
               
Preferred Stock ($.001 par value; 10,000,000 shares authorized)
    -       -  
Common stock ($.001 par value; 100,000,000 shares authorized; 17,106,045 and 13,421,045 shares issued and outstanding at September 30, 2011 and September 30, 2010, respectively)
    17,107       13,422  
Additional paid in capital
    28,171,461       28,088,297  
Deficit accumulated during the development stage
    (29,578,435 )     (28,859,699 )
                 
Total stockholders' deficit
    (1,389,867 )     (757,980 )
                 
Total liabilities and stockholders' deficit
  $ 14,237     $ 68,751  

See Notes to Financial Statements.

 
F-2

 

VOIS INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS

               
Cumulative
 
               
For the
 
               
Period From
 
               
May 19,
 
               
2000
 
         
(Inception) to
 
   
Year Ended September 30,
   
September 30,
 
   
2011
   
2010
   
2011
 
               
(Unaudited)
 
Revenues
  $ -     $ -     $ 36,139  
                         
Operating expenses:
                       
Selling, general & administrative
    686,518       16,073,818       25,747,852  
Total operating expenses
    686,518       16,073,818       25,747,852  
                         
Operating loss
    (686,518 )     (16,073,818 )     (25,711,713 )
                         
Other (income) expense:
                       
Interest income
    -       -       (4,572 )
Loss on investment in A.D. Parma
    -       -       125,000  
Interest expense
    32,217       32,188       672,509  
Interest expense - related party
    -       -       13,391  
      32,217       32,188       806,328  
                         
Loss from continuing operations
    (718,735 )     (16,106,006 )     (26,518,041 )
                         
Loss from discontinued operations
    -       -       (3,060,394 )
                         
Net loss
  $ (718,735 )   $ (16,106,006 )   $ (29,578,435 )
                         
Per share data- basic and diluted:
                       
Loss from continuing operations
  $ (0.04 )   $ (1.69 )        
Loss from discontinued operations
    -       -          
Net loss
  $ (0.04 )   $ (1.69 )        
                         
Basic and diluted weighted average common shares outstanding
    16,161,250       9,551,331          

See Notes to Financial Statements.

 
F-3

 

VOIS INC.
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
From May 19, 2000 (Inception) to September 30, 2011 (Unaudited)*

               
Additional
                   
  
 
Common Stock
   
Stock Subscription
   
Paid-in
   
Deferred
   
Accumulated
   
Stockholders'
 
  
 
Shares
   
$
   
Receivable
   
Capital
   
Compensation
   
Deficit
   
Deficit
 
                                           
Opening balance, January 1, 2000
                                         
Shares issued to founders
    173,334       173       (26,000 )     25,827                    
Fair value of purchase rights issued to private placement
                      14,700                   14,700  
Net loss
                                  (79,157 )     (79,157 )
Balance, December 31, 2000
    173,334       173       (26,000 )     40,527             (79,157 )     (64,457 )
  
                                                       
Payments of stock subscriptions
                26,000                         26,000  
Exercise of stock rights by note holders
    2,434       2             3,648                   3,650  
Shares issued for services
    1,334       1             199                   200  
Shares issued pursuant to private placements
    28,680       29             2,150,971                   2,151,000  
Fees associated with issuance of stock
                      (537,491 )                 (537,491 )
Fair market value of purchase rights to be issued in private placement
                      251,288                   251,288  
Net loss
                                  (1,151,807 )     (1,151,807 )
Balance, December 31, 2001
    205,781       206             1,909,142             (1,230,964 )     678,383  
  
                                                       
Exercise of stock rights by note holders
    767       1             1,149                   1,150  
Shares issued for services
    1,174       1             108,349                   108,350  
Net loss
                                  (1,147,650 )     (1,147,650 )
Ending balance, December 31, 2002
    207,721       208             2,018,640             (2,378,614 )     (359,767 )
  
                                                       
Shares issued pursuant to private placements
    2,734       3             92,184                   92,187  
Exercise of stock option
    800       1             29,999                   30,000  
Conversion of note payable into common stock
    667       1             24,999                   25,000  
Shares issued for services
    734       1             23,749                   23,750  
Compensatory element of stock option grants
                      211,650                   211,650  
Compensatory element of stock purchase rights
                      85,500                   85,500  
Net loss
                                    (883,983 )     (883,983 )
Ending balance, December 31, 2003
    212,654       213             2,486,721             (3,262,597 )     (775,663 )
  
                                                       
Exercise of stock option
    2,334       2             348                   350  
Shares issued pursuant to private placements
    3,667       4             54,996                   55,000  
Shares issued for payment of royalties
    667       1             4,999                   5,000  
Net income
                                  2,363       2,363  
Ending balance, December 31, 2004
    219,321       219             2,547,064             (3,260,234 )     (712,950 )
  
