Mind Solutions, Inc. (VOIS) - Description of business

Company Description
Background VOIS Inc. is a development stage company that was incorporated in the State of Delaware on May 19, 2000. We changed our name to VOIS Inc. from MedStrong International Corporation on March 30, 2007, following our acquisition in February 2007 of the vois.com domain name (URL) among other assets. We have an authorized capital of 1,000,000,000 shares of common stock, each with a par value of $.001. At March 15, 2007, 5,447,951 shares of common stock were issued and outstanding. A reverse stock split of our common stock occurred effective for trading purposes as of the opening of business on November 2, 2006. Pursuant to this reverse stock split, each seventy-five (75) shares of common stock issued and outstanding as of the date following the reverse stock split were converted into one (1) share of VOIS common stock. The reverse stock split did not affect the number of our 4,302,000 outstanding warrants, which prior to the reverse split entitled the holder of each warrant to purchase shares of the Company’s common stock at a purchase price of $.40 per share. Following effectiveness of the reverse split of the common stock, and our lowering the warrant exercise and redemption prices in January 2007, these warrants entitled the holders to purchase a total of approximately 57,360 shares of common stock at an exercise price of $18.75 per share. If the common stock trades for at least five (5) consecutive trading days at a price of $22.50 or more, we have the right to call the warrants at a price of $.75 per warrant share unless the warrant holder of record chooses to exercise his or her warrants at that time.   Our common stock and warrants are quoted on the Over-The-Counter Bulletin Board and trade under the symbols VOIS.OB and VOISW.OB respectively. In addition, the Company has an authorized class of 10,000,000 shares of preferred stock, each with a par value of $.001 per share, no shares of which have been issued. Recent Developments Changes in our Board of Directors At a meeting of the Board of Directors of the Company held on April 30, 2006, Mr. Robert M. Cohen was elected to our Board of Directors to fill a vacancy on the Board resulting from Mr. Ron Glime’s resignation as a director on February 26, 2006. Following Mr. Cohen’s election as a director, Messrs. Joel San Antonio, our then-Chairman, David Scotch, Edward Spindel and Michael Spindel resigned as directors. At the April 30, 2006, Board meeting, the Board also formally confirmed the resignation of Michael Salpeter as a director. Mr. Cohen served as the sole director of the Company until November 3, 2006, and Secretary of the Company until January 2007. In the period from May through October 2006 Mountain View Capital Partners, Inc., a privately-held company owned by Mr. Gary J. Schultheis, our Chairman, and Silver Lake Capital Partners, Inc., a privately-held company owned by Herbert Tabin, our Senior Vice President–Corporate Development and a director, each purchased a total of 1,200,000 shares of our common stock for $90,000. On November 3, 2006, Jeanine M. Folz resigned as our President and Interim Chief Executive Officer, and our Board of Directors elected Gary J. Schultheis to the Board to fill a vacancy on the Board and appointed Mr. Schultheis as our President and Chief Executive Officer. In November 2006, we completed a private placement of 2,600,000 shares of common stock at $.10 per share. Commencing in the first quarter of 2007, the Company began developing a new line of business in connection with a Web 2.0 Internet social commerce networking site, has incurred expenses developing this business, has brought in experienced senior management and hired employees and consultants, and has purchased certain assets in furtherance of this line of business. In January 2007, in furtherance of our new business direction, we elected Mr. Stephen J. Bartkiw, former Chief Executive Officer of AOL Canada, as our President and Chief Executive Officer and a director, and Mr. Mark J. Minkin, former Vice President/Managing Director, New Market Development for AOL International, as our Senior Vice President of Marketing, Secretary of the Company and a director. In February 2007, we elected Mr. Marc Saitta, former Chief Financial Officer of AOL Canada, as our Chief Financial Officer. At that time, we also acquired certain assets including furniture, equipment and several Internet domain names (URLs) (including vois.com and all website and software development and contracts applicable thereto) from Vois Networking Inc., a corporation owned by Mr. Schultheis and Mr. Tabin. Liquidity and Financial Resources As of March 15, 2007, the Company had $227,510 of cash on hand. Through December 31, 2006, the Company was in the development stage and had not carried on any significant operations and had not generated significant revenues. The Company has incurred losses since inception aggregating $3,744,463 and has working capital and stockholders’ deficiencies of $703,092 at December 31, 2006. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.   Our Social Commerce Networking Web 2.0 Business Background On January 31, 2007, our Board of Directors approved an agreement to acquire certain assets from Vois Networking, Inc. (a privately-held, Florida corporation) controlled by two of our directors and officers, Mr. Schultheis and Mr. Tabin. We purchased fixed assets in the form of furniture, fixtures and equipment as well as intangible assets comprised of several web site domain names (URLs), including vois.com and all website and software development and applicable contracts relating thereto. We have filed for U.S. registered trademark for the mark “VOIS”. The acquisition of such assets is congruent with our current business direction and intentions to debut an online social commerce networking community with the adoption of a Web 2.0 business platform and recent appointment of former AOL Canada founder and Chief Executive Officer Mr. Stephen J. Bartkiw as our President and Chief Executive Officer. The term Web 2.0 refers to the advancement of the Internet from a collection of individual websites to fully-integrated computing platforms serving web applications to end users. In the past few years, Web 2.0 has evolved the worldwide web from disparate information silos into more interactive, user-friendly and often user-generated content. Wikipedia ( http://wikipedia.org ) defines Web 2.0 as “a social phenomenon embracing an approach to generating and distributing Web content itself, characterized by open communication, decentralization of authority, freedom to share and re-use, and the market as a conversation.” Social community websites, such as MySpace.com, Facebook.com and YouTube.com are among the most popular Web 2.0 companies. Online social networks enable people to instantly connect with other people worldwide and share thoughts, photographs, music and videos. Users can create their own personal profiles to communicate