PRELIMINARY OFFERING CIRCULAR DATED [DATE]
iConsumer Corp.
Suite 351
19821 NW 2nd Avenue
Miami Gardens, FL 33169
$1,000,000
in
Series A Non-Voting Preferred Stock
SEE “SECURITIES BEING OFFERED” AT PAGE 21
| Price to Public | Underwriting discount and commissions** | Proceeds to issuer | Proceeds to other persons | |
| Per share/unit | $0.09 to $0.42* | N/A | ||
| Total Minimum | $100,000 | No net proceeds | N/A | |
| Total Maximum | $1,000,000 | $100,000 | N/A | |
* Offered at “stepped” prices as set out in “Plan of Distribution.”
**Does not include expenses of the offering, including service fees to be paid to any broker for processing payments and costs of posting offering information on StartEngine.com. See “Plan of Distribution.”
The company expects that the amount of expenses of the offering that it will pay will be approximately $150,000. The company will pay StartEngine, an online investment platform, for hosting the offering on its platform, as set out in “Plan of Distribution.”
This offer will terminate on September 30, 2016. The company has engaged _______ as escrow agent to hold any funds that are tendered by investors, and assuming it sells a minimum of $100,000 million in shares, may hold a series of closings at which the company receives the funds from the escrow agent and issues the shares to investors. In the event the company has not sold the minimum amount of shares by September 30, 2016, any money tendered by potential investors will be returned to them by the escrow agent.
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OROTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN >EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPTFROM REGISTRATION.
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GENERALLY NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS.BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OFREGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TOwww.investor.gov.
This offering is inherently risky. See “Risk Factors” on page 4.
Sales of these securities will commence on approximately [date].
The company is following the “Offering Circular” format of disclosure under Regulation A.
AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TOBUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILEDMAY BE OBTAINED.
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TABLE OF CONTENTS
| Summary |
| Risk Factors |
| Dilution |
| Plan of Distribution and Selling Securityholders |
| Use of Proceeds to Issuer |
| The Company’s Business |
| The Company’s Property |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| Directors, Executive Officers and Significant Employees |
| Compensation of Directors and Officers |
| Security Ownership of Management and Certain Securityholders |
| Interest of Management and Others in Certain Transactions |
| Securities Being Offered |
| Financial Statements |
In this Offering Circular, the term “iConsumer” or “the company” refers to iConsumer Corp.
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RISK FACTORS
The SEC requires the company to identify risks that are specific to its business and its financial condition. The company is still subject to all the same risks that all companies in its business, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as hacking and the ability to prevent hacking). Additionally, early-stage companies are inherently more risky than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest.
The company has only recently commenced its planned principal operations.
iConsumer was formed in 2010 and recognized no significant revenues prior to 2015. Accordingly, the company has a limited history upon which an evaluation of its performance and future prospects can be made. iConsumer’s current and proposed operations are subject to all the business risks associated with new enterprises. These include likely fluctuations in operating results as the company reacts to developments in its market, including purchasing patterns of shoppers and the reaction of existing competitors to iConsumer’s offerings and entry of new competitors into the market. iConsumer will only be able to pay dividends on any shares once its directors determine that it is financially able to do so.
The company depends on one source of revenue.
The company is completely dependent on online shopping. If this market were to cease to grow, or to decrease, for reasons that may include economic or technological reasons (including, for example, recessions or loss of confidence in online commerce due to hacking) the company may not succeed. The company’s current customer base of members is very small, having just begun operations, and the company will only succeed if it can attract a significant number of customers.
The company’s current customer base of retailers and advertisers (to whom it provides advertising and loyalty services) numbers approximately 1,600. The company will only succeed if these retailers choose to continue to do business with iConsumer. They may choose to stop doing business with the company for reasons in or out of control of the company. There are no contractual requirements binding the retailer or advertiser to continue a relationship.
The company is depending on the incentive of ownership in the company to attract customers.
iConsumer is using the prospect of ownership in the company and the ability to share in its success as an incentive to use the company’s products. If potential consumers do not find this a compelling reason to use iConsumer as opposed to its competitors, the company will have no unique selling proposition to distinguish it from its competitors.
The company’s operations are reliant on technology licensed from a related company.
iConsumer’s operations are run on technology licensed from Outsourced Site Services, LLC (“OSS”), a company under common control, pursuant to a License Agreement dated May 1, 2015 (the “License Agreement”), which is summarized under “Interest of Management and Others in Certain Transactions.” iConsumer pays OSS a license fee for the use of this technology, and it is the intention of Robert Grosshandler, who controls both companies, to reduce the fee over time, as described in “Management’s Discussion and Analysis.” Changes in the license fee will impact the company’s expenses and net revenue. Since Mr. Grosshandler controls both companies, and will continue to control iConsumer after this offering, he will have the power to determine whether the company will continue to be able to rely on the OSS license, and the price (whether at market rate, or above or below market rate) it pays for the license.
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A related company provides operational and other services, which eventually the company will have to pay for at market rates.
The company’s personnel and other operational support such as web hosting, site maintenance, customer support, retailer support and marketing are currently provided by OSS, pursuant to the License Agreement, as described in “Interest of Management and Others in Certain Transactions.” The company will eventually have to pay its own personnel and perform these functions itself, or outsource them to other providers. This may have the result of increasing the company’s expenses. The current arrangement also means that the financial results of the company in its early stages of operations are unlikely to be a good indicator of future performance.
The company depends on a small management team.
The company depends on the skill and experience of two individuals, Robert Grosshandler and Sanford Schleicher. If the company is not able to call upon either of these people for any reason, its operations and development could be harmed.
The company is controlled by its officers and directors.
Robert Grosshandler currently holds all of the company’s voting stock, and at the conclusion of this offering will continue to hold all of the company’s common stock. Investors in this offering will not have the ability to control a vote by the shareholders or the board of directors.
Competitors may be able to call on more resources than the company.