                                                       
Compensatory element of stock rights grants
                      4,860                   4,860  
Exercise of stock purchase rights
    400                   300                   300  
Net loss
                                  (259,035 )     (259,035 )
Ending balance, December 31, 2005
    219,721       220             2,552,224             (3,519,269 )     (966,825 )
  
                                                       
Shares issued pursuant to private placements
    2,500,022       2,500             437,550                   440,050  
Exercise of stock purchase rights
    734       1             549                   550  
Compensatory element of stock option grants
                      24,766                   24,766  
Compensatory element of stock purchase rights
                      23,561                   23,561  
Net loss
                                  (225,194 )     (225,194 )
Ending balance, December 31, 2006
    2,720,476       2,720             3,038,650             (3,744,463 )     (703,092 )
  
                                                       
Compensatory element of stock option grants
                      2,669,569                   2,669,569  
Exercise of stock purchase rights
    4,001       4             2,998                   3,002  
Fair value of rights issued pursuant to notes payable
                      46,438                   46,438  
Fair value of rights issued pursuant to notes payable to related party
                      28,892                   28,892  
Net loss
                                  (3,710,507 )     (3,710,508 )
Ending balance, September 30, 2007
    2,724,477       2,724             5,786,547             (7,454,970 )     (1,665,699 )
  
                                                       
Exercise of stock options
    3,300       3             34,648                   34,651  
Shares issued pursuant to private placements
    518,782       519             1,689,265                   1,689,784  
Shares issued for extinguishment of debt
    124,497       124             809,107                   809,231  
Compensatory element of stock option grants
                      2,695,680                   2,695,680  
Exercise of stock purchase rights
    100                   75                   75  
Fair value of rights issued pursuant to notes payable
                      11,230                   11,230  
Fair value of rights issued pursuant to notes payable to related party
                      6,991                   6,991  
Fair value of shares issued for services
    44,737       45             416,244       (68,613 )           347,676  
Net loss
                                  (4,234,477 )     (4,234,477 )
Ending balance, September 30, 2008
    3,415,893       3,416             11,449,787       (68,613 )     (11,689,448 )     (304,858 )
  
                                                       
Shares issued pursuant to private placement
    190,000       190             75,810                   76,000  
Shares issued for extinguishment of officer loans
    511,250       512             203,989                   204,501  
Fair value of shares issued for services
    25,498       26             55,973                   55,999  
Forgiveness of executive compensation
                      630,848       68,613             699,461  
Compensatory element of stock option grants
                      296,913                   296,913  
Net loss
                                  (1,064,246 )     (1,064,246 )
Ending balance, September 30, 2009
    4,142,641       4,144             12,713,320             (12,753,693 )     (36,230 )
                                                         
Fair value of shares issued for services
    1,313,334       1,313             2,236,687                   2,238,000  
Compensatory element of stock option grants
                      1,232,690                   1,232,690  
Issuance of common shares in lieu of compensation
    7,051,000       7,051             11,773,569                   11,780,620  
Shares issued pursuant to private placement
    800,000       800             47,200                   48,000  
Exercise of common stock options
    114,070       114             84,830                     84,944  
Net loss
                                  (16,106,006 )     (16,106,006 )
Ending balance, September 30, 2010
    13,421,045       13,422             28,088,296             (28,859,699 )     (757,982 )
                                                         
Issuance of common shares in lieu of compensation
    175,000       175             36,575                   36,750  
Shares issued pursuant to private placement
    3,510,000       3,510             46,590                   50,100  
Net loss
                                  (718,735 )     (718,735 )
Ending balance, September 30, 2011
    17,106,045       17,107             28,171,461             (29,578,435 )     (1,389,867 )

*  The numbers presented from inception May 19, 2000 to October 1, 2007 are unaudited by our current auditor.

See Notes to Financial Statements

 
F-4

 

VOIS INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS

  
           
Cumulative For the Period
 
  
 
For the Year Ended September 30
   
From May 19, 2000 (Inception)
 
   
2011
   
2010
   
to September 30, 2011 *
 
Cash flows from operating activities:
                 
Net loss
  $ (718,735 )   $ (16,106,006 )   $ (29,578,434 )
Less income -loss from discontinued operations
    -       -       (3,060,394 )
Loss from continuing operations
    (718,735 )     (16,106,006 )     (26,518,040 )
Adjustments to reconcile loss from continuing operations to net cash used by continuing operating activities
                       
Fair value of options granted and shares issued to directors, employees, and consultants
    36,750       11,780,620       17,504,299  
Fair value of rights issued pursuant to notes payable
    -       -       117,112  
Fair value of shares issued for services
    -       2,238,000       2,325,838  
Gain on extinguishment of debt
    -       -       1,711  
Amortization of deferred financing costs
    -       -       16,693  
Loss on investment in A.D. Parma
    -       -       125,000  
Depreciation
    4,574       6,922       28,761  
Amortization
    47,137       168,013       504,892  
Amortization of deferred compensation
    -       1,232,688       1,507,138  
Changes in operating assets and liabilities
                       
