0001079973-11-000625.txt : 20110808 0001079973-11-000625.hdr.sgml : 20110808 20110805205348 ACCESSION NUMBER: 0001079973-11-000625 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 20110808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Liquid Spins, Inc. CENTRAL INDEX KEY: 0001504136 IRS NUMBER: 270471921 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-176123 FILM NUMBER: 111015485 BUSINESS ADDRESS: STREET 1: 5525 ERINDALE DRIVE STREET 2: SUITE 200 CITY: COLORADO SPRINGS STATE: CO ZIP: 80918 BUSINESS PHONE: (800) 595-1641 MAIL ADDRESS: STREET 1: 5525 ERINDALE DRIVE STREET 2: SUITE 200 CITY: COLORADO SPRINGS STATE: CO ZIP: 80918 FORMER COMPANY: FORMER CONFORMED NAME: Malemark, Inc. DATE OF NAME CHANGE: 20101022 S-1 1 liquidspins_s1.htm FORM S-1 liquidspins_s1.htm
As filed with the Securities and Exchange Commission on August 5, 2011
Registration No. 333-______
 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________

FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

LIQUID SPINS, INC.
(Exact name of registrant as specified in its charter)
______________________________

Colorado
7380
27-0471921
(State or other jurisdiction of
(Primary Standard Industrial
(I.R.S. Employer
incorporation or organization)
Classification Code Number)
Identification No.)

5525 Erindale Drive, Suite 200, Colorado Springs, Colorado 80918
(800) 595-1641
(Address and telephone number of principal executive offices)

Herman C. DeBoard, III,
Chairman of the Board and Chief Executive Officer
Liquid Spins, Inc.
5525 Erindale Drive, Suite 200, Colorado Springs, Colorado 80918
(800) 595-1641
(Name, address and telephone number of agent for service)

With a copy to:
David J. Babiarz, Esq.
Dufford & Brown, P.C.
1700 Broadway, Suite 2100
Denver, Colorado 80290-2101
(303) 861-8013

Approximate date of commencement of proposed sale to public: As soon as practical after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, 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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer   o Accelerated filer    o
       
Non-accelerated filer  o Smaller reporting company  x
                                      
CALCULATION OF REGISTRATION FEE
 
Title of each class of
securities to be registered
 
Amount to
be registered(1)
   
Proposed maximum
offering price
per share
   
Proposed maximum
aggregate
offering price
   
Amount of
registration fee
 
Common stock, $0.001 par value
    14,241,875     $ 0.50     $ 7,120,938     $ 826.74  
Total
                               
 
(1)     Pursuant to Rule 416 under the Securities Act of 1933, as amended, includes an indeterminate number of additional shares to prevent dilution in the event of stock splits, stock dividends or similar events.


The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 
 
 
 
 
 

 

 
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
SUBJECT TO COMPLETION, DATED August 5, 2011

PROSPECTUS
LIQUID SPINS, INC.
___________________

14,241,875 Shares
of Common Stock
 
Our shareholders identified in this prospectus under “SELLING SHAREHOLDERS” are offering 14,241,875 shares of our common stock.  All of these shares of common stock are being offered by the selling shareholders or their transferees, pledgees, donees or successors in interest. The selling shareholders will receive all of the proceeds from the sale of the shares of the common stock being offered by this prospectus.
 
 
The selling shareholders may sell the shares of common stock being offered by them from time to time at a fixed price of $0.50 per share until such time, if ever, our shares are quoted on the electronic bulletin board, which we refer to as the OTC Bulletin Board, maintained by the Financial Industry Regulatory Authority, which we refer to as FINRA,  or the interdealer quotation system known as OTC Markets following which the shares may be offered at prices prevailing in the market or at privately negotiated prices. The selling shareholders may sell these securities to or through one or more underwriters, broker-dealers or agents, or directly to purchasers on a continuous or delayed basis. The names of any underwriters or agents will be included in a post-effective amendment to the registration statement of which this prospectus is a part, as required.  For additional information on the methods of sale, you should refer to the section entitled “PLAN OF DISTRIBUTION” on page 37.
 
        There is presently no market for our common stock.
 
___________________

Investing in our common stock involves a high degree of risk and should only be purchased by those who can afford to lose their entire investment.  See the “RISK FACTORS” section beginning on page 5 of this prospectus.
__________________

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of our common stock or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is August 5, 2011
 
 
 

 
TABLE OF CONTENTS
 


 
Page
Prospectus Summary
 1
Risk Factors
 5
Business
11
Use of Proceeds 17
Market for Common Stock and Related Stockholder Information
17
Determination of Offering Price 21
Management’s Discussion and Analysis of Financial Condition and Results of Operation
22
Management
28
Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
33
Selling Shareholders
33
Plan of Distribution
37
Description of Capital Stock
38
Shares Eligible For Future Sale
40
Where You Can Find More Information
40
Legal Matters
41
Experts
41
Financial Statements
F-1
About This Prospectus
Back Cover
 
Additional Information

This prospectus contains summary descriptions of certain contracts, agreements or other documents affecting our business. These descriptions are not necessarily complete. For the complete text of these documents, you can refer to the exhibits filed with the registration statement of which this prospectus is a part. (SeeWHERE YOU CAN FIND MORE INFORMATION”).

You should rely only on the information contained in this prospectus, or to which we have referred you. We have not authorized anyone to provide you with information other than as contained or referred to in this prospectus. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate as of the date of this document.
 
Special Note Regarding Forward-Looking Statements

Please see the note under “RISK FACTORS for a description of special factors potentially affecting forward-looking statements included in this prospectus.

 

 
 

 
SUMMARY

The following summary highlights information contained elsewhere in this prospectus. It does not contain all of the information you should consider before investing in our stock.  You should read the entire prospectus carefully, including the sections entitled “RISK FACTORS” and “FINANCIAL STATEMENTS.”

As used in this prospectus, unless the context requires otherwise, the terms “Liquid Spins,” “we,” “our” or “us” refer to Liquid Spins, Inc.

Our Company

Liquid Spins, Inc. was incorporated under the laws of the State of Colorado on June 20, 2009 under the name “Malemark, Inc.” to develop and market a line of greeting cards under the Malemark trademark and logo.  Our original line of greeting cards was geared primarily toward male consumers and was distributed via our website and in a small number of retail locations.  However, our business has evolved substantially since our inception in 2009, and accordingly, on April 26, 2011, we changed our name to “Liquid Spins, Inc.”

While marketing our original greeting cards, we developed the concept of a “lyrical” greeting card, which incorporated lyrics from popular songs as part of the card message.  In conjunction with this concept, we utilized a quick response, or “QR,” code which enabled users to scan the code on their smart phones, preview the song and download it from our website.  These concepts then evolved into various prototype products, including greeting cards that distribute digital media (primarily music) via the Internet, and we began marketing these products and our technology under the “Liquid Spins” name.  However, as of the date of this prospectus, we remain a development stage company with very limited revenue to date.

In the course of developing our business plan, we fostered relationships with certain national retailers and participants in the recording and music industry.  Our relationships in the recording industry, which include record executives and performers, allowed us the opportunity to negotiate for and acquire the non-exclusive rights to a significant catalog of digital music.  Our relationships with retailers allowed us to market this catalog of music in a myriad of forms.  The culmination of these events resulted in the genesis of our current business plan.

We currently operate an online music store under the name “Liquid Spins.”  Our proprietary digital music platform allows consumers to sample and download music on computers and certain mobile devices.  We currently have license agreements with three major record labels providing a catalog of a wide range of music, and continue efforts to obtain additional licenses.  Our music store is marketed independently by us and through partnerships with certain participants in the music industry.  We also recently signed an agreement with a national distributor of prepaid and other stored-value products (gift cards) which we hope will create sales of our digital music through grocery, big box and other retail outlets.  Our business plan contemplates eventually partnering with major retailers to private, or “white,” label our store with these retail partners.  We hope to reduce the time-to-market for our prospective retail partners while reducing the complexity and cost of digital asset management and distribution.  However, this latter concept is in the exploratory phase, and there is no assurance that we will be successful in developing formal agreements with any of our prospective retail partners.

Our office is currently located at 5525 Erindale Drive Suite 200, Colorado Springs, CO 80918 and our telephone number is (800) 595-1641.  We maintain two websites at www.liquidspins.com and www.malemark.com.  None of the information contained on our websites is part of this prospectus.
 

 1
 
 

 
Our Revenue Model

Under our existing business plan, we hope to generate revenue by selling music that we have licensed from record labels and collecting a wholesale licensing fee or royalty.  We also hope to provide white label services to prospective retail partners, thus broadening our potential sources of revenue.  We offer the songs at prices ranging from $0.99 to $1.29 each, and albums from $4.49 to $24.99, consistent with other on-line music stores.  Our major selling expense is the licensing fee we must pay to the record labels as owners of the music.  As of July 31, 2011, our only revenue has been generated from very limited sales of our paper greeting cards.

We currently have executed music distribution agreements with three major record labels which allow us to market in excess of 2 million songs.  We believe we have secured the same pricing structure and margins as large competitors such as Apple’s iTunes and Amazon.com.  These distribution agreements require that we pay a portion of the revenue generated from sale of the music to the record company, in some cases offset by prepaid royalties.  As of August 5, 2011, we have invested approximately $225,000 in prepaid royalties, other fees and expenses to acquire our initial catalog of music.

In addition to the direct costs of acquiring our music inventory, we have spent significant sums developing the technology necessary to deliver this product.  Including general and administrative expenses, we have spent approximately $1,000,000 from the inception of our company to March 31, 2011.

Recent Financings
 
In July 2011, we completed a private placement of our common stock, selling 650,000 shares at a price of $0.40 per share for gross proceeds of $260,000.  We have used a portion of that amount to pay advance royalties related to our music catalog and for other operating expenses.  Prior to that, we completed a private placement which commenced in September 2010 and extended to April 2011 consisting of 4,668,750 shares at a price of $0.40 per share for gross proceeds of $1,867,500.  The proceeds from that offering have been used for expenses such as acquiring an inventory of paper greeting cards, creating prototype products, advance royalties on music, salaries, development expenses associated with our website and travel.
 
The Offering
 
Common stock outstanding before and after the offering                                                                
22,903,750 shares
Common stock offered by the selling shareholders                                                                
14,241,875 shares(1)
Use of proceeds                                                                
None
__________________
(1)
Assumes that all of the common stock offered under this prospectus is sold, of which there is no assurance.
 
Risk Factors

This offering involves as high degree of risk.  Our common stock should only be purchased by persons who can afford to lose their entire investment.  Risk factors relating to our company include:

·  
We are a new business with a limited operating history and investors have no basis to evaluate our ability to operate profitably;
 
2
 
 

 
 
·  
We are dependent on achieving profitable operations and receipt of additional working capital to continue in business;
·  
The rights to substantially all of the music that we offer are owned by third parties and subject to license agreements which may expire or be terminated in the future;
·  
We currently have no agreement with any retail partner to distribute our digital music;
·  
Our profit margins may be small due to significant competition and other factors;
·  
The requirement to secure access to our digital music catalog may require the expenditure of significant amounts of money or the development of new technology;
·  
We may be liable for monetary damages to third parties for failure to maintain adequate security of the digital music;
·  
Our business is substantially dependent on our chief executive officer and there is no assurance that we would be able to replace such individual should that become necessary;
·  
Our officers and directors have very limited experience operating an online music store;
·  
We face intense competition from other, well established businesses;
·  
As a company with securities registered with the Securities and Exchange Commission, we will be subject to detailed reporting requirements, including the need to file and deliver audited financial statements and an assessment of our internal controls over financial reporting;
·  
Since it is not contemplated that our common stock will be listed on a national securities exchange, certain of our directors may not be considered “independent”;
·  
There is no assurance that any trading market for our common stock will develop;
·  
Trading in our common stock may be volatile as a result of not listing on a national securities exchange or having the participation of a registered broker or dealer;
·  
We have the ability to issue significant amounts of common stock in the future without the approval of our shareholders; and
·  
It is not anticipated that we will pay dividends on our common stock in the foreseeable future.

Prospective investors in our common stock should be aware of these and other risk factors discussed in this prospectus.

Summary Financial Data

The following tables present certain selected historical financial data about our company.  Historical financial information as of and for the year ended December 31, 2010 and the period from inception to December 31, 2009 has been derived from our financial statements, which have been audited by StarkSchenkein, LLP, our independent registered public accounting firm.  The financial information for the three months ended March 31, 2011 and 2010 is unaudited.  All amounts included in these tables and elsewhere in this prospectus are stated in United States dollars.  You should read the data set forth below in conjunction with the section entitled “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” our financial statements and related notes included elsewhere in this prospectus.
 
   
Balance Sheet Data
 
   
March 31,
   
December 31,
 
   
2011
   
2010
   
2009
 
   
(unaudited)
             
Cash and Cash Equivalents
  $ 1,113,659     $ 251,068     $ 2,357  
Total Current Assets
    1,188,762       274,464       2,357  
Total Assets
    1,385,589       309,092       21,072  
Total Liabilities
    41,224       49,082       11,475  
Shareholders’ Equity
    1,344,365       260,010       9,597  
 

 3
 
 

 

   
Operating Data
 
   
Three months ended
March 31,
   
Year ended
December 31
   
Period from inception to December 31,
 
   
2011
   
2010
   
2010
   
2009
 
   
(unaudited)
             
                         
Revenue
    538       230       27,888       -  
Costs of Sales
    14,936       1,626       63,043       -  
Other Income
    708       -       (18,023 )     -  
General and Administrative   Expenses
    401,955       108,136       1,433,309       26,572  
Total costs and Expenses
    401,955       108,136       1,433,309       77,503  
Net (Loss)
    (415,645 )     (109,532 )     (1,486,487 )     (77,503 )
Net (Loss) per Share
  $ (0.02 )   $ (0.01 )   $ (0.09 )   $ (0.01 )
                                 

 
 
 

 4
 
 

 
RISK FACTORS

An investment in our securities involves a high degree of risk.  You should carefully consider the risks described below together with all of the other information included in this prospectus before making an investment decision.  If any of the following risks actually occurs, our business, financial condition or results of operation could materially suffer.  In that case, you may lose all or part of your investment.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also impair our business operations.  If we are unable to prevent events that have a negative affect from occurring, then our business may suffer.

Risks Relating to Our Company
 
    Since we are a new business with essentially no operating history, investors have no basis to evaluate our ability to operate profitability.  We were incorporated in June 2009 and have limited revenue from operations since our inception.  Our activities to date have been limited to organizational efforts, raising capital, researching and developing our business plan, identifying consultants, and establishing relationships with certain retailers and music industry participants.  We face all of the risks commonly encountered by other new businesses, including the lack of an established operating history or a recognized brand reputation, need for additional capital and personnel, and competition.  There is no assurance that our business will be successful or that we can ever operate profitably.
 
    We are dependent on achieving profitable operations and receipt of additional working capital to fund continued development and implementation of our business plan, and our failure to obtain this capital may cause the partial or total loss of your investment.  Our company has extremely limited capitalization and is dependent upon achieving profitable operations and receipt of additional financing to continue operations.  As of March 31, 2011, we had working capital of $1,147,538, a net worth of $1,344,365 and an accumulated deficit of $1,979,635.  Continued development of our business plan will require significant additional working capital.  The continued acquisition of an adequate catalog of digital music, development of a platform to deliver that content and pursuit of the remainder of our business plan will require substantial additional capital from investors, and we have no established source of obtaining that financing.  We may also require additional capital to pay our administrative expenses, including salary, rent, and website development.  Adverse developments in our business or general economic conditions may require us to raise additional financing at prices or on terms that are disadvantageous to existing shareholders.  We may not be able to obtain additional capital at all and may be forced to curtail or cease our operations.
 
    Because we are a relatively new company with very limited assets, we are likely not a candidate for traditional commercial borrowing or debt financing.  Commercial lenders generally require a proven source of cash flow and sufficient assets to secure the loan.  As a result of our status as a newly formed entity with very limited revenue, we do not satisfy either of these criteria.  If we are unable to access a credit line or other form of commercial credit, we may be unable to grow our business.  We may also be forced to finance any accounts receivable that we may generate to free up capital.  If we finance our accounts receivable, it may reduce our cash flow.  As a result, we may have less cash flow and our operations may suffer.
 
    We do not own the digital content that we propose to offer to our customers, and there is no assurance that such content will be available to us on commercially reasonable terms or at all.  The digital music content that we offer is owned by independent third parties and provided to us under non-exclusive license arrangements.  As of the date of this prospectus, we have executed agreements with two major record labels to obtain the rights to their portfolios of digital content.  However, our existing agreements with EMI Music,Warner Music Inc. and RED Distribution, LLC are for a limited period of time, and we expect similar arrangements with other potential providers.  The agreements can be terminated if we fail to honor our obligations, including calculation and payment of licensing fees, and the record companies can suspend or terminate our right to certain songs at any time.  Even if we are successful in negotiating agreements with other labels, there is no assurance we will retain access to their content for more than a limited period of time.  Future agreements, if available, may require us to pay additional fees to obtain or retain access to the content.  Such additional fees may erode our potential profit.  If we are unable to obtain and maintain access to this digital content, our business plan may be unsuccessful and the value of your investment may decline.  The agreements can be terminated if we fail to honor our obligations, including calculation and payment of licensing fees, and the record companies can suspend or terminate our right to certain songs at any time.
 
5
 
 

 
 
    Our marketing efforts are limited and we do not have any agreements to partner with retailers to distribute our digital music.  Our plan of operation is predicated on appealing to a large number of customers, since our revenue and profit margin per-song are limited.  To that end, we are negotiating with several prospective retail partners that are interested in our digital music platform.  However, we have not secured an agreement with any of these prospects, and there is no assurance that we will obtain such agreements in the future.  Since our existing marketing efforts are very limited at present, if we are unable to secure an agreement with a major retail partner in the future, our revenue and results of operations will suffer.
 
    We may not have full control and ability to direct the operations we may conduct with any retail partner.  A prospective retail partner may use its size and the prospect of significant business for our company to impose terms and conditions on us which are disadvantageous to our company.  Since we are a relatively new business with very limited revenue, we may be dependent on an arrangement with one or more of these retail partners to sustain operations.  The potential disparity in bargaining power between a prospective partner and our company may result in an arrangement which is not as favorable as we contemplate.
 
    One or more of our existing music distribution agreements requires payment of a significant minimum licensing fee.  The minimum fee is payable at the conclusion of the initial term of the agreement, 12 months from inception.  In the event we are unable to sell a sufficient number of songs to satisfy the minimum licensing fee required by the agreements, we would be required to pay any difference upon expiration thereof.  Such minimum fee may represent a significant portion of our then-existing working capital, and would deplete funds which would otherwise be available for marketing and other revenue generating purposes.  Any such fee would adversely affect our results of operations.
 
    If we are unsuccessful in managing our mobile music store service offerings, we may fail to meet expectations of our business plan and our results of operations could be harmed.  We believe that the future growth in digital music store services depends significantly upon the growth of the mobile market for digital content services, including music and later, video and other digital content.  We have significantly invested in creating a “mobile music platform” that allows smart phone users to decipher special codes to obtain our digital media content.  There are a number of technological and practical challenges that could impact the adoption rate of mobile platforms as an acceptable method of digital music purchase, including the rate of adoption of compatible mobile handsets, availability of high speed mobile data networks, adoption by consumers of mobile data plans, any pricing differential (both wholesale and retail) between content purchased over-the-air to a mobile device and purchased by other means, development of content and digital rights management standards and technologies acceptable to content licensors, and the impact on the economics of the mobile music business of certain issued patents.  Acceptance of our music store services is likely to also depend on significant growth in adoption of internet capable portable music devices.  If we are unsuccessful in meeting the challenges and complexities of mobile music distribution or are unsuccessful in securing additional partners for our services, our results of operations could be harmed.
 
    Our failure to accurately calculate and pay license fees due to the owners of digital content may result in our losing access to such content or imposition of financial penalties.  The licensing agreements with our existing content providers require that we calculate and pay the licensing fees on an ongoing basis, and confirm such calculations to the owners.  If we do not accurately calculate these fees, the providers may terminate the agreement or impose financial penalties on our company.  Either event would adversely affect our operations.
 

 6
 
 

 
    We may be liable for monetary damages to third parties for music, software, and other content that we encode, distribute, archive or distribute to our customers. We may be liable or alleged to be liable to third parties, such as the recorded music companies, music publishers, recording artists and trade unions, for the content that we distribute, archive or make available to our customers as samples, streams, downloads or otherwise:

·  
If the use of the content is not properly licensed by the content owners or their representatives;
·  
If our customers violate the intellectual property rights of others by providing content to unauthorized third parties;
·  
If the manner of delivery of content is alleged to violate terms of use of third party delivery systems, such as peer-to-peer networks; or
·  
If content that we handle is deemed obscene, indecent, or defamatory.

Any alleged damage could harm our business by damaging our reputation, requiring us to incur legal costs in defense, exposing us to awards of damages and costs and diverting management’s attention.
 
    The requirement to secure access to digital content may require the expenditure of significant amounts of money or the development of additional technology.  One or more of our music distribution agreements requires that we acquire and maintain Internet media liability, network security liability or other suitable insurance with significant limits to cover errors and omissions in connection with our technology that lead to breaches of security or other similar losses to the distributor.  There is no assurance that we will be able to acquire such insurance, or if so, on terms which are commercially reasonable.  We are also required to indemnify the record companies from liability arising from breaches in security in our technology.  The cost of the insurance and any losses we are required to pay may adversely affect our results of operation and financial condition.
 
    Our management and consultants have no experience in operating an on-line music store, and accordingly, our business may suffer.  Only one of our officers has extensive experience in the music industry, and none of our employees have managed, operated or been employed by businesses that distribute digital media.  They therefore have limited experience securing the rights to digital catalogs of songs and otherwise building a platform for distribution.  Our management will be forced to learn the industry, including the strategies for securing rights to the digital media content and formulating a strategy for distribution to consumers.  For these reasons, our business may not be successful.  We have hired several personnel who have experience in the music recording industry and website design; however, there is no assurance that our business plan will be successful.
 
    Our business is substantially dependent on our chief executive officer and the loss of his service would adversely affect our business.  Herman DeBoard, III is our Chief Executive Officer and is primarily responsible for overseeing our business, developing our business plan and creating the strategic vision of our company.  He is critical to the perceived success of our business.  The loss of service of Mr. DeBoard would adversely affect our business.  If he were to leave our business for any reason, there is no assurance we would be able to replace him, or if so, on terms that were acceptable to our company.  We have no key man life insurance on Mr. DeBoard.
 
    We face intense competition in the digital media distribution industry from several key players and have limited financial resources and personnel with which to compete.  There are numerous nationally and internationally-known companies which are firmly established as distributors of digital media content, including Apple iTunes store and Amazon.com.  These competitors include both established companies and new entrants with different market approaches, such as subscription service models.  Some of these companies have established brands and may be affiliated with products.  We are an insignificant participant in the digital media distribution industry due to our brief operating history and limited financial and personnel resources.  We may be unable to attract the necessary investment capital to fully develop our digital media distribution platform and expand our retail offerings.
 
7
 
 

 
 
    While we believe we have adequate internal controls over financial reporting, we will be required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have a material adverse effect on the price of our common stock. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we will likely be required to furnish a report by our management on internal controls for the fiscal year ending December 2012.  Such a report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting, including a statement as to whether or not our internal controls are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by our management.  While we believe our internal controls over financial reporting are effective, we are still constructing the system, processing documentation and performing the evaluations needed to comply with Section 404, which is both costly and challenging.  We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. If we are unable to assert that our internal controls over financial reporting are effective, or if we disclose significant deficiencies or material weaknesses in our internal controls, investors could lose confidence in the accuracy and completeness of our financial reports, which would have a material adverse effect on our stock price.
 
    Because we do not have an audit or compensation committee, shareholders will have to rely on our Board of Directors to perform the functions typically delegated to these committees, and certain members of our Board are not independent.  We do not presently maintain an audit or compensation committee. These functions are performed by our Board of Directors as a whole.  Since two of our current Board members are also part of our management team, there is a potential conflict where these individuals participate in discussions concerning management compensation and audit issues that may affect management decisions.  This lack of independence may adversely affect our corporate governance and the operation of our business.
 
    Colorado law and our Articles of Incorporation may protect our directors from certain types of lawsuits at the expense of the shareholders.  The laws of the State of Colorado provide that directors of a corporation shall not be liable to the corporation or its shareholders for monetary damages for all but limited types of conduct.  Our Articles of Incorporation permit us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law.  The exculpation provisions may have the effect of preventing shareholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances.

Risks Related to the Offering and Our Common Stock
 
    The initial price of our common stock in this offering has been arbitrarily determined and bears no necessary relationship to our lack of earnings, the book value of our common stock or any other traditional criteria of value.  The initial offering price has been determined by negotiations between representatives of our management and certain selling shareholders and is based in part on the recent sales price of our common stock.  However, since no underwriter has been involved in the offering of our common stock in the past and no underwriter is involved in this offering, the price has not been negotiated at arm’s length as might otherwise be the case.  Purchasers of our common stock in this offering have no assurance that they will be able to sell the common stock for a profit, or at all.
 
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    Since no broker or dealer has committed to create or maintain a market in our stock, there is no assurance that our stock will be quoted in the OTC Bulletin Board or OTC Markets, and purchasers of our common stock may have difficulty selling their shares, should they desire to do so.  It is our intention to seek one or more broker-dealers to apply for quotation of our common stock on the OTC Bulletin Board or OTC Markets following the date of this prospectus. However, we have no agreement with any broker-dealer at this time, and there is no assurance that we will be successful in finding one in the future. In addition, we believe that our stock will be characterized as a “micro-cap” security and therefore subject to increased scrutiny by FINRA.  A micro-cap security is generally a low priced security issued by a small company, or the stock of a company with low capitalization. If we are unable to obtain quotation of our common stock on the OTC Bulletin Board or OTC Markets, trading in our stock will be limited, and purchasers of our common stock may have difficulty selling their shares, should they desire to do so.
 
    Even if a trading market for our common stock develops, since we do not have an underwriter for our stock, there may be inadequate support for our stock and you may not be able to sell your stock for a profit.  We have not retained an underwriter to sell our common stock, as is customary with many companies “going public” for the first time.  An underwriter, in addition to marketing the stock in connection with the public offering, most often provides after-market support for the stock after the offering.  That after-market support may help to stabilize the price of the stock at a price different than might otherwise result in the absence of that support.  Since we have not retained an underwriter, the price of our stock may not remain at the level that is established when the trading market begins.  As a result, investors in our stock may have difficulty selling their stock at a profit or at all.
 
    Our stock price may be volatile and as a result you could lose all or part of your investment. In addition to volatility associated with over-the-counter securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock:
 
 
failure to successfully implement our business plan;
 
failure to meet our revenue or profit goals or operating budget;
 
decline in demand for our common stock;
 
sales of additional amounts of common stock;
 
downward revisions in securities analysts’ estimates or changes in general market conditions;
 
technological innovations by competitors or in competing technologies;
 
investor perception of our industry or our prospects; and
 
general economic trends.

In addition, stock markets have experienced extreme price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to resell their shares at a fair price.
 
     A small number of existing shareholders own a significant amount of our common stock, which could limit your ability to influence the outcome of any shareholder vote. Our executive officers and directors beneficially own approximately 52.3% of our common stock as of the date of this prospectus. Under our Articles of Incorporation and Colorado law, the vote of a majority of the shares outstanding is generally required to approve most shareholder action.  As a result, these individuals will be able to control the outcome of shareholder votes for the foreseeable future, including votes concerning the election of directors, amendments to our Articles of Incorporation or proposed mergers or other significant corporate transactions. We have no existing agreements or plans for mergers or other corporate transactions that would require a shareholder vote at this time. However, shareholders should be aware that they may have limited ability to influence the outcome of any vote in the future. (SeeSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT”).
 
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    The sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.  It is likely that market sales of large amounts of common stock (or the potential for those sales even if they do not actually occur) could cause the market price of our common stock to decline, if a trading market is ever established, which may make it difficult to sell our common stock in the future at a time and price which we deem reasonable or appropriate and may also cause you to lose all or a part of your investment. (SeeSHARES ELIGIBLE FOR FUTURE SALE”).
 
    Since our common stock is not presently listed on a national securities exchange, trading in our shares will likely be subject to rules governing “penny stocks,” which will impair trading activity in our shares.  Our common stock may be subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks.  Those disclosure rules applicable to penny stocks require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized disclosure document required by the SEC.  These rules also require a cooling off period before the transaction can be finalized.  These requirements may have the effect of reducing the level of trading activity in any secondary market for our common stock.  Many brokers may be unwilling to engage in transactions in our common stock because of the added disclosure requirements, thereby making it more difficult for stockholders to dispose of their shares. (SeeMARKET INFORMATION”).
 
    Issuance of our stock in the future could dilute existing shareholders and adversely affect the market price of our common stock, if a public trading market develops.  We have the authority to issue up to 55,000,000 shares of stock, including 50,000,000 shares of common stock and 5,000,000 shares of preferred stock, and to issue options and warrants to purchase shares of our stock without shareholder approval.  Because our common stock is not currently listed on an exchange, we are not required to solicit shareholder approval prior to issuing large blocks of our stock.  These future issuances could be at values substantially below the price paid for our common stock by investors in this offering.  In addition, we could issue large blocks of our stock to fend off unwanted tender offers or hostile takeovers without further shareholder approval.  Because there is presently no trading market for our common stock, the issuance of our stock may have a disproportionately large impact on its price compared to larger companies.
 
    We have never paid dividends on our common stock and we do not anticipate paying any in the foreseeable future. We have not paid dividends on our common stock to date, and we may not be in a position to pay dividends for the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop our business plan and generate revenue from operations. Further, our initial earnings, if any, will likely be retained to finance our operations. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors, and will be at the discretion of our Board of Directors. (SeeMARKET INFORMATION”).
 
Forward-Looking Statements
 
    This prospectus contains statements that plan for or anticipate the future. Forward-looking statements include statements about our future business plans and strategies, statements about future revenue, profit and the receipt of working capital, and most other statements that are not historical in nature.  In this prospectus, forward-looking statements are often identified by the words “anticipate,” “plan,” “intend,” “believe,” “expect,” “estimate,” and the like. Because forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results to differ materially from those expressed or implied. Prospective investors are urged not to put undue reliance on these forward-looking statements.
 
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    A few of the uncertainties that could affect the accuracy of forward-looking statements, besides the specific Risk Factors identified above, include:
 
Changes in the general economy affecting the disposable income of the public;
Technological changes in the entertainment industry;
Our costs;
The level of demand for our products; and
Changes in our business strategy.
 
    The Private Securities Litigation Reform Act of 1995, which provides a “safe harbor” for similar statements by existing public companies, does not apply to our offering, as we have not been previously registered with the SEC.
 
