UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
(Name of small business issuer in its charter)
With copies to:
Wani Iris Manly, Esq.
W. Manly, P.A.
10 SW South River Drive, Suite 1712
Miami, Florida 33130
Telephone: (305) 407-8236
Facsimile: (786) 269-2187
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer o Accelerated Filer o
Non-accelerated Filer o Smaller reporting company x
(do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
(1) The proposed maximum offering price is based on the estimated high end of the range at which the common stock will initially be sold.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this Prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement is filed with the Securities and Exchange Commission and becomes effective. This Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the sale is not permitted.
Prospectus Subject to Completion dated October 11, 2011
PROSPECTUS (Subject to Competition)
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
1,886,500 Shares of Common Stock
This prospectus relates to periodic offers and sales of 1,886,500 shares of common stock the selling security holders, which consists of:
The sales price to the public is currently bid at $.60 per share on the OTC Markets Bulletin Board. There is currently no trading market for our common stock, however, we expect to see our common stock to become a traded security. If our common stock begins trading on the Bulletin Board, then the sales to the public will vary accordingly to selling decisions of each selling shareholder and the market for our common stock at the time of resale. There is no active market for our common stock.
The information in this prospectus is not complete and may be changed. Selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
TABLE OF CONTENTS
SUMMARY OF OUR OFFERING
This summary highlights selected information about our Company, VDO-Ph International. This summary is intended to highlight information contained elsewhere in this prospectus. You should carefully read the entire prospectus, including the section entitled "Risk Factors."
VDO-Ph. International (the "Company" or "VDO") is an operating company in it’s developmental stage. The Company was organized under the laws of the state of Nevada on April 8, 2010. During the 12 month period prior to incorporation, eight family members, which includes the current management, hired individuals and companies to complete research and development and software engineering and decided to move forward with this new product. The Company has developed a proprietary software to be used with a new business telephony appliance that combines audio and video telephony functions that provides the user multipoint to multipoint conference calling capabilities in addition to standard telephone functions all in one appliance. We formed our Company for the purpose of developing a software program which management believes will allow businesses to operate telephone (both digital and video), computer and Internet services from one appliance which has been enhanced with the Company’s software product. Although management does not have experience in the software business, they do have significant experience in operating other businesses and expect to use that experience in operating the Company. Although not experienced in running a public company, management believes being a reporting company is important to the capital markets for full disclosure of all material information. Management currently utilizes legal and accounting expertise required to run a reporting public company although funds are not currently available for such services. Management intends to devote full time to the Company when production begins and will continue to provide necessary funding.
Management can provide no assurance that the Company will be quoted on the bulletin board and the stock when and if quoted would most likely be a penny stock. (See “Risk Factors”) Using our software we intend to work directly with the cable companies who in turn would sell to businesses and homes an appliance which management believes will serves as a digital telephone, full motion video phone and an advanced computer system all in one appliance. We believe that businesses will be able to save money and become more efficient based on the fact our “all in one” product will allow them to operate at less expense than supporting three different appliances.
We are currently marketing our products in the US under the brand name VDO-Ph. International. Our software is intended to be loaded into selected computer products. Our product is intended to be marketed by the cable companies for sale to businesses initially and then to residential consumers as the Company grows. None of the Company’s current officers, directors, promoters or affiliates will use this Company as a vehicle for a private company to become a reporting public company. There is no plan or intention to engage in a merger or acquisition with an unidentified company. Our principal executive offices are located at 2700 E. Sunset Road, Bldg. B suite #18 Las Vegas, NV 89120 and our telephone number is (702)570-7700.
Our Financial Situation
Since the inception of our Company, we have incurred losses. Our auditors have indicated that there is substantial doubt regarding our ability to continue as a going concern. The opinion issued by our auditors reflects uncertainty regarding whether we have sufficient working capital available as of June 30, 2011 to enable the Company to continue operating as a going concern.
We will not be able to complete the development of our business plan or commence operations without additional financing which management has provided to date . We have no operations, profits, strategic relationships, products, acquisitions or revenues as of the date hereof. We have limited funds and we will continue to incur operating losses in the foreseeable future.
If we cannot operate profitably we may have to suspend operations. In order to become profitable we will need to generate revenues to offset our costs of sales and marketing, and general and administrative expenses. If we do not become profitable, we will need to raise additional capital to sustain our operations. However, we may be unable to secure additional financing on terms acceptable to us and we may not even be able to obtain any financing at all. If our losses continue and we are unable to secure sufficient additional financing and management is unable to continue funding us, we may ultimately fail and any investment would be lost in its entirety.
We are a development stage company and have generated limited revenues from operations. Our business plan was designed to create a viable business. We are a reporting company and are current with all reports as filed with the Securities and Exchange Commission. Our operations to date have been devoted primarily to startup and development activities, which include the following:
We are currently fully operational. In order to generate increased revenues, we must successfully address the following areas:
This prospectus relates to the sale of a total of 1,886,500 shares of our common stock. Up to 1,886,500 shares may be sold by the selling stockholders as set forth under the caption "Selling Stockholders". The distribution of the shares by the Selling Stockholders is not subject to any underwriting agreement. We will receive none of the proceeds from the sale of the shares by the Selling Stockholders. We will bear all expenses of the registration incurred in connection with this offering, but all selling and other expenses incurred by the Selling Stockholders will be borne by the Selling Stockholders.
Summary of Selected Financial Information
The following table sets forth summary financial data derived from our financial statements. The data should be read in conjunction with the financial statements and the related notes thereto as well as the "Management's Discussion and Plan of Operation" included elsewhere in this Prospectus.
Financial Data Summary
Balance Sheet Data
Statements of Operational Data
We are seeking additional financing to fund our product development and operations, and if we are unable to obtain funding when needed, our business would fail
We need additional capital to obtain lab and office space and hire five software technicians, locate and develop our product manufacturing relationships, and to secure the means necessary to deliver our product to our customers at their location. We will be required to fund operations through management as well as the sale of equity shares and may not be able to continue as a going concern if we are unsuccessful in selling such shares. Any additional equity financing may be dilutive to stockholders and such additional equity securities may have rights, preferences or privileges that are senior to those of our existing common stock.
Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on our operating flexibility. Our failure to successfully obtain additional future funding may jeopardize our ability to continue our business and operations.
If we are unable to establish and maintain relationships with our targeted audience, we would not be able to continue with operations
We intend to establish relationships with those engaged in the telephony industry through a multifaceted marketing plan designed to distribute our VDO products and services to specific target markets through the eight major cable companies. There is intense competition for these relationships and we may not be able to attract and retain these relationships in light of competitors with larger budgets and pre-existing relationships. If we cannot successfully secure these relationships, our business would fail and any investment made into the Company would be lost in its entirety.