Other asset
    -       16,339       2,113  
Deferred tax asset
    -       -       (77,500 )
Accrued interest
    36,967       29,000       211,577  
Accrued interest-related party
    -       -       5,474  
Accounts payable and accrued expenses
    540,405       430,802       2,032,517  
Deferred tax liability
    -               77,500  
Total adjustments to loss from continuing operations
    665,833       15,902,384       24,383,125  
Net cash flows from continuing operating activities
    (52,902 )     (203,622 )     (2,134,915 )
Net operational cash flows from discontinued operations
    -       -       (2,088,117 )
Net cash used by operating activities
    (52,902 )     (203,622 )     (4,223,031 )
                         
Cash flows used in investing activities:
                       
Investment in A.D. Parma
    -       -       (125,000 )
Website development costs
    -       (16,800 )     (507,560 )
Capital expenditures
    -       -       (108,477 )
Acquisition and purchases of intangible and other assets
    -       -       (8,197 )
                         
Net cash used in investing activities
    -       (16,800 )     (749,234 )
                         
Cash flows from financing activities:
                       
Proceeds from issuance of notes payable
    -       -       979,519  
Repayment of notes payable
    -       -       (438,769 )
Exercise of options
    -       84,944       119,595  
Repayment from notes payable- related party
    -       -       38,500  
Issuance of notes receivable-related party
    -       -       (38,500 )
Proceeds from sale of royalty agreement
    -       -       50,000  
Equipment loans
    -       -       (32,481 )
Advance from executive officers
    -       -       204,500  
Payments of financing costs
    -       -       (182,140 )
Proceeds from issuance of shares of common stock
    50,100       48,000       4,599,688  
Offering costs and fees
    -       -       (326,980 )
                         
Net cash provided by financing activities
    50,100       132,944       4,972,932  
                         
Net increase (decrease) in cash
    (2,802 )     (87,478 )     667  
                         
Cash, beginning of period
    3,469       90,947       -  
                         
Cash, end of period
  $ 667     $ 3,469     $ 667  
                         
Supplemental disclosures of cash flow information:
                       
Cash paid for interest
    -       -       32,443  
Cash paid for taxes
    -       -       -  
                         
Non-cash investing and financing activities:
                       
Issuance of shares pursuant to conversion of advances from executive officers
  $ -     $ -     $ 204,500  
Forfeiture of executive compensation
  $ -     $ -     $ 630,848  
Fair value of shares issued to satisfy notes payable and accrued interest
  $ -     $ -     $ 834,231  
Deferred financing and offering costs
  $ -     $ -     $ 49,689  
Deferred compensation
  $ -     $ -     $ (274,450 )
Equipment financed
  $ -     $ -     $ 34,120  

*  The numbers presented from inception May 19, 2000 to October 1, 2007 are unaudited by our current auditor.

See Notes to Financial Statements

 
F-5

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 1 - PLAN OF ORGANIZATION

Organization, Presentation of Financial Statements, and Going Concern

VOIS Inc. (the “Company”) was incorporated in the State of Delaware on May 19, 2000 as Medical Records by Net, Inc. On October 17, 2000, its name was changed to Lifelink Online, Inc. In January 2001, its name was changed to MedStrong Corporation and on March 9, 2001 the Company name was changed to MedStrong International Corporation. Finally, on March 30, 2007, the Company’s name was changed to VOIS Inc.

Through September 30, 2011, the Company was in the development stage and has not carried on any significant operations and has generated minimal revenues. The Company has incurred losses since inception aggregating $29,578,435 and has a stockholders’ deficit of $1,389,867 at September 30, 2011.  These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
 
Principal Business Activity

On January 31, 2007, our Board of Directors approved an agreement to acquire certain assets from Vois Networking, Inc. (a privately held, Florida corporation) controlled by two of our former directors and officers. We purchased fixed assets in the form of furniture, fixtures and equipment as well as certain intangible assets. The Company’s operations are located in Northern Virginia. The Company develops and markets an internet social networking site.

Basis of Presentation

All share and per share information herein gives retroactive effect to the one hundred for one (100:1) forward stock split of our common stock effective at the close of business on July 8, 2009, a change in the par value of our common stock from $0.001 per share to $0.00001 per share effective October 29, 2009, and to the one for two hundred (1:200) reverse stock split of our common stock effective at the close of business on November 23, 2010, a change in the par value of our common stock from $0.00001 per share to $0.001 per share effective November 23, 2010.