BUSINESS

Our History
 
    Liquid Spins, Inc. was incorporated under the laws of the State of Colorado on June 20, 2009 under the name “Malemark, Inc.” to develop and market a line of greeting cards under the Malemark trademark and logo.  Our original line of greeting cards was geared primarily toward male consumers and was distributed via our website and in a small number of retail locations.  The thrust of the Malemark brand was ‘For Men Who Make Mistakes.’  We created more than 1,100 unique cards divided among nine character lines.  We designed 14 unique greeting card displays that we offered for sale to retailers.  We also own multiple domain names including “malemark.com” and have paid for the development, implementation, testing and marketing of multiple aspects of a large website capable of supporting online sales of our greeting cards.
 
    In the course of our initial development, we were able to secure vendor agreements for our cards with:

·  
Fry’s Electronics.  Fry’s has 34 locations nationwide and a customer base that is 83% male.  Stores average approximately 2,000 customers per day (68,000 total daily foot traffic).
 
·  
Various flower and gift shops and golf courses.
 
    In addition, we applied for and were awarded an official license by the Collegiate Licensing Company (CLC).  Colorado State University Bookstore has sold three lines of our cards in its bookstore to students and visitors.  
 
    While marketing our original greeting cards, we developed the concept of a “lyrical” greeting card, which incorporated lyrics from popular songs as part of the card message.  In conjunction with this concept, we utilized a quick response, or “QR,” code which enabled users to scan the code on their smart phones, preview the song and download it from on our website.  These concepts then evolved into various prototype products, including greeting cards that distribute digital media (primarily music) via the Internet, and we began marketing these products and our technology under the “Liquid Spins” name.
 
    In the course of developing our business plan, we fostered relationships with certain national retailers and participants in the recording and music industry.  Our relationships in the recording industry, which include record executives and performers, allowed us the opportunity to negotiate for and acquire the non-exclusive rights to a significant catalog of digital music.  Our relationships with retailers allowed us to market this catalog of music, originally as part of our lyrical cards and later in a myriad of forms.  In conjunction with the new focus of our business plan, we changed our name to “Liquid Spins, Inc.” on April 26, 2011
 
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    In July 2011, we completed a private placement of our common stock, selling 650,000 shares at a price of $0.40 per share for gross proceeds of $260,000.  We have used a portion of that amount to pay advance royalties related to our music catalog and other operating expenses.  Prior to that, we completed a private placement  which commenced in September 2010 and extended to April 2011 consisting of 4,668,750 shares at a price of $0.40 per share for gross proceeds of $1,867,500.  The proceeds from that offering have been used for expenses such as acquiring an inventory of paper greeting cards, creating prototype products, advance royalties on music, salaries, development expenses associated with our website and travel.

Our Digital Music Store
 
    We currently operate an online music store under the name “Liquid Spins.”  Our proprietary digital music platform allows consumers to sample and download music on computers and certain mobile devices.  We currently have license agreements with two major record labels providing a catalog of a wide range of music, and continue efforts to obtain additional licenses.  Our music store is marketed independently by us and through partnerships with certain participants in the music industry.  Our business plan contemplates eventually partnering with major retailers to private, or “white,” label our store with these retail partners.  We hope to reduce the time-to-market for our prospective retail partners while reducing the complexity and cost of digital asset management and distribution.  However, this latter concept is in the exploratory phase, and there is no assurance that we will be successful in developing formal agreements with any of our prospective retail partners.
 
    The use of the Internet and wireless networks as mediums for media distribution has continued to evolve and grow in recent years.  Traditional media and entertainment companies, such as major record labels, have in recent years faced significant challenges associated with digital distribution of music.  Such challenges have eroded revenues from traditional sources of music, such as CDs.  To replace that lost revenue, record companies now license the rights to some of their content for certain forms of digital distribution over the Internet and wireless networks.  Consumers enjoy this content by means of many different types of service and offerings, including purchased downloads, paid subscriptions, prepaid credit offerings and streaming radio.  Consumers acquire and consume content using personal computers, mobile devices and other digital devices.
 
    Our primary emphasis at present is building a platform that can be used as a means to distribute digital media content to consumers.  We have completed the development of the platform using digital music files in MP3 format and hope to expand our offerings to include digital video in the future.  The digital music file can be played on any device capable of playing an MP3 file.
 
    We have constructed the Liquid Spins website and platform to enable consumers to sample and purchase digital music content.  The website is maintained in the cloud on server space leased from Amazon Web Services.  In order to offer the digital music content on the website, we have licensed the content from various record labels and are required to pay a continuing royalty to the record label each time a consumer purchases a digital song through our website.  The continuing royalty consists of a percentage of the retail sales price of the song.  We contract with a third party merchant credit card vendor to power the purchase functionality on the website and pay over the revenue generated from sales of downloads of the digital music files.  We continue to invest in our platform.
 
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    In conjunction with our website and platform, we have developed several products using technology known as a “quick response code” or “QR code,” which is two-dimensional bar code.  Similar to a traditional bar code, one must use a “reader” to translate the QR code.  Companies across all industries are using QR codes as part of their marketing and communication strategies.  Various smart phone applications contain software that enables the smart phone to scan the code using its camera feature and decipher the QR code, and these applications are currently the primary method of decoding the QR codes.  Once deciphered, the QR code often contains a URL link to a particular website or other information such as contact information or a map location.  Smart phones will typically display the website or other information from the QR code, depending on the smart phone’s capability.
 
    The Liquid Spins prototype products have utilized the QR code to provide a URL link to our website where the digital media file can be accessed.  We refer to the URL link to our website embedded in the QR code as a LiquidclixTM.  Once a consumer activates the LiquidclixTM by using his or her smart phone application to decipher the QR code and link to the website, the consumer is able to listen for free to a sample of a particular song or purchase a download of the digital file containing the entire song.
 
    We have licensed our QR technology to record labels in an effort to increase distribution of our music products.  In turn, these record labels utilized the QR code in marketing initiatives, such as concert programs and other advertising, in an effort to increase distribution of their content.  These codes allow recipients to immediately access our website and download samples or complete songs offered by these record companies.

Our Music Catalog
 
    Our existing music catalog includes a vast array of music, the digital rights to which are owned by three major record labels, EMI, Warner Music Inc. and RED Distribution, LLC.  We have the right to distribute this music digitally, either directly or through approved partners.  The catalog includes music from diverse musical genres such as rock, pop, country, religious, rap and blues.  Noted artists include Frank Sinatra, Katy Perry, Coldplay, Pink Floyd, the Rolling Stones, the Beach Boys, John Lennon/Paul McCartney, Madonna, Van Helen, Prince, Led Zeppelin, Ray Charles, the Eagles and Fleetwood Mac.  The catalog currently consists of approximately 2.2 million songs.
 
    We are pursuing additional distribution agreements with other companies in an effort to expand our digital content.

Our Agreement with Tim Rushlow
 
    In an effort to increase our visibility and provide additional revenue, we have entered into two agreements with singer, composer and performing artist Timothy Rushlow.  Mr. Rushlow is a recording artist in Nashville and the former lead singer for the band Little Texas.  That band sold in excess of 11 million records during its existence, which ceased in 1998.  Mr. Rushlow continues to enjoy a successful solo career.
 
    On December 1, 2010, we executed a recording agreement with Mr. Rushlow pursuant to which he agreed to provide a minimum of 5 master recordings to us.  The initial 5 masters have been completed.  We anticipate the masters may be recorded and sold in the form of an extended play.  This music is within the Contemporary Christian Music (“CCM”) genre and has cross-over Adult Contemporary (“AC”) potential.
 
    Under the terms of the recording agreement, Liquid Spins owns all of the masters, the performances embodied therein and the worldwide copyright in perpetuity.  Such agreement provides us with the exclusive right of a copyright owner, including without limitation, the right to reproduce in copies and embody the masters in phonograph records, including promotional compact disc and compilations.  However, we must obtain the consent of Mr. Rushlow to commercially exploit the masters, which consent shall not be unreasonably withheld or delayed.
 
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    We intend to offer the music embodied in such masters on our website as part of our digital music catalog.
 
    On March 1, 2011, we executed an exclusive songwriting agreement with Mr. Rushlow.  Pursuant to the terms of that agreement, Mr. Rushlow assigned to us his entire publisher’s interest in all musical compositions and related works and materials written, composed, arranged, adapted or acquired in whole or in part by Mr. Rushlow, together with all copyrights therein and all renewals or extensions thereof throughout the world.  Mr. Rushlow also agreed to render his exclusive service to us as an author, composer, arranger and adapter of musical compositions during the period of the agreement.  During each year of the term of the agreement, Mr. Rushlow agreed to compose and deliver to us not less than 12 new and original musical compositions of marketable commercial quality at the rate of not less than 1 such composition per month.  We intend to review and, where appropriate, market these compositions as part of our music catalog.

Our Potential Retail Partners

           During discussions with various retailers regarding the distribution of our Liquid Spins products, we determined there was a market opportunity to provide companies with a platform to create a music store.  Using the Liquid Spins website as the underlying platform that already has the capability of hosting digital content and offering it for sale to customers provides us with an opportunity to partner with various companies to offer the content through a website co-branded with a company that has more name recognition than us.  This could significantly increase the distribution of our music and our revenue.
 
    In an effort to attract these retail partners, we may build additional websites to the specification of the customer that includes the customer’s name and branding which are “powered by” Liquid Spins.  An example of this is creating an online music store for a large national retailer that does not currently offer its customers the ability to purchase digital media content on the Internet.  The retailer would determine which digital media content would be offered on its website and we would license to the retailer the QR codes that contain the link to the location of the file on the website.  The retailer could then replicate the QR code on its own products and communications with its customers.  The retailer would receive a percentage of the revenue generated from the purchase of a download of the digital music file.
 
    We hope to provide our customers with a highly scaleable consumer-facing digital music commerce and delivery solution that includes:

·  
Hosting and managing digital music content and delivering such content to end users on behalf of those customers;
 
·  
Support for private label user interfaces that have the look, feel and branding of the customer’s existing commerce platform;
 
·  
Delivery across both Internet and mobile delivery protocols, and in various forms, such as sampling and full-song download;
 
·  
Integration to a customer’s website and mobile application, inventory and account management;
 
·  
Integrated payment functionality supporting multiple end consumer payment alternatives; and
 
·  
Digital rights management and licensing, usage reporting, royalty settlement, customer support and publishing related services.
 
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    All of our significant licensing agreements require the content owner to pre-approve each of our potential customers in advance of launching that service.
 
    The Company believes that its ability to provide “white label” platforms for other companies to use their own brand recognition while offering digital media content for sale to their customers has tremendous potential for growth because it can decrease time to market while reducing the complexity and cost of digital asset management and distribution.  In addition, due to the unique nature of a smart phone to decipher the QR code and almost instantaneously link the user to the website where he or she can sample and purchase a download of the digital media file, there is potential to create a customer out of every smart phone user, irrespective of the venue the user is in, so long as the user has internet access on the smart phone.  The potential customer no longer needs to be physically present at a bricks and mortar location or even virtually present at a laptop or desktop computer.  This also provides us the opportunity to offer our digital media platform to a wide variety prospects that are not limited to traditional retail organizations.  We believe that there is the potential to partner with restaurants, clothing brands, sports teams, tourist attractions and any other type of organization that is interested in offering digital media to its customers or visitors.

Marketing and Advertising
 
    Our existing marketing efforts consist of efforts to distribute our proprietary QR codes to consumers to drive traffic to our website.  Our current efforts include an arrangement with a record company which utilizes the QR code in connection with concert promotions and musical events.  Through these efforts, the record company is promoting the artists that it represents and driving traffic to our website, thus potentially increasing their revenue and ours through downloads of digital music.  We hope to increase such efforts in the future, as the costs are relatively insignificant compared to what we believe to be the potential revenue.
 
    We also recently executed a distribution agreement with a company marketing and distributing prepaid gift cards and other stored value products.  Under the terms of that agreement, we granted the exclusive rights to promote, market, distribute and sell our products at retail locations throughout the United States.  These products consist of prepaid gift cards redeemable for digital music from our website and any other products which we may develop in the future which utilize a PIN-based or card-based program.  We hope such agreement substantially increases traffic to our website.

Operations and Technology
 
    Liquid Spins is a Digital Service Provider who sells music through www.LiquidSpins.com and through “The Liquid Spins Mobile Network” which uses a unique QR code placed in strategic high traffic public locations. We call this feature “Liquid Clix”. Customers access our store using smart phone bar code scanners. They purchase music through the mobile network and then manage and download their music through the web-based interface. We report to Soundscan and use Authorize.net to manage payments.
 
    The number one difference between Liquid Spins and all of our competitors is the simple way we drive customers to our site. We place hundreds of thousands or “Mobile Access Signage” around the United States in high traffic areas. This gives us in excess of 5,000,000 physical customer impressions per week. The signage does not include artist or label images or logos; is our own branding driving potential customers to the music download site.
 
    The Liquid Spins website is setup similar to a traditional Pay-Per-Download digital media server with the exception of our “Spin Code” feature, which allows users to purchase varuious approved retail products for music. Every user has a registered profile where they can manage their purchases.
 
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    Our online store, in its basic form, is a Pay-Per-Download site. It is organized by ARTIST – ALBUM – SONG respectively.
 
    One unique aspect of our online store is “My Music” Player. This player allows the user to build a playlist of 30 second samples in real-time that they can listen to while browsing the site. If they like the playlist they have built, they can use our one-click technology to “Purchase My Music”. This player also allows the user to build a playlist and send it to their friends creating a viral music experience.
 
Mobile Gateways
 
    The single most unique aspect of Liquid Spins pertains to our use of QR codes and Mobile Gateways. For each artist, album and song in our system, we create a branded QR code called Liquid Clix. We intend to distribute these QR codes throughout the United States and approved territories through partnerships with media outlets such as magazines, newspapers, television, campus posters, billboard signage and much more. Each QR can be scanned using a bar code-enabled smart phone. When scanned, the smart phone will open a mini mobile web page we call Mobile Gateways. These Mobile Gateways allow a user to preview and purchase songs using the browser in their smart phone.
 
Some smart phones allow a user to download directly to their phone. If this function is not available, the user will receive a message prompting them to download their purchase the next time they log into their Liquid Spins account.
 
Our Licensing Arrangements
 
    Effective May 15, 2011, the Company entered into a certain “MP3 Download Aggregator Agreement” (“Agreement”) with Warner Music Inc., the terms of which are contractually confidential.   We have similar agreements with EMI, and RED Distribution, LLC each of which is confidential.

Intellectual Property
 
    We are working diligently to build a strong portfolio of intellectual property.  We have federally registered trademarks on the terms “Malemark” and “Liquid Spins” and we have filed for a patent on “Paper Records”.  We are currently evaluating all of our other intellectual property needs, including a federal trademark for our name, Liquid Spins, and potential patent protection of Liquidclix.
 
    We own multiple domain names including “liquidspins.com” and “malemark.com”.  We also own multiple social networking domains and groups on twitter.com, facebook.com, flickr.com, and myspace.com.

Competition
 
    We face intense competition in the distribution of digital media content.  Apple’s iTunes is the national market leader for offering digital media content to consumers for purchase.  Retailers such as Amazon.com and Wal-Mart also have their own online digital media stores where consumers can purchase music by downloading digital files.  These companies are all better known than us in the marketplace and have significantly greater resources than our company.  If any of these companies were to begin offering a platform to other companies to sell digital media under a branded or co-branded strategy, we likely would have to change our marketing strategy or target different white label customers.
 

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Company Facilities
 
    Our principal executive office is located at 5525 Erindale Drive, Suite 200, Colorado Springs, Colorado 80918 where we lease approximately 2,000 square feet of office space.  The term of the lease extends until November 30, 2011 and we have prepaid all the rent for that term.  The lease is renewable at the discretion of both parties.
 
    We also lease approximately 950 square feet of office space in Nashville, Tennessee on a month to month basis for $1,250 per month.  We believe that these facilities are adequate for our needs for the foreseeable future.

Employees
 
    We currently employ seven full time employees, including our Chief Executive Officer, Chief Operating Officer, President of Entertainment, Director of Design, Senior Designer, an executive assistant, and an accountant.  We also engage two contractors, six part time employees and expect to employ additional individuals in an operational and administrative capacity to assist in our business in the future as working capital permits.

Legal Proceedings
 
    Neither our company nor any of our officers or directors in their capacity as such is a party to any pending legal proceeding and no such proceeding is contemplated to the best of their knowledge and belief.

USE OF PROCEEDS
 
    We will not receive any proceeds from the sale by the selling shareholders of shares of common stock pursuant to this prospectus.

MARKET FOR COMMON STOCK
AND RELATED STOCKHOLDER INFORMATION

Market Information
 
    There currently exists no public trading market for our common stock.  However, following the date of this prospectus, we intend to identify one or more registered broker-dealers who might be interested in making application to FINRA to quote our common stock on the OTC Bulletin Board or OTC Markets. There can be no assurance that a public trading market will develop at that time, or be sustained in the future.  Without an active public trading market, you may not be able to liquidate your shares without considerable delay, if at all.  If a market does develop, the price for our securities may be highly volatile and may bear no relationship to our actual financial condition or results of operations.  Factors that we discuss in this prospectus, including the many risks associated with an investment in our stock, may have a significant impact on the market price of our common stock.  Also, because of the relatively low expected initial trading price of our common stock, many brokerage firms may be unwilling to effect transactions in the common stock.
 
    Any market which may develop for our common stock will be affected by the offer and sale of securities by the selling shareholders, as well as future sales of securities. We currently have outstanding 22,903,750 shares of our common stock which may be sold under Rule 144 of the Securities Act.  See “SHARES ELIGIBLE FOR FUTURE SALE” for additional information.
 

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Holders of our Common Stock
 
    As of August 1, 2011, we had approximately 122 record holders of our common stock.

Penny Stock Rules
 
    Due to the price of our common stock, as well as the fact that we are do not expect our stock to be listed on a national securities exchange, our stock may be characterized as a “penny stock” under applicable securities regulations.  If our stock is or becomes a penny stock, we will be subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks.  The broker or dealer proposing to effect a transaction in a penny stock must furnish the customer with a document containing information prescribed by the SEC and obtain from the customer an executed acknowledgment of receipt of that document.  The broker or dealer must also provide the customer with pricing information regarding the security prior to the transaction and with the written confirmation of the transaction.  The broker or dealer must also disclose the aggregate amount of any compensation received or receivable by him in connection with such transaction prior to consummating the transaction and with the written confirmation of the trade.  The broker or dealer must also send an account statement to each customer for which he has executed a transaction in a penny stock each month in which such security is held for the customer’s account.  The existence of these rules may have an adverse effect on the price of our stock, and the willingness of certain brokers to effect transactions in our stock.

Transfer Agent
 
    We currently act as our own transfer agent for our common stock. We anticipate hiring Corporate Stock Transfer, Inc. of Denver, Colorado as our transfer agent in the future in the event that a public market for our stock develops.

Securities Authorized for Issuance under Equity Compensation Plans
 
    On April 21, 2011, upon the recommendation of our Board of Directors, our shareholders approved an amendment and restatement of our equity incentive plan.  The plan, as amended and restated, is referred to in this discussion as the Plan.

    The Plan is administered by the Board of Directors or a committee appointed by the Board.  The committee has the power to select the participants to be granted awards, determines the time or times when awards will be made, and determines the form of an award, the number of shares of our common stock subject to the award, and all the terms, conditions (including performance requirements), restrictions and/or limitations, if any, of awards, including the time and conditions of exercise or vesting, with the following exceptions:

    •   the maximum number of shares subject to one or more options that may be granted during any calendar year to any participant is 1,000,000 shares of common stock; and

    •   the maximum number of shares that may be issued under the Plan is 5,000,000 shares of common stock (including those previously granted).
 
    Incentive options may be granted only to employees.  Non-qualified options, restricted stock, and other stock grants may be made to employees, directors, consultants and advisors.

    The Plan provides that the committee may delegate authority to specified officers to grant options and other awards, provided that no grants of options or other awards may be made by such specified officers to any employee, consultant or advisor whose compensation is, or may become, subject to the $1 million limit on deductible compensation under Section 162(m) of the Code. At this time, the committee has not made such a delegation.
 
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    Shares Subject to the Plan.  There are currently 5,000,000 shares of common stock reserved for the grant of awards under the Plan.  No more than 2,000,000 shares may be issued under incentive options.  As of the date of this prospectus, no options or other grants have been made under the Plan.

    Adjustment of Shares.  The number of shares available under and subject to the Plan, and each share reserved for issuance under the Plan, are subject to adjustment on account of stock splits, stock dividends, recapitalizations and other dilutive changes in our common stock. Any shares of our common stock related to awards that terminate by expiration, forfeiture, cancellation or otherwise will be available again for grant under the Plan.

    Exercise of Options.  The committee determines the exercise price for each option, but no option may be granted at an exercise price that is less than the fair market value of our common stock on the date of grant (or at least 110% of the fair market value of our common stock on the date of grant in the case of an incentive option granted to an individual who owns stock of our company having more than 10% of the voting power).  An option holder may exercise an option by written notice and payment of the exercise price in cash or by check, bank draft or money order payable to the order of us, or a combination of the foregoing. In addition, an option may be exercised by a broker-dealer acting on behalf of the participant if the broker-dealer has received from the participant a notice of exercise and adequate provision has been made with respect to the payment of any withholding taxes due upon exercise.  If the exercise price of the shares being purchased is $2,000 or less, the exercise price must be paid in cash or by check, bank draft or money order payable to the order of us.

    Option Term.  The committee determines the period and the conditions of exercisability, the minimum periods during which participants must be employed by us or must hold options before they may be exercised, the minimum periods during which shares acquired upon exercise must be held before sale, conditions under which the options or shares may be subject to forfeiture, the frequency of exercise or the minimum or maximum number of shares that may be acquired at any one time. Incentive options must expire no later than 10 years from the date of grant (five years in the case of an incentive option granted to an individual who owns stock of our company having more than 10% of the voting power).  If a participant’s employment terminates for any reason other than cause or death, the participant will be entitled to purchase all or any part of the shares subject to any vested option for a period of up to three months from the date of termination (not longer than one year in the case of death). If the participant’s employment terminates for cause, as determined by us, the unexercised option will be forfeited and expire.

    Restricted Stock.  The committee may grant a participant a number of shares of restricted stock as determined by the committee in its sole discretion. Grants of restricted stock may be subject to such restrictions, including for example, continuous employment with us for a stated period of time or the attainment of performance goals and objectives, as determined by the committee in its sole discretion. The restrictions may vary among awards and participants. If a participant dies or becomes disabled or retires pursuant to our retirement policy, the restricted stock will become fully vested as to a pro rata portion of each award based on the ratio of the number of months of employment or service completed at termination of employment or service from the date of the award to the total number of months of employment or service required for each award to become fully vested. The remaining portion of the restricted stock will be forfeited. If a participant terminates employment for any other reason, all unvested shares of restricted stock will be forfeited. 
 
   Stock Grants.  The committee may grant shares of our common stock to participants. The committee determines the number of shares of our common stock to be granted, the vesting conditions and other restrictions, if any, the time and manner of payment, and any other terms and conditions of the stock grants. The committee may also, in its sole discretion, accelerate vesting and waive other restrictions and conditions under such circumstances as it deems appropriate.
 
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    Non-transferability.  Except as may otherwise be provided by the committee at the time of a grant, options and restricted stock awards are not transferable except by will or pursuant to the laws of descent and distribution.

    Amendment and Termination.  The Board of Directors may alter, suspend or terminate the Plan at any time and may, from time to time, amend the Plan in any manner, but may not without shareholder approval adopt any amendment that would increase the aggregate number of shares of common stock available under the Plan or modify any provision of the Plan that would materially increase the benefit or rights of any participant in the Plan. Unless terminated sooner, the Plan will terminate on April 5, 2021.

    Change of Control.  Upon the occurrence of a corporate transaction involving a change of control of the Company, as defined in the Plan, the committee may take action with respect to outstanding awards under the Plan, including the immediate vesting of options, lapse of restrictions on restricted stock or provide for assumption or substitution of options by any successor company.  The committee may also provide that any awards that are outstanding at the time the corporate transaction is closed shall expire at the time of the closing. The committee need not take the same action with respect to all outstanding awards or to all outstanding awards of the same type.

Federal Income Tax Consequences of the Grant and Exercise of Options

    Certain of the federal income tax consequences applicable to the grant and exercise of non-qualified options and incentive options are as follows:

    Non-Qualified Options.  There are no income tax consequences to the participant or to us when a non-qualified option is granted. When a non-qualified stock option is exercised, in general, the participant recognizes compensation, subject to wage withholding and income tax, equal to the excess of the fair market value of the common stock on the date of exercise over the exercise price. We are generally entitled to a deduction equal to the compensation recognized by the participant, assuming that the compensation satisfies the ordinary, necessary and reasonable compensation requirements for deductibility and that the deduction is not limited by Section 162(m) of the Code.

    Incentive Options.  When an incentive option is granted, there are no income tax consequences for the participant or us. When an incentive option is exercised, the participant does not recognize income and we do not receive a deduction. The participant, however, must treat the excess of the fair market value of our common stock on the date of exercise over the exercise price as an item of adjustment for purposes of the alternative minimum tax. If the participant makes a “disqualifying disposition” of the common stock (described below) in the same taxable year the incentive option was exercised, there are no alternative minimum tax consequences.

    If the participant disposes of our common stock after the participant has held it for at least two years after the incentive option was granted and at least one year after the incentive option was exercised, the amount the participant receives upon the disposition over the exercise price is treated as capital gain. We are not entitled to a deduction for this amount. If the participant makes a “disqualifying disposition” of common stock by disposing of common stock before it has been held for at least two years after the date the incentive option was granted and at least one year after the date the incentive option was exercised, the participant recognizes compensation income equal to the excess of:

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    •   the fair market value of common stock on the date the incentive option was exercised or, if less, the amount received on the disposition, over

    •   the exercise price.
   
    We are not required to withhold income or other taxes in connection with a “disqualifying disposition.” We are generally entitled to a deduction equal to the compensation recognized by the participant, assuming that the compensation satisfies the ordinary, necessary and reasonable compensation requirements for deductibility and that the deduction is not limited by Section 162(m) of the Code.

    Code Section 409A.  Section 409A of the Code provides that all amounts deferred under a nonqualified deferred compensation plan are currently includible in gross income to the extent they are not subject to a substantial risk of forfeiture and have not been taxed previously unless the plan satisfies both the plan document and operational requirements specified in Section 409A of the Code. If the deferred compensation plan fails to satisfy the requirements of Section 409A, all amounts deferred for the year of the failure and all preceding years (to the extent they are not subject to a substantial risk of forfeiture) are included in the gross income of the participant(s) affected by the failure. The amount included in gross income is also subject to an additional tax equal to 20% of that amount and to interest. Incentive options are not subject to Section 409A. We have structured the Plan and expect to administer the Plan with the intention that non-qualified options will qualify for an exemption from Section 409A of the Code.

    Code Section 162(m).  Under Section 162(m) of the Code, we may be limited as to federal income tax deductions to the extent that total annual compensation in excess of $1 million is paid to our chief executive officer or any one of the four highest paid executive officers who were employed by us on the last day of the taxable year. However, certain “performance-based compensation,” the material terms of which are disclosed to and approved by our shareholders, is not subject to this limitation on deductibility. We have structured the Plan with the intention that compensation resulting from options granted under the plan would be deductible without regard to the limitations otherwise imposed by Section 162(m) of the Code.

Dividend Policy
 
    We have never declared or paid dividends on our common stock.  Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including the terms of any credit arrangements, our financial condition, operating results, current and anticipated cash needs and plans for expansion.  At the present time, we are not party to any agreement that would limit our ability to pay dividends.

DETERMINATION OF OFFERING PRICE
 
    Our common stock is being offered by the selling shareholders at a price of $0.50 per share, until such time, if ever as our common stock is listed on the OTC Bulletin Board or OTC Markets. The price of the shares was determined by us in negotiation with certain of our selling shareholders and primarily with reference to recent sales prices of our common stock. We also considered factors such as our history and limited revenue and other factors which our management considered in determining, in their best judgment, the fair market value of our common stock. However, the offering price of the common stock should not be used as an indication of the value of the securities or an assurance that purchasers will be able to resell the securities for an amount equal to the offering price or an amount in excess thereof.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Overview
 
    The following discussion summarizes our plan of operation for the next 12 months.  It also analyzes our financial condition at March 31, 2011 and December 31, 2010 and compares that financial condition to our condition at the end of the previous period.  The discussion also analyzes our results of operations for the three months ended March 31, 2011 and 2010, the year ended December 31, 2010 and the period from inception to December 31, 2009.  Our discussion and analysis of financial condition and results of operation should be read in conjunction with the financial statements and related notes included in this prospectus and with the understanding that the actual future results may be materially different from what we currently expect.
 
    We were organized in 2009 and have very limited operations to date.  Our business plan has changed in the last 12 months and accordingly, we have generated very limited revenue from operations.  We remain in the development stage for accounting purposes at March 31, 2011.  We are considered a development stage company under criteria established by the SEC since we have not yet demonstrated the ability to generate revenue sufficient to fund operations.  We are still developing our business plan, including efforts to secure relationships with additional record companies and potential retail partners.  As required by applicable guidelines of the SEC, substantially all of our expenditures to date have been expensed, and we expect to expense additional expenditures in 2011 related to securing agreements and developing our products.  We expect to remain as a development stage company for the foreseeable future, although we expect to achieve some revenue from our online music store in 2011.

Plan of Operation
 
    Our plan of operation for the next twelve months is to continue development of our website and online music platform, invest in additional marketing initiatives and generate revenue from the sale of our digital music catalog.  As of the date of this prospectus, we are positioned to generate revenue, as our website is operable and the technology required to deliver music is complete.  However, we expect to remain in the development stage until such time, if ever, as our marketing initiatives have matured and we can generate sufficient revenue to fund our operations.  We have budgeted approximately $100,000 in the twelve months following the date of this prospectus for product development.
 
    We are currently offering our digital music downloads for prices ranging from $0.99 to $1.29 per song and from $4.49 to $24.99 per album.  We believe these prices are competitive with other participants in the industry.  Under the terms of our distribution agreements with record companies, we are required to pay a significant portion of the revenue generated from digital downloads to those companies in exchange for the licensing rights to the songs.  Accordingly, the success of our business plan depends on our ability to generate sufficient downloads to cover fixed and variable expenses.
 
    Our existing marketing efforts consist of distribution of our proprietary QR codes to consumers in an effort to drive traffic to our website.  We have an arrangement with a record company which utilizes the QR code in connection with concert promotions and other advertising initiatives.  We hope to increase such efforts in the future, as the costs are relatively insignificant compared to what we believe to be the potential revenue.  We also recently executed a distribution agreement with a company marketing and distributing prepaid gift cards and other stored-value products.  Under the terms of that agreement, we granted the exclusive rights to promote, market, distribute and sell our products at retail locations throughout the United States.  These products consist of prepaid gift cards redeemable for digital music from our website and any other products which we may develop in the future which utilize a PIN-based or card-based program.  We hope such agreement substantially increases traffic to our website.
 

