UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 28, 2009
Itokk, Inc.
(Exact name of registrant as specified in its charter)
Nevada 000-52278 26-1281852
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
440 North Wolfe Road, Sunnyvale, CA 94085
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: 408-419-1719
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions.
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR240.14d-2(b))
[ ] Soliciting material pursuant to Rule 14a-12 under Exchange Act (17
CFR240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR240.13e-4(c))
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On September 14, 2009, we entered into a licensing agreement with Packetera
Communications Inc. ("Packetera"), a private Canadian company, whereby we agreed
to acquire an exclusive worldwide 75 year license to use, sell, market,
distribute and/or sublicense various products and services owned by Packetera,
including an application programming interface for voice-over-Internet protocol
("VOIP"), callback web-to-voice applications, session initiation
protocol-Softphone products, virtual calling card products and social VOIP
solutions, Internet protocol devices, hosted network platforms and VOIP
engineering consulting services. We also agreed to acquire Packetera's interest
in three existing reseller agreements to supply such products and services. The
license also covers any future telecommunications products and services that
Packetera develops.
In consideration of Packetera granting the license and assigning the existing
agreements to us, we agreed to issue to Packetera 30,600,000 post forward-split
common shares in the capital of Shadow. The agreement also required that we
complete a forward split of our common stock such that 8.5 new shares of common
stock are exchanged for each currently issued share of common stock outstanding.
As well, the 4,000,000 pre-split shares of common stock that our directors
currently hold were required to be returned to treasury.
We completed the acquisition contemplated by this licensing agreement on October
28, 2009.
DESCRIPTION OF BUSINESS
PRIOR OPERATIONS
We were incorporated pursuant to the laws of Nevada on September 19, 2003. We
commenced business operations in 2005 when we published the first issue of Up &
Over Magazine. Up & Over Magazine contained articles focusing on the purchase,
training and care of sports horses. It included training tips, riding
techniques, health concerns and horses for sale.
While we intended to publish three or four issues of Up & Over Magazine each
year, we were unable to publish any additional issues due to our inability to
raise additional funds to cover design, printing and publication costs.
Following publication of the first issue of our magazine, all administrative
costs and expenses incurred in connection with complying with our obligations as
a reporting issuer were covered by one of our directors.
Due to our difficulties in raising additional funds to cover our planned
operations in the publishing industry, management decided to discontinue
operations in the sector.
ACQUISITION OF LICENSE
We intend to proceed with business operations in the VOIP sector. On October 28,
2009, we completed the acquisition of a license to use, sell, market, distribute
and/or sublicense various products and services owned by Packetera. These
products currently consist of:
* the Npoints Framework, a application programming interface; and
* click-to-talk and mobile VOIP applications under the trade names
"itokk.com", "itokk.mobi" and "Itokk wireless".
In addition, we acquired the licensing rights to various products that Packetera
is currently developing, including the following:
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* Softphone products under the trade name "itokksoft.com", which will
allow users to make voice and video calls over the Internet;
* virtual calling card products; and
* social VOIP for web communities.
NPOINTS FRAMEWORK
The Npoints framework is an application programming interface ("API") that
allows a customer to utilize VOIP for voice and video communications. An API is
a language format that an application program uses to communicate with an
operating system or other services. The Npoints framework is an API that
resellers can install in order to provide their customers with access to VOIP
technology and related Itokk products, namely click-to-talk and Itokk wireless
applications.
VOIP, or voice-over-Internet-protocol, is a term used to describe a series of
technologies whereby voice communications are transmitted over the Internet.
This contrasts with typical telephone communication that relies on a public
switched telephone network. VOIP, which is also known as telephony, involves
converting a human voice that originates as an analog signal into a digital
format. This digital signal is then compressed or translated into Internet
packets for transmission. The packets are similarly converted back to an analog
voice at the receiving end of the voice communication. The key advantage of a
VOIP network is that it costs much less than traditional telephone communication
to establish. As a result, companies that provide VOIP services to consumers are
usually able to do so at a large price discount when compared to traditional
telecommunications companies.
ADDITIONAL PRODUCTS
In order to add value to the Npoints Framework, Itokk has developed additional
products that customers using their platform can utilize: click-to-talk and
Itokk wireless. Click-to-talk allows owners to install a button on their
websites for communications with customers. When someone accesses a business
website and wants to speak directly with a representative of the company, he or
she clicks on a button on the webpage and Itokk connects the customer to the
business by VOIP. It allows the customer to contact the business immediately for
free while he or she is accessing your website.
Itokk wireless allows cellular phone users to make outgoing calls without
incurring charges from their cellular phone service provider. In order to use
the feature, a mobile phone caller dials the number of the intended call
recipient using Itokk software. Itokk then contacts the caller's cellular phone
and connects the caller with the recipient through its VOIP network. As a
result, all outgoing calls are received as incoming, which typically avoids any
charges on most cellular phone plans. Itokk offers pay-as-you-go and minute
purchase plans for its wireless VOIP product with prices that vary depending on
expected use.
