SAFEDOX, INC. - FORM S-1/A - May 2, 2012
Attached files
As
filed
with
the
Securities
and
Exchange
Commission
on
May
2,
2012
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Commission File Number: 333-178206
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No.
4 to
FORM S-1
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SAFEDOX, INC.
(Exact name of registrant as specified in its charter)
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Wyoming
(State or Other Jurisdiction of
Incorporation or Organization)
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7372
(Primary Standard Industrial
Classification Code Number)
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45-2024931
(I.R.S. Employer
Identification No.)
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11801 Pierce Street, Second Floor, Riverside, California 92505
Telephone: (951) 710-3090
(Address, including zip code, and telephone number, including area code,
of registrant’s principal executive offices)
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Manoj Patel, 11801 Pierce Street, 2nd Floor, Riverside, California 92505
Telephone: (951) 710-3090
(Name, address, including zip code, and telephone number, including area code, of agent for service)
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Copies of communications to:
Eric Newlan, Esq.
Newlan & Newlan, Ltd.
800 Parker Square, Suite 205, Flower Mound, Texas 75028
Telephone: (972) 899-4070
Facsimile: (877) 796-3934
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Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this
registration statement.
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If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933 check the following box. [X]
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If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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If this Form is a post effective amendment filed under Rule 462(c) of the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. [ ]
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If this Form is a post effective amendment filed under Rule 462(d) of the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. [ ]
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer’ and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [X]
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of
Securities to be Registered
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Amount to be
Registered (1)
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Proposed
Maximum
Offering Price
Per Unit
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Proposed
Maximum
Aggregate
Offering
Price (2)
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Amount of
Registration
Fee (2)
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Common Stock,
$.0001 par value per share
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3,037,671
shares (3)
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$3.00
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$9,113,013
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$1,057.11
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TOTALS
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3,037,671
shares
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$9,113,013
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$1,057.11 *
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*
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$1,026.67 of this amount was paid previously.
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(1)
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In the event of a stock split, stock dividend or similar transaction involving the common shares of the
registrant, in order to prevent dilution, the number of shares of common stock registered shall be
automatically increased to cover additional shares in accordance with Rule 416(a) under the Securities Act
of 1933, as amended.
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(2)
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The offering price has been estimated solely for the purpose
of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock
is not traded on any national exchange and, in accordance with Rule 457, the offering price was determined
arbitrarily by our Board of Directors. The non-affiliate selling shareholders may sell shares of
our common stock at a fixed price of $3.00 per share until our common stock is quoted on the OTC
Bulletin Board (OTCBB) and thereafter at prevailing market prices or privately negotiated prices;
the affiliate selling shareholders, who are considered underwriters, must offer their shares at a
fixed price of $3.00 per share even if our shares are quoted on the OTCBB. There can be no assurance
that a market maker will agree to file the necessary documents with the Financial Industry Regulatory
Authority (FINRA), which operates the OTCBB, nor can there be any assurance that such an application
for quotation will be approved.
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(3)
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Existing Shareholders.
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The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay
its effective date until the Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act
of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS Subject
to completion, dated April 30, 2012
SAFEDOX, INC.
3,037,671 Shares By Existing Shareholders
We are registering for resale 3,037,671 shares of our common
stock by Selling Shareholders. Our company will not derive any funds from sales of common stock
by the Selling Shareholders.
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Non-affiliate Selling Shareholders
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Affiliate Selling Shareholders
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Non-affiliate Selling Shareholders are offering a total of
2,037,681 shares and will sell such shares at a fixed price of $3.00 per share, until our common
stock is quoted on the OTCBB and, thereafter, at prevailing market prices or privately negotiated
prices. Each of the Non-affiliate Selling Shareholders may be deemed to be an “underwriter”.
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Affiliate Selling Shareholders (both of our officers) are
offering a total of 1,000,000 shares at a fixed price of
$3.00 per share. As these Affiliate Selling Shareholders
are considered underwriters, they are required to offer
their shares at the fixed price of $3.00 per share, even
after our common stock is quoted on the OTCBB.
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There has never been a market for our common stock and a public
market may never develop, or, if any market does develop, it may not be sustained. Our common stock
is not traded on any exchange or on the over-the-counter market. Delaney Equity Group, LLC has filed
an application with the Financial Industry Regulatory Authority (“FINRA”) for our common
stock to become eligible for trading on Over-the-Counter Bulletin Board (the “OTCBB”).
There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation
service or that any market for our common stock will develop.
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INVESTING IN OUR COMMON STOCK INVOLVES VERY HIGH RISKS. SEE "RISK FACTORS",
BEGINNING ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU
SHOULD NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT
OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL. THE
INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE ON THE COVER.
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Dealer Prospectus Delivery Obligation
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Until _________________ (90 days from the date of this Prospectus) all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to deliver a Prospectus. This is in addition
to the dealers' obligation to deliver a Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
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Subject to completion, the date of this
Prospectus is April 30, 2012.
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TABLE OF CONTENTS
Prospectus Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Summary Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Determination of Offering Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Plan of Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
State Securities (Blue Sky) Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Dilution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Description of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Management’s Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . .22
Note Regarding Forward-Looking Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Directors, Executive Officers, Promoters and Control Persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Certain Relationships and Related Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Commission Position on Indemnification for Securities Act Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Where You Can Find More Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Index to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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You should rely only on the information contained or incorporated by reference in this Prospectus in deciding
whether to purchase our common stock. We have not authorized anyone to provide you with information different
from that contained or incorporated by reference in this Prospectus. Under no circumstances should the delivery to
you of this Prospectus or any sale made pursuant to this Prospectus create any implication that the information
contained in this Prospectus is correct as of any time after the date of this Prospectus. To the extent that any facts
or events arising after the date of this Prospectus, individually or in the aggregate, represent a fundamental change
in the information presented in this Prospectus, this Prospectus will be updated to the extent required by law.
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PROSPECTUS SUMMARY
The following summary highlights material information contained in this Prospectus. This summary does not
contain all of the information you should consider before investing in our common stock. Before making an investment
decision, you should read this Prospectus carefully, including the section entitled “Risk Factors” and the financial
statements and the notes thereto. You should also review the other available information referred to under “Where You
Can Find More Information”, as well as any amendment or supplement hereto. Unless otherwise indicated, the terms
“we”, “us” and “our” refer and relate to SafedoXTM, Inc., a Wyoming corporation.
The Issuer
We incorporated in the State of Wyoming on May 2, 2011, under the name SafedoXTM, Inc. On May 3, 2011,
we acquired our predecessor company, mind3power Inc., a California corporation (“M3P”), pursuant to a Plan and
Agreement of Merger that has been accounted for as a reorganization, whereby M3P merged with and into SafedoXTM,
Inc. and ceased its separate existence. M3P and SafedoXTM are considered to be entities under common control at the
time of the merger and the financial data presented herein encompasses the period from inception of M3P (January 4,
2011) through our fiscal year end of July 31, 2011. SafedoXTM, Inc. carries on the business operations of M3P
uninterrupted. Further, the plan of business of M3P has been adopted as the plan of business of SafedoXTM, Inc.
Our Business and Products
We
are in the business of selling our Internet-based, subscription-based SafedoXTM security software products to businesses
of all sizes and institutions who are in need of securing sensitive digital files, as well as to individuals for home and business
use.
We have designed our SafedoXTM security software products such that they can be employed by any user of any
computer skill level. The overriding objective behind the design of our SafedoXTM security software products is to
provide content owners direct control over the distribution and use of their intellectual property.
As more fully described under “Business” below, we believe our SafedoXTM security software has the following
competitive strengths:
• A
subscriber is able to control third-party access to, and manipulation of, digital files created by the subscriber, at any time,
from time to time, and in real time, on the subscriber’s computer, even after the digital file has been delivered to
a third party.
• The security software’s design includes current state-of-the-art, peer-reviewed encryption algorithms.
• The security software is simple in its utility, being no more complex than standard e-mail applications.
• The security software is affordable.
We believe our SafedoXTM security software has the following competitive weaknesses:
• The security software products are new and have not been focus-group, or otherwise, tested for
potential consumer acceptance.
• The security software products do not yet enjoy brand name recognition.
• The Internet-based platform upon which the security products operate has not yet been challenged to
sustain a high level of subscriber activity.
From
December 2011 through early February 2012, we advertised our security software products on the radio in the Los Angeles market.
We have suspended our radio advertising campaign through at least June 2012, due to a lack of sales success associated therewith.
We advertise on the Internet as a means of driving Internet traffic to the sales web page of our website, as well as directly
through our website, www.safedox.com. In addition, we employ traditional face-to-face sales efforts to potential enterprise-level
customers and our small network of independent resellers has recently begun to market our SafedoXTM security software
directly to potential users, using their own methods. There is no assurance that these marketing efforts will result in our achieving
profitable operations. (See “Risk Factors”).
Securities Offered
This
Prospectus relates to the resale of 3,037,671 shares of our common stock by the Selling Shareholders. (See “Plan of Distribution”).
Non-affiliate
Selling Shareholders. Non-affiliate Selling Shareholders are offering a total of 2,037,671 shares and will sell such shares
at a fixed price of $3.00 per share, until our common stock is quoted on the OTCBB and, thereafter, at prevailing market prices
or privately negotiated prices.
Affiliate Selling Shareholders. Affiliate Selling Shareholders (both of our officers and promoters) are offering
a total of 1,000,000 shares at a fixed price of $3.00 per share. As these Affiliate Selling Shareholders are considered
underwriters, they are required to offer their shares at the fixed price of $3.00 per share, even after our common stock
is quoted on the OTCBB.
No Public Market
There is no public market for our common stock. We cannot give any assurance that the shares being offered
will have a market value, or that they can be resold at the offered price if and when an active secondary market might
develop, or that a public market for our securities may be sustained even if developed. The absence of a public market
for our common stock will make it difficult to sell your shares. Delaney Equity Group, LLC has filed an application with
FINRA for our common stock to become eligible for trading on the OTCBB. There is no assurance that this application
will be approved by FINRA. (See “Risk Factors”).
Duration of Offering
This offering by the Selling Shareholders will terminate on the earlier of the date on which the shares are eligible
for resale without restrictions pursuant to Rule 144 under the Securities Act and the date on which all shares offered by
this Prospectus have been sold by the Selling Shareholders.
Shares Outstanding
There
are 28,396,976 shares of our common stock issued and outstanding as of the date of this Prospectus. Following this offering, there
will be 28,396,976 shares of our common stock issued and outstanding.
Offering Proceeds
Our company will not derive any funds from sales of common stock by the Selling Shareholders.
Use of Proceeds
Our company will not derive any funds from sales of common stock by the Selling Shareholders.
Risk Factors
An investment in our common stock involves a high degree of risk. You should carefully consider the
information included in the “Risk Factors” section of this Prospectus, as well as the other information contained in this
Prospectus, prior to making an investment decision regarding our common stock.
SUMMARY FINANCIAL INFORMATION
The following summary financial data should be read in conjunction with “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”, as well as the financial statements and notes thereto,
beginning on page F-1 of this Prospectus. The Balance Sheet Data and the Statement of Operations Data presented
below is derived from our audited financial statements.
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Balance Sheet Data
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As
at 1/31/12 (unaudited)
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As at 7/31/11
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Current assets
Total assets
Total liabilities
Stockholders’ equity
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$127,125
$131,537
$54,431
$77,106
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$339,183
$340,295
$38,145
$302,150
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Statement of Operations Data
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Six Months Ended 1/31/12 (unaudited)
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Period
from Inception (1/4/11) through 1/31/12 (unaudited)
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Revenues
Operating expenses
Net loss
Net loss per share
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$ ---
$656,179
$655,972
$(0.023)
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$ ---
$1,016,743
$1,016,473
$(0.053)
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks
described below and the other information in this Prospectus before investing in our common stock. The occurrence of
any of the following risks could have a material adverse effect on our business, financial condition and results of
operations.
General Risks
Uncertainty about future political and economic conditions and other adverse changes in general political conditions
could adversely affect our operating results.
Uncertainty about future political and economic conditions makes it difficult for us to forecast operating results.
If economic growth in the U.S. and other countries slows further or does not improve or gets worse, many potential
customers may delay or reduce purchases on products such as our SafedoXTM security software products. This could
result in a reduction in our sales. Also, political instability in any of the major countries in which we might do future
business would also likely harm our future results of operations and financial condition.
Risks Concerning Our Business
The report of our independent auditors indicates uncertainty concerning our ability to continue as a going concern
and this may impair our ability to raise capital to fund our business plan.
In
its opinion on our financial statements for the period ended July 31, 2011, our independent auditors raised substantial doubt
about our ability to continue as a going concern. We cannot assure you that this will not impair our ability to raise capital
on attractive terms. Additionally, we cannot assure you that we will ever achieve significant revenues and therefore remain a
going concern. Our financial statements do not include any adjustments relating to the recoverability and classification of asset
carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a
going concern.
Our lack of operating history makes it difficult to predict our future operating results.
Neither our company nor our predecessor, mind3power, Inc., has an operating history in the computer software
industry upon which you can evaluate our business, which makes a purchase of our common stock speculative in nature.
There are risks and uncertainties encountered by early-stage companies in rapidly evolving markets, such as the
computer software market.
We cannot assure you that, in the rapidly evolving and highly competitive computer software industry, we will
be able to overcome our lack of brand name recognition and be successful in preventing our SafedoXTM security software
products from becoming obsolete.
We may not be successful in establishing our security software sales business model.
We have recently begun to market our SafedoXTM security software products. We cannot assure you that we
will be successful in these efforts. Should we fail to implement successfully our business plan, that is, to garner a
significant number of subscribers to our security software products, purchasers of common stock can expect to lose their
entire investments.
We may never earn a profit.
Because we lack a long-term operating history, we cannot assure you that we will ever earn a profit from our
operations.
At January 31, 2012, we had an accumulated deficit of $1,016,476,
working capital of $72,694 and cash on hand of $127,125, which is not sufficient to permit us to pursue our growth strategy in
full.
From
our inception through January 31, 2012, we incurred an accumulated deficit of $1,016,476. Through January 31, 2012, we had not
generated revenues from sales of subscriptions to our SafedoXTM software security products, our accumulated deficit
increased during the three months ended January 2012 and we expect that our accumulated deficit will again increase during the
three months ending April 30, 2012.
As
of January 31, 2012, we had working capital of $72,694, including cash on hand of $127,125. Currently, we possess cash on hand
of approximately $10,000. We require additional funds with which to conduct our business operations and to implement our marketing
plan. There is no assurance that we will be able to generate revenues that are sufficient to sustain our operations, nor can we
assure you that we will be able to obtain additional sources of financing in order to satisfy our working capital needs.
During
the next 12 months, it will be necessary for our company to obtain additional funds with which to sustain our operations in the
approximate amount of $600,000, based on our expected future “burn rate”. We expect that our operations will provide
an ever-increasing level of funds from subscription fees. However, as we are unable to predict accurately our future revenues,
or the timing thereof, we are currently exploring numerous third-party funding sources. In this regard, our management has held
face-to-face meetings with numerous potential funding sources, over the past three months. To date, we have not entered into any
binding obligation to obtain funds from a third party. Any funds obtained by us may be in the form of loans, equity investments
or a combination thereof. Should we fail to obtain needed capital, we may be forced to cease operations.
We currently depend on our two officers; the loss of either of these officers could disrupt our operations and adversely
affect the development of our business.
Our success in establishing our business plan will depend on the continued service and on the performance of
our President, Manoj Patel, and our Executive Vice President, James F. Lay, and, as we grow, other executive officers
and key employees. We have entered into an employment agreement with each of Messers. Patel and Lay. The loss of
services of these key personnel for any reason could seriously impair our ability to execute our business plan, which
could have a materially adverse effect on our business and future results of operations. We have not purchased any key-man life insurance.
If we are unable to recruit and retain key personnel, our business may be harmed.
Much of our future success depends on the continued service and availability of our senior management. These
individuals possess specialized knowledge and skills with respect to our SafedoXTM security software products. The loss
of these individuals could harm our business. In the future, our business may become dependent on our ability to retain,
hire and motivate talented, highly-skilled personnel. Experienced personnel in the information technology industry are
in high demand and competition for their talents is intense. If we are unable to attract and retain key personnel, our
business may be harmed. Our failure to enable the effective transfer of knowledge and facilitate smooth transitions with
regards to our key employees could adversely affect our long-term strategic planning and execution.
Our business plan is not based on independent market studies, so we cannot assure you that our strategy will be
successful.
We have not commissioned any independent market studies concerning the computer software industry. Rather,
our plans for implementing our business strategy and achieving profitability are based on the experience, judgment and
assumptions of our management and upon other available information concerning the computer software industry. If
our management’s assumptions prove to be incorrect, we will not be successful in establishing our computer software
business.
We may not be able to compete effectively in our industry.
The computer software industry, including the security software market segment, is highly competitive. As there
are few barriers to entry, the industry has a high number of product offerings, including those within the security software
market segment. Many of our expected competitors possess substantially greater resources, financial and otherwise, than
do we. We cannot assure you that we will be able to compete successfully in our markets.
Introduction of new products by competitors could harm our competitive position and results of operations.
The market for our security software products is characterized by intense competition, evolving industry
standards and business and distribution models, disruptive software and hardware technology developments, frequent
new product introductions, short product life cycles, price cutting, with resulting downward pressure on gross margins,
and price sensitivity on the part of consumers. Our future success will depend, first, on our ability to gain name brand
recognition and user subscriptions, and, next, on our ability to enhance our existing products, introduce new products
and services on a timely and cost-effective basis, meet changing customer needs and anticipate and respond to emerging
standards, business models, software delivery methods and other technological changes. If we fail to satisfy such
standards of operation, our operating results could suffer. Further, recent intra-industry consolidations may result in
stronger competitors and may, therefore, impair our ability to expand our current operations and harm our future results
of operations.
Revenue from our product sales may be difficult to predict.
We sell our SafedoXTM security software products on a subscription basis, which subscription periods are
generally one month to one year in length. While our subscriptions contain automatic renewal terms, our customers have
no obligation to renew their subscriptions for our SafedoXTM security software products after the expiration of their initial
subscription periods and there is no assurance that these subscriptions will be renewed. It is possible that our customers’
renewal rates may decline or fluctuate as a result of a number of factors, including their satisfaction or dissatisfaction
with our SafedoXTM security software products, the prices of our subscriptions, the prices of products offered by our
competitors, reductions in our customers’ spending levels or declines in consumer Internet activity as a result of
economic downturns or uncertainty in financial markets. If our customers do not renew their subscriptions for our
SafedoXTM security software products or if they renew on less favorable terms to us, our revenues may decline.
It is likely that we will be required to obtain an export license for our products.
Due to the strength of the encryption technology associated with our products, we expect that our products will
be subject to export control laws and regulations. Specifically, in such circumstance, we will be required to apply for
an export license from the Bureau of Industry and Security within the U.S. Department of Commerce. While we expect
that we will be able to obtain an export license with respect to our products, there is no assurance that such will be the
case. Our inability to obtain an export license with respect to our products can be expected to have a negative effect on
our future operating results.
We may incur substantial costs enforcing intellectual property rights and/or defending against third-party claims,
as a result of litigation or other proceedings.
In connection with the enforcement of our own intellectual property rights or disputes relating to the validity
or alleged infringement of third-party intellectual property rights, including patent rights, we may, in the future, be subject
to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation are typically very
costly and can be expected to be disruptive to our business operations by diverting the attention and energies of
management and key technical personnel. We may not prevail in any such future litigation and disputes.
We may not be able to protect our intellectual property rights from third-party infringers or unauthorized copying,
use or disclosure.
Although we are committed to defending our intellectual property rights and combating unlicensed copying and
use of our software and intellectual property rights, preventing unauthorized use or infringement of our rights is
inherently difficult. If our SafedoXTM security software products are victimized by piracy activities, our business would
be harmed.
Additionally, we take significant measures to protect the secrecy of our confidential information and trade
secrets, including our source codes. If unauthorized disclosure of our confidential information and trade secrets occurs
through security breach or attack, or otherwise, we could potentially lose future trade secret protection for that source
code. The loss of trade secret protection could make it easier for third-parties to compete with our products by copying
functionality, which could adversely affect our future revenue and operating margins. We also seek to protect our
confidential information and trade secrets through the use of non-disclosure agreements with our customers, contractors
and vendors. However, there is a risk that our confidential information and trade secrets may be disclosed or published
without our authorization, and, in these situations, it may be difficult and/or costly for us to enforce our rights.
Security vulnerabilities in our products and systems could lead to reduced revenues or to liability claims.
Maintaining the security of computers and computer networks is a critical issue for us and our customers.
Hackers may develop and deploy viruses, worms and other malicious software programs that are designed to attack our
products and systems, including our internal network. This is an industry-wide problem that affects computers and
products across all information technology platforms. Any vulnerabilities that might exist in our products could cause
the application to crash and could potentially allow an attacker to take control of the affected system.
We take significant steps to address potential security vulnerabilities in our security software products. The
cost of these steps could, in the future, reduce our operating margins. Despite our efforts, actual or perceived security
vulnerabilities in our security software products may lead to claims against us and harm our reputation, and could lead
some customers to seek to cancel their subscriptions for our security software products, to reduce or delay future
purchases of our products or to use competing products. Any of these actions by customers could adversely affect our
revenue.
Application of our SafedoXTM security software products provides us with access to our subscribers’ computers.