opinions, and share hobbies, interests and links to other sites or people and much more. Our VOIS.com Community Our VOIS.com community is intended to be a social commerce networking site, what we believe to be the next step in the evolution of social media. Social commerce (or sCommerce) combines social networking and online commerce, empowering peer-to-peer, business-to-consumer and business-to-business interactions and transactions influenced by individuals and communities of interest. According to an October 2006 report by Compete Inc. entitled “s-commerce: The intersection of social computing and the transactional web”: “social commerce strategies are transactional by nature, but they also harness the growing popularity and influence of online communities. By weaving commerce and community, social commerce expands the applications for social networking and can bring the fixed supply of consumer attention more closely inline with marketers’ unlimited demand for online media.” Our goal is to develop and define social commerce networking. Social commerce networking is distinct from social networking. According to the report by Compete Inc., “By organizing connections between people, social networking sites are changing consumer behavior and making it harder for marketers to find and engage customers. Social commerce is the solution. This new approach weaves best practices from social networks and online commerce, and invites consumer participation into the marketing process.” At VOIS our goal is to gather and distill the experience of people and make it accessible, tangible. We intend to amplify and channel the voices of our members to create clarity instead of cacophony. Further, our objective is to give every individual an opportunity to benefit from the collective wisdom of real people and to give back by sharing their experience. We plan to provide tools to facilitate a unique blend of social and commercial interaction, or sCommerce.   We intend that VOIS will connect our members together both socially and economically. We expect to generate revenue through targeted interactive marketing, premium services and sCommerce transactions. Through VOIS, we anticipate that members will be empowered to create their personal and professional online personality and digital identity that is in context and communicated through photos, videos and tools, including instant messaging, bulletin boards, e-mail groups and blogs. We plan to encourage product- and interest-specific blogs and groups to help members find the best information to make more informed purchase decisions. We intend for our members to be able to profile their lives online and connect with others around shared interests. Our goal is that with VOIS, members can make unlimited friends and connections and then use those connections to connect personally and do business with others on a whole new level. We are targeting the most affluent age group. We believe that VOIS’ target age demographic is the most attractive to marketers and advertisers seeking interactive marketing opportunities. We intend to earn interactive marketing revenues through a variety of traditional ad units such as banner, skyscraper, pop-up, rich media, and interstitial ads, targeted permission-based E-mail marketing, paid search marketing, lead generation marketing and affiliate marketing. Based on our research (including conclusions stated in the aforementioned Compete Inc. report), we believe that the five key reasons for joining social commerce networks are:   •   sCommerce or buying and selling,   •   meeting other people,   •   influencing other people,   •   learning things of interest and   •   entertainment. The majority of our product development and maintenance costs are related to the VOIS.com service. We direct and manage our product development and maintenance internally, while we have contracted with third parties to provide creative, website development, maintenance and hosting services. We believe this to be the most efficient operational balance to conduct our business at our current stage until we reach an appropriate scale. Domain Names and Trademarks As of March 15, 2007, we own multiple domain names that we may or may not operate in the future. Also important to our business is the registration in the U.S. of the trademark “VOIS”, which was applied for on February 9, 2007. We believe that we presently have, or are capable of acquiring, ownership and control of the intellectual property rights that are necessary to conduct our operations. Competition – Online Social Networks As we stated above, social commerce networking is distinct from social networking. According to the report by Compete Inc., “New online services are … emerging that are mashing up communities and commerce in a seamless business model. … For these companies, member-to-member interactions are at the core of their customer value propositions and create unique and compelling customer experiences.” There are many companies that are vying for the same member base that we are targeting. These include some of the largest technology and media companies, as well as a large number of start-ups that are being launched on a daily basis. Major competitors   include MySpace, FaceBook, Friendster, Orkut, Piczo, YouTube, MyYearbook; on the e-commerce side, we may potentially compete with the likes of e-Bay and CraigsList. Major players in the Internet who will also vie for this member base are AOL, MSN and Yahoo!. Most of our competitors are well-established networks and have substantially greater financial resources than we have. Our Market We are targeting the most affluent age demographic. According to an October 2006 analysis by comScore Media Metrix (publicly-disclosed in an October 5, 2006 press release), more than half of U.S. visitors to select major social networking sites are 35 and older. This analysis completely contradicts the widely-held perception of social networking sites such as MySpace.com as interchangeable parts of a youth-oriented phenomenon. According to the press release, comScore Media Metrix’s analysis found that more than 51 percent of MySpace.com visitors are over 35, with the largest percentage of visitors to MySpace.com (40.6%) being between the ages of 35 and 54. Our Intended Functional Areas In order to implement our social commerce networking business, subject to our financial resources, our goal is to develop and implement functional areas within the Company to include the following key areas:   •   Product Development, which area is intended to be responsible for defining the overall direction of the product based upon input from senior management in all disciplines within the Company along with market research data that may include focus groups.   •   Application Development, which area is intended to be responsible for developing and implementing a software configuration management strategy, including creation of source code, test planning and execution, and final production.   •   Technology Infrastructure, which area is intended to be responsible for defining and utilizing software development languages, the third party applications, database technology, hardware and network architecture and product security.   •   Marketing, which area is intended to be responsible for various initiatives including: product marketing, partner or cooperative marketing, member acquisition, member retention, branding, public relations and advertising in both online and offline formats.   •   Business Development, which area is intended to be responsible for assisting to build the Company and creating shareholder value through: growing revenue and membership, creating new businesses and revenue streams, constantly challenging and changing traditional business initiatives to stay ahead of the evolving industry and embracing competitor partnering while preempting competitor strikes.   •   Corporate Development, which area is intended to be responsible for identifying, negotiating and implementing new business opportunities, strategic initiatives and potential acquisitions.   •   Administration, which area is intended to be responsible for all Company support areas such as finance and accounting, business support technology, legal, human resources and other applicable support functions.   RISK FACTORS RISKS RELATING TO OUR CURRENT OPERATIONS WE HAVE ONLY A LIMITED OPERATING HISTORY, HAVE NOT OPERATED PROFITABLY SINCE INCEPTION AND WILL BE REQUIRED TO RAISE SUBSTANTIAL AMOUNTS OF CAPITAL Our operations have never been profitable, and it is expected that we will continue to incur operating losses in the future. In 2006, we generated revenues of $ 0, incurred operating expenses of $269,085 for continuing operations, and had no net income. As of March 15, 2007, we had approximately $227,510 of cash on hand to fund operations. There is no assurance that we will operate profitably in the future. We will have to obtain significant additional capital to continue with our proposed business. There is no assurance that we will be able to obtain sufficient capital to implement our proposed business and developing business plan. BECAUSE OF OUR FINANCIAL POSITION, THERE IS SUBSTANTIAL DOUBT IN OUR ABILITY TO OPERATE AS A GOING CONCERN We have spent substantially all of the investment funds that we have raised so far. As a result, as of December 31, 2006, we have a capital deficiency of ($703,092) and have a working capital deficiency in the same amount. Although within the last year we raised a total of $440,550 in equity offerings, our financial condition still raises substantial doubt about our ability to operate as a going concern. WE HAVE $565,000 IN DEBT WHICH WE HAVE NOT REPAID AND WHICH IS IN DEFAULT From December 2002 through February 2003 we borrowed $250,000 by issuing 13 promissory notes bearing interest at a rate of 15% per annum payable monthly in arrears. No principal payments have been made on these notes. The notes are due six months from the date issued. The notes mature at varying dates through July 2004. Subsequently, 11 note holders extended the payment of their notes to December 31, 2004. The past interest which accrued on the unpaid principal amounts of the 11 notes were waived by each of the 11 note holders and each of the 11 note holders agreed that the note be interest free to December 31, 2004. As consideration for the note holders extending the notes and forgiving the interest in the notes, each note holder was granted the right to purchase 2 shares of the Company’s Common Stock for each one dollar amount of his or her principal loan amount at a purchase price of $.01 per share. To date, five of the note holders have exercised their right to purchase the Company’s shares. One note holder converted his $25,000 note into 1,334 shares of the Company’s common stock on July 31, 2003 and one note holder is holding his original note which is past due. In January 2004 we borrowed an additional $100,000 by issuing two promissory notes bearing interest at a rate of 15% per annum payable monthly in arrears. The notes were due 60 days from the date issued and are now in default. In July, 2004, we borrowed $25,000 from a private investor. The loan bears interest at the rate of 20% per annum, was due October 15, 2004 and is now in default. On November 29, 2004, we borrowed $50,000 from a private investor. The loan bears interest at the rate of 20% per annum, was due December 31, 2005 and is now in default. Commencing in March 2005 through May 2005 we issued additional 20% interest bearing 90 day notes aggregating $65,000 to six accredited persons, all of whom are stockholders of the Company. At December 31, 2005, the Company was in default on all of the notes and accrued interest thereon.   RISKS RELATING TO OUR NEW SOCIAL COMMERCE NETWORKING WEBSITE THIS IS A NEW BUSINESS CATEGORY AND MANAGEMENT HAS NO EXPERIENCE WITH THIS BUSINESS Management has begun efforts to engage in the business of social commerce networking websites. We have no experience in this business category and we have no way to determine whether it will be successful. To date, we have not received any revenues from this business. We will have to obtain significant additional capital to develop our business. There is no assurance that we will be able to obtain sufficient capital for this purpose. WE RELY ON THIRD PARTIES TO PROVIDE SOFTWARE DEVELOPMENT AND MAINTENANCE, BANDWIDTH PROVIDERS, DATA CENTERS (HOSTING) AND OTHER THIRD PARTIES FOR KEY ASPECTS OF THE PROCESS OF PROVIDING VOIS TO OUR USERS, AND ANY INTERRUPTION OR FAILURE IN THE SERVICES AND PRODUCTS PROVIDED BY THESE THIRD PARTIES COULD SERIOUSLY HARM OUR BUSINESS, REPUTATION AND OPERATING RESULTS. We rely on third-party vendors, including software development and maintenance, data center (hosting) and bandwidth providers. Any disruption in the services provided by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could significantly harm our business. Any financial or other difficulties our providers face may have negative effects on our business, the nature and extent of which we cannot predict. Although we have contracts in place with our third-party vendors, we do not exercise control over them, which increases our vulnerability to problems with the services they provide. We expect to experience interruptions and delays in service and availability; any errors, failures, interruptions or delays experienced in connection with these third-party vendors could negatively impact our relationship with users, could adversely affect our brand, reputation and business, could adversely harm our business, and could expose us to liabilities to third parties. We may from time-to-time license technology underlying certain key components of our software from third parties that we do not control, including without limitation the technology underlying our system architecture and audio and video technology. Although we will have contracts in place with third party technology providers, there can be no assurance that the licensed technology or other technology that we may