The Company is currently a development stage enterprise reporting under the provisions of FASB ASC 915, Development Stage Entity. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

NOTE 2 - SUMMARY OF CRITICAL AND SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Online advertising revenue is recognized as advertisements are displayed. Search advertising revenue is recognized when the ad appears in the search results or when the action necessary to earn the revenue has been completed.

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 certain reported amounts and disclosures. Significant estimates for the periods reported include certain assumptions used in deriving the fair value of share-based compensation recognized, the useful life of tangible assets and the future value of our website development costs. Assumptions and estimates used in these areas are material to our reported financial condition and results of our operations. Actual results will differ from those estimates.

 
F-6

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 2 - SUMMARY OF CRITICAL AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents

Cash and cash equivalents are reported in the balance sheets at cost, which approximates fair value. The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased, to be cash equivalents.

Concentrations of Risks

The Company is subject to concentrations of credit risk primarily from cash.  At September 30, 2011, the FDIC insured deposits up to $250,000.  At September 30, 2011, the Company’s bank balances did not exceed the FDIC insurance limit. While the Company periodically evaluates the credit quality of the financial institutions in which it holds deposits, it cannot reasonably alleviate the risk associated with the sudden possible failure of such financial institutions.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. When assets are sold or retired, the cost and related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is reflected in income for the period. The cost of maintenance and repairs are charged to expense as incurred. Significant renewals and replacements, which substantially extend the lives of the assets, are capitalized. Depreciation is provided by the straight-line method over the estimated useful lives of the related assets ranging from 3 to 7 years.
 
Website Development Costs 

The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development, FASB ASC 350-40, Internal-Use Software, FASB 985-20, Costs of Computer Software to be Sold, Leased, or Marketed and FASB ASC 350-50, Website Development Costs. As of September 30, 2011, the Company has capitalized certain internal use software and website development costs amounting to approximately $508,000. The estimated useful life of costs capitalized is evaluated for each specific project and is currently being amortized over two years.

Income Taxes

The Company adopted FASB ASC 740, Income Taxes, at its inception. Under FASB ASC 740, the deferred tax provision is determined under the liability method. Under this method, deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities using presently enacted tax rates.

Share-based Payment

We record share based payments under the provisions of FASB ASC 718, Compensation - Stock Compensation. Under FASB ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005 the SEC issued Staff Accounting Bulletin No. 107, or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction between FASB ASC 718 and certain SEC rules and regulations and provides the staff's views regarding the valuation of share-based payment arrangements for public companies. FASB ASC 718 permitted public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule amending the compliance dates for FASB ASC 718. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS 123.  Effective with its fiscal 2006 year, the Company adopted the provisions of FASB ASC 718 and related interpretations as provided by SAB 107 prospectively. As such, compensation cost is measured on the date of grant as its fair value.   Such compensation amounts are amortized over the respective vesting periods of the options granted.

 
F-7

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 2 - SUMMARY OF CRITICAL AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Share
 
The Company adopted FASB ASC 260, Earnings Per Share. Basic earnings per share is based on the weighted effect of all common shares issued and outstanding and is calculated by dividing net income (loss) available to common stockholders by the weighted average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of common shares used in the basic earnings per share calculation plus the number of common shares, if any, that would be issued assuming conversion of all potentially dilutive securities outstanding. For all periods diluted earnings per share is not presented, as potentially issuable securities are anti-dilutive.

The following securities have been excluded from the calculation of diluted earnings (loss) per share, as their effect would be anti-dilutive.
 
  
 
September 30,
 
  
 
2011
   
2010
 
Stock Options:
   
266,667
     
1,937,346
 
Warrants:
   
     
 
Rights Issued to Note Holders:
   
7,934
     
7,934
 
Total
   
274,601
     
1,945,280
 

Advertising Costs

The Company expenses advertising costs as incurred. Advertising expense amounted to $0 and $0 during the fiscal years ended September 30, 2011 and 2010, respectively.

Accounting Pronouncements Recently Adopted

In September 2011, the FASB issued ASU No. 2011-09, “Compensation-Retirement Benefits-Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer's Participation in a Multiemployer Plan (September 2011)" The amendments in this Update require that employers provide additional separate disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. The amendment is effective for fiscal years and interim periods within those years, beginning after December 15, 2011. Upon adoption, the Company will provide the additional disclosures required by this amendment.

In September 2011, the FASB issued ASU No. 2011-08, “Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for
Impairment (September 2011)" Under the amendments in this Update, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The amendment is effective for fiscal years and interim periods within those years, beginning after December 15, 2011.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income (June 2011).” The amendments require that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The amendment is effective for fiscal years and interim periods within those years, beginning after December 15, 2011. The Company will adopt the two-statement approach.