Because our SafedoXTM security software products provide us access to our subscribers’ computers, it could
be perceived by potential customers as a means of obtaining confidential and secret information from such customers’
computers. Although we do not seek to obtain such information from our customers, this perception could have a
material adverse affect on our ability to market successfully our SafedoXTM security software products.
Risks Related to this Offering
Investing in our company is a highly speculative investment and could result in the loss of your entire investment.
A purchase of our common stock is highly speculative and involves significant risks. The common stock should
not be purchased by any person who cannot afford the loss of his entire purchase price. The business objectives of our
company are also speculative, and we may be unable to satisfy those objectives. Our shareholders may be unable to
realize a substantial, or any, return on their investments and may lose their entire investments.
For the foreseeable future, we will not have a class of our securities registered under Section 12 of the Securities
Exchange Act of 1934 (the “Exchange Act”); thus, we will not be a fully-reporting company.
Following the effective time of the Registration Statement of which this Prospectus forms a part, we will be
required to comply only with the reporting requirements imposed by Section 15(d) of the Exchange Act, which are less
rigorous than the reporting requirements imposed by Section 12 of the Exchange Act. For so long as we do not have a
class of our securities registered under Section 12 of the Exchange Act, we will not be a “fully-reporting” company.
Section 15(d)-reporting companies are required to file periodic financial reports on Form 10-K (annual report)
and Form 10-Q (quarterly report), as well as current reports on Form 8-K, which report material events affecting a
company. Section 12-reporting companies, or “fully reporting” companies, in addition to being required to file the same
reports as Section 15(d)-reporting companies, are also subject to the proxy requirements of Section 14 of the Exchange
Act and the “short-swing profit” rules of Section 16 of the Exchange Act. Further, officers, directors and 10%-owners
are required to file ownership reports (Forms 3, 4 and 5), and other persons are required to file certain ownership reports
required by Section 13 of the Exchange Act.
It is likely that our reporting obligations under Section 15(d) of the Exchange Act will be suspended under that
statutory section, beginning for Fiscal 2013 reporting periods.
Inasmuch as it appears reasonably likely that we will have less than 300 shareholders at the end of our current
fiscal year ending July 31, 2012, there is a significant risk that, following the filing of our Form 10-K for our fiscal year
ending July 31, 2012, we will no longer be required to file periodic reports with the SEC. Were we to cease the filing
of periodic reports, it is likely that any trading market for our common stock would be dramatically and negatively
affected, to the severe detriment of our shareholders.
However,
our board of directors has the current intention of causing our company to continue to file all Section 15(d)-required reports
in the future, including periods during which we are not statutorily required to do so. Notwithstanding this current intention,
our board of directors may, nevertheless, determine to discontinue voluntary reporting. Current and potential future shareholders
should note that, although any reports provided are required to be accurate and not misleading, the information provided by us
might be less extensive that the information required of mandatory filers.
Our management has not performed an assessment of the effectiveness of our disclosure controls and procedures,
nor has an assessment of our internal controls over financial reporting been made by our independent auditor.
To
date, our management has not been required to report on our disclosure controls and procedures or on our internal controls over
financial reporting. Further, for so long as we are considered a “smaller reporting company”, we will be exempt from
the auditor attestation requirement concerning any of our periodic reports.
Without
effective current controls and procedures relating to disclosure and financial reporting, there is a greater likelihood that our
disclosure and financial reporting procedures will, in fact, fail to yield timely and accurate reporting, than if our management
and auditor were required to assess our controls and procedures on a regular basis. In addition, without effective controls and
procedures, there exists an increased possibility that our management would be unable to detect and correct operating inefficiencies
or discrepancies. This circumstance could cause us to report reduced profits or greater losses, depending on the overall strength
of our then operations.
Risks Related to Our Common Stock
Currently, there is no public market for our common stock; there can be no assurance that any public market will
ever develop or that our common stock will be quoted for trading.
Prior to the date of this Prospectus, there has not been any established trading market for our common stock,
and there is currently no public market whatsoever for our securities. Delaney Equity Group, LLC has filed an
application with FINRA for the quotation of our common stock on the OTCBB maintained by FINRA. There can be
no assurance as to whether such application will be accepted by FINRA. If the application is accepted, there can be no
assurances as to whether any market for our shares will develop or the prices at which our common stock will trade. If
the application is accepted, we cannot predict the extent to which investor interest in us will lead to the development of
an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient
execution of buy and sell orders for investors.
The market price for our common stock may be volatile.
Our common stock is unlikely to be followed by any market analysts and it can be expected that there may be
few institutions that will act as market makers for our common stock. The existence of either of these circumstances
could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed
and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate
significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors,
including the depth and liquidity of the market for shares of our common stock, developments affecting our business,
including the impact of the factors referred to elsewhere in these Risk Factors, investor perception and general economic
and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of
our common stock. Because of the anticipated low price of our common stock, many brokerage firms may not be willing
to effect transactions therein.
In addition, the securities markets have, from time to time, experienced significant price and volume fluctuations
that are unrelated to the operating performance of particular companies. These market fluctuations may also materially
and adversely affect the market price of our common stock.
Our Board of Directors is authorized to issue shares of preferred stock, which may have rights and preferences
detrimental to the rights of the holders of our common stock.
We are authorized to issue up to 5,000,000 shares of preferred stock, $.0001 par value. As of the date of this
Prospectus, we have not issued any shares of preferred stock. Our preferred stock may bear such rights and preferences,
including dividend and liquidation preferences, as the Board of Directors may fix and determine from time to time. Any
such preferences may operate to the detriment of the rights of the holders of the common stock being offered hereby.
We do not intend to pay dividends on our common stock.
We intend to retain earnings, if any, to provide funds for the implementation of our business strategy. We do
not intend to declare or pay any dividends in the foreseeable future. Therefore, there can be no assurance that holders
of our common stock will receive any cash, stock or other dividends on their shares of our common stock, until we have
funds which our Board of Directors determines can be allocated to dividends.
If you purchase shares of our common stock, you should expect to experience substantial dilution of your investment.
In the event that you do not purchase shares of our common stock from an Affiliate Selling Shareholder, we are
unable to predict the exact dilution of your investment in our common stock. However, you will suffer substantial and
immediate dilution, due to the lower book value per share of our common stock compared to the expected market price
per share of our common stock. (See “Dilution”).
Purchasers of common stock hereunder will suffer dilution in their ownership, should our currently outstanding
warrants be exercised by their holders.
Currently, we have outstanding 3,057,520 currently exercisable warrants to purchase a like number of shares
of our common stock. Purchasers of common stock hereunder will suffer dilution in their ownership, to the extent any
of these warrants are exercised by their holders. However, the exact dilution in ownership cannot be predicted by us.
As a public company, we will incur audit fees and legal fees in connection with the preparation of our required
financial reporting under the Exchange Act, which costs could reduce or eliminate our ability to earn a profit.
Following the effective date of our registration statement of which this Prospectus is a part, we will be required
to file periodic reports with the SEC pursuant to the Exchange Act, including the rules and regulations promulgated
thereunder. In order to comply with these requirements, our independent registered public accounting firm will be
required to review our financial statements on a quarterly basis and audit our financial statements on an annual basis.
Moreover, our legal counsel will be required to review and assist in the preparation of such reports. While the fees
charged by these professionals for their services cannot be accurately predicted at this time, it can be expected that these
fees will have a significant impact on our ability to earn a profit. We may be exposed to potential risks resulting from
new requirements under Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports
or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported
financial information and the trading price of our common stock, if a market ever develops, could drop significantly.
FINRA sales practice requirements may limit a shareholder’s ability to buy and sell our common stock.
FINRA has adopted rules that relate to the application of the SEC’s “penny stock” rules in trading our securities
and require that a broker-dealer have reasonable grounds for believing that the investment is suitable for that customer,
prior to recommending the investment. Prior to recommending speculative, low-priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax
status, investment objectives and other information.
Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low-priced
securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers
to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading
activity and liquidity of our common stock. Further, many brokers-dealers charge higher transactional fees for penny
stock transactions. As a result, fewer broker-dealers may be willing to make a market in our common stock, thereby
reducing a shareholder’s ability to resell shares of our common stock.
We anticipate our common stock being quoted on the OTCBB, which may result in limited liquidity and the inability
of our shareholders to maintain accurate price quotations of the common stock.
Until our shares of common stock qualify for inclusion in the NASDAQ system, if ever, the trading of our
common stock, if any, will be in the over-the-counter market which is commonly referred to as the OTCBB, as
maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to,
the price of our common stock.
If a market develops for our common stock, sales of our common stock in reliance upon Rule 144 may depress prices
in that market by a material amount.
All of the outstanding shares of our common stock are “restricted securities” within the meaning of Rule 144
under the Securities Act of 1933, as amended (the “Securities Act”). As restricted shares, these shares may be resold
only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides, in
essence, that a person who has held restricted securities for a prescribed period may, under certain conditions, sell every
three months, in brokerage transactions, a number of shares that does not exceed 1% of a company’s outstanding common
stock. The alternative amount of permissible sales, average weekly trading volume during the four calendar weeks prior
to the sale, is not available to our shareholders in that the OTCBB (if and when listed thereon) is not an “automated
quotation system”. Market based volume limitations are not available for securities quoted only over the OTCBB. As
a result of the 2008 revisions to Rule 144, there is no limit on the amount of restricted securities that may be sold by a
non-affiliate (i.e., a shareholder who has not been an officer, director or control person for at least 90 consecutive days)
after the restricted securities have been held by the owner for a period of one year. A sale under Rule 144 or under any
other exemption from the Securities Act, if available, or pursuant to registration of shares of common stock of present
shareholders, may have a depressive effect upon the price of the common stock in any market that may develop.
Any trading market that may develop for our common stock may be restricted by virtue of state securities “Blue Sky”
laws, which prohibit trading absent compliance with individual state laws; these restrictions may make it difficult or
impossible to sell shares of our common stock in those states.
There is no public market for our common stock and there can be no assurance that any public market will
develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities laws or
securities regulations promulgated by various states and foreign jurisdictions (commonly referred to as “Blue Sky” laws).
Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because
the securities registered hereunder have not been registered for resale under the “Blue Sky” laws of any state, the holders
of such shares and persons who desire to purchase them in any trading market that might develop in the future, should
be aware that there may be significant state “Blue Sky” law restrictions upon the ability of investors to sell the securities
and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock.
We currently do not intend and may not be able to qualify our common stock for resale in the approximately 17 states
which do not offer “manual exemptions” and require shares to be qualified before they can be resold by our shareholders.
Accordingly, investors should consider the secondary market for our securities to be a limited one.
Any market that develops in shares of our common stock will be subject to the “penny stock” restrictions which will
create a lack of liquidity and make trading difficult or impossible.
SEC Rule 15g-9 establishes the definition of a “penny stock”, for purposes relevant to us, as any equity security
that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a
limited number of exceptions. It is likely that our common stock will be considered a “penny stock” for the immediately
foreseeable future. This classification severely and adversely affects the market liquidity for our common stock. For any
transaction involving a penny stock, unless exempt, the penny stock rules require that a broker-dealer approve a person’s
account for transactions in penny stocks and the broker-dealer receive from the investor a written agreement to the
transaction setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny stocks, the broker-dealer must obtain financial
information and investment experience and objectives of the person and make a reasonable determination that the
transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in
financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker-dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared
by the SEC relating to the penny stock market, which, in highlight form, sets forth:
• the basis on which the broker-dealer made the suitability determination; and
• that the broker-dealer received a signed, written agreement from the investor prior to the transaction.
Disclosure also must be made about the risks of investing in penny stocks in both public offerings and in
secondary trading and commissions payable to both the broker-dealer and the registered representative, current
quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.
Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary
paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which
may affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the
effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure
requirements could impede the sale of our common stock, if and when our common stock becomes publicly traded. In
addition, the liquidity for our common stock may decrease, with a corresponding decrease in the price of our common
stock. Our common stock, in all probability, will be subject to such penny stock rules for the foreseeable future and our
shareholders will, in all likelihood, find it difficult to sell their common stock. (See “Penny Stock” under “Plan of
Distribution”).
The elimination of monetary liability against our directors, officers and employees under Wyoming law and the
existence of indemnification rights in favor of our directors, officers and employees may result in substantial
expenditures by our company and may discourage lawsuits against our directors, officers and employees.
Our Articles of Incorporation contain a specific provision that eliminates the liability of directors for monetary
damages to our company and our shareholders. Further, we intend to give such indemnification to our directors and
officers to the extent provided by Wyoming law. We also have contractual indemnification obligations under indemnity
agreements with our executive officers. The foregoing indemnification obligations could result in our incurring
substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may
be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit
against directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative
litigation by our shareholders against our directors and officers, even though such actions, if successful, might otherwise
benefit our company and our shareholders.
We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal
securities laws is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against these types of liabilities, other than the payment by us of expenses incurred or
paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted
by a director, officer or controlling person in connection with the securities being registered, we will (unless, in the
opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction,
the question whether indemnification by us is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue. The legal process relating to this matter, if it were to occur, is likely
to be very costly and may result in us receiving negative publicity, either of which factors are likely to materially reduce
the market for, and price of, our common stock, if such a market ever develops.
THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE EXPLANATION
OF THE RISKS INVOLVED IN THIS OFFERING. PROSPECTIVE INVESTORS SHOULD READ THE ENTIRE
PROSPECTUS BEFORE DECIDING TO INVEST IN SAFEDOX, INC.
DETERMINATION OF OFFERING PRICE
As a result of there being no established public market for our common stock, the offering price and other terms
and conditions relative to our common stock have been arbitrarily determined and do not bear any relationship to assets,
earnings, book value or any other objective criteria of value. In addition, no investment banker, appraiser or other
independent third party has been consulted concerning the offering price for the common stock or the fairness of the
offering price used for the common stock.
USE OF PROCEEDS
We
will not receive any of the proceeds from the sale of the common stock offered by the Selling Shareholders. We are registering
3,037,671 of our 28,396,976 currently outstanding shares for resale to provide the holders thereof with freely tradable securities,
but the registration of such shares does not necessarily mean that any of such shares will be offered or sold by the holders thereof.
PLAN OF DISTRIBUTION
In May 2011, we issued a total of 26,000,000 shares of our common stock for consideration other than cash,
as follows:
• 21,100,000 shares were issued to our officers and directors, Manoj Patel (10,550,000 shares) and
James F. Lay (10,550,000 shares), pursuant to the merger of mind3power, Inc. into our company,
which shares were valued for financial reporting purposes at $2,110 ($.0001 per share);
• 900,000 shares were issued in payment of an existing $300 loan ($.0003 per share); and
• 4,000,000 shares were issued to third-party consultants under four separate agreements, in payment
of $11,000 ($0.002 and $0.005 per share) of consulting services.
Also in May 2011, we issued 350,000 shares to nine persons for a total of $105,000 ($.30 per share) in cash.
These shares were issued under ten separate stock purchase agreements.
In June 2011, we issued 1,287,600 shares to seven persons for a total of $386,280 ($.30 per share) in cash.
These shares were issued in a private offering pursuant to Rule 506 of Regulation D under the Securities Act. Each
investor therein represented in writing that he was acquiring the shares for his own account and for investment.
In August 2011, we issued 35,000 shares to two third-party consultants under separate consulting agreements,
in payment of a total of $10,500 ($.30 per share) of consulting services. In addition, we issued a total of 10,376 shares
to two persons as finder’s fees under written agreements, which shares were valued, in the aggregate, at $31,128 ($3.00
per share). The persons who were issued shares as finder’s fees made an introduction of our company to certain
investors. No further services were performed by these persons in this regard, the introductions constituting the entirety
of their duties. As of the date of filing of the Registration Statement of which this Prospectus forms a part, these persons
were no longer providing such services.
In September 2011, we issued 143,000 shares to four persons for a total of $143,000 ($1.00 per share) in cash.
These shares were issued under four separate stock purchase agreements. In addition, we issued 21,000 shares to a
consultant under a consulting agreement, in payment of a total of $6,300 ($.30 per share) of consulting services.
In October 2011, we issued 250,000 shares to two third-party consultants under separate consulting agreements,
in payment of a total of $80,000 ($.30 per share) of consulting services.
In November 2011, we issued 100,000 shares to a third-party consultant under a consulting agreement, in
payment of $30,000 ($.30 per share) of consulting services, and we issued 100,000 shares to one person for $100,000
($1.00 per share) in cash under a stock purchase agreement.
As described in the foregoing paragraphs, during September, October and November 2011, our board of
directors authorized issuances of our common stock at varying prices. Specifically, all sales of our common stock for
cash were made at a price of $1.00 per share, while all issuances of our common stock in payment of consulting services
were valued at $.30 per share. The lower value assigned to the shares issued for consulting services was the direct result
of our negotiations with these third parties, each of whom refused to be compensated with shares valued at any higher
price. Having determined that the services of these consultants were important to our continued operations and in our
company’s and our shareholders’ best interests, our board of directors authorized these issuances.
No underwriter participated in the foregoing transactions, and no underwriting discounts or commissions were
paid, nor was any general solicitation or general advertising conducted. The securities bear a restrictive legend and stop
transfer instructions are noted on our stock transfer records.
The common stock offered under this Prospectus by the Selling Shareholders may be sold from time to time
for the account of the Selling Shareholders named in the following table. The table also contains information regarding
each Selling Shareholder’s beneficial ownership of shares of our common stock as of the date of this Prospectus, and
as adjusted to give effect to the sale of the shares offered hereunder.
Other than the relationships described below, none of the Selling Shareholders had or has any material
relationship with our company. Except as stated in the table below, none of the Non-affiliate Selling Shareholders is a
family member of the current officers and directors of our company.
The following table sets forth certain information regarding the beneficial ownership of shares of common stock
by the Selling Shareholders as of the date of this Prospectus, as well as the number of shares of common stock covered
by this Prospectus.
|
Prior
to this Offering
|
|
After
this Offering
|
Name of Selling Shareholder
|
Position, Office
or Other
Material
Relationship
|
# of Shares
Beneficially
Owned
|
%
Bene-ficially Owned (1)
|
#
of
Shares
to be Offered
for the Account
of the Selling
Shareholder
|
# of Shares Beneficially Owned
|
%
Bene-ficially Owned (1)
|
Manoj Patel
James F. Lay
Vern C. Moter
David Loflin
Newlan & Newlan, Ltd. (2)
Global Interactive Network
Services, Inc. (3)
Gerald Harms
IAM&W Services, LLC (4)
JATN Family Limited
Partnership(5)
James Parker
Gaylene J. Smith and
Donald A. Smith
Larry S. Thomas
New Beginnings Life Center,
LLC, dba Imperial Heights (6)
Dawn E. Graeff
Bharatkumar D. Patel (8)
Mahesh S. Patel (7)
Jack Domet and Angela Domet
Leala M. Anajafi
Matthew S. Quesada
Mukesh S. Patel (7)
Daffron Marketing (17)
Justin Beauchane
Tom Powell and Susan Powell
Ryan Rafferty
Jim Belanger
Daniel S. Jacoby V
Gumption Enterprises (18)
|
Officer/Director
Officer/Director
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
|
11,100,000(9)
11,100,000(9)
1,200,000(10)
1,200,000(10)
1,200,000(10)
198,000(11)
150,000(12)
417,120(13)
182,500(14)
120,000(15)
180,000(14)
300,000(16)
116,667
33,333
33,333
50,000
33,333
16,667
16,667
33,333
25,000
117,876
43,000
21,000
100,000
1,000,000
100,000
|
35.29%
35.29%
3.83%
3.83%
3.83%
*
*
1.33%
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
3.18%
*
|
500,000
500,000
500,000
500,000
500,000
13,200
7,500
52,140
60,000
30,000
30,000
100,000
11,667
6,667
6,667
5,000
10,000
5,000
5,000
6,667
25,000
5,363
8,600
4,200
20,000
100,000
25,000
|
10,600,000(9)
10,600,000(9)
700,000(10)
700,000(10)
700,000(10)
184,800(11)
142,500(12)
364,980(13)
122,500(14)
90,000(15)
150,000(14)
200,000(16)
105,000
26,666
26,666
45,000
23,333
11,667
11,667
26,666
-0-
112,513
34,400
16,800
80,000
900,000
75,000
|
33.70%
33.70%
2.23%
2.23%
2.23%
*
*
1.16%
*
*
*
*
*
*
*
*
*
*
*
*
0%
*
*
*
*
2.86%
*
|
|
TOTALS
|
29,087,829(19)
|
92.48%
|
3,037,671
|
26,050,158(19)
|
82.82%
|
*
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
|
Less than 1%.
Based on 31,454,496 shares outstanding, including a total of 3,057,520 unissued shares that underlie currently exercisable warrants.
Lee Newlan and Eric Newlan possess voting and investment control with regard to the securities owned by this entity.
Brian Baschnagel possesses voting and investment control with regard to the shares owned by this entity.
Justin Beauchane possesses voting and investment control with regard to the shares owned by this entity.
John A. King possesses voting and investment control with regard to the shares owned by this entity.
Derek King possesses voting and investment control with regard to the shares owned by this entity.
This Selling Shareholder is a first cousin of our President, Manoj Patel.
This Selling Shareholder is a brother-in-law of our President, Manoj Patel.
1,000,000 of these shares are unissued, but underlie currently exercisable warrants.
200,000 of these shares are unissued, but underlie currently exercisable warrants.
33,000 of these shares are unissued, but underlie currently exercisable warrants.
25,000 of these shares are unissued, but underlie currently exercisable warrants.
69,520 of these shares are unissued, but underlie currently exercisable warrants.