While the company believes that its approach to online bargain shopping is unique, it is not the only way to attract users. Additionally, existing or new competitors may replicate iConsumer’s business ideas (including the issuance of shares to users) and produce directly competing offerings. These competitors may be better capitalized than iConsumer, which might give them a significant advantage, for example, in surviving an economic downturn where shoppers pull back. Competitors may be able to use their greater resources to provide greater rebates or cashback to consumers, even to uneconomic levels that iConsumer cannot match.
There are logistical challenges involved in the management of large numbers of shareholders.
iConsumer’s business plan is based upon using share ownership as a way to attract online shoppers to its services, and the more it succeeds in doing so, the larger the number of shareholders it will have to manage. The need to address shareholder concerns with respect to recording of ownership, transfer, and communications with shareholders may take up a disproportionate amount of management time.
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There is no current market for the preferred stock.
There is no formal marketplace for the resale of the company’s preferred stock. The shares may be traded on the over-the-counter market to the extent any demand exists. Investors should assume that they may not be able to liquidate their investment for some time, or be able to pledge their shares as collateral.
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DILUTION
Dilution means a reduction in value, control or earnings of the shares the investor owns.
Immediate dilution
An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity” into the company. When the company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders or earlier investors, which means that the cash value of your stake is diluted because each share of the same type is worth the same amount, and you paid more for your shares than earlier investors did for theirs.
The following table demonstrates the price that new investors are paying for their shares with the effective cash price paid by existing shareholders for pre-financing shares of $0. It reflects all transactions since inception (including the Recapitalization and Exchange effected in July 2015 and discussed in more detail in “The Company’s Business”), establishing a net tangible book value of $(14,600) or $(0.0001) per share as of June 18, 2015. Net tangible book value is calculated as tangible assets less tangible liabilities. This method gives investors a better picture of what they will pay for their investment compared to the company’s insiders than just including such transactions for the last 12 months, which is what the SEC requires. The table then gives effect to the sale of shares at the mid-range estimated offering price ($1.00) and at: (A) the minimum number of shares issued, (B) the mid-range number of shares issued, and (C) the maximum number of shares issued.
| Minimum Raise | Mid-Range Raise | Maximum Raise | |||||||
| Price per Share | $ | 0.255 | $ | 0.255 | $ | 0.255 | |||
| Shares Issued | 392,157 | 2,156,863 | 3,921,569 | ||||||
| Capital Raised | $ | 100,000 | $ | 550,000 | $ | 1,000,000 | |||
| Less: Offering Costs | $ | (150,000 | ) | $ | (150,000 | ) | $ | (150,000 | ) |
| Net Offering Proceeds | $ | (50,000 | ) | $ | 400,000 | $ | 850,000 | ||
| Net Tangible Book Value Pre-Financing | $ | (14,600 | ) | $ | (14,600 | ) | $ | (14,600 | ) |
| Net Tangible Book Value Post-Financing | $ | (64,600 | ) | $ | 385,400 | $ | 835,400 | ||
| Shares Issued and Outstanding Pre-Financing | 200,000,000 | 200,000,000 | 200,000,000 | ||||||
| Post-Financing Shares Issued and Outstanding | 200,392,157 | 202,156,863 | 203,921,569 | ||||||
| Net tangible book value per share prior to offering | $ | (0.0001 | ) | $ | (0.0001 | ) | $ | (0.0001 | ) |
| Increase/(Decrease) per share atributable to new investors | $ | (0.0004 | ) | $ | 0.0018 | $ | 0.0040 | ||
| Net tangible book value per share after offering | $ | (0.0003 | ) | $ | 0.0019 | $ | 0.0041 | ||
| Dilution per share to new investors | $ | 0.2553 | $ | 0.2531 | $ | 0.2509 |
Investors should note that this calculation is made on the basis of the mid-point of the range of the estimated offering price. Since the company is planning to offer the preferred shares at “stepped” prices, as explained in “Plan of Distribution,” earlier investors in the offering will suffer less immediate dilution and later investors will suffer more dilution compared to earlier investors and to the founder of the company.
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Future dilution
Another important way of looking at dilution is the dilution that happens due to future actions by the company. The investor’s stake in a company could be diluted due to the company issuing additional shares, whether as part of a capital-raising event, or issued as compensation to the company’s members, employees, or marketing partners. In other words, when the company issues more shares, the percentage of the company that you own will go down, even though the value of the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, another crowdfunding round, a venture capital round, angel investment), employees exercising stock options, or by conversion of certain instruments (e.g. convertible bonds, preferred shares or warrants) into stock.
If the company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the company offers dividends; early stage companies such as iConsumer do not pay dividends for some time and iConsumer does not anticipate paying dividends).
The type of dilution that hurts early-stage investors most occurs when the company sells more shares in a “down round,” meaning at a lower valuation than in earlier offerings. An example of how this might occur is as follows (numbers are for illustrative purposes only):
| • | In June 2014 Jane invests $20,000 for shares that represent .02% of a company valued at $1 million. | |
| • | In December the company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Jane now owns only 0.013% of the company but her stake is worth $200,000. | |
| • | In June 2015 the company has run into serious problems and in order to stay afloat it raises $1 million at a valuation of only $2 million (the “down round”). Jane now owns only 0.0089% of the company and her stake is worth only $26,660. |
If you are making an investment expecting to own a certain percentage of the company or expecting each share to hold a certain amount of value, it’s important to realize how the value of those shares can decrease by actions taken by the company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share.
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PLAN OF DISTRIBUTION AND SELLING SECURITYHOLDERS
Plan of Distribution
The Offering Statement filed with the Commission covers the offer and sale of preferred shares to:
| • | New investors in the company who will pay cash for their investments; and | |
| • | Members of the company (shoppers who use the company’s website) who will be awarded preferred shares in reward for using iConsumer’s services and to encourage them to shop more through iConsumer and urge their friends to do the same. Members will earn shares of the company based on the amount of shopping rebates they earn. Members may also earn shares as incentive for other activities, including, but not limited to, signing up to become a member. |
The company is planning to offer its preferred shares at “stepped” prices. Earlier investors or members will pay less for their shares.