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    A future focus of our business efforts in 2011 will be to secure agreements with large retailers and other organizations that are interested in partnering with us to offer a co-branded website utilizing our Liquid Spins platform.  In the event we are successful in executing agreements with one or more of these retailers, we expect the distribution of our digital music would be increased substantially.  However, in that event, we would also be obligated to share any revenue with such retailer.
 
    Our corporate overhead consists primarily of salaries for our employees, rent and other general and administrative expenses.  With our current commitments for facilities and staff, we expect to incur approximately $900,000, or $75,000 per month, over the next 12 months for general and administrative expenses, including marketing.   We anticipate that we may add additional staff in the near future.  In addition, we are contractually obligated to provide public relations support for our large retail customers and record labels, such as public interviews, national advertising campaigns and nationally sponsored events and we anticipate outsourcing those duties to a firm who specializes in such services.  We expect these expenses and all other expenses will be paid from the proceeds of recent stock offerings until such time, if ever, as we move past the start-up phase and generate sufficient revenue to cover our expenses.
 
    As discussed in more detail below, our working capital at March 31, 2011 equaled $1,147,538.  We believe this working capital will be sufficient for the next 12 months.

Liquidity and Capital Resources
 
    March 31, 2011.  At March 31, 2011, our working capital of $1,147,538 consisted of current assets of $1,188,762 and current liabilities of $41,224.  Substantially all of our current assets consisted of cash and cash equivalents.  We expect this working capital, together with capital raised subsequent to March 31, to be sufficient for the foreseeable future.
 
    As has been the case since our inception, all of our cash during 2011 has been generated from the sale of our common stock.  During the three months ended March 31, 2011, we generated $1,425,000 from the sale of our common stock at a price of $0.40 per share.  Historically, all of the sales of our common stock, including those during the first quarter of 2011, have come in transactions exempt from the registration requirements of state and federal securities laws.  As of the date of this prospectus, there is no public market for our common stock.  However, if we are successful in identifying one or more broker-dealers interested in making a market for our common stock, and creating some trading volume, we believe our ability to raise financing in the future may be enhanced.
 
    Subsequent to March 31, 2011, we completed a private placement  which commenced in September 2010 and extended to April 2011 consisting of 4,668,750 shares at a price of $0.40 per share for gross proceeds of $1,867,500.  We also completed an additional placement of our common stock, selling 650,000 shares at a price of $0.40 per share for gross proceeds of $260,000.  The proceeds from that offering have been, and will continue to be, utilized to pay our administrative expenses, including salaries and other overhead, advance royalties to acquire our catalog of digital music, and marketing expenses.
 
    Our operating and investing activities continue to consume cash generated from our financing activities.  Cash used in operations for the first three months of 2011 was $395,571, including our net loss for that period of $415,645.  The cash consumed in connection with our net loss was partially offset by payment of certain professional services with our common stock.
 
    Cash used in investing activities for the first quarter of 2011 totaled $166,838, including capital expenditures of $32,026 and web and infrastructure costs of $42,812.  Deferred Record Productions Costs of $15,000 were incurred in the first quarter of 2011, in accordance with an agreement that obligated the Company to pay for certain recording costs for the Masters in return for certain recording services and other copyright deliverables.  Upon execution of specific terms by the Artist, the Company shall be reimbursed promptly for all monies advanced, and shall be paid a royalty in accordance with the terms of the agreement.
 
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   December 31, 2010.  As of December 31, 2010, our working capital totaled $225,382, consisting of current assets of $274,464 and current liabilities of $49,082. During the period from inception to December 31, 2010, we received $869,000 in cash, services and other property through the issuance of our common stock.  At December 31, 2010, we did not have any debt.  We expect to fund our future working capital requirements through the sale of equity, as we have not made arrangements to borrow funds to meet our working capital requirements.  Due to our status as a development stage company, as well as the absence of significant amounts of tangible assets on our balance sheet, we do not believe we are a candidate for debt financing.
  
    During 2009 and 2010, we conducted various financing transactions.  During the period from inception to December 31, 2009, we sold 7,210,000 shares of our common stock for aggregate proceeds of $79,000.  During that period, we also issued 8,100,000 shares of common stock for intellectual property valued at $8,100.  During the year ended December 31, 2010, we sold 2,496,250 shares of common stock, some at a price of $0.25 per share and the remainder at a price of $0.40 per share.  Aggregate proceeds from those sales during 2010 totaled $790,000.  During that time, we also issued 497,500 shares for accrued expenses valued at $190,000.
   
Results of Operations
 
    Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010.  During the three months ended March 31, 2011, we reported a net loss of $415,645 or $0.02 per share.  Revenue during that time, consisting solely of the sale of paper greeting cards, was negligible.  This compares to a net loss for the three months ended March 31, 2010 of $109,532.  As of March 31, 2011, we have not reported any revenue from our online music store.  We expect to incur losses until such time, if ever, that we secure retail contracts and can exit the development stage when our revenue is sufficient to cover expenses, including continued product development, sales, marketing and operations.
 
    Our accounting treatment as a development stage company, specifically regarding the classification of pre-production product testing and development costs as a operating expense rather than a capital expenditure, has caused us to report large losses since inception.  During the three months ended March 31, 2011, production startup expense and product development totaled $182,207, compared to $52,168 for the three months ended March 31, 2010.  These expenses represented a significant portion of our net loss for those periods.  The other most significant expense was general and administrative.  For the three months ended March 31, 2011, general and administrative expenses totaled $213,069, compared to $35,026 for the comparable period of 2010.  Included in general and administrative expenses for the three months ended March 31, 2011 was $75,000 in stock compensation for services.
 
    Year Ended December 31, 2010 Compared to the period Inception (June 20, 2009) to  December 31, 2009.  During the year ended December 31, 2010, we reported a net loss of $1,486,487, or $0.09 per share, on revenue of $27,888.  This compares to a net loss during the period from inception, June 20, 2009, to December 31, 2009 of $77,503 on no revenue.  Our first revenue was recorded in June 2010.  We sold paper greeting cards, primarily through retail venues, for $27,888 during the year ended December 31, 2010.
   
    Product research and development for the year ended December 31, 2010 totaled $256,703, compared to $50,931 for the period from inception through December 31, 2009.  Research and development efforts during 2010 were primarily geared toward our digital music store, while efforts during 2009 related to our paper greeting card business.
 
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    Labor and other operating costs associated with our paper greeting card business during the year ended December 31, 2010 totaled $63,043.  There was no comparable cost during 2009, as we had not reported any sales during that time.
 
    Selling, distribution and marketing expenses during 2010 totaled $38,853.  There were no comparable expenses during 2009.
 
    General and administrative expenses during the year ended December 31, 2010, which represented the single largest category of expense during that time, totaled $1,137,753.  Comparable expenses during 2009 totaled $26,572.  Included in this amount was $756,900 in non-cash expense for shares transferred by an officer and two directors who are also the beneficial owners of more than 5% of our common stock, to consultants and employees.  Also, included $190,000 in non-cash expense for financial management provided by a consulting firm that we retained in September, 2010.
 
    During the year ended December 31, 2010, we realized a loss on the disposal of an asset when we wrote off $15,262, the cost of our Malemark website, again due to slow sales.

Off-Balance Sheet Arrangements
 
    As of December 31, 2010, we had no off-balance sheet arrangements.

Contractual Obligations
 
    Our known obligations at December 31, 2010 are set forth in the table below:

      Payments Due by Period  
Contractual Obligations
 
Total
   
Less than 1
Year
   
1-3
Years
   
3-5
Years
   
More than
5 Years
 
Management Consulting Agreement(1)
  $ 22,000     $ 22,000       --       --       --  
Management Services Agreement – Cash(2)
  $ 62,500     $ 62,500       --       --       --  
Management Services Agreement – Stock(2)
  $ 62,500     $ 62,500       --       --       --  
_______________
(1)
Represents amounts due to a management consulting firm.
(2)
Represents amounts due under a management services agreement in the amount of $25,000 per month payable in common stock valued at $0.40 per share, plus fees incurred for the first three months. The agreement ended on March 15, 2011.
 
Critical Accounting Policies
 
    We believe that application of the following accounting policies, which are critical to our financial position and results of operations, requires significant judgments and estimates on the part of management.
 
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Use of Estimates
 
    The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.  Estimates that are critical to the accompanying consolidated financial statements include estimates related to asset impairments of long lived assets and investments, estimates related to asset impairment of trade receivables, classification of expenditures as either an asset or an expense, valuation of deferred tax assets, and the likelihood of loss contingencies.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary.  Actual results could differ from these estimates.
 
Property and Equipment
 
    All items of property and equipment are carried at cost not in excess of their estimated net realizable value.  Normal maintenance and repairs are charged to operations while expenditures for major maintenance and betterments are capitalized.  Gains or losses on disposition are recognized in operations.  Equipment and software are reviewed for impairment in accordance with ASC Topic 360 (“ASC 360”), “Property, Plant, and Equipment.”  In assessing the recoverability of its long-lived assets, the Company makes certain assumptions regarding the useful life and contribution to the estimated future cash flows.  If such assumptions change in the future, the Company is required to record impairment charges for these assets not previously recorded.
 
Deferred Recording Production Costs
 
    The Company is engaged in the production of recording-based entertainment, which is generally exploited in the CD or broadcast format.  Deferred costs are contractually recouped first from initial sales.  The artist is not paid until deferred costs have been recouped in full by the Company.

    Record production costs are accounted for pursuant to ASC Topic 928 “Entertainment – Music” (“ASC 928”), and are stated at the lower of cost or net realizable value based on anticipated total revenue (ultimate revenue).  Recording production costs are capitalized and then recognized ratably based on the ratio of the current period’s revenue to estimated remaining ultimate revenue. Ultimate revenues are calculated in accordance with ASC 928 and require estimates and the exercise of judgment.  Accordingly, these estimates are periodically updated to include the actual results achieved or new information as to anticipated revenue performance of each title.  As of December 31, 2010, there were no revenues generated related to the recording production costs, and no production costs amortized and recognized to expense.

Intangible Assets/Website Application and Infrastructure Development Costs 
 
    The Company has a federally registered trademark on the term “Malemark” and owns multiple domain names including “Liquidspins.com” and “Malemark.com”.  The Company also manages multiple social networking on twitter.com, facebook.com, flickr.com, and myspace.com.  The domain’s value is based on the average number of users, demographics of these users, geography and number of advertisers and general sales it generates.
 
    Costs related to the domain name are capitalized and amortized over a 3-year period.  Periodic costs of maintaining the websites are expensed as operating costs as incurred.  In accordance with ASC Topic 350 (“ASC 350-50”), “Website Development Costs”, fees incurred for website hosting are expensed over the period of benefit, while costs incurred during the website application and infrastructure development stage are accounted for in accordance with ASC Topic (“ASC 350-40”) “Internal Use Software”, and capitalized.  This includes costs to purchase software tools, or costs incurred during the application development stage for internally developed tools, costs to maintain and register an internet domain.  Graphics are generally considered a component of software costs.  Modifications to graphics after the software is launched are evaluated to determine whether the modifications represent maintenance or enhancements to the website.
 

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    The primary business of Liquid Spins is no longer greeting cards.  The Company decided to direct their resources towards digital media distribution and has therefore determined that the cost of Malemark's website value should be written off as of December 31, 2010.

Income Taxes
 
    Income taxes are computed using the liability method.  Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes and the effect of net operating loss carry-forwards.  Deferred tax assets are evaluated to determine if it is more likely than not that they will be realized.  Valuation allowances have been established to reduce the carrying value of deferred tax assets in recognition of significant uncertainties regarding their ultimate realization.  Further, the evaluation has determined that there are no uncertain tax positions required to be disclosed.
 
Recent Accounting Pronouncements
 
    We evaluate the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the SEC, and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company.

Recently Adopted Accounting Standards

Subsequent Events

    In May 2009, the Accounting Standards Codification (“ASC”) guidance for subsequent events was updated to establish accounting and reporting standards for events that occur after the balance sheet date but before financial statements are issued.  The guidance was amended in February 2010 via ASU No. 2010-09.  The standard sets forth: (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet in its financial statements, and (iii) the disclosures that an entity should make about events or transactions occurring after the balance sheet date in its financial statements.  The amended Accounting Standards Update (“ASU”) was effective immediately and its adoption had no impact on our consolidated financial position, results of operations or cash flows.

Fair Value Measurements
 
    In January 2010, ASU No. 2010-06 amended existing disclosure requirements about fair value measurements by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation.  The ASU was adopted during the period ended March 31, 2010, and its adoption had no impact on our consolidated financial position, results of operations or cash flows.
 

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Recently Issued Accounting Standards Updates
 
    Certain accounting standards updates were recently issued and have not yet been adopted by us.  These standards are currently under review to determine their impact on our consolidated financial position, results of operations, or cash flows and are not expected to a have a material impact on our consolidated financial position, results of operations or cash flows.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
    There have been no changes in or disagreements with our independent registered public accounting firm on accounting or financial disclosure.
 
MANAGEMENT

Directors and Officers
 
    The following persons serve as our officers and directors as of the date of this prospectus:

Name
Age
Positions With the Company
Board Position
Held Since
Herman C. DeBoard, III
39
Chairman of the Board of Directors and Chief Executive Officer
June 2009
Raymond E. McElhaney
55
Director
June 2009
Bill M. Conrad
54
Director
June 2009
Christy P. DiNapoli
48
President of Entertainment and Director
April 2011
Paul D. Myers
33
Chief Operating Officer, Secretary and Treasurer
N/A
James M. Poage
58
Chief Financial Officer
N/A
 
    Each of our directors is serving a term which expires at the next annual meeting of our shareholders and until his or her successor is elected and qualified or until he resigns or is removed.  Our officers serve at the will of our board of directors.
 
    Mr. DeBoard should be considered the “founder” of our company (as such term is defined by rule under the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”)).
 
    The following information summarizes the business experience of each of our directors and officers for at least the last five years:
 
    Herman C. DeBoard, III.  Mr. DeBoard was appointed our President and Chief Executive Officer at inception, and served in that capacity until April 2011 when he assumed the title of Chairman and Chief Executive Officer.
 
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    Mr. DeBoard’s business and educational background has provided him broad experience, primarily focused in the areas of communication and technology.  From July 2006 to November 2008, he served as chief information officer of Giant 5 Funds, a mutual fund company registered under the Investment Company Act of 1940.  In that capacity, he served as the chief of technology, working on Internet technology, disaster preparedness and IT administration.  From April to June 2006, he was Director of Functional Technology for the United States Army at Fort Carson in Colorado Springs, Colorado, where he was responsible for all technology, software, hardware, disaster preparedness and security.  From March 2002 to April 2004, Mr. DeBoard was Chief of Emergency Communications at Schriever Air Force Base.  Mr. DeBoard was a Program Director III and liaison for the Centers of Disease Control from 2000 to 2002.  Mr. DeBoard began his career in the United States Air Force where he served during the first Gulf War in the early 1990’s, and was awarded the National Defense Service Medal, the Southwest Asia Service Medal and was a member recipient of the Presidential Unit Citation.  Following his time in the Air Force, he earned his Bachelor’s and Master’s Degree in Communication Studies from Marshall University, and has begun working toward a Ph.D.  Mr. DeBoard has not served on the board of directors of any other public companies or registered investment companies during the past five years.  Our board believes that the technical and management experience gained by Mr. DeBoard in his prior career makes him well qualified to be a director of our company.
 
    Raymond E. McElhaney.  Mr. McElhaney has served as a director of our company since inception.  Mr. McElhaney is the president and co-founder of MCM Capital Management, Inc, a privately held financial management firm providing financial services since 1990.  From May 2005 until September 2008, Mr. McElhaney served as the president and chief executive officer of Brishlin Resources, Inc., now known as Synergy Resources Corporation, a publicly-traded Colorado-based corporation engaged in the oil and gas industry with securities quoted on the NYSE Amex.  Mr. McElhaney continues to serve as a director of Synergy Resources.  He has not served on the board of directors of any other public companies or registered investment companies during the past five years.  From February 2002 until June 2005, Mr. McElhaney served as chairman and secretary of Wyoming Oil & Minerals, Inc., now known as Sun Motor International Inc., which is quoted on the OTC Pink.  From May 2000 until April 2003, he served as vice president and secretary of New Frontier Energy, Inc., which is quoted on the OTCQB.  Our board believes that the management and corporate finance experience developed by Mr. McElhaney over many years serving as an executive officer and director of numerous publicly traded companies makes him well qualified to be a director of our company.
 
    Bill M. Conrad.  Mr. Conrad has served as a director of the Company since inception.   In 1990, Mr. Conrad co-founded MCM Capital Management Inc. with Mr. McElhaney and has served as its vice president, chief financial officer and a director since that time.  From May 2005 until September 2008, Mr. Conrad served as the vice president and secretary of Synergy Resources Corporation, where he continues to serve as a director.  Mr. Conrad also currently serves as a director of Gold Resource Corporation, a publicly-traded corporation involved in mineral exploration and production with securities traded on the NYSE Amex.  He has not served on the board of directors of any other public companies or registered investment companies during the past five years.  From February 2002 until June 2005, Mr. Conrad served as president and a director of Sun Motor International Inc.  From May 2000 until April 2003, he served as vice president and a director of New Frontier Energy, Inc.  Our board believes that the management and corporate finance experience developed by Mr. Conrad over many years serving as an executive officer and director of numerous publicly traded companies make him well-qualified to be a director of our company.
 
    Christy P. DiNapoli.  Mr. DiNapoli was elected as a director in April 2011 and has served as our President of Entertainment since March, 2011.  He has a lengthy background and extensive experience in the music and recording industry.  Since March 2007, Mr. DiNapoli has been the president of THE Music Group in Nashville, Tennessee, a privately-held company that manages a song catalog and various recording artists and also provides music industry consulting services.  Prior to 2007, Mr. DiNapoli was Vice President of KMG Entertainment, an entity formed in 2005.  In addition to his experience running music entertainment companies, Mr. DiNapoli is also an award-winning songwriter, music producer and publisher.  He formed the band known as Little Texas and served as its manager, co-producer and music publisher for nine years, winning various awards during that time.  Mr. DiNapoli serves on the boards of several non-profit organizations in Nashville, is a voting member of the National Academy of Recording Arts and Sciences (the distributor of the Grammy Awards) and is a former board member of the Academy of Country Music.  Mr. DiNapoli has not served on the board of directors of any other public companies or registered investment companies during the past five years.  Our board believes that the management and music industry experience that Mr. DiNapoli has acquired over many years as well as his experience in managing several companies makes him well qualified to be a director of our company.
 
29
 
 

 
 
    Paul D. Myers.  Mr. Myers joined our company in February 2010 and was appointed to serve as Chief Operating Officer, Secretary and Treasurer effective June 1, 2010.  From June 2006 to November 2009, he served as interim chief compliance officer, fund secretary and fund treasurer at Giant 5 Funds.  From May 2004 to June 2006, he worked as an account executive and assistant editor in the music industry.  Mr. Myers possesses a diverse business and educational background that provides a wide range of experience and resources to our company. Mr. Myers graduated from graphic design school and Arizona State University with degrees in Visual Communication, Business Marketing and Communication.
 
    James M. Poage.  Mr. Poage was named our Chief Financial Officer in March 2011 and serves in this capacity on a contract basis.  Mr. Poage was also appointed in March 2011 as the interim Chief Financial Officer for Earthstone Energy, Inc., a publicly-traded Colorado-based corporation engaged in the oil and gas industry with securities quoted on Nasdaq. Since January 2009, Mr. Poage has been a principal of QAS, LLC, a private consulting firm providing financial services, including inventory valuation, risk analysis, fraud investigation, internal control and business process reviews and SOX 404 compliance. From 1999 until 2009, Mr. Poage was self employed, and provided financial and tax accounting services to clients mostly in the Oil and Gas industry.
 
Director Independence
 
    Our Board of Directors believes that Messrs. McElhaney and Conrad are independent within the meaning of the Nasdaq Listing Rules.  Section 5605(a)(2) of those rules defines an independent director as a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the company’s board of directors, may interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Director Compensation
 
    Our independent directors are currently compensated at the rate of $3,000 per month, which they may elect to receive in the form of cash or our common stock.  If the directors elect to receive stock for their services, the stock is valued at not less than the price at which it was sold in the Company’s most recent stock offering or the 20 day average closing bid price immediately preceding the payment, if a trading market for the stock develops.  We also reimburse our directors for reasonable and necessary expenses incurred by them in that capacity.  We will review our compensation arrangements periodically in the future and may compensate our directors as our business needs dictate and our resources permit.

30
 
 

 
Executive Compensation
 
The following table summarizes the total compensation of our named executive officers for the fiscal year ended December 31, 2010 and the period from inception (June 20, 2009) to December 31, 2009:

Summary Compensation Table
 
Name and
Principal
Position
Year
 
Salary
   
Bonus
   
Stock
Awards
   
Option
Awards
   
Non-Equity
Incentive Plan
Compensation
   
All
Other
Compensation
   
Total
 
                                             
Herman C. DeBoard III(1),
Chairman of the Board and
2010
  $ 49,000     $     $     $     $     $ 39,000 (2)   $ 68,000  
Chief Executive Officer 2009                                   33,833 (2)     33,833  
                                                           
Christy P. DiNapoli,
President of Entertainment
2010
  $     $     $     $     $     $     $  
                                                           
Paul Myers,
Chief Operating Officer,
2010   $ 30,000     $     $     $     $     $ 25,000 (2)   $ 55,000  
Secretary and Treasurer 2009                                          
 
 
______________
(1)           The executive officer did not receive additional compensation for his service as a director of our company.
(2)           The individuals were paid as independent contractors for a portion of the year, which amount is reflected as ‘Other Compensation.’
 
    We entered into an employment agreement with Mr. DeBoard effective October 1, 2009.  The agreement is effective for a minimum three-year term expiring on September 30, 2012 unless sooner terminated in accordance with the provisions of the agreement.  This agreement, as amended, provides that Mr. DeBoard was compensated at the rate of $6,500 per month through June 30, 2010, following which his compensation was raised to $8,166.67 per month.  Mr. DeBoard is also entitled to participate in other compensation programs applicable to our other executive officers.
 
    The agreement with Mr. DeBoard may be terminated prior to its expiration either by us or the employee.  We may terminate the agreement immediately for cause and for any reason on not less than 60 advance written notice.  “Cause” for purposes of the agreement means such conduct by the employee which constitutes in fact or law a breach of fiduciary duty or felonious conduct having the effect, in the opinion of our board of directors, of materially and adversely affecting our company or its reputation.  If we terminate the agreement without cause, or if Mr. DeBoard resigns in connection with a merger, acquisition, buy-out or any corporate restructure, he is entitled to be paid any amount remaining under the agreement for the balance of the initial three-year term, payable in full at the time of separation.

Certain Relationships and Related Transactions
 
    Initial Capitalization.  On July 20, 2009, we issued 9,000,000 shares of our common stock to Herman DeBoard, III for a price of $9,000, including cash and property, and 2,500,000 shares of common stock each to Raymond McElhaney and Bill Conrad for $2,500 cash each, or $0.001 per share.  Messrs. DeBoard, McElhaney and Conrad were the only members of our Board of Directors approving that transaction on our behalf.
 
    Consulting Agreement with MCM Capital.  Upon formation of the Company, we entered into an agreement with MCM Capital Management, Inc. to provide consulting services to the company as needed.  We entered into a written agreement with MCM Capital effective December 1, 2010 pursuant to which we agreed to pay MCM $2,000 per month in consulting fees.  The agreement is for a term of one year and is renewable upon mutual agreement of the parties.  Bill Conrad and Ray McElhaney, the shareholders, officers and directors of MCM Capital, are also members of our board of directors and the beneficial owners of more than five percent of our common stock.
 

 31
 
 

 
 
    Lease Agreement.  Effective March 1, 2011, we entered into a lease agreement with DiAffari Properties under which we lease office space in the city of Nashville, Tennessee.  The term of the lease is on a month-to-month basis, and provides for payment of $1,250 per month.  Christy DiNapoli, an officer and director of our company, is the owner of DiAffari Properties.

Indemnification and Limitation on Liability of Directors
 
    Our Articles of Incorporation and Bylaws provide that we must indemnify, to the fullest extent permitted by Colorado law, any of our directors, officers, employees or agents made or threatened to be made a party to a proceeding, by reason of the person serving or having served in a capacity as such, against judgments, penalties, fines, settlements and reasonable expenses incurred by the person in connection with the proceeding if certain standards are met. At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification will be required or permitted. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, 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 and is, therefore, unenforceable.
 
    The Colorado Business Corporation Act (the “CBCA”) allows indemnification of directors, officers, employees and agents of a company against liabilities incurred in any proceeding in which an individual is made a party because he was a director, officer, employee or agent of the company if such person conducted himself in good faith and reasonably believed his actions were in, or not opposed to, the best interests of the company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A person must be found to be entitled to indemnification under this statutory standard by procedures designed to assure that disinterested members of the board of directors have approved indemnification or that, absent the ability to obtain sufficient numbers of disinterested directors, independent counsel or shareholders have approved the indemnification based on a finding that the person has met the standard. Indemnification is limited to reasonable expenses.
 
    Our Articles of Incorporation limit the liability of our directors to the fullest extent permitted by the CBCA. Specifically, our directors will not be personally liable for monetary damages for breach of fiduciary duty as directors, except for:
 
·    
any breach of the duty of loyalty to our company or our stockholders;
·    
acts or omissions not in good faith or that involved intentional misconduct or a knowing violation of law;
 ·    
dividends or other distributions of corporate assets that are in contravention of certain statutory or contractual restrictions;
·    
violations of certain laws; or
·    
any transaction from which the director derives an improper personal benefit.
 
Liability under federal securities law is not limited by the Articles.

32
 
 

 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
    As of August 5, 2011, there were a total of 22,903,750 shares of our common stock outstanding, our only class of voting securities currently outstanding.  The following table describes the ownership of our voting securities by: (i) each of our officers and directors; (ii) all of our officers and directors as a group; and (iii) each shareholder known to us to own beneficially more than 5% of our common stock.  The table also describes the percentage of our voting securities owned by the foregoing individuals before the offering and after the offering, assuming receipt of the maximum proceeds.  Unless otherwise stated, the address of each of the individuals is our address, 5525 Erindale Drive, Suite 200, Colorado Springs, CO 80918.
 
   
Shares Beneficially Owned
 
Name and Address of Beneficial Owner
 
Number
   
Percentage
(%)
 
Herman C. DeBoard, III(1)
    6,476,875       28.3  
Raymond E. McElhaney(2)
    2,185,000       9.5  
Bill M. Conrad(2)
    2,000,000       8.7  
                 
Christy P. DiNapoli(1)
1019 17th Ave. South
Nashville, TN  37212
    550,000       2.4  
                 
Paul D. Myers(3)
    775,000       3.4  
                 
James Poage(3)
8156 S. Wadsworth Blvd., Unit E-150
Littleton, CO 80128
    -0-       -0-  
                 
All officers and directors as a group (6 persons)
    11,986,875       52.3  
___________________
(1)      Officer and director.
(2)      Director.
(3)      Officer.
 
Changes in Control
 
    We are aware of no circumstances that may give rise to a change in control of our company.

SELLING SHAREHOLDERS
 
    We have agreed to file the registration statement which contains this prospectus on behalf of our selling shareholders. We have also agreed to use our best efforts to keep the registration statement effective and update the prospectus until the securities owned by the selling shareholders have been sold or may be sold without registration or prospectus delivery requirements under the Securities Act. We will pay the costs and fees of registering the shares, but the selling shareholders will pay any brokerage commissions, discounts or other expenses relating to the sale of the shares.
 
33
 
 

 
    The registration statement which we have filed with the SEC, of which this prospectus forms a part, covers the resale of our common stock by the selling shareholders from time to time under Rule 415 of the Securities Act. Our agreement with the selling shareholders is designed to provide those shareholders some liquidity in their ownership of common stock and to permit secondary public trading of our securities. The selling shareholders may offer our securities covered under this prospectus for resale from time to time. The selling shareholders may also sell, transfer or otherwise dispose of all or a portion of our securities in transactions exempt from the registration requirements of the Securities Act. (SeePLAN OF DISTRIBUTION”).
 
    The table below presents information as of August 5, 2011 regarding the selling shareholders and our common stock that the selling shareholders may offer and sell from time to time under this prospectus. The table is prepared based on information supplied to us by those shareholders. Except as otherwise noted, the individuals listed in the table below have sole voting and investment power over the shares.  Although we have assumed, for purposes of the table below, that the selling shareholders will sell all of the securities offered by this prospectus, because they may offer all or some of the securities in transactions covered by this prospectus or in another manner, no assurance can be given as to the actual number of shares that will be resold by the selling shareholders. Information covering the selling shareholders may change from time to time, and changed information will be presented in a supplement to this prospectus if and when required. If we are advised of a change in selling shareholders and the new selling shareholders, any pledges, donees or transferees wish to rely upon this prospectus in the resale of their shares, we will file an amendment to the registration statement of which this prospectus is a part. Except as described above, there are no agreements, arrangements or understandings with respect to resale of any of the securities covered by this prospectus.
 