30,000 of these shares are unissued, but underlie currently exercisable warrants.
20,000 of these shares are unissued, but underlie currently exercisable warrants.
50,000 of these shares are unissued, but underlie currently exercisable warrants.
This business name is an assumed name of Angela Daffron, who possesses voting and investment control with regard to the securities
owned by Daffron Marketing.
David G. Smith and Brenda Maetzold possess voting and investment control with regard to the securities owned by this entity.
2,857,520 of these shares are unissued, but underlie currently exercisable warrants.
|
None of the Selling Shareholders is a broker-dealer or an affiliate of a broker-dealer.
Manoj Patel and James F. Lay, our officers and directors, are Affiliate Selling Shareholders and will be
considered to be underwriters for purposes of this offering; the Non-affiliate Selling Shareholders may be deemed to be
underwriters. Messrs. Patel and Lay’s intentions are to remain associated with our company regardless of whether or
not they sell all or a substantial portion of their holdings in our company. As officers, control persons, promoters or
affiliates of SafedoXTM, Inc., these persons may not avail themselves of the provisions of Rule 144(d) which otherwise
would permit a non-affiliate to sell an unlimited number of restricted shares provided that Rule 144’s one-year holding
period requirement is met.
The Non-affiliate Selling Shareholders will sell their shares of common stock at a fixed price of $3.00 per share
until our common stock is quoted on the OTCBB or another quotation medium and, thereafter, at prevailing market
prices, or privately negotiated prices. The Affiliate Selling Shareholders will sell their shares at the fixed price of $3.00
per share, even after our common stock is quoted on the OTCBB.
The Selling Shareholders may offer their shares at various times in one or more of the following transactions:
• in any market that might develop;
• in transactions other than market transactions;
• by pledge to secure debts or other obligations;
• purchases by a broker-dealer as principal and resale by the broker-dealer for its account; or
• in a combination of any of the above.
The Selling Shareholders may use broker-dealers to sell shares. Should this occur, a broker-dealer would either
receive discounts or commissions from Selling Shareholders or receive commissions from purchasers of shares for whom
they shall have acted as agents. To date, no discussions have been held or agreements reached with any broker-dealer.
No broker–dealer participating in the distribution of the shares covered by this Prospectus may charge commissions in
excess of 8% on any sales made hereunder.
The Affiliate Selling Shareholders who are offering their shares for resale hereunder and any broker-dealers
who act in connection with the sale of the shares hereunder will be considered underwriters of this offering, within the
meaning of the Securities Act, and any commissions they receive and proceeds of any sale of the shares may be deemed
to be underwriting discounts and commissions under the Securities Act.
The Selling Shareholders and any purchasers of our common stock should be aware that any market that
develops in our common stock will be subject to “penny stock” restrictions.
We will pay all expenses incident to the registration, offering and sale of our common stock, other than
commissions or discounts of underwriters, broker-dealers or agents. We have also agreed to indemnify the Selling
Shareholders against certain liabilities, including liabilities under the Securities Act.
This offering by the Selling Shareholders will terminate on the earlier of:
• the date on which the shares are eligible for resale without restrictions pursuant to Rule 144 under the
Securities Act; and
• the date on which all shares offered by this Prospectus have been sold by the Selling Shareholders.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors,
officers and controlling persons, we have been advised that, in the opinion, of the SEC, such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable.
If any of the Selling Shareholders enter into an agreement after the effectiveness of the registration statement
of which this Prospectus is a part to sell all or a portion of their shares to a broker-dealer as principal and the
broker-dealer is acting as underwriter, we will file a post-effective amendment to our registration statement of which this
Prospectus is a part identifying the broker-dealer, providing the required information on the plan of distribution, revising
disclosures in the registration statement as required and filing the agreement as an exhibit to the registration statement.
Until our shares of common stock qualify for inclusion in the NASDAQ system, if ever, the trading of our
common stock, if any, will be in the over-the-counter markets, including the OTCBB, as maintained by FINRA. As a
result, investors may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our common stock.
Penny Stock
SEC Rule 15g-9 establishes the definition of a “penny stock”, for purposes relevant to us, as any equity security
that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a
limited number of exceptions. It is likely that our common stock will be considered to be a “penny stock” for the
immediately foreseeable future. For any transaction involving a penny stock, unless exempt, the penny stock rules
require that a broker-dealer approve a person's account for transactions in penny stocks and the broker-dealer receive
from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be
purchased.
In order to approve a person's account for transactions in penny stocks, the broker-dealer must obtain financial
information, investment experience and objectives of the investor and make a reasonable determination that the
transactions in penny stocks are suitable for that investor and that the investor has sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker-dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared
by the SEC relating to the penny stock market, which, in highlight form, sets forth the basis on which the broker-dealer
made the suitability determination, and that the broker-dealer received a signed, written agreement from the investor prior
to the transaction.
Disclosure also must be made about the risks of investing in penny stocks in both public offerings and in
secondary trading and commissions payable to both the broker-dealer and the registered representative, current
quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. The above-referenced requirements may create a lack
of liquidity, making trading difficult or impossible, and accordingly, shareholders may find it difficult to dispose of our
common stock. (See “Risk Factors”).
STATE SECURITIES (BLUE SKY) LAWS
There is no public market for our common stock, and there can be no assurance that any market will develop
in the foreseeable future. Transfer of our common stock may also be restricted under the securities laws and regulations
of various states, commonly referred to as "Blue Sky" laws. Absent compliance with such individual state laws, our
common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been
registered for resale under the “Blue Sky” laws of any state, the holders of such shares and persons who desire to
purchase them in any trading market that might develop in the future should be aware that there may be significant state
“Blue Sky” law restrictions upon the ability of investors to sell the common stock and of purchasers to purchase the
common stock. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold
the common stock for an indefinite period of time.
The Selling Shareholders may contact us directly to ascertain procedures necessary for compliance with Blue
Sky laws in the applicable states relating to sellers and/or purchasers of our common stock.
We intend to apply for listing in a nationally recognized securities manual which, once published, would provide
us with "manual" exemptions in 33 states, as indicated in CCH Blue Sky Law Desk Reference at Section 6301 entitled
"Standard Manuals Exemptions".
33 states have what is commonly referred to as a "manual exemption" for secondary trading of securities, such
as those to be resold by the Selling Shareholders pursuant to this Prospectus. In these states, so long as we obtain and
maintain a listing in an acceptable manual, secondary trading of our common stock can occur without any filing, review
or approval by state regulatory authorities in these states. These states are: Alaska, Arizona, Arkansas, Colorado,
Connecticut, District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts,
Michigan, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma,
Oregon, Rhode Island, South Carolina, Texas, Utah, Washington, West Virginia and Wyoming. We cannot secure this
listing, and, thus, this qualification, until after the registration statement of which this Prospectus is a part is declared
effective. Once we secure this listing, secondary trading can occur in these states without further action.
We currently do not intend to and may not be able to qualify securities for resale in other states which require
shares to be qualified before they can be resold by our shareholders.
DILUTION
At
January 31, 2012, the net tangible book value per share of our common stock was $.002. Purchasers of our common stock will incur
significant dilution in their investments, due to the lower book value per share of a purchaser’s common stock compared
to the offering price per share.
With respect to the common stock offered and sold by the Affiliate Selling Shareholders hereunder, purchasers
of common stock will incur substantial dilution in their investments, due to the Affiliate Selling Shareholders’ being
required to sell their shares of common stock at the fixed price of $3.00. The table below depicts the dilution to new
investors, upon their purchasing shares of our common stock from Affiliate Selling Shareholders.
|
Affiliate Selling Shareholder offering
price per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$3.00
Net tangible book value per share as of January 31, 2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.002
Dilution in net tangible book value per share to new investors. . . . . . . . . . . . . . . . . . . . . . .$2.998
|
With
respect to the common stock offered and sold by the Non-affiliate Selling Shareholders hereunder, purchasers of common stock will
incur substantial dilution in their investments, $2.998 per share, during the period that the Non-affiliate Selling Shareholders
are required to sell their shares of common stock the fixed price of $3.00. After our common stock is quoted on the OTCBB, and
thereafter, Non-affiliate Selling Shareholders may sell their shares at prevailing market prices or in privately negotiated prices.
While the dilution to be suffered by purchasers in such transactions will, in all likelihood, be significant, a purchaser’s
exact dilution cannot be predicted.
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 100,000,000 shares of common stock, $.0001 par value per share, and
5,000,000 shares of preferred stock, $.0001 par value per share. As of the date of this Prospectus, there were 28,396,976
shares of our common stock issued and outstanding, held by 36 holders of record; a total of 5,000,000 shares are reserved
for issuance upon the exercise of a like number of currently exercisable warrants; and there are no shares of preferred
stock issued and outstanding.
Common Stock
The following is a summary of the material rights and restrictions associated with our common stock. This
description does not purport to be a complete description of all of the rights of our shareholders and is subject to, and
is qualified in its entirety by, the provisions of our most current Articles of Incorporation and Bylaws, which are included
as exhibits to the registration statement of which this Prospectus is a part.
The holders of our common stock currently have (i) equal ratable rights to dividends from funds legally
available therefore, when, as and if declared by our Board of Directors; (ii) are entitled to share ratably in all of our assets
available for distribution to holders of common stock upon liquidation, dissolution or winding up of the affairs of our
company; (iii) do not have preemptive, prescriptive or conversion rights and there are no redemption or sinking fund
provisions or rights applicable thereto; and (iv) are entitled to one non-cumulative vote per share on all matters on which
shareholders may vote.
Our Bylaws provide that, at all meetings of the shareholders for the election of directors, a plurality of the votes
cast shall be sufficient to elect.
On all other matters, except as otherwise required by Wyoming law or our Articles of Incorporation, a majority
of the votes cast at a meeting of the shareholders shall be necessary to authorize any corporate action to be taken by vote
of the shareholders.
A “plurality” means the excess of the votes cast for one candidate over any other. When there are more than
two competitors for the same office, the person who receives the greatest number of votes has a plurality.
Please refer to our Articles of Incorporation, Bylaws and the applicable statutes of the State of Wyoming for
a more complete description of the rights and liabilities of holders of our common stock.
Preferred Stock
The following is a summary of the material rights and restrictions associated with our preferred stock. This
description does not purport to be a complete description of all of the rights of our shareholders and is subject to, and
qualified in its entirety by, the provisions of our most current Articles of Incorporation and Bylaws, which are included
as exhibits to the registration statement of which this Prospectus is a part.
Our Board of Directors is authorized to determine or alter any or all of the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series of preferred stock and, within the limitations or
restrictions stated in any resolution or resolutions of our Board of Directors originally fixing the number of shares
constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding)
the number of shares comprising any such series subsequent to the issue of shares of that series, to set the designation
of any series, and to provide for rights and terms of redemption, conversion, dividends, voting rights, and liquidation
preferences of the shares of any such series.
Anti-Takeover Effects of Our Articles of Incorporation and Bylaws
Our
Articles of Incorporation and Bylaws contain certain provisions that may have anti-takeover effects, making it more difficult
for, or preventing, a third party from acquiring control of our company or changing our Board of Directors and management. According
to our Articles of Incorporation and Bylaws, the holders of our common stock do not have cumulative voting rights in the election
of our directors. The combination of the present ownership by a few shareholders of a significant portion of our issued and outstanding
common stock and lack of cumulative voting makes it more difficult for other shareholders to replace our Board of Directors or
for a third party to obtain control of our company by replacing our Board of Directors.
Anti-Takeover Effects of Wyoming Law
The Wyoming anti-takeover law contains certain provisions that may have anti-takeover effects, making it
difficult for, or preventing a third party from, acquiring control of our company or changing our Board of Directors. The
law requires that any person acquiring controlling shares of our company stock must give notice to our company of
acquisition of, or a proposal to so acquire, control shares. Shares of our company acquired for the purpose of gaining
control are denied voting rights, unless approved by a majority of shares not included in the control shares. If voting
rights are denied, the company may redeem the shares acquired in the control share acquisition at fair value, which value
may be determined without regard to any increase or proposal for increase in the price of the share following the
announcement or commencement of the control share acquisition or proposal.
Dividend Policy
We have never declared or paid any dividends on our common stock. We currently intend to retain future
earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends
in the foreseeable future.
Warrants
We currently have outstanding 1,528,760 warrants to purchase a like number of shares our common stock at
an exercise price $1.00 and 1,528,760 warrants to purchase a like number of shares our common stock at an exercise
price $2.00. All of these warrants are exercisable for two years from their respective dates of issuance, and expire
variously from May 2013 to June 2013.
BUSINESS
General
We incorporated in the State of Wyoming on May 2, 2011, under the name SafedoXTM, Inc. Effective May 3,
2011, pursuant to an agreement and plan of merger, we acquired 100% of the common stock of our predecessor
company, M3P, in a transaction that has been accounted for as a reorganization, by issuing 21,100,000 shares of its
common stock. SafedoXTM, Inc. carries on the business operations of M3P uninterrupted. Further, the plan of business
of M3P has been adopted as the plan of business of SafedoXTM, Inc.
Our corporate office is located at 11801 Pierce Street, Second Floor, Riverside, California 92505; our telephone
number is (951) 710-3090; and our corporate web site is www.safedox.com.
The SafedoXTM Paradigm
Real Security Through Real-Time Control Over All Aspects of a Digital File
We
are in the business of selling our Internet-based, subscription-based SafedoXTM security software products to businesses
of all sizes and institutions who are in need of securing sensitive digital files, as well as to individuals for home and business
use.
Our
SafedoXTM security software allows subscribers to control the use and functionality of digital files, even after the
digital file has been delivered to its intended recipient.
We have designed our SafedoXTM security software products such that they can be employed by any user of any
computer skill level. The overriding objective behind the design of our SafedoXTM security software products is to
provide content owners direct control over the distribution and use of their intellectual property.
Current Status
Through
January 31, 2012, we had no revenues from sales of subscriptions to our SafedoXTM security software products. Currently,
we market our software security products through traditional face-to-face sales efforts to potential enterprise-level customers.
We also market our security software products on the Internet, directly through our website, www.safedox.com. In addition, our
independent resellers have recently begun to market our security software products. Early in February 2012, we suspended our radio
advertising campaign through at least June 2012, due to a lack of sales success associated therewith.
Our SafedoXTM Security Software Technology and Products
In
General. Our SafedoXTM security software technology is an Internet-based, subscription-based computer software
application that allows a subscriber to control third-party access to, and manipulation of, digital files created by the subscriber,
even after the digital file has been delivered to a third party.
What
is SafedoXTM? SafedoX is a security software technology, a dynamic method of securing any digital file. The first
embodiment of the SafedoX technology is a secure document distribution system that operates in a manner similar to standard e-mail
programs. However, the SafedoX security software does not send e-mails. Rather, our security software “carries” a
subscriber’s digital file to its intended recipient. The following diagrams depict the process of securing and sending a
digital file via the SafedoX document distribution system.
Step
1: Sending Digital File
|
Encrypt Digital
File with SafedoX Shell
|
➔
|
Send Digital
File to SafedoX Server via SSL
|
➔
|
Digital File
Reaches SafedoX Server
|
Step
2: SafedoX Server Processing
|
Digital File
Encrypted Uniquely for Intended Recipient
|
➔
|
SafedoX Server
Sends Encrypted Digital File to Intended Recipient
via SSL
|
|
|
Step
3: Receiving Encrypted Digital File
|
Encrypted
Digital File Delivered to Intended Recipient via
SSL
|
➔
|
Encrypted
Digital File is Decrypted Using Recipient’s
SafedoX “key”
|
➔
|
Encrypted
Digital File is Displayed in SafedoX Viewer
|
Step
4: Example of Sender Control Post-Delivery
|
Sender Inputs
Instruction into SafedoX On-Screen Dashboard to
Terminate Recipient’s Access Rights to Digital
File
|
➔
|
SafedoX Server
Receives Sender’s Instruction and Applies
to Digital File in Real-Time
|
➔
|
Immediately,
Recipient’s Access Rights to Digital File
Are Terminated
|
The
following diagrams depict the process of securing and sending a digital file via the SafedoX document distribution system.
Typical SSL Protection
|
|
|
|
SSL: Secure Socket Layer
|
|
|
|
|
Cryptographic protocols that
|
|
|
Digital
File
|
|
provide communication security
|
|
|
|
|
over the Internet.
|
|
|
Normal
SSL “Wrapper”
|
|
|
SSL Coupled with SafedoX
|
|
|
Normal SSL
“Wrapper”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SafedoX
|
|
SafedoX
|
|
|
|
|
Hard Shell
|
Digital
File
|
Hard Shell
|
|
|
|
|
Scalable Encryption
|
|
Scalable Encryption
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normal SSL
“Wrapper”
|
|
|
|
An
“armored car service” analogy demonstrates the essence of our security software technology:
As an armored car service is hired to transport
an item, usually of significant value, from the owner’s location to another location specified by the item’s owner
for delivery, the SafedoX security software securely delivers a subscriber’s digital file, the item of significant value,
to its intended recipient’s computer. In both scenarios, the transported item is protected from theft, in the case of the
armored car, and from hacking and unauthorized use, in the case of the SafedoX security software, while it is in transport. The
item then reaches its destination, free from tampering.
As
when the armored car service delivers the owner’s item to its intended recipient, many competing security software products
will have fully performed its security service, to the extent capable, upon the digital file’s having been delivered to
its intended recipient’s computer. Other competing security software products also permit subscribers to set access parameters
with respect to the use of their digital files.
Our
SafedoX security software, on the other hand, not only allows a subscriber to deliver digital files in a secure manner and to
set access parameters with respect to the use of a digital file, it also permits a subscriber to alter access parameters at any
time, from time to time, and in real time, all from the SafedoX program’s “dashboard”, or program window, on
the subscriber’s computer.
Encryption.
In all facets of the SafedoXTM security software products, we employ current state-of-the-art, peer-reviewed encryption
algorithms and, as technology changes over time, we will continue to develop ever-stronger encryption capability. We view our
encryption technology as our “armored car”.
Product
Subscriptions. We currently market the SafedoX security software technology as a customizable solution for an enterprise’s
unique security needs, including security needs relating to internal communications. Of the SafedoXTM security software
products listed below, we currently market the Personal Edition and the Business Edition. The Free Edition and the Professional
Edition will be added to our product offering, with the release of the next software version expected in early May 2012.
|
Key Features
|
Free
Edition
|
Personal
Edition
|
Business
Edition
|
Professional
Edition
|
|
Number of Digital Files
per Month
|
100
|
100
|
1,000
|
100,000
|
|
Number
of
Authorized
Users
|
1
|
1
|
Up
to
5
|
Up
to 99
|
|
Mac / PC Compatible
|
•
|
•
|
•
|
•
|
|
Receipt
on
Delivery
/
Read
|
•
|
•
|
•
|
•
|
|
Read Once / Allow Printing
|
•
|
•
|
•
|
•
|
|
Receipt
on
Delete
|
•
|
•
|
•
|
•
|
|
Set Time Window for
Viewing
|
|
|
•
|
•
|
|
Track
Time
on
Digital
File
|
|
|
•
|
•
|
|
Secondary Authentication
|
|
|
•
|
•
|
|
eBooks
Control
Page
View
|
|
|
•
|
•
|
|
eSignature / Bates Stamping
|
|
|
•
|
|
|
Advertisements
|
•
(1)
|
|
|
•
(2)
|
|
Monthly
Subscription
Fee
|
$-0-
|
$9.95
|
$49.95
|
$995.95
|
(1)
(2)
|
SafedoX would place in the recipients’ notification e-mails
and in the SafedoX program download packet stream.
Subscribers would be able to place advertisements in the recipients’ notification
e-mail and within the SafedoX viewer of the recipient.
|
|
Our
enterprise-level
products
offer
standard
per-user
subscription
options
and
a
corporate
purchasing
plan
that
offers
a
customized,
enterprise-specific
package
of
our
SafedoXTM
security
software
products.
Enterprise
circumstances
that
demand
special
purchasing
requirements
and
integration
of
our
products
into
a
particular
IT
environment
are
readily
programmed
into
our
SafedoXTM
security
software
products.
|
SafedoXTM
Security Features. All digital files prepared and sent utilizing the SafedoXTM security software technology
share two features: (1) each digital file is encrypted with the best available encryption technology; and (2) each digital file
is forever associated with the recipient – the digital file cannot be transferred to, or opened by, any other SafedoX user.
Once
a digital file has been prepared for sending to a recipient, the final step in the process permits the SafedoXTM subscriber
to select access parameters with respect to the digital file, which selected access parameters will govern the recipient’s
use of the digital file. Our security software provides subscribers the ability to set access parameters, as follows:
• the
number of times a recipient may open the digital file;
• the
number of times, if any, a recipient may print (to file or a printer) the digital file;
• the
“window” of time during which the digital file may be opened; and
• secondary
authentication (another layer of security, this feature permits a subscriber to require a password for access to the document,
though the use of this feature is not required to be employed for a subscriber to enjoy the other security features).
In
addition to the foregoing capabilities of our security software technology, there remains the capability that our company believes
to be our security software technology’s greatest capability:
Our SafedoXTM security software technology
allows a subscriber the ability to change access parameters with respect to a digital file that has already been delivered
to a third party, in real time, from time to time and at any time, all from the SafedoX program’s “dashboard”,
or program window, on the subscriber’s computer or other device.
We
are unaware of another product that has the capability of permitting users to change access parameters in the manner of our SafedoXTM
security software technology.