In May 2011, the FASB issued ASU No. 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IRFSs (May 2011)." The amendments in this Update explain how to measure fair value. They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendment is effective during interim and annual periods beginning after December 15, 2011. The Company is evaluating the impact of this amendment.

In December 2010, the FASB issued ASU No. 2010-29, “Business Combinations: Disclosure for Supplementary Pro Forma Information for Business Combinations.” If a public entity presents financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combinations that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. It requires expanded supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The Update is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company will evaluate the impact of this update on future acquisitions as they occur.

 
F-8

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 3: WEBSITE DEVELOPMENT COSTS

Website development costs, net of accumulated amortization are as follows:

   
September 30,
 
   
2011
 
2010
 
Website development costs
  $ 507,560   $ 507,560  
Less: accumulated amortization
    (504,892 )   (457,755 )
Website development costs, net
  $ 2,668   $ 49,805  

Amortization expense of the website development costs totaled $47,137 and $168,013 during the fiscal years ended September 30, 2011 and 2010, respectively.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and Equipment are comprised of the following:
 
  
 
September 30,
2011
   
September 30,
2010
 
Continuing Operations
           
Computer equipment
  $ 14,563     $ 14,563  
Furniture and fixtures
    9,388       9,388  
Leasehold improvements
    5,586       5,586  
Equipment
    4,043       4,043  
  
    33,580       33,580  
Accumulated depreciation
    (28,762 )     (24,187 )
Property and equipment, net
  $ 4,818     $ 9,393  

Depreciation expense of the property and equipment amounted to $4,574 and $6,922 during the fiscal years ended September 30, 2011 and 2010, respectively.

 
F-9

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses are comprised of the following:
 
  
 
September 30,
2011
   
September 30,
2010
 
Trade payables and accrued expenses
  $ 977,338     $ 365,965  
Accrued compensation and related benefits
    96,000       159,000  
Total
  $ 1,073,338     $ 524,965  
 
NOTE 6 - NOTES PAYABLE

The total amount due on notes payable and related interest and penalty is as follows:

  
 
September 30,
2011
   
September 30,
2010
 
Principal
  $ 145,000     $ 145,000  
Interest and Penalty
    185,766       156,766  
Total
  $ 330,766     $ 301,766  

The $145,000 in notes payable, bear an interest of 20% per annum, which includes a 5% penalty component, were due, as extended, on dates ranging from June 23, 2004 to December 31, 2004. The Company owed $156,766 and $127,766 in accrued interest and penalty at September 30, 2011 and 2010, respectively. The notes payable are unsecured and currently in default.  On July 19, 2010, plaintiffs, Edward and Michael Spindel filed a motion for summary judgment on the notes.  Vois Inc. filed a response in opposition on August 5, 2010.  The Spindels filed a reply on September 9, 2010.  The court held a hearing on September 16, 2010 and at the hearing granted summary judgment in favor of the Spindels.  Final judgment was ordered on November 16, 2010 in the amount of $287,266 plus post judgment interest.  Attorney’s fees were also awarded in the amount of $172,304.  On December 6, 2010 we filed an appeal to the judgment and will continue to aggressively defend the counterclaims based on the promissory notes, and believe strongly in the merits of our defenses.

The default penalty contained in the notes issued in 2005 provided the note holder with a stock purchase right to acquire, for every 30 day period that the Company is in default on the loan, one hundred shares of the Company’s common stock at $0.75 per share for each dollar of the loan. During the fiscal year ended September 30, 2008, these note holders were issued rights to acquire 1,734 common shares. During the fiscal year ended September 30, 2008 certain note holders purchased 100 common shares for $15,000 pursuant to such stock purchase rights. The fair value of the rights associated with the default penalty amounted to $18,221 during the fiscal year ended September 30, 2008, and was recorded as interest expense during that year.  During the fiscal year ended September 30, 2008, the notes containing this default penalty provision were satisfied.  
       
NOTE 7 - RELATED PARTY TRANSACTIONS

None.

NOTE 8 - CAPITAL STOCK
 
Issuance of Shares to Officers and Directors

On November 3, 2010, the Company issued 50,000 shares to our CFO, James Thomas as compensation in lieu of cash. The shares were valued at $0.36 per share. The expense associated with the issuance of stock totaled $18,000 and is included in selling, general & administrative expense in the accompanying statement of operations.

On December 7, 2010, the Company issued 125,000 shares to directors of the Company as compensation for serving on the Board. The shares were valued at $0.15 per share. The expense associated with the issuance of stock totaled $18,750 and is included in selling, general & administrative expense in the accompanying statement of operations.

 
F-10

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 8 - CAPITAL STOCK (Continued)

Issuance of Shares Pursuant to Private Placements

During the year ended September 30, 2011, the Company issued 3,510,000 shares of common stock pursuant to a private placement, generating proceeds of $50,100.