Our success is dependent on our officers and directors to properly manage the Company
We are heavily dependent on the personal efforts and abilities of our Officers and Directors to manage the Company’s proposed business. In the event we lose any of our officers and directors, our business could be adversely affected. Currently, we do not have a succession plan in place nor do we carry any insurance to compensate for such a loss.
Our officers and directors have no experience in operating a company in a similar industry nor do they have experience running a public reporting company
Our officers and directors have never operated any company in an industry similar to that of the Company. Although they do have general experience in running a business, they may not be able to readily address specific issues related to the Company’s contemplated operations. In addition, none of our officers and directors have experience with operating a public company that is a reporting company with the Securities and Exchange Commission. This includes their obligation to prepare and disclose material information to the public in a timely manner and to implement specific accounting controls and procedures to meet the requirement under the Sarbanes Oxley Act of 2002. Failure of our officers and directors to operate within the industry or to implement proper disclosure and accounting controls could cause the Company to fail or to become subject to fines and/or sanctions by the SEC. In either case, investors could lose their entire investment.
Non-Officer and Director Family Members May Exert Undue Influence Over Management
Some of the founding family members are not officers or directors of the Company; however, they own a significant percentage of the Company’s common stock. Family members not serving as officers and directors are in a position to exert control over the Company’s operations even though there is a lack of background information available to the shareholders. In the event such control is exerted by such family members, the Company’s business could be adversely affected without our shareholders having full information as to their respective backgrounds.
As a result of becoming a reporting company, our expenses have increased significantly
As a result of becoming a reporting company whose shares are registered pursuant to the Securities Act of 1933, as amended, our ongoing expenses have increased significantly, including ongoing public company expenses, including increased legal, accounting expenses as a result of our status as a reporting company, and expenses incurred in complying with the internal control requirements of the Sarbanes-Oxley Act. These increased expenses which are anticipated to be $50,000 annually may negatively impact our ability to become profitable.
Changing and unpredictable market conditions including obsolete technology may impact the demand for our products
There can be no guarantee that current demand for all-in-one telephone, video and internet products will continue. There are several other companies currently marketing similar products and if these companies are successful in developing software applications like ours, our software platform may become obsolete and undesirable in the marketplace. In such a scenario, our products may well no longer be salable to our prospective customers.
We will rely on others for production of our hardware products; any interruptions of these arrangements would disrupt our ability to fill customers' orders and have a material impact on our ability to operate
Our software platform can only be delivered based on the cable companies’ customers having the appropriate hardware prior to the delivery of our software platform. Any increase in labor, equipment, or other production costs could adversely affect our cost of sales. The manufacture of hardware required for our product installation could be subject to unforeseen manufacturing and operational problems. If the manufacturers are unable to meet manufacturing requirements, it will adversely affect our ability to fill customer orders through the download of our software platform. If this were to occur, the resulting decline in revenue would harm the business.
RISKS RELATED TO OUR COMMON STOCK
We are controlled by current officers, directors and principal stockholders and they will be able to control the outcome of all corporate matters on a non-arm’s length basis.
Our officers and directors and principal founding stockholders beneficially own approximately 66% of the outstanding shares of our common stock. So long as our officers and directors and principal founding stockholders control a majority of our shares, they will continue to have the ability to elect our directors and determine the outcome of votes by our stockholders on corporate matters, including mergers, sales of all or substantially all of our assets, charter amendments and other matters requiring stockholder approval. This controlling interest may have a negative impact on the market price of our common stock by discouraging third-party investors.
Although the Company is not offering any shares, if you purchase shares from the selling shareholders, you will experience immediate and substantial dilution
The $0.60 per share offering price of the common stock being sold under this prospectus is based on the current bid price of the Company’s common stock. The price does not bear any relationship to our assets, book value, earnings or net worth and it is not an indication of actual value. Many of the initial shareholders paid less than $.60 per share for their shares and you will suffer substantial dilution based on shares issued at a lower price. You may also suffer additional dilution in the future from the sale of additional shares of common stock or other securities.
There is currently no market for VDO-Ph International common stock, but if a market for our common stock does develop, our stock price may be volatile
There is currently no market for our common stock and there is no assurance that a market will develop. If a market develops, it is anticipated that the market price of our common stock will be subject to wide fluctuations in response to several factors including:
There are legal restrictions on the resale of the common shares offered, including penny stock regulations under the U.S. federal securities laws. These restrictions may adversely affect the ability of investors to resell their shares
We anticipate that our common stock will continue to be subject to the penny stock rules under the Securities Exchange Act of 1934, as amended. These rules regulate broker/dealer practices for transactions in "penny stocks." Penny stocks are generally equity securities with a price of less than $5.00. The penny stock rules require broker/dealers to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations and the broker/dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction, the broker and/or dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.
The transaction costs associated with penny stocks are high, reducing the number of broker- dealers who may be willing to engage in the trading of our shares. These additional penny stock disclosure requirements are burdensome and may reduce all of the trading activity in the market for our common stock. As long as the common stock is subject to the penny stock rules, holders of our common stock may find it more difficult to sell their shares.
Future sales of the company's common stock by the selling shareholders could cause our stock price to decline
We cannot predict the effect, if any, that market sales of shares of the Company's common stock or the availability of shares for sale will have on the market price prevailing from time to time. Sales by the Selling Shareholders named herein of our common stock in the public market, or the perception that sales by the Selling Shareholders may occur, could cause the trading price of our stock to decrease or to be lower than it might be in the absence of those sales or perceptions.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements relating to revenue, revenue composition, demand and pricing trends, future expense levels, competition in our industry, trends in average selling prices and gross margins, the transfer of certain manufacturing operations to contract manufacturers, product and infrastructure development, market demand and acceptance, the timing of and demand for products, customer relationships, employee relations, plans and predictions for acquired companies and assets, future acquisition plans, restructuring charges, the incurrence of debt, and the level of expected capital and research and development expenditures. Such forward-looking statements are based on the beliefs of, estimates made by, and information currently available to the Company's management and are subject to certain risks, uncertainties and assumptions. Any other statements contained herein (including without limitation statements to the effect that the Company or management "estimates," "expects," "anticipates," "plans," "believes," "projects," "continues," "may," "could," or "would" or statements concerning "potential" or "opportunity" or variations thereof or comparable terminology or the negative thereof) that are not statements of historical fact, reflect our current views with respect to future events and financial performance, and any other statements of a future or forward looking nature are forward looking statements. The actual results of the Company may vary materially from those expected or anticipated in these forward-looking statements. The realization of such forward-looking statements may be impacted by certain important unanticipated factors, including those discussed in "Risk Factors" and elsewhere in this prospectus.