Other
SafedoXTM Product Features. Our SafedoXTM security software products also include several features that,
when activated by a subscriber, provide useful information to its subscribers, including the following:
• Notice
when a digital file is delivered to the recipient;
• Notice
when a digital file is opened by the recipient;
• Notice
when a digital file deleted by the recipient; and
• Reports
that track the recipient’s time on the opened digital file, including information regarding which pages of the digital file
were opened and the time spent on each page.
Other
user-friendly features of our SafedoXTM security software products include:
• Simplicity
of use;
• Complete
and secure control over documents in PDF format;
• Prevents
unauthorized editing, copying or saving of digital file;
• Real-time
digital file access revocation;
• Complete
off-line protection;
• AES
256 bit encryption; and
• Free
viewer software (SafedoXTM App).
Uses of SafedoXTM Security Software Products. The potential uses of our SafedoXTM security software products
are numerous and varied. For example, with our security software, medical service providers are able to protect all
patient information, attorneys are able to shield a client’s sensitive documents from unwanted viewing, accountants are
able to protect a client’s confidential financial information and home users are able to protect their personal records.
At the enterprise level, our SafedoXTM security software is capable of being integrated into nearly any business
in any industry, permitting subscribers to address today’s ever-increasing privacy concerns.
SafedoXTM for eBooks. SafedoXTM for eBooks provides a full range of document security options, allowing
content owners to assert control over the use and distribution of electronic versions of their intellectual properties, that
is, their eBooks. By setting parameters of use with the SafedoXTM security software, following the download, whether
by purchase or otherwise, of an eBook by a third party, the third party is unable to print, copy or transmit the eBook.
Through the use of this SafedoXTM security feature, content owners can better assure that they are compensated each time
their content is accessed, by eliminating a third party’s ability to make unauthorized copies or make unauthorized
distributions of such eBook.
SafedoXTM App. Our SafedoXTM App (application) software product is required to be installed on a person’s
computer, in order for that person to read documents that have been created with SafedoXTM security software. Our
SafedoXTM App is available for download from our website at no charge.
Future Products.
Hand-held
Devices. We are nearing completion of SafedoXTM security software applications, or “apps”, for use on hand-held
devices, including smart phones. It is our intention to introduce these products in third quarter of 2012.
Audio and Video. We have begun to design enhanced features into our SafedoXTM security software, such that
subscribers would be able to control the distribution and use of audio and video content in much the same manner as is
currently possible with documents. However, it is not expected that these enhancements would be ready for market prior
to the second half of 2012.
Foreign Language Versions. It is our intention to develop foreign language versions of our SafedoXTM security
software. It is expected that the first several of these foreign language versions will be produced for use in markets
located in the Far East. As there are significant costs associated with the development and introduction of foreign
language versions, we have not set a time line for accomplishing objective, and there is no assurance that we will ever
possess sufficient capital with which to do so.
Our Competitive Strengths and Weaknesses
In Particular. We believe our SafedoXTM security software has the following competitive strengths:
• A
subscriber is able to control third-party access to, and manipulation of, digital files created by the subscriber, at any time,
from time to time, and in real time, on the subscriber’s computer or other device, even after the digital file has been
delivered to a third party.
• The security software’s design includes current state-of-the-art, peer-reviewed encryption algorithms.
• The security software is simple in its utility, being no more complex than standard e-mail applications.
• The security software is affordable.
We believe our SafedoXTM security software has the following competitive weaknesses:
• The security software products are new and have not been focus-group, or otherwise, tested for
potential consumer acceptance.
• The security software products do not yet enjoy brand name recognition.
• The Internet-based platform upon which the security products operate has not yet been challenged to
sustain a high level of subscriber activity.
In General. We believe our company has the following competitive strengths:
• Our SafedoXTM security software products are unique and provide an affordable means by which to
secure documents;
• We have low overhead costs; and
• We have implemented a strong customer service program.
We believe our company has the following competitive weaknesses:
• We possess relatively limited capital; and
• We have limited personnel.
Competition
The market for our SafedoXTM security software products is characterized by intense competition, evolving
industry standards and business and distribution models, disruptive software and hardware technology developments,
frequent new product introductions, short product life cycles, price cutting with resulting downward pressure on gross
margins and price sensitivity on the part of consumers.
Products that offer similar security features as our SafedoXTM software security products include FileOpen®,
Adobe® Content Server and Adobe® Digital Publishing. In comparing these software security products to our
SafedoXTM software security products, it is helpful to recall the armored car service analogy discussed above under
“What is SafedoXTM?” and the distinctions made between competing products and our SafedoXTM software security
products, to wit:
As when the armored car service delivers the owner’s item to its intended recipient, many competing security
software products will have fully performed their security service, to the extent capable, upon the digital files’
having been delivered to their intended recipients’ computers. Other competing security software products also
permit subscribers to set access parameters with respect to the use of their digital files.
Our SafedoX security software, on the other hand, not only allows a subscriber to deliver digital files in a secure
manner and to set access parameters with respect to the use of a digital file, it also permits a subscriber to alter
access parameters at any time, from time to time, and in real time, all from the SafedoX program’s
“dashboard”, or program window, on the subscriber’s computer.
In general, a majority of the security software products against which we compete enjoy significant brand name
recognition and are owned by large, multi-national companies with greater resources than does our company. Our future
success will depend on our ability to enhance our existing security software products, introduce new products on a timely
and cost-effective basis, meet changing customer needs and anticipate and respond to emerging standards, business
models, software delivery methods and other technological changes.
Primary competitive factors in the software industry are: name recognition, price and functionality. While we
believe our SafedoXTM security software products to be unique in their utility, i.e., to alter access parameters at any time,
from time to time, and in real time, even after a document has been delivered to its intended recipient, there are many
software products that enjoy greater name recognition and that offer apparently similar functions. It is possible that we
may be unable to compete effectively in our industry, which would negatively impact our future operating results.
Distribution and Marketing
Traditional Methods. We employ traditional sales efforts, particularly face-to-face meetings, to potential
enterprise-level customers. Currenlty, we are attempting to attract independent sales consultants who are capable of
consummating enterprise-level sales through traditional sales methods. We cannot assure you that these efforts will be
successful.
Internet. Currently, we market our SafedoXTM security software products on the Internet, directly through our
web site, www.safedox.com. Recently, we began to advertise our security software products on the Internet, as a means
of driving Internet traffic to the sales web page of our website. We will increase expenditures in this advertising medium
as results warrant.
Also, in the near future, we will begin to market our SafedoXTM security software products through one or more
Internet-based resellers. These resellers will be paid a per-subscriber commission.
Independent Resellers. We have engaged several persons who are commission-based independent resellers of
our SafedoXTM security software products. It is expected that these persons will market our SafedoXTM security software
products directly to potential users, using their own methods. Each of these independent resellers will be paid a per-subscriber commission on subscriptions to our SafedoXTM security software products resulting from their marketing
efforts.
Radio.
From December 2011 through early February 2012, we ran our first large-scale marketing efforts through a planned six-month radio
advertising campaign in the Southern California area. We have suspended this radio advertising campaign through at least June
2012, due to a lack of sales success associated therewith. At such time as we re-instate this radio campaign, the ultimate duration
of this campaign will depend on the level of success we achieve. We cannot make any predictions in this regard.
Regulatory Matters
In general, the software industry is not heavily regulated in the United States and, overall, we do not believe
that our business will be significantly impacted by governmental regulation.
However, the export of encryption technologies, such as the encryption technology associated with our products,
is strictly regulated by the Bureau of Industry and Security within the U.S. Department of Commerce.
Due to the strength of the encryption technology associated with our products, it is possible that our products
would be subject to export control laws and regulations. Should such be the case, our management intends to apply for
an export license. While we expect that we will be able to obtain an export license with respect to our products should
such be necessary, there is no assurance that such will be the case. (See “Risk Factors”).
Intellectual Property
In General. We regard our intellectual property pertaining to our SafedoXTM products, our trademarks and our
business know-how as having significant value and as being an important factor in the marketing of our SafedoXTM
security software products. Our policy is to establish, enforce and protect our intellectual property rights using the
intellectual property laws.
Patents.
In April 2012, we filed a patent application with respect to our SafedoXTM software security technology, which is titled
“Secure Digital Document Distribution with Real-time Sender Control of Recipient Document Content Access Rights”.
It is possible that additional patent applications will be filed with respect to our technology.
Trademarks. We are the owner of the “SafedoXTM” trademark. In the near future, we intend to file for
registration of this trademark with the U.S. Patent and Trademark Office.
Description of Property
We lease a small office at 11801 Pierce Street, Second Floor, Riverside, California 92505. Should additional
space be required as we expand our operations, we expect that such space would be available at reasonable rates. We
do not own any real property.
Employees
We currently have no employees other than our President and Executive Vice President. Our business
development, corporate administration and business operations are overseen directly by our President. Our President
also oversees record keeping functions. We intend to hire a small number of employees, at such times as our business
development warrants. We have used, and, in the future, expect to use, the services of certain outside consultants and
advisors as needed on a consulting basis.
Company Website
Our company’s corporate website can be found at www.safedox.com. As a public company, we will make
available free of charge at our website all of our reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, including our annual reports on Form 10-K, our quarterly reports on Form 10-Q and
our current reports on Form 8-K. These reports will be made available on our website as soon as reasonably practicable
after their filing with, or furnishing to, the SEC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement
Effective May 3, 2011, pursuant to an agreement and plan of merger, we acquired 100% of the common stock
of our predecessor company, mind3power, Inc. (M3P), a California corporation incorporated on January 4, 2011
(“Inception”), in a combination that has been accounted for as a reorganization.
The
following discussion and analysis should be read in conjunction with the unaudited balance sheet as of January 31, 2012, and the
unaudited financial statements for the six month period ended January 31, 2012, as well as the audited balance sheet as of July
31, 2011, and the financial statements for the period from Inception to July 31, 2011, included elsewhere in this Prospectus.
The results shown herein are not necessarily indicative of the results to be expected for any future periods.
This discussion contains forward-looking statements. These forward-looking statements are based on our
management’s current expectations with respect to future events, financial performance and operating results, which
statements are subject to risks and uncertainties, including, but not limited to, those discussed below and elsewhere in
this Prospectus. The risks and uncertainties discussed herein could cause our actual results to differ from the results
contemplated by these forward-looking statements. We urge you to consider carefully the information set forth in this
Prospectus under “Note Regarding Forward Looking Statements” and “Risk Factors”.
Overview
While
we are a business in the early-stage of development, we have recently begun to derive a small level of revenues from our operations.
In order to accelerate the growth of our business, we will, over time, need to obtain additional capital. We intend to apply additional
capital, as and if obtained, to the expansion of our business, primarily through Internet marketing strategies and expansion of
traditional marketing channels, including direct sales.
Principal Factors Affecting Our Financial Performance
Our operating results are primarily affected by the following factors: our ability to expand the channels of
distribution for our products; our ability to attract new customers to our products; and our ability to contain our sales
costs and maintain a low overheard.
Based
on our current business plan, we expect to incur operating losses for all of Fiscal 2012 and at least the first two quarters of
Fiscal 2013. However, because our products are new, we cannot predict the levels of our sales during the remainder of Fiscal 2012.
Recent Developments
In
April 2012, we filed a patent application with respect to our SafedoXTM software security technology, which is titled
“Secure Digital Document Distribution with Real-time Sender Control of Recipient Document Content Access Rights”.
From
December 2011 through early February 2012, we advertised our software security products on the radio in the Southern California
area. While the first weeks of this campaign yielded promising results, this radio campaign has been suspended through at least
June 2012, due to a lack of sales success associated therewith. Upon resumption of this campaign, we cannot predict the ultimate
duration of this radio advertising campaign.
Since
Inception, we have sold a total of 1,880,600 shares of our common stock for a total of $734,280 in cash. 1,637,600 of these shares
were sold for $.30 per share, for a total of $491,280; 243,000 of these shares were sold for $1.00 per share, for a total of $243,000.
We are currently seeking additional funds, as our current cash position is approximately $127,000.
Results of Operations
For
the Six Months Ended January 31, 2012. During the six months ended January 31, 2012 (the “Current Period”),
we generated no revenues from sales of our SafedoXTM security software products. While we did not generate revenues
during the Current Period, we continued the implementation of the marketing plan for our SafedoXTM security software
products. In this regard, our efforts were focused on redesigning our web site, to make it more user-friendly and establishing
Internet-based and traditional product reseller marketing relationships. Subsequent to the Current Period, we have begun to derive
small revenues from sales of our SafedoXTM security software products.
For
the Current Period, we incurred a net loss of $655,972. Of the $656,179 in expenses for the Current Period, $187,928 is attributable
to the issuance of shares of our common stock in payment of services to third parties. By issuing common stock in payment of these
necessary services, we were able to preserve our available cash. While we do not expect that we will issue common stock in payment
of third-party consulting services in the future, it is possible that, if we lack the cash needed to obtain necessary services,
we would issue shares of common stock in payment therefor. Our cash expenses during the Current Period related to normal start-up
and operating costs, costs associated with the marketing of our SafedoXTM security software products and, to a lesser
degree, costs associated with our becoming a publicly-traded company.
For the Period from Inception to July 31, 2011. During the Period from Inception to July 31, 2011 (the “Initial
Period”), we generated no revenues from sales of our SafedoXTM security software products. While we did not generate
revenues during the Initial Period, we were, in response to the shifting dynamics of the current U.S. economy, able to
finalize and begin to implement the marketing plan for our SafedoXTM security software products. In this regard, our
efforts were focused on redesigning our web site, to make it more user-friendly, and establishing Internet-based
marketing relationships. Subsequent to the Initial Period, we have begun to derive small revenues from sales of our
SafedoXTM security software products.
For the Initial Period, we incurred a net loss of $360,504. Of the $360,564 in expenses for the Initial Period,
$11,000 is attributable to the issuance of shares of our common stock in payment of services to third parties and
$157,964 is attributable to the issuance of warrants for services to our officers and to third parties. A total of 3,000,000
shares of common stock, valued at $6,000 for financial reporting purposes, were issued to third-party consultants and
1,000,000 shares of common stock, valued at $5,000 for financial reporting purposes, were issued in payment of legal
services. By issuing common stock in payment of these necessary services, we were able to preserve our available cash.
Subsequent to the Initial Period, we issued shares of common stock have been issued to third-party consultants in
payment of their respective services. While we do not expect that we will issue common stock in payment of third-party
consulting services in the future, it is possible that, if we lack the cash needed to obtain necessary services, we would
issue shares of common stock in payment therefor. Our cash expenses during the Initial Period related to normal start-up
costs, costs associated with the marketing of our SafedoXTM security software products and costs associated with our
becoming a publicly-traded company.
Plan of Operations
For
the next 12 months, our Plan of Operations is centered around the marketing of our SafedoXTM security software products,
as we attempt to acquire subscribers. We currently market the SafedoX security software technology as a customizable solution
for an enterprise’s unique security needs, including security needs relating to internal communications. Of the SafedoXTM
security software products listed below, we currently market the Personal Edition and the Business Edition. The Free Edition
and the Professional Edition will be added to our product offering, with the release of the next software version expected in
early May 2012.
|
Key Features
|
Free
Edition
|
Personal
Edition
|
Business
Edition
|
Professional
Edition
|
|
Number of Digital Files
per Month
|
100
|
100
|
1,000
|
100,000
|
|
Number
of
Authorized
Users
|
1
|
1
|
Up
to
5
|
Up
to 99
|
|
Mac / PC Compatible
|
•
|
•
|
•
|
•
|
|
Receipt
on
Delivery
/
Read
|
•
|
•
|
•
|
•
|
|
Read Once / Allow Printing
|
•
|
•
|
•
|
•
|
|
Receipt
on
Delete
|
•
|
•
|
•
|
•
|
|
Set Time Window for
Viewing
|
|
|
•
|
•
|
|
Track
Time
on
Digital
File
|
|
|
•
|
•
|
|
Secondary Authentication
|
|
|
•
|
•
|
|
eBooks
Control
Page
View
|
|
|
•
|
•
|
|
eSignature / Bates Stamping
|
|
|
•
|
|
|
Advertisements
|
•
(1)
|
|
|
•
(2)
|
|
Monthly
Subscription
Fee
|
$-0-
|
$9.95
|
$49.95
|
$995.95
|
(1)
(2)
|
SafedoX would place in the recipients’ notification e-mails
and in the SafedoX program download packet stream.
Subscribers would be able to place advertisements in the recipients’ notification
e-mail and within the SafedoX viewer of the recipient.
|
|
Our
enterprise-level
products
offer
standard
per-user
subscription
options
and
a
corporate
purchasing
plan
that
offers
a
customized,
enterprise-specific
package
of
our
SafedoXTM
security
software
products.
Enterprise
circumstances
that
demand
special
purchasing
requirements
and
integration
of
our
products
into
a
particular
IT
environment
are
readily
programmed
into
our
SafedoXTM
security
software
products.
|
From
December 2011 through early February 2012, we advertised our software security products on the radio in the Southern California
area. While the first weeks of this campaign yielded promising results, this radio campaign has been suspended through at least
June 2012, due to a lack of sales success associated therewith. Upon resumption of this campaign, we cannot predict the ultimate
duration of this radio advertising campaign. Currently, we market our SafedoXTM security software products on the Internet,
directly through our web site, www.safedox.com. Recently, we began to advertise our security software products on the Internet,
as a means of driving Internet traffic to the sales web page of our website. We will increase expenditures in this advertising
medium as results warrant. We have engaged several persons who are independent resellers of our SafedoXTM security
software products. It is expected that these persons will market our SafedoXTM security software products directly
to potential users, using their own methods. Each of these independent resellers will be paid a per-subscriber commission on subscriptions
to our SafedoXTM security software products resulting from their marketing efforts. Also, in the near future, we will
begin to market our SafedoXTM security software products through one or more Internet-based resellers. These resellers
will be paid a per-subscriber commission.
A significant portion of the funds that we obtain in the future, whether derived from our operations or from
outside parties, will be applied to the expansion of our overall marketing efforts. In addition to seeking an ever-increasing number of third-party sales agents, we will increase our Internet marketing designed to drive Internet traffic
to our sales web page located on our web site, www.safedox.com.
While our level of future funding will determine the potential rate of growth for our business, our Plan of
Operations will be the same, that is, a singular focus of marketing our SafedoXTM security software products. There is,
of course, no assurance that our operations will be successful, in this regard. As with any start-up company that offers
unproven products, there is no assurance that our company will be successful with any level of additional funding.
Liquidity
As
of January 31, 2012, we had working capital of $72,694, including cash on hand of $127,125. At July 31, 2011, we had working capital
of $301,038, including cash on hand of $339,183.
Since
Inception, we have raised a total of $734,280 from private sales of our common stock. Currently, we possess approximately $75,000
in cash. Given our current “burn rate”, our current cash position is adequate to support our current level of operations
at least through May 2012.
During
the 12 months to end March 31, 2013, it will be necessary for our company to obtain additional funds with which to sustain our
operations, in the approximate amount of $600,000, based on our expected future “burn rate”. We expect that our operations
will provide an ever-increasing level of funds from subscription fees. However, as we are unable to predict accurately our future
revenues, or the timing thereof, we are currently exploring numerous third-party funding sources. In this regard, our management
has held face-to-face meetings with numerous potential funding sources, over the past three months. To date, we have not entered
into any binding obligation to obtain funds from a third party.
Historically,
we have not obtained funds on a serial basis. Rather, we have been able to secure funds in relatively large amounts at irregular
intervals. During the next twelve months, we expect that any funds obtained by us will be done at irregular intervals, not equally
across the twelve-month period. Any funds obtained by us may be in the form of loans, equity investments or a combination thereof.
Should we fail to obtain needed capital, we may be forced to cease operations.
Summary of Cash Flows
Six
Months Ended January 31, 2012. For the six months ended January 31, 2012, we used $451,346 in our operating activities; our
investing activities used $3,712 for equipment purchases; and our financing activities provided $243,000 in cash, which we obtained
from private sales of our common stock.
Period from Inception to July 31, 2011. For the Period from Inception to July 31, 2011, we used $150,985 in
our operating activities; our investing activities used $1,112 for equipment purchases; and our financing activities
provided $491,280 in cash, which we obtained from private sales of our common stock.
Contractual Obligations
In October 2011, we entered into a radio advertising contract with a radio station located in Southern California.
This advertising contract commits us to a total of approximately $800,000 in radio advertisement purchases beginning
in December 2011 and continuing through April 2012. However, we have suspended this radio advertising campaign
through at least June 2012, which has also served to suspend our commitment.
Critical Accounting Policies
Our critical accounting policies, including the assumptions and judgments underlying them, are disclosed in the
notes to our financial statements included in this Prospectus. We have consistently applied these policies in all material
respects. We do not believe that our operations to date have involved uncertainty of accounting treatment, subjective
judgment or estimates, to any significant degree.
Uncertainties and Trends
Our operations and revenues are dependent, now and in the future, upon the following factors:
• whether we successfully commercialize our security software products;
• whether we compete effectively in the highly competitive information technology industry; and
• whether the continuing economic recession in the United States will adversely affect our ability to
attract customers to our security software products.
There is no assurance that we will be able to accomplish our objectives. Our failure to do so would likely cause
purchasers of our common stock to lose their entire investments in our company.
Inflation
Inflation can be expected to have an impact on our operating costs. A prolonged period of inflation could cause
interest rates, wages and other costs to increase which would adversely affect our results of operations. In the current
economic and political climate, no predictions can be made with respect to the future effects of inflation on or business.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that would have any current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources.