PRODUCTS IN DEVELOPMENT
Packetera's products in development include the Softphone suite, virtual calling
call products and social VOIP. Pursuant to our licensing agreement with
Packetera, our license will extend to all future telecommunications products and
services that Packetera develops.
The purpose of the Softphone suite is to allow users to make voice and video
calls over the Internet. While this is similar to the VOIP product offered by
Skype, Packetera intends to develop its video and voice software for use in a
web browser rather than requiring a user to download specific software. This
allows a user to log into Softphone from any computer regardless of whether the
computer has been used for Softphone applications previously.
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Packetera is also developing a group of virtual calling card products under the
name "italkexpress.com". These products will allow users to sign up online and
pay for VOIP services without the need for a personal identification number.
Itokk Social is a product in development that will create a social VOIP system
for web based communities. This will be implemented in conjunction with the
Softphone suite, which will allow the web browser based voice and video system
to be embedded in social networks.
DISTRIBUTION OF PRODUCTS AND SERVICES
We intend to distribute our products and services through the use of resellers.
As part of our acquisition of the license, Packetera also assigned to us its
interest in three reseller agreements. The agreements are with One World United
Inc., Isource Communications Inc. and Voice S.r.L., doing business as Voice
Italia.
Each agreement provides that we will provide the reseller with access to our
VOIP platform system and associated products. Each reseller agrees to use its
best efforts to promote our products and services and to solicit customers. We
have the right to terminate each reseller agreement if the reseller fails to
meet specific sales targets. We reserve the right to set the retail prices for
our products and services. Resellers are not permitted to charge customers any
additional fees in addition to the retail prices that we charge. In
consideration for its efforts to generate sales of our products and services,
each reseller receives a percentage commission that varies depending on the
product involved.
Our reseller agreement with Isource Communications Inc. provides that it is the
exclusive reseller of the Packetera products in the United States and Canada for
charities, gaming and home based business affiliate marketing. Our agreement
with Voice S.r.L. provides that it will be the exclusive reseller in Italy. One
World United Inc. is a non-exclusive reseller. One World United Inc. is based in
Winnipeg, Manitoba, Canada.
COMPETITION
We will compete with other VOIP companies telephone and video communication
services through the Internet through resellers and directly to consumers. Most
of these companies solely provide an API to facilitate VOIP communications and
do not provide any additional products and services. Because these companies
offer almost identical services, there is extreme price competition that keeps
profit margins very low.
Rather than engaging in price competition in a mature VOIP marketplace, we
intend to differentiate our business by developing products for consumers that
add value to our Npoints Framework, such as click-to-talk and Itokk wireless.
Some competitors have adopted a similar model including Ribbit Corporation,
which is owned by British Telecom, and Jajah Inc. Competition with these
companies will be based primarily on product features and marketing. These
companies have greater financial and technical resources than we do.
Our Softphone video and voice over the Internet suite that is currently in
development faces competition from Skype, which provides user-to-user voice and
video communication software free of charge, except when a user is calling a
land line or cellular phone. We hope to compete with Skype and any similar
products by providing Softphone in a web browser rather than a software download
and by working with social networks to embed our product in their websites.
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Our success in the VOIP sector depends on our ability to introduce innovative
products before our competitors do and to market them effectively in order to
attract customers that currently rely on other VOIP providers or traditional
phone service.
PATENTS AND TRADEMARKS
Due to the costs involved and the potential inability to qualify, we have not
filed for patent protection of our products and our trademarks. We have also not
sought legal advice regarding whether or not patent protection of our technology
is possible. Accordingly, our business is subject to the risk that competitors
could either copy our technology or release competing products.
GOVERNMENT REGULATION
There are an increasing number of laws and regulations pertaining to the
Internet in general and to VOIP specifically. Currently, in many jurisdictions,
there are questions about whether VOIP should be considered as a
telecommunications service and therefore be subject to government regulation. In
June 2005, the Federal Communications Commission imposed 911 emergency service
obligations on providers of interconnected VOIP services that allow users to
make and receive calls from the regular telephone network.
In addition, the FCC requires interconnected VOIP providers to comply with the
Communications Assistance for Law Enforcement Act of 1994 and to contribute to
the Universal Service Fund, which supports communications services in high-cost
areas and for income-eligible telephone subscribers.
Aspects of these considerations may change with new developments in Internet and
VOIP technology. Other laws or regulations may be adopted with respect to
telecommunications regulation, online content regulation, user privacy, pricing,
taxation and quality of products and services that could negatively impact our
business operations.
RESEARCH AND DEVELOPMENT
We have not incurred any expenditures on research and development activities.
Packetera conducted all research and development involved in the products and
services that are subject to our license agreement.
EMPLOYEES
As of the date of this report, we have four full-time employees and four
independent contractors that provide services to us.
SUBSIDIARIES
The license that we hold relating to Packetera's products and services, as well
as our interest in three reseller agreements is held in our wholly owned
subsidiary, Itokk Communications, Inc.