 34
 
 

 
 
         
Shares Owned
After the Offering(2)
Name of Selling
Shareholder
 
Number of Shares
to be Offered
   
Number
 
Percent
Herman C. DeBoard III(1)
 
1,000,000
   
5,476,875
 
23.9
John Michael Talley
 
40,000
   
 
Caron Talley
 
20,000
   
 
Herman C. DeBoard
 
40,000
   
 
Raymond E. McElhaney(1)
 
500,000
   
1,685,000
 
7.4
Bill M. Conrad(1)
 
500,000
   
1,500,000
 
6.5
Erik B. Carlson
 
500,000
   
 
Donna K. Klimas
 
100,000
   
 
Verne P. Collier
 
220,000
   
 
Henderson Convenience, LLC(3)
 
280,000
   
 
Paul Davis and Nageeba L. Davis, JTWROS
 
100,000
   
 
Dewey Williams
 
50,000
   
 
Jay W. Roth
 
100,000
   
 
Judith C. Jacobsen Trust(4)
 
20,000
   
 
William E. Skeith
 
125,000
   
 
Accredited Members Holding Corporation(5)
 
745,000
   
 
Mark McGinnis Trust(6)
 
20,000
   
 
Steven M. Bathgate
 
20,000
   
 
Michael E. Donnelly
 
20,000
   
 
Kevin E. Duis
 
570,000
   
 
Jon B. Kruljac
 
20,000
   
 
Karen McClaflin
 
45,000
   
 
David C. Reid
 
100,000
   
 
Jolie Slaton
 
335,875
   
 
Robert C. Fay
 
20,000
   
 
William E. Scaff Jr. and Kim R. Scaff, JTWROS
 
80,000
   
 
Ed Holloway and Renee Holloway, JTWROS
 
180,000
   
 
Walton Financial
 
20,000
   
 
Verne P. Collier, Custodian for Angela R. Collier, UGMA
 
20,000
   
 
Verne P. Collier, Custodian for David R. Collier, UGMA
 
20,000
   
 
Robert M. Igo and Jane M. Igo, JTWROS
 
40,000
   
 
Robert Igo
 
40,000
   
 
Jason Reid
 
40,000
   
 
Dollar Investments(7)
 
80,000
   
 
Brian Inglis
 
38,750
   
 
Dewey Williams PSP&T, Dewey Williams, Trustee
 
50,000
   
 
Amber Robinson
 
40,000
   
 
Paul D. Myers(1)
 
775,000
   
 
Christina Wedge
 
25,000
   
 
Chad M. Mansfield
 
100,000
   
 
Christy P. DiNapoli(1)
 
550,000
   
 
Timothy R. Rushlow
 
500,000
   
 
G. Mark Rowe
 
37,500
   
 
H. Leigh Severance
 
375,000
   
 
David Inglis
 
275,000
   
 
Chris David Abeyta
 
25,000
   
 
Bill Walton
 
100,000
   
 
Cary Jeansonne
 
50,000
   
 
Brian K. Livie and Roberta L. Livie
 
125,000
   
 
Carol Audra Cooper
 
25,000
   
 
Michael S. Barish
 
625,000
   
 
Kenneth Ray Harder & Kay G. Harder, Trustees of the Kenneth Ray Harder Living Trust dated January 31, 2008
 
50,000
   
 
Gene Smith
 
1,000
   
 
Mark Hamilton
 
50,000
   
 
Beau A. Oblinger and Stacey L. Oblinger
 
37,500
   
 
 
35
 
 

 
Ronni L. Wiley
 
25,000
   
 
John Robert Munro
 
125,000
   
 
Carl A. Phillips and Teresa L. Norris-Phillips
 
25,000
   
 
Clayton L. Andrews
 
50,000
   
 
Jerome Jaroska and Faythe Ann Jaroska
 
25,000
   
 
Faythe Ann Jaroska
 
25,000
   
 
Boco Investments, LLC(8)
 
250,000
   
 
Mohammed Osman
 
25,000
   
 
Leslie S.R. Leohr
 
100,000
   
 
Carla Renee Retief
 
25,000
   
 
Dennis J. Wells and Doris M. Wells
 
62,500
   
 
Libertadores Investment Group, LLC(9)
 
750,000
   
 
Larry Noffsinger and Vicki Noffsinger
 
25,000
   
 
Richard Emory Tewch and Darcy Anne Derler as Tenants in Common
 
25,000
   
 
Howard Crosby
 
40,000
   
 
Lee Edmondson and Donna Edmondson
 
25,000
   
 
James J. Brown and Teresa Brown
 
50,000
   
 
David W. Mealer and Sheryl L. Mealer
 
37,500
   
 
Jeffery L. Bright and Sandra K. Bright
 
25,000
   
 
Michael W. Taylor and P. Diane Taylor
 
25,000
   
 
Brian W. Pettersen
 
40,000
   
 
Glen S. Davis
 
37,500
   
 
Delray Wannemacher
 
100,000
   
 
James E. Mayer
 
75,000
   
 
Peter G. Traber
 
125,000
   
 
James C. Czirr
 
62,500
   
 
YENRAB Investing(10)
 
50,000
   
 
Larry L. Holmes, Jr.
 
25,000
   
 
Jay Senter
 
100,000
   
 
Joe Patton
 
150,000
   
 
Jesse Griffith
 
150,000
   
 
Valerie A. Ochsendorf
 
25,000
   
 
Bryan and Diane Myers
 
150,000
   
 
Craig Collier
 
125,000
   
 
Brett Collier
 
190,000
   
 
Brett Collier, Custodian for Angela R. Collier, UGMA
 
65,000
   
 
Brett Collier, Custodian for David R. Collier, UGMA
 
65,000
   
 
Brian Conrad
 
165,000
   
 
Angie Ricther
 
20,000
   
 
Sue McElhaney-Lew
 
20,000
   
 
Michelle Catherine McElhaney
 
50,000
   
 
Caitlin M. McElhaney
 
50,000
   
 
Ted and Susan Mohr
 
10,000
   
 
Eric Douglas Sickler
 
6,250
   
 
Brian C. Beatty
 
125,000
   
 
Link Home & Land, LLC(11)
 
100,000
   
 
Z, Inc.(12)
 
37,500
   
 
Robert C. Lombardi & Cyndy L. Kraft JTWROS
 
125,000
   
 
Jeremy Jon Van Sickle
 
62,500
   
 
David M. Limpert
 
110,000
   
 
Larry W. Douglas
 
100,000
   
 
Reid Grandchildren Trust J Reid & L Reid TTEE U/A DTD 12/07/2007
 
60,000
   
 
Patterson Grandchildren Trust J Patterson & G Patterson TTEE U/A DTD 12/07/2007
 
60,000
   
 
               
TOTAL
 
14,241,875
         
 
(1) 
Officer and/or director of our company.
(2) 
Assumes that all of shares offered under this prospectus are sold, of which there is no assurance.
 
36
 
 

 
(3)
The selling shareholder has identified William E. Scaff, Jr. as the individual with voting and investment power over these shares.
(4)
The selling shareholder has identified Judith C. Jacobsen as the individual with voting and investment power over these shares.
(5)
The selling shareholder has identified Jay W. Roth as the individual with voting and investment power over these shares.
(6)
The selling shareholder has identified Mark McGinnis as the individual with voting and investment power over these shares.
(7)
The selling shareholder has identified John Dollarhide as the individual with voting and investment power over these shares.
(8)
The selling shareholder has identified Joseph Zimlich as the individual with voting and investment power over these shares.
(9)
The selling shareholder has identified Jorge Sprevtels as the individual with voting and investment power over these shares.
(10) 
The selling shareholder has identified Jerry D. Barney as the individual with voting and investment power over these shares.
(11) 
The selling shareholder has identified Tom Golden as the individual with voting and investment power over these shares.
(12) 
The selling shareholder has identified Darin Zaruba as the individual with voting and investment power over these shares.
 
    Except as otherwise noted in the table above and to the best of our knowledge, the selling shareholders are not associated with or affiliates of United States broker-dealers, and at the time of purchase the selling shareholders purchased the securities in the ordinary course of business and did not have any agreements or understandings, directly or indirectly, with any persons to distribute or dispose of the securities.  Further, except as otherwise stated, none of the selling shareholders have any relationship to our company, except as a shareholder.
 
PLAN OF DISTRIBUTION
 
    The selling shareholders and their pledgees, donees, transferees or other successors in interest may offer the shares of our common stock from time to time after the date of this prospectus and will determine the time, manner and size of each sale in the over the counter market, in privately negotiated transactions or otherwise.  The shares will be offered at a price of $0.50 per share until such time, if ever, our shares are quoted on the Over the Counter Bulletin Board or the Over the Counter Markets, following which the shares may be offered at prices prevailing in the market or at privately negotiated prices. The selling shareholders may negotiate, and may pay, brokers or dealers commissions, discounts or concessions for their services. In effecting sales, brokers or dealers engaged by the selling shareholders may allow other brokers or dealers to participate. However, the selling shareholders and any brokers or dealers involved in the sale or resale of the shares may qualify as “underwriters” within the meaning of Section 2(a)(11) of the Securities Act. In addition, the brokers’ or dealers’ commissions, discounts or concessions may qualify as underwriters’ compensation under the Securities Act.
 
    The methods by which the selling shareholders may sell the shares of our common stock include:

·
A block trade in which a broker or dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block, as principal, in order to facilitate the transaction;
·
Sales to a broker or dealer, as principal, in a market maker capacity or otherwise and resale by the broker or dealer for its account;
·
Ordinary brokerage transactions and transactions in which a broker solicits purchases;
·
Privately negotiated transactions;
 

 37
 
 

 
·
Short sales;
·
Any combination of these methods of sale; or
·
Any other legal method.
 
    In addition to selling their shares under this prospectus, the selling shareholders may transfer their shares in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer, or sell their shares under Rule 144 of the Securities Act rather than under this prospectus, if the transaction meets the requirements of Rule 144. Any selling shareholder who uses this prospectus to sell his shares will be subject to the prospectus delivery requirements of the Securities Act.
 
    Regulation M under the Securities Exchange Act of 1934 provides that during the period that any person is engaged in the distribution of our shares of common stock, as defined in Regulation M, such person generally may not purchase our common stock. The selling shareholders are subject to these restrictions, which may limit the timing of purchases and sales of our common stock by the selling shareholders. This may affect the marketability of our common stock.
 
    The selling shareholders may use agents to sell the shares. If this happens, the agents may receive discounts or commissions. The selling shareholders do not expect these discounts and commissions to exceed what is customary for the type of transaction involved. If required, a supplement to his prospectus will set forth the applicable commission or discount, if any, and the names of any underwriters, brokers, dealers or agents involved in the sale of the shares. The selling shareholders and any underwriters, brokers, dealers or agents that participate in the distribution of our common stock offered hereby may be deemed to be “underwriters” within the meaning of the Securities Act, and any profit on the sale of shares by them and any discounts, commissions, concessions or other compensation received by them may be deemed to be underwriting discounts and commissions under the Securities Act. The selling shareholders may agree to indemnify any broker or dealer or agent against certain liabilities relating to the selling of the shares, including liabilities arising under the Securities Act.
 
    Upon notification by the selling shareholders that any material arrangement has been entered into with a broker or dealer for the sale of the shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, disclosing the material terms of the transaction.

DESCRIPTION OF CAPITAL STOCK
 
    Our authorized capital consists of 50,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of preferred stock, $0.01 per share.  As of August 5, 2011 we had 22,903,750 shares of common stock issued and outstanding, and no shares of preferred stock outstanding.
 
    The following discussion summarizes the rights and privileges of our capital stock.  This summary is not complete, and you should refer to our Articles of Incorporation, as amended, filed with the Colorado Secretary of State.

Common Stock
 
    The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to stockholders, including the election of directors.  Cumulative voting for directors is not permitted.  Except as provided by special agreement, the holders of common stock are not entitled to any preemptive rights and the shares are not redeemable or convertible.  All outstanding common stock is, and all common stock offered hereby will be, when issued and paid for, fully paid and non-assessable.  The number of authorized shares of common stock may be increased or decreased (but not below the number of shares then outstanding or otherwise reserved under obligations for issuance by us) by the affirmative vote of a majority of shares cast at a meeting of our shareholders at which a quorum is present.
 
38
 
 

 
    Our Articles of Incorporation and Bylaws do not include any provision that would delay, defer or prevent a change in control of our company.  However, as a matter of Colorado law, certain significant transactions would require the affirmative vote of a majority of the shares eligible to vote at a meeting of shareholders which requirement could result in delays to or greater cost associated with a change in control of our company.
 
    The holders of our common stock are entitled to dividends if, as and when declared by our Board of Directors from legally available funds, subject to the preferential rights of the holders of any outstanding preferred stock.  Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of our common stock are entitled to share, on a pro rata basis, all assets remaining after payment to creditors and prior to distribution rights, if any, of any series of outstanding preferred stock.

Preferred Stock
 
    Our Articles of Incorporation vest our board of directors with authority to divide the preferred stock into series and to fix and determine the relative rights and preferences of the shares of any such series so established to the full extent permitted by the laws of the State of Colorado and our Articles of Incorporation in respect to, among other things:

(i) the number of shares to constitute such series and the distinctive designations thereof;

(ii) the rate and preference of dividends, if any, the time of payment of dividends, whether dividends are cumulative and the date from which any dividend shall accrue;

(iii) whether preferred stock may be redeemed and, if so, the redemption price and the terms and conditions of redemption;

(iv) the liquidation preferences payable on preferred stock in the event of involuntary or voluntary liquidation;

(v) sinking fund or other provisions, if any, for redemption or purchase of preferred stock;

(vi) the terms and conditions by which preferred stock may be converted, if the preferred stock of any series are issued with the privilege of conversion; and

(vii) voting rights, if any.
 
    As of the date of this memorandum, we have not designated or authorized any preferred stock for issuance.

Restrictions on Future Sales of Our Common Stock
 
    All of our common stock currently outstanding is subject to restrictions on resale.  The shares being offered have not been registered under the Securities Act or under any state securities laws or regulations.  Purchasers of the shares may not offer, sell or otherwise dispose of the common stock in the absence of (i) an effective registration for such securities under the Securities Act, or (ii) an opinion of Company’s counsel that such registration is not required.
 
39
 
 

 
    Under Rule 144 of the Securities Act, a person holding such restricted securities who is not an affiliate of our company and who beneficially owns those securities that were not acquired from us or an affiliate of our company within the previous one year would be entitled to sell their shares free of any restrictions, should a market for our common stock develop.  An affiliate of our company would be entitled to sell, within any 12-month period, a number of shares that does not exceed the greater of:

 
one percent (1%) of the then outstanding shares of our common stock, or

 
the average weekly trading volume of our common stock during the four calendar weeks preceding the date of the proposed sale.
 
    The sale of any shares in the future, either pursuant to this prospectus or pursuant to Rule 144, could depress the price of our common stock in any market which might develop.

SHARES ELIGIBLE FOR FUTURE SALE
 
    Sales of substantial amounts of common stock (including shares issued upon the exercise of outstanding options) in the public market after this offering could cause the market price of our common stock to decline.  Those sales also might make it more difficult for us to sell equity-related securities in the future or reduce the price at which we could sell any equity-related securities.

Rule 144
 
    In general, under Rule 144 as currently in effect, a person who is not an affiliate of our company holding restricted securities that were not acquired from us or an affiliate of our company within the previous year would be entitled to sell those shares free of any restrictions.  An affiliate of our company would be entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

·  
1% of the then outstanding shares of our common stock, or

·  
the average weekly trading volume of our common stock during the four calendar weeks preceding the date of proposed sale.
 
    Sales by affiliates under Rule 144 are also subject to requirements relating to manner of sale and filing of notice with the SEC.
 
WHERE YOU CAN FIND MORE INFORMATION
 
    You may read and copy any document we file at the SEC’s Public Reference Rooms at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Rooms. You can also obtain copies of our SEC filings by going to the SEC’s website at http://www.sec.gov.
 
    We have filed with the SEC a registration statement on Form S-1 to register the shares of our common stock. This prospectus is part of that registration statement and, as permitted by the SEC’s rules, does not contain all of the information set forth in the registration statement. For further information about us or our common stock, you may refer to the registration statement and to the exhibits filed as part of the registration statement. The description of all agreements or the terms of those agreements contained in this prospectus are specifically qualified by reference to the agreements, filed or incorporated by reference in the registration statement.
 
40
 
 

 
    We will provide copies of our reports and other information which we file with the SEC without charge to each person who receives a copy of this prospectus. Your request for this information should be directed in writing to our secretary, Paul Myers, at our corporate office in Colorado Springs, Colorado. You can also review this information at the public reference rooms of the SEC and on the SEC’s website as described above.

LEGAL MATTERS
 
    We have been advised on the legality of the shares included in this prospectus by Dufford & Brown, P.C., of Denver, Colorado.

EXPERTS
 
    Our financial statements as of December 31, 2010 and for the period from inception to December 31, 2010 included in this prospectus have been included in reliance on the report of StarkSchenkein, LLP, our independent registered public accounting firm. These financial statements have been included on the authority of this firm as an expert in auditing and accounting.

 
 

 41
 
 

 
FINANCIAL STATEMENTS

Table of Contents
 
 

Balance Sheets as of March 31, 2011 (unaudited) and December 31, 2010
F-2
   
Statements of Operations for the three months ended March 31, 2011 and 2010, and for the period from Inception (June 20, 2009) to March 31, 2011 (unaudited)
F-3
   
Statements of Cash Flows for the three months ended March 31, 2011 and 2010, and for the period from Inception (June 20, 2009) to March 31, 2011 (unaudited)
F-4
   
Notes to Financial Statements – March 31, 2011 (unaudited)
F-6
   
Report of Independent Registered Public Accounting Firm
F-14
   
Balance Sheets at December 31, 2010 and 2009
F-15
   
Statements of Operations for the year ended December 31, 2010, the period from Inception (June 20, 2009) to December 31, 2009, and for the period from Inception (June 20, 2009) to December 31, 2010
F-16
   
Statement of Changes in Shareholders’ Equity for the period from Inception (June 20, 2009) to December 31, 2010
F-17
   
Statements of Cash flows for the year ended December 31, 2010, the period from Inception (June 20, 2009) to December 31, 2009, and for the period from Inception (June 20, 2009) to December 31, 2010
F-18
   
Notes to Consolidated Financial Statements – December 31, 2010 and 2009
F-20






F-1
 
 

 


LIQUID SPINS, INC.
 
(A Development Stage Company)
 
BALANCE SHEETS
 
   
   
March 31,
   
December 31
 
   
2011
   
2010
 
   
(Unaudited)
       
ASSETS
           
             
Current assets:
           
Cash and cash equivalents
  $ 1,113,659     $ 251,068  
Restricted cash
    1,000       2,100  
Accounts receivable, net
    -       13,429  
Prepaid  Expenses
    59,110       6,667  
Notes Receivable
    13,793       -  
Deposits
    1,200       1,200  
Total current assets
    1,188,762       274,464  
                 
                 
Property and equipment – net
    44,804       15,961  
Web application and infrastructure costs, net
    43,923       3,667  
Other assets/Deferred costs and recoupables
    108,100       15,000  
Total assets
  $ 1,385,589     $ 309,092  
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
Current liabilities:
               
Accounts payable
  $ 30,675     $ 36,777  
Accrued Expenses and Other Current Liabilities
    10,549       12,305  
Total current liabilities
    41,224       49,082  
                 
Shareholders' equity:
               
Preferred stock - $0.01 par value, 5,000,000 shares authorized:
               
no shares issued and outstanding
    -       -  
Common stock - $0.001 par value, 50,000,000 shares authorized:
               
22,053,750 and 18,303,750 shares issued and
  outstanding, respectively
    22,054       18,304  
Additional paid-in capital
    3,301,946       1,805,696  
(Deficit) accumulated during the production stage
    (1,979,635 )     (1,563,990 )
Total shareholders' equity
    1,344,365       260,010  
                 
Total liabilities and shareholders' equity
  $ 1,385,589     $ 309,092  
                 
                 
                 
The accompanying notes are an integral part of these financial statements.
 
 
F-2
 
 

LIQUID SPINS INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
for the quarters ended March 31, 2011 and 2010,
 and Inception June 20, 2009 to March 31, 2011
 
   
Three months ended
March 31,
   
Inception
(June 20, 2009) to
 
   
2011
   
2010
   
March 31, 2011
 
Card sales
  $ 538     $ 230     $ 28,426  
                         
Cost of sales
                       
Cost of product applicable to sales
    129       58       50,862  
Labor & operations
    14,807       1,568       29,550  
Total costs of sales
    14,936       1,626       80,412  
                         
Gross profit
    (14,398 )     (1,396 )     (51,986 )
                         
Costs and Expenses:
                       
Production start up expense and product development
    182,207       52,110       489,841  
Selling, distribution and marketing
    6,679       21,000       45,532  
General and administrative
    213,069       35,026       1,374,961  
Total costs and expenses
    401,955       108,136       1,910,334  
                         
Operating (loss)
    (416,353 )     (109,532 )     (1,962,320 )
                         
Other income (expense):
                       
Loss on sale of assets
    -       -       (2,917 )
Loss on disposal of asset
    -       -       (15,262 )
Interest income
    708       -       864  
Total other income
    708       -       (17,315 )
                         
(Loss) before income taxes
    (415,645 )     (109,532 )     (1,979,635 )
                         
Provision for income taxes
    -       -       -  
                         
Net (loss)
  $ (415,645 )   $ (109,532 )   $ (1,979,635 )
                         
                         
Net (loss) per common share:
                       
Basic and Diluted
  $ (0.02 )   $ (0.01 )        
                         
Weighted average shares outstanding:
                       
Basic and Diluted
    19,969,278       15,598,444          
                         
                         
 
The accompanying notes are an integral part of these financial statements.
 
F-3

 
 
 

LIQUID SPINS INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 2011 and 2010, and Inception (June 20, 2009) to March 31, 2011
 
   
Three months ended
   
Inception
 
   
March 31,
   
(June 20, 2009) to
 
   
2011
   
2010
   
March 31, 2011
 
                   
 Cash flows from operating activities:
                 
Net (loss)
  $ (415,645 )   $ (109,532 )   $ (1,979,635 )
Adjustments to reconcile net (loss)   to net cash
                       
 (used in) operating activities:
                       
 Allowance for doubtful accounts
    -       -       13,549  
 Inventory impairment
    -       -       10,724  
 Depreciation and amortization
    5,739       1,843       20,095  
 Professional services paid in stock
    75,000       15,000       265,000  
 Services paid in stock
    -       -       756,000  
 Loss on sale of asset
    -       -       2,918  
 Loss on disposal of asset
    -       -       15,262  
 Changes in operating assets and liabilities:
                       
 Accounts receivable
    13,429       -       (13,549 )
 Inventory
    -       -       (10,724 )
 Prepaid expenses
    (52,443 )     -       (59,110 )
 Deposit
    -       -       (1,200 )
 Notes Receivable
    (13,793 )     -       (13,793 )
 Accounts payable
    (6,102 )     15,175       30,675  
 Accrued expenses and other liabilities
    (1,756 )     5,000       10,549  
 Total adjustments
    20,074       37,018       1,027,296  
Net cash (used in) operating activities
    (395,571 )     (72,515 )     (952,339 )
                         
Cash flows from investing activities:
                       
 Capital expenditures
    (32,026 )     -       (55,652 )
 Web application and infrastructure costs
    (42,812 )     -       (63,250 )
 Restricted Cash
    1,100               (1,000 )
Other assets/Deferred record production costs
    (93,100 )     -       (108,100 )
Net cash (used in) investing activities
    (166,838 )     -       (228,002 )
                         
Cash flows from financing activities:
                       
Proceeds from sales of stock
    1,425,000       120,000       2,294,000  
Net cash provided by financing activities
    1,425,000       120,000       2,294,000  
                         
Net increase in cash and equivalents
    862,591       47,485       1,113,659  
                         
Cash and equivalents at beginning of period
    251,068       2,357       -  
                         
Cash and equivalents at end of period
  $ 1,113,659     $ 49,842     $ 1,113,659  
                         
Supplemental Cash Flow Information
                       
     Interest paid
  $ -     $ -     $ -  
     Income taxes paid
  $ -     $ -     $ -  
                         
Non-cash investing and financing activities:
                       
Non-cash related party purchase of intellectual property paid in stock
  $ -     $ -     $ 8,100  
    Sale of common stock for subscription receivable
  $ -     $ 80,000     $ -  

 
The accompanying notes are an integral part of these financial statements.
 
F-4
 
 

 

LIQUID SPINS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 2011

1.     Summary of Significant Accounting Policies

Basis of Presentation:    Liquid Spins, Inc. (the “Company”) was incorporated under the laws of the State of Colorado on June 20, 2009 under the name “Malemark, Inc.” to develop and market a line of greeting cards under the Malemark trademark and logo that were primarily targeted towards male consumers.  On April 26, 2011, the Company changed its name to “Liquid Spins, Inc.”.  While working on the greeting card portfolio, the Company developed a “lyrical greeting card” product which incorporated lyrics from popular songs as part of the card message.  The lyrical greeting card evolved into additional web-based products that focused on distributing digital media (primarily music) via the internet, and began marketing these products under the “Liquid Spins” name.  The Company began exploring other opportunities with the retail outlets it was pursuing in connection with its Liquid Spins products and discovered a market opportunity to partner with certain retailers to provide them with a branded platform for digital media distribution.  While the Company is still maintaining web-based greeting card products, the Company’s business continues to evolve into a digital media platform including associated products.  The Company has emerged as a distribution company building a digital media platform that can be used as a system for distributing digital media to customers.

The financial statements included herein are expressed in United States dollars, the Company's reporting currency.  The accounting policies conform to accounting principles generally accepted in the United States of America (“US GAAP”).  The financial statements are accounted for in accordance with ASC 915 (“ASC 915”) “Development Stage Companies”.  In accordance with ASC 915, a development stage company is a company whose primary activities, include, but are not limited to financial planning, raising capital, and research and development.  It is an entity devoting substantially all its efforts to establishing a new business for which either of the following conditions exist:

·  
Planned principal operations have not commenced; or
·  
Planned principal operations have commenced, but there has been no significant revenue therefrom.

Research is generally defined as planned research or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service or a new process or technique or in bringing about a significant improvement to an existing product or process.   Development is generally defined as the translation of research findings or other knowledge into a plan, or design for a new product or process, or for a significant improvement to an existing product or process whether intended for sale or use.  It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot programs.

Use of Estimates:    The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.  Estimates that are critical to the accompanying financial statements include estimates related to impairments of long lived assets and investments and trade receivables, classification of expenditures as either an asset or an expense, valuation of deferred tax assets, and the likelihood of loss contingencies.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary.  Actual results could differ from these estimates.

 F-5
 
 

 
Accounts Receivable and Allowance for Doubtful Accounts:    Accounts receivables consists of uncollateralized customer obligations generally due under normal trade terms requiring payment within 30 days from the invoice date. However, as is customary in the industry, the Company’s accounts receivable may extend up to 90 days.  Accounts receivable are stated at the amount billed to the customer net of an allowance for doubtful accounts.
 
Stock Based Compensation:   The Company follows ASC 718 “Compensation – Stock Compensation,” which requires it to provide compensation costs for its stock option plans determined in accordance with the fair value based method prescribed in ASC 718.  The fair value of each stock option is estimated at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option.  As of March 31, 2011 , there were no issued or outstanding stock options and no stock option activity for the quarter then ended.

Share-based Payment Transactions:  Share-based payments awarded to employees and consultants of the Company by a related party and other holder of an economic interest in the Company as compensation for services provided to the Company are accounted for under ASC Topic 718.  Under ASC Topic 718, the economic interest holder makes a capital contribution to the Company, and the Company makes a share-based payment to certain employee and contractors in exchange for services rendered.  Share-based payment transactions are recorded as the difference between the market value of the shares of stock, as determined by the price paid for shares of the Company stock by non-related parties on or about the date of the share-based payments, and the price originally paid for the stock by the related party and other holder of an economic interest in the company.

Per Share Amounts:    The Company computes earnings per share under ASC subtopic 260-10, “Earnings Per Share” (“ASC 260-10”). Net earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon conversion of convertible preferred shares and the exercise of the Company’s stock options.   As of March 31, 2011 and March 31, 2010, there were no dilutive common stock equivalents.

Recently Issued Accounting Standards Updates:   

The following accounting standards updates were recently issued and have been adopted by the Company.  
 
ASU No. 2010-11 was issued in March 2010, and clarifies that the transfer of credit risk that is only in the form of subordination of one financial instrument to another is an embedded derivative feature that should not be subject to potential bifurcation and separate accounting.  This ASU was effective for the first fiscal quarter beginning after June 15, 2010, with early adoption permitted.

ASU No. 2010-13 was issued in April 2010, and will clarify the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades.  This ASU was effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted.

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries.  None of the updates are expected to a have a material impact on the Company's financial position, results of operations or cash flows.
 

 F-6
 
 

 
2.     Record Master, Advance Royalty and Deferred Distribution Costs:
 
    Record Master and Advance Royalty Costs:- In accordance with the terms of a December 1, 2010 Master Recording Agreement under a twelve month "Recording Term", between the Company and a certain artist, the Company has agreed to fund a “Recording Fund” in the amount of $30,000.   The agreement ends November 30, 2011.   In accordance with this agreement, the Company shall pay for the recording costs for the Masters in an amount to be determined by the Company for each Master, in return for certain recording services and other copyright deliverables, a wave file or other current master and all multi-track master tapes for each Master.  Upon execution of specific terms by the Artist, the Company shall be reimbursed promptly for all monies advanced, and shall be paid a royalty in accordance with the terms of the agreement.
 
    As of March 31, 2011 the commitment had been fully funded.   As of December 31, 2010, $15,000 of the $30,000 commitment had been funded.  The costs are recognized ratably based on the ratio of the current period’s advances and royalty revenue to estimated remaining ultimate revenues.

3.     Equipment and Purchased Software

    Depreciation expense relating to computer equipment and software amounted to $3,184 and $585 for the quarters ended March 31, 2011 and March 31, 2010, respectively.  Depreciation relating to computer equipment and software is included in Material, Labor and Other Production costs.

    Computer equipment and software consist of the following:
             
   
March 31,
   
December 31,
 
   
2011
   
2010
 
 
 
 
   
 
 
Computer equipment and purchased software
  $ 50,651     $ 18,625  
                 
Less accumulated depreciation
    (5,847 )     (2,664 )
 
  $ 44,804     $ 15,961  

    The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired.

4.    Website Application and Infrastructure Development Costs:

    Amortization expense relating to website application and infrastructure costs amounted to $2,555 and $1,258 for the quarters ending March 31, 2011 and 2010, respectively.  Amortization expense relating to website application and infrastructure costs are included in Operations and Development expense.  Website Application and Infrastructure Development Costs consists of the following:
 
F-7
 
 

 
 
 
March 31,
   
December 31,
 
   
2011
   
2010 
 
Application and infrastructure costs
  $ 27,212     $ 4,400  
Less accumulated amortization
    (3,289 )     (733 )
 
  $ 43,923     $ 3,667  

5.    Long-term Leases and Prepaid Expenses
 
    The Company leases its office facilities under a non-cancelable lease agreement for a total sum of $8,000. The lease expired on May 31, 2011.  $2,667 and $6,667 is recorded as prepaid lease expense as of March 31, 2011 and December 31, 2010, respectively.  On June 01, 2011 the Company entered into a non-cancelable prepaid lease agreement for $12,000 which expires on November 30, 2011.
 
    Retainers for legal and accounting professional service fees related to the Company’s public registration statement are recorded as prepaid expense when paid and amortized to expense as the services are rendered.  Prepaid expenses consist of the following:

   
March 31,
   
December 31,
 
   
2011
   
2010
 
             
Prepaid Rent
  $ 2,667     $ 6,667  
Professional Services
    53,100       -  
Other
    3,343       -  
    $ 59,110     $ 6,667  

6.    Deferred Income Taxes
 
    Since inception, the Company has accumulated substantial net operating loss carry forwards for tax purposes.  At March 31 2011 and December 31, 2010, the Company had deferred tax assets of approximately $303,137 attributable to tax loss carry forwards for U.S. tax purposes.  The principal difference between the net loss reported for financial reporting purposes and the taxable loss reported for tax purposes relates to stock based compensation, asset valuation and impairment, and depreciation and amortization expenditures differences for financial reporting purposes versus tax reporting purposes.
 
F-8
 
 

 
Deferred income taxes are stated at tax rates expected to be in effect when taxes are actually paid or recovered. Deferred income tax assets represent amounts available to reduce income tax payments in future years.  Significant components of the Company’s deferred tax assets are as follows:


   
March 31,
2011
   
December 31, 2010
 
Deferred tax Assets
           
Net operating loss carry forwards
  $ 435,580     $ 303,137  
Stock Compensation
    329,325       299,603  
Other                      
    16,680       15,667  
Total deferred tax assets
    781,585       618,407  
Valuation allowance
    (781,585 )     (618,407 )
Total net deferred taxes
    -       -  
                 
Net deferred tax assets
    -       -  
Current portion:
    -       -  
Deferred portion:
    -       -  
Total
    -       -  
                 
Provision for income taxes:
               
Federal                                
    -       -  
State
    -       -  
Total
    -       -  
Current portion:
    -       -  
Deferred portion:
    -       -  
Total
  $ -       -  

Net operating loss carry forwards approximates $435,580 and $303,137 as of March 31, 2011 and December 31, 2010, respectively. There are statutory limitations on the Company’s ability to realize any future benefit from the related potential tax assets, including a requirement that losses be offset against future taxable income, if any.  If the Company were to experience a change in ownership under Section 382, the Company may be limited in its ability to fully utilize its net operating losses.