The anticipated pricing for members and new investors will depend on the number of members the company has, as follows:
| Stage of development of company | Price per share ($) |
| Company has less than 50,000 members | 0.09 |
| Company has 50,000-100,000 members | 0.13 |
| 100,000-150,000 members | 0.17 |
| 200,000-250,000 members | 0.21 |
| 250,000-300,000 members | 0.24 |
| 300,000-350,000 members | 0.28 |
| 350,000-400,000 members | 0.32 |
| 400,000-450,000 members | 0.35 |
| 450,000-500,000 members | 0.39 |
| Over 500,000 members | 0.42 |
The company intends to market the shares in this offering both through online and offline means. Online marketing may take the form of contacting potential investors through social media and posting the company’s Offering Circular or “testing the waters” materials on an online investment platform.
The company may engage a broker-dealer to perform certain services such as processing and accounting for investor funds and performing anti-money laundering checks on investors.
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The company will also pay StartEngine, an online investment platform not affiliated with the company, for its services in hosting the offering of the preferred shares on its online platform. This compensation consists of $20 per investor in cash and $20 per investor in warrants (calculated at the same price paid by such investor), paid (or issued of flat fees) when such investor deposits funds into escrow. No compensation will be paid to StartEngine with respect to the company’s members who are compensated through shares. The services rendered by StartEngine include the hosting offering documents and information including a link to the company's filings with the commission on StartEngine’s platform. StartEngine does not solicit investors, make recommendations or provide investment advice with respect to offerings posted on its site, although it does advertise the existence of its platform, which may include identifying a broad selection of issuers listed on the platform.
The company is offering its securities in all states.
No securities are being sold for the account of securityholders; all net proceeds of this offering will go to the company.
Investors’ Tender of Funds and Return of Funds
After the Offering Statement has been qualified by the Securities and Exchange Commission, the company will accept tenders of funds to purchase the preferred shares. The company may close on investments on a “rolling” basis (so not all investors will receive their shares on the same date), and may accept the tender of funds before it is clear that the minimum amount sought will be raised. The funds tendered by potential investors will be held either by an escrow agent or by a registered broker-dealer, and will be transferred to the company upon closing. In the event the minimum amount the company is trying to raise is not reached, the escrow agent or broker-dealer will return the funds to investors. The company has engaged ___________ as escrow agent and the escrow agreement can be found in Exhibit 8 to the Offering Statement of which this Offering Circular is a part.
In the event that it takes some time for the company to raise funds in this offering, the company will rely on income from sales. It has only a limited amount of cash on hand, but the License Agreement with OSS provides that OSS will be responsible for much of the company’s operations as set out in "Interests of Management and Others in Certain Transactions."
You will be required to complete a subscription agreement in order to invest. The subscription agreement includes a representation by the investor to the effect that, if you are not an “accredited investor” as defined under securities law, you are investing an amount that does not exceed the greater of 10% of your annual income or 10% of your net worth (excluding your principal residence).
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USE OF PROCEEDS TO ISSUER
The net proceeds of this offering to the issuer, after expenses of the offering (payment to StartEngine, payment to any broker servicing payments, professional fees and other expenses) will be approximately $850,000.
iConsumer plans to use these proceeds as follows:
| • | Marketing expenses in the amount of approximately $450,000. | |
| • | Expenses for website development in the amount of approximately $200,000. |
Approximately $200,000, or 20% of the net proceeds assuming the maximum amount offered is raised, has not been allocated for any particular purpose.
Because the offering is a "best efforts" offering with a minimum offering size of $100,000, iConsumer may close the offering without sufficient funds for all the intended purposes set out above. In that event it will "bootstrap" its expenses and only spend funds on marketing and website development when it has revenues to do so.
The company reserves the right to change the above use of proceeds if management believes it is in the best interests of the company.
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THE COMPANY’S BUSINESS
Overview
The company was founded in 2010 and began operations in 2015. Since founding, it has not undergone any reorganization or acquisitions. Prior to beginning its online bargain shopping operations it acted as a marketing agent for iGive.com, an affiliated company, attracting online traffic and directing it to iGive.com. Until the present it has generated minimal revenues. In July 2015, it executed a recapitalization and exchange with its sole stockholder, Robert Grosshandler, exchanging the existing outstanding Class A Common Stock, all of which was held by Mr. Grosshandler, for newly reclassified Common Stock and Preferred Stock.
Principal Products and Services
The company is an online bargain shopping (cash back rebates and coupon shopping) company that makes money by driving consumers to take advantage of coupons and cash back rebate offers for products and services displayed on its site. The company is paid by participating merchants when iConsumer members click on those offers and when iConsumer members reach participating merchants’ sites via iConsumer, and make purchases there.
The company launched its online bargain shopping services to the general public on June 19, 2015.
Market
The company’s target market encompasses all online shoppers, with the initial target being those shoppers located in the United States. The company’s direct competitors estimate that they have nearly 100 million global users, and those shoppers located in the United States are the initial target of the company’s marketing efforts.
The company uses social media, PR, display and other forms of paid and unpaid advertising to attract new members to its site. The initial marketing strategy includes “influencers” such as bloggers, writers, and other outlets reachable through social media and public relations. After establishing this beachhead, the company intends to use its own members to spread the word about the advantages of the company’s offering.
A further source of potential customers is the people who have expressed interest in the company’s offering of shares through its “testing the waters” campaign.
Competition
The company’s competitors include eBates, Shopathome, RetailMeNot, MyPoints, CouponCabin, BradsDeals, swagbucks, and Mainstreetshares. iConsumer offers the same ability to save money shopping by offering coupons and cashback rebates but differentiates itself by additionally offering its members the ability to "earn" ownership in the company through the acquisition of shares. This further incentivizes members to prefer iConsumer offerings and to encourage their friends to do the same.
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Participating Merchants
Through an agreement with OSS, iConsumer represents over 1,600 retailers, providing cash back and coupon based savings to consumers when they shop at these retailers. OSS personnel are responsible for attracting and maintaining those relationships. iConsumer pays OSS a fee based on revenues for this service. OSS provides similar services to iGive.com Holdings, LLC, an affiliated company.