Capital Expenditures
During
the six months ended January 31, 2012, we made capital expenditures in the amount of $3,712. During the period from Inception
to July 31, 2011, we made capital expenditures in the amount of $1,112. We cannot predict future levels of our capital expenditures.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements, which relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these
terms or other comparable terminology. These statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our
industry's actual results, levels of activity, performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith
and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
Except as required by applicable law, including the securities laws of the United States, we do not intend to update any
of the forward-looking statements to conform these statements to actual results.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
The following table sets forth the names and ages of our current directors and executive officers.
|
Manoj Patel
James F. Lay
|
|
47
50
|
|
President and Director
Executive Vice President, Secretary and Director
|
|
Our current officers and directors serve until the next annual meeting of our board of directors or until their
respective successors are elected and qualified. All officers serve at the discretion of our board of directors. There exist
no family relationships between our officers and directors. Certain information regarding the backgrounds of each of
the officers and directors is set forth below.
Manoj Patel is a founder of our company and serves as our President, on a full-time basis. Mr. Patel served
our predecessor company, mind3power, Inc. (M3P), as its President and director from January through May 2011. From
1989 through 2010, Mr. Patel was the owner of Dhobhi Inc., a dry cleaners business located in Antelope Valley,
California. From 2003 through 2010, Mr. Patel worked as an independent consultant to numerous information
technology companies with respect to corporate training strategies, organizational behavior matters, business
development strategies and product deployment strategies.
James F. Lay is a founder of our company and serves as our Executive Vice President and Secretary, on a full-time basis. Mr. Lay served our predecessor company, mind3power, Inc. (M3P), as its lead software engineer from
January through May 2011. From 2001 through the present, Mr. Lay has been the owner of Software Factory, LLC, a
Georgia-based firm focused on the design of business software solutions and business analysis. Also, from 2004 through
the present, Mr. Lay has been the owner of Tri-State Associates, LLC, a Georgia-based real estate development firm.
Corporate Governance
Committees; Meetings of the Board. We do not have a separate Compensation Committee, Audit Committee
or Nominating Committee. These functions are to be conducted by our Board of Directors meeting as a whole.
To date, our Board of Directors has taken action by unanimous written consent in lieu of a meeting on 16
occasions; our Board of Directors has not yet held a meeting.
Audit Committee. Our Board of Directors has not established an audit committee. The functions of an audit
committee are currently performed by our entire Board of Directors. We are under no legal obligation to establish an
audit committee and our Board of Directors has elected not to do so. This decision was made so as to avoid the time and
expense of identifying independent directors willing to serve on the audit committee. We may establish an audit
committee in the future, if our Board of Directors determines it to be advisable or we are otherwise required to do so by
applicable law, rule or regulation.
Independence of Board of Directors
Neither of our directors is “independent”, within the meaning of definitions established by the SEC or any
self-regulatory organization. We are not currently subject to any law, rule or regulation requiring that all or any portion
of our Board of Directors include “independent” directors.
Shareholder Communications with Our Board of Directors
Our company welcomes comments and questions from our shareholders. Shareholders should direct all
communications to our President, Manoj Patel, at our executive offices. However, while we appreciate all comments
from shareholders, we may not be able to respond individually to all communications. We attempt to address shareholder
questions and concerns in our press releases and documents filed with the SEC, so that all shareholders have access to
information about us at the same time. Mr. Patel collects and evaluates all shareholder communications. All
communications addressed to our directors and executive officers will be reviewed by those parties, unless the
communication is clearly frivolous.
Code of Ethics
As of the date of this Prospectus, our Board of Directors has not adopted a code of ethics with respect to our
directors, officers and employees.
EXECUTIVE COMPENSATION
Employment Agreements
Manoj Patel. We have entered into an employment agreement with Manoj Patel, who is our President. Mr.
Patel’s employment agreement has an initial term of five years, with a renewal term of three years. Mr. Patel’s annual
salary is $240,000. Until such time as our company possesses adequate capital with which to pay Mr. Patel’s salary, Mr.
Patel’s monthly salary will be accrued; provided, however, that, until our company shall have earned gross revenues in
excess of $50,000 for a calendar month, a maximum of $5,000 of Mr. Patel’s monthly salary as is unpaid shall be
accrued, and that, upon our company’s earning such level of monthly gross revenues, up to $20,000 in unpaid monthly
salary may be accrued each month. Further, as a signing bonus, Mr. Patel was paid $50,000 in cash and was issued (1)
500,000 warrants to purchase a like number of shares of common stock at an exercise price of $1.00 per share and (2)
500,000 warrants to purchase a like number of shares of common stock at an exercise price of $2.00 per share. In
connection with his employment agreement, Mr. Patel executed an indemnity agreement and a confidentiality agreement.
James F. Lay. We have entered into an employment agreement with James F. Lay, who is our Executive Vice
President and Secretary. Mr. Lay’s employment agreement has an initial term of five years, with a renewal term of three
years. Mr. Lay’s annual salary is $240,000. Until such time as our company possesses adequate capital with which to
pay Mr. Lay’s salary, Mr. Lay’s monthly salary will be accrued; provided, however, that, until our company shall have
earned gross revenues in excess of $50,000 for a calendar month, a maximum of $5,000 of Mr. Lay’s monthly salary as
is unpaid shall be accrued, and that, upon our company’s earning such level of monthly gross revenues, up to $20,000
in unpaid monthly salary may be accrued each month. Further, as a signing bonus, Mr. Lay was paid $50,000 in cash
and was issued (1) 500,000 warrants to purchase a like number of shares of common stock at an exercise price of $1.00
per share and (2) 500,000 warrants to purchase a like number of shares of common stock at an exercise price of $2.00
per share. In connection with his employment agreement, Mr. Lay executed an indemnity agreement and a confidentiality
agreement.
Summary Compensation Table
The
following table sets forth certain compensation information for our executive officers since the inception of our company.
Name and
Principal Position(s)
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock Awards ($)
|
Option Awards ($)
|
Non-Equity
Incentive
Plan
Compen-sation
($)
|
Non-qualified
Deferred
Compen-sation
Earnings
($)
|
All Other Compen-sation
($)
|
Total
($)
|
Manoj
Patel
|
2011
|
16,857(1)
|
50,000
|
---
|
---(2)
|
---
|
---
|
---
|
66,857(1)
|
President
and
Acting
Chief
Financial
Officer
|
|
|
|
|
|
|
|
|
|
James
F.
Lay
|
2011
|
16,857(1)
|
50,000
|
---
|
---(2)
|
---
|
---
|
---
|
66,857(1)
|
Executive
Vice
President,
Secretary
and
Treasurer
|
|
|
|
|
|
|
|
|
|
(1)
(2)
|
$16,857
($15,000
in
salary
and
$1,857
in
payroll
tax
liability)
has
been
accrued
as
of
July
31,
2011.
Pursuant
to
the
employment
agreements
of
Messrs.
Patel
and
Lay,
until
our
company
shall
have
earned
gross
revenues
in
excess
of
$50,000
for
a
calendar
month,
a
maximum
of
$5,000
of
such
persons’
$20,000
monthly
salaries
as
is
unpaid
shall
be
accrued
each
month.
Upon
our
company’s
achieving
$50,000
in
monthly
gross
revenues,
up
to
$20,000
of
such
persons’
monthly
salaries
as
is
unpaid
may
be
accrued
each
month.
Messrs.
Patel
and
Lay
have
advised
our
company
that
they
do
not
intend
to
seek
the
payment
of
accrued
salary
amounts,
until
such
time
as
we
possess
adequate
capital
for
such
purpose.
This person was issued a total of 1,000,000 warrants, 500,000 warrants with an exercise
price of $1.00 per share and 500,000 warrants with an exercise price of $2.00 per share, which warrants had an intrinsic value
of $-0-, on their date of issuance. In determining the fair value of these warrants, we employed a Black-Scholes option-pricing
model that uses assumptions regarding expected volatility concerning our common stock, dividend yield and risk free interest rates.
Please refer to Note 6 of our financial statements on page F-19, for further information on our valuation method.
|
As of the date of this Prospectus, there are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of our company, pursuant to any presently existing plan provided or contributed to by
our company.
Outstanding Equity Awards Since Inception
|
Option Awards
|
Stock Awards
|
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexer-cised
Options (#)
Unex-ercisable
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price ($)
|
Option
Expir-ation Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number of
Un-earned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested ($)
|
Manoj Patel
James R. Lay
|
500,000 sh.
500,000 sh.
500,000 sh.
500,000 sh.
|
---
---
---
---
|
---
---
---
---
|
$1.00
$2.00
$1.00
$2.00
|
5/2013
5/2013
5/2013
5/2013
|
---
---
---
---
|
n/a
n/a
n/a
n/a
|
---
---
---
---
|
---
---
---
---
|
Long-Term Incentive Plans
We currently have no long-term incentive plans.
Director Compensation
Our directors receive no compensation for their serving as directors.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Ownership of Common Stock
The
following table sets forth certain information as of the date of this Prospectus, with respect to the beneficial ownership of
shares of our common stock by (i) each person known to us who owns beneficially more than 5% of the outstanding shares of common
stock, (ii) each of our directors, (iii) each of our executive officers and (iv) all of our executive officers and directors as
a group. Unless otherwise indicated, each shareholder has sole voting and investment power with respect to the shares shown. As
of the date of this Prospectus, we had 28,396,976 shares of common stock issued and outstanding. Unless otherwise indicated, the
address for each of the shareholders in the table below is c/o SafedoXTM, Inc., 11801 Pierce Street, 2nd Floor, Riverside,
California 92505.
|
|
Prior
to This Offering
|
|
After
This Offering
|
Name
and
Address
of Beneficial Owner
|
|
Shares Owned
|
|
% (1)
|
|
Shares Owned
|
|
% (1)
|
Manoj Patel
|
|
11,100,000(2)
|
|
35.29%
|
|
10,600,000
|
|
33.70%
|
James F. Lay
|
|
11,100,000(2)
|
|
35.29%
|
|
10,600,000
|
|
33.70%
|
Officers and directors
as a group (2 persons)
|
|
22,200,000(3)
|
|
70.58%
|
|
21,200,000
|
|
67.40%
|
(1)
(2)
(3)
|
Based on 31,454,496 shares outstanding, including 3,057,520
shares underlying currently exercisable warrants.
1,000,000 of these shares are unissued, but underlie currently exercisable warrants.
2,000,000 of these shares are unissued, but underlie currently exercisable warrants.
|
Shares Eligible for Future Sale
As of the date of this Prospectus, there were 28,396,976 shares of our common stock issued and outstanding.
Shares Covered by this Prospectus. As of the date of this Prospectus, all 3,037,671 shares being offered
hereunder by the Selling Shareholders may be sold without restriction under the Securities Act.
Rule 144. A person who has beneficially owned restricted shares of our common stock or warrants for at least
six months would be entitled to sell their common stock provided that (1) such person is not deemed to have been one
of our affiliates at the time of, or at any time during the three months preceding, a sale, (2) we had been subject to the
Exchange Act reporting requirements for at least 90 days before the sale and, (3) if the sale occurs prior to satisfaction
of a one-year holding period, we provide current information at the time of sale.
Persons who have beneficially owned restricted shares of our common stock or warrants for at least six months,
but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to
additional restrictions, by which such person would be entitled to sell within any three-month period only a number of
shares of common stock that does not exceed the greater of:
• 1% of the total number of shares of common stock then outstanding, which, as of the date of this
Prospectus, equals approximately 283,000 shares; and
• the average weekly trading volume of such securities during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to such sale;
provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three
months before the sale.
However, since we anticipate that our shares will be quoted on the OTC Bulletin Board, which is not an
“automated quotation system”, our shareholders will not be able to rely on the market-based volume limitation described
in the second item above. If, in the future, our common stock is listed on an exchange or quoted on NASDAQ, then our
shareholders would be able to rely on the market-based volume limitation. Unless and until our common stock is so
listed or quoted, our shareholders are able to rely only on the percentage-based volume limitation described in the first
item above.
Such sales by affiliates must also comply with the manner of sale, current public information and notice
provisions of Rule 144. The Selling Shareholders will not be governed by the foregoing restrictions when selling their
shares pursuant to this Prospectus.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
mind3power Inc. Transaction
On May 3, 2011, we consummated a plan and agreement of merger (the “Merger Agreement”) with our
predecessor company, mind3power, Inc., a California corporation (M3P), pursuant to which M3P merged with and into
our company. Pursuant to the Merger Agreement, we issued a total of 21,100,000 shares of our common stock to the
M3P shareholders. Pursuant to the Merger Agreement, Manoj Patel, our President, and James F. Lay, our Executive
Vice President, each were issued 10,550,000 shares of our common stock. M3P and SafedoXTM are considered to be
entities under common control at the time of the merger.
In determining the number of shares of our common stock to be issued under the Merger Agreement, our board
of directors did not employ any standard valuation formula or any other standard measure of value.
Employment Agreements
Manoj Patel. We have entered into an employment agreement with Manoj Patel, who is our President. Mr.
Patel’s employment agreement has an initial term of five years, with a renewal term of three years. Mr. Patel’s annual
salary is $240,000. Until such time as our company possesses adequate capital with which to pay Mr. Patel’s salary, Mr.
Patel’s monthly salary will be accrued; provided, however, that, until our company shall have earned gross revenues in
excess of $50,000 for a calendar month, a maximum of $5,000 of Mr. Patel’s monthly salary as is unpaid shall be
accrued, and that, upon our company’s earning such level of monthly gross revenues, up to $20,000 in unpaid monthly
salary may be accrued each month. Further, as a signing bonus, Mr. Patel was paid $50,000 in cash and was issued (1)
500,000 warrants to purchase a like number of shares of common stock at an exercise price of $1.00 per share and (2)
500,000 warrants to purchase a like number of shares of common stock at an exercise price of $2.00 per share. In
connection with his employment agreement, Mr. Patel executed an indemnity agreement and a confidentiality agreement.
James F. Lay. We have entered into an employment agreement with James F. Lay, who is our Executive Vice
President and Secretary. Mr. Lay’s employment agreement has an initial term of five years, with a renewal term of three
years. Mr. Lay’s annual salary is $240,000. Until such time as our company possesses adequate capital with which to
pay Mr. Lay’s salary, Mr. Lay’s monthly salary will be accrued; provided, however, that, until our company shall have
earned gross revenues in excess of $50,000 for a calendar month, a maximum of $5,000 of Mr. Lay’s monthly salary as
is unpaid shall be accrued, and that, upon our company’s earning such level of monthly gross revenues, up to $20,000
in unpaid monthly salary may be accrued each month. Further, as a signing bonus, Mr. Lay was paid $50,000 in cash
and was issued (1) 500,000 warrants to purchase a like number of shares of common stock at an exercise price of $1.00
per share and (2) 500,000 warrants to purchase a like number of shares of common stock at an exercise price of $2.00
per share. In connection with his employment agreement, Mr. Lay executed an indemnity agreement and a confidentiality
agreement.
LEGAL MATTERS
The validity of the shares to be sold by us under this Prospectus will be passed upon for us by Newlan &
Newlan, Ltd., Flower Mound, Texas. Newlan & Newlan, Ltd. owns 1,000,000 shares of our common stock and 200,000
warrants to purchase a like number of shares.
EXPERTS
Our financial statements for the period from Inception to July 31, 2011, included in this Prospectus have been
audited by PMB Helin Donovan, LLP, as set forth in its report of independent registered public accounting firm included
in this Prospectus. Its report is given upon its authority as an expert in accounting and auditing.
COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Under our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including
a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best
interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is
successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses
incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually
and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order.
The indemnification is intended to be to the fullest extent permitted by the laws of the State of Wyoming.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors,
officers and controlling persons pursuant to the foregoing provisions, we have been advised that, in the opinion of the
SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1, including this Prospectus, exhibits, schedules
and amendments, under the Securities Act, with respect to the shares of common stock to be offered and sold in this
offering. This Prospectus does not contain all of the information included in the registration statement. For further
information about us and the shares of our common stock to be offered and sold in this offering, please refer to this
registration statement (Commission File No.: 333-178206).
As of the date of this Prospectus, we became subject to the informational requirements of the Exchange Act.
Accordingly, we will file annual, quarterly and special reports and other information with the SEC. You may read and
copy any document we file at the SEC's public reference room at 100 F Street, N. E., Washington, D.C. 20549. You
should call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings will also
be available to the public at the SEC's web site located at http:/www.sec.gov.
INDEX TO FINANCIAL STATEMENTS
Unaudited Financial Statements – Six Months Ended
January 31, 2012
|
Unaudited Balance Sheet as of January 31, 2012
Unaudited Statement of Operations for the Six Months Ended January 31, 2012, and the Period
from
Inception
(January 4, 2011) to January 31, 2012
Statement of Cash Flows for the Six Months Ended January 31, 2012, and the Period from Inception
(January 4,
2011) to January 31, 2012
Notes to Unaudited Financial Statements
|
F-1
F-2
F-3
F-4
|
Financial Statements – Period Ended July 31, 2011
|
Report of Independent Registered Public Accounting Firm
Balance Sheet as of July 31, 2011
Statement of Operations for the Period from Inception (January 4, 2011) to July 31, 2011
Statement of Changes in Stockholders’ Equity for the Period from Inception (January 4, 2011)
to July 31, 2011
Statement of Cash Flows for the Period from Inception (January 4, 2011) to July 31, 2011
Notes to Financial Statements
|
F-9
F-10
F-11
F-12
F-13
F-14
|
|
SAFEDOX, INC.
(A Development Stage Company)
|
|
|
January 31, 2012, and July 31, 2011
|
|
|
|
1/31/12
(unaudited)
|
|
7/31/11
|
|
Cash and cash equivalents
|
$127,125
|
|
$339,183
|
|
Total current assets
|
127,125
|
|
339,183
|
Property and equipment
|
4,412
|
|
1,112
|
|
Total assets
|
$131,537
|
|
$340,295
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
Accrued payroll
|
$20,000
|
|
$33,714
|
|
Accrued consulting fees
|
30,000
|
|
---
|
|
Related party payables
|
4,431
|
|
4,431
|
|
Total liabilities
|
54,431
|
|
38,145
|
|
Preferred stock, $.0001 par value: 5,000,000 shares authorized; zero
shares issued and outstanding at January 31, 2012, and July 31, 2011
|
---
|
|
---
|
|
Common stock, $.0001 par value: 100,000,000 shares authorized;
28,396,976 shares issued and outstanding at January 31, 2012, and
27,637,600 shares issued and outstanding at July 31, 2011
|
2,840
|
|
2,764
|
|
Additional paid-in capital
|
1,090,742
|
|
659,890
|
|
Deficit accumulated during the development stage
|
(1,016,476)
|
|
(360,504)
|
|
Total stockholders’ equity
|
77,106
|
|
302,150
|
|
Total liabilities and stockholders’ equity
|
$131,537
|
|
$340,295
|
The accompanying notes are an integral part of these statements.
|
|
SAFEDOX, INC.
(A Development Stage Company)
|
|
|
For the Six Months Ended January 31, 2012, and the Period from
Inception (January 4, 2011) to January 31, 2012
|
|
|
|
|
|
Six Months
Ended
1/31/12
(unaudited)
|
|
Period
from
Inception
(1/4/11) to
1/31/12
(unaudited)
|
|
|
|
|
|
Salaries and wages
|
|
|
$90,000
|
|
$370,395
|
|
|
|
|
|
Consulting
|
|
|
358,374
|
|
389,490
|
|
|
|
|
|
Legal and professional
|
|
|
17,891
|
|
56,242
|
|
|
|
|
|
General and administrative
|
|
|
179,156
|
|
189,506
|
|
|
|
|
|
Total operating expenses
|
|
|
656,179
|
|
1,016,743
|
|
|
|
|
Operating loss
|
|
|
(656,179)
|
|
(1,016,743)
|
|
|
|
|
|
Total other income
|
|
|
207
|
|
267
|
|
|
|
|
Net loss before income taxes
|
|
|
(655,972)
|
|
(1,016,476)
|
|
|
|
|
Income tax expense
|
|
|
---
|
|
---
|
|
|
|
|
Net loss
|
|
|
$(655,972)
|
|
$(1,016,476)
|
|
|
|
|
Basic and diluted
|
|
|
$(0.023)
|
|
$(0.053)
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
28,114,453
|
|
19,061,268
|
|
|
|
|
The accompanying notes are an integral part of these statements.
|
|
SAFEDOX, INC.
(A Development Stage Company)
|
|
|
For the Six Months Ended January 31, 2012, and the Period from
Inception (January 4, 2011) to January 31, 2012
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
1/31/12
(unaudited)
|
|
Period
from
Inception
(1/4/11) to
1/31/12
(unaudited)
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
Net loss
|
|
|
$(655,972)
|
|
$(1,016,476)
|
|
Adjustments to reconcile net loss to cash used in
operating activities:
|
|
|
|
|
|
|
Non-cash operating expenses
|
|
|
187,928
|
|
359,302
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accrued payroll
|
|
|
(13,714)
|
|
20,000
|
|
Accrued consulting
|
|
|
30,000
|
|
30,000
|
|
Related party payables
|
|
|
---
|
|
4,431
|
Net cash used in operating activities
|
|
|
(451,346)
|
|
(602,331)
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(3,712)
|
|
(4,824)
|
Net cash used in investing activities
|
|
|
(3,712)
|
|
(4,824)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
Proceeds from sale of common stock for cash
|
|
|
243,000
|
|
734,280
|
Net cash provided by financing activities
|
|
|
243,000
|
|
734,280
|
NET CHANGE IN CASH
|
|
|
(212,058)
|
|
127,125
|
Cash, beginning of period
|
|
|
339,183
|
|
---
|
Cash, end of period
|
|
|
$127,125
|
|
$127,125
|
|
Cash paid for interest
|
|
|
$ ---
|
|
$ ---
|
|
Cash paid for income taxes
|
|
|
$ ---
|
|
$ ---
|
Supplemental disclosure of non-cash financing activities:
|
|
|
|
|
|
|
Common stock issued for services rendered
|
|
|
$187,928
|
|
$198,928
|
|
Common stock issued for payment of indebtedness
|
|
|
$ ---
|
|
$300
|
|
Warrants issued for services rendered
|
|
|
$ ---
|
|
$157,964
|
The accompanying notes are an integral part of these statements.
|
|
SAFEDOX, INC.