If not used, the carry forward will expire through 2030 and 2032.   The Company is uncertain as to whether it will ever utilize the operating loss carry forwards.  Accordingly, the deferred tax asset of approximately $781,585 and $618,407 relating to the operating loss carry forward has been fully reserved as of March 31, 2011 and December 31, 2010, respectively.  The increase in the valuation allowance related to the deferred tax asset was approximately $163,178 during the quarter ended March 31, 2011.

The Company’s provision for income taxes differs from applying the statutory United States federal income tax rate to income before income taxes.   The difference results from the Company’s net operating loss.  Deferred tax assets at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets are expected to be settled or realized.  A reconciliation of the U.S. federal tax rate and the effective tax rate is as follows:
 
Income tax provision at federal statutory rate:     35%  
Effect of net operating loss  (35% )
Effective tax rate:    -%  
 
The Company is subject to examination by the IRS and various U.S. state and local jurisdictions for tax years 2009 to the present.

7.    Shareholders' Equity

On July 18, 2009, the Company commenced the sale of its common shares under exemptions offered by federal and state securities regulations of those laws in what may be referred to as a private placement.  As a result, its securities were subject to restrictions on resale.  The sales were made pursuant to a subscription agreement between the Company and each subscriber.  
 

 F-9
 
 

 
During 2009, the Company sold 6,500,000 shares of common stock at par value of $0.001 (total $6,500).  8,100,000 shares were exchanged for the intellectual property of Malemark, Inc. valued $8,100, from an officer of the Company.

On July 22, 2009, the Company sold 100,000 shares of common stock at $.025 or $2,500.

On July 23, 2009, the Board approved a private offering of the Company’s common stock at a price of $0.10 per share on a best efforts basis for a period not to exceed 90 days. 550,000 shares were sold at $.10 per share or $55,000.

On September 9, 2009, the Board approved a private offering of the Company’s common stock at a price of $0.25 per share on a best efforts basis for a period not to exceed 90 days.   During 2009, the Company sold 60,000 shares at $0.25 per share or $15,000.  During 2010, the Company sold 1,390,000 shares at $0.25 per share or $347,500.

During 2010, pursuant to a contract, the Company agreed to issue common stock to a consultant performing management consulting and investor relations work on its behalf.  The 60,000 shares issued in 2010 in exchange for the services were valued at $0.25 per share, or $15,000.    The 187,500 shares issued during the quarter ending March 31, 2011 in exchange for services were valued at $0.40 per share, or $75,000.

During 2010, pursuant to a contract effective September 15, 2010, the Board of Directors approved the issuance of 125,000 shares of common stock per month, (aggregating 437,500 shares valued at $0.40 per share, or $175,000 for the period September 15, 2010 through December 31, 2010), as payment for financial management consulting.

 On August 16, 2010 the Board of Directors approved a private offering of 5,000,000 of the Company’s common stock at $0.40 per share on a best efforts basis until November 30, 2010.  During 2010, 1,106,250 shares of common stock were issued for an aggregate of $442,500.  During the quarter ended March 31, 2011, 3,562,500 shares of common stock were issued for an aggregate of $1,425,500.

 In November, 2010, the Board of Directors considered the Company’s need for additional working capital and agreed to extend the Company’s non-public offerings until March 15, 2011.

8.    Commitments and Contingencies

Consulting Agreement – MCM: -  Effective December 1, 2010, the Company entered into a consulting agreement (“Agreement”) with MCM Capital Management, Inc. (“MCM”) in the amount of $2,000 per month beginning on December 1, 2010 and effective for a period of one year.

Future minimum payments relating to the management services agreement are as follows at March 31, 2011:
 
   2011  $16,000
 
Employment Agreement: - The Company entered into an employment agreement with a key employee for a three-year term commencing October 01, 2009 for $6,500 per month until July 1, 2010, and increasing to $8,167 per month thereon and terminating September 30, 2012, to be renewed by the Company and the individuals upon mutual agreement.
 

 F-10
 
 

 
Future payments relating to the employment agreement are as follows as of March 31, 2011:
 
   2011  $98,000
   2012  $73,500

Legal Proceedings: - Neither the Company nor any of its officers or directors in their capacity as such is a party to any pending legal proceeding and no such proceeding is contemplated to the best of their knowledge and belief.

9.    Related Party Transactions

Initial Capitalization:  -   On July 20, 2009, the Company issued 9,000,000 shares of its common stock to Herman DeBoard III for a price of $9,000, including cash and intellectual property, and 2,500,000 shares of common stock each to Raymond McElhaney and Bill Conrad for $2,500 cash each, or $0.001 per share.  Messrs. DeBoard, McElhaney and Conrad were the only members of our board of directors approving that transaction on the Company’s behalf. Included in Malemark, Inc. Website and Infrastructure costs is $8,100 of the $9,000 intellectual property.
 
Consulting Agreement with MCM Capital: - Upon formation of the Company, the Company entered into an agreement with MCM Capital Management, Inc.(“MCM”) to provide consulting services to the company as needed. Fees for MCM Capital’s consulting services were calculated on an hourly basis.  On December 1, 2010 the Company entered into a formal agreement with MCM Capital in the amount of $2,000 per month for a period of one year.  The agreement is renewable upon mutual agreement of the parties.  Bill Conrad and Ray McElhaney, the shareholders, officers and directors of MCM Capital, are also members of the Company’s board of directors and shareholders of the Company.   MCM consulting fees included in General and Administrative expense amounted to $6,000 for the three months ended March 31, 2011 incurred under the December 1, 2010 formal contract.

Equipment Purchase: - On May 11, 2011, the Company purchased recording studio equipment from a shareholder of the Company in exchange for 200,000 shares of its common stock priced at $0.40 per share.

Note Receivable: - On March 1, 2011, the Company loaned the Medina Group, dba The Music Group the principal amount of $13,792.  The note was due and paid in full on April 30, 2011.  Christy DiNapoli, Chief Manager of the Medina Group and noteholder, along with other members of the Medina Group became employees of Liquid Spins, Inc. as of March 1, 2011.  Christy DiNapoli was elected as a corporate director at the 2011 Annual Shareholder's meeting held on April 21, 2011.

Related-party Accounts Payable: - Related party payables as of March 31, 2011 and December 31, 2010 are as follows:
 
 
 
March 31,
   
December 31,
 
 
 
2011
   
2010
 
             
Directors and Shareholders
  $ 2,880     $ 8,401  
Employee Officer and Shareholder
    1,445       282  
Employee and Shareholder                                                      
    1,143       49  
Vendor under common ownership
               
    with certain directors and shareholders
               
of the Company
    -       2,000  
Total
  $ 5,468     $ 10,732  
 
F-11
 
 

 
    Share-based Payment Transactions:  During the year ended December 31, 2010, an officer who is also the beneficial owner of more than 5% of our common stock transferred 900,000 shares of his stock at a discount to two employees of the Company and 1,000,000 shares of his shares to two consultants of the Company as compensation for services rendered.  Share-based compensation and share-based payment for consulting services amounted to $358,900 and $398,000, respectively, for the year ended December 31, 2010.   There were no share-based compensation transactions during the three months ending March 31, 2011.
 
10.    Subsequent Events
 
       Private Placement Memorandum: - In April 2011 the Company completed a private placement offering,  which commenced in September 2010, consisting of 4,668,750 shares at a price of $0.40 per share for gross proceeds of $1,867,500.

Company’s Non-qualified Stock Option and Stock Grant Plan: - On April 21, 2011, the Board of Directors, as per the Proxy Statement, ratified and approved an amendment to the Company’s Non-qualified Stock Option and Stock Grant Plan to (i) permit the issuance of incentive options and restricted stock, (ii) increase the number of shares of common stock reserved for issuance under the plan from 2,500,000 to 5,000,000, and (iii) change the name of the plan to Equity Incentive Plan.

Purchase and Sale Agreement: - On April 30, 2011 the Company entered into a purchase agreement to purchase certain equipment for $80,000 payable in the form of 200,000 shares of the Company’s, restricted common stock, valued at $0.40 per share, representing $80,000.  The 200,000 shares were issued May 2, 2011.  The equipment was purchased from a shareholder of the company.

Private Placement Memorandum: - On May 10, 2011 the Board of Directors approved a Private Placement Memorandum, dated May 16, 2011, regarding the offering of up to 1,000,000 shares of common stock. $0.001 par value, at a purchase price of $0.40 per share.  The Company’s common stock was offered by its officers and directors on a “best efforts” basis until May 31, 2011.  This period could be extended up to an additional 90 days.  There is no minimum amount of common stock that must be sold in this offering and no escrow of the proceeds of the sale of the shares.  The minimum investment by an investor was 100,000 shares of common stock or $40,000, unless the officers and directors agreed otherwise.  This private placement was closed on July 08, 2011.  The Company sold 650,000 shares at $.40 per share or $260,000.
 
Deferred Distribution Costs: - Effective May 15, 2011, the Company entered into a certain “MP3 Download Aggregator Agreement” (“Agreement”) with Warner Music Inc. the terms of which are contractually confidential.

Distribution Agreement: - Effective May 26, 2011, the Company entered into a distribution agreement (“Agreement”) with Interactive Communications International, Inc. (“InComm”).  Headquartered in Atlanta, GA, InComm is the industry leading marketer, distributor and technology innovator of stored-value gift and prepaid products. The initial term of this agreement ends on January 1, 2013 and shall be automatically extended after this initial term for successive consecutive terms of one (1) year unless either party gives notice of termination.
 
Office Lease/Commitment: -  On June 01, 2011 the Company entered into a non-cancelable prepaid lease agreement for its Colorado Springs location.  The lease cost was $12,000 and expires on November 30, 2011. 
 
Distribution Agreement: - Effective June 30, 2011, the Company entered into a certain “Digital Download Sales Agreement” with RED Distribution, LLC, the terms of which are contractually confidential.

F-12
 
 

 




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Shareholders and Board of Directors
Liquid Spins, Inc.

We have audited the accompanying balance sheets of Liquid Spins, Inc., as of December 31, 2010 and 2009, and the related statements of operations, stockholders' equity, and cash flows for the year ended December 31, 2010 and the period inception (June 20, 2009) to December 31, 2009 and for the period from inception (June 20, 2009) to December 31, 2010.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Liquid Spins, Inc., as of December 31, 2010 and 2009, and the results of its operations, and its cash flows for the year ended December 31, 2010 and the period inception (June 20, 2009) to December 31, 2009 and for the period from inception (June 20, 2009) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.



/s/ StarkSchenkein, LLP

Denver, Colorado
July 29, 2011
 
 
F-13
 
 

 

LIQUID SPINS, INC.
(A Development Stage Company)
BALANCE SHEETS

   
   
December 31,
 
   
2010
   
2009
 
ASSETS
           
             
Current assets:
           
Cash and cash equivalents
  $ 251,068     $ 2,357  
Restricted cash
    2,100       -  
Accounts receivable, net
    13,429       -  
Prepaid lease expense
    6,667       -  
Deposits
    1,200       -  
Total current assets
    274,464       2,357  
                 
                 
Equipment and Software - net
    15,961       6,048  
Web application and infrastructure costs, net
    3,667       12,667  
Deferred record production costs
    15,000       -  
Total assets
  $ 309,092     $ 21,072  
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
Current liabilities:
               
Accounts payable
  $ 36,777     $ 11,475  
Accrued expenses and other current liabilities
    12,305       -  
Total current liabilities
    49,082       11,475  
                 
Shareholders' equity:
               
Preferred stock - $0.01 par value, 5,000,000 shares authorized:
               
no shares issued and outstanding
    -       -  
Common stock - $0.001 par value, 50,000,000 shares authorized:
               
18,303,750 and 15,310,000 shares issued and outstanding, respectively
    18,304       15,310  
Additional paid-in capital
    1,805,696       71,790  
(Deficit) accumulated during the development stage
    (1,563,990 )     (77,503 )
Total shareholders' equity
    260,010       9,597  
                 
Total liabilities and shareholders' equity
  $ 309,092     $ 21,072  
                 
The accompanying notes are an integral part of these financial statements.
 
F-14
 
 

 

LIQUID SPINS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
for the year ended December 31, 2010, the period from  Inception (June 20, 2009) to December 31, 2009
and for the period from Inception (June 20, 2009) to December 31, 2010
 
                     
                     
           
Inception
(June 20, 2009) to
   
Inception
(June 20, 2009) to
 
     
2010
   
December 31, 2009
   
December 31, 2010
 
                     
Sales
    $ 27,888     $ -     $ 27,888  
                           
Cost of Sales
                       
Cost of product applicable to sales
    35,926       -       35,926  
Labor & operations
    27,117       -       27,117  
 
Total cost of sales
    63,043       -       63,043  
                           
Gross (loss)
    (35,155 )     -       (35,155 )
                           
Costs and Expenses:
                       
Product research and development
    256,703       50,931       307,634  
Selling, distribution and marketing
    38,853       -       38,853  
General and administrative
    1,137,753       26,572       1,164,325  
 
Total costs and expenses
    1,433,309       77,503       1,510,812  
                           
Operating (loss)
    (1,468,464 )     (77,503 )     (1,545,967 )
                           
Other income (expense):
                       
Loss on sale of assets
    (2,917 )     -       (2,917 )
Loss on disposal of assets
    (15,262 )     -       (15,262 )
Interest income
    156       -       156  
 
Total other income
    (18,023 )     -       (18,023 )
                           
(Loss) before income taxes
    (1,486,487 )     (77,503 )     (1,563,990 )
                           
Provision for income taxes
    -       -       -  
                           
Net (loss)
  $ (1,486,487 )   $ (77,503 )   $ (1,563,990 )
                           
                           
Net (loss) per common share:
                       
Basic and Diluted
  $ (0.09 )   $ (0.01 )        
                           
Weighted average shares outstanding:
                       
Basic and Diluted
    16,516,620       7,536,548          
                           
The accompanying notes are an integral part of these financial statements.
 
F-15
 
 

 
LIQUID SPINS, INC.
(A Development Stage Company)
STATEMENTS OF SHAREHOLDERS' EQUITY
For the period from Inception (June 20, 2009) to December 31, 2010
               
 
       
    Common Stock     
Additional
   
Accumulated  
   
Shareholders'  
 
   
# of Shares
   
Par Value
   
Paid-In Capital
    Deficit     Equity  
BALANCE, JUNE 20, 2009
    -     $ -     $ -     $ -     $ -  
                                         
Sales of shares for cash at $0.001
  per share (par value)
    6,500,000       6,500       -       -       6,500  
Shares issued for purchase of
  intellectual capital
    8,100,000       8,100       -       -       8,100  
Sale of shares for cash at $0.025
  per share
    100,000       100       2,400       -       2,500  
Sale of shares for cash at $0.10
  per share
    550,000       550       54,450       -       55,000  
Sale of shares for cash at $0.25
  per share
    60,000       60       14,940       -       15,000  
Net Loss
                            (77,503 )     (77,503 )
BALANCE, DECEMBER 31, 2009
    15,310,000       15,310       71,790       (77,503 )     9,597  
                                         
                                         
Shares issued for services
    60,000       60       14,940       -       15,000  
Sale of shares for cash at $0.25
  per share
    1,390,000       1,390       346,110       -       347,500  
Sale of shares for cash at $0.40
 per share
    1,106,250       1,106       441,394       -       442,500  
Shares issued for services
    437,500       438       174,562       -       175,000  
Shares transferred for employee services
    -       -       398,000       -       398,000  
Shares transferred for consulting services
    -       -       358,900       -       358,900  
Net loss
                            (1,486,487 )     (1,486,487 )
BALANCE, DECEMBER 31, 2010
    18,303,750     $ 18,304     $ 1,805,696     $ (1,563,990 )   $ 989,597  
                                         

 
The accompanying notes are an integral part of these financial statements.
 
F-16
 
 
 

 
 
LIQUID SPINS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for the year ended December 31, 2010, the period from  Inception (June 20, 2009) to December 31, 2009
and for the period from Inception (June 20, 2009) to December 31, 2010
                   
                   
         
Inception
(June 20, 2009) to
   
Inception
(June 20, 2009) to
 
   
2010
   
December 31, 2009
   
December 31, 2010
 
                   
 Cash flows from operating activities:
                 
 Net (loss)
  $ (1,486,487 )   $ (77,503 )   $ (1,563,990 )
 Adjustments to reconcile net (loss) to net cash
                       
 (used in) operating activities:
                       
 Allowance for doubtful accounts
    13,549       -       13,549  
 Inventory impairment
    10,724       -       10,724  
 Depreciation and amortization
    10,948       3,408       14,356  
 Professional services agreement paid in stock
    190,000       -       190,000  
 Services paid in stock
    756,900       -       756,900  
 Loss on sale of asset
    2,918       -       2,918  
 Loss on disposal of asset
    15,262       -       15,262  
 Changes in operating assets and liabilities:
                       
 Accounts receivable
    (26,978 )     -       (26,978 )
 Inventory
    (10,724 )     -       (10,724 )
 Prepaid leases expense
    (6,667 )     -       (6,667 )
 Deposits
    (1,200 )     -       (1,200 )
 Accounts payable
    25,302       11,475       36,777  
 Accrued expenses and accrued liabilities
    12,305       -       12,305  
 Total adjustments
    992,339       14,883       1,007,222  
Net cash (used in) operating activities
    (494,148 )     (62,620 )     (556,768 )
                         
Cash flows from investing activities:
                       
Capital expenditures
    (16,603 )     (7,023 )     (23,626 )
Web application and infrastructure costs, capitalized
    (13,438 )     (7,000 )     (20,438 )
Restricted cash
    (2,100 )     -       (2,100 )
Deferred record production costs
    (15,000 )     -       (15,000 )
Net cash (used in) investing activities
    (47,141 )     (14,023 )     (61,164 )
                         
Cash flows from financing activities:
                       
Proceeds from sales of stock
    790,000       79,000       869,000  
Net cash provided by financing activities
    790,000       79,000       869,000  
                         
Net increase in cash and equivalents
    248,711       2,357       251,068  
                         
Cash and equivalents at beginning of period
    2,357       -       -  
                         
Cash and equivalents at end of period
  $ 251,068     $ 2,357     $ 251,068  
                         
Supplemental Cash Flow Information
                       
Interest paid
  $ -     $ -     $ -  
Income taxes paid
  $ -     $ -     $ -  
                         
Non-cash investing and financing activities:
                       
Non-cash related party purchase of intellectual property paid in stock
  $ -     $ 8,100     $ 8,100  
 
The accompanying notes are an integral part of these financial statements.
 
F-17
 
 

 
LIQUID SPINS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2010 and 2009

1.     Summary of Significant Accounting Policies
 
    Basis of Presentation:    Liquid Spins, Inc. (the “Company”) was incorporated under the laws of the State of Colorado on June 20, 2009 under the name “Malemark, Inc.” to develop and market a line of greeting cards under the Malemark trademark and logo that were primarily targeted towards male consumers.  On April 26, 2011, the Company changed its name to “Liquid Spins, Inc.”.  While working on the greeting card portfolio, the Company developed a “lyrical greeting card” product which incorporated lyrics from popular songs as part of the card message.  The lyrical greeting card evolved into additional web-based products that focused on distributing digital media (primarily music) via the internet, and began marketing these products under the “Liquid Spins” name.  The Company began exploring other opportunities with the retail outlets it was pursuing in connection with its Liquid Spins products and discovered a market opportunity to partner with certain retailers to provide them with a branded platform for digital media distribution.  While the Company is still maintaining web-based greeting card products, the Company’s business continues to evolve into a digital media platform including associated products.  The Company has emerged as a distribution company building a digital media platform that can be used as a system for distributing digital media to customers.
 
    The financial statements included herein are expressed in United States dollars, the Company's reporting currency.  The accounting policies conform to accounting principles generally accepted in the United States of America (“US GAAP”).  The financial statements are accounted for in accordance with ASC 915 (“ASC 915”) “Development Stage Companies”.  In accordance with ASC 915, a development stage company is a company whose primary activities, include, but are not limited to financial planning, raising capital, and research and development.  It is an entity devoting substantially all its efforts to establishing a new business for which either of the following conditions exist:

·  
Planned principal operations have not commenced; or
·  
Planned principal operations have commenced, but there has been no significant revenue therefrom.
 
    Research is generally defined as planned research or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service or a new process or technique or in bringing about a significant improvement to an existing product or process.   Development is generally defined as the translation of research findings or other knowledge into a plan, or design for a new product or process, or for a significant improvement to an existing product or process whether intended for sale or use.  It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot programs.
 
    Use of Estimates:    The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.  Estimates that are critical to the accompanying financial statements include estimates related to impairments of long lived assets and investments and trade receivables, classification of expenditures as either an asset or an expense, valuation of deferred tax assets, and the likelihood of loss contingencies.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary.  Actual results could differ from these estimates.
 

 F-18
 
 

 
    Cash and Cash Equivalents:   The Company’s operating cash balances are maintained in financial institutions and periodically exceed federally insured limits. The Company believes that the financial strength of these institutions mitigates the underlying risk of loss.  To date, these concentrations of credit risk have not had a significant impact on the Company’s financial position or results of operations.
 
    Restricted Cash:    Pursuant to the terms of an on-line vendor agreement, the Company agreed to place cash in escrow, to be released to the vendor upon the Company’s satisfaction with the service.  The restricted cash balances were placed in separate non- interest bearing accounts.   As of December 31, 2010, $2,100 of website project services related to restricted cash in escrow had not been completed.
 
    Accounts Receivable and Allowance for Doubtful Accounts:  Accounts receivables consists of uncollateralized customer obligations generally due under normal trade terms requiring payment within 30 days from the invoice date. However, as is customary in the industry, the Company’s accounts receivable may extend up to 90 days.  Accounts receivable are stated at the amount billed to the customer net of an allowance for doubtful accounts.
 
    The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where the Company is aware of a customer’s inability to meet its financial obligations, a specific allowance for bad debts against amounts due is recorded to reduce the receivable to the amount the Company reasonably expects will be collected. In addition, the Company recognizes a general allowance for bad debts based on estimates developed by using either standard quantitative measures incorporating historical write-offs, or a subjective percentage of remaining accounts receivable.  As of December 31, 2010, the majority of the Company’s accounts receivable were generated from sales to a single retail vendor.  The Company’s review of the outstanding balance as of December 31, 2010, indicated that a valuation allowance was required.  The gross accounts receivable balance was reduced by $13,549.
 
    Deferred Recording Production Costs: The Company is engaged in the production of recording-based entertainment, which is generally exploited in the DVD or broadcast format.  Deferred costs are contractually recouped first from initial sales.  The artist is not paid until deferred costs have been recouped in full by the Company.

    Record production costs are accounted for pursuant to ASC Topic 928 “Entertainment – Music” (“ASC 928”), and are stated at the lower of cost or net realizable value based on anticipated total revenue (ultimate revenue).  Recording production costs are capitalized and then recognized ratably based on the ratio of the current period’s revenue to estimated remaining ultimate revenue. Ultimate revenues are calculated in accordance with ASC 928 and require estimates and the exercise of judgment.  Accordingly, these estimates are periodically updated to include the actual results achieved or new information as to anticipated revenue performance of each title.  As of December 31, 2010, there were no revenues generated related to the recording production costs, and no production costs amortized and recognized to expense.
 
    Impairment of Long-Lived Assets:    The Company evaluates its long-lived assets for impairment.  If impairment indicators exist, the Company performs additional analysis to quantify the amount, if any, by which capitalized costs exceed recoverable value.  The periodic evaluation of capitalized costs is based upon expected future cash flows, including estimated salvage values.  As of December 31, 2010, there was no impairment of capitalized long-term assets.
 
F-19
 
 

 
    Property and Equipment:    All items of property and equipment are carried at cost not in excess of their estimated net realizable value.  Normal maintenance and repairs are charged to operations while expenditures for major maintenance and betterments are capitalized.  Gains or losses on disposition are recognized in operations.  Equipment and software are reviewed for impairment in accordance with ASC Topic 360 (“ASC 360”), “Property, Plant, and Equipment.”  In assessing the recoverability of its long-lived assets, the Company makes certain assumptions regarding the useful life and contribution to the estimated future cash flows.  If such assumptions change in the future, the Company is required to record impairment charges for these assets not previously recorded.
 
    Depreciation:   Depreciation of property and equipment is computed using straight-line methods over the estimated useful lives of the various assets.   The cost of computer equipment is depreciated over 3 to 5 years and software is amortized over 3 years.
 
    Intangible Assets/Website Application and Infrastructure Development Costs:  The Company has a federally registered trademark on the term “Malemark” and owns multiple domain names including “LiquidSpins.com”, “Malemark.com” and “cavemangreetingcards.com”.  The Company also owns multiple social networking domains and groups on twitter.com, facebook.com, flickr.com, and myspace.com.  The domain’s value is based on the average number of users, demographics of these users, geography and number of advertisers and general sales it generates.
 
    Costs related to the domain name are capitalized and amortized over a 3-year period.  Periodic costs of maintaining the websites are expensed as operating costs as incurred.  In accordance with ASC Topic 350 (“ASC 350-50”), “Website Development Costs”, fees incurred for website hosting are expensed over the period of benefit, while costs incurred during the website application and infrastructure development stage are accounted for in accordance with ASC Topic (“ASC 350-40”) “Internal Use Software”, and capitalized.  This includes costs to purchase software tools, or costs incurred during the application development stage for internally developed tools, costs to maintain and register an internet domain.  Graphics are generally considered a component of software costs.  Modifications to graphics after the software is launched are evaluated to determine whether the modifications represent maintenance or enhancements to the website.
 
    The primary business of Liquid Spins is no longer greeting cards.  The Company decided to direct their resources towards digital media distribution and has therefore determined that the Malemark website’s value should be written off.
 
    Stock Based Compensation:   The Company follows ASC 718 “Compensation – Stock Compensation,” which requires it to provide compensation costs for its stock option plans determined in accordance with the fair value based method prescribed in ASC 718.  The fair value of each stock option is estimated at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option.  As of December 31, 2010 and December 31, 2009, there were no issued or outstanding stock options and no stock option activity for the year ended December 31, 2010 and the period June, 20, 2009 through December 31, 2009.
 
    Share-based Payment Transactions:  Share-based payments awarded to employees and consultants of the Company by a related party and other holder of an economic interest in the Company as compensation for services provided to the Company are accounted for under ASC Topic 718.  Under ASC Topic 718, the economic interest holder makes a capital contribution to the Company, and the Company makes a share-based payment to certain employee and contractors in exchange for services rendered.  Share-based payment transactions are recorded as the difference between the market value of the shares of stock, as determined by the price paid for shares of the Company stock by non-related parties on or about the date of the share-based payments, and the price originally paid for the stock by the related party and other holder of an economic interest in the company.
 

 F-20
 
 

 
 
    Per Share Amounts:    The Company computes earnings per share under ASC subtopic 260-10, “Earnings Per Share” (“ASC 260-10”). Net earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon conversion of convertible preferred shares and the exercise of the Company’s stock options.   As of  December 31, 2010 and 2009  there were no dilutive common stock equivalents.
 
    Income Taxes:    Income taxes are computed using the liability method.  Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes and the effect of net operating loss carry-forwards.  Deferred tax assets are evaluated to determine if it is more likely than not that they will be realized.  Valuation allowances have been established to reduce the carrying value of deferred tax assets in recognition of significant uncertainties regarding their ultimate realization.  Further, the evaluation has determined that there are no uncertain tax positions required to be disclosed.
  
    Sales Taxes: Sales taxes are not included in net sales as the Company is a conduit for collecting and remitting taxes to the appropriate taxing authorities.
 
    Revenue Recognition and Sales Returns: Revenue is recognized when all applicable recognition criteria have been met, which generally include (a) persuasive evidence of an existing arrangement; (b) fixed or determinable price; (c) delivery has occurred or service has been rendered; and (d) collectability of the sales price is reasonably assured.
 
    The Company sells music downloads at its website utilizing third-party vendors such as PayPal to process payments.  Sales are recognized when title and the risk of loss have been transferred to the customer.  The Company’s music download business had no sales during 2009 and 2010.
 
    Concentration of Credit Risk:  As of December 31, 2010, approximately 97% of the Company’s total sales, representing Malemark, Inc. cards, were generated from sales to a single vendor, and accounted for 100% of its accounts receivable as of December 31, 2010.
The Company has carefully considered and assessed the credit risk resulting from its concentrate sales arrangement with this vendor, has provided for a reserve for uncollectible accounts, and believes it is not exposed to significant credit risk in relation to the counterparty meeting its contractual obligations as it pertains to its trade receivables during the ordinary course of business.
 
    Operating Leases: Rent expense for operating leases is recorded on a straight-line basis over the initial lease term.  The difference between rent expense and rent paid is recorded as deferred rent.
 
    Fair Value of Financial Instruments:    ASC 825, “Disclosures About Fair Value of Financial Instruments,” requires disclosure of fair value information about financial instruments.  ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2010.
 
    The respective carrying value of certain on-balance-sheet financial instruments approximate their fair values.  These financial instruments include cash, cash equivalents, restricted cash, accounts receivable, prepaid and refundable taxes, accounts payable and accrued expenses.  Fair values were assumed to approximate carrying values for these financial instruments due to their short term nature or they are receivable or payable on demand.
 
F-21
 
 

 
    Recently Adopted Accounting Standards:  The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the FASB, the U.S. Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company.  The Company has adopted the following new accounting standards during 2009 and 2010.

    Subsequent Events: –ASU 2010-09 amends disclosure requirements within Subtopic 855-10. An entity that is a filer with the Securities and Exchange Commission is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC’s requirements. The standard sets forth: (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet in its financial statements, and (iii) the disclosures that an entity should make about events or transactions occurring after the balance sheet date in its financial statements.  All of the amendments in ASU 2010-09 that are applicable to the Company are effective upon issuance and its adoption had no impact on the Company’s financial position, results of operations or cash flows.  The Company adoption of this update during the fourth quarter of 2010 did not have a material effect on its financial statements.
 
    Fair Value Measurements: – In January 2010, Accounting Standards Updates (“ASU”) No. 2010-06 amended existing disclosure requirements about fair value measurements by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation.  The ASU was adopted during the period ended March 31, 2010, and its adoption had no impact on the Company’s financial position, results of operations or cash flows.
 
    Recently Issued Accounting Standards Updates:   
 
    The following accounting standards updates were recently issued and have been adopted by the Company.  
 
    ASU No. 2010-11 was issued in March 2010, and clarifies that the transfer of credit risk that is only in the form of subordination of one financial instrument to another is an embedded derivative feature that should not be subject to potential bifurcation and separate accounting.  This ASU will be effective for the first fiscal quarter beginning after June 15, 2010, with early adoption permitted.
 