Research and Development
The company is licensing technology developed by its affiliate OSS and has not yet made any expenditures on research and development.
Employees
The company has no employees at present. Its management is provided by the affiliated company OSS, as described in “Interest of Management and Others in Certain Transactions.”
Intellectual Property
iConsumer has a copyright in its web site, applications, and other computer software. It has filed a trademark application for iConsumer, the logo, and related marks. The technology upon which the company is relying for its operations is owned by OSS, and licensed to iConsumer.
Litigation
The company is not involved in any litigation.
THE COMPANY’S PROPERTY
The company does not own any real estate or significant assets.
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MANGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The company is in the very earliest stages of development. Operations prior to June 2015 produced minimal revenues.
The company earns revenues through royalties and advertising on its website and intends to earn revenues through agreements with vendors for web traffic and sales referred through the iConsumer.com website. The company recognizes revenue only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the services have been provided, and collectability is assured. Insignificant revenues have been earned or recognized for the years ended December 31, 2014 or December 31, 2013.
The company anticipates that cashflow from operations is likely to begin in December 2015.
The primary factors affecting gross income are the number of users of the company’s services (members), the amount each member spends and the amount spent on marketing to attract those members. The amount spent on marketing is likely to be larger in relation to the number of members in the earlier days of operations, decreasing as the number of members grows.
The provisions of the License Agreement with OSS will significantly affect the company’s financial results. As described in “Interest of Management and Others in Certain Transactions,” the company will pay 20% of its gross revenues to OSS for the license of the software on which its operations rely and other support services, or 5% of its gross revenues if it uses the software and not other services from OSS. In the event the company decides to provide for itself the support services provided by OSS, the company’s gross margins and profitability are likely to change.
Plan of Operations
The company’s current operations focus on attracting as many members as possible to the iConsumer site, and thus the primary expenditure in the near future will be on paid advertising in addition to the use of social media. As discussed in “Use of Proceeds,” the company expects to spend at least $450,000 on marketing over the next approximately six months.
The company anticipates that revenues will support the operations of the company when the company has 250,000 active members (defined as individuals with legitimate email addresses who are over 18, register on the site and make at least one purchase per year via the site) on its site.
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Liquidity and Capital Resources
As of the date of this offering Circular, iConsumer has only nominal liquid assets. The company is completely dependent on the proceeds from this offering and support from affiliated companies to execute its plan of operations. The company has no debt and no obligations to make any capital expenditures. The company has no bank lines or other financing arranged.
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DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The company’s officers and directors are as follows. Both are full-time. The company does not currently employ any “significant employees” as defined by the Commission.
| Name | Position | Age | Term of office |
| Executive officers | |||
| Robert N. Grosshandler | President | 59 | Indefinitely from December 2010 |
| Sanford David Schleicher | Chief Technology Officer | 45 | Indefinitely from April 2015 |
| Directors | |||
| Robert Grosshandler | 59 | Since December 2010 | |
Robert N. Grosshandler, President
Robert Grosshandler has been President of the company since its inception. In 1997, he founded iGive.com, a company that helps consumers raise money for charities by shopping online. He founded iGive and has acted as CEO of iGive from that date to the present. iGive today helps 350,000 consumers contribute to 35,000 charities. He is also founder and CEO of OSS. Between 1976 and 1981 Mr. Grosshandler participated in real estate and industrial workouts. In 1981, he co-founded The SOFTA Group, Inc., which grew to 160 employees when it was sold in 1993. In 1995 he founded and sold a company to a West Coast integrated circuit manufacturer.
Sanford Schleicher, Chief Technology Officer
Mr. Schleicher is Chief Technology Officer, which position he has held since April 2015 and in that capacity he oversees engineering, production and development. From 2009 to the present date he was the Chief Technology Officer of iGive. As CTO, he is responsible forall technology R&D as well as platform operations.Prior to joining iGive.com, Mr. Schleicher was Director of Engineering of Onebox Solutions, and before that Director of Research and Development of Call Sciences which he joined in early 2001, when Call Sciences purchased Vocal Link, a company Mr. Schleicher co-founded in 1997. Prior to Vocal Link, he worked at Quantra Corporation. Previous professional experience includes Baxter Healthcare Inc. and Price Waterhouse. Mr. Schleicher holds an Engineering Degree in Computer Science from the University of Illinois in Champaign/Urbana.
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
iConsumer has not yet paid or agreed to pay its officers or directors. Currently, Mr. Grosshandler and Mr. Schleicher are compensated by OSS and their services are provided to iConsumer under the License Agreement. See “Interest of Management and Others in Certain Transactions.”
In the future the company will have to pay its officers, directors and other employees, which will impact the company’s financial condition, as discussed in “Management’s Discussion and Analysis.” The company may choose to establish an equity compensation plan for its management and other employees in the future.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
The following table sets out, as of August 31, 2015 the voting securities of the company that are owned by executive officers and directors, and other persons holding more than 10% of the company’s voting securities, or having the right to acquire those securities.
| Title of class | Name and address of beneficial owner | Amount and nature of beneficial ownership | Amount and nature of beneficial ownership acquirable | Percent of class |
| Common Stock | Robert N. Grosshandler 2724 Simpson Street Evanston, IL 602021 | Direct ownership | N/A | 100% |
| Series A Non- Voting Preferred Stock | Robert N. Grosshandler | Direct ownership | N/A | 43% |
| Sanford D. Schleicher 2724 Simpson Street Evanston, IL 602021 | Direct ownership | N/A | 10% | |
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INTEREST OF MANGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Software License and Services Agreement with Outsourced Site Services
The technology used by iConsumer to operate its website is licensed from OSS, where it has been used for 17 years for the operations of iGive, a business that caters to online shoppers who are interested in helping non-profits. iConsumer receives services from OSS, which include hosting, servers, support, internet connectivity, and interconnections with retailers. OSS also provides marketing, management, and accounting services. OSS also employs Robert Grosshandler and Sanford Schleicher.