RISK FACTORS
Please consider the following risk factors before deciding to invest in our
common stock. Any investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below and all of the
information contained in this current report before deciding whether to purchase
our common stock. If any of the following risks actually occur, our business,
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financial condition and results of operations could be harmed. The trading price
of our common stock could decline, and you may lose all or part of your
investment in our common stock.
THERE IS SUBSTANTIAL UNCERTAINLY AS TO WHETHER WE WILL CONTINUE AS A GOING
CONCERN. IF WE DISCONTINUE OPERATIONS, YOU WILL LOSE YOUR INVESTMENT.
We have incurred losses since our inception resulting in an accumulated deficit
of $80,387 at June 30, 2009. Further losses are anticipated in the development
of our business. As a result, there is substantial doubt about our ability to
continue as a going concern. In fact, our auditors have issued a going concern
opinion in connection with their audit of our financial statements for our most
recent fiscal year ended June 30, 2009. This means that our auditors believe
there is substantial doubt that we can continue as an on-going business for the
next twelve months. While we have acquired a license relating to certain VOIP
technology applications subsequent to our most recently completed fiscal year,
there is still no assurance that our intended operations will be profitable.
Our ability to continue as a going concern is dependent upon our ability to
generate profitable operations in the future and to obtain the necessary
financing to expand our business operations; to market our current products and
services; and to develop new products and services.
Our ability to achieve and maintain profitability and positive cash flow is
dependent upon:
* our ability to raise necessary financing in order to develop and
expand our operations;
* our ability to successfully market and sell our VOIP products and
services;
* our success in expanding operations by hiring experienced employees
and independent contractors in the technology sector;
* our ability to develop additional products and services; and
* our ability to enter additional contracts for our products and
services.
Based upon current plans, we expect to incur operating losses in future periods
because we will be incurring expenses related to anticipated expansion. We
cannot guarantee that we will be successful in generating substantial revenues
in the future. Failure to generate revenues will cause us to go out of business.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
In order to successfully utilize the license that we acquired from Packetera
Communications Inc., we will need to obtain additional financing in order to
assemble an integration team and call center support; complete product updates
and maintenance; and pursue business development and marketing. As of June 30,
2009, we had cash in the amount of $122. In order to expand and develop our
operations as we envision, we anticipate that our expenses over the next 12
months will be approximately $3 million. While we anticipate that some of these
expenses will be funded from operational revenue, there is no guarantee that we
will generate sufficient funding in this manner.
We will require additional financing to sustain our business operations if we
are not successful in earning significant revenues from operations. We do not
currently have any arrangements for financing and we can provide no assurance to
investors that we will be able to find such financing if required. Obtaining
additional financing would be subject to a number of factors, including our
ability to generate revenue, our success in securing new reseller agreements for
our products and services, investor acceptance of our business plan and general
economic and market conditions. These factors may make the timing, amount, terms
or conditions of additional financing unavailable to us.
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The most likely source of future funds presently available to us is through the
sale of equity capital. Any sale of share capital will result in dilution to
existing shareholders. We do not have any arrangement in place for the sale of
shares of our common stock.
BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE.
We are considered to be a development stage company. Because we only acquired
our license to Packetera Communication Inc.'s VOIP technology in October 2009,
we have not yet generated any revenue from our new operations.
Potential investors should be aware of the difficulties normally encountered by
new high technology companies and the high rate of failure of such enterprises.
The likelihood of success must be considered in light of the problems, expenses,
difficulties, complications and delays often encountered by development phase
companies.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and we can provide investors with no assurance that we
will generate any operating revenues or ever achieve profitable operations. If
we are unsuccessful in addressing these risks, our business will most likely
fail.
BECAUSE OUR VOIP PRODUCTS ARE NOT PATENT PROTECTED, A COMPETITOR COULD COPY OUR
TECHNOLOGY, WHICH COULD CAUSE OUR BUSINESS TO FAIL.
Due to the costs involved and the potential inability to qualify, we have not
applied for patent protection of our VOIP products. Accordingly, our business is
subject to the risk that competitors could copy our technology and release
competing products with similar features. If this occurs, our ability to
sublicense our technologies could be jeopardized, which could cause our business
to fail.
THE VOIP INDUSTRY IS EXTREMELY FRAGMENTED AND COMPETITIVE AND WE MAY NOT BE ABLE
TO COMPETE SUCCESSFULLY WITH EXISTING COMPETITORS OR NEW ENTRANTS IN THIS
MARKET.
The VOIP industry is extremely fragmented and competitive. The sector includes
large entities such as British Telecom, through its purchase of Ribbit
Corporation, as well as many smaller providers that focus exclusively on long
distance phone call savings. As a result, obtaining a competitive advantage
through cost leadership and pricing is extremely difficult.
Most of our competitors have greater financial resources and may be able to
withstand sales or price decreases better than we can. We also expect to
continue to face competition from new market entrants. If we are not able to
develop and sell product add-ons to customer networks that they value, we will
not be able to compete effectively with these existing or new competitors, which
could have a material adverse effect on our financial condition and results of
operations.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.