    ASU No. 2010-13 was issued in April 2010, and will clarify the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades.  This ASU will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted.
 
    There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries.  None of the updates are expected to a have a material impact on the Company's financial position, results of operations or cash flows.  The following table summarizes the Company’s inventory as of December 31, 2010 and 2009.
 

 F-22
 
 

 
 
2.     Inventories
 
           
   
December 31,
2010
   
December 31,
2009
 
Finished products
  $ 10,724     $ -  
Less reserve
    (10,724 )     -  
    $ -     $ -  
 
    As of December 31, 2010, inventory consisted of pre-printed finished product purchased from a third-party vendor determined by management to have no future market value.  The reserve for obsolete or unsalable inventory is computed by reserving 100% of the inventory.  There was no inventory held on location with retailers as of December 31, 2010 and 2009.
 
    Unique displays for the Company’s cards which are manufactured by a third party are expensed as purchased.
 
3.     Record Master, Advance Royalty and Deferred Distribution Costs:
 
    Record Master and Advance Royalty Costs:- In accordance with the terms of a December 1, 2010 Master Recording Agreement under a twelve month "Recording Term", between the Company and a certain artist, the Company has agreed to fund a “Recording Fund” in the amount of $30,000.   The agreement ends November 30, 2011.  In accordance with this agreement, the Company shall pay for the recording costs for the Masters in an amount to be determined by the Company for each Master, in return for certain recording services and other copyright deliverables, a wave file or other current master and all multi-track master tapes for each Master.  Upon execution of specific terms by the Artist, the Company shall be reimbursed promptly for all monies advanced, and shall be paid a royalty in accordance with the terms of the agreement.
   
    As of December 31, 2010, $15,000 of the $30,000 commitment had been funded.  The costs are recognized ratably based on the ratio of the current period’s advances and royalty revenue to estimated remaining ultimate revenues.

4.     Equipment and Purchased Software
 
    Depreciation expense relating to computer equipment and software amounted to $975 for the period June 20, 2009 through December 31, 2009 and $3,772 for the year ended December 31, 2010, respectively.  Depreciation relating to computer equipment and software is included in Material, Labor and Other Production costs.
 

 F-23
 
 

 
Computer equipment and software consist of the following:

   
Year Ended
December 31,
2010
   
June 20, 2009
through
December 31,
2009
 
Computer equipment and purchased software
  $ 18,625     $ 7,023  
Less accumulated depreciation
    (2,664 )     (975 )
                 
    $ 15,961     $ 6,048  
 
    The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired.

5.    Website Application and Infrastructure Development Costs:
 
    Amortization expense relating to website application and infrastructure costs amounted to $733 for the year ended December 31, 2010 and $2,433 for the period June 20, 2009 through December 31, 2009 respectively.   Amortization expense relating to website application and infrastructure costs are included in Operations and Development expense.
 
 
           
   
Twelve Months
 Ended
   
June 20, 2009
through
 
 
 
December 31,
   
December 31,
 
   
2010
   
2009
 
             
Application and infrastructure costs
  $ 28,538     $ 15,100  
Less accumulated amortization
    (24,871 )     (2,433 )
 
  $ 3,667     $ 12,667  

6.    Long-term Leases and Prepaid Expenses
 
    The Company leases its office facilities under a non-cancelable lease agreement for a total sum of $8,000. The lease expired on May 31, 2011.  $6,667 is recorded as prepaid lease expense as of December 31, 2010.  On June 01, 2011 the Company entered into a non-cancelable prepaid lease agreement for $12,000 which expires on November 30, 2011.

7.    Deferred Income Taxes
 
    Since inception, the Company has accumulated substantial net operating loss carry forwards for tax purposes.  At December 31, 2010, the Company had deferred tax assets of approximately $618,407 attributable to tax loss carry forwards for U.S. tax purposes.  The principal difference between the net loss reported for financial reporting purposes and the taxable loss reported for tax purposes relates to stock based compensation, asset valuation and impairment, and depreciation and amortization expenditures differences for financial reporting purposes versus tax reporting purposes.
 
 
F-24
 
 

 

    Deferred income taxes are stated at tax rates expected to be in effect when taxes are actually paid or recovered. Deferred income tax assets represent amounts available to reduce income tax payments in future years.  Significant components of the Company’s deferred tax assets are as follows:

     
December 31, 2010
   
December 31, 2009
 
Deferred tax Assets
           
 
Net operating loss carry forwards
  $ 303,137     $ 32,821  
 
Stock Compensation
    299,603       -  
 
Other
    15,667       -  
Total deferred tax assets
    618,407       32,281  
Valuation allowance
    (618,407 )     (32,281 )
Total net deferred taxes
  $ -          
Net deferred tax assets
    -          
 
Current portion:
    -       -  
 
Deferred portion:
    -       -  
Total
      -          
                   
Provision for income taxes:
               
 
Federal
  $ -          
 
State
  $ -          
Total
    $ -          
 
Current portion:
    -          
 
Deferred portion:
    -          
Total
      -          
 
    As of December 31, 2010, the Company had net operating loss carry forwards of approximates $682,099. There are statutory limitations on the Company ability to realize any future benefit from the related potential tax assets, including a requirement that losses be offset against future taxable income, if any.  If not used, the carry forward will expire through 2030 and 2032.   If the Company were to experience a change in ownership under Section 382, the Company may be limited in its ability to fully utilize its net operating losses.
 
    The Company is uncertain as to whether it will ever utilize the operating loss carry forwards.  Accordingly, the deferred tax asset of approximately $618,407 and $32,281 relating to the operating loss carry forward has been fully reserved as of December 31, 2010 and 2009, respectively.    The increase in the valuation allowance related to the deferred tax asset was approximately $586,126 during the year ended December 31, 2010.
 
    The Company’s provision for income taxes differs from applying the statutory United States federal income tax rate to income before income taxes.   The difference result from the Company’s net operating loss.  Deferred tax assets at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets are expected to be settled or realized.  A reconciliation of the U.S. federal tax rate and the effective tax rate is as follows:

Income tax provision at federal statutory rate:
  35%
Effect of net operating loss
(35%)
Effective tax rate:
   - %
 
The Company is subject to examination by the IRS and various U.S. state and local jurisdictions for tax years 2009 to the present.
 

 F-25
 
 

 

8.    Shareholders' Equity
 
    On July 18, 2009, the Company commenced the sale of its common shares under exemptions offered by federal and state securities regulations of those laws in what may be referred to as a private placement.  As a result, its securities were subject to restrictions on resale.  The sales were made pursuant to a subscription agreement between the Company and each subscriber.  
 
    During 2009, the Company sold 6,500,000 shares of common stock at par value of $0.001 (total $6,500).  8,100,000 shares were exchanged for the intellectual property of Malemark, Inc. valued $8,100, from an officer of the Company.
 
    On July 22, 2009, the Company sold 100,000 shares of common stock at $.025 or $2,500.
 
    On July 23, 2009, the Board approved a private offering of the Company’s common stock at a price of $0.10 per share on a best efforts basis for a period not to exceed 90 days. 550,000 shares were sold at $0.10 per share or $55,000.
 
    On September 9, 2009, the Board approved a private offering of the Company’s common stock at a price of $.25 per share on a best efforts basis for a period not to exceed 90 days.   During 2009, the Company sold 60,000 shares at $.25 per share or $15,000.  During 2010, the Company sold 1,390,000 shares at $0.25 per share or $347,500.
 
    During 2010, pursuant to a contract, the Company agreed to issue common stock to a consultant performing management consulting and investor relations work on its behalf.  The 60,000 shares issued in 2010 in exchange for the services were valued at $0.25 per share, or $15,000.  
 
    During 2010, pursuant to a contract effective September 15, 2010, the Board of Directors approved the issuance of 125,000 shares of common stock per month, (aggregating 437,500 shares valued at $0.40 per share, or $175,000 for the three and one-half month period ending December 31, 2010), as payment for financial management consulting.
 
    On August 16, 2010 the Board of Directors approved a private offering of 5,000,000 of the Company’s common stock at $.40 per share on a best efforts basis until November 30, 2010.  During 2010, 1,106,250 shares of common stock were issued for an aggregate of $442,500.
 
    In November, 2010, the Board of Directors considered the Company’s need for additional working capital and agreed to extend the Company’s non-public offerings until March 15, 2011 unless sooner terminated by the Company.

9.    Stock Options
 
    The Company’s Equity Incentive Plan (“Plan”) was adopted effective August 1, 2009 and amended with the approval of the shareholders on April 21, 2011. The Plan terminates in accordance with its terms on April 5, 2021.  Under the Plan, a total of 5,000,000 shares of our common stock are reserved for issuance thereunder.
 
    Under the Plan, non-qualified stock options and/or grants of our common stock may be granted to key persons assisting in our development, including officers, directors, employees and consultants.  Incentive stock options may be granted to our employees.  The Plan gives our board of directors broad authority to grant options and make stock grants to key persons selected by the board, while considering criteria such as employment position or other relationship with the company, duties and responsibilities, ability, productivity, length of service or association, morale, interest in the company, recommendations by supervisors, and other matters, to set the option price, term of option, and other broad parameters.  Options may not be granted at a price less than the fair market value of our common stock at the date of grant and may not have a term in excess of 10 years.
 
F-26
 
 

 
    Options granted under the Plan do not generally give rise to taxable income to the recipient or any tax consequence to us, since the Plan requires that the options be issued at a price not less than the fair market value of the common stock on the date of grant. However, when a non-qualified option is exercised, the holder is subject to tax on the difference between the exercise price of the option and the fair market value of the stock on the date of exercise. We receive a corresponding deduction for income tax purposes. If the option is an incentive option, the holder is not subject to tax upon exercise of the option and we do not receive a corresponding deduction for tax purposes.  Incentive options are subject to additional holding period requirements.  Recipients of stock grants are subject to tax on the fair market value of the stock on the date of grant and we receive a corresponding deduction
 
    As of December 31, 2010, and 2009, there have been no options or shares awarded under the Plan.

10.    Commitments and Contingencies
 
    Consulting Agreement – MCM: -  Effective December 1, 2010, the Company entered into a consulting agreement (“Agreement”) with MCM Capital Management, Inc. (“MCM”) in the amount of $2,000 per month beginning on December 1, 2010 and effective for a period of one year.

Future minimum payments relating to the management services agreement are as follows at December 31, 2010:

2011
$22,000

    Management Services Agreement – AMHC: - Effective September 15, 2010, the Company entered into a management services agreement (“Agreement”) with Accredited Members Holding Corporation (“AMHC”) in the amount of $25,000 per month payable in common stock valued at $.40 per share, plus fees incurred for the first three months.  Per the agreement, effective the first day of the fourth month (January, 2011), the Company agrees to pay $25,000 per month in cash plus $25,000 per month in common stock valued at $.40 per share, plus fees incurred.   The Agreement ended on March 15, 2011.

Future minimum payments relating to the management services agreement are as follows at December 31, 2010:

2011
$62,500

Future common stock issued in lieu of services rendered is as follows at December 31, 2010:

 
Par Value
Additional Paid-In Capital
137,500 shares at $.40
$137.50
$62,362.50

    Employment Agreement: - The Company entered into an employment agreement with a key employee for a three-year term commencing October 01, 2009 for $6,500 per month until July 1, 2010, and increasing to $8,167 per month thereafter and terminating September 30, 2012, to be renewed by the Company and the individuals upon mutual agreement
 
 

 F-27
 
 

 
Future payments relating to the employment agreement are as follows at December 31, 2010:

2011
$88,000
2012
$73,500

Future payments relating to the Production Services Agreement are as follows at December 31, 2010:

2011
$15,000
 
    Consulting Agreement – Griffith:  Effective November 1, 2010, the Company entered into a consulting agreement with Jesse Griffith in the amount of $4,000 per month increasing to $5,000 per month on March 1, 2011.  The agreement continues on a month-to-month basis.

Future payments relating to the consulting agreement are as follows as of December 31, 2010:

2011
$8,000

Refer to subsequent events for an additional related agreement entered into March 1, 2011.
 
    Legal Proceedings: - Neither the Company nor any of its officers or directors in their capacity as such is a party to any pending legal proceeding and no such proceeding is contemplated to the best of their knowledge and belief.

11.    Related Party Transactions
 
    Initial Capitalization:   On July 20, 2009, the Company issued 9,000,000 shares of our common stock to Herman DeBoard III for a price of $9,000, including cash and intellectual property, and 2,500,000 shares of common stock each to Raymond McElhaney and Bill Conrad for $2,500 cash each, or $0.001 per share.  Messrs. DeBoard, McElhaney and Conrad were the only members of our board of directors approving that transaction on the Company’s behalf.  Included in Malemark, Inc. Website and Infrastructure costs is $8,100 of the $9,000 intellectual property.

    Consulting Agreement with MCM Capital: Upon formation, the Company entered into an agreement with MCM Capital Management, Inc. (“MCM”) to provide consulting services to the company as needed. Fees for MCM Capital’s consulting services were calculated on an hourly basis.  On December 1, 2010 the Company entered into a formal agreement with MCM Capital in the amount of $2,000 per month for a period of one year.  The agreement is renewable upon mutual agreement of the parties.  Bill Conrad and Ray McElhaney, the shareholders, officers and directors of MCM Capital, are also members of the Company’s board of directors and shareholders of the Company.   MCM consulting fees included in General and Administrative expense amounted to $7,500 for the period June 20, 2009 through December 31, 2009, and $26,500 for the year ended December 31, 2010, including $2,000 incurred under the December 1, 2010 formal contract.
 
    Equipment Purchase: - On May 11, 2011, we purchased recording studio equipment from a shareholder of the Company in exchange for 200,000 shares of our common stock priced at $0.40 per share.
 
    Note Receivable: - On March 1, 2011, the Company loaned the Medina Group, dba The Music Group, the principal amount of $13,792.50.  The note was due and paid in full on April 30, 2011.  Christy DiNapoli, Chief Manager of the Medina Group and note holder, along with other members of the Medina Group became employees of Liquid Spins, Inc. as of March 1, 2011.  Christy DiNapoli was elected as a corporate director at the 2011 Annual Shareholder's meeting held on April 21, 2011.
 
F-28
 
 

 
    Related-party Accounts Payable: - Related party payables as of December 31 2009 and 2010 are as follows:
 
   
Twelve Months Ended
   
June 20, 2009
 through
 
   
December 31,
   
December 31,
 
                                                                                                                                                   
 
2010
   
2009
 
             
Directors and Shareholders
  $ 8,401     $ 49  
Employee Officer and Shareholder
    282       -  
Employee and Shareholder
    49       -  
Vendor under common ownership
               
with certain directors and shareholders
               
of the Company
  $ 2,000       -  
Total
  $ 10,732     $ 49  

12.    Subsequent Events
 
    Consulting Services Agreement:  On January 15, 2011, the Company entered into a consulting services agreement with Timothy Ray Rushlow for certain corporate development services.  Under the terms of the agreement, the Company shall pay to consultant a total of $2,500 per month, and reimbursement of preapproved expenses consultant incurs in conjunction with performing the services outlined in the agreement.  The agreement is effective until February 28, 2011.
 
    Related-party Consulting Agreement:  On January 15, 2011, the Company entered into a consulting agreement with Christy DiNapoli for $3,125 per month and reimbursement of certain pre-approved expenses incurred in conjunction with performing the consulting services.  Christy DiNapoli was elected as a corporate director at the 2011 Annual Shareholder's meeting held on April 21, 2011.
 
    Related-party Promissory Note:  On March 1, 2011, the Company loaned the Medina Group, dba. The Music Group the principal amount of $13,792.50.  The note is due and payable in full by April 30, 2011.  Christy DiNapoli, Chief Manager of the Medina Group and note holder, along with other members of the Medina Group became employees of Liquid Spins, Inc. as of March 1, 2011.  Christy DiNapoli was elected as a corporate director at the 2011 Annual Shareholder's meeting held on April 21, 2011.
 
    Record Master and Advance Royalty Costs: - On March 1, 2011, the Company entered into an Exclusive Songwriting Agreement with a composer and the composer’s co publisher.  Under the terms of the agreement, in exchange for certain exclusive composer services and assignment of composer's entire interest in all related works and materials, along with other conditions imposed on the Composer and co publisher, the Company agrees to pay certain nonreturnable advances regard to each Composition, including, but not limited to $24,000 during the initial period of the term payable in equal monthly installments of $2,000 per month, and 50% of all sums expended by Publisher in connection with independent promotion.   The advances are recoupable from any and all royalties otherwise payable to Composer pursuant to the terms of the agreement, including, but not limited to, fifty percent (50%) of any and all gross receipts derived from uses of the Composition, with certain restrictions.  The term of the agreement consists of an initial period of one year ending February 29, 2012 with the mutual option to extend the term for two consecutive option periods of one year each. As of March 31, 2011, $3,100 had been paid to the Composer.
 
    Related-party Lease Agreement:  On March 01, 2011 the Company entered into a lease agreement for office space in Nashville, TN with DiAffari Properties.  The lease is on a month to month basis at a cost of $1,250 per month.  Christy DiNapoli, a director of the Company is a partial owner of DiAffari Properties.
 
F-29
 
 

 
    Deferred Distribution Costs: - Effective March 25, 2011, the Company entered into a certain “Digital Distribution Agreement” (“Agreement”) with EMI Music Marketing, a division of Capital Records LLC (“EMI”) the terms of which are contractually confidential.
 
    Private Placement Memorandum: - In April 2011 the Company completed a private placement offering, which commenced in September 2010, consisting of 4,668,750 shares at a price of $0.40 per share for gross proceeds of $1,867,500.
 
    Change of Corporate Name: - On April 21, 2011, the Board of Directors, as per the Proxy Statement, ratified and approved an amendment to the Company’s Articles of Incorporation to change the Company’s name from Malemark, Inc. to Liquid Spins, Inc.
 
    Company’s Equity Incentive Plan: - On April 21, 2011, the shareholders of the Company ratified and approved an amendment to the Company’s Non-qualified Stock Option and Stock Grant Plan to (i) permit the issuance of incentive options and restricted stock, (ii) increase the number of shares of common stock reserved for issuance under the plan from 2,500,000 to 5,000,000, and (iii) change the name of the plan to Equity Incentive Plan.
 
    Purchase and Sale Agreement: - On April 30, 2011 the Company entered into a purchase agreement to purchase certain equipment for $80,000 payable in the form of 200,000 shares of Liquid Spins Inc's, restricted common stock, valued at $.40 per share, representing $80,000.  The 200,000 shares were issued May 2, 2011.  The equipment was purchased from a shareholder of the company.
 
    Private Placement Memorandum: - On May 10, 2011 the Board of Liquid Spins approved a Private Placement Memorandum, dated May 16, 2011, regarding the offering of up to 1,000,000 shares of common stock. $0.001 par value, at a purchase price of $.40 per share.  The Liquid Spins common stock is being offered by its officers and directors on a “best efforts” basis until May 31, 2011.  This period may be extended up to an additional 90 days.  There is no minimum amount of common stock that must be sold in this offering and no escrow of the proceeds of the sale of the shares.  The minimum investment by an investor is 100,000 shares of common stock or $40,000, unless the officers and directors agree otherwise.  This private placement was closed on July 08, 2011.  The Company sold 650,000 shares at $.40 per share or $260,000.

    Deferred Distribution Costs: - Effective May 15, 2011, the Company entered into a certain “MP3 Download Aggregator Agreement” (“Agreement”) with Warner Music Inc. the terms of which are contractually confidential.
 
    Distribution Agreement: - Effective May 26, 2011, the Company entered into a distribution agreement (“Agreement”) with Interactive Communications International, Inc. (“InComm”).  Headquartered in Atlanta, GA, InComm is the industry leading marketer, distributor and technology innovator of stored-value gift and prepaid products. The initial term of this agreement ends on January 1, 2013 and shall be automatically extended after this initial term for successive consecutive terms of one (1) year unless either party gives notice of termination.
 
    Office Lease/Commitment: -  On June 01, 2011, the Company entered into a non-cancelable prepaid lease agreement for its Colorado Springs location.  The lease cost was $12,000 and expires on November 30, 2011.
 
    Distribution Agreement: - Effective June 30, 2011, the Company entered into a certain “Digital Download Sales Agreement” with RED Distribution, LLC, the terms of which are contractually confidential.


F-30
 
 

 
 
You should rely only on the information contained in this document or that we have referred you to. We have not authorized anyone to provide you with information that is different. This prospectus is not an offer to sell common stock and is not soliciting an offer to buy common stock in any state where the offer or sale is not permitted.
 
 
 
 
14,241,875 Shares
 
 
LIQUID SPINS, INC.
 
Until  ●, 2011, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
   
   
 
Common Stock
     
 TABLE OF CONTENTS
   
     
Prospectus Summary
1
 
Risk Factors
5
 ___________________
Business
11
 
Use of Proceeds 17  
Market for Common Stock and Related Stockholder Information
17
 
Determination of Offering Price 21  
Management’s Discussion and Analysis of Financial Condition and Results of Operation
22
PROSPECTUS
Management
28
____________________
Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
33
 
Selling Shareholders
33
 
Plan of Distribution
37
 
Description of Capital Stock
38
____________, 2011
Shares Eligible for Future Sale
40
 
Where You Can Find More Information
40
 
Legal Matters
41
 
Experts
41
 
Financial Statements
   
About This Prospectus
Back Cover
 
 




 
 

 
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

We will pay all expenses in connection with the issuance and distribution of the securities being registered except selling discounts and commissions of the selling shareholders. The following table sets forth expenses and costs related to this offering (other than underwriting discounts and commissions) expected to be incurred with the issuance and distribution of the securities described in this registration statement.
 
SEC registration fee
    $
826.74
Legal fees
     
50,000.00
Accounting fees
     
_,___.__
Blue Sky filing fees and expenses
     
_,___.__
Printing and engraving expenses
     
_,___.__
Miscellaneous 
     
_,___.__
Total
    $
__,___.__


Item 14. Indemnification of Directors and Officers

Included in the prospectus.


Item 15.  Recent Sales of Unregistered Securities.

Since our inception in 2009, we have issued an aggregate of 22,903,750 shares of our common stock without registering those securities under the Securities Act.  The following information describes the transactions in which those securities were issued:

In June 2009, in connection with our initial organization, we issued a total of 14,600,000 shares of our common stock to six individuals at a price per share of $0.001 per share, for a total of $6,500 in cash and personal property valued at $8,100.  The common stock was issued pursuant to the exemption from registration contained in Section 4(2) of the Securities Act.

In July and August 2009, we issued an additional 650,000 shares of common stock to six individuals or entities, also in reliance on Section 4(2) of the Securities Act.  Of the total number of shares sold in that transaction, 100,000 were sold at a price of $0.025 per share and the remainder were sold for a price of $0.10 per share.

Between November 2009 and June 2010, we sold an additional 1,450,000 shares of common stock to a group consisting of 33 individuals or entities for a price of $0.25 per share, or total proceeds of $362,500.  In connection with these sales, we relied on the exemption provided by Rule 504 of the Securities Act.

In January 2010, we issued 60,000 shares of our common stock valued at $0.25 per share to Accredited Members Holding Corporation (“AMHC”).   These shares were issued for services provided by that entity.

In September 2010, we entered into a Management Services Agreement with AMHC pursuant to which we agreed to issue that entity 125,000 shares of common stock per month for the first three months of the term and issue 62,500 shares and pay a stipulated sum of cash for the remainder of the term in exchange for management services to be provided to us, including accounting and financial services.  The 625,000 shares issued in connection with this agreement were valued at $0.40 per share, or aggregate consideration of $250,000.  We relied on the exemption provided by Section 4(2) of the Securities Act in connection with the issuance of these shares.
 

II-1
 
 

 
Between September 2010 and April 2011, we issued an additional 4,668,750 shares of common stock at a price of $0.40 per share for aggregate proceeds of $1,867,750.  The shares were sold to a group of individuals and entities, each of which we reasonably believed was an “accredited investor” within the meaning of Rule 501 of the Securities Act.  In connection with the issuance of shares in these transactions, we relied on Rule 506 of the Securities Act.

Finally, between May and July 2011, we issued an additional 650,000 shares of common stock at a price of $0.40 per share, for aggregate proceeds of $260,000.  We reasonably believed that each of the investors in this transaction was an accredited investor within the meaning of Rule 501.  We relied on the exemption provided by Rule 506 in connection with the issuance of these shares.

In each transaction in which we relied on Section 4(2) of the Securities Act, we offered the securities to a limited number of persons with whom we had pre-existing relationships.  In each case, we endeavored to ensure that each of the offerees had access to the information that would have been included in a registration statement filed pursuant to the Securities Act.  In addition, certificates representing all of the shares issued in these transactions contained the restrictive legend required by Rule 144 of the Securities Act, and we placed stop transfer restrictions with our transfer agent.

In each transaction in which we relied on Rule 504 or 506, we did not engage in any general solicitation or advertising.  We exercised reasonable care to ensure that the purchasers of securities were not underwriters within the meaning of the Securities Act, including making reasonable inquiry prior to accepting any subscription, making written disclosure regarding the restricted nature of the securities and placing a legend on the certificates representing the shares.  In each case, the offerees were provided with a subscription agreement detailing the restrictions on transfer of the shares and eliciting their investment intent.  Further, stop transfer restrictions were placed with our transfer agent and a restrictive legend was placed on the certificate in connection with these offerings.


Item 16.  Exhibits and Financial Statement Schedules.

The following exhibits are filed with this registration statement:

3.1
Amended and Restated Articles of Incorporation of the Company as filed with the Colorado Secretary of State on April 26, 2011.

3.2
Bylaws of the Company dated June 20, 2009.

*4
Specimen stock certificate.

*5
Opinion on Legality.

10.1
Equity Incentive Plan dated April 21, 2011.

10.2
Lease Agreement between the Company and Pointe West, Inc. dated December 1, 2010.

10.3
Lease Agreement between the Company and DiAffari dated March 1, 2011.
 

II-2
 
 

 
10.4
Consulting Agreement dated December 1, 2010 between the Company and MCM Capital Management, Inc.

10.5
Employment Agreement dated October 1, 2009 between the Company and Herman DeBoard.

10.6
Form of Subscription Agreement between the Company and investors in the 2009 private placement.

10.7
Form of Subscription Agreement between the Company and investors in the 2010 private placement.

10.8
Form of Subscription Agreement between the Company and investors in the 2011 private placement.

10.9
Consulting Services Agreement dated November 1, 2010 between the Company and Jesse Griffith.

10.10
Agreement dated May 26, 2011 between the Company and Interactive Communications International, Inc.

23.1
Consent of StarkSchenkein, LLP.

*23.2
Consent of Dufford & Brown, P.C. (included in Exhibit 5).

24
Power of Attorney (included on signature page).
 
_______________
* To be filed by amendment.

Item 17.    UNDERTAKINGS.

The undersigned registrant hereby undertakes that it will:

1.
File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:
 
 
i.
Include any prospectus required by section 10(a)(3) of the Securities Act;
 
 
ii.
Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

 
iii.
Include any additional or changed material information on the plan of distribution.

2.
For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

3.
File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

4.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question, whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
 

II-3
 
 

 
5.
For determining liability of the undersigned registrant under the Securities Act to any purchaser:

 
 i.
That each prospectus filed by the undersigned pursuant to Rule 424(b)(3) shall be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

 
ii.
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

 
iii.
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 
 

II-5
 
 

 
 
 
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and authorize this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Colorado Springs, Colorado, on this ______ day of _______________, 2011.
 
  LIQUID SPINS, INC.
(Registrant)
 
     
 
/s/ Herman C. DeBoard III  
  By:  Herman C. DeBoard III  
 
Chairman of the Board and Chief Executive Officer
 
     


 

POWER OF ATTORNEY

We, the undersigned officers and directors of Liquid Spins, Inc., do hereby constitute and appoint Herman DeBoard to be our true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for each of us and in our name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith and about the premises, as fully to all intents and purposes as each of us might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

In accordance with the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons in the capacity and on the dates stated.

         
/s/ Herman C. DeBoard III 
 
Chairman of the Board and  
 
 August 5, 2011
Herman C. DeBoard III 
  Chief Executive Officer    
         
/s/ James Poage
 
Principal Financial and
 
 August 5, 2011
James Poage
  Accounting Officer    
         
/s/ Raymond McElhaney
 
Director 
 
  August 5, 2011
Raymond McElhaney
       
         
/s/ Bill Conrad
 
Director 
 
 August 5, 2011
Bill Conrad
       
         
/s/ Christy DiNapoli
 
Director 
 
 August 5, 2011
Christy DiNapoli
       

II-6
 
 

 
EXHIBIT INDEX

The following Exhibits are filed as part of this post-effective amendment to the registration statement on Form S-1.

3.1
Amended and Restated Articles of Incorporation of the Company as filed with the Colorado Secretary of State on April 26, 2011.

3.2
Bylaws of the Company dated June 20, 2009.

*4
Specimen stock certificate.

*5
Opinion on Legality.

10.1
Equity Incentive Plan dated April 21, 2011.

10.2
Lease Agreement between the Company and Pointe West, Inc. dated December 1, 2010.

10.3
Lease Agreement between the Company and DiAffari dated March 1, 2011.

10.4
Consulting Agreement dated December 1, 2010 between the Company and MCM Capital Management, Inc.

10.5
Employment Agreement dated October 1, 2009 between the Company and Herman DeBoard.

10.6
Form of Subscription Agreement between the Company and investors in the 2009 private placement.

10.7
Form of Subscription Agreement between the Company and investors in the 2010 private placement.

10.8
Form of Subscription Agreement between the Company and investors in the 2011 private placement.

10.9
Consulting Services Agreement dated November 1, 2010 between the Company and Jesse Griffith.

10.10
Agreement dated May 26, 2011 between the Company and Interactive Communications International, Inc.

23.1
Consent of StarkSchenkein, LLP.

*23.2
Consent of Dufford & Brown, P.C. (included in Exhibit 5).

24
Power of Attorney (included on signature page).
 
______________
 
* To be filed by amendment.

II-7
 
 

 
EX-3.1 2 ex3x1.htm AMENDED AND RESTATED ARTICLES OF INCORPORATION AS FILED WITH THE COLORADO SECRETARY OF STATE ON APRIL 26, 2011 ex3x1.htm
Exhibit 3.1
 
 
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
LIQUID SPINS, INC.


Pursuant to § 7-110-103, § 7-110-107  and Part 3 of Article 90 of Title 7, Colorado Revised Statutes (C.R.S.), the undersigned corporation hereby adopts the following Amended and Restated Articles of Incorporation and certifies that (1) these Amended and Restated Articles of Incorporation correctly set forth provisions of the Articles of Incorporation as amended and supercede the original Articles of Incorporation and all amendments heretofore, and (2) the Amended and Restated Articles of Incorporation as set forth herein were duly adopted by the board of directors by unanimous written consent on April 5, 2011 and by the shareholders of said corporation at a general meeting of the shareholders duly convened on the 21st day of April, 2011:
 
ARTICLE I

NAME

The Name of the Corporation is Liquid Spins, Inc. (hereinafter referred to as the “Corporation”).