Stock Option Plans

We currently have three stock option plans, our 2002 Stock Option Plan, as amended (the "2002 Plan"), our 2007 Equity Compensation Plan (the "2007 Plan") and our 2010 Equity Compensation Plan (the “2010 Plan”).  The purpose of each of these plans is to enable us to offer to our employees, officers, directors and consultants whose past, present and/or potential contributions to our company have been are or will be important to our success, an opportunity to acquire a proprietary interest in our company.  All of these plans are administered by our Board of Directors.

2002 Plan

The effective date of the 2002 Plan was August 9, 2002 and the maximum number of shares which could be initially issued over the term of the 2002 Plan was 1,000,000 shares.  The 2002 Plan was amended on August 12, 2003 to increase the number of shares available for issuance thereunder to 3,000,000 shares. While the shares underlying outstanding options and the exercise price automatically adjust for all stock splits, the actual number of shares reserved under the 2002 Plan does not adjust.  As of September 30, 2011, options and stock rights covering an aggregate of 225,034 shares of our common stock have been granted (giving effect to the 100:1 stock split in July 2009 and the 1:200 reverse stock split in November, 2010) and 2,774,966 shares remain available for issuance under the 2002 Plan.  At September 30, 2011 we have outstanding options to purchase an aggregate of 225,034 shares of our common stock with an exercise price of $10.50 per share.  The 2002 Plan will terminate on August 8, 2012, unless earlier terminated by our Board of Directors.

The 2002 Plan authorizes the grant of:

 
options which qualify as "incentive stock options" ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code");
 
options which do not qualify as ISOs ("Non-Qualified Options" or "NSOs");
 
awards of our common stock; and
 
rights to make direct purchases of our common stock which may be subject to certain restrictions.

The stock rights granted under the 2002 Plan will be authorized but unissued shares of our common stock or shares of common stock reacquired by us in any manner.  If any stock rights granted under the 2002 Plan should expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the shares of common stock subject to such stock rights will again be available for grants of stock rights under the 2002 Plan.

 
F-11

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

The exercise price per share for each Non-Qualified Option granted, and the purchase price per share of stock granted in any award or authorized as a purchase, cannot be less than the minimum legal consideration required therefor under the laws of any jurisdiction in which we or our successors in interest may be organized. The exercise price per share for each ISO granted cannot be less than the fair market value per share of common stock on the date of such grant.  In the case of an ISO to be granted to an employee owning stock possessing more than 10% of the total combined voting power of all classes of our company, the price per share cannot be less than 110% of the fair market value per share of common stock on the date of grant.

Subject to earlier termination, each option will expire on the date specified by the Board of Directors, but not more than 10 years from the date of grant in the case of options generally and five years from the date of grant in the case of ISOs granted to an employee owning stock possessing more than 10% of the total combined voting power of all classes of our stock.  Unless otherwise specified in the agreements relating to such ISOs, if an ISO optionee ceases to be employed by us other than by reason of death, disability, voluntary termination or a breach of his or her employment agreement, no further of his or her ISOs will become exercisable, and his or her ISOs shall terminate on the earlier of 90 days after the date of termination of his or her employment, or their specified expiration dates.  Stock rights granted to members of the Board of Directors will be identical to those granted to other eligible persons.  Members of the Board of Directors who either are eligible to receive grants of stock rights pursuant to the 2002 Plan or have been granted stock rights may vote on any matters affecting the administration of the 2002 Plan or the grant of any stock rights pursuant to the 2002 Plan, except that no such member can act upon the granting to himself or herself.  The shares of common stock which a recipient of an authorization to make a purchase may be subject to specified restrictions, to be determined by the Board, and may include the requirement of continued employment with our company or a subsidiary or achievement of certain performance objectives, among other conditions.  Awards of the common stock may be made to a recipient as a bonus or as additional compensation, as determined by the Board of Directors.

On October 30, 2009 our Board of Directors approved amendments to the outstanding options to purchase 200,000 shares of our common stock with an exercise price of $10.50 per share granted under our 2002 Stock Option Plan which are held by members of our management and an employee to provide that these options are exercisable until the earlier of the original expiration date of June 7, 2012, or the first anniversary following the date the holder is no longer a member of the Board of Directors or employee of our company.

2007 Plan

On October 3, 2007, our Board of Directors authorized the 2007 Plan covering 1,500,000 shares of common stock.  The 2007 Plan was required to be approved by our shareholders prior to October 3, 2009.  As we did not submit the 2007 Plan to our shareholders for approval prior to that date, incentive stock options may not be awarded under the 2007 Plan and any incentive stock options previously awarded under the 2007 Plan have been converted into non-qualified options upon terms and conditions determined by the Board, as nearly as is reasonably practicable in its sole determination, the terms and conditions of the incentive stock options being so converted.  As of September 30, 2011, options and stock rights covering an aggregate of 600,000 shares of our common stock have been granted and 150,000 shares remain available for issuance under the 2007 Plan.  At September 30, 2011 we have outstanding options to purchase an aggregate of 600,000 shares of our common stock with an exercise price of $5.00 per share. The 2007 Plan will terminate on October 3, 2017, unless earlier terminated by our Board of Directors.