Because of these and other factors that may affect our operating results, our past performance should not be considered as an indicator of future performance, and investors should not use historical results to anticipate results or trends in future periods. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers should carefully review the risk factors described in this and other documents that we file from time-to-time with the Securities and Exchange Commission, including subsequent Current Reports on Form 8-K, Quarterly Reports on Form l0-Q and Annual Reports on Form l0-K.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of shares offered by the Selling Stockholders.
DETERMINATION OF OFFERING PRICE
The $0.60 per share offering price of the common stock being sold under this prospectus is reflected based upon the current bid price of the Company’s common stock. The price does not bear any relationship to our assets, book value, earnings or net worth and it is not an indication of actual value.
The Company is not offering any securities in this offering and therefore no additional shares will be issued and no additional dilution will be incurred.
PLAN OF DISTRIBUTION
The selling shareholders may be deemed underwriters. They may sell some or all of their common stock in one or more transactions, including block transactions.
The sales price to the public is fixed at $.60 per share until such time, as the shares of our common stock become traded on the Bulletin Board operated by the Financial Industry Regulatory Authority (“FINRA”). The sales price of our common stock to the public will vary according to the selling decisions of each selling shareholder and the market for our stock at the time of resale. In circumstances, the sales to the public may be;
The selling shareholders may also sell their shares directly to market makers acting as principals or brokers or dealers, who may act as an agent or acquire the common stock as a principal. Any broker or dealer participating in transactions as agents may receive a commission from the selling shareholder (s) or if they act as an agent for the purchaser of such common stock from such purchaser. The selling shareholders will likely in conjunction with such resale’s may pay or receive commissions to or from the purchaser of such shares. These transactions may involve cross and block transactions that may involve sales to and through other brokers-dealers.
We can provide no assurance that all or any of the common stock offered will be sold by the selling shareholders. We are bearing all costs relating to the registration of the common stock. The selling shareholders, however, will pay a commission or other fees payable to brokers or dealers in connection with any sale of common stock. The selling shareholders must comply with the requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934 in the offer and sale of common stock. In particular, during such times as the selling shareholders may be deemed to be engaged in a distribution of common stock, and therefore be considered to be an underwriter, they must comply with applicable law and may among other things not engage in any stabilization activities in connection with our common stock.
There is no assurance that any of the selling shareholders will sell any or all of the shares offered by them. Under the securities law of certain states, the shares may be sold in such states only through registered or licensed broker-dealers. In addition in certain states the shares may not be sold unless they have been registered or qualified for sale in that state or an exemption from registration or qualification is available and is met.
Of the 20,169,768 shares of common stock outstanding as of June 30, 2011, 19,333,796 are owned by our officers, directors and founding shareholders some of whom received shares for services and which may only be sold in compliance with Rule 144(i) or Section 4(1) of the Securities Exchange Act of 1933 unless otherwise registered.
We have not declared any cash dividends, nor do we intend to do so. We are not subject to any legal restrictions respecting payment of dividends, except that they may not be paid to render us insolvent. Dividend policy will be based on our needs and it is anticipated that all available cash will be needed for our operations in the foreseeable future.
SELLING SECURITY HOLDERS
The persons listed in the following table plan to offer the shares shown opposite their respective names by means of this prospectus. The owners of the shares to be sold by means of this prospectus are referred to as the "selling" shareholders". Each Selling Stockholder purchased the securities registered hereunder in accordance with exemptions provided by Section 4(2) of the Securities Act of 1933 , as amended. No Selling Stockholder has any agreement or understanding, directly or indirectly with any person to distribute the securities. The Selling Stockholders and any underwriters, broker-dealers or agents participating in the distribution of the shares of our common stock may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, and any profit from the sale of such shares by the Selling Stockholders and any compensation received by any underwriter, broker-dealer or agent may be deemed to be underwriting discounts under the Securities Act. The Selling Stockholders may agree to indemnify any underwriter, broker-dealer or agent that participates in transactions involving sales of the shares against certain liabilities, including liabilities arising under the Securities Act.
In completing sales, brokers or dealers engaged by the selling shareholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from selling shareholders in amounts to be negotiated. As to any particular broker-dealer, this compensation might be in excess of customary commissions. Neither, we nor the selling stockholders can presently estimate the amount of such compensation.
The selling shareholders and any broker/dealers who act in connection with the sale of the shares may be deemed to be "underwriters" within the meaning of the Securities Acts of 1933, and any commissions received by them and any profit on any resale of the shares as a principal might be deemed to be underwriting discounts and commissions under the Securities Act.
If any selling shareholders enters into an agreement to sell his or her shares to a broker/dealer as principal and the broker/dealer is acting as an underwriter, we will file a post-effective amendment to the registration statement, of which this prospectus is a part, identifying the broker/dealer, providing required information concerning the plan of distribution, and otherwise revising the disclosures in this prospectus as needed. We will also file the agreement between the selling shareholder and the broker/dealer as an exhibit to the post-effective amendment to the registration statement.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliate. In addition, we will make copies of the Prospectus as it may be supplemented or amended from time to time available to the selling stockholder for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholder may indemnify any broker-dealer that participates in transactions involving the sale of shares against certain liabilities arising under the Securities Act.
To our knowledge, there are currently no plans, arrangements or understandings between any Selling Stockholder and any underwriter, broker-dealer or agent regarding the sale of shares of our common stock by the Selling Stockholders. The Selling Stockholders will pay all fees, discounts and brokerage commissions in connection with any sales, including any fees to finders.
Any shares of common stock covered by this prospectus that qualify for sale under Rule 144 of the Securities Act may be sold under Rule 144 rather than under this prospectus. The shares of our common stock may be sold in some states only through registered or licensed brokers or dealers. In addition, in some states, the shares of our common stock may not be sold unless they have been registered or qualified for sale or the sale is entitled to an exemption from registration. We will pay all expenses of preparing and reproducing this prospectus with respect to the offer and sale of the shares of common stock registered for sale under this prospectus, including expenses or compliance with state securities laws and filing fees with the SEC.
The Company is registering for offer and sale by the holders thereof 1,886,500 of common stock held by such shareholders. All the Selling Shareholders' Shares registered hereby will become tradable on the effective date of the registration statement of which this prospectus is a part.