ARTICLE II

DURATION

The Corporation shall have perpetual existence from and after the filing of these Articles of Incorporation with the Secretary of State and unless the Corporation is dissolved in accordance with applicable law.

ARTICLE III

PRINCIPAL OFFICE

The principal office of the Corporation shall be located at 5525 Erindale Dr., Suite 200, Colorado Springs, CO  80918, and thereafter at such location as the board of directors may determine.

ARTICLE IV

PURPOSES

The nature of the business of the Corporation and the objects, purposes and business thereof proposed to be transacted, promoted or carried on are to engage in any lawful act or activity for which corporations may be organized under the Colorado Business Corporation Act (“Act”).
 

1
 
 

 
ARTICLE V

CAPITAL

           A.           Classes of Stock.  The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.”  The total number of shares of all classes which the Corporation shall have authority to issue is 55,000,000 shares.  Of that amount, 50,000,000 shares shall be Common Stock, $0.001 par value, and 5,000,000 shares shall be Preferred Stock, $0.01 par value.  The consideration for the issuance of the shares shall be paid to or received by the Corporation in full before their issuance.
 
            B.           Common Stock.
 
    (1)           Dividends.  Dividends in cash, property, or shares of the Corporation may be paid upon the Common Stock, as and when declared by the board of directors, out of funds of the Corporation to the extent and in the manner permitted by law.
 
    (2)           Distribution in Liquidation.  Upon any liquidation, dissolution or winding up of the Corporation, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Corporation shall be distributed, either in cash or in kind, pro rata to the holders of Common Stock, subject to the rights, if any, of the holders of any preferred stock issued by the Corporation. The board of directors may, from time to time, distribute to the shareholders in partial liquidation, out of stated capital or capital surplus of the Corporation, a portion of its assets, in cash or property, in the manner permitted and upon compliance with limitations imposed by law.
 
    (3)           Voting Rights; Cumulative Voting.  Each outstanding share of Common Stock shall be entitled to one vote and each fractional share of Common Stock shall be entitled to a corresponding fractional vote on each matter submitted to a vote of shareholders. Cumulative voting shall not be allowed in the election of directors of the Corporation.
 
    C.           Preferred Stock.
 
    Shares of Preferred Stock may be divided into such series as may be established, from time to time, by the board of directors.  The board of directors, from time to time, may fix and determine the designation and number of shares of any series and the relative rights and preferences of the shares of any series so established as to distinguish the shares thereof from the shares of all other series.  The board of directors is also authorized, within limits and restrictions stated in any resolution or resolutions of the board of directors originally fixing the number of shares constituting any such series, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such other series and the designations, relative powers, preferences and rights, and the qualifications, limitations or restrictions of such other series, including preferences with respect to any other series of Preferred Stock, in each case, so far as not inconsistent with the provisions of these Articles of Incorporation or the Act as then in effect.
 
    D.           Denial of Preemptive Rights. No holder of any shares of the Corporation, whether now or hereafter authorized, shall have any preemptive or preferential right to acquire any shares or securities of the corporation, including shares or securities held in the treasury of the Corporation.

ARTICLE VI

BOARD OF DIRECTORS
 
    The business and affairs of the Corporation shall be managed by a board of directors.  The number of directors constituting the board of directors shall be fixed in the manner provided in the Bylaws of the Corporation, and shall serve as directors of the Corporation until his or her successor shall have been elected and qualified, or until they resign or are removed.  The initial number of directors shall be three (3).
 

2
 
 

 
ARTICLE VII

RIGHT OF DIRECTORS TO CONTRACT WITH CORPORATION

No contract or transaction shall be void or voidable or be enjoined, set aside, or give rise to an award of damages or other remedy in a proceeding by a shareholder or by or in the right of the corporation, solely because the contract or transaction involves a director of the corporation or an entity in which a director of the corporation is a director or officer or has a financial interest or solely because the director is present at or participates in the meeting of the corporation’s board of directors or of a committee of the board of directors which authorizes, approves, or ratifies the contract or transaction or solely because the director’s vote is counted for such purpose if:

A.           The material facts as to the director’s relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board of directors or committee in good faith authorizes, approves, or ratifies the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or

B.           The material facts as to the director’s relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically authorized, approved, or ratified in good faith by a vote of the shareholders; or

C.           The contract or transaction is fair as to the corporation.

Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes, approves, or ratifies such contract or transaction.

ARTICLE VIII

INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

The board of directors of the Corporation shall have the power to:

A.           Indemnify any director, officer, employee or agent of the Corporation to the fullest extent permitted by the Act as presently existing or as hereafter amended.

B.           Authorize payment of expenses (including attorney’s fees) incurred in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it is ultimately determined that he is entitled to be indemnified by the Corporation as authorized in this Article VIII.

C.           Purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation or who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VIII.

The indemnification provided by this Article VIII shall not be deemed exclusive of any other rights to which those indemnified may be entitled under these Articles of Incorporation, Bylaws, agreement, vote of shareholders or disinterested directors or otherwise, and any procedure provided for by any of the foregoing, both as to action in his official capacity and as to action in another capacity while holding such office, shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
 
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ARTICLE IX

CORPORATE OPPORTUNITY

The officers, directors and other members of management of this Corporation shall be subject to the doctrine of “corporate opportunities” only insofar as it applies to business opportunities in which this Corporation has expressed an interest as determined from time to time by this Corporation’s board of directors as evidenced by resolutions appearing in the Corporation’s minutes.  Once such areas of interest are delineated, all such business opportunities within such areas of interest which come to the attention of the officers, directors, and other members of management of this Corporation shall be disclosed promptly to this Corporation and made available to it.  The board of directors may reject any business opportunity presented to it and thereafter any officers, directors or other member of management may avail himself of such opportunity.  Until such time as this Corporation, through its board of directors, has designated an area of interest, the officers, directors and other members of management of this Corporation shall be free to engage in such areas of interest on their own and this doctrine shall not limit the right of any officer, director or other member of management of this Corporation to continue a business existing prior to the time that such area of interest is designated by the Corporation.  This provision shall be construed to release any employee of this Corporation (other than an officer, director or member of management) from any duties which he may have to this Corporation.

ARTICLE X

VOTING BY SHAREHOLDERS

Any action required or permitted by Articles 101 to 117 of the Act to be taken at a shareholders’ meeting may be taken without a meeting if shareholders holding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting as set forth in the Bylaws of the Corporation, at which all of the shares entitled to vote thereon were present and voted, consent to such action in writing.

ARTICLE XI

LIMITATIONS ON DIRECTOR LIABILITY

To the fullest extent permitted by the Act, as the same exists or may hereafter be amended, a director of this Corporation shall not be liable to the Corporation or its shareholders for monetary damages for breach of fiduciary duty as a director.
 

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ARTICLE XII

REGISTERED OFFICE AND REGISTERED AGENT

The registered agent of the Corporation is Herman C. DeBoard III; the registered office of the Corporation shall be located at 5525 Erindale Dr., Suite 200, Colorado Springs, CO 80918.
 
 
 
 
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Executed this 22nd day of April, 2011:
 
  /s/ Paul Myers  
  Paul Myers, Secretary  
 

 
 
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EX-3.2 3 ex3x2.htm BYLAWS ex3x2.htm
Exhibit 3.2
 
BYLAWS
 
OF
 
MALEMARK, INC.
 
ARTICLE I
Office
 
 
    The principal office of the Corporation in the State of Colorado shall be located at 5525 Erindale Drive, Suite 201, Colorado Springs, CO 80918, and thereafter at such location as the Board of Directors may determine.
 
    The Corporation may have such other offices, either within or without the State of Colorado, as the Board of Directors may determine or as the affairs of the Corporation may require from time to time.
 
    The Corporation shall have and continuously maintain in the State of Colorado a registered office and a registered agent whose office is identical with such registered office as required by the Colorado Business Corporation Act.
 
ARTICLE II
Shareholders' Meetings
 
 
    Section 1.     Annual Meetings.
 
    A.  Time and Place. The Annual Meeting of the Shareholders of the Corporation, commencing with the year of incorporation, shall be as determined by the Board of Directors on a date not less frequent than once every 365 days. If said day is a legal holiday, the meeting shall be held on the next succeeding day not a legal holiday.
 
    B.  Purpose of Annual Meeting. The business to be transacted at such Annual Meeting shall be the election of Directors and such other business as shall be properly brought before the meeting.
 
    C.  Alternate Election Date. If the election of Directors shall not be held on the day designated for the Annual Meeting, or at the designated date upon adjournment of such meeting, the Board of Directors shall call a Special Meeting of the Shareholders as soon as conveniently possible thereafter. At such meeting, the election of Directors shall take place, and such election and any other business transacted there at shall have the same force and effect as at an Annual Meeting duly called and held.
 
 
 
 
 

 
D.      Notice. Written notice at the address last shown on the books of the Corporation stating the place, day and hour of the meeting, and in the case of a Special Meeting the purpose for which the meeting is called, shall be delivered not less than 10 days nor more than 60 days before the date of the meeting, either personally or by mail at the direction of the President, Secretary or other officer or person calling the meeting; except that if the authorized shares of the Corporation are to be increased, at least 30 days notice shall be given.
 
    Section 2.  Special Meetings. Special Meetings of the Shareholders may be called by the Chief Executive Officer or President, Board of Directors or by the holders of at least 10% the stock entitled to vote at such meeting.
 
    Section 3.    Waiver of Notice, A Shareholder may waive the notice of meeting by attendance, either in person or by proxy, at the meeting, or by so stating in writing either before or after such meeting. Attendance at a meeting for the express purpose of objecting that the meeting was not lawfully called or convened shall not, however, constitute a waiver of notice. Except where otherwise required by law, notice need not be given of any adjourned meeting of the Shareholders.
 
    Section 4.    Quorum. The holders of record of at thirty-three and one-third (33 1/3%) of the shares of the stock of the Corporation, issued and outstanding and entitled to vote, present in person or by proxy, shall, except as otherwise provided by law or by these Bylaws, constitute a quorum at all meetings of the Shareholders; if there be no such quorum, the holders of a majority of such shares so present or represented may adjourn the meeting from time to time until a quorum shall have been obtained and, except as otherwise provided by law, no notice of any such adjourned meeting need be given if the time and place to which the meeting is adjourned are announced at the meeting so adjourned.
 
    Section 5.     Closing of Transfer Books; Record Date. In order to determine the Shareholders of record of the Corporation's stock who are entitled to notice of meetings, to vote at a meeting or adjournment thereof, and to receive payment of any dividend, or to make a determination of the Shareholders of record for any other proper purpose, the Board of Directors of the Corporation may order that the Stock Transfer Books be closed for a period not to exceed 50 days. If the purpose of such closing is to determine who is entitled to notice of a meeting and to vote at such meeting, the Stock Transfer Books shall be closed for at least 10 days preceding such meeting.
 
    A.      Record Date. In lieu of closing the Stock Transfer Books, the Board of Directors may fix a date as the record date for such determination of Shareholders, such date in any case to be not more than 70 days prior to the date of action which requires such determination, nor in the case of a Shareholders' meeting, not less than 10 days in advance of such meeting.
 
 
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    B.  Alternate Record Date. If the Stock Transfer Books are not closed and no record date is fixed for such determination of the Shareholders of record, the date on which notice of the meeting is mailed or on which the resolution of the Board of Directors declaring a dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders.
 
    C.  Adjournment. When a determination of Shareholders entitled to vote at any meeting has been made, as provided in this Section, such determination shall apply to any adjournment of such meeting.
 
    Section 6.     Presiding Officer. Meetings of the Shareholders shall be presided over by the Chief Executive Officer or President.
 
    Section 7.     Proxies. At all meetings of Shareholders, a Shareholder may vote by proxy executed in writing by the Shareholder or the Shareholder's duly authorized attorney-in- fact. Such proxies shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after 11 months from the date of its execution, unless otherwise provided in the proxy.
 
    Section 8.      Voting of Shares by Shareholders.
 
    A.  Neither treasury shares, nor shares of its own stock held by the Corporation in a fiduciary capacity, nor shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by this Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time.
 
    B.  At each meeting of the Shareholders, except as otherwise provided by law or by the Articles of Incorporation, every holder of record of stock entitled to vote shall be entitled to one vote for each share of stock standing in his name on the books of the Corporation. Elections of directors shall be determined by a plurality of the votes cast, and except as otherwise provided by law, the Articles of Incorporation, or these Bylaws, all other actions shall be determined by a majority of the votes cast at such meeting. Each proxy to vote shall be in writing and signed by the Shareholder or by his duly authorized attorney and shall not be voted or acted upon after eleven (11) months from the date of its execution, unless such proxy expressly provides for a longer period.
 
    C.  At all elections of directors, the voting shall be by ballot or in such other manner as may be determined by the Shareholders present in person or by proxy entitled to vote at such election. With respect to any other matter presented to the Shareholders for their consideration at a meeting, any Shareholder entitled to vote may, on any question, demand a vote by ballot. The cumulative system of voting for the election of directors or for any other purpose shall not be allowed.
 
 
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    D.  A complete list of the Shareholders entitled to vote at each such meeting, arranged in alphabetical order, with the address of each, and the number of shares registered in the name of each Shareholder, shall be prepared by the Secretary and shall be open to the examination of any Shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any Shareholder who is present.
 
    E.  The Board of Directors in advance of any meeting of Shareholders may appoint one or more inspectors of election to act at that meeting or any adjournment thereof. If inspectors of election are not so appointed, the Chairman of the meeting may, and on the request of any Shareholder entitled to vote shall, appoint one or more inspectors of election. Each inspector of election, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector of election at such meeting with strict impartiality and according to the best of his ability. If appointed, inspectors of election shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law.
 
    Section 9.      Informal Action by Shareholders. Any action required to be taken at a meeting of the Shareholders or any other action which may be taken at a meeting of the Shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the Shareholders and may be stated as such in any documents filed with the Secretary of State of Colorado under the Colorado Business Corporation Act.
 
    Section 10.      Presumption of Assent. A Shareholder of the Corporation who is present at a meeting of the Shareholders at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless such Shareholder's dissent shall be entered in the Minutes of the meeting or unless such Shareholder shall have filed written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by certified mail to the Secretary of the Corporation immediately following the adjournment of the meeting. Such right to dissent shall not apply to a Shareholder who voted in favor of such action.
 
ARTICLE III
Directors
 
    Section 1.       Number. The property, affairs and business of the Corporation shall be managed by a Board of Directors of not less than one (1) person as shall be fixed by the Board of Directors from time to time. Except as hereinafter provided, Directors shall be elected at the Annual Meeting of the Shareholders and each Director shall serve until the next annual meeting of shareholders or his resignation or removal and until his successor shall be elected and qualify.
 
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    Section 2.      Increase in Numbers. The number of Directors may be increased or decreased from time to time by a majority vote of the whole Board of Directors, provided however, that no vote to decrease the number of Directors shall have the effect of shortening the term of any incumbent Director.
 
    Section 3.      Qualification. Directors need not be Shareholders of the Corporation.
 
    Section 4.      Quorum. A majority of the Directors in office shall be necessary to constitute a quorum for the transaction of business. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting without further notice, from time to time, until a quorum shall have been obtained.
 
    Section 5.     Vacancies. Any Director may resign at any time by giving written notice to the President or to the Secretary of the Corporation. Such resignation shall take effect at the time specified therein except such resignations shall not be submitted effective retroactively. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of the Shareholders, or by the remaining Directors, though less than a quorum. A Director elected to fill a vacancy shall be elected for the unexpired term of such Director's predecessor in office. Any vacancy may be filled by the affirmative vote of Directors then in office or by an election at an Annual Meeting or at a Special Meeting of Shareholders called for that purpose, and a Director so chosen shall hold office until the next Annual meeting of Shareholders and thereafter until such Director's successor shall have been elected and qualified.
 
    Section 6.      Meetings. Regular meetings of the Board of Directors shall be held at such times as are fixed from time to time by resolution of the Board. Special Meetings may be held at any time upon call of the President, or a majority of Directors. A meeting of the Board of Directors shall be held without notice immediately following the Annual Meeting of the Shareholders. Notice need not be given of regular meetings of the Board of Directors held at any time without notice if all the Directors are present, or if before the meeting those not present waive such notice in writing. Notice of a meeting of the Board of Directors need not state the purpose of or the business to be transacted at such meeting.
 
    Section 7.     Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless such Director's dissent shall be entered in the Minutes of the meeting or unless such Director shall have filed written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by certified mail to the Secretary of the Corporation immediately following the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.
 
 
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    Section 8.     Removal. At any meeting of Shareholders, any Director or Directors may be removed from office, without assignment of any reason therefore, by a requisite majority of the Shareholders. When any Director or Directors are removed, new Directors may be elected at the same meeting of Shareholders for the unexpired term of the Director or Directors to be removed. If the Shareholders fail to elect persons to fill the unexpired term or terms of the Director or Directors removed, such unexpired terms shall be considered vacancies on the Board to be filled by the remaining Directors.
 
    Section 9.     Informal Action by Directors. Any action required to be taken at a meeting of the Board of Directors or any other action which may be taken at a meeting of the Board of Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the Directors and may be stated as such in any documents filed with the Secretary of State of Colorado under the Colorado Business Corporation Act.
 
    Section 10.   Compensation. Directors and members of any committee of the Board of Directors shall be entitled to such reasonable compensation for their services as Directors and members of any such committee as shall be fixed from time to time by resolution of the Board of Directors, and shall also be entitled to reimbursement for any reasonable expenses incurred in attending such meetings. The compensation of Directors may be on such basis as is determined in the resolution of the Board of Directors. Any Directors receiving compensation under these provisions shall not be barred from serving the Corporation in any other capacity and receiving reasonable compensation for such other services.
 
    Section 11.   Committees. The Board of Directors, by a resolution or resolutions adopted by a majority of the members of the whole Board, may appoint an executive committee and such other committees as it may deem appropriate. Each such committee shall consist of at least two members of the Board of Directors. Each committee shall have and may exercise such powers as shall be conferred or authorized by the resolution appointing it and as otherwise provided by Colorado law. A majority of any such committee may determine its action and may fix the time and place of its meetings, unless provided otherwise by the Board of Directors. The Board of Directors shall have the power at any time to fill vacancies in, to change the size of membership of and to discharge any such committee.
 
    A.      Committee to Keep Written Records. Each such committee shall keep a written record of its acts and proceedings and shall submit such record to the Board of Directors at each regular meeting thereof and at such other times as requested by the Board of Directors.
 
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B.       Failure to Keep Written Records. Failure to submit such records, or failure of the Board to approve any action indicated therein will not, however, invalidate such action to the extent it has been carried out by the Corporation prior to the time the record of such action was, or should have been, submitted to the Board of Directors as herein provided.
 
    Section 12.   Director Voting. At all meetings of the Board of Directors, each Director present shall have one vote, irrespective of the number of shares of stock, if any, which such Director may hold.
 
    Section 13.   Majority. The action of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors with respect to regularly conducted business affairs. Any action authorized, in writing, by all of the Directors entitled to vote thereon and filed with the minutes of the Corporation shall be the act of the Board of Directors with the same force and effect as if the same had been passed by unanimous vote at a duly called meeting of the Board.
 
    Section 14.   Board and Committee Meeting by Telephone. Any one or more (including, without limitation, all) members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board or such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.
 
ARTICLE IV
Officers
 
    Section 1.   Election and Term of Office. The Officers of the Corporation shall be elected by the Board of Directors annually at the first meeting of the Board held after each Annual Meeting of the Shareholders. If the election of the Officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may occur. Any number of offices may be held by the same person. Each Officer shall hold office until the first of the following to occur: until such Officer's successor shall have been duly elected and shall have qualified; or until such Officer's death; or until such Officer shall resign; or until such Officer shall have been removed in the manner herein provided. The Officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, a Secretary, a Treasurer and one (1) or more Vice-Presidents, Assistant Secretaries or Assistant Treasurers, at the discretion of the Board of Directors.
 
    Section 2.   Removal. Any Officer or agent or employee of the Corporation may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of any Officer or agent shall not of itself create contract rights.
 
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    Section 3.    Powers and duties of the Chief Executive Officer. Subject to the control of the Board of Directors, the Chief Executive Officer shall have general charge and control of all its business and affairs and shall have all powers and shall perform all duties incident to the office the Chief Executive Officer. He shall preside at all meetings of the shareholders and at all meetings of the Board of Directors and shall have such other powers and perform such other duties as may from time to time be assigned to him by these Bylaws or the Board of Directors.
 
    Section 4.    Powers and Duties of the President. Subject to the control of the Board of Directors or the direction of the Chief Executive Officer, the President shall have general charge and control of all its business and affairs and shall have all powers and shall perform all duties incident to the office President. He shall have such other powers and perform such other duties as may from time to time be assigned to him by these Bylaws, the Board of Directors or the Chief Executive Officer.
 
    Section 5.    Power and Duties of the Chairman of the Board. If Chairman of the Board is elected by the directors, the Chairman shall preside at all meetings of the directors. The Chairman shall have such other powers and duties as the Board may prescribe from time to time.
 
    Section 6.    Powers and Duties of the Vice Presidents. Each Vice President shall have all powers and shall perform all duties incident to the office of Vice President and shall have such other powers and perform such other duties as may from time to time be assigned to him or her by these Bylaws or by the Board of Directors, the President or the Chief Executive Officer.
 
    Section 7.    Powers and Duties of the Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors and the minutes of all meetings of the shareholders in books provided for that purpose; he or she shall attend to the giving or serving of all notices of the Corporation; documents and other papers as the Board of Directors, the President or the Chief Executive Officer shall authorize and direct; he or she shall have charge of the stock certificate books, transfer books and stock ledgers and such other books and papers as the Board of Directors, the President or the Chief Executive Officer shall direct, all of which shall at all reasonable times be open to the examination of any Director, upon application, at the office of the Corporation during business hours; and he or she shall have all powers and shall perform such duties incident to the office of Secretary and shall also have such other powers and shall perform such other duties as may from time to time be assigned to him or her by these Bylaws or the Board of Directors, the President or the Chief Executive Officer.
 
    Section 8.    Powers of the Treasurer. Duties of Treasurer. The Treasurer shall have the care and custody of the corporate funds and securities, sign checks, drafts, notes and orders for the payment of money, pay out and disburse the funds of the Corporation as may be ordered by the Board, taking proper vouchers for such payments and disbursements, deposit all monies and securities belonging to the Corporation and, in general, perform such other duties as are customarily performed by the Treasurer.
 
 
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The Treasurer shall:
 
    A.  Have charge and custody of, and be responsible for, all funds and securities of the Corporation.
 
    B.  Render a statement of the condition of the finances of the Corporation from time to time and at the specific request of the Board of Directors.
 
    C.  Receive and give receipts for monies due and payable to the Corporation from any source whatsoever.
 
    D.  Perform all duties incident to the office of Treasurer, and such other duties as from time to time may be assigned by the Board of Directors or by the President. The Treasurer may be required to give bond for the faithful performance of Treasurer's duties in such sum and with such surety as may be determined by the Board of Directors.
 
    Section 9.     Vacancies. Any vacancy in an office from any cause may be filled for the unexpired portion of the term by the Board of Directors,
 
    Section 10.   Duties of Assistant Secretaries. Assistant Treasures and Other Subordinate Officers. Assistant Secretaries, Assistant Treasurers and other subordinate officers appointed by the Board of Directors shall exercise such powers and perform such duties as may be delegated to them by the resolutions appointing them, or by subsequent resolutions adopted from time to time.
 
    Section 11.   Duties of Officers May Be Delegated. In case of the absence or disability of any officer of the Corporation, or for any other reason that the Board may deem sufficient, the Board may delegate, for the time being, the powers or duties, or any of them, of such officer to any other officer, or to any director.
 
    Section 12.   Salaries. The salaries of all Officers of the Corporation shall be fixed by the Board of Directors. No Officer shall be ineligible to receive such salary by reason of the fact that he is also a Director of the Corporation and receiving compensation therefore.
 
    Section 13.   Checks and Endorsements. All checks and drafts upon the funds to the credit of the Corporation in any of its depositories shall be signed by such of its Officers or agents as shall from time to time be determined by resolution of the Board of Directors which may provide for the use of signatures under specific conditions, and all notes, bills, receivables, trade acceptances, drafts and other evidences of indebtedness payable to the Corporation shall, for the purpose of deposit, discount, or collection be endorsed by such Officers or agents of the Corporation or in such manner as shall from time to time be determined by resolution of the Board of Directors.
 
 
 
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ARTICLE V
Stock
 
    Section 1.    Certificates. The shares of stock shall be represented by consecutively numbered certificates signed in the name of the Corporation by its Chief Executive Officer or President and the Secretary and shall be sealed with the seal of the Corporation, or with a facsimile thereof. The signatures of the Corporation's Officers on such certificate may also be a facsimile engraved or printed if the certificate is countersigned by the transfer agent, or registered by a registrar. In the event any Officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such before the certificate is issued, it may be issued by the Corporation with the same effect as if such Officer had not ceased to be an officer at the date of its issue. Certificates of stock shall be in such form consistent with law as shall be prescribed by the Board of Directors. No certificate shall be issued until the shares represented thereby are fully paid.
 
    Section 2.    Consideration for Shares. Shares shall be issued for such consideration as shall be fixed from time to time by the Board of Directors. Treasury shares shall be disposed of for such consideration as may be fixed from time to time by the Board. Such consideration may consist in whole or in part of money, other property, tangible or intangible, or such other consideration as shall be permitted under the Colorado Business Corporation Act.
 
    Section 3.    Lost, Destroyed or Stolen Certificates. No certificates for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen except on production of evidence satisfactory to the Board of Directors of such loss, destruction or theft; and if the Board of Directors so requires, upon the furnishing of an indemnity bond in such amount and with such terms and such surety as the Board of Directors may, in its discretion, require.
 
    Section 4.     Transfer of Shares.
 
    A.  Upon surrender to the Corporation of a certificate of stock duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate. Every such transfer of stock shall be entered on the stock book of the Corporation which shall be kept either at the offices of the Corporation's legal counsel, at the Corporation's principal office or by its registered duly appointed agent.
 
 
    B,  The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to interest in such share on the part of any other person whether or not it shall have express or other notice thereof, except as may be required by the laws of the State of Colorado.
 
    Section 5.    Record Dates. The Board of Directors may fix in advance a date, not less than ten (10) or more than seventy (70) days preceding the date of any meeting of Shareholders or the date for the payment of any dividend, or the date for the distribution or allotment of rights, or the date, when any. change, conversion or exchange of capital stock shall go into effect, as a record date for the determination of Shareholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend, or to receive any distribution orallotment of such rights, or to exercise the rights in respect of any such change, conversion or exchange or capital stock, and in such case only such Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such distribution or allotment of rights, or to exercise any stock on the books of the Corporation after any such record date fixed as aforesaid.
 
 
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    Section 6.    Voting on Stock. All stock owned by the Corporation, other than stock of the Corporation, shall be voted, in person or by proxy, by the Chief Executive Officer or President, the Chief Executive Officer or President or any Vice President of the Corporation on behalf of the Corporation upon resolution and approval by the board.
 
ARTICLE VI
Contracts. Loans, Checks and Deposits
 
    Section 1.    Contracts. The Board of Directors may authorize any officer or agent to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.
 
    Section 2.    Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances.
 
    Section 3.    Checks, Drafts, etc. All checks,, drafts, or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.
 
    Section 4.    Deposits. The money of the Corporation shall be deposited in the name of the Corporation in such banks, trust companies, or other depositories, as the Board of Directors may designate and shall be subject to the order of the Corporation signed by such officer or agent of the Corporation, and in such manner as shall from time to time be determined by resolution of  the Board of Directors.
 
ARTICLE VII
Corporate Seal
 
    The corporate seal of the Corporation shall consist of a circular imprint bearing around the outside rim the name of the Corporation and the words "The Great Seal of Malemark Greeting Cards Incorporated 2008" and in the center shall be the corporate rendering of our representative cave man and the words "Malemark Greeting Cards".
 
 
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ARTICLE VIII
Amendment of Bylaws
 
    Section 1.   By Shareholders. All Bylaws of the Corporation shall be subject to alteration or repeal and new Bylaws may be made by the requisite vote of Shareholders, a quorum being present in person or by proxy, provided that the notice or waiver of notice of such meeting shall have summarized or set forth in full therein the proposed amendment.
 
    Section 2.   By Directors. The Board of Directors shall have power to make, adopt, amend or repeal, from time to time, these Bylaws of the Corporation.
 
ARTICLE IX
Fiscal Year
 
    The fiscal year end of the Corporation shall be as determined by the Board of Directors.
 
ARTICLE X
Approval
 
The undersigned hereby certifies that the foregoing Bylaws constitute a true and complete copy of the Bylaws of MALEMARK, INC. and the same have been approved, ratified and accepted by the Board of Directors as the Bylaws of the Corporation.
 
 
Dated:  June 20, 2009
  /s/ Christina B.T. DeBoard
    Christina B.T. DeBoard, Secretary
 
 
 
 
12
EX-10.1 4 ex10x1.htm EXHIBIT 10.1 ex10x1.htm
Exhibit 10.1
 

 
 
 
 
 
 
 
 
 
 
LIQUID SPINS, INC.
 
EQUITY INCENTIVE PLAN
 
Amended and Restated effective April 21, 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents
 
  Page
EQUITY INCENTIVE PLAN
 1
   
ARTICLE I INTRODUCTION
 1
   1.1
Establishment
 1
   1.2
Purposes
 1
   1.3
Effective Date; Amendment and Restatement
 1
       
ARTICLE II DEFINITIONS
 1
   2.1
Definitions
 1
   2.2
Gender and Number
 3
       
ARTICLE III PLAN ADMINISTRATION
4
   3.1
General
 4
   3.2
Delegation by Committee
 4
       
ARTICLE IV STOCK SUBJECT TO THE PLAN
 4
   4.1
Number of Shares
 4
   4.2
Limit on Option Grants
5
   4.3
Other Shares of Stock
 5
   4.4
Adjustments for Stock Split, Stock Dividend, Etc.
 5
   4.5
General Adjustment Rules
 5
   4.6
Determination by the Committee, Etc.
6
       
ARTICLE V CORPORATE REORGANIZATION; CHANGE IN CONTROL
 6
   5.1
Adjustment of Awards
 6
   5.2
Assumption or Substitution of Options and Other Awards
 6
   5.3
Corporate Transaction
 6
       
ARTICLE VI PARTICIPATION
7
       
ARTICLE VII OPTIONS
 7
   7.1
Grant of Options
 7
   7.2
Stock Option Agreements
10
   7.3
Restrictions on Incentive Options
 10
   7.4
Transferability
10
   7.5 Shareholder Privileges  10
       
ARTICLE VIII RESTRICTED STOCK AWARDS
 11
   8.1
Grant of Restricted Stock Awards
 11
   8.2
Restrictions
 11
   8.3
Privileges of a Stockholder, Transferability
 11
   8.4
Enforcement of Restrictions
 11
       
ARTICLE IX STOCK BONUSES
 12
       
ARTICLE X OTHER COMMON STOCK GRANTS
 12
 
 
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ARTICLE XI RIGHTS OF PARTICIPANTS
 12
   11.1
Service
 12
   11.2
Nontransferability of Awards Other Than Options
 12
   11.3
No Plan Funding
 13
       
ARTICLE XII GENERAL RESTRICTIONS
 13
   12.1
Investment Representations
 13
   12.2
Compliance with Securities Laws
 13
   12.3
Changes in Accounting Rules
 13
       
ARTICLE XIII PLAN AMENDMENT, MODIFICATION AND TERMINATION
 13
       
ARTICLE XIV WITHHOLDING
 14
   14.1
Withholding Requirement
 14
     4  
ARTICLE XV REQUIREMENTS OF LAW
 14
   15.1
equirements of Law
 14
   15.2
Federal Securities Law Requirements
 14
   15.3
Governing Law
 14
       
ARTICLE XVI DURATION OF THE PLAN
 14
 
 
ii
 
 

 
LIQUID SPINS, INC.
 