In the event of any stock split of our outstanding common stock, the Board of Directors in its discretion may elect to maintain the stated amount of shares reserved under the 2007 Plan without giving effect to such stock split.  Subject to the limitation on the aggregate number of shares issuable under the 2007 Plan, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.  Plan options may either be ISOs or NSOs.  In addition, the 2007 Plan allows for the inclusion of a reload option provision, which permits an eligible person to pay the exercise price of the option with shares of common stock owned by the eligible person and receive a new option to purchase shares of common stock equal in number to the tendered shares.  Any ISO granted under the 2007 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant.  The 2007 Plan further provides that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000.  Any NSO granted under the 2007 Plan must provide for an exercise price of not less than the par value of our common stock.  The term of each plan option and the manner in which it may be exercised is determined by the Board of Directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant.

 
F-12

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 8 - CAPITAL STOCK (Continued)

On October 30, 2009 our Board of Directors amended options to purchase an aggregate of 600,000 shares of our common stock with an exercise price of $5.00 per share granted under our 2007 Equity Compensation Plan which are held by members of our management and an employee to provide that these options are exercisable until the earlier of the original expiration date of October 3, 2012, or the first anniversary following the date the holder is no longer a member of the Board of Directors or employee.

2009 Plan

On April 17, 2009, our Board of Directors authorized the 2009 Plan covering 5,000,000 shares of common stock.   The 2009 Plan was required to be approved by our shareholders prior to April 17, 2010 or any incentive stock options we may award under the 2009 Plan will automatically convert into non-qualified options upon terms and conditions determined by the Board, as nearly as is reasonably practicable in its sole determination, the terms and conditions of the incentive stock options being so converted.  Following the adoption of the 2009 Plan our Board granted options to purchase an aggregate of 970,000 shares of our common stock with exercise prices ranging from $0.70 to $1.40 per share.

In the event of any stock split of our outstanding common stock, the Board of Directors in its discretion may elect to maintain the stated amount of shares reserved under the 2009 Plan without giving effect to such stock split.  Subject to the limitation on the aggregate number of shares issuable under the 2009 Plan, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.  Plan options may either be (i) ISOs, (ii) NSOs (iii) awards of our common stock or (iv) rights to make direct purchases of our common stock which may be subject to certain restrictions.  Any option granted under the 2009 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant.  The 2009 Plan further provides that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000.  The term of each plan option and the manner in which it may be exercised is determined by the Board of Directors or the compensation committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant.

On October 30, 2009 our Board of Directors amended options to purchase an aggregate of 832,500 shares of our common stock with exercise prices ranging from $0.70 to $1.40 per share granted under our 2009 Equity Compensation Plan which are held by members of management, an employee and a consultant to accelerate the vesting of all previously unvested portions to October 29, 2009 and to provide that all such options are exercisable for the earlier of three years from the vesting date or one year after the date the holder is no longer an officer, director or employee of our company or, as to the consultant, no longer renders services to us.

The fair value of the options was based on the Black Scholes Model using the following assumptions:

  
 
2011
   
2010
 
Exercise price:
  $ 0.70     $ 0.70  
Market price at date of grant:
  $ 0.60     $ 0.60  
Volatility:
    542%-551 %     193 %
Expected dividend rate:
    0 %     0 %
Risk-free interest rate:
    0.31%-0.34 %     1.38 %

 
F-13

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 8 - CAPITAL STOCK (Continued)

The weighted-average grant-date fair value of options granted during the year ended September 30, 2011 and 2009 totaled to $1.526 and $0.574, respectively.

The total compensation cost for options amounted to $0 and $1,232,688 during the fiscal years ended September 30, 2011 and 2010, respectively.
 
The Company's policy is to issue shares pursuant to the exercise of stock options from its available authorized but unissued shares of common stock. It does not intend to issue shares pursuant to the exercise of stock options from its treasury shares.

There are no unamortized costs associated with share-based payments at September 30, 2011 or 2010.