The following table sets forth ownership of the shares held by each person who is a selling shareholder
The selling shareholders either purchased their shares or received them for services rendered at a price of par value. All such shares were sold for cash or services since the date of incorporation. None of the selling shareholders have or have had material relationship with the Company or its predecessor or affiliates during the last three years. W. Manly, P.A. and Richard P. Greene Business and Legal Support, Inc have only worked with the Company in connection with this filing and have had no material relationship to the Company. None of the selling shareholders are a broker- dealer. None of the other persons or entities receiving shares for services have past relationships with the Company.
*Less than one percent (1%)
(1) Assumes current issued and outstanding shares
(2) Wani Manly, Esq. is the sole shareholder of W. Manly, P.A.
Our shares are “penny stocks” covered by Section 15 (g) of the Exchange Act, and Rules 15 g-1 through 15g-6 and Rule 15g-9 promulgated there under. The impose additional sales practice requirements on brokers-dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). While Section 15(g) and Rules 15 (g)-1 through 15(g)-6 apply to broker-dealers, they do not apply to us.
Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.
Rule 15g-2 declares unlawful broker-dealer transactions in penny stocks unless the broker-dealer has first provided to the customer a standardized document.
Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in questions.
Rule g-4 prohibits broker-dealers from completing penny stock transfers for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration’s received as a result of the penny stock transaction.
Rule g-5 requires that a broker-dealer executing a penny stock transaction, other than the one exempt under Rule 15g-1, discloses to its customer at the time of or prior to the transaction, information about the sales persons compensation.
Ruleg-6 requires that a broker-dealer selling penny stocks to provide their customers with the monthly account statements.
Rule g-9 requires broker-dealers to approve the transaction for the customers’ account: obtain a written agreement from the customer setting forth the identity and quantity of stock being purchased; obtain from the customer information regarding his/her investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his/her rights and remedy’s in cases of fraud in the penny stock transaction; and FINRA’a toll free telephone number a d the central number of the North American Administrators Association, for information on the disciplinary history of broker-dealers and their associated persons. The application of the penny stock rules may affect your ability to resell your shares.
FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low prices securities to their non-institutional customer, brokers/dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is to high probability that the speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for a broker-dealer to recommend that their customers buy our common stock, which may have an effect; of reducing the level of trading activity and the liquidity of our common stock. Further many broker/dealers charge higher transactional fees for penny stock transaction. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a stockholders ability to resell shares of our common stock.
Again, the forgoing rules apply to broker-dealers. They do not apply to us in any manner whatsoever. Since our shares are covered by Section 15(g) of the Exchange Act, which imposes additional sales practice requirements on broker/dealers, many broker-dealers may not want to make a market in our shares or conduct any transactions in our shares. As such, your ability to dispose of your shares may be adversely affected.
DESCRIPTION OF SECURITIES
We have 20,169,768 shares of our common stock issued and outstanding as of June 30, 2011.
There is currently no public market for our common stock and there can be no guarantee that any such market will ever develop.
The Company is authorized to issue up to 200,000,000 shares of common stock, par value $.001. Holders of our common stock are entitled to one vote for each share in the election of directors and on all matters submitted to a vote of stockholders. There is no cumulative voting in the election of directors.
The holders of the common stock are entitled to receive dividends, when and as declared, from time to time, by our board of directors, in its discretion, out of any assets of the Company legally available.
Upon the liquidation, dissolution or winding up of the Company, the remaining assets of the Company available for distribution to stockholders will be distributed among the holders of common stock, pro rata based on the number of shares of common stock held by each.
Holders of common stock generally have no preemptive, subscription, redemption or conversion rights. The outstanding shares of common stock are, when issued, fully paid and non-assessable.
No holder of any shares of VDO-Ph. International stock has preemptive or preferential rights to acquire or subscribe for any unissued shares of any class of stock or any unauthorized securities convertible into or carrying any right, option or warrant to subscribe for or acquire shares of any class of stock not disclosed herein.
Holders of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares voting for the election of directors can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of VDO's directors.
The Company has no class of capital stock designated as preferred stock.
The payment by us of dividends, if any, in the future rests within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition, as well as other relevant factors. We have not paid any dividends since our inception and we do not intend to pay any cash dividends in the foreseeable future, but intend to retain all earnings, if any, for use in our business.
ClearTrust, LLC, 16540 Pointe Village Drive, Suite 201, Lutz, Florida 33558, telephone 813-235-4490.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
The law office of W. Manly, P.A., of Miami, Florida, as independent legal counsel, has provided an opinion and consent on the validity of VDO-Ph. International issuance of common stock and is presented as an exhibit to this filing. W. Manly, P.A. owns 250,000 shares of the Company’s common stock and is offering 225,000 shares pursuant to this offering.
The financial statements included in this Prospectus and in the Registration Statement have been audited by David Aronson, CPS, P.A., of North Miami Beach, Florida to the extent and for the period set forth in their report (which contains an explanatory paragraph regarding VDO's ability to continue as a going concern) appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
DESCRIPTION OF BUSINESS
VOO-Ph. International (the "Company" or "VDO") is a development company and has commenced generating revenues. The Company was organized under the laws of the state of Nevada on April 8, 2010.
VDO has never declared bankruptcy, it has never been in receivership, and it has never been involved in any legal action or proceedings. Since becoming incorporated, VDO has not made any significant purchase or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations. VDO is not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, since it has a specific business plan or purpose.
Since our inception, we have been engaged in business planning activities, including researching the industry and marketing plans, developing our economic models and financial forecasts, performing due diligence regarding potential customers most suitable for our VDO products and identifying future sources of capital.
Currently, VDO has three officers and directors who have assumed responsibility for all planning, development and operational duties, and will continue to do so throughout the beginning stages of the Company, Other than the officers and directors, there are 5 employees at the present time.
VDO currently has no intention to engage in a merger or acquisition with an unidentified company. We may pursue strategic acquisitions that complement our current business model within the telecom which may allow us to expand our activities and capabilities and advance our production.
VDO's fiscal year end is December 31.
Business of Issuer
We formed our Company for the purpose of marketing and selling our telephony software platform for commercial and residential use. Using our software we intend to work directly with the cable companies and/or software retailers who in turn are in a position to sell to business and homes our software product which will allow their existing hardware to serve as a digital telephone, full motion video phone and computer all in one. We believe businesses will be able to save money and become more efficient based on the fact that our product will allow them to operate on a single appliance that now takes 3 different appliances to do the same task. Our developed software is able to demonstrate these functions as of this date. The following challenges currently exist for us to operate successfully.
We intend to begin marketing our products in the U.S. under the brand name VDO-Ph. International. Our intended products currently are not subject to any regulatory requirements.