seek to license in the future will continue to be available on commercially reasonable terms, or at all. The loss of, or inability to maintain, licenses could result in a decrease in service quality until equivalent technology or suitable alternatives can be developed, identified, licensed and integrated. OUR BUSINESS DEPENDS ON OUR SOFTWARE AND SERVER AND NETWORK HARDWARE AS WELL AS OUR ABILITY TO SCALE OUR TECHNOLOGY INFRASTRUCTURE CAPACITY. The performance of our software, server, and networking hardware infrastructure is critical to our business and reputation and our ability to attract users, advertisers, members and e-commerce partners. An unexpected and/or substantial increase in the use of our website(s) could strain the capacity of our systems, which could lead to slower response time or system failures. Any slowdowns or system failures could adversely affect the speed and responsiveness of our website(s) and diminish the experience for our customers and members. If the usage of our website(s) substantially increases, we may need to procure additional servers, networking equipment and bandwidth from third parties to maintain adequate data transmission speeds, the availability of which may be limited or the cost of which may be significant. Any system failure that causes an interruption in service or a decrease in the responsiveness of our website(s) could reduce traffic on our website(s) and, if sustained or repeated, could impair our reputation and the attractiveness of our brand as well as reduce revenue and negatively impact our operating results.   We rely on many different software applications. If these software applications fail, it could adversely affect our ability to provide our services. If we receive a significant unexpected increase in usage and are not able to rapidly scale our transaction-processing systems and network infrastructure without any systems interruptions or failures, it could seriously harm our business and reputation. COMPUTER VIRUSES, COMPUTER ATTACKS AND SECURITY BREACHES COULD HARM OUR BUSINESS. The networks of our third-party providers are vulnerable to damaging software programs, such as computer viruses and worms. Certain of these programs have disabled the ability of computers to access the Internet, requiring users to obtain technical support in order to gain access to the Internet. Other programs have had the potential to damage or delete computer programs. The development and widespread dissemination of harmful programs has the potential to seriously disrupt Internet usage. If Internet usage is significantly disrupted for an extended period of time, or if the prevalence of these programs results in decreased residential Internet usage, our business could be materially and adversely impacted. Our business may be adversely affected by malicious applications that make changes to our users’ computers and interfere with the VOIS experience. These applications could attempt to change our users’ Internet experience. The interference often occurs without disclosure to or consent from users, resulting in a negative experience that users may associate with VOIS. These applications may be difficult or impossible to uninstall or disable, may reinstall themselves and may circumvent other applications’ efforts to block or remove them. The ability to reach users and provide them with a superior experience is critical to our success. If our efforts to combat these malicious applications are unsuccessful, or if our services have actual or perceived vulnerabilities, our reputation may be harmed and our business may be adversely damaged. We depend on the security of our third-party telecommunications service providers. Unauthorized or inappropriate access to, or use of, these networks could potentially jeopardize the security of confidential information of our customers and of third parties. So in the future, users or third parties may assert claims of liability against us as a result of any failure by us to prevent these activities. Although we use security measures, there can be no assurance that the measures we take will be successfully implemented or will be effective in preventing these activities. Further, the security measures of our third-party network, hardware and software providers may be inadequate. These activities may subject us to legal claims, may adversely impact our reputation, and may interfere with our ability to provide our services, all of which could have a material adverse effect on our business, financial position and results of operations. We are subject to laws relating to the use and transfer of personally identifiable information about our users. New laws in this area have been passed by several jurisdictions, and other jurisdictions are considering imposing additional restrictions. Violation of these laws, which in many cases apply not only to third-party transactions but also to transfers of information between ourselves and other parties with which we have commercial relations, could subject us to significant penalties and negative publicity and could adversely affect us. To succeed, online commerce and communications must provide a secure transmission of confidential information over public networks. Our security measures may not detect or prevent security breaches that could harm our business. An increasing number of websites have reported breaches of their security. Any compromise of our security could harm our reputation and, therefore, our business.   OUR OPERATIONS COULD BE SIGNIFICANTLY HINDERED BY THE OCCURRENCE OF A NATURAL DISASTER OR OTHER CATASTROPHIC EVENT. Our operations are susceptible to outages due to “rolling black-outs”, fire, floods, telecommunication failures, break-ins, and other natural disasters. We do not have multiple site capacity in the event of any such occurrence. Outages could cause significant interruptions of our service. In addition, despite our implementation of network security measures, our servers are vulnerable to computer viruses, physical and electronic break-ins, and similar disruptions from unauthorized tampering with our computer systems. We do not carry business interruption insurance to compensate us for losses that may occur as a result of any of these events. BECAUSE OUR OPERATING HISTORY IS LIMITED AND THE REVENUE AND INCOME POTENTIAL OF OUR BUSINESS AND MARKETS ARE UNPROVEN, WE CANNOT PREDICT WHETHER WE WILL MEET INTERNAL OR EXTERNAL EXPECTATIONS OF FUTURE PERFORMANCE. We believe that our future success depends on our ability to develop revenue from our operations, of which we have a very limited history. Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies with a limited operating history. These risks include our ability to:   •   attract a large audience to our community;   •   increase awareness of our brand and attempt to build member loyalty;   •   attract advertisers and marketers;   •   maintain and develop new, strategic relationships;   •   derive revenue from our members from premium based services;   •   respond effectively to competitive pressures and address the effects of strategic relationships or corporate combinations among our competitors;   •   attract and retain qualified management and employees; and   •   upgrade our technology to support increased traffic and expanded services Our future success not to mention our ability to generate revenues depends on our ability to successfully deal with these risks, expenses and difficulties. WE INTEND TO RELY ON INTERACTIVE MARKETING SALES AS A SIGNIFICANT PART OF OUR FUTURE REVENUE, BUT THE ONLINE ADVERTISING MARKET IS SUBJECT TO MANY UNCERTAINTIES, WHICH COULD CAUSE OUR INTERACTIVE MARKETING REVENUES TO FLUCTUATE OR DECLINE. Our interactive marketing revenue will be dependent on the sale of interactive marketing inventory on our network. The growth of online interactive advertising and marketing is subject to many uncertainties. Our ability to generate interactive marketing and advertising revenue will depend on a number of factors, many of which are beyond our control, including but not limited to:   •   the development and retention of a large base of users possessing demographic characteristics attractive to advertisers and marketers;   •   the attractiveness of our interactive marketing offerings to prospective advertisers and marketers;   •   increased competition and potential downward pressure on online advertising prices and limitations on interactive marketing inventory;     •   the development of independent and reliable means of verifying levels of online interactive marketing and traffic; and   •   the effectiveness of our advertising delivery, tracking and reporting systems. In addition, advertising spending is subject to many uncertainties and has historically been cyclical in nature, reflecting overall economic conditions as well as budgeting and buying patterns. For example, in 1999, advertisers spent heavily on Internet advertising. This was followed by a lengthy downturn in ad spending on the web. Further, advertisers are not paying the kind of rates to Internet media outlets that they pay to traditional media outlets, and thus our traffic will need to be significant. Also, user traffic tends to be seasonal. IF OUR SOCIAL NETWORKING SITE DOES NOT BECOME MORE WIDELY ACCEPTED AS A MEDIUM FOR INTERACTIVE MARKETING, OUR ABILITY TO GENERATE INTERACTIVE MARKETING REVENUE COULD BE NEGATIVELY-AFFECTED. Our growth in interactive marketing revenues, to a certain extent, will also depend on our ability to increase the advertising space on our network. If we fail to increase our interactive marketing space at a sufficient rate, our growth in interactive marketing revenues could be hampered. Further, the increasing usage of interactive marketing blocking software may result in a decrease of our interactive marketing revenues as the advertisers and marketers may choose not to advertise on our social commerce network if such blocking software is widely used. THE MARKETS FOR ONLINE NETWORKS ARE HIGHLY COMPETITIVE, AND WE MAY BE UNABLE TO COMPETE SUCCESSFULLY AGAINST NEW ENTRANTS AND ESTABLISHED INDUSTRY COMPETITORS, SOME OF WHICH HAVE GREATER FINANCIAL RESOURCES THAN WE DO OR CURRENTLY ENJOY A SUPERIOR MARKET POSITION TO US. There is significant competition among online networking providers. Many compete against us. We may be unable to generate any substantial revenues from our social commerce network in this competitive environment. Any of our present or future competitors may offer online social networking services which provide significant technology, performance, creativity or other advantages, over those offered by us, and therefore achieve greater market acceptance than ours. The market for Internet services is competitive and rapidly changing. Barriers to entry are relatively low, and current and new competitors can launch new websites or services at a relatively low cost. We also face competition from providers of software and other Internet products and services that incorporate online social networking into their offerings. In addition, entities that sponsor or maintain high-traffic websites or provide an initial point of entry for Internet users, such as ISPs, including large, well-capitalized entities such as Microsoft (MSN), Yahoo! Inc., eBay Inc., Google Inc. and America Online Inc., currently offer and could further develop or acquire content and services that compete with those that we offer. Companies such as these have greater financial resources and assets, better brand recognition, more developed sales and other internal organizations, more customers and more extensive operating histories. As a result, such companies may be able to quickly provide competitive services and obtain a significant number of users. We also compete for advertisers with traditional media companies, such as newspapers, television networks and radio stations that have a longer history of use and greater acceptance among advertisers. Many of our current and potential future competitors have greater financial and other resources than we have, and may be able to more quickly react to changing consumer requirements and demands, deliver competitive services at lower prices and more effectively respond to new Internet technologies or technical standards. Increased competition could result in reduced page views, loss of market share and revenues, and lower profit margins from reduced pricing for Internet-based marketing and advertising services.   ACQUISITIONS COULD RESULT IN OPERATING DIFFICULTIES, DILUTION AND OTHER HARMFUL CONSEQUENCES. From time to time, we may engage in discussions regarding potential acquisitions. Any of these transactions if completed could be material to our financial condition and results of operations. In addition, the process of integrating an acquired company, business or technology may create unforeseen operating difficulties and expenditures and is risky. The areas where we may face risks include:   •   The need to implement or remediate controls, procedures and policies appropriate for a public company at companies that prior to the acquisition lacked these controls, procedures and policies.   •   Diversion of management time and focus from operating our business to acquisition integration challenges.   •   Cultural challenges associated with integrating employees from the acquired company into our organization.   •   Retaining employees from the businesses we acquire.   •   The need to integrate each company’s accounting, management information, human resource and other administrative systems to permit effective management. WE MAY NOT BE ABLE TO MANAGE OUR EXPANDING OPERATIONS EFFECTIVELY, WHICH COULD HARM OUR BUSINESS. We anticipate continuous expansion in our business in our member base and in market opportunities. In order to manage the expected growth of our operations and personnel, we will be required to improve and implement operational and financial systems, procedures and controls, and expand, train and manage our growing employee base. Further, our management will be required to maintain and expand our relationships with various other websites, Internet and other online service providers, technology providers and other third parties necessary to our business. We cannot assure that our current and planned personnel, systems, procedures and controls will be adequate to support our future operations. If we are not successful in establishing, maintaining and managing our personnel, systems, procedures and controls, our business will be materially and adversely affected. IF WE FAIL TO SUCCESSFULLY DEVELOP AND INTRODUCE NEW PRODUCTS AND SERVICES, OUR COMPETITIVE POSITION AND ABILITY TO GENERATE REVENUES COULD BE HARMED. We are developing new products and services. The planned timing or introduction of new products and services is subject to risks and uncertainties. Actual timing may differ materially from original plans. Unexpected technical, operational, distribution or other problems could delay or prevent the introduction of one or more of our new products or services. Moreover, we cannot be sure that any of our new products and services will achieve widespread market acceptance or generate incremental revenue. If our efforts to develop, market and sell new products and services to the market are not successful, our financial position, results of operations and cash flows could be materially adversely affected.   IF WE ARE UNABLE TO KEEP UP WITH THE RAPID TECHNOLOGICAL CHANGES OF THE INTERNET INDUSTRY, OUR BUSINESS MAY SUFFER. The Internet industry is experiencing rapid technological changes. With the advent of Web 2.0, the interests and preferences of Internet users is shifting to user-generated content, such as blogs. Our future success will depend on our ability to anticipate, adapt and support new technologies and industry standards. If we fail to anticipate and adapt to these and other technological changes, our market share and our profitability could suffer. OUR SUCCESS DEPENDS ON RETAINING OUR CURRENT KEY PERSONNEL AND ATTRACTING ADDITIONAL KEY PERSONNEL. The Company is dependent on the services of key personnel, including our senior management: our President and Chief Executive Officer, Stephen J. Bartkiw, our Chairman, Mr. Gary J. Schultheis, our Senior Vice President of Marketing, Mark J. Minkin, our Senior Vice President–Corporate Development, Herbert Tabin, and our Chief Financial Officer, Mr. Marc A. Saitta. In addition, our success depends on our continuing ability to attract, hire, train and retain highly skilled executive, managerial, technical, financial, sales, marketing and customer support personnel, particularly in the areas of content development, product development, website design, legal, and sales and marketing. IF WE ARE UNABLE TO PROTECT OUR DOMAIN NAMES, TRADEMARKS AND OTHER PROPRIETARY RIGHTS, OUR REPUTATION AND BRAND COULD BE IMPAIRED, AND WE COULD LOSE CUSTOMERS. We regard our domain names, copyrights, trademarks, trade secrets and similar intellectual property as valuable to our business, and rely on trademark and copyright law, trade secret protection and confidentiality or license agreements with our employees, partners and others to protect our proprietary rights. There can be no assurance that the steps taken by us will be adequate to prevent misappropriation or infringement of our proprietary property. We have applied for registration of the mark “VOIS” as a trademark of the Company. Completion of our application for this trademark may not be successful. The regulation of domain names in the United States and in other countries is subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we might not be able to maintain our domain names or obtain comparable domain names in all the countries in which we conduct business, which could harm our business. Furthermore, the relationship between regulations governing domain names and laws protecting trademarks, service marks and similar proprietary rights is unclear and still evolving. Therefore, we might be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our trademarks and other proprietary rights. CHANGES IN GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD REDUCE DEMAND FOR OUR PRODUCTS AND SERVICES OR INCREASE THE COST OF DOING BUSINESS. Government regulation and legal uncertainties could increase our costs and risks of doing business on the Internet. There are currently few laws or regulations that specifically regulate commerce on the Internet. Moreover, it may take years to determine the extent to which existing laws relating to issues such as property ownership, defamation, taxation and personal privacy are applicable to the Internet. The application of existing laws, the adoption of new laws and regulations in the future, or increased regulatory scrutiny with respect to issues such as user privacy, pricing, taxation and the characteristics and quality of products and services, could create uncertainty in the Internet marketplace. The CAN-SPAM Act of 2003, a federal law that impacts the way certain commercial E-mails are sent over the Internet, took effect January 1, 2004 and preempted most state commercial E-mail laws. Penalties for failure to comply with the CAN-SPAM Act include significant fines, forfeiture of property and imprisonment. This law and other laws or regulations that impact E-mail advertising could reduce our revenues.   The Children’s Online Protection Act and the Children’s Online Privacy Protection Act restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors. In addition, the Protection of Children from Sexual Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances. Any failure on our part to comply with these regulations may subject us to additional liabilities. The Federal Trade Commission and other governmental or regulatory bodies have increasingly focused on issues impacting online marketing practices and consumer protection. Governmental or regulatory bodies may make a different judgment about the adequacy of the support for the marketing claims we may make. We could be subject to regulatory proceedings for future marketing campaigns, and we could be required to make changes in our future marketing claims, either of which could adversely affect our revenues. Network neutrality is the principle that Internet users should be in control of what content they view and what applications they use on the Internet. The Internet has operated according to this neutrality principle since its earliest days. Net neutrality is now being actively being considered by the U.S. Congress. Our proposed business operations could be materially impacted by legislation that does not safeguard net neutrality as it has been in effect, and our costs of operation could increase substantially in an environment where net neutrality was not required to be observed by telecommunications carriers in their pricing. In our business activities as a social commerce network, the Internal Revenue Service may take the position that we are a “broker” and required to report users’ sales to the IRS, if a certain sales volume is surpassed. A requirement