(A Development Stage Company)
|
|
|
NOTES TO FINANCIAL STATEMENTS
|
|
|
January 31, 2012
(unaudited)
|
|
SafedoX, Inc. (the “Company”) was incorporated in the State of Wyoming on May 2, 2011. Effective May 3, 2011,
pursuant to an agreement and plan of merger, the Company acquired 100% of the common stock of the Company’s
predecessor company, mind3power, Inc., a California corporation (“M3P”), incorporated on January 4, 2011
(“Inception”), in a combination that has been accounted for as a reorganization, by issuing 21,100,000 shares of
Company common stock. M3P and the Company are considered to be entities under common control at the time of
the merger and the financial data presented in the financial statements encompasses the period from inception of M3P
(January 4, 2011) through January 31, 2012.
|
The Company’s focus is on the development and commercial exploitation of its computer security software products.
To date, the Company has instituted the first phase of its business plan, whereby it intends to obtain at least 100,000
subscribers to its security software products.
|
Liquidity and Management Plans
|
At January 31, 2012, the Company had cash and cash equivalents of $127,125, working capital of $72,694 and an
accumulated deficit of $1,016,476. While continuing the development of its business in an aggressive manner,
management has taken several actions to ensure that the Company will be able to preserve its available cash for its
working capital needs, including minimization of discretionary expenditures and maintenance of no debt liabilities.
|
During the period to end March 31, 2013, the Company will be required to obtain additional funds with which to
sustain its operations, in the approximate amount of $600,000, based on its expected future “burn rate”. The
Company is currently exploring numerous third-party funding sources. The Company believes it will be able to secure
the financing, in the form of debt, equity or a combination thereof, as may be necessary to achieve its objectives. The
Company does not have a current commitment for an equity investment or a loan in any amount.
|
The Company has incurred losses totaling $1,016,476 from its Inception through January 31, 2012. During the 12
months to end March 31, 2013, the Company will be required to obtain additional funds with which to sustain its
operations and is exploring numerous third-party funding sources. The Company believes it will be able to secure the
financing, in the form of debt, equity or a combination thereof, as may be necessary to achieve its objectives. In
addition to these sources, the Company expects to begin generating sales revenue in the near future.
|
There are no assurances that the Company will be able to achieve a level of revenues adequate to generate sufficient
cash flow from operations or obtain additional financing through private placements, public offerings and/or bank
financing necessary to support the Company’s working capital requirements in the future. To the extent that funds
generated from operations and any private placements, public offerings and/or bank financing are insufficient, the
Company will have to raise additional working capital. No assurance can be given that additional financing will be
available, or if available, that such will be on terms acceptable to the Company. If adequate working capital is not
available, the Company may not continue its operations or execute its business plan.
|
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts
or the amount and classification of liabilities that might be necessary should the Company be unable to continue as
a going concern.
|
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
The accompanying unaudited interim financial statements of the Company have been prepared by the Company in
accordance with accounting principles generally accepted in the United States of America, pursuant to the Securities
and Exchange Commission rules and regulations. In management’s opinion, all adjustments necessary for a fair
presentation of the results for interim periods have been reflected in the interim financial statements. The results of
operations for any interim period are not necessarily indicative of the results for a full year. All adjustments to the
financial statements are of a normal recurring nature.
|
Certain information and footnote disclosures normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. Such disclosures are those that would
substantially duplicate information contained in the most recent audited financial statements of the Company, such
as significant accounting policies and stock options. Management presumes that users of the interim statements have
read or have access to the audited financial statements and notes thereto included in the Company’s Registration
Statement on Form S-1 (SEC File No. 333-178206).
|
Development Stage Company
|
Through January 31, 2012, the Company had not generated revenue since Inception. The accompanying financial
statements have, therefore, been prepared using the accounting format prescribed for a development stage company.
|
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting
of amounts of revenues and expenses during the reported period. Actual results could differ from those estimates,
and such differences may be material to the financial statements.
|
The Company derives its revenue from sales of its computer software products. Revenue is recognized when there
is persuasive evidence of an arrangement, delivery has occurred and services have been rendered, the sales price is
determinable and collectability is reasonably assured. Sales are recorded net of discounts, rebates and returns.
|
Property and equipment are carried at cost, less accumulated depreciation. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life of the
Company’s equipment is three years. Upon retirement or sale, the cost of assets disposed and the related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to operations.
Repairs and maintenance and minor replacements are charged to expense as incurred.
|
Long-lived assets consist of computer software, including source codes, know-how, trade names, trademarks and
brand names. Purchased trademarks are initially measured based on their fair values. Trademarks include purchased
trademarks, brand names, logos or other recognizable symbols associated with the Company's products. Trademarks
are not amortized because they have indefinite lives. Assets determined to have indefinite lives are no longer
amortized, but are tested for impairment on an annual basis. The carrying amount of long-lived assets not subject to
amortization is $-0- as of January 31, 2012.
|
The Company evaluates the recoverability of identifiable long-lived assets annually or whenever events or changes
in circumstances indicate that a long-lived asset's carrying amount may not be recoverable. Such circumstances could
include, but are not limited to: (1) a significant decrease in the market value of an asset, (2) a significant adverse
change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the
amount originally expected for the acquisition of an asset. The Company measures the carrying amount of the asset
against the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash
flows are less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The
impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value.
The fair value is measured based on quoted market prices, if available. If quoted market prices are not available, the
estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash
flows. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over
the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ
from assumed and estimated amounts. During the period from Inception through January 31, 2012, the Company
recorded no impairment losses related to a long-lived asset.
|
Equity Instruments Issued to Parties Other than Employees for Acquiring Goods or Services
|
All transactions in which goods or services are received in exchange for the consideration received for the issuance
of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair
value of the equity instrument issued is the earlier of the date on which the performance is complete, the date on which
it is probable that performance will occur or the date of issuance of the equity instrument.
|
Provision for Income Taxes
|
The Company accounts for income taxes using the asset and liability method whereby deferred tax asset and liability
account balances are determined based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be in effect when the asset or liability is
expected to be realized or settled. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized.
|
In the ordinary course of business, there are many transactions for which the ultimate tax outcome is uncertain. The
Company regularly assesses uncertain tax positions in each of the tax jurisdictions in which it has operations and
accounts for the related financial statement implications. Unrecognized tax benefits are reported using the two-step
approach under which tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained and
the amount of the tax benefit recognized is equal to the largest tax benefit that is greater than fifty percent likely of
being realized upon ultimate settlement of the tax position. Determining the appropriate level of unrecognized tax
benefits requires the Company to exercise judgment regarding the uncertain application of tax law. The amount of
unrecognized tax benefits is adjusted when information becomes available or when an event occurs indicating a
change is appropriate. The Company includes interest and penalties related to its uncertain tax positions as part of
income tax expense, if any.
|
The Company files U.S. federal and U.S. state tax returns.
|
Net Income (Loss) per Common Share
|
The Company is required to provide basic and dilutive earnings (loss) per common share information. The basic net
loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted
average number of common shares outstanding.
|
Diluted net loss per common share is computed by dividing the net loss applicable to common stockholders, adjusted
on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive
securities. At January 31, 2012, there were potentially dilutive securities outstanding consisting of warrants
convertible into 3,057,520 shares of common stock. Common Stock equivalents at January 31, 2012, were considered
but were not included in the computation of loss per share because they would have been anti-dilutive.
|
Basic loss per share has been calculated based on the weighted average number of shares of common stock
outstanding during the period.
|
The Company evaluates events that occur subsequent to the balance sheet date of periodic reports, but before financial
statements are issued for periods ending on such balance sheet dates, for possible adjustment to such date.
|
NOTE 3. RELATED-PARTY TRANSACTIONS
|
The Company has entered into employment agreements with both of its officers. Each of these employment
agreements has an initial term of five years, with a renewal term of three years, and pays the officer an annual salary
is $240,000. Until such time as the Company possesses adequate capital with which to pay these officers’ salaries,
their salaries will accrue; provided, however, that, until the Company shall have earned gross revenues in excess of
$50,000 for a calendar month, a maximum of $5,000 of each such officer’s monthly salary as is unpaid shall be
accrued, and that, upon the Company’s earning such level of monthly gross revenues, up to $20,000 in unpaid monthly
salary may be accrued each month. At January 31, 2012, a total of $20,000 in salary had been accrued under the
employment agreements of these officers. Further, as a signing bonus, each officer was paid $50,000 in cash and was
issued (1) 500,000 warrants to purchase a like number of shares of Company common stock at an exercise price of
$1.00 per share and (2) 500,000 warrants to purchase a like number of shares of Company common stock at an
exercise price of $2.00 per share.
|
Acquisition Transaction Relating to M3P
|
Effective May 3, 2011, pursuant to an agreement and plan of merger, the Company acquired 100% of the common
stock of the Company’s predecessor company, mind3power, Inc. (M3P), incorporated on January 4, 2011 (Inception),
in a combination that has been accounted for as a reorganization. In this reorganization, the Company issued a total
of 21,100,000 shares of the Company’s common stock to the Company’s officers and directors, who were the only
shareholders of M3P. See Note 1. The Company.
|
In determining the number of shares of Company common stock to be issued in the M3P acquisition transaction, the
Company’s board of directors did not employ any standard valuation formula or any other standard measure of value.
|
Common Stock Issued for Services
|
During the six months ended January 31, 2012, the Company issued a total of 506,000 shares of its common stock
for services to third-party consultants for services, resulting in $187,928 in non-cash compensation expense included
in consulting in the accompanying statement of operations. The value of the transactions was determined based on
value of shares of common stock issued as determined by the board of directors. As there are no performance
commitments or penalties for non-performance, the Company recorded the expense at the date of issuance.
|
Common Stock Issued for Finder’s Fees
|
During the six months ended January 31, 2012, the Company issued a total of 10,376 shares of its common stock in
payment of finder’s fee, which shares were valued at $31,128 for financial reporting purposes.
|
Common Stock Issued for Cash
|
During the six months ended January 31, 2012, the Company issued a total of 243,000 shares of its common stock
for cash in the total amount of $243,000.
|
NOTE 5. WARRANTS TO PURCHASE COMMON STOCK
|
Outstanding Stock Warrants
|
In May 2011, the Company issued stock warrants to two related-parties, its officers and directors. These persons were
each issued 1,000,000 warrants (500,000 warrants with an exercise price of $1.00 per share and 500,000 warrants with
an exercise price of $2.00 per share) as part of a signing bonus under their respective employment agreements. All
of these warrants expire in May 2013 and are fully vested and exercisable at January 31, 2012.
|
Also in May 2011, the Company issued stock warrants to four third-party consultants. These consultants were each
issued 200,000 warrants (100,000 warrants with an exercise price of $1.00 per share and 100,000 warrants with an
exercise price of $2.00 per share) in partial payment of consulting services under their respective consulting
agreements. All of these warrants expire in May 2013 and are fully vested and exercisable at January 31, 2012.
|
From Inception through January 31, 2012, a total of 3,057,520 warrants were issued to purchasers of Company
common stock. Of these warrants, 1,528,760 (1,000,000 of which are owned by officers and directors and 800,000
of which are owned by third-party consultants) allow the warrant holders to purchase a like number of shares of
Company common stock at a price of $1.00 per share and 1,528,760 (1,000,000 of which are owned by officers and
directors and 800,000 of which are owned by third-party consultants) allow the warrant holders to purchase a like
number of shares of Company common stock at a price of $2.00 per share. All of these warrants expire in June 2013
and are fully vested and exercisable at January 31, 2012.
|
A summary of the status and changes of the warrants issued during the period from Inception through January 31,
2012, are as follows:
|
|
|
|
|
|
Shares
|
|
Weighted Average
Exercise Price
|
|
|
|
Outstanding at beginning of period
|
|
-0-
|
|
$ -0-
|
|
|
|
Outstanding at January 31, 2012
|
|
3,057,520
|
|
$1.50
|
|
|
|
Exercisable at end of period
|
|
3,057,520
|
|
$1.50
|
A summary of the status of the warrants outstanding at January 31, 2012, is presented below:
|
|
Warrants Outstanding
|
|
Warrants Exercisable
|
Exercise
Price
|
|
Number
Outstanding
|
|
Weighted Average
Remaining Contractual Life
|
|
Weighted
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
$1.00
$2.00
|
|
1,528,760
1,528,760
|
|
2 years
2 years
|
|
$1.00
$2.00
|
|
1,528,760
1,528,760
|
|
$1.00
$2.00
|
At January 31, 2012, vested warrants of 3,057,520 had an aggregate intrinsic value of $0.
|
The fair value of each of the Company’s stock warrants is estimated on the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the table below. Expected volatility is based on an average of
historical volatility of the Company’s common stock. The risk-free interest rate for periods within the contractual life
of the stock warrant award is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the award is
granted with a maturity equal to the expected term of the award. The Company uses historical data to estimate
forfeitures within its valuation model.
|
The significant weighted average assumptions relating to the valuation of the Company’s options for the period ended
July 31, 2011, were as follows:
|
|
Strike price
|
$1.00 to $2.00
|
|
|
Risk-free interest rate (2 YR U.S. Treasury)
|
0.45% to 0.61%
|
|
No additional warrants were issued during the six months ended January 31, 2012.
|
NOTE 6. RADIO ADVERTISING COMMITMENT
|
In October 2011, the Company entered into a radio advertising contract with a radio station located in Southern
California. This advertising contract commits the Company to a total of approximately $800,000 in radio
advertisement purchases beginning in December 2011 and continuing through May 2012. However, this radio
advertising campaign was suspended through at least June 2012, due to the lack of sales success associated therewith.
|
NOTE 7. SUBSEQUENT EVENTS
|
In April 2012, the Company filed a patent application with respect to its software security technology, which is titled
“Secure Digital Document Distribution with Real-time Sender Control of Recipient Document Content Access
Rights”.
|
Report of Independent Registered Public Accounting Firm
|
The Board of Directors and Shareholders
SafedoX, Inc.:
We have audited the accompanying balance sheet of SafedoX, Inc. (the "Company") (a development stage company)
as of July 31, 2011, and the related statements of operations, stockholders' equity, and cash flows for the period from
January 4, 2011 ("Inception") through July 31, 2011. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of SafedoX, Inc. as of July 31, 2011, and the results of its operations and its cash flows for the period from Inception
through July 31, 2011, in conformity with generally accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, the Company has sustained a net loss from operations and has an
accumulated deficit during the development stage. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in this regard are also described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
PMB Helin Donovan, LLP
/s/ PMB HELIN DONOVAN, LLP
December 19, 2011
Dallas, Texas
|
SAFEDOX, INC.
(A Development Stage Company)
|
|
|
Cash and cash equivalents
|
$339,183
|
|
|
|
Total current assets
|
339,183
|
|
|
Property and equipment
|
1,112
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
Related party payables
|
4,431
|
|
|
|
Preferred stock, $.0001 par value: 5,000,000 shares authorized; zero
shares issued and outstanding
|
---
|
|
|
|
Common stock, $.0001 par value: 100,000,000 shares authorized;
27,637,600 shares issued and outstanding at July 31, 2011
|
2,764
|
|
|
|
Additional paid-in capital
|
659,890
|
|
|
|
Deficit accumulated during the development stage
|
(360,504)
|
|
|
|
Total stockholders’ equity
|
302,150
|
|
|
|
Total liabilities and stockholders’ equity
|
$340,295
|
|
|
The accompanying notes are an integral part of these statements.
|
|
SAFEDOX, INC.
(A Development Stage Company)
|
|
|
For the Period from Inception (January 4, 2011) to July 31, 2011
|
|
|
Salaries and wages
|
|
|
|
|
$280,747
|
|
|
|
|
|
Legal and professional
|
|
|
|
|
38,351
|
|
|
|
|
|
General and administrative
|
|
|
|
|
10,350
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
360,564
|
|
|
|
|
Net loss before income taxes
|
|
|
|
|
(360,504)
|
|
|
|
|
Basic and diluted
|
|
|
|
|
$(0.01)
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
|
|
26,793,507
|
|
|
|
|
The accompanying notes are an integral part of these statements.
|
|
SAFEDOX, INC.
(A Development Stage Company)
|
|
|
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
|
|
|
For the Period From Inception (January 4, 2011) to July 31, 2011
|
|
|
Common Stock, $.0001 par value
|
|
|
|
|
|
|
Shares
|
Amount
|
Additional
Paid-in Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
|
Inception, January 4, 2011
|
|
|
|
|
2,600
|
$ ---
|
$ 10,000
|
$ ---
|
$10,000
|
M3P stock cancelled during merger, May 3, 2011
|
|
|
|
|
(2,600)
|
---
|
(10,000)
|
---
|
(10,000)
|
SafedoX stock issued during merger, May 3, 2011
|
|
|
|
|
21,100,000
|
2,110
|
---
|
---
|
2,110
|
Stock issued for services rendered
|
|
|
|
|
4,000,000
|
400
|
10,600
|
---
|
11,000
|
Stock issued for cash
|
|
|
|
|
1,637,600
|
164
|
491,116
|
---
|
491,280
|
Stock issued for payment of indebtedness
|
|
|
|
|
900,000
|
90
|
210
|
---
|
300
|
Warrants issued for services
|
|
|
|
|
—
|
---
|
157,964
|
---
|
157,964
|
Net loss
|
|
|
|
|
—
|
---
|
---
|
(360,504)
|
(360,504)
|
Balance, July 31, 2011
|
|
|
|
|
27,637,600
|
$2,764
|
$659,890
|
$(360,504)
|
$302,150
|
The accompanying notes are an integral part of these statements.
|
|
SAFEDOX, INC.
(A Development Stage Company)
|
|
|
For the Period from Inception (January 4, 2011) to July 31, 2011
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Adjustments to reconcile net loss to cash used in
operating activities:
|
|
|
|
|
|
|
Non-cash operating expenses
|
|
|
171,374
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Related party payables
|
|
|
4,431
|
|
|
Net cash used in operating activities
|
|
|
(150,985)
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(1,112)
|
|
|
Net cash used in investing activities
|
|
|
(1,112)
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
Proceeds from sale of common stock for cash
|
|
|
491,280
|
|
|
Net cash provided by financing activities
|
|
|
491,280
|
|
|
NET CHANGE IN CASH
|
|
|
339,183
|
|
|
Cash, beginning of period
|
|
|
---
|
|
|
Cash, end of period
|
|
|
$339,183
|
|
|
|
Cash paid for interest
|
|
|
$ ---
|
|
|
|
Cash paid for income taxes
|
|
|
$ ---
|
|
|
Supplemental disclosure of non-cash financing activities:
|
|
|
|
|
|
|
Common stock issued for services rendered
|
|
|
$11,000
|
|
|
|
Common stock issued for payment of indebtedness
|
|
|
$300
|
|
|
|
Warrants issued for services rendered
|
|
|
$157,964
|
|
|
The accompanying notes are an integral part of these statements.
|
|
SAFEDOX, INC.
(A Development Stage Company)
|
|
|
NOTES TO FINANCIAL STATEMENTS
|
|
SafedoX, Inc. (the “Company”) was incorporated in the State of Wyoming on May 2, 2011. Effective May 3, 2011,
pursuant to an agreement and plan of merger, the Company acquired 100% of the common stock of its predecessor
company, mind3power, Inc., a California corporation (“M3P”) incorporated on January 4, 2011 (“Inception”), in a
combination that has been accounted for as a reorganization, by issuing 21,100,000 shares of Company common
stock. M3P and SafedoX were both companies under the common control of the founding shareholders at their
inception and at the time of the merger, thus these financial statements include the operations of both SafedoX and
its predecessor company, M3P, from the date of Inception through July 31, 2011.
|
The Company’s focus is on the development and commercial exploitation of its computer security software products.
To date, the Company has instituted the first phase of its business plan, whereby it intends to obtain at least 100,000
subscribers to its security software products.
|
Liquidity and Management Plans
|
At July 31, 2011, the Company had cash and cash equivalents of $339,183, working capital of $301,038 and an
accumulated deficit of $360,504. While continuing the development of its business in an aggressive manner,
management has taken several actions to ensure that the Company will have sufficient cash for its working capital
needs, including minimization of discretionary expenditures and maintenance of no debt liabilities. Management
believes that these actions will enable the Company to meet its working capital needs through at least March 31, 2012.
|
Should the Company require additional funds in order to sustain its operations, the Company believes it will be able
to secure the financing, in the form of debt, equity or a combination thereof, as may be necessary to achieve its
objectives. The Company does not have a current commitment for an equity investment or a loan in any amount.
|
The Company has incurred losses totaling $360,504 from its Inception through July 31, 2011, and believes it has
sufficient working capital to carry it through to March 31, 2012, or beyond. Because of these conditions, the
Company will require additional working capital to continue operations and develop its business beyond March 2012.