Management believes that the web cam industry has not only become part of the day-to-day life of millions of people domestically, but it is also starting to capture the business market as well. Teleconferencing and tele-presence are common words for an application used by large or medium sized business. Teleconferencing is the ability of point- to-point video calling between two parties in two different locations anywhere in the world that has a high bandwidth means of communication.
Tele-presence is the ability to provide a video presence via a conference room to another conference room that provides access to groups of people in each of the conference room facilities.
VDO is able to provide up to eight (8) Web Cam images at the same time from eight (8) different desk top locations and can demonstrate this ability at the present time in broad band facilities. In addition, VDO provides via video calls to a business all of the standard functions of a standard voice grade digital business telephone from answer call, hold, transfer, video "out of office" message plus a full contact directory of customers with video capabilities with simple touch to call simplicity. Most important is the fact that video communications by the business to its customers will put the personality back in that business that made it successful to begin with.
We have developed a, telephony software-based platform to create, highly advanced telephony appliance. The Company intends to obtain protection for its property as soon as possible. The design of product is intended to combine our telephony software with an advanced computer "core" system manufactured by a major computer manufacturer that will provide three operational modes - voice, keystroke, and touch screen - in a user-friendly format. Our system will provide businesses and homes a menu of features which the company believes has not been offered before to the consumers. The Company intends to offer its telephony system to the business market for the purpose of updating current business telephony systems as well as new businesses just starting which will be the focus of marketing by the Company cable companies.
This software based computer appliance will include Wi-Fi and WAN digital connectivity to an unlimited amount of offices within the clients facility. The appliance has the ability to provide TV quality streaming video on any size color screen with PIP and Desk Top Conferencing capability. In addition, the appliance loaded with our software will provide all the functions of a business based digital telephone as well as those functions mirrored via a large screen video telephone all commanded by touch, voice or keystroke.
Our software platform which has been developed in house is loaded into an off the shelf manufactured computer, the result being a “3 appliances in 1” and what the Company believes to be a cutting edge business solution. Our software currently provides the capability to have video calls and provide tele-presence.
The extent of manufacturing is the installation/ loading of our software Operating System. This and other software programs are loaded in the off the shelf computer made by Hp (or Sony or Dell) which has full computer capabilities which can be enhanced by our software functions. For purposes of clarity, only our software provides the functions attributed to the telephone, full motion video phone and computer services we intend to offer. Most off the shelf computers come with their own operational software like Windows 7, Word and Home Office. We will download our software platform via the cloud to our users. The cable companies marketing our product will be responsible to provide customers adequate bandwidth.
The Company has completed the development of its software over the past several months. The following sets forth the functions that our software can achieve at this time. The operational heading sets forth those functions that have been tested and can be fully demonstrated. By utilizing our software, we made telephone calls to cell phones, digital lines, standard two pair lines, local calls and long distance calls where we both transmitted and received. As developed, our software package will turn a computer into a fully operational digital phone which can be controlled by voice, touch and key stroke. The following chart sets forth the operational and non-operational functions of the services we intend to provide. These functions are all from our created software. In addition, any reference to providing fiber communications abilities is not a function of the Company, but provided as part of the telephony service offered by outside broadband servers. This explains the chart on the previous page because the broadband service providers will provide the broadband requirements to deliver TV quality to visual messages.
Our software currently provides capability to have video calls.
Our principal market is somewhat unique in that we have a defined market with a singular purpose. That market is the cable companies of the United States who have become the new telephone companies with the advent of digital telecommunications. When a new business opens its doors, one of the very first items on the agenda is a broadband communication source. The Telco's of the world can hand off transmission with DSL, a far cry from a 1.5Mbps our system operates on plus that is the base speed for most cable companies. Broadband provides the abilities of high speed computer activities as well as unlimited line access and much reduced telephone charges, including long distance.
VDO's intended market is the eight (8) cable companies of the USA. They include Cablevision, Comcast, Cox Communications, Cable One, Charter Communications, Media Com, RCN and Time Warner Cable. These eight companies control not only the domestic television market but also the domestic home market for broadband. In addition, with their abilities in the digital world, they are well on their way to controlling the telephone market commercially. It should be noted the Company does not have any agreements or understandings with any of the cable companies at this time.
As an example of the effectiveness of cable in the business world, we will take Comcast as an example. As of 2007, Comcast controlled over 15 million Internet users, 25 million TV subscribers and 6.4 million telephone subscribers making Comcast the third largest Telco provider in the US. The geographic area covered by these eight cable companies is the entire 48 states.
Using the cable companies as the marketing force for the VDO software based appliance will provide product exposure to many businesses nationwide.
The Company's strategic marketing plan is to develop a market in the Las Vegas Valley in Nevada. This is also home to one of the COX Media cable franchises as well as where the Company currently has its corporate offices, tech facility and customer call center. The Company intends to work with Cox in the development of this market area. (At present, the Company has no agreement with Cox nor does it have a time table with Cox in any form.) Should this proposed work agreement not take place, it is the Company’s intent to move forward on its own in marketing the Valley’s business community or to work with other telecom providers and/or software retailers.
The advantage to cable companies to use our product is that we will give them an exclusive arrangement. Our software loaded appliance may provide the cable companies the potential of securing a greater market share of the telephone - internet - television market.
The Company intends, as part of its leasing program to the cable companies, to provide preferred pricing packages, full service call center and full service lease collections. Furthermore, if the cable companies become a marketing partner to the company the Company, intends, from its receipts from the credit card swipe, to provide a further incentive to the cable companies of one-half percent of all revenues generated through the card system in that cable company's market area.
Based upon the functions provided by our currently developed software, we intend to provide the domestic market and businesses with the following services and equipment.
The cost to businesses based upon managements expectations is as follows:
Additional multi user leasing agreements are available for larger office installations by way of specified quotations.
The Company believes the key challenges it will face are as follows:
Presently, the Company has no affiliations with sources for obtaining such financing.
Management believes that at the present time, no company is developing a telephony Operating System for business like that of the Company’s software platform which can be demonstrated using its various component programs. We believe we will be the first to market, however, we expect competition to follow. Other companies that are involved in the video telephony business include but are not limited to CISCO, HP, SKYPE, and MSN. These companies are significantly larger than VDO-Ph International but the Company believes its marketing plan will help level the playing field even though at present, the Company may not be able to reach its proposed marketing program for lack of funds.
Other than our officers and directors, there are five employees of the Company. Our officers and directors intend to do whatever work is necessary to bring the Company to the point of earning increased revenues from the sale of our products.
VDO has not yet implemented any board committees as of the date of this Prospectus.
There is no maximum number of directors VDO is authorized to have. However, in no event may VDO have less than one director. Although the Company anticipates appointing additional directors, it has not identified any such person(s).