A summary of stock option activity during 2011 and 2010 of the Company’s stock option plans is as follows:

   
Year Ended September 30, 2011
   
Year Ended September 30, 2010
 
  
       
Weighted
               
Weighted
       
         
Average
   
Aggregate
         
Average
   
Aggregate
 
   
Number of
   
Exercise
   
Intrinsic
   
Number of
   
Exercise
   
Intrinsic
 
   
Options
   
Price
   
Value
   
Options
   
Price
   
Value
 
Stock options
                                   
Balance at beginning of year
    1,937,346     $ 3.50               1,795,034     $ 3.50          
Granted
    -       -               350,000     $ 1.06          
Exercised
    -       -               (197,404 )   $ 2.00          
Forfeited
    (1,670,679 )   $ 3.70               (10,284 )   $ 10.50          
Balance at end of year
    266,667     $ 0.97               1,937,346     $ 3.33          
  
                                               
Options exercisable at end of year
    266,667     $ 0.97               1,710,940     $ 3.62          
  
                                               
Weighted average fair value of options granted during the year
            -                     $ 1.06          

The following table summarizes information about employee stock options outstanding at September 30, 2011:
 
Options Outstanding
 
Options Exercisable
 
  
     
Weighted
               
  
 
Number
 
Average
 
Weighted
 
Number
   
Weighted
 
Range of
 
Outstanding at
 
Remaining
 
Average
 
Exercisable at
   
Average
 
Exercise
 
September,
 
Contractual
 
Exercise
 
September 30,
   
Exercise
 
Price ($)
 
2011
 
Life
 
Price ($)
 
2011
   
Price ($)
 
  
     
  
               
0.70
   
150,000
 
3.40 years
 
.070
   
150,000
     
0.70
 
1.32
   
116,667
 
3.13 years
 
1.32
   
116,667
     
1.32
 
  
   
266,667
 
  
       
266,667
     
0.97
 

 
F-14

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 8 - CAPITAL STOCK (Continued)

The following activity occurred under the Company’s plans:

  
 
September 30,
   
September 30,
 
  
 
2011
   
2010
 
Weighted-average grant date fair value of options granted
  $ -     $ 1.53  
Aggregate intrinsic value of options exercise
    N/A       N/A  
Fair value of options recognized as expense
  $ -     $ 1,232,688  

NOTE 9 – INCOME TAXES

The components of the Company’s income tax expense at September 30, 2011 and 2010 are as follows:

  
 
2011
   
2010
 
Current
 
$
   
$
 
Deferred
   
     
 
Total
 
$
   
$
 
 
A reconsolidation of the Company’s effective tax rate to the statutory federal rate is as follows:
 
  
 
2011
   
2010
 
Tax at US Statutory Rate
   
34.0 
%
   
34.0 
%
State tax rate, net of federal benefits
   
3.5 
     
3.5 
 
Permanent difference
   
(1.9)
     
(32.6)
 
Changes in valuation allowance
   
(35.6)
%
   
(4.9)
%
Effective tax note
   
0.0 
%
   
0.0 
%

The tax effects of principal temporary differences between the carrying amount of assets and their tax bases are summarized below.

The components of the deferred tax assets are as follows:

  
 
2011
   
2010
 
Net operating loss carryforwards
  $ 2,270,000     $ 2,206,000  
Fair value of stock options
    2,604,000       2,604,000  
Fair value of stock rights
           
Accounts payable and accrued interest
           
Other
    525,000       336,000  
Deferred tax asset
    5,399,000       5,146,000  
Valuation
    (5,204,000 )     (4,951,000 )
Net deferred tax asset, current
  $ 195,000     $ 195,000  

The components of the deferred tax liability are as follows:

  
 
2011
   
2010
 
Website development costs, net
  $ 195,000     $ 195,000  
Net deferred tax liability, current
  $ 195,000     $ 195,000  

 
F-15

 

VOIS Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2011

NOTE 9 – INCOME TAXES (Continued)

Management believes it is more likely than not that it will be able to realize the tax benefit of certain deferred tax assets to the extent of its deferred tax liability, and therefore has provided a valuation allowance of less than 100 percent.

The valuation allowance increased by $253,000 from September 30, 2010 to September 30, 2011.

At September 30, 2011 the Company had estimated tax net operating loss carryforwards of approximately $6,054,000, which expire through its tax year ending in 2031.  Utilization of these net operating loss carryforwards may be limited in accordance with IRC Section 382 in the event of certain owner shifts.

NOTE 10 – COMMITMENTS

During fiscal 2011, we terminated our office lease and have no future rent commitments at September 30, 2011.  We have accrued for amounts owed which relate to a combined summary judgment which was entered in April, 2010 against VOIS in the amount of $106,231.  This judgment is related to the lease agreements for our former office space. At September 30, 2011 our liabilities as reported in our financial statements contained elsewhere in this report reflect the principal amount of the judgment together with $3,187 in accrued interest.

The commitments over the next three years are as follows:

Year
 
Commitments
 
2012
  $  
2013
  $  
2014
  $  

NOTE 11 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing date of this Form 10-K, and determined that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes thereto other than as discussed in the accompanying notes.

 
F-16