such as this could have adversely affect the growth of e-commerce in our network and have an adverse impact on our members and on our business. FROM TIME TO TIME, CONCERNS MAY BE EXPRESSED ABOUT WHETHER OUR PRODUCTS AND SERVICES COMPROMISE THE PRIVACY OF USERS AND OTHERS. Concerns about our practices with regard to the collection, use, disclosure or security of personal information or other privacy-related matters, even if unfounded, could damage our reputation and operating results. While we strive to comply with all applicable data protection laws and regulations, as well as our own posted privacy policies, any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others, which could potentially have an adverse affect on our business. Laws related to data protection continue to evolve. It is possible that certain jurisdictions may enact laws or regulations that impact our ability to offer our products and services in those jurisdictions, which could harm our business. AS OUR WEBSITE(S) GROW IN POPULARITY, WE COULD BE SUBJECTED TO CLAIMS AND INCUR COMPLIANCE COSTS RELATED TO IMPROPER CONDUCT BY USERS. We plan to operate websites that facilitate social interaction among users, which can facilitate unlawful behavior by these users. The terms of use of our websites prohibit a broad range of unlawful or undesirable conduct. Nevertheless, although we have a variety of measures in place to enforce these terms of use, the nature of online social interaction poses enforcement challenges. We are unable to block access in all instances to users who are determined to gain access to our sites for improper motives. Although we do not believe that current law subjects the Company to liability for the activities of such users, this area of law is unsettled. Claims may be threatened or brought against us using various legal theories based on the nature   and content of information that may be posted online or generated by our users. Investigating and defending any of these types of claims could be expensive, even to the extent that the claims do not ultimately result in liability. We could experience periodic blockages of the delivery of our E-mails, which would limit the effectiveness of E-mail marketing. If Internet service providers materially limit or block the delivery of our E-mails, or if our technology fails to be compatible with these Internet service providers’ E-mail technologies, then our planned business could be materially and adversely affected. WE MAY IN THE FUTURE HAVE TO RESORT TO LITIGATION TO ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS. Monitoring unauthorized use of our products is difficult and costly, and we cannot be certain that the steps we have taken (and/or will take in the future) will prevent misappropriations of our intellectual property rights (e.g., technology, trademarks, copyrights and patents), particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the U.S. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources. WE MAY IN THE FUTURE BE SUBJECT TO INTELLECTUAL PROPERTY (e.g., PATENTS, COPYRIGHTS, TRADEMARKS AND TRADE SECRETS) RIGHTS CLAIMS, WHICH ARE COSTLY TO DEFEND, AND COULD REQUIRE US TO PAY DAMAGES AND COULD LIMIT OUR ABILITY TO USE CERTAIN TECHNOLOGIES IN THE FUTURE. Companies in the Internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. As we face increasing competition and become increasingly high profile, the possibility of intellectual property rights claims against us grows. Our technologies may not be able to withstand any third-party claims or rights against their use. Any intellectual property claims, with or without merit, could be time-consuming, expensive to litigate or settle and could divert resources and attention. In addition, third parties may initiate litigation against us alleging infringement of their intellectual property rights. With respect to any intellectual property rights claim, we may have to pay damages or discontinue the practices found to be in violation of a third party’s rights. We may have to seek a license to continue such practices, which may not be available on reasonable terms and may significantly increase our operating expenses. A license to continue such practices may not be available to us at all. As a result, we may also be required to develop alternative non-infringing technology or practices or discontinue the practices. The development of alternative non-infringing technology or practices could require significant effort and expense. If we cannot obtain a license to continue such practices or develop alternative technology or practices for the infringing aspects of our business, we may be forced to limit our product and service offerings and may be unable to compete effectively. Any of these results could harm our brand, operating results or could otherwise harm our business. THE LISTING OR SALE BY OUR USERS OF PIRATED OR COUNTERFEIT ITEMS MAY HARM OUR BUSINESS. We anticipate receiving in the future, communications alleging that certain items displayed, listed or sold through our service by our users infringe third-party copyrights, trademarks and trade names, or other intellectual property rights. Although we will seek to work actively with the owners of intellectual property rights to eliminate listings displaying or offering infringing items on our websites, some rights owners may express the view that our efforts are insufficient. Content owners   and other intellectual property rights owners have been active in asserting their rights against online companies. In addition, a public perception that counterfeit or pirated items are commonplace on our site could damage our reputation and our business. Litigation and negative publicity could increase as our site gains prominence. Such litigation could be costly for us, could result in damage awards or increased costs of doing business through adverse judgment or settlement, could require us to change our business practices in expensive ways, or could otherwise harm our business. Litigation against other online companies could result in interpretations of the law that could also require us to change our business practices or otherwise increase our costs. OUR BUSINESS AND USERS MAY BE SUBJECT TO SALES TAX AND OTHER TAXES. The application of indirect taxes (such as sales and use tax, value-added tax, or VAT, goods and services tax, business tax, and gross receipt tax) to e-commerce businesses and to our users is a complex and evolving issue. Many of the fundamental statutes and regulations that impose these taxes were established before the growth of the Internet and e-commerce. In many cases, it is not clear how existing statutes apply to the Internet or electronic commerce or communications conducted over the Internet. In addition, some jurisdictions have implemented or may implement laws specifically addressing the Internet or some aspect of electronic commerce or communications on the Internet. The application of existing, new, or future laws could have adverse effects on our business. Several proposals