DESCRIPTION OF PROPERTY
VDO's corporate office is located at 2700 East Sunset Road, Building B, Suite 18, Las Vegas, NY 89128 and our telephone number is 702-570-7700.
VDO's management does not currently have policies regarding the acquisition or sale of real estate assets primarily for possible capital gain or primarily for income. VDO does not presently hold any investments or interests in real estate, investments in real estate mortgages or securities of or interests in persons primarily engaged in real estate activities.
We are not currently a party to any legal proceedings. VDO's officers and directors have not been convicted in any criminal proceedings nor has they been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.
The Company's officers and directors have not been convicted of violating any federal or state securities or commodities law.
There are no known pending legal or administrative proceedings against the Company.
This section must be read in conjunction with the Audited Financial Statements included in this prospectus.
Plan of Operation
We are a development stage company, incorporated on April 8, 2010 and have generated initial revenues from our business operations subsequent to June 30, 2011. We plan to enter into the telephony business by way of our software that enables a computer to be three services in one. See "Description of Business" contained herein.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve (12) months.
Our auditors' opinion is based on the uncertainty of our ability to establish profitable operations.
The opinion results from the fact that we have not generated significant revenues. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our Company and funding from our founding shareholders. We must raise cash to sustain our existing operations.
Our Officers and Directors are responsible for our managerial and organizational structure which will include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, they will be responsible for the administration of the controls. Should they not have sufficient experience, they may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the Securities and Exchange Commission which ultimately could cause you to lose your investment. The family members meet via VDO-Ph’s video telephony method on a daily basis. Their discussions cover such topics as competition growth, new companies entering the video market, interviewing potential candidates for various managerial positions in the Company, review of Company policies with relations to Human Resources, personnel record keeping, payroll review, bidding of work benches and other requirements needed for production and a broad discussion as to what the Company’s future web site needs to do and what they should look at.
Currently we are in our early operational and development stage. The April 8, 2010 date of incorporation is not indicative of the time the Company was actually founded by the family which was May, 2009 but is representative of the time and date when it was determined by the family members after 12 months of initial research and analysis of the potential financial requirements and financial returns that development of a new business telephony system could require/achieve. From information gathered by an out sourced research company on past, current and future business telephone services the family determined (with this data) to take the next step to analyze (by hiring several programming companies) the complications, if any, in development of the proposed new telephony system.
Since inception through June 30, 2011 the Company has had limited revenues. For the six months and three months ended June 30, 2011 and for the period from inception to June 30, 2011 we had total expenses of $155,369, $61,616 and $327,651 respectively. Such expenses have been incurred in the development of our product, the expansion of our facilities and for administrative expenses. For the same periods reflected above we have a net loss of $167,562, $73,809, and $339,844, respectively. This is due to development stage costs and costs related to bringing our product to market, which happened in the third quarter of 2011.
The new appliance developed provides a combination of computer, internet, digital telephone, video telephone, and tele-presence capabilities and provide the business market with the same advances the domestic market has had over the last few years with cellular, web cams, and 4G networks.
The Company determined that the three systems that could be used for the appliance were Hp, Micros and Dell. These computers were all running Windows 7 and had no conflict to the new telephony Operating System. In addition, all three fit the design desires. In talking with these firms, it was concluded that HP could provide the quantities that may be required and at a very reasonable OEM fee structure. The Company completed the development of the software and presented a viable product in January 2011.
The new appliance developed provides a combination of computer, internet, digital telephone, video telephone, and tele-presence capabilities and provide the business market with the same advances the domestic market has had over the last few years with cellular, web cams, and 4G networks.
The Company determined that the three systems that could be used for the appliance were Hp, Micros and Dell. These computers were all running Windows 7 and had no conflict to the new telephony Operating System. In addition, all three fit the design desires. In talking with these firms, it was concluded that HP could provide the quantities that may be required and at a very reasonable OEM fee structure. The Company completed the development of the software and presented a viable product in January 2011.
Results of Operations
Since January 2011, the Company has received continued interest form Cox Media for the product. The Company has reached an agreement with Cox Media whereby the Company will assist Cox Media in the development of their SIP communication system for the purpose of facilitating the implementation of the Company’s software based telephony appliance in Las Vegas, Nevada. Our proprietary imbedded software combines Polycom with Hewlett Packard (“HP”) and has the capability of providing tele-presence telecommunications. The Company intends to use HP appliances, Logitech web cams and Polycom hand sets in conjunction with its software based product. The Company has expanded its operational facilities and intends to have additional space of 150,000 square feet available for operations in the fourth quarter of 2011.
Impact of Inflation
We believe that the rate of inflation has had negligible effect on us. We believe we can absorb most, if not all, increased non-controlled operating costs by operating our Company in the most efficient manner possible.
Cash Flows from Investing Activities
We made no investments as of June 30, 2011.
Cash Flows from Financing Activities
We have financed our operations from the issuance of equity securities and loans from family members. Net cash provided by financing activities through June 30, 2011 relates to the sale of shares of common stock to shareholders in private transactions exempt from registration pursuant to Section 4(2)of the Securities Act of 1933, as amended. We intent to continue to raise expansion capital through private placement or debt financing.
There were no intangible assets during the period ended June 30, 2011.
There were no material commitments for the period ended June 30, 2011.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Cash and Cash Equivalents
We consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. We have no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
The Company accounts for income taxes as outlined in ASC 740 “Income Taxes”, which was previously Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Fair Value of Financial Instruments
The Company considers that the carrying amount of financial instruments, including accounts payable, approximates fair value because of the short maturity of these instruments.
Share Based Payments
(included in ASC 718 “Compensation-Stock Compensation”)
In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R), companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees or independent contractors are required to provide services. Share-based compensation arrangements include stock options and warrants, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, or “SAB 107”. SAB 107 expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provides the staff's views regarding the valuation of share-based payment arrangements for public companies. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule amending the compliance dates for SFAS 123(R). Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under SFAS 123.
The Company has fully adopted the provisions of SFAS No. 123(R) and related interpretations as provided by SAB 107. As such, compensation cost is measured on the date of grant as the fair value of the share-based payments. Such compensation amounts, if any, are amortized over the respective vesting periods of the share-based payments.
Recent Accounting Pronouncements
The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
If VDO does not produce sufficient cash flow to support its operations over the next 12 months, the Company will need to raise additional capital by issuing capital stock in exchange for cash in order to continue as a going concern. There are no formal or informal agreements to attain such financing. VDO cannot assure any investor that, if needed, sufficient financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for operations to continue and any investment made by an investor would be lost in its entirety.