The Company intends to begin generating sales revenue and to raise additional working capital either through private
placements, public offerings and/or bank financing as necessary by that time.
|
There are no assurances that the Company will be able to achieve a level of revenues adequate to generate sufficient
cash flow from operations or obtain additional financing through private placements, public offerings and/or bank
financing necessary to support the Company’s working capital requirements in the future. To the extent that funds
generated from operations and any private placements, public offerings and/or bank financing are insufficient, the
Company will have to raise additional working capital. No assurance can be given that additional financing will be
available, or if available, that such will be on terms acceptable to the Company. If adequate working capital is not
available, the Company may not continue its operations or execute its business plan.
|
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts
or the amount and classification of liabilities that might be necessary should the Company be unable to continue as
a going concern.
|
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Development Stage Company
|
Through July 31, 2011, the Company had not generated revenue since Inception. The accompanying financial
statements have, therefore, been prepared using the accounting format prescribed for a development stage company.
|
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting
of amounts of revenues and expenses during the reported period. Actual results could differ from those estimates,
and such differences may be material to the financial statements.
|
The Company elected July 31 as its fiscal year ending date.
|
Cash and Cash Equivalents
|
The Company considers all highly liquid investments with original maturities of three months or less at the time of
purchase to be cash equivalents.
|
The Company derives its revenue from sales of its computer software products. Revenue is recognized when there
is persuasive evidence of an arrangement, delivery has occurred and services have been rendered, the sales price is
determinable and collectability is reasonably assured. Sales are recorded net of discounts, rebates and returns.
|
Property and equipment are carried at cost, less accumulated depreciation. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life of the
Company’s equipment is three years. Upon retirement or sale, the cost of assets disposed and the related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to operations.
Repairs and maintenance and minor replacements are charged to expense as incurred.
|
Long-lived assets consist of computer software, including source codes, know-how, trade names, trademarks and
brand names. Purchased trademarks are initially measured based on their fair values. Trademarks include purchased
trademarks, brand names, logos or other recognizable symbols associated with the Company's products. Trademarks
are not amortized because they have indefinite lives. Assets determined to have indefinite lives are no longer
amortized, but are tested for impairment on an annual basis. The carrying amount of long-lived assets not subject to
amortization is $-0- as of July 31, 2011.
|
The Company evaluates the recoverability of identifiable long-lived assets annually or whenever events or changes
in circumstances indicate that a long-lived asset's carrying amount may not be recoverable. Such circumstances could
include, but are not limited to: (1) a significant decrease in the market value of an asset, (2) a significant adverse
change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the
amount originally expected for the acquisition of an asset. The Company measures the carrying amount of the asset
against the estimated undiscounted future cash flows associated with it. If the sum of the expected future net cash
flows are less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The
impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value.
The fair value is measured based on quoted market prices, if available. If quoted market prices are not available, the
estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash
flows. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over
the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ
from assumed and estimated amounts. During the period from Inception through July 31, 2011, the Company
recorded no impairment losses related to a long-lived asset.
|
Fair Value of Financial Instruments
|
The fair value of the Company’s financial instruments reflects the amounts that the Company estimates to receive in
connection with the sale of an asset or paid in connection with the transfer of a liability in an orderly transaction
between market participants at the measurement date (exit price). The fair value hierarchy that prioritizes the use of
inputs used in valuation techniques is as follows:
|
Level 1:
|
quoted prices in active markets for identical assets and liabilities;
|
Level 2:
|
observable inputs other than quoted prices in active markets, such as quoted prices for similar assets
and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets
that are not active, or other inputs that are observable or can be corroborated by observable market
data; and
|
Level 3:
|
unobservable inputs reflecting management’s assumptions, consistent with reasonably available
assumptions made by other market participants. These valuations require significant judgment.
|
The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, accounts
payable and accrued expenses, approximate their fair values due to their short maturities.
|
Equity Instruments Issued to Parties Other than Employees for Acquiring Goods or Services
|
All transactions in which goods or services are received in exchange for the consideration received for the issuance
of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair
value of the equity instrument issued is the earlier of the date on which the performance is complete, the date on which
it is probable that performance will occur or the date of issuance of the equity instrument.
|
Provision for Income Taxes
|
The Company accounts for income taxes using the asset and liability method whereby deferred tax asset and liability
account balances are determined based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be in effect when the asset or liability is
expected to be realized or settled. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized.
|
In the ordinary course of business, there are many transactions for which the ultimate tax outcome is uncertain. The
Company regularly assesses uncertain tax positions in each of the tax jurisdictions in which it has operations and
accounts for the related financial statement implications. Unrecognized tax benefits are reported using the two-step
approach under which tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained and
the amount of the tax benefit recognized is equal to the largest tax benefit that is greater than fifty percent likely of
being realized upon ultimate settlement of the tax position. Determining the appropriate level of unrecognized tax
benefits requires the Company to exercise judgment regarding the uncertain application of tax law. The amount of
unrecognized tax benefits is adjusted when information becomes available or when an event occurs indicating a
change is appropriate. The Company includes interest and penalties related to its uncertain tax positions as part of
income tax expense, if any.
|
The Company files U.S. federal and U.S. state tax returns. The Company is generally no longer subject to tax
examinations relating to federal and state tax returns for years prior to 2007.
|
Net Income (Loss) per Common Share
|
The Company is required to provide basic and dilutive earnings (loss) per common share information. The basic net
loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted
average number of common shares outstanding.
|
Diluted net loss per common share is computed by dividing the net loss applicable to common stockholders, adjusted
on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive
securities. At July 31, 2011, there were potentially dilutive securities outstanding consisting of warrants convertible
into 3,057,520 shares of common stock. Common Stock equivalents at July 31, 2011, were considered but were not
included in the computation of loss per share because they would have been anti-dilutive.
|
Basic loss per share has been calculated based on the weighted average number of shares of common stock
outstanding during the period.
|
The Company evaluates events that occur subsequent to the balance sheet date of periodic reports, but before financial
statements are issued for periods ending on such balance sheet dates, for possible adjustment to such financial
statements or other disclosure. The Company has evaluated subsequent events through the date on which the
Company’s financial statements are electronically prepared for filing.
|
Recently Issued Accounting Pronouncements
|
In September 2011, the FASB issued ASU 2011-08, Intangibles—Goodwill and Other (Topic 350) which provides
guidance on financial accounting and reporting related to goodwill and other intangibles, other than the accounting
at acquisition for goodwill and other intangibles acquired in a business combination or an acquisition by a
not-for-profit. The guidance is effective for annual and interim goodwill impairment tests performed for fiscal years
beginning after December 15, 2011. However, the Company early adopted the guidance for fiscal year 2011 and
implementation did not have a material impact on its financial statements.
|
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements. This guidance amends the disclosure requirements related to recurring
and nonrecurring fair value measurements and requires new disclosures on the transfers of assets and liabilities
between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other
observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers.
Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance and settlements of the
assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance
became effective for the Company's 2011 fiscal year, and its implementation had no material affect on the Company's
financial statements.
|
In July 2010, the FASB issued ASU 2010-20, Receivables (Topic 310), which provides guidance to enhance
disclosures about the credit quality of a creditor's financing receivables and the adequacy of its allowance for credit
loses. The guidance became effective for fiscal year 2011 and its implementations had no material affect on the
Company's financial statements or footnotes.
|
NOTE 3. RELATED-PARTY TRANSACTIONS
|
The Company has entered into employment agreements with both of its officers. Each of these employment
agreements has an initial term of five years, with a renewal term of three years, and pays the officer an annual salary
is $240,000. Until such time as the Company possesses adequate capital with which to pay these officers’ salaries,
their salaries will accrue; provided, however, that, until the Company shall have earned gross revenues in excess of
$50,000 for a calendar month, a maximum of $5,000 of each such officer’s monthly salary as is unpaid shall be
accrued, and that, upon the Company’s earning such level of monthly gross revenues, up to $20,000 in unpaid monthly
salary may be accrued each month. At July 31, 2011, a total of $33,714 in salary had been accrued under the
employment agreements of these officers. Further, as a signing bonus, each officer was paid $50,000 in cash and was
issued (1) 500,000 warrants to purchase a like number of shares of Company common stock at an exercise price of
$1.00 per share and (2) 500,000 warrants to purchase a like number of shares of Company common stock at an
exercise price of $2.00 per share.
|
Acquisition Transaction Relating to M3P
|
Effective May 3, 2011, pursuant to an agreement and plan of merger, the Company acquired 100% of the common
stock of its predecessor company, mind3power, Inc. (M3P), incorporated on January 4, 2011 (Inception), in a
combination that has been accounted for as a reorganization. In this reorganization, the Company issued a total of
21,100,000 shares of the its common stock to the Company’s officers and directors, who were the only shareholders
of M3P. M3P and SafedoX were both companies under the common control of the founding shareholders at their
inception and at the time of the merger, thus these financial statements include the operations of both SafedoX and
its predecessor, M3P, from the date of Inception through July 31, 2011.
|
In determining the number of shares of Company common stock to be issued in the M3P acquisition transaction, the
Company’s board of directors did not employ any standard valuation formula or any other standard measure of value.
|
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of
the Company’s deferred taxes at July 31, 2011, is as follows:
|
|
Deferred tax assets (liabilities):
|
|
|
|
Depreciable assets
|
$ (389)
|
|
|
Net operating loss carryforwards
|
70,468
|
|
|
Total net deferred tax assets
|
70,079
|
|
|
Less valuation allowance
|
(70,079)
|
|
|
Deferred tax assets (liabilities)
|
$ ---
|
|
The Company has established a valuation allowance equal to the total gross deferred tax asset due to uncertainties
regarding the realization of deferred tax assets based on the Company’s lack of earnings history. The valuation
allowance increased by $70,079 during the period from Inception through July 31, 2011, primarily as a result of
changes in net operating loss.
|
The Company does not foresee recognition of any tax benefits within the next twelve months. The Company’s policy
for recording interest and penalties associated with uncertain tax positions is to record such items as a component of
income tax expense. As of July 31, 2011, the Company has no accrued interest or penalties.
|
The Company’s provision for income taxes differs from the expected tax expense (benefit) amount computed by
applying the statutory federal income tax rate of 34% to income before income taxes as a result of the following:
|
|
Tax at U.S. statutory rate of 34%
|
$(122,571)
|
|
|
Permanent differences and other
|
52,492
|
|
|
Change in valuation allowance
|
70,079
|
|
|
Income tax provision (benefit)
|
$ ---
|
|
As of July 31, 2011, the Company had federal net operating loss carryforwards of approximately $201,000, which
will expire in varying amounts beginning in 2031, if not utilized. Under the provisions of the Internal Revenue Code,
certain substantial changes in the Company’s ownership may result in a limitation on the amount of net operating loss
carryforwards which can be used in future years.
|
The holders of the Company’s common stock currently have (i) equal ratable rights to dividends from funds legally
available therefor, when, as and if declared by the Board of Directors; (ii) are entitled to share ratably in all of the
Company’s assets available for distribution to holders of common stock upon liquidation, dissolution or winding up
of the affairs of the Company; (iii) do not have pre-emptive, prescriptive or conversion rights and there are no
redemption or sinking fund provisions or rights applicable thereto; and (iv) are entitled to one non-cumulative vote
per share on all matters on which shareholders may vote.
|
The Company’s Board of Directors is authorized to determine or alter any or all of the rights, preferences, privileges
and restrictions granted to or imposed upon any wholly unissued series of preferred stock and, within the limitations
or restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares
constituting any series, to increase or decrease (but not below the number of shares of any such series then
outstanding) the number of shares comprising any such series subsequent to the issue of shares of that series, to set
the designation of any series, and to provide for rights and terms of redemption, conversion, dividends, voting rights,
and liquidation preferences of the shares of any such series.
|
Common Stock Issued at Inception of M3P
|
At Inception, the Company’s predecessor company, M3P, issued a total of 2,600 shares of common stock, 1,300
shares each to Manoj Patel and James F. Lay, with a determined total value of $10,000.
|
Common Stock Issued in Acquisition of M3P
|
Effective May 3, 2011, pursuant to an agreement and plan of merger, the Company acquired 100% of the common
stock of its predecessor company, mind3power, Inc. (M3P), in a combination that has been accounted for as a
reorganization. In this reorganization, the previously issued shares of M3P were cancelled and exchanged for
21,100,000 shares of the Company’s common stock in acquiring all of the outstanding common stock of M3P.
|
Common Stock Issued in Payment of Indebtedness
|
During the period from Inception through July 31, 2011, the Company issued 900,000 shares of its common stock
in payment of indebtedness in the amount of $300.
|
Common Stock Issued for Services
|
During the period from Inception through July 31, 2011, the Company issued a total of 4,000,000 shares of its
common stock for services to third-party consultants for services, resulting in $6,000 in non-cash compensation
expense included in consulting fees and $5,000 included in professional and legal expenses in the accompanying
statement of operations. The value of the transactions was determined based on value of shares of common stock
issued as determined by the board of directors. As there are no performance commitments or penalties for
non-performance, the Company recorded the expense at the date of issuance.
|
Common Stock Issued for Cash
|
During the period from Inception through July 31, 2011, the Company issued a total of 1,637,600 shares of its
common stock for cash in the total amount of $491,280.
|
NOTE 6. WARRANTS TO PURCHASE COMMON STOCK
|
Outstanding Stock Warrants
|
In May 2011, the Company issued stock warrants to two related-parties, its officers and directors. These persons were
each issued 1,000,000 warrants (500,000 warrants with an exercise price of $1.00 per share and 500,000 warrants with
an exercise price of $2.00 per share) as part of a signing bonus under their respective employment agreements. All
of these warrants expire in May 2013 and are fully vested and exercisable at July 31, 2011.
|
Also in May 2011, the Company issued stock warrants to four third-party consultants. These consultants were each
issued 200,000 warrants (100,000 warrants with an exercise price of $1.00 per share and 100,000 warrants with an
exercise price of $2.00 per share) in partial payment of consulting services under their respective consulting
agreements. All of these warrants expire in May 2013 and are fully vested and exercisable at July 31, 2011.
|
During the period from Inception through July 31, 2011, a total of 3,057,520 warrants were issued to purchasers of
Company common stock. Of these warrants, 1,528,760 (1,000,000 of which are owned by officers and directors and
800,000 of which are owned by third-party consultants) allow the warrant holders to purchase a like number of shares
of Company common stock at a price of $1.00 per share and 1,528,760 (1,000,000 of which are owned by officers
and directors and 800,000 of which are owned by third-party consultants) allow the warrant holders to purchase a like
number of shares of Company common stock at a price of $2.00 per share. All of these warrants expire in June 2013
and are fully vested and exercisable at July 31, 2011.
|
A summary of the status and changes of the warrants issued during the period from Inception through July 31, 2011,
are as follows:
|
|
|
|
|
|
Shares
|
|
Weighted Average
Exercise Price
|
|
|
|
Outstanding at beginning of period
|
|
-0-
|
|
$ -0-
|
|
|
|
Outstanding at end of period
|
|
3,057,520
|
|
$1.50
|
|
|
|
Exercisable at end of period
|
|
3,057,520
|
|
$1.50
|
A summary of the status of the warrants outstanding at July 31, 2011, is presented below:
|
|
Warrants Outstanding
|
|
Warrants Exercisable
|
Exercise
Price
|
|
Number
Outstanding
|
|
Weighted Average
Remaining Contractual Life
|
|
Weighted
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
$1.00
$2.00
|
|
1,528,760
1,528,760
|
|
2 years
2 years
|
|
$1.00
$2.00
|
|
1,528,760
1,528,760
|
|
$1.00
$2.00
|
At July 31, 2011, vested warrants of 3,057,520 had an aggregate intrinsic value of $0.
|
The fair value of each of the Company’s stock warrants is estimated on the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the table below. Expected volatility is based on an average of
historical volatility of the Company’s common stock. The risk-free interest rate for periods within the contractual life
of the stock warrant award is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the award is
granted with a maturity equal to the expected term of the award. The Company uses historical data to estimate
forfeitures within its valuation model.
|
The significant weighted average assumptions relating to the valuation of the Company’s options for the period ended
July 31, 2011, were as follows:
|
|
Strike price
|
$1.00 to $2.00
|
|
|
Risk-free interest rate (2 YR U.S. Treasury)
|
0.45% to 0.61%
|
|
NOTE 7. EARNINGS (LOSS) PER SHARE
|
The computation of earnings (loss) per share of common stock is based on the weighted average number of shares
outstanding at the date of the financial statements. The computation of diluted earnings per common share is based
on the weighted average number of shares outstanding during the year plus the common stock equivalents that would
arise from the exercise of stock options and warrants outstanding under the treasury method and the average market
price per share during the year. Common stock equivalents at July 31, 2011, consisted of 3,057,520 in warrants.
Common stock equivalents at July 31, 2011, were considered but were not included in the computation of loss per
share at July 31, 2011, because they would have been anti-dilutive.
|
|
|
|
Net Loss
(Numerator)
|
|
Shares
(Denominator)
|
|
Per-Share
Amount
|
|
Earnings for the period from Inception through July 31,
2011:
|
|
|
|
|
|
|
|
Net loss to common shareholders
|
|
$(360,504)
|
|
27,637,600
|
|
$(0.01)
|
NOTE 8. LEASE COMMITMENTS
|
At July 31, 2011, the Company leased its operating facilities in Riverside, California under a month-to-month
operating lease. Lease expense was $1,700 for the period from Inception through July 31, 2011. The total amount of
base lease payments is being charged to expense on the straight-line method over the term of the lease.
|
Subsequent to July 31, 2011, in August 2011, the Company entered into a lease for its corporate office located in
Riverside, California. This lease expires in July 2012, and requires monthly rental payments of $1,140 per month.
The Company has no future minimum rental commitments beyond July 2012.
|
NOTE 9. SUBSEQUENT EVENTS
|
Common Stock Issued for Services
|
Subsequent to July 31, 2011, the Company has issued a total of 406,000 shares of its common stock to third-party
consultants for services, which shares were valued at $126,800 for financial reporting purposes.
|
Common Stock Issued for Cash
|
Subsequent to July 31, 2011, the Company has issued a total of 243,000 shares of its common stock for cash in the
total amount of $243,000.
|
Common Stock Issued for Finder’s Fees
|
Subsequent to July 31, 2011, the Company has issued a total of 10,376 shares of its common stock in payment of
finder’s fee, which shares were valued at $31,128 for financial reporting purposes.
|
Radio Advertising Commitment
|
Subsequent to July 31, 2011, in October 2011, the Company entered into a radio advertising contract with a radio
station located in Southern California. This advertising contract commits the Company to a total of approximately
$800,000 in radio advertisement purchases beginning in November 2011 and continuing through April 2012.
|
PART II – INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth estimated expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered. All such expenses will be paid by us.
|
SEC Registration Fee
Blue Sky Fees and Expenses *
Audit Fees and Expenses
Legal Fees and Expenses
Miscellaneous Expenses *
|
|
$ 1,057.11
750.00
9,000.00
9,000.00
1,000.00
|
|
* Estimate.
|
TOTAL *
|
|
$20,807.11
|
|
|
Item 14. Indemnification of Directors and Officers.
Under our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including
a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best
interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is
successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses
incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually
and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order.
The indemnification is intended to be to the fullest extent permitted by the laws of the State of Wyoming.
Relevant Wyoming statutory provisions are as follows:
Section 17-16-851 of the Wyoming Business Corporation Act (WBCA) provides that a corporation may
indemnify an individual who is a party to a proceeding because he is a director against liability incurred in the
proceeding if, among other factors: (i) he conducted himself in good faith; and (ii) he reasonably believed that
his conduct was in or at least not opposed to the corporation’s best interests; and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful. Such indemnification must be
authorized by directors, special legal counsel or shareholders as provided in Section 17-16-855.
Unless ordered by a court under WBCA Section 17-16-854(a)(iii), a corporation may not indemnify a director
under Section 17-16-851: (i) in connection with a proceeding by or in the right of the corporation, except for
reasonable expenses incurred in connection with the proceeding if it is determined that the director has met the
standard of conduct as set forth in the preceding paragraph; or (ii) in connection with any proceeding with
respect to conduct for which he was adjudged liable on the basis that he received a financial benefit to which
he was not entitled.
Pursuant to Section 17-16-852 of the WBCA, a corporation is required to indemnify a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he was
a director of the corporation against reasonable expenses incurred by him in connection therewith.
Pursuant to Section 17-16-853 of the WBCA, a corporation may, before final disposition of a proceeding,
advance funds to pay for or reimburse reasonable expenses incurred by a director who is a party to a proceeding
because he is a director, if he delivers to the corporation: (i) a written affirmation of his good faith belief that
he has met the standard of conduct described in WBCA Section 17-16-851; and (ii) his written undertaking to
repay any funds advanced if he is not entitled to mandatory indemnification under Section 17-16-852 (above)
and it is determined that he has not met the standard of conduct described in WBCA Section 17-16-851.
Section 17-16-854 of the WBCA provides for a director who is a party to a proceeding because he is a director
to apply for indemnification or an advance for expenses to the court conducting the proceeding or another court
of competent jurisdiction. If the court determines that the director is entitled to indemnification or advance for
expenses, it may also order the corporation to pay the director’s reasonable expenses incurred in connection
with obtaining court-ordered indemnification or advance for expenses.