While are shares are quoted for trading on the OTC Bulletin Board, there is
currently no liquid market for our common stock. We can provide no assurance
that a liquid market will develop. If no market is ever developed for our
shares, it will be difficult for shareholders to sell their stock. In such a
case, shareholders may find that they are unable to achieve benefits from their
investment.
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BECAUSE OUR CHIEF EXECUTIVE OFFICER OWNS 51.1% OF OUR OUTSTANDING COMMON STOCK,
HE COULD MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO
MINORITY SHAREHOLDERS.
Kevin Penstock, our C.E.O., owns 51.1% of the outstanding shares of our common
stock through his control of Packetera Communications Inc., the company that
granted us a license to its VOIP and related technology. Accordingly, he will
have a significant influence in determining the outcome of all corporate
transactions or other matters, including mergers, consolidations, and the sale
of all or substantially all of our assets. He will also have the power to
prevent or cause a change in control. The interests of Mr. Penstock may differ
from the interests of the other stockholders and thus result in corporate
decisions that are disadvantageous to them.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
OUR STOCK.
Our shares of common stock constitute penny stock under the Exchange Act. The
shares will remain penny stock for the foreseeable future. "Penny stock" rules
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors,
that is, generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with a spouse. For transactions covered
by these rules, the broker-dealer must make a special suitability determination
for the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our shares of
common stock. The market price of our shares would likely suffer as a result.
REPORTS TO SECURITY HOLDERS
We are required to file annual, quarterly and current reports, and other
information with the Securities & Exchange Commission. The public may read and
copy any materials that we file with the Commission at the Commission's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission. The address of
that site is http://www.sec.gov.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We are a development stage corporation with no revenues from our business
operations. 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 months. While we have acquired a license
relating to certain VOIP technology applications subsequent to our most recently
completed fiscal year, there is still no assurance that our intended operations
will be profitable.
To meet our financing requirements, we anticipate raising funds through the sale
of our equity. At the present time, we have not made any arrangements to raise
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additional cash. If we need additional cash and cannot raise it, we will either
have to delay or suspend operations until we do raise the cash, or cease
operations entirely.
PLAN OF OPERATION
We were incorporated pursuant to the laws of Nevada on September 19, 2003 and we
involved in the magazine publishing business until we entered into a license
agreement with Packetera Communications Inc. on September 14, 2009.
Our plan of operation for the twelve months following the date of this
prospectus is to expand our business operations by:
* executing additional reseller agreements pursuant to which third
parties will market our products and services to end-users;
* assembling an integration team to aid and assist resellers;
* assembling a call center support team to answer reseller and end-user
inquiries;
* conducting a marketing plan to secure additional resellers and
customers; and
* pursuing research and development initiatives to complete certain
products in the development stage and to generate proposals for
potential new products.
In order to execute additional reseller agreements, we plan to have our
management travel extensively in order to introduce our products and services to
telecommunications companies, cable companies, Internet service providers, VOIP
service providers and marketing organizations throughout North America and
Europe. Our C.E.O., Kevin Penstock, will be primarily responsible for initiating
new contacts in North America, while Carmelo D'Anzi, our vice-president of
business development, will initiate new contacts in Europe. Our goal is to
execute and maintain a minimum of 17 new, active resellers within the next 12
months. We intend to commence this marketing effort immediately and anticipate
that it will be ongoing throughout the next 12 month period.
Our management will also oversee the assembly of the integration and call center
support teams. This will primarily involve hiring and training personnel to aid
and assist resellers in their efforts to sell our products to their customers
and to answer any questions from either the resellers or their customers. We
expect to hire 12 client and customer support personnel in the next 12 months.
The timing of the expansion of these teams will depend on our ability to raise
funding to cover labor and related overhead expense.
Our marketing efforts will consist of a mix of new social and media viral
marketing via the Internet sustained by channel marketing through our resellers.
In order to complete existing new product development, such as our Softphone
suite, and Itokk social, a social VOIP for web communities, as well as to design
new products, we intend to retain software developers. Our C.E.O., Kevin
Penstock, and our vice-president of research and development, Ioannis
Karamitsos, Ph.D., will oversee the training and management of these employees.
We intend to expand our research and development efforts by retaining five
technical staff in Vancouver and another 30 developers in India, with an initial
recruitment of five employees. The timing of the expansion of these teams will
depend on our ability to raise funding to cover labor and related overhead
expense.
In order to achieve the preceding objectives, we anticipate incurring the
following approximate costs:
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Management wages: $ 915,000
Operations and overhead: $1,268,000
Research and development: $ 402,000
Marketing: $ 528,000
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TOTAL: $3,113,000
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Of this amount, we expect that in order to achieve our objectives, we will
require these funds on a per quarter basis approximately as follows:
Quarter 1: $ 256,000
Quarter 2: $ 630,000
Quarter 3: $1,013,000
Quarter 4: $1,214,000
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TOTAL: $3,113,000
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As well, we anticipate spending an additional $100,000 on administrative costs
such as accounting and auditing fees, legal fees and fees payable in connection
with reporting obligations.