VDO management will incur further development costs within the next twelve months (12) as it continues to expand its market to the domestic and medical markets.
VDO currently does not own any significant plant or equipment that it would seek to sell in the near future.
VDO management anticipates hiring additional employees over the next twelve (12) months as needed. Currently, the Company believes the services provided by its employees, officers and directors appear sufficient at this time.
The Company has not paid for expenses on behalf of any directors. Additionally, VDO believes that this policy shall not materially change within the next twelve months.
The Company has no plans to seek a business combination with another entity in the foreseeable future; however, it may entertain strategic acquisitions in the telephony sector which complement its business plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to VDO who own more than 5% of the outstanding common stock as of the date of this prospectus, and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.
The table below sets forth all cash compensation paid or proposed to be paid by us to the chief executive officer and the most highly compensated executive officers, and key employees for services rendered in all capacities to the Company during fiscal year 2010.
Summary Compensation Table
Compensation Policy: Because we are still in the early stages of formation and development, our directors and officers are not currently receiving any compensation.
Stock Option: Because we are still in the early stages of formation and development, our directors and officers have not received any stock options.
Bonuses: To date no bonuses have been granted. Any bonuses granted in the future will relate to meeting certain performance criteria that are directly related to areas within the executive's responsibilities with the Company. As the Company continues to grow, more defined bonus programs will be created to attract and retain our employees at all levels.
Stock Option Plans:
Our board of directors has not adopted any Stock Option Plans as of the date of this prospectus.
Compensation of Directors:
Because we are still in the development stage, our directors are not receiving any compensation other than reimbursement for expenses incurred during their duties.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our executive officers and directors and their age as of the date of this prospectus are as follows:
Executive Officers and Directors
The term of office for each director is one year, or until the next annual meeting of the shareholders. All of our executive officers and directors are family members and founders of the Company. They serve their respective positions based upon years of business experience. None of these individuals serve as officers or directors of any other entities. The Company intends to seek advisory board members whose experience will assist the Company in its efforts.
Set forth below is a brief description of the background and business experience of our executive officers and directors.
Valeria Stringer currently serves as President and a Director of the Company. Ms. Stringer has over 40 years of management experience. While working at National Bella Hess, a major collections firm, Ms. Stringer managed 15 full time employees and was instrumental in assisting the firm to achieve its daily collection quotas. Ms. Stringer was also responsible for managing 24 marketing / demonstrators for Sam's Club in Kansas for over three years. Ms. Stringer also spent over 12 years working with a market research company where her duties included managing over 25 analysts in the retail arena. Ms. Stringer's experience and task oriented achievements should greatly assist in the Company's development.
Elizabeth Twitty, currently serves as Secretary and Director of the Company. During the last 30 years, Ms. Twitty has been involved in commercial construction and coordination of inventory control. Ms. Twitty will oversee dissemination of plans and bid for the Board's approval. She will follow through on day-to-day construction work to assure timely completion and will be responsible for reviews of assembly and warehouse functions to ascertain the clients' needs relative to these items.
Marion Matson currently serves as a Director of the Company. Mr. Marion Matson brings to the Company over 50 years of corporate business management experience to the Company. During the past thirty five years, Mr. Matson has owned and operated a company that remanufactures Caterpillar equipment and resells the equipment worldwide. Mr. Matson will provide his business experience as the Company expands its business plan. Mr. Matson is not an independent director.
VDO has not yet implemented any board committees as of the date of this prospectus.
There are currently no employment agreements; however, the Company anticipates entering into employment agreements with key management positions as the Company grows.
VDO has no significant employees other than current management. All family members including the officers and directors devote approximately 2 hours per day to the Company. The founding family members and principal shareholders who are not officers and directors participate with current management in discussions and in sharing ideas to be considered by the officers and directors in making decisions for the Company. (See Risk Factors “Non-Officer and Director Family Members May Exert Undue Influences Over Management”)
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of the date of this prospectus, we are listed on the OTC Bulletin Board however, no trading market has been developed even though there is a $0.60 bid price posted. This prospectus is a step toward creating a public market for our common stock, which may enhance the liquidity of our shares. However, there can be no assurance that a meaningful trading market will ever develop. VDO and its management make no representation about the present or future value of VDO's common stock.
As of the date of this prospectus, there are no outstanding options or warrants to purchase, or other instruments convertible into, common equity of the Company and other than the stock registered under this Registration Statement, there is no stock that has been proposed to be publicly offered resulting in dilution to current shareholders.
As of the date of this document we have approximately 20,169,768 shares of common stock outstanding held by 62 shareholders. Shares of our common stock are restricted from resale under Rule 144 until registered under the Securities Act, or an exemption is applicable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Conflict of Interest
The current officers and directors of the Company currently devote part-time to the Company and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such person may face a conflict in selecting between our business interest and their other business interests. The policy of the Board is that any personal business or corporate opportunity incurred by an officer or director of VDO must be examined by the Board and turned down by the Board in a timely basis before an officer or director can engage or take advantage of a business opportunity which could result in a conflict of interest.
The following clearly identifies each family relationship:
Valeria Stringer - sister to Marion Matson and Marlan Matson
Elizabeth Twitty - niece to Marion Matson, Marlan Matson and daughter of Valeria Stringer
Sara Stanly - grandniece to Marion Matson, Marlan Matson and granddaughter to Valeria Stringer
Connie Decker – close family friend for many years
Marion Matson – brother to Valeria Stringer and Marlan Matson
Michelle Bryngelson – daughter to Marion Matson and niece to Valeria Stringer and Marlan Matson
Stephanie Wright – daughter to Marlan Matson and niece to Marion Matson and Valeria Stringer
Maurice Matson – son of Marion Matson and nephew to Marlan Matson and Valeria Stringer
Other than loans of $3,256 and $6,198 made by Marlan Matson of Financial Services, Las Vegas, NV, such accounts will only be repaid with no interest when and if funds become available, none of the following parties has, since the date of incorporation, had any material interest, direct or indirect, in any transaction with the Company or in any presently proposed transaction that has or will materially affect us:
There are no promoters being used in relation with this offering. No persons who may, in the future, be considered a promoter will receive or expect to receive any assets, services or other consideration from the Company. No assets will be or are expected to be acquired from any promoter on behalf of the Company.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Since inception until the present time, the principal independent accountant for the Company has neither resigned, declined to stand for reelection, nor have been dismissed. The independent accountant for the Company is David Aronson, CPS, P .A.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
Our By-laws provide for the elimination of the personal liability of our officers, directors, corporate employees and agents to the fullest extent permitted by the provisions of Nevada law. Under such provisions, the director, officer, corporate employee or agent who in his/her capacity as such is made or threatened to be made, party to any suit or proceeding, shall be indemnified if it is determined that such director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of our Company. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and persons controlling our Company pursuant to the foregoing provision, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court's decision.