These services are provided pursuant to Software License and Services Agreement dated May 1, 2015 between OSS and the company (the “License Agreement”). Under the License Agreement, the company pays 20% of its gross revenue to OSS. The License Agreement provides that in the event the company wishes to assume responsibility for the support services provided by OSS, it can do so upon at least six months’ notice. In that event, the company will pay 5% of its gross revenues to OSS.
Both iGive and OSS are100% owned by Robert Grosshandler.
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SECURITIES BEING OFFERED
iConsumer’s authorized capital stock consists of 100,000,000 shares of common stock, $0.001 par value per share, and 300,000,000 shares of preferred stock, $0.001 par value per share, 250,000,000 of which preferred stock have been designated Series A Non-Voting Preferred Stock. As of August 31, 2015 there were 100,000,000 shares of iConsumer’s common stock outstanding, held by one stockholder of record, and 100,000,000 shares of Series A Non-Voting Preferred Stock outstanding, held by 20 stockholders of record. The company’s board of directors is authorized, without stockholder approval, to issue additional shares of capital stock.
The shares being offered to investors are Series A Non-Voting Preferred Stock of iConsumer. The rights of holders in the Series A Non-Voting Preferred Stock are different from the rights of the holders of the company’s common stock.
The following description summarizes the most important terms of the company’s capital stock. This summary does not purport to be complete and is qualified in its entirety by the provisions of the company’s amended and restated certificate of incorporation and amended and bylaws and the Certificate of Designations for the Series A Non-Voting Preferred Stock, copies of which have been filed with the SEC as Exhibits 2 and 3 to the Offering Statement of which this Offering Circular is a part. For a complete description of iConsumer’s capital stock, you should refer to the amended and restated certificate of incorporation and bylaws, to the Certificate of Designations, and to the applicable provisions of Delaware law.
Series A Non-Voting Preferred Stock
Dividend Rights
Series A Preferred Stock will receive dividends, in preference to the holders of common stock and any other capital stock, when and as dividends may be declared from time to time by the board of directors out of legally available funds. While any shares of Series A Preferred Stock are outstanding, no dividends can be paid or declared, and no distribution can be made, until all accrued and unpaid dividends have been paid or declared and set apart.
Voting Rights
The Series A Preferred Stock have no voting rights except as required under law.
Right to Receive Liquidation Distributions
In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the company’s affairs, a holder of Series A Preferred Stock will be entitled to be paid, before any distribution or payment may be made to any holders of Junior Stock: (1) the liquidation preference equal to the amount paid per share at the time of original issue (for example, in this offering); and (2) the amount of any accrued and unpaid dividends, if any, whether or not declared, prior to such distribution or payment date. If the assets of the company are insufficient to pay all holders of Series A Preferred Stock, the amounts to be distributed will be reduced in proportion to the amounts they would be entitled.
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Investors should note that since the prices to be paid for the preferred stock will vary as described in “Plan of Distribution,” the amounts to be received upon liquidation will also vary.
Rights and Preferences
The Series A Preferred Stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions applicable to the Series A Preferred Stock.
Common Stock
Dividend Rights
Subject to preferences that may be applicable to any then outstanding preferred stock, holders of iConsumer’s common stock are entitled to receive dividends, if any, as may be declared from time to time by the board of directors out of legally available funds. The company has never declared or paid cash dividends on any of its capital stock and currently does not anticipate paying any cash dividends after this offering or in the foreseeable future.
Voting Rights
Each holder of iConsumer’s common stock is entitled to ten votes for each share on all matters submitted to a vote of the stockholders, including the election of directors. The company’s stockholders do not have cumulative voting rights in the election of directors.
Right to Receive Liquidation Distributions
In the event of iConsumer’s liquidation, dissolution or winding up, holders of its common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of the company’s debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then outstanding shares of preferred stock.
Rights and Preferences
Holders of iConsumer’s common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions applicable to the company’s common stock. The rights, preferences and privileges of the holders of the company’s common stock are subject to and may be adversely affected by, the rights of the holders of shares of any series of the company’s Series A Non-Voting Preferred Stock and any additional classes of preferred stock that the company may designate in the future.
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Transfer Agent and Registrar
The company intends to appoint a transfer agent and registrar for the company’s preferred stock prior to any closing.
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FINANCIAL STATEMENTS
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iConsumer Corp.
A Delaware Corporation
Financial Statements and Independent Auditor’s Report December 31, 2014 and 2013
- 24 -
| iConsumer Corp. |
| TABLE OF CONTENTS |
| Page | |
| INDEPENDENT AUDITOR’S REPORT | 26-27 |
| FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013: | |
| Balance Sheets | 28 |
| Statements of Operations | 29 |
| Statements of Changes in Stockholder’s Equity | 30 |
| Statements of Cash Flows | 31 |
| Notes to Financial Statements | 32–38 |
- 25 -
| To the Board of Directors of |
| iConsumer Corp. |
| Miami Gardens, FL |
INDEPENDENT AUDITOR’S REPORT
Report on the Financial Statements
We have audited the accompanying financial statements of iConsumer Corp., which comprise the balance sheets as of December 31, 2014 and 2013, and the related statements of operations, changes in stockholder’s equity, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
26