Total expenditures over the next 12 months are therefore expected to be
approximately $3,213,000. Our ability to meet these objectives in the time
frames indicated will be dependent on our ability to generate revenue from
operations and to raise sufficient additional capital to expand operations. If
we are unable to generate sufficient revenue or raise financing as required, we
will delay our expansion of operations as necessary.
SOURCES AND USES OF CASH
At June 30, 2009, our current assets consisted of $12 in cash. Accordingly, we
will have to raise additional funds in the next twelve months in order to cover
our anticipated administrative costs and costs of expanding our operations as
outlined above. We currently do not have a specific plan of how we will obtain
such funding; however, we anticipate that additional funding will be in the form
of equity financing from the sale of our common stock. Any private placement of
our common stock could result in substantial dilution to existing shareholders.
We have and will continue to seek to obtain short-term loans from our directors,
although no future arrangements for additional loans have been made. We do not
have any agreements with our directors concerning these loans. We do not have
any arrangements in place for any future equity financing.
EVENTS, TRENDS AND UNCERTAINTIES
The development of our business will depend upon our ability to attract
resellers and customers for our VOIP and related products and services. Our
ability to generate revenue may be affected by events and trends such as general
economic conditions, technological advances and competing products from existing
and new companies in the same business.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED JUNE 30, 2009
We did not earn any revenues from operations in the fiscal year ended June 30,
2009. We incurred operating expenses in the amount of $13,856 during the fiscal
year. These operating expenses were comprised entirely of general and
administrative costs.
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FISCAL YEAR ENDED JUNE 30, 2008
We did not earn any revenues from operations in the fiscal year ended June 30,
2008. We incurred operating expenses in the amount of $20,795 during the fiscal
year. These operating expenses were comprised entirely of general and
administrative costs.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons, there is
substantial doubt that we will be able to continue as a going concern.
PROPERTIES
We have leasehold interests in two offices: one in Sunnyvale, California and one
in Vancouver, British Columbia. The remaining term of the initial lease on the
Sunnyvale office is three months, after which it will continue on a month to
month basis. The Vancouver lease is on a month to month basis. The aggregate
monthly cost of our office space is $1,950.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of the date of this
current report, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Amount of
Title of Name and address beneficial Percent
Class of beneficial owner ownership of class
----- ------------------- --------- --------
Common Angelo Soukas 0 0%
Stock President
201 - 2495 West 2nd Ave,
Vancouver, B.C. Canada V6K 1L6
Common Kevin Penstock 30,600,000 51.10%
Stock CEO, Secretary Treasurer
and Director
3864 West 16th Ave,
Vancouver, B.C. Canada V6R 1B6
Common Ioannis Karamitsos 0 0%
Stock VP of Research and Development
and Director
2635 W 8th Avenue,
Vancouver, B.C. V6K 2B5 Canada
Common Carmelo D'Anzi 0 0%
Stock VP of Business Development
8502 Edgewood Drive
Rowlett, TX 75089
Common All Officers and Directors 30,600,000 51.10%
Stock as a Group that consists of shares
four people
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The percent of class is based on 59,882,500 shares of common stock issued and
outstanding as of the date of this current report.
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The shares that Kevin Penstock beneficially owns are held in Packetera
Communications Inc., the private company that granted us the license relating to
it VOIP and related products and services.
There are no arrangements that may result in our change in control of the
company.
DIRECTORS AND EXECUTIVE OFFICERS
Our executive officers and directors and their respective ages as of the date of
this current report are as follows:
DIRECTORS:
Name of Director Age
---------------- ---
Kevin Penstock 46
Ioannis (John) Karamitsos 47
EXECUTIVE OFFICERS:
Name of Officer Age Office
--------------- --- ------
Angelo Soukas 44 President
Kevin Penstock 46 C.E.O., Secretary and Treasurer
Ioannis (John) Karamitsos 47 Vice-president of Research and Development
Carmelo D'Anzi 53 Vice-president of Business Development
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BIOGRAPHICAL INFORMATION
Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years.
ANGELO SOUKAS acts as our president and has been responsible for the operation
and global growth of Packetera and its key brand iTokk. Mr Soukas has 19 years
of international sales and marketing experience with companies such as F2F
Italy, Unlimited Groups SE Italy, Pacific Rim Development Corp (Mexico),
Overdrive products Inc of Vancouver. From 2005 to 2007, Mr. Soukas was North
America Sales Manager for F2F. After six months, he became the International
Vice-President of Europe and signed 43 international distributors. From 2007 to
2008, He was president of Pacific Rim Development Corp and was instrumental from
conception of the project in creating an international sales and marketing team.
Mr Soukas studied Commerce at the University of British Columbia in Vancouver,
British Columbia and at the American Academy of International Business in Paris,
France. He is fluent in Greek, Spanish and English.