WHERE CAN YOU FIND ADDITIONAL INFORMATION
We have filed a registration statement on Form S-1 under the Securities Act, relating to the shares of common stock being offered by this prospectus, and reference is made to such registration statement. This prospectus constitutes the prospectus of VDO-PH International, Inc. filed as part of the registration statement and it does not contain all information in the registration statement, as certain portions have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission.
In addition, after the effective date of this prospectus, we will be required to final annual, quarterly, and current reports or other information with the SEC as provided by the Exchange Act. You may read and copy any reports, statements or other information we file at the SEC’s public reference facility maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Our SEC filings are also available to the public through the SEC’s Internet website at http://www.sec.gov.
W. Manly, P.A., has passed upon the validity of the issuance of the shares of common stock offered by this prospectus.
The financial statements appearing in this prospectus and registration statement on Form S-1 have been audited by David A. Aronson, CPA, P.A., independent public accountants, as set forth in their report thereon appearing elsewhere in this prospectus and in the registration statement on Form S-1, and such report is included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
VDO-Ph International ("VDO-Ph" or the "Company") was incorporated in Nevada in April 2010. The Company is in the development stage and intends to sell a state-of-the-art telephony appliance for commercial and residential use employing proprietary software. The appliance, which will serve as a digital telephone, full motion video and advanced computer system, will be marketed and sold through cable companies to their commercial and residential customers.
In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:
Revenue will be recognized at the time the product is delivered or services are performed. Provision for sales returns will be estimated based on the Company's historical return experience.
Revenue will be presented net of returns.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
The Company follows Accounting Standards Codification ("ASC") 280, "Segment Reporting". The Company currently operates in a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
Net Loss Per Common Share
Basic net (loss) income per common share is calculated using the weighted average common shares outstanding during each reporting period. Diluted net (loss) income per common share adjusts the weighted average common shares for the potential dilution that could occur if common stock equivalents (convertible debt and preferred stock, warrants, stock options and restricted stock shares and units) were exercised or converted into common stock. There were no common stock equivalents at June 30, 2010.
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized when, based on the weight of all available evidence, it is considered more likely than not that all, or some portion, of the deferred tax assets will not be realized. Income tax expense is the sum of current income tax plus the change in deferred tax assets and liabilities.
ASC 740, Income Taxes, requires a company to first determine whether it is more likely than not (which is defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.
The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value using an option pricing model. ASC 718 requires forfeitures to be estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates.
Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance.
In September 2009, Accounting Standards Codification ("ASC") became the source of authoritative GAAP recognized by the Financial Accounting Standards Board ("FASB") for nongovernmental entities, except for certain FASB Statements not yet incorporated into ASC. Rules and interpretive releases of the SEC under federal securities laws are also sources of authoritative GAAP for registrants.
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Equipment, consisting of computer equipment, is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, of five years.
The Company reviews long-lived assets, such as equipment, for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds the estimated future cash flows, an impairment loss will be recorded by the amount the carrying value exceeds the fair value of the asset.
Note 2. EQUIPMENT (NET)
Depreciation for the year ended December 31, 2010 was $500.
Note 3. LOAN PAYABLE - STOCKHOLDER
During 2010 a stockholder of the Company advanced the Company $7,954 to pay for certain expenses. The loan bears no interest and is payable on demand.
Note 4. LOAN PAYABLE - RELATED PARTY
During the year ended December 31, 2010 a corporation under common ownership with VDO-Ph advanced the Company $7,954 to pay for certain expenses. The loan bears no interest and is payable on demand.
Note 5. STOCKHOLDERS' EQUITY
In April 2010 the Company issued 13,333,328 shares of common stock at par value.
In April 2010 the Company issued 6,000,000 shares of common stock at par value for services provided to the Company.
In April 2010 the Company issued 196,940 shares of common stock at $0.50 per share.
In September 2010 the Company issued 1,000 shares of common stock at $0.50 per share.
In September 2010 the Company issued 10,000 shares of common stock at $0.50 per share.
In September 2010 the Company issued 4,000 shares of common stock at $0.50 per share.
In September 2010 the Company issued 4,000 shares of common stock at $.50 per share for services provided to the Company.
In November 2010 the Company issued 60,000 shares of common stock at $0.50 per share.
In December 2010 the Company issued 20,000 shares of common stock at $0.50 per share.
In December 2010 the Company issued 8,000 shares of common stock at $0.50 per share.
In December 2010 the Company issued 8,000 shares of common stock at $.50 per share for services provided to the Company.
In December 2010 the Company issued 15,000 shares of common stock at $.50 per share for services provided to the Company.
Note 6. RELATED PARTY TRANSACTIONS
Until July 31, 2010 the Company had leased its offices from a stockholder of the Company. The lease was on a month to month basis and required monthly payments of approximately $2,000. Rent expense paid to this stockholder during 2010 was $7,240.
Note 7. COMMITMENTS AND CONTINGENCIES
The Company leases its office pursuant to an agreement entered into in August 2010 and that originally terminated in January 2011. The lease called for monthly payments of $1,026 for this initial period. Rent expense for the year ended December 31, 2010 under the terms of the lease totaled $5,130. Subsequent to year end the lease was extended for a period of 36 months (see Note 10).
At December 31, 2010, future minimum lease payments were as follows:
Note 8. INCOME TAXES
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences are as follows:
As of December 31, 2010, the Company has a net operating loss carryforward of approximately $172,000. This loss will be available to offset future taxable income. If not used, this carryforward will expire in 2030. The deferred tax asset relating to the operating loss carryforward has been fully reserved at December 31, 2010. The principal difference between the operating loss for income tax purposes and reporting purposes results from the issuance of common shares for services.
Note 9. BASIS OF REPORTING
The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
The Company has experienced a loss from operations during its development stage as a result of its investment necessary to achieve its operating plan, which is long-range in nature. For the period from inception to December 31, 2010, the Company incurred a net loss of approximately $172,000. In addition, the Company has no significant assets or revenue generating operations.
Note 9. BASIS OF REPORTING (continued)
The Company currently does not have sufficient cash to sustain itself for the next 12 months, and will require additional funding in order to execute its plan of operations and to continue as a going concern. To meet its cash needs, management expects to raise capital through a private placement offering. In the event that this funding does not materialize, certain stockholders have agreed, orally, to loan, on a non-interest bearing demand basis, sufficient funds to maintain the Company's operations for the next 12 months.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Note 10. SUBSEQUENT EVENT