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of iConsumer Corp., as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 4 to the financial statements, the Company is a business that has not commenced planned principal operations, plans to incur significant costs in pursuit of its capital financing plans, has not generated significant revenues or profits since inception, and has sustained net losses of $915 and $375 for the years ended December 31, 2014 and 2013, respectively. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
/s/ Artesian CPA, LLC
Denver, Colorado
August 27, 2015
27
| iConsumer Corp. |
| BALANCE SHEETS |
| As of December 31, 2014 and December 31, 2013 |
| 2014 | 2013 | |||||
| ASSETS | ||||||
| Current Assets: | ||||||
| Cash | $ | - | $ | - | ||
| TOTAL ASSETS | $ | - | $ | - | ||
| LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||
| Non-Current Liabilities: | ||||||
| Due to Related Party | $ | 3,211 | $ | 2,296 | ||
| Total Liabilities | 3,211 | 2,296 | ||||
| Stockholder's Equity: | ||||||
| Class A Common Stock, 1,000,000 authorized, $0.001 par, 1,000,000 issued and outstanding at December 31, 2014 and 2013 | 1,000 | 1,000 | ||||
| Class B Common Stock, 1,000,000 authorized, $0.001 par, 1,000,000 issued and outstanding at December 31, 2014 and 2013 | 1,000 | 1,000 | ||||
| Additional Paid-In Capital (Deficit) | (2,000 | ) | (2,000 | ) | ||
| Accumulated Deficit | (3,211 | ) | (2,296 | ) | ||
| Total Stockholder's Equity | (3,211 | ) | (2,296 | ) | ||
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $ | - | $ | - |
| See Independent Auditor’s report and accompanying notes, which are an integral part of these financial statements. | 28 |
| iConsumer Corp. |
| STATEMENTS OF OPERATIONS |
| For the years ended December 31, 2014 and December 31, 2013 |
| 2014 | 2013 | |||||
| Revenues: | ||||||
| Royalties | $ | 250 | $ | 250 | ||
| Total Revenues | 250 | 250 | ||||
| Operating Expenses: | ||||||
| Hosting Fees | 250 | 250 | ||||
| Legal fees ] | 915 | 375 | ||||
| Total Operating Expenses | 1,165 | 625 | ||||
| Net Loss | $ | (915 | ) | $ | (375 | ) |
| Weighted Average Common Shares Outstanding -Basic and Diluted | 2,000,000 | 2,000,000 | ||||
| Net Loss per Share -Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) |
| See Independent Auditor’s report and accompanying notes, which are an integral part of these financial statements. | 29 |
| iConsumer Corp. |
| STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY |
| For the years ended December 31, 2014 and December 31, 2013 |
| Class A Common Stock | Class B Common Stock | ||||||||||||||||||||
| Additional | |||||||||||||||||||||
| Paid-In | Total | ||||||||||||||||||||
| Number of | Number of | Capital | Accumulated | Stockholder's | |||||||||||||||||
| Shares | Amount | Shares | Amount | (Deficit) | Deficit | Equity | |||||||||||||||
| Balance at December 31, 2012 | 1,000,000 | $ | 1,000 | 1,000,000 | $ | 1,000 | $ | (2,000 | ) | $ | (1,921 | ) | $ | (1,921 | ) | ||||||
| Net Loss | - | - | - | - | - | (375 | ) | (375 | ) | ||||||||||||
| Balance at December 31, 2013 | 1,000,000 | $ | 1,000 | 1,000,000 | $ | 1,000 | $ | (2,000 | ) | $ | (2,296 | ) | $ | (2,296 | ) | ||||||
| Net Loss | - | - | - | - | - | (915 | ) | (915 | ) | ||||||||||||
| Balance at December 31, 2014 | 1,000,000 | $ | 1,000 | 1,000,000 | $ | 1,000 | $ | (2,000 | ) | $ | (3,211 | ) | $ | (3,211 | ) | ||||||
| See Independent Auditor’s report and accompanying notes, which are an integral part of these financial statements. | 30 |
| iConsumer Corp. |
| STATEMENTS OF CASH FLOWS |
| For the years ended December 31, 2014 and December 31, 2013 |
| 2014 | 2013 | |||||
| Cash Flows From Operating Activities | ||||||
| Net Loss | $ | (915 | ) | $ | (375 | ) |
| Adjustments to reconcile net loss to net cash provided by / (used in) operating activities: | ||||||
| Increase in Due to Related Party | 915 | 375 | ||||
| Net Cash Provided by / (Used In) Operating Activities | - | - | ||||
| Net Change In Cash | - | - | ||||
| Cash at Beginning of Period | - | - | ||||
| Cash at End of Period | $ | - | $ | - |
| See Independent Auditor’s report and accompanying notes, which are an integral part of these financial statements. | 31 |
| iConsumer Corp. |
| NOTES TO THE FINANCIAL STATEMENTS |
| As of December 31, 2014 and December 31, 2013 and for the years then ended |
NOTE 1: NATURE OF OPERATIONS
iConsumer Corp. (the “Company”), is a corporation organized December 16, 2010 under the laws of Delaware. The Company was formed to provide money saving services to consumers through a web site that is designed to be searchable and discoverable by Google. As of December 31, 2014, it has not commenced planned principal operations nor generated significant revenue, though in the years preceding the commencement of its planned principal operations, the Company actively provided the service of directing web traffic to iGive.com, primarily aimed at Google and other search engines. Additionally, the Company’s activities since inception have consisted of formation activities and preparations to raise additional capital as described in Note 6. The Company is dependent upon additional capital resources for the commencement of its planned principal operations and is subject to significant risks and uncertainties; including failing to secure additional funding to operationalize the Company’s planned operations.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP) and Article 8 of Regulation S-X of the rules and regulations of the Securities and Exchange Commission (SEC).
The Company has elected to adopt early application of Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements; the Company does not present or disclose inception-to-date information and other remaining disclosure requirements of Topic 915.
The Company adopted the calendar year as its basis of reporting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Cash Equivalents
For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months or less.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability based on past credit history with clients and other factors. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance and current economic conditions. There are no accounts receivable or associated allowances for doubtful accounts established as of December 31, 2014 and December 31, 2013.
| See accompanying Independent Auditor’s report | 32 |
| iConsumer Corp. |
| NOTES TO THE FINANCIAL STATEMENTS |
| As of December 31, 2014 and December 31, 2013 and for the years then ended |
Property and Equipment
The Company has a policy to capitalize expenditures with useful lives in excess of one year and costs exceeding $1,000. No property and equipment has been recorded as of December 31, 2014 or December 31, 2013.
Fair Value of Financial Instruments
The Company discloses fair value information about financial instruments based upon certain market assumptions and pertinent information available to management. There were no financial instruments outstandingas of December 31, 2014 or December 31, 2013.