KEVIN PENSTOCK was the co-founder and has acted as C.E.O. of Packetera
Communications Inc., the private Canadian company that licensed its VOIP and
related technology to us, since February 2007. From 2005 to 2006, Mr. Penstock
was vice-president of technology for Galaxy Telecom Inc. of Vancouver, British
Columbia. From 2002 to 2008, Mr. Penstock held the position of C.E.O. of Goa
Strategies Corp., an outsourcing consulting company providing specialized VOIP
software engineering services to communication companies worldwide such as
Counterpath, Times Telecom, VocalScape, ANEW Broadband, NetFone and many more.
From 1999 to 2003, Mr. Penstock was a technology advisor for Monetary Capital
Corp., a venture capital company based in Vancouver. During the same period, Mr.
Penstock was the Chief Technical Officer (CTO) for Global Sortweb.com Inc., a
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Canadian reporting company, a provider of hosted content management systems, and
was responsible for building and managing a development organization in India
for multiple technology companies and projects. Mr. Penstock graduated from the
British Columbia Institute of Technology in 1992 in Computer Systems Technology
and Management Decision Systems.
DR. IOANNIS (JOHN) KARAMITSOS is responsible for our research and development,
engineering, the design and the implementation of our Global VoIP network. Dr.
Karamitsos launched his career at Intracom in 1994, holding senior positions in
research and development. In the following 10 years, he worked on a variety of
telecom systems covering most technical and business aspects of exploration and
production. Later, he moved to Huawei Technologies where he worked in Business
Development as Executive Director. He worked for three years in developing and
implementing Huawei's research and development strategy for broadband and
wireless product lines in the Greek and Balkan area. In 2007, he acted as the
Deputy C.T.O. for ON Telecoms, a Greek ISP start-up that provides triple play
services (Internet, Voice, IPTV) based on broadband technologies. Dr. Karamitsos
received an award from Huawei as "2005 Best Employee in Europe". He holds a
Bachelor of Electronics Engineering from the University of Rome "La Sapienza",
Italy, a Master of Science degree in Telematics Management from the Donau-Krems
University, Krems, Austria and a Ph.D. in Optical Networks from the University
of the Aegean in Greece.
CARMELO D'ANZI acts as our vice-president of business development. Mr. D'Anzi
joined Packetera in the summer 2009. From 2000 to 2005, Mr. D'Anzi founded and
headed Deltacomgroup, a company involved in the cellular infrastructure
hardware. From 2005 to 2008, he became vice-president of sales and marketing for
RBC Lifescience, a company involved in the nutritional industry. From 2008 to
2009, Mr. D'Anzi acted as the principal of ACN Inc. Mr. D'Anzi graduated from
University of Messina in with a bachlor's degree in political science in 1980.
Mr. D'Anzi speaks four languages fluently (English, Italian, Spanish and
Portuguese).
TERM OF OFFICE
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by the board of directors
and will hold office until removed by the board.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal years ended June 30, 2009, 2008 and 2007:
ANNUAL COMPENSATION
Restricted
Other Stock Options/ LTIP Other
Name Title Year Salary Bonus Comp. Awarded SARs(#) Payouts($) Comp.
---- ----- ---- ------ ----- ----- ------- ------- ---------- -----
Greg Former 2009 $0 0 0 0 0 0 0
Fedun Pres 2008 $0 0 0 0 0 0 0
CEO/Dir 2007 $0 0 0 0 0 0 0
Chris Former 2009 $0 0 0 0 0 0 0
Paterson Sec. 2008 $0 0 0 0 0 0 0
Treas 2007 $0 0 0 0 0 0 0
& Dir.
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STOCK OPTION GRANTS
We have not granted any stock options to the executive officer since our
inception.
CONSULTING AGREEMENTS
We do not have any employment or consulting agreement with our current officers.
We do not pay them any amount for acting as directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of the following parties has, since our date of incorporation, had any
material interest, direct or indirect, in any transaction with us or in any
presently proposed transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
* Any of our promoters; or
* Any relative or spouse of any of the foregoing persons who has the
same house as such person.
LEGAL PROCEEDS
There are no legal proceedings pending or threatened against us. Our address for
service of process in Nevada is 1802 N Carson Street, Suite 212, Carson City,
Nevada, 89701.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
Our shares of common stock are quoted for trading on the OTC Bulletin Board
under the symbol [IKTO]. However, no trades of our shares of common stock
occurred through the facilities of the OTC Bulletin Board during the fiscal year
ended June 30, 2009.
DIVIDENDS
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities
plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving
the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
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RECENT SALES OF UNREGISTERED SECURITIES
In the past three years, we have sold the following securities that were not
registered under the Securities Act, including new securities resulting from the
modification of outstanding securities:
On October 28, 2009, we issued 30,600,000 shares of our common stock to
Packetera Communications Inc. ("Packetera") pursuant to a licensing agreement
whereby we acquired an exclusive worldwide 75 year license to use, sell, market,
distribute and/or sublicense various products and services owned by Packetera.
We issued these shares pursuant to Section 4(2) of the Securities Act of 1933.