have been made at the U.S. federal, state and local levels that would impose additional taxes on the sale of goods and services through the Internet. These proposals, if adopted, could substantially impair the growth of e-commerce, and could diminish our opportunity to derive financial benefit from our activities. The U.S. federal government’s moratorium on states and other local authorities imposing access or discriminatory taxes on the Internet is scheduled to expire in November 2007. This moratorium does not prohibit federal, state, or local authorities from collecting taxes on our income or from collecting taxes that are due under existing tax rules. We do not intend to collect taxes on the goods or services sold by users of our services. The U.S. federal and/or state government(s) and/or foreign country government(s) may seek to impose a tax collection or reporting or record-keeping obligation on companies such as ourselves that engage in or facilitate e-commerce. Such an obligation could be imposed by legislation intended to improve tax compliance or if VOIS were ever deemed to be the legal agent of VOIS user-sellers by a jurisdiction in which VOIS operates or if VOIS were ever deemed to be a broker and obliged to collect Tax Identification numbers and report sales. Imposition of a record keeping or tax collecting requirement would harm our business. WE MAY BE SUBJECT TO GENERAL LITIGATION AND REGULATORY DISPUTES. We may be involved in other disputes or regulatory inquiries that arise in the ordinary course of business. The number and significance of these disputes and inquiries could increase as our business expands and our company grows larger. We may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act, the Lanham Act and the Communications Decency Act are interpreted by the courts and as we expand geographically into jurisdictions where the underlying laws with respect to the potential liability of online intermediaries such as ourselves are either unclear or less favorable. Any claims or regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, and result in the diversion of significant operational resources.   RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK WE HAVE INCURRED AND WILL CONTINUE TO INCUR INCREASED COSTS AS A RESULT OF BEING A PUBLIC COMPANY. As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses that we would not incur as a private company. We will continue to incur costs associated with our public company reporting requirements. We also have incurred and will continue to incur costs associated with corporate governance requirements, as well as rules implemented by the Securities and Exchange Commission and The Nasdaq National Market. These rules and regulations have increased our legal and financial compliance costs and made some activities more time-consuming and costly. BECAUSE CERTAIN EXISTING STOCKHOLDERS OWN A LARGE PERCENTAGE OF OUR VOTING STOCK, OTHER STOCKHOLDERS’ VOTING POWER MAY BE LIMITED. Our executive officers, directors and their affiliates beneficially own or control approximately 90% of our Common Stock. As a result, if those stockholders act together, they will have the ability to control all matters submitted to our stockholders for approval, including the election and removal of directors and the approval of any merger, consolidation or sale of all or substantially all of our assets. These stockholders may make decisions that are adverse to your interests. See our discussion under the caption in Item 11 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for more information about ownership of our outstanding shares. WE DO NOT INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK. We have never declared or paid any cash dividend on our Common Stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW COULD DISCOURAGE A TAKEOVER THAT STOCKHOLDERS MAY CONSIDER FAVORABLE. Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:   •   Our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors.   •   Our certificate of incorporation prohibits cumulative voting in the election of directors. This limits the ability of minority stockholders to elect director candidates.   •   Stockholders must provide advance notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting. These provisions may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of the Company.   •   Our Board of Directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.   As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of us. OUR STOCK PRICE HAS BEEN VOLATILE HISTORICALLY AND MAY CONTINUE TO BE VOLATILE REGARDLESS OF OUR OPERATING PERFORMANCE. The trading price of our Common Stock has in the past been volatile and will likely continue to be volatile. The trading price of our Common Stock may fluctuate widely in response to various factors, some of which are beyond our control. These factors include:   •   Quarterly variations in our results of operations or those of our competitors.   •   Announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments.   •   Disruption to our operations or our data centers.   •   The emergence of new sales channels in which we are unable to compete effectively.   •   Our ability to develop and market new and enhanced products on a timely basis.   •   Commencement of, or our involvement in, litigation.   •   Any major change in our board or management.   •   Changes in governmental regulations or in the status of our regulatory approvals.   •   Recommendations by securities analysts or changes in earnings estimates.   •   Announcements about our earnings that are not in line with analyst expectations, the likelihood of which is enhanced because it is our policy not to give guidance on earnings.   •   Announcements by our competitors of their earnings that are not in line with analyst expectations.   •   The volume of shares of Common Stock available for public sale.   •   Sales of stock by us or by our stockholders.   •   Short sales, hedging and other derivative transactions on shares of our Common Stock.   •   General economic conditions and slow or negative growth of related markets. In addition, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. These broad market and industry factors may seriously harm the market price of our Common Stock, regardless of our actual operating performance. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these   companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. Additionally, volatility or a lack of positive performance in our stock price may adversely affect our ability to retain key employees, all of whom would have been granted stock options. EMPLOYEES The Company currently has seven employees. REPORTS TO SECURITY HOLDERS VOIS is a reporting company under the Securities Exchange Act of 1934 and files reports with the Security and Exchange Commission (SEC). The company files Form 10-QSB quarterly reports, Form 10-KSB Annual Reports, and Current Reports on Form 8-K as required. The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the