Concentrations of Credit Risks
The Company’s financial instruments that are exposed to concentrations of credit risk consist of its cash. The Company will place its cash and cash equivalents with financial institutions of high credit worthiness and has a policy to not carry a balance in excess of FDIC insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Revenue Recognition
The Company earns revenues through commissions, royalties, and advertising on its website and intends to earn revenues through agreements with vendors for web traffic and sales referred through the iConsumer.com website. The Company recognizes revenue in accordance with FASB ASC 605, Revenue Recognition, only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the services have been provided, and collectability is assured. Insignificant revenues have been earned or recognized for the years ended December 31, 2014 or December 31, 2013.
Net Loss Per Share
Net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted earnings per share. Basic and diluted earnings per share reflect the actual weighted average of common shares issued and outstanding during the period. There are no dilutive or potentially dilutive instruments outstanding as of December 31, 2014 or December 31, 2013. As a result, diluted loss per share is the same as basic loss per share for the periods presented.
Offering Costs
The Company complies with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A - "Expenses of Offering" with regards to offering costs. Prior to the completion of an offering, offering costs will be capitalized as deferred offeringcosts on the balance sheet. The deferred offering costs will be charged to stockholder’sequity upon the completion of an offering or to expense if the offering is not completed. The Company anticipates significant offering costs in connection with the Proposed Offering discussed in Note 6. No offering costs were incurred during the years ended December 31, 2014 and 2013.
| See accompanying Independent Auditor’s report | 33 |
| iConsumer Corp. |
| NOTES TO THE FINANCIAL STATEMENTS |
| As of December 31, 2014 and December 31, 2013 and for the years then ended |
Income Taxes
The Company accounts for income taxes with the recognition of estimated income taxes payable or refundable on income tax returns for the current period and for the estimated future tax effect attributable to temporary differences and carryforwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized in the immediate future. At December 31, 2014 and 2013, the Company had deferred tax assets of approximately $3,211 and $2,296, respectively, related to net operating loss carryforwards (NOL). Due to the uncertainty as to the Company’s ability to generate sufficient taxable income in the future and utilize the NOL’s before they expire, the Company has recorded a valuation allowance to reduce the net deferred tax asset to zero.
The Company reviews tax positions taken to determine if it is more likely than not that the position would be sustained upon examination resulting in an uncertain tax position. The Company did not have any material unrecognized tax benefit as of December 31, 2014 or December 31, 2013. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2014 and 2013, the Company recognized no interest and penalties.
The Company files U.S. federal tax returns. The U.S. federal tax returns were not filed for the Company for the years 2010-2014, in violation of IRS regulations and federal statutes. The Company filed the returns for each year 2010-2014 during July 2015. As each year incurred a net operating loss, no taxes were due when the returns were filed. However, $100 late filing penalties were assessed and paid for each year. The Company believes it is in compliance after filing these returns. All tax periods since inception remain open to examination by the taxing jurisdictions to which the Company is subject.
NOTE 3: STOCKHOLDER’S EQUITY
Class A Common Stock - The Company is authorized to issue 1,000,000 shares of Class A Common Stockat $0.001 par value. The company issued 1,000,000 shares of common stock to the sole stockholder at inception without cash payment. Therefore, an additional paid-in deficit was recorded to offset the par value of the issued shares.
Class B Common Stock - The Company is authorized to issue 1,000,000 shares of Class B Common Stockat $0.001 par value. The company issued 1,000,000 shares of common stock to the sole stockholder at inception without cash payment. Therefore, an additional paid-in deficit was recorded to offset the par value of the issued shares.Class B Common Stock holders are not entitled to vote on any matter submitted to a vote of the stockholders.
Subsequent to the years ended December 31, 2014 and 2013 the Company restructured its equity as described in Note 8.
| See accompanying Independent Auditor’s report | 34 |
| iConsumer Corp. |
| NOTES TO THE FINANCIAL STATEMENTS |
| As of December 31, 2014 and December 31, 2013 and for the years then ended |
NOTE 4: GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not commenced planned principal operations, has not generated meaningful revenues or profits since inception, and has sustained net losses of $915 and $375 for the years ended December 31, 2014 and 2013, respectively. The Company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional capital financing from its stockholder and/or third parties, including through the Proposed Offering described in Note 6. It plans to incur significant costs in pursuit of its Proposed Offering. No assurance can be given that the Company will be successful in these efforts.These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or theamounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 5: RELATED PARTIES
Prior to and during the years ended December 31, 2014 and 2013, the Company was subject to a three-party oral agreementwith iGive.com Holdings LLC (“iGive”) and Outsourced Site Services, LLC (“OSS”), both related parties under common control with shared ownership and management (referred to herein collectively as the “Related Parties”). This agreement stipulated that iConsumer Corp. maintain a website at iConsumer.com that directs traffic to iGive.com (owned and operated by iGive). It shall maintain that website in such a way as to maximize the traffic to iGive.com. In return, the Related Parties shall cover all of the costs of maintaining the iConsumer.com website. After launch of the full iConsumer web site, a site that promotes the iConsumer Corp. planned business operations, this agreement shall cease, and iConsumer Corp. shall be responsible for its own costs, or entering into a formal agreement with the either or both of the Related Parties or others. On June 19, 2015 iConsumer Corp. launched its web site thereby terminating this agreement. Subsequent to December 31, 2014, the Company entered into a formal written agreement with OSS for software license and support services, as described in Note 8.
As of December 31, 2014 and 2013 the Company owed $3,211 and $2,296, respectively, to the Related Parties for expenses paid on the Company’s behalf since inception.
NOTE 6: PROPOSED OFFERING
Subsequent to December 31, 2014, the Company began pursuing an offering (“Proposed Offering”). The Proposed Offering calls for the Company to offer for sale under Regulation A $1,000,000 of its Class A Non-Voting Preferred Stock at a to be determined price between $0.01 and $2.00 per share. Sales of these securities are expected to commence during 2015. The Company expects to incur costs of approximately $150,000 related to the Proposed Offering.
| See accompanying Independent Auditor’s report | 35 |
| iConsumer Corp. |
| NOTES TO THE FINANCIAL STATEMENTS |
| As of December 31, 2014 and December 31, 2013 and for the years then ended |
There is presently no secondary market for Company’s stock and therefore the Company cannot guarantee that its securities will ever be tradeable on an exchange or have any other liquidity. This offering is not yet finalized nor qualified by the Securities Exchange Commission (SEC) and is subject to changes. These financial statements should not be relied upon as a basis for determining the terms of the Proposed Offering as this information may not be current or accurate relative to the final terms of the Proposed Offering.