We were able to rely upon this exemption since this issuance does not constitute
a public offering of our shares.
In connection with this issuance, the principal of Packetera, Kevin Penstock was
provided with access to all material aspects of the company, including the
business, management, offering details, risk factors and financial statements.
He also represented to us that he was acquiring the shares as principal for his
own account with investment intent. He also represented that he was
sophisticated, having prior investment experience and having adequate and
reasonable opportunity and access to any corporate information necessary to make
an informed decision. This issuance of securities was not accompanied by general
advertisement or general solicitation. The shares were issued with a Rule 144
restrictive legend.
In connection with the completion of the aforementioned licensing agreement, we
agreed to split our common stock such that every share of pre-split stock was
exchange for 8.5 post-split shares of common stock.
DESCRIPTION OF SECURITIES
COMMON STOCK
Our authorized common stock consists of 200,000,000 shares, $0.001 par value, of
which 59,882,500 shares of common stock are currently issued and outstanding.
Holders of our common stock have no preemptive rights to purchase additional
shares of common stock or other subscription rights. The common stock carries no
conversion rights and is not subject to redemption or to any sinking fund
provisions. All shares of common stock are entitled to share equally in
dividends from sources legally available. Therefore, when, as and if declared by
the Board of Directors, and upon our liquidation or dissolution, whether
voluntary or involuntary, to share equally in our assets that are available for
distribution to stockholders.
The Board of Directors is authorized to issue additional shares of common stock
not to exceed the amount authorized by our Articles of Incorporation, on such
terms and conditions and for such consideration as the Board may deem
appropriate without further stockholder action.
PREFERRED STOCK
Our authorized preferred stock consists of 1,000,000 shares, $0.001 par value.
No shares of preferred stock are issued and outstanding.
Our Board of Directors has the authority to prescribe the classes, series and
the number of each class or series of stock and the voting powers, designations,
preferences, limitations, restrictions and relative rights of any classes of
preferred stock.
15
VOTING RIGHTS
Each holder of common stock is entitled to one vote per share on all matters on
which such stockholders are entitled to vote. Since the shares of common stock
do not have cumulative voting rights, the holders of more than fifty percent of
the shares voting for the election of directors can elect all the directors if
they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the Board of Directors.
DIVIDEND POLICY
Holders of our common stock are entitled to dividends if declared by the Board
of Directors out of funds legally available therefore. We do not anticipate the
declaration or payment of any dividends in the foreseeable future. We intend to
retain earnings, if any, to finance the development and expansion of our
business. Future dividend policy will be subject to the discretion of the Board
of Directors and will be contingent upon future earnings, if any, our financial
condition, capital requirements, general business conditions and other factors.
Therefore, there can be no assurance that any dividends of any kind will ever be
paid.
SHARE PURCHASE WARRANTS
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
OPTIONS
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
CONVERTIBLE SECURITIES
We have not issued and do not have outstanding any securities convertible into
shares of our common stock or any rights convertible or exchangeable into shares
of our common stock.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes (the "NRS") and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is specifically limited
by a company's articles of incorporation that is not the case with our articles
of incorporation. Excepted from that immunity are:
(1) a willful failure to deal fairly with the company or its shareholders
in connection with a matter in which the director has a material
conflict of interest;
(2) a violation of criminal law (unless the director had reasonable cause
to believe that his or her conduct was lawful or no reasonable cause
to believe that his or her conduct was unlawful);
(3) a transaction from which the director derived an improper personal
profit; and
(4) willful misconduct.
16
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless:
(1) such indemnification is expressly required to be made by law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole discretion,
pursuant to the powers vested us under Nevada law; or
(4) such indemnification is required to be made pursuant to the bylaws.
Our bylaws provide that we will advance all expenses incurred to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was our director or
officer, or is or was serving at our request as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following request. This
advanced of expenses is to be made upon receipt of an undertaking by or on
behalf of such person to repay said amounts should it be ultimately determined
that the person was not entitled to be indemnified under our bylaws or
otherwise.
Our bylaws also provide that no advance shall be made by us to any officer in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made: (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding; or (b) if such quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision- making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
FINANCIAL STATEMENTS
Our pro forma financial statements for the fiscal year ended June 30, 2009
showing what our financial position would have been if our acquisition of the
license described in the "Description of Business" section had occurred at June
30, 2009 are filed as an exhibit to this current report.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On September 16, 2009, we dismissed Michael T Studer C.P.A., P.C. ("Studer") as
our principal independent accountant, and concurrently engaged Dale Matheson
Carr-Hilton LaBonte LLP as our principal independent accountant. The decision of
our Board of Directors to dismiss Studer and to appoint DMCL was made because we
are a reporting issuer in multiple jurisdictions and we wanted to retain a
principal independent accountant that is able to render audit opinions in both
jurisdictions.