Section 17-16-856 of the WBCA provides that a corporation may indemnify and advance expenses to an officer
of the corporation who is a party to a proceeding because he is an officer of the corporation: (i) to the same
extent as a director; and (ii) if he is an officer but not a director, to such further extent as may be provided by
the Articles of Incorporation, the Bylaws, a resolution of the board of directors or contract, except for: (A)
liability in connection with a proceeding by or in the right of the corporation other than for reasonable expenses
incurred in connection with the proceeding; or (B) liability arising out of conduct that constitutes: receipt by
him of a financial benefit to which he is not entitled; an intentional infliction of harm on the corporation or the
shareholders; or (C) an intentional violation of criminal law; and (iii) a corporation may also indemnify and
advance expenses to a current or former officer, employee or agent who is not a director to the extent, consistent
with public policy, that may be provided by its articles of incorporation, Bylaws, general or specific action of
its board of directors or contract. An officer of a corporation who is not a director is entitled to mandatory
indemnification under Section 17-16-852 of the WBCA, and may apply to a court under Section 17-16-854 of
the WBCA for indemnification or an advance for expenses, in each case to the same extent to which a director
may be entitled to indemnification or advance for expenses under those provisions.
We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under the Securities
Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in
connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been
settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court
of appropriate jurisdiction. We will then be governed by the court’s decision.
Item 15. Recent Sales of Unregistered Securities.
1. (a) Securities Sold. On May 2, 2011, 21,100,000 shares of common stock were issued; (b) Underwriter or
Other Purchasers. Such shares of common stock were issued to Manoj Patel (10,550,000 shares) and James F. Lay
(10,550,000 shares); (c) Consideration. Such shares of common stock were issued in a merger transaction in exchange
for shares of the target corporation; and (d) Exemption from Registration Claimed. These securities are exempt from
registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule
506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of
evaluating an investment in our company.
2. (a) Securities Sold. On May 2, 2011, 1,000,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to Manoj Patel (500,000 warrants) and James F. Lay (500,000 warrants); (c) Consideration. Such common
stock purchase warrants were issued as bonuses under employment agreements; and (d) Exemption from Registration
Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the
provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This
purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of Conversion
or Exercise. The exercise price of the common stock purchase warrants is $1.00 per share. All of the common stock
purchase warrants are exercisable until May 1, 2013.
3. (a) Securities Sold. On May 2, 2011, 1,000,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to Manoj Patel (500,000 warrants) and James F. Lay (500,000 warrants); (c) Consideration. Such common
stock purchase warrants were issued as bonuses under employment agreements; and (d) Exemption from Registration
Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the
provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This
purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of Conversion
or Exercise. The exercise price of the common stock purchase warrants is $2.00 per share. All of the common stock
purchase warrants are exercisable until May 1, 2013.
4. (a) Securities Sold. May 2, 2011, 1,000,000 shares of common stock were issued; (b) Underwriter or Other
Purchasers. Such shares of common stock were issued to Vern C. Moter; (c) Consideration. Such shares of common stock
were issued in payment of $2,000 in consulting services; and (d) Exemption from Registration Claimed. These securities
are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2)
thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated
investor capable of evaluating an investment in our company.
5. (a) Securities Sold. On May 2, 2011, 100,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to Vern C. Moter; (c) Consideration. Such common stock purchase warrants were issued as part of a
securities unit, there being no consideration assigned to such common stock purchase warrants; and (d) Exemption from
Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended,
pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public
offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of
Conversion or Exercise. The exercise price of the common stock purchase warrants is $1.00 per share. All of the
common stock purchase warrants are exercisable until May 1, 2013.
6. (a) Securities Sold. On May 2, 2011, 100,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to Vern C. Moter; (c) Consideration. Such common stock purchase warrants were issued as part of a
securities unit, there being no consideration assigned to such common stock purchase warrants; and (d) Exemption from
Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended,
pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public
offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of
Conversion or Exercise. The exercise price of the common stock purchase warrants is $2.00 per share. All of the
common stock purchase warrants are exercisable until May 1, 2013.
7. (a) Securities Sold. May 2, 2011, 1,000,000 shares of common stock were issued; (b) Underwriter or Other
Purchasers. Such shares of common stock were issued to Marshall Sylver; (c) Consideration. Such shares of common
stock were issued in payment of $2,000 in consulting services; and (d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of
Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a
sophisticated investor capable of evaluating an investment in our company.
8. (a) Securities Sold. On May 2, 2011, 100,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to Marshall Sylver; (c) Consideration. Such common stock purchase warrants were issued as part of a
securities unit, there being no consideration assigned to such common stock purchase warrants; and (d) Exemption from
Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended,
pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public
offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of
Conversion or Exercise. The exercise price of the common stock purchase warrants is $1.00 per share. All of the
common stock purchase warrants are exercisable until May 1, 2013.
9. (a) Securities Sold. On May 2, 2011, 100,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to Marshall Sylver; (c) Consideration. Such common stock purchase warrants were issued as part of a
securities unit, there being no consideration assigned to such common stock purchase warrants; and (d) Exemption from
Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended,
pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public
offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of
Conversion or Exercise. The exercise price of the common stock purchase warrants is $2.00 per share. All of the
common stock purchase warrants are exercisable until May 1, 2013.
10. (a) Securities Sold. May 2, 2011, 1,000,000 shares of common stock were issued; (b) Underwriter or Other
Purchasers. Such shares of common stock were issued to David Loflin; (c) Consideration. Such shares of common stock
were issued in payment of $2,000 in consulting services; and (d) Exemption from Registration Claimed. These securities
are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2)
thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated
investor capable of evaluating an investment in our company.
11. (a) Securities Sold. On May 2, 2011, 100,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to David Loflin; (c) Consideration. Such common stock purchase warrants were issued as part of a securities
unit, there being no consideration assigned to such common stock purchase warrants; and (d) Exemption from
Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended,
pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public
offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of
Conversion or Exercise. The exercise price of the common stock purchase warrants is $1.00 per share. All of the
common stock purchase warrants are exercisable until May 1, 2013.
12. (a) Securities Sold. On May 2, 2011, 100,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to David Loflin; (c) Consideration. Such common stock purchase warrants were issued as part of a securities
unit, there being no consideration assigned to such common stock purchase warrants; and (d) Exemption from
Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended,
pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public
offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of
Conversion or Exercise. The exercise price of the common stock purchase warrants is $2.00 per share. All of the
common stock purchase warrants are exercisable until May 1, 2013.
13. (a) Securities Sold. May 2, 2011, 1,000,000 shares of common stock were issued; (b) Underwriter or Other
Purchasers. Such shares of common stock were issued to Newlan & Newlan, Ltd.; (c) Consideration. Such shares of
common stock were issued in payment of $5,000 in legal services; and (d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of
Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a
sophisticated investor capable of evaluating an investment in our company.
14. (a) Securities Sold. On May 2, 2011, 100,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to Newlan & Newlan, Ltd.; (c) Consideration. Such common stock purchase warrants were issued as part
of a securities unit, there being no consideration assigned to such common stock purchase warrants; and (d) Exemption
from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended,
pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public
offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of
Conversion or Exercise. The exercise price of the common stock purchase warrants is $1.00 per share. All of the
common stock purchase warrants are exercisable until May 1, 2013.
15. (a) Securities Sold. On May 2, 2011, 100,000 common stock purchase warrants to purchase a like number
of shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants
were issued to Newlan & Newlan, Ltd.; (c) Consideration. Such common stock purchase warrants were issued as part
of a securities unit, there being no consideration assigned to such common stock purchase warrants; and (d) Exemption
from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended,
pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public
offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company; (e) Terms of
Conversion or Exercise. The exercise price of the common stock purchase warrants is $2.00 per share. All of the
common stock purchase warrants are exercisable until May 1, 2013.
16. (a) Securities Sold. May 2, 2011, 900,000 shares of common stock were issued; (b) Underwriter or Other
Purchasers. Such shares of common stock were issued to MWW Partners, LLC; (c) Consideration. Such shares of
common stock were issued in payment of a $300 loan; and (d) Exemption from Registration Claimed. These securities
are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2)
thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated
investor capable of evaluating an investment in our company.
17. (a) Securities Sold. In May 2011, 350,000 shares of common stock were issued; (b) Underwriter or Other
Purchasers. Such shares of common stock were issued to nine persons; (c) Consideration. Such shares of common stock
were issued for a total of $105,000 in cash; and (d) Exemption from Registration Claimed. These securities are exempt
from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and
Rule 506 thereunder, as a transaction not involving a public offering. These purchasers were sophisticated investors
capable of evaluating an investment in our company.
18. (a) Securities Sold. In June 2011, 1,287,600 shares of common stock were issued; (b) Underwriter or Other
Purchasers. Such shares of common stock were issued to seven persons; (c) Consideration. Such shares of common stock
were issued for a total of $386,280 in cash, or $.30 per share; and (d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of
Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. These purchasers were
sophisticated investors capable of evaluating an investment in our company.
19. (a) Securities Sold. In June 2011, 128,760 common stock purchase warrants to purchase a like number of
shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants were
issued to seven persons; (c) Consideration. Such common stock purchase warrants were issued as part of a securities unit,
there being no consideration assigned to such common stock purchase warrants; and (d) Exemption from Registration
Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the
provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. These
purchasers were sophisticated investors capable of evaluating an investment in our company; (e) Terms of Conversion
or Exercise. The exercise price of the common stock purchase warrants is $1.00 per share. All of the common stock
purchase warrants are exercisable until June 29, 2013.
20. (a) Securities Sold. In June 2011, 128,760 common stock purchase warrants to purchase a like number of
shares of common stock were issued; (b) Underwriter or Other Purchasers. Such common stock purchase warrants were
issued to seven persons; (c) Consideration. Such common stock purchase warrants were issued as part of a securities unit,
there being no consideration assigned to such common stock purchase warrants; and (d) Exemption from Registration
Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the
provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. These
purchasers were sophisticated investors capable of evaluating an investment in our company; (e) Terms of Conversion
or Exercise. The exercise price of the common stock purchase warrants is $2.00 per share. All of the common stock
purchase warrants are exercisable until June 29, 2013.
21. (a) Securities Sold. In August 2011, 25,000 shares of common stock were issued; (b) Underwriter or Other
Purchasers. Such shares of common stock were issued to Daffron Marketing; (c) Consideration. Such shares of common
stock were issued in payment of $7,500 in consulting services; and (d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of
Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a
sophisticated investor capable of evaluating an investment in our company.
22. (a) Securities Sold. In August 2011, 10,000 shares of common stock, and, in October 2011, 100,000 shares
of common stock, were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to Justin
Beauchane; (c) Consideration. Such shares of common stock were issued in payment of a total of $33,000 in consulting
services; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the
Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a
transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an
investment in our company.
23. (a) Securities Sold. In August 2011, 10,376 shares of common stock were issued; (b) Underwriter or Other
Purchasers. Such shares of common stock were issued to Justin Beauchane (7,876 shares) and John King (2,500 shares);
(c) Consideration. Such shares of common stock were issued as finder’s fee and were valued at $31,128, in the aggregate;
and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act
of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not
involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our
company.
24. (a) Securities Sold. In September 2011, 143,000 shares of common stock were issued; (b) Underwriter or
Other Purchasers. Such shares of common stock were issued to four persons; (c) Consideration. Such shares of common
stock were issued for a total of $143,000 in cash, or $1.00 per share; and (d) Exemption from Registration Claimed.
These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions
of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. These purchasers were
sophisticated investors capable of evaluating an investment in our company.
25. (a) Securities Sold. In September 2011, 21,000 shares of common stock were issued; (b) Underwriter or
Other Purchasers. Such shares of common stock were issued to Ryan Rafferty; (c) Consideration. Such shares of common
stock were issued in payment of $6,300 in consulting services; and (d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of
Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a
sophisticated investor capable of evaluating an investment in our company.
26. (a) Securities Sold. In October 2011, 100,000 shares of common stock were issued; (b) Underwriter or
Other Purchasers. Such shares of common stock were issued to Jim Belanger; (c) Consideration. Such shares of common
stock were issued in payment of $30,000 in consulting services; and (d) Exemption from Registration Claimed. These
securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of
Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a
sophisticated investor capable of evaluating an investment in our company.
27. (a) Securities Sold. In October 2011, 150,000 shares of common stock were issued; (b) Underwriter or
Other Purchasers. Such shares of common stock were issued to William R. Lay; (c) Consideration. Such shares of
common stock were issued in payment of $50,000 in consulting services; and (d) Exemption from Registration Claimed.
These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions
of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a
sophisticated investor capable of evaluating an investment in our company.
28. (a) Securities Sold. In November 2011, 100,000 shares of common stock were issued; (b) Underwriter or
Other Purchasers. Such shares of common stock were issued to Daniel S. Jacoby V; (c) Consideration. Such shares of
common stock were issued in payment of $30,000 in consulting services; and (d) Exemption from Registration Claimed.
These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions
of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a
sophisticated investor capable of evaluating an investment in our company.
29. (a) Securities Sold. In November 2011, 100,000 shares of common stock were issued; (b) Underwriter or
Other Purchasers. Such shares of common stock were issued to Gumption Enterprises; (c) Consideration. Such shares
of common stock were issued for $100,000 in cash; and (d) Exemption from Registration Claimed. These securities are
exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof
and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor
capable of evaluating an investment in our company.
Item 16. Exhibits.
The following is a list of exhibits filed as part of this registration statement. Where so indicated by footnote,
exhibits which were previously filed are incorporated herein by reference. Any statement contained in an incorporated
document shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that
a statement contained herein or in any other subsequently filed incorporated document modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
2.1 @
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Plan and Agreement of Merger between SafedoX, Inc. and mind3power, Inc.
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3.1 @
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Articles of Incorporation of SafedoX, Inc.
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3.2 @
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Articles of Merger of SafedoX, Inc.
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3.3 @
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Bylaws of SafedoX, Inc.
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3.4 @
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Articles of Incorporation of mind3power, Inc.
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4.1 @
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Specimen Common Stock Certificate.
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4.2 @
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Common Stock Purchase Warrant ($1.00) issued to Manoj Patel.
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4.3 @
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Common Stock Purchase Warrant ($2.00) issued to Manoj Patel.
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4.4 @
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Common Stock Purchase Warrant ($1.00) issued to James F. Lay.
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4.5 @
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Common Stock Purchase Warrant ($2.00) issued to James F. Lay.
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4.6 @
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Common Stock Purchase Warrant ($1.00) issued to Vern C. Moter.
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4.7 @
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Common Stock Purchase Warrant ($2.00) issued to Vern C. Moter.
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4.8 @
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Common Stock Purchase Warrant ($1.00) issued to Marshall Sylver.
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4.9 @
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Common Stock Purchase Warrant ($2.00) issued to Marshall Sylver.
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4.10 @
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Common Stock Purchase Warrant ($1.00) issued to David Loflin.
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4.11 @
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Common Stock Purchase Warrant ($2.00) issued to David Loflin.
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4.12 @
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Common Stock Purchase Warrant ($1.00) issued to Newlan & Newlan, Ltd.
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4.13 @
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Common Stock Purchase Warrant ($2.00) issued to Newlan & Newlan, Ltd.
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4.14 @
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Common Stock Purchase Warrant ($1.00) issued to Global Interactive Network Services, Inc.
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4.15 @
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Common Stock Purchase Warrant ($2.00) issued to Global Interactive Network Services, Inc.
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4.16 @
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Common Stock Purchase Warrant ($1.00) issued to Gerald Harms.
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4.17 @
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Common Stock Purchase Warrant ($2.00) issued to Gerald Harms.
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4.18 @
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Common Stock Purchase Warrant ($1.00) issued to IAM&W Services, LLC.
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4.19 @
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Common Stock Purchase Warrant ($2.00) issued to IAM&W Services, LLC.
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4.20 @
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Common Stock Purchase Warrant ($1.00) issued to JATN Family Limited Partnership.
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4.21 @
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Common Stock Purchase Warrant ($2.00) issued to JATN Family Limited Partnership.
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4.22 @
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Common Stock Purchase Warrant ($1.00) issued to James Parker.
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4.23 @
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Common Stock Purchase Warrant ($2.00) issued to James Parker.
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4.24 @
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Common Stock Purchase Warrant ($1.00) issued to Galene J. Smith and Donald A. Smith.
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4.25 @
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Common Stock Purchase Warrant ($2.00) issued to Galene J. Smith and Donald A. Smith.
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4.26 @
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Common Stock Purchase Warrant ($1.00) issued to Larry Thomas.
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4.27 @
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Common Stock Purchase Warrant ($2.00) issued to Larry Thomas.
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5.1 *
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Opinion of Newlan & Newlan, Ltd. re: legality of the securities being registered.
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10.1 @
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Employment Agreement between SafedoX, Inc. and Manoj Patel.
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10.2 @
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Employment Agreement between SafedoX, Inc. and James F. Lay.
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10.3 @
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Indemnity Agreement between SafedoX, Inc. and Manoj Patel.
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10.4 @
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Indemnity Agreement between SafedoX, Inc. and James F. Lay.
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10.5 @
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Confidentiality Agreement between SafedoX, Inc. and Manoj Patel.
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10.6 @
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Confidentiality Agreement between SafedoX, Inc. and James F. Lay.
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10.7 @
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Consulting Agreement between SafedoX, Inc. and Vern C. Moter.
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10.8 @
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Consulting Agreement between SafedoX, Inc. and Marshall Sylver.
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10.9 @
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Consulting Agreement between SafedoX. Inc. and David Loflin.
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10.10 @
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Memorandum of Legal Services between SafedoX, Inc. and Newlan & Newlan, Ltd.
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10.11 @
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Stock Purchase Agreement between SafedoX, Inc. and New Beginnings Life Center, LLC, d/b/a
Imperial Heights.
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10.12 @
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Stock Purchase Agreement between SafedoX, Inc. and New Beginnings Life Center, LLC, d/b/a
Imperial Heights.
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10.13 @
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Stock Purchase Agreement between SafedoX, Inc. and Dawn E. Graeff.
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10.14 @
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Stock Purchase Agreement between SafedoX, Inc. and Hasmukh S. Patel.
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10.15 @
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Stock Purchase Agreement between SafedoX, Inc. and Bharatkumar D. Patel.
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10.16 @
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Stock Purchase Agreement between SafedoX, Inc. and Mahesh S. Patel.
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10.17 @
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Stock Purchase Agreement between SafedoX, Inc. and Jack Domet and Angela Domet.
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10.18 @
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Stock Purchase Agreement between SafedoX, Inc. and Leala M. Anajafi.
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10.19 @
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Stock Purchase Agreement between SafedoX, Inc. and Matthew S. Quesada.
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10.20 @
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Stock Purchase Agreement between SafedoX, Inc. and Mukesh S. Patel.
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10.21 @
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Stock Purchase Agreement between SafedoX, Inc. and Nick Cernohous.
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10.22 @
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Stock Purchase Agreement between SafedoX, Inc. and Cyril C. Cernohous.
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10.23 @
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Stock Purchase Agreement between SafedoX, Inc. and Tom Powell and Susan Powell.
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10.24 @
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Stock Purchase Agreement between SafedoX, Inc. and Eric Wackwitz.
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10.25 @
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Consulting Agreement between SafedoX, Inc. and Ryan Rafferty.
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10.26 @
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Consulting Agreement between SafedoX, Inc, and Jim Belanger.
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10.27 @
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Consulting Agreement between SafedoX, Inc. and William R. Lay.
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10.28 @
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Consulting Agreement between SafedoX, Inc. and Justin Beauchane.
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10.29 @
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Consulting Agreement between SafedoX, Inc. and Daniel S. Jacoby V.
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10.30 @
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Stock Purchase Agreement between SafedoX, Inc. and Gumption Enterprises.
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10.31 @
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Finder’s Fee Letter Agreement between SafedoX, Inc. and John A. King.
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23.2 *
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Consent of Newlan & Newlan, Ltd. (included in Exhibit 5.1).
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Item 17. Undertakings.
The undersigned registrant hereby undertakes:
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1.
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To file, during any period in which offers or sales are being made, a post-effective amendment to this
registration statement to:
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(i)
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Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the
“Securities Act”);
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(ii)
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Reflect in the prospectus any facts or events which, individually or in the aggregate, represent a
fundamental change in the information in the registration statement.
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Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Commission (the “Commission”) pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement.
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(iii)
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Include any additional or changed material information on the plan of distribution.
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2.
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That, for the purpose of determining liability under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities offered, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering.
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3.
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To remove from registration by means of a post-effective amendment any of the securities that remain unsold
at the end of the offering.
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4.
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For determining liability of the undersigned registrant under
the Securities Act to any purchaser:
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(i)
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Each prospectus filed by the registrant pursuant to Rule 424(b)(3)
shall be deemed to be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
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(ii)
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each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration statements relying on Rule
430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such first use, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such date of first use.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Riverside,
State of California, on the 30th day of April, 2012.
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Manoj Patel, President
(Principal Executive Officer)
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In accordance with the requirements of the Securities Act of 1933, this Registration Statement has been signed
below by or on behalf of the following persons in the capacities and on the dates stated.
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/s/ MANOJ PATEL
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April 30, 2012
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Manoj Patel
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President (Principal Executive Officer),
Acting Chief Financial Officer (Principal
Financial and Accounting Officer) and
Director
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/s/ JAMES F. LAY
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April 30, 2012
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James F. Lay
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Executive Vice President, Secretary,
Treasurer and Director
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