NOTE 7: RECENT ACCOUNTING PRONOUNCEMENTS
In June 2014, the FASB issued Accounting Standards Update (ASU) 2014-10 which eliminated the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and members’ equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. This ASU is effective for annual reporting periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015. Early application is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has early adopted the new standard effective as of the inception date.
In August 2014, the FASB issued ASU 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) –Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this update provide such guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the termsubstantial doubt,(2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures whensubstantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (oravailable to be issued). The amendments in this update are effective for public and nonpublic entities for annual periods ending after December 15, 2016.Early adoption is permitted. The Company has not elected to early adopt this pronouncement.
Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
| See accompanying Independent Auditor’s report | 36 |
| iConsumer Corp. |
| NOTES TO THE FINANCIAL STATEMENTS |
| As of December 31, 2014 and December 31, 2013 and for the years then ended |
NOTE 8: SUBSEQUENT EVENTS
Subsequent to December 31, 2014, the Company commenced plans and activities related to a Proposed Offering, as described in Note 6.
On June 19, 2015, the Company launched its web site, effectively commencing its planned principal business operations.
The Articles of Incorporation were Amended and Restated effective July 6, 2015. Among the revised provisions, the Company authorized 150,000,000 shares of Common Stock, par value $0.001 per share and reclassified "Class A Common Stock" to "Common Stock"; authorized 300,000,000 shares of Preferred Stock, par value $0.001 per share and reclassified "Class B Common Stock" to "Preferred Stock"; amended the power to authorize the number of authorized shares to by affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding shares of Common Stock of the Company. The terms and preferences of these reclassified shares were revised where Common Stock, among other provisions, entitles holders to ten votes for each share of Common Stock, subordinate dividend rights to Preferred Stock, and certain liquidation rights. Various other terms were revised and/or added to the Articles of Incorporation. The Company also ratified Bylaws formalizing the governance policies and procedures for the Company effective July 6, 2015.
The Company filed a Certificate of Designations, Preferences, and Rights of Series A Non-Voting Preferred Stock of iConsumer Corp. (under Section 151 of the Delaware General Corporation Law) on July 6, 2015, designating 250,000,000 shares of Preferred Stock authorized under the Amended and Restated Certificate of Incorporation filed July 6, 2015 as Series A Non-Voting Preferred Stock ("Series A Preferred Stock"), par value $0.001. The Series A Preferred Stock was granted certain rights and preferences including: dividend preference and liquidation priority with respect to unpaid dividends. The Series A Preferred Stock holders are not entitled to vote on any matters placed to a vote of the stockholders of the Company.
The Company entered into a recapitalization and exchange agreement effective July 6, 2015 with Robert Grosshandler. This agreement stipulates the terms of a tax-free reorganization pursuant to Internal Revenue Code section 368(a), where Robert Grosshandler transfers, assigns, delivers, and surrenders to the Company his pre-recapitalization shares and the Company issues post-recapitalization shares, among other pertinent terms. This exchange retires 1,000,000 Class A Common shares pre-recapitalization and issues 100,000,000 shares of Common Stock and 100,000,000 shares of Series A Non-Voting Preferred Stock post recapitalization.
As of the issuance date of these financial statements, 100,000,000 shares of Common Stock and 100,000,000 shares of Preferred Stock were issued and outstanding.
On July 6, 2015 by an Action by Joint Written Consent of Sole Director and Sole Stockholder, the Company elected Robert Grosshandler to serve as a member of the Board of Directors and as an Officer of the Company in the capacity of Chief Executive Officer, President, and Secretary. It alsoset the number of directors of the Company at one, established an Audit Committee of the Company naming Robert Grosshandler as the sole member of such, set the fiscal year as the calendar year, and other actions.
| See accompanying Independent Auditor’s report | 37 |
Effective May 1, 2015, the Company entered into a software license and services agreement (the “License Agreement”) with Outsourced Site Services, LLC (“OSS”), a related party as described in Note 5. Among the terms of the License Agreement, the Company’s operations will be run on technology licensed from OSS and OSS will provide the Company with certain support services, as defined in the License Agreement. For the use of these services and technology, the Company agrees to pay OSS 20% of its gross revenue, as defined in the License Agreement. The License Agreement provides that in the event the company wishes to assume responsibility for the support services provided by OSS, it can do so upon at least six months’ notice. In that event, the company will pay 5% of its gross revenues to OSS. Since OSS is under common control of Robert Grosshandler, he will have the power to determine whether the company will continue to be able to rely on the OSS license, and the price it pays for the license. The License Agreement has a term of 20 years.
The Company has evaluated subsequent events through August 27, 2015, the date the financial statements were available to be issued. Based on the evaluation, no additional material events were identified which require adjustment or disclosure.
38
PART III
INDEX TO EXHIBITS
| 2.1 | Amended Certificate of Incorporation |
| 2.2 | Bylaws |
| 3.1 | Certificate of Designations |
| 4 | Form of Subscription Agreement |
| 6.1 | Software Licenses and Services Agreement with Outsourced Site Services, LLC dated May 1, 2015 |
| 7 | Recapitalization and Exchange Agreement dated July 6, 2015 |
| 8 | Escrow Agreement (to be filed by amendment) |
| 9 | Auditors’ Consent |
| 12 | Opinion of KHLK LLP (to be filed by amendment) |
39
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on September 1, 2015.
iConsumer Corp., Inc.
| By | /s/ Robert N. Grosshandler |
| Robert N. Grosshandler, Chief Executive Officer of iConsumer Corp. Inc. |
This Offering Statement has been signed by the following persons in the and on the dates indicated.
| /s/ Robert N. Grosshandler | |
| Robert N. Grosshandler, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Sole Director | |
| Date: September 1, 2015 |
40