Studer's reports on our financial statements for the two most recent fiscal
years ended June 30, 2009 and 2008 did not contain an adverse opinion or
disclaimer of opinion, or qualification or modification as to uncertainty, audit
scope, or accounting principles, except that such report on our financial
17
statements contained an explanatory paragraph in respect to the substantial
doubt about our ability to continue as a going concern.
During our two most recent fiscal years ended June 30, 2009 and 2008,, through
to the date of its dismissal on September 16, 2009, there were no disagreements,
resolved or not, with Studer on any matter of accounting principles or
practices, financial statement disclosure, or audit scope and procedures, which
disagreements, if not resolved to the satisfaction of Studer would have caused
Studer to make reference to the subject matter of the disagreements in
connection with its report.
During our two most recent fiscal years ended June 30, 2009 and 2008 and in the
subsequent interim period through the date of dismissal, there were no
reportable events as described in Item 304(a)(1)(v) of Regulation S-K.
We did not consult with DMCL prior to the date of engagement regarding the
application of accounting principles, the type of audit opinion that might be
rendered by it any other similar matter. In addition, during such periods, we
have not consulted with DMCL regarding any matter that was either the subject of
a disagreement (as defined in Item 304(a)(1)(iv) and the related instructions)
or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES
On October 28, 2009, we issued 30,600,000 shares of our common stock to
Packetera Communications Inc. ("Packetera") pursuant to a licensing agreement
whereby we acquired an exclusive worldwide 75 year license to use, sell, market,
distribute and/or sublicense various products and services owned by Packetera.
We issued these shares pursuant to Section 4(2) of the Securities Act of 1933.
We were able to rely upon this exemption since this issuance does not constitute
a public offering of our shares.
In connection with this issuance, the principal of Packetera, Kevin Penstock was
provided with access to all material aspects of the company, including the
business, management, offering details, risk factors and financial statements.
He also represented to us that he was acquiring the shares as principal for his
own account with investment intent. He also represented that he was
sophisticated, having prior investment experience and having adequate and
reasonable opportunity and access to any corporate information necessary to make
an informed decision. This issuance of securities was not accompanied by general
advertisement or general solicitation. The shares were issued with a Rule 144
restrictive legend.
In connection with the completion of the aforementioned licensing agreement, we
agreed to split our common stock such that every share of pre-split stock was
exchange for 8.5 post-split shares of common stock.
ITEM 3.03. MATERIAL MODIFICATION TO MATERIAL RIGHTS OF SECURITY HOLDERS
We have amended our Articles of Incorporation to change our authorized capital
to include 1,000,000 shares of preferred stock. Authority is vested in our board
of directors to prescribe the classes, series and the number of each class or
series of stock and the voting powers, designations, preferences, limitations,
restrictions and relative rights of each class or series of stock. Management
decided to authorize a class of preferred stock in order to provide us with
greater flexibility in arranging future equity financings. We do not have any
current plans, proposals or arrangements to issue the newly authorized preferred
securities.
ITEM 5.01. CHANGES IN CONTROL OF REGISTRANT
On October 28, 2009 we completed a licensing agreement whereby we issued
30,600,000 post-shares of common stock to Packetera Communications Inc. These
18
shares were issued in consideration of Packetera's grant of a license and
assignment of contracts to us.
Concurrently, our former directors, Greg Fedun and Christopher Paterson agreed
to return to treasury a total of 34,000,000 post-split shares in our common
stock, thereby relinquishing control. As a result of these transactions, Kevin
Penstock, the principal of Packetera Communications Inc., is the beneficial
owner of 51.5% of our issued common stock.
ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS
On October 28, 2009, we appointed Kevin Penstock and Ioannis Karamitsos as our
directors in place of Greg Fedun and Christopher Paterson, who both tendered
their resignations in accordance with the terms of the licensing agreement
between us and Packetera Communications Inc. completed October 28, 2009.
Our officers now consist of Angelo Soukas (president), Kevin Penstock (C.E.O.,
secretary and treasurer), Ioannis Karamitsos (vice-president of research and
development) and Carmelo D'Anzi (vice-president of business development).
ITEM 5.03. AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR.
We have amended our Articles of Incorporation to change our name from Shadow
Marketing Inc. to Itokk, Inc. We have also amended our Articles to change our
authorized capital to include 1,000,000 shares of preferred stock and provide
that we vest authority in the board of directors to prescribe the classes,
series and the number of each class or series of stock and the voting powers,
designations, preferences, limitations, restrictions and relative rights of each
class or series of stock.
ITEM 5.06. CHANGE IN SHELL COMPANY STATUS
As a result of the closing of between us and Packetera Communications Inc.
management believes that we have ceased to be a shell company as defined in Rule
12b-2 of the Securities Exchange Act. Details of the material terms of the
licensing agreement that led to our change in shell company status are contained
in Item 2.01 in this current report.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. Description
----------- -----------
3.1 Articles of Amendment
10.1 Licensing Agreement
99.1 Pro Forma Financial Statements
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ITOKK, INC.
Date: October 28, 2009 By: /s/ Kevin Penstock
--------------------------------------------
Kevin Penstock, CEO, Secretary and Treasurer
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