EQUITY INCENTIVE PLAN
 
ARTICLE I
INTRODUCTION
 
1.1  Establishment  
 
Liquid Spins, Inc., a Colorado corporation (the “Company”), established the Malemark, Inc. Non-Qualified Stock Option and Stock Grant Plan (as the same is hereby amended, the “Plan”) effective August 1, 2009 for certain employees of the Company (as defined in subsection 2.1(f)), directors and consultants to the Company.  The Plan permitted the grant of non-qualified stock options and other stock grants to key employees, directors and to certain consultants to the Company.
 
1.2  Purposes
 
The purposes of the Plan are to provide those who are selected for participation in the Plan with added incentives to continue in the long-term service of the Company and to create in such persons a more direct interest in the future success of the operations of the Company by relating incentive compensation to increases in shareholder value, so that the remuneration of those participating in the Plan is more closely aligned with the value of the Company’s stock.  The Plan is also designed to provide a financial incentive that will help the Company attract, retain and motivate the most qualified employees and consultants.
 
1.3  Effective Date; Amendment and Restatement 
 
The initial effective date of the Plan was August 1, 2009.  On April 5, 2011 the Board (as defined in subsection 2.1(d)) authorized an amendment and restatement of the Plan to increase the number of shares reserved under the Plan from 2.5 million to 5 million, to specify the maximum number of shares that may be subject to options granted to an individual in a calendar year, to provide for the grant of Incentive Options (as defined in subsection 2.1(n)), to provide for the grant of Restricted Stock Awards (as defined in subsection 2.1(n)), to provide for termination of the Plan on April 5, 2021 and to change the name of the Plan.  Incentive options may be granted after the shareholders approve the Plan, as amended and restated.
 
ARTICLE II
DEFINITIONS
 
2.1  Definitions
 
The following terms shall have the meanings set forth below:
 
(a)  “Affiliated Corporation” means any corporation or other entity that is affiliated with the Company through stock ownership or otherwise and is designated as an “Affiliated Corporation” by the Board, provided, however, that for purposes of Incentive Options granted pursuant to the Plan, an “Affiliated Corporation” means any parent or subsidiary of the Company as defined in Section 424 of the Code.
 
(b)  “Award” means an Option, grant of Stock pursuant to ARTICLE III or other issuances of Stock hereunder.
 
 
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(c)      “Board” means the Board of Directors of Liquid Spins, Inc. a Colorado corporation.
 
(d)  “Code” means the Internal Revenue Code of 1986, as it may be amended from time to time.
 
(e)  “Committee” means a committee consisting of members of the Board who are empowered hereunder to take actions in the administration of the Plan. If applicable, the Committee shall be so constituted at all times as to permit the Plan to comply with Rule 16b-3 or any successor rule promulgated under the Exchange Act.  Except as provided in Section 3.2, the Committee shall select Participants from Eligible Directors, Eligible Employees and Eligible Consultants of the Company and shall determine the awards to be made pursuant to the Plan and the terms and conditions thereof.
 
(f)  “Company” means Liquid Spins, Inc., a Colorado corporation, and its Affiliated Corporations.
 
(g)  “Disabled” or “Disability” shall have the meaning given to such terms in Section 22(e)(3) of the Code.
 
(h)  “Effective Date” means the original effective date of the Plan, August 1, 2009.
 
(i)  “Eligible Consultants” means those consultants and advisors to the Company who are determined, by the Committee, to be individuals whose services are important to the Company and who are eligible to receive Awards, other than Incentive Options, under the Plan.
 
(j)  “Eligible Directors” means those members of the Board who are determined by the Board to be individuals whose services are important to the Company and who are eligible to receive Awards under the Plan.  Eligible Directors who are not also Eligible Employees may not receive Incentive Options.
 
(k)  “Eligible Employees” means those employees (including, without limitation, officers and directors who are also employees) of the Company or any subsidiary or division thereof, upon whose judgment, initiative and efforts the Company is, or will become, largely dependent for the successful conduct of its business.  For purposes of the Plan, an employee is any individual who provides services to the Company or any subsidiary or division thereof as a common law employee and whose remuneration is subject to the withholding of federal income tax pursuant to Section 3401 of the Code.
 
(l)  “Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.
 
(m)  “Fair Market Value” means, as of a given date, (i) the closing price of a Share on the principal stock exchange on which Shares are then trading, if any (or as reported on any composite index that includes such principal exchange) on such date, or if Shares were not traded on such date, then on the next preceding date on which a trade occurred; or (ii) if the Stock is not traded on an exchange but is quoted on the OTC Bulletin Board or a successor quotation system, the mean between the closing representative bid and asked prices for the Stock on such date as reported by the OTC Bulletin Board or such successor quotation system; or (iii) if the Stock is not publicly traded on an exchange and not quoted on an electronic quotation system, the Fair Market Value of a Share shall be determined by the Committee acting in good faith.
 
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(n)  “Incentive Option” means an Option designated as such and granted in accordance with Section 422 of the Code.  Incentive Options maybe granted only after the shareholders approve the amendment to the Plan that adds Incentive Options to the Awards that may be granted under the Plan.
 
(o)      “Non-Qualified Option” means any Option other than an Incentive Option.
 
(p)  “Option” means a right to purchase Stock at a stated or formula price for a specified period of time.  Options granted under the Plan shall be either Incentive Options or Non-Qualified Options.
 
(q)  “Option Agreement” shall have the meaning given to such term in Section 7.2 hereof.
 
(r)  “Option Holder” means a Participant who has been granted one or more Options under the Plan.
 
(s)  “Option Period” means the period of time, determined by the Committee, during which an Option may be exercised by the Option Holder.
 
(t)  “Option Price” means the price at which each share of Stock subject to an Option may be purchased, determined in accordance with subsection 7.2(b).
 
(u)  “Participant” means an Eligible Director, Eligible Employee or Eligible Consultant designated by the Committee from time to time during the term of the Plan to receive one or more of the Awards provided under the Plan.
 
(v)  “Restricted Stock Award” means an award of Stock granted to a Participant pursuant to ARTICLE VIII that is subject to certain restrictions imposed in accordance with the provisions of such Section.
 
(w)  “Securities Act” means the Securities Act of 1933, as it may be amended from time to time.
 
(x)  “Share” means one whole share of Stock.
 
(y)  “Stock” means the common stock of the Company.
 
(z)  “Stock Bonus” means either an outright grant of Stock or a grant of Stock subject to and conditioned upon certain employment or performance related goals.
 
2.2  Gender and Number.  
 
Except when otherwise indicated by the context, the masculine gender shall also include the feminine gender, and the definition of any term herein in the singular shall also include the plural.
 
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ARTICLE III
PLAN ADMINISTRATION
 
3.1  General  
 
The Plan shall be administered by the Committee, or in the absence of appointment of a Committee, by the entire Board.  All references in the Plan to the Committee shall include the entire Board if no Committee is appointed.  In accordance with the provisions of the Plan, the Committee shall, in its sole discretion, select the Participants from among the Eligible Directors, Eligible Employees and Eligible Consultants, determine the Awards to be made pursuant to the Plan, or shares of Stock to be issued thereunder and the time at which such Awards are to be made, fix the Option Price, period and manner in which an Option becomes exercisable, establish the duration and nature of Restricted Stock Award restrictions, establish the terms and conditions applicable to Stock Bonuses, and establish such other terms and requirements of the various compensation incentives under the Plan as the Committee may deem necessary or desirable and consistent with the terms of the Plan.  The Committee shall determine the form or forms of the agreements with Participants that shall evidence the particular provisions, terms, conditions, rights and duties of the Company and the Participants with respect to Awards granted pursuant to the Plan, which provisions need not be identical except as may be provided herein; provided, however, that Eligible Consultants and Eligible Directors who are not also Eligible Employees shall not be eligible to receive Incentive Options.  The Committee may from time to time adopt such rules and regulations for carrying out the purposes of the Plan as it may deem proper and in the best interests of the Company.  The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement entered into hereunder in the manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency.  No member of the Committee shall be liable for any action or determination made in good faith.  The determinations, interpretations and other actions of the Committee pursuant to the provisions of the Plan shall be binding and conclusive for all purposes and on all persons.
 
3.2  Delegation by Committee  
 
The Committee may, from time to time, delegate, to specified officers of the Company, the power and authority to grant Awards under the Plan to specified groups of Eligible Employees and Eligible Consultants, subject to such restrictions and conditions as the Committee, in its sole discretion, may impose.  The delegation shall be as broad or as narrow as the Committee shall determine.  To the extent that the Committee has delegated the authority to determine certain terms and conditions of an Award, all references in the Plan to the Committee’s exercise of authority in determining such terms and conditions shall be construed to include the officer or officers to whom the Committee has delegated the power and authority to make such determination.  The power and authority to grant Awards to any Eligible Employee or Eligible Consultant who is covered by Section 16(b) of the Exchange Act or who is or may become covered by Code Section 162(m) shall not be delegated by the Committee.
 
ARTICLE IV
STOCK SUBJECT TO THE PLAN
 
4.1  Number of Shares  
 
The maximum aggregate number of Shares issuable under the Plan pursuant to Awards is five million (5,000,000) Shares.  Notwithstanding anything to the contrary contained herein, no Award granted hereunder shall become void or otherwise be adversely affected solely because of a change in the number of Shares of the Company that are issued and outstanding from time to time, provided that changes to the issued and outstanding Shares may result in adjustments to outstanding Awards in accordance with the provisions of this ARTICLE IV. The maximum number of Shares that may be issued under Incentive Options is two million (2,000,000) Shares.  The Shares may be either authorized and unissued Shares or previously issued Shares acquired by the Company.  Such maximum numbers may be increased from time to time by approval of the Board and by the stockholders of the Company if, in the opinion of counsel for the Company, stockholder approval is required.  The Company shall at all times during the term of the Plan and while any Options are outstanding retain as authorized and unissued Stock at least the number of Shares from time to time required under the provisions of the Plan, or otherwise assure itself of its ability to perform its obligations hereunder.
 
4
 
 

 
4.2  Limit on Option Grants
 
The maximum number of Shares with respect to which a Participant may receive Options under the Plan during a calendar year is one million (1,000,000) Shares.  The maximum number may be increased from time to time by approval of the Board and by the stockholders of the Company.  No Options may be granted with respect to any increased number of Shares until such increase has been approved by the stockholders.  Stockholder approval shall not be required for increases solely pursuant to Section 4.4 below.
 
4.3  Other Shares of Stock 
 
Any Shares that are subject to an Option that expires or for any reason is terminated unexercised and any Shares that are subject to an Award (other than an Option) and that are forfeited shall automatically become available for use under the Plan, provided, however, that no more than two million (2,000,000) Shares may be issued under Incentive Options.
 
4.4  Adjustments for Stock Split, Stock Dividend, Etc.  
 
If the Company shall at any time increase or decrease the number of its outstanding Shares or change in any way the rights and privileges of such Shares by means of the payment of a stock dividend or any other distribution upon such Shares payable in Stock, or through a stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Stock, then in relation to the Stock that is affected by one or more of the above events, the numbers, rights and privileges of the following shall be increased, decreased or changed in like manner as if they had been issued and outstanding, fully paid and nonassessable at the time of such occurrence:  (i) the Shares as to which Awards may be granted under the Plan, (ii) the Shares then included in each outstanding Award granted hereunder, (iii) the maximum number of Shares available for grant to any one person in a calendar year pursuant to Section 4.2, (iv) the maximum number of Shares available for grant pursuant to Incentive Options, and (v) the number of Shares subject to a delegation of authority under Section 3.2 of this Plan.
 
4.5  General Adjustment Rules
 
No adjustment or substitution provided for in this ARTICLE IV shall require the Company to sell a fractional Share under any Option, or otherwise issue a fractional Share, and the total substitution or adjustment with respect to each Option and other Award shall be limited by deleting any fractional Share.  In the case of any such substitution or adjustment, the aggregate Option Price for the total number of Shares then subject to an Option shall remain unchanged but the Option Price per Share under each such Option shall be adjusted by the Committee to reflect the greater or lesser number of Shares or other securities into which the Stock subject to the Option may have been changed, and appropriate adjustments shall be made to other Awards to reflect any such substitution or adjustment.  All adjustments to Options shall be made according to Section 1.424-1 of the Treasury Regulations.
 
 
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4.6  Determination by the Committee, Etc.  
 
Adjustments under this ARTICLE IV shall be made by the Committee, whose determinations with regard thereto shall be final and binding upon all parties thereto.
 
ARTICLE V
CORPORATE REORGANIZATION; CHANGE IN CONTROL
 
5.1  Adjustment of Awards 
 
Upon the occurrence of a Corporate Transaction (as defined in Section 5.3), the Committee may take any one or more of the following actions with respect to outstanding Awards:
 
(a)  Provide that any or all Options shall become fully exercisable regardless of whether all conditions of exercise relating to length of service, attainment of financial performance goals or otherwise have been satisfied;
 
(b)  Provide that any or all restrictions with respect to Restricted Stock and other Awards shall lapse;
 
(c)  Provide for the assumption or substitution of any or all Awards as described in Section 5.2;
 
(d)  Make any other provision for outstanding Awards as the Committee deems appropriate and consistent with applicable law.
 
The Committee may also provide that any Awards that are outstanding at the time the Corporate Transaction is closed shall expire at the time of the closing.  The Committee need not take the same action with respect to all outstanding Awards or to all outstanding Awards of the same type.
 
5.2  Assumption or Substitution of Options and Other Awards  
 
(a)      The Company, or the successor or purchaser, as the case may be, may make adequate provision for the assumption of the outstanding Options or the substitution of new options for the outstanding Options on terms comparable to the outstanding Options or (b) the Company, or the successor or purchaser, as the case may be, may make adequate provision for the equitable adjustment of outstanding Awards (other than Options).  Any assumption or substitution of Options shall be made according to Section 1.424-1 of the Treasury Regulations.
 
5.3  Corporate Transaction
 
A Corporate Transaction shall include the following:
 
(a)  Merger; Reorganization:  the merger or consolidation of the Company with or into another corporation or other reorganization (other than a reorganization under the United States Bankruptcy Code) of the Company (other than a consolidation, merger, or reorganization in which the Company is the continuing corporation and which does not result in any reclassification or change of outstanding shares of Stock); or
 
(b)  Sale:  the sale or conveyance of the property of the Company as an entirety or substantially as an entirety (other than a sale or conveyance in which the Company continues as a holding company of an entity or entities that conduct the business or businesses formerly conducted by the Company);
 
6
 
 

 
(c)  Liquidation:  the dissolution or liquidation of the Company; or
 
(d)  Change in Control:  A “Change in Control” shall be deemed to have occurred if either (i) any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either (a) the then-outstanding shares of Stock (“Outstanding Shares”) or (b) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (“Voting Power”) or (ii) at any time during any period of two consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board (and any new director whose election by the Board or whose nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof.
 
ARTICLE VI
PARTICIPATION
 
Participants in the Plan shall be those Eligible Employees who, in the judgment of the Committee, are performing, or during the term of their incentive arrangement will perform, vital services in the management, operation and development of the Company, and significantly contribute, or are expected to significantly contribute, to the achievement of long-term corporate economic objectives.  Eligible Consultants shall be selected from those non-employee consultants or advisors to the Company who are performing services important to the operation and growth of the Company.  Eligible Directors are those whose services, in the judgment of the Committee, are important to the Company. Participants may be granted from time to time one or more Awards; provided, however, that the grant of each such Award shall be separately approved by the Committee and receipt of one such Award shall not result in automatic receipt of any other Award.  Upon determination by the Committee that an Award is to be granted to a Participant, written notice shall be given to such person, specifying the terms, conditions, rights and duties related thereto.  Each Participant shall, if required by the Committee, enter into an agreement with the Company, in such form as the Committee shall determine and which is consistent with the provisions of the Plan, specifying such terms, conditions, rights and duties.  Awards shall be deemed to be granted as of the date specified in the grant resolution of the Committee, which date shall be the date of any related agreement with the Participant.  In the event of any inconsistency between the provisions of the Plan and any such agreement entered into hereunder, the provisions of the Plan shall govern.
 
ARTICLE VII
OPTIONS
 
7.1  Grant of Options  
 
Coincident with or following designation for participation in the Plan, a Participant may be granted one or more Options.  The Committee in its sole discretion shall designate whether an Option is an Incentive Option or a Non-Qualified Option; provided, however, that only Non-Qualified Options may be granted to Eligible Consultants and to Eligible Directors who are not also Eligible Employees; and further provided that Incentive Options may be granted only after the shareholders have approved the amendment to the Plan to add Incentive Options.  The Committee may grant both an Incentive Option and a Non-Qualified Option to an Eligible Employee at the same time or at different times.  Incentive Options and Non-Qualified Options, whether granted at the same time or at different times, shall be deemed to have been awarded in separate grants and shall be clearly identified, and in no event shall the exercise of one Option affect the right to exercise any other Option or affect the number of shares for which any other Option may be exercised.  An Option shall be considered as having been granted on the date specified in the grant resolution of the Committee.
 
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7.2  Stock Option Agreements
 
Each Option granted under the Plan shall be evidenced by a written stock option certificate or agreement (an “Option Agreement”).  An Option Agreement shall be issued by the Company in the name of the Participant to whom the Option is granted (the “Option Holder”) and in such form as may be approved by the Committee.  The Option Agreement shall incorporate and conform to the conditions set forth in this Section 7.2 as well as such other terms and conditions that are not inconsistent as the Committee may consider appropriate in each case.
 
(a)  Number of Shares  
 
Each Option Agreement shall state that it covers a specified number of shares of Stock, as determined by the Committee.
 
(b)  Price.  The price at which each share of Stock covered by an Option may be purchased shall be determined in each case by the Committee and set forth in the Option Agreement, but in no event shall the price be less than 100% of the Fair Market Value of the Stock on the date the Option is granted.
 
(c)  Duration of Options; Restrictions on Exercise  
 
Each Option Agreement shall state the Option Period.  The Option Period must end, in all cases, not more than ten years from the date the Option is granted.  The Option Agreement shall also set forth any installment or other restrictions on exercise of the Option during such period, if any, as may be determined by the Committee.  Each Option shall become exercisable (vest) over such period of time, if any, or upon such events, as determined by the Committee.
 
(d)  Termination of Services, Death, Disability, Etc.  
 
The Committee may specify the period, if any, during which an Option may be exercised following termination of the Option Holder’s services.  The effect of this subsection 7.2(d) shall be limited to determining the consequences of a termination and nothing in this subsection 7.2(d) shall restrict or otherwise interfere with the Company’s discretion with respect to the termination of any individual’s services.  If the Committee does not otherwise specify, the following shall apply:
 
(i)  If the services of the Option Holder are terminated within the Option Period for “cause”, as determined by the Company, the Option shall thereafter be void for all purposes.
 
(ii)  If the Option Holder dies during the Option Period while still performing services for the Company or within the three-month period referred to in (iii) below, the Option may be exercised by those entitled to do so under the Option Holder’s will or by the laws of descent and distribution within one year following the Option Holder’s death, (provided that such exercise must occur within the Option Period), but not thereafter.  In any such case, the Option may be exercised only as to the shares as to which the Option had become exercisable on or before the date of the Option Holder’s death.
 
(iii)  If the services of the Option Holder are terminated (which for this purpose means that the Option Holder is no longer employed by the Company or performing services for the Company) by the Company within the Option Period for any reason other than cause or death, the Option may be exercised by the Option Holder within three months following the date of such termination (provided that such exercise must occur within the Option Period), but not thereafter.  In any such case, the Option may be exercised only as to the shares as to which the Option had become exercisable on or before the date of termination of employment or services.
 
 
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(e)  Exercise, Payments, Etc.
 
(i)  Manner of Exercise.  The method for exercising each Option granted hereunder shall be by delivery to the Company of written notice specifying the number of Shares with respect to which such Option is exercised.  The purchase of such Shares shall take place at the principal offices of the Company within thirty (30) days following delivery of such notice, at which time the Option Price of the Shares shall be paid in full by any of the methods set forth below or a combination thereof.  Except as set forth in the next sentence, the Option shall be exercised when the Option Price for the number of shares as to which the Option is exercised is paid to the Company in full.  If the Option Price is paid by means of a broker’s transaction described in subsection 7.2(e)(ii)(C), in whole or in part, the closing of the purchase of the Stock under the Option shall take place (and the Option shall be treated as exercised) on the date on which, and only if, the sale of Stock upon which the broker’s transaction was based has been closed and settled, unless the Option Holder makes an irrevocable written election, at the time of exercise of the Option, to have the exercise treated as fully effective for all purposes upon receipt of the Option Price by the Company regardless of whether or not the sale of the Stock by the broker is closed and settled.  A properly executed certificate or certificates representing the Shares shall be delivered to or at the direction of the Option Holder upon payment therefor.  If Options on less than all shares evidenced by an Option Certificate are exercised, the Company shall deliver a new Option Certificate evidencing the Option on the remaining shares upon delivery of the Option Certificate for the Option being exercised.
 
(ii)  If the exercise price is $2,000 or less, the exercise price shall be paid by one or a combination of the methods set forth in subsections 7.2(e)(ii)(A) or (B) below.  If the exercise price is more than $2,000, the exercise price shall be paid by any of the following methods or any combination of the following methods at the election of the Option Holder, or by any other method approved by the Committee upon the request of the Option Holder:
 
(A)  in cash;
 
(B)  by certified check, cashier’s check or other check acceptable to the Company, payable to the order of the Company;
 
(C)  by delivery to the Company of a properly executed notice of exercise together with irrevocable instructions to a broker to deliver to the Company promptly the amount of the proceeds of the sale of all or a portion of the Stock or of a loan from the broker to the Option Holder required to pay the Option Price; or
 
(D)  by delivery to the Company for cancellation shares of the Company’s Stock previously owned by the Optionee with a Fair Market Value as of the date of the payment equal to the portion of the purchase price for the Option Shares that the Optionee does not pay in cash or by use of attestation of shares already owned by the Optionee to eliminate the need for physical delivery of stock certificate(s) by the Optionee to the Company under this Section 7.2(e).  By use of attestation, the Optionee will be issued the number of shares exercised reduced by the number of whole shares necessary to pay the exercise price, or portion thereof.
 
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(f)  Date of Grant.  An Option shall be considered as having been granted on the date specified in the grant resolution of the Committee.
 
(g)     Withholding.
 
(i)  Non-Qualified Options.  Upon exercise of an Option, the Option Holder shall make appropriate arrangements with the Company to provide for the amount of additional withholding required by Sections 3102 and 3402 of the Code and applicable state income tax laws.
 
(ii)  Incentive Options.  If an Option Holder makes a disposition (as defined in Section 424(c) of the Code) of any Stock acquired pursuant to the exercise of an Incentive Option prior to the expiration of two years from the date on which the Incentive Option was granted or prior to the expiration of one year from the date on which the Option was exercised, the Option Holder shall send written notice to the Company at the Company’s principal place of business of the date of such disposition, the number of shares disposed of, the amount of proceeds received from such disposition and any other information relating to such disposition as the Company may reasonably request.  The Option Holder shall, in the event of such a disposition, make appropriate arrangements with the Company to provide for the amount of additional withholding, if any, required by Sections 3102 and 3402 of the Code and applicable state income tax laws.
 
7.3  Restrictions on Incentive Options
 
(a)  Initial Exercise.  The aggregate Fair Market Value of the Shares with respect to which Incentive Options are exercisable for the first time by an Option Holder in any calendar year, under the Plan or otherwise, shall not exceed $100,000.  For this purpose, the Fair Market Value of the Shares shall be determined as of the date of grant of the Option and Incentive Options shall be taken into account in the order granted.
 
(b)  Ten Percent Stockholders.  Incentive Options granted to an Option Holder who is the holder of record of more than 10% of the total combined voting power of all classes of stock of the Company shall have an Option Price equal to at least 110% of the Fair Market Value of the Shares on the date of grant of the Option and the Option Period for any such Option shall not exceed five years.
 
7.4  Transferability
 
(a)  General Rule: No Lifetime Transfers.  An Option shall not be transferable by the Option Holder except by will or pursuant to the laws of descent and distribution.  An Option shall be exercisable during the Option Holder’s lifetime only by him or her, or in the event of Disability or incapacity, by his or her guardian or legal representative.  The Option Holder’s guardian or legal representative shall have all of the rights of the Option Holder under this Plan.
 
(b)  No Assignment.  No right or interest of any Option Holder in an Option granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Option Holder, either voluntarily or involuntarily, or be subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy, except as set forth above.
 
7.5  Shareholder Privileges  
 
No Option Holder shall have any rights as a shareholder with respect to any shares of Stock covered by an Option until the Option Holder becomes the holder of record of such Stock, and no adjustments shall be made for dividends or other distributions or other rights as to which there is a record date preceding the date such Option Holder becomes the holder of record of such Stock.
 
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ARTICLE VIII
RESTRICTED STOCK AWARDS
 
8.1  Grant of Restricted Stock Awards  
 
Coincident with or following designation for participation in the Plan, the Committee may grant a Participant one or more Restricted Stock Awards consisting of Shares of Stock.  The number of Shares granted as a Restricted Stock Award shall be determined by the Committee.
 
8.2  Restrictions  
 
A Participant’s right to retain a Restricted Stock Award granted to him under Section 8.1 shall be subject to such restrictions, including but not limited to his continuous employment by or performance of services for the Company for a restriction period specified by the Committee or the attainment of specified performance goals and objectives, as may be established by the Committee with respect to such Award.  The Committee may in its sole discretion require different periods of service or different performance goals and objectives with respect to different Participants, to different Restricted Stock Awards or to separate, designated portions of the Shares constituting a Restricted Stock Award.  In the event of the death or Disability of a Participant, or the retirement of a Participant in accordance with the Company’s established retirement policy, all required periods of service and other restrictions applicable to Restricted Stock Awards then held by him shall lapse with respect to a pro rata part of each such Award based on the ratio between the number of full months of employment or services completed at the time of termination of services from the grant of each Award to the total number of months of employment or continued services required for such Award to be fully nonforfeitable, and such portion of each such Award shall become fully nonforfeitable.  The remaining portion of each such Award shall be forfeited and shall be immediately returned to the Company.  If a Participant’s employment or consulting services terminate for any other reason, any Restricted Stock Awards as to which the period for which services are required or other restrictions have not been satisfied (or waived or accelerated as provided herein) shall be forfeited, and all shares of Stock related thereto shall be immediately returned to the Company.
 
8.3  Privileges of a Stockholder, Transferability  
 
A Participant shall have all voting, dividend, liquidation and other rights with respect to Stock in accordance with its terms received by him as a Restricted Stock Award under this ARTICLE VIII upon his becoming the holder of record of such Stock; provided, however, that the Participant’s right to sell, encumber, or otherwise transfer such Stock shall be subject to the limitations of Section 11.2.
 
8.4  Enforcement of Restrictions 
 
The Committee shall cause a legend to be placed on the Stock certificates issued pursuant to each Restricted Stock Award referring to the restrictions provided by Sections 8.2 and 8.3 and, in addition, may in its sole discretion require one or more of the following methods of enforcing the restrictions referred to in Sections 8.2 and 8.3:
 
(a)  Requiring the Participant to keep the Stock certificates, duly endorsed, in the custody of the Company while the restrictions remain in effect; or
 
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(b)  Requiring that the Stock certificates, duly endorsed, be held in the custody of a third party while the restrictions remain in effect.
 
ARTICLE IX
STOCK BONUSES
 
The Committee may award Stock Bonuses to such Participants, subject to such conditions and restrictions, as it determines in its sole discretion.  Stock Bonuses may be either outright grants of Stock, or may be grants of Stock subject to and conditioned upon certain employment or performance related goals.
 
ARTICLE X
OTHER COMMON STOCK GRANTS
 
From time to time during the duration of this Plan, the Board may, in its sole discretion, adopt one or more incentive compensation arrangements for Participants pursuant to which the Participants may acquire shares of Stock, whether by purchase, outright grant, or otherwise.  Any such arrangements shall be subject to the general provisions of this Plan and all shares of Stock issued pursuant to such arrangements shall be issued under this Plan.
 
ARTICLE XI
RIGHTS OF PARTICIPANTS
 
11.1  Service 
 
Nothing contained in the Plan or in any Option, or other Award granted under the Plan shall confer upon any Participant any right with respect to the continuation of his employment by, or consulting or advisory relationship with, the Company, or membership on the Board or interfere in any way with the right of the Company, subject to the terms of any separate employment agreement or other contract to the contrary, at any time to terminate such services or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Award.  Whether an authorized leave of absence, or absence in military or government service, shall constitute a termination of service shall be determined by the Committee at the time.
 
11.2  Nontransferability of Awards Other Than Options  
 
Except as provided otherwise at the time of grant or thereafter, no right or interest of any Participant in a Restricted Stock Award (prior to the completion of the restriction period applicable thereto), or other Award (excluding Options) granted pursuant to the Plan, shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy.  In the event of a Participant’s death, a Participant’s rights and interests in Options, Restricted Stock Awards and other Awards shall, to the extent provided in ARTICLE VII, ARTICLE VIII, ARTICLE IX, and ARTICLE X, be transferable by will or the laws of descent and distribution, and payment of any amounts due under the Plan shall be made to, and exercise of any Options may be made by, the Participant’s legal representatives, heirs or legatees.  If in the opinion of the Committee a person entitled to payments or to exercise rights with respect to the Plan is disabled from caring for his affairs because of mental condition, physical condition or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator or other legal personal representative upon furnishing the Committee with evidence satisfactory to the Committee of such status.
 
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11.3  No Plan Funding
 
Obligations to Participants under the Plan will not be funded, trusteed, insured or secured in any manner.  The Participants under the Plan shall have no security interest in any assets of the Company, and shall be only general creditors of the Company.
 
ARTICLE XII
GENERAL RESTRICTIONS
 
12.1  Investment Representations
 
The Company may require any person to whom an Option, Restricted Stock Award, or Stock Bonus is granted, as a condition of exercising such Option, or receiving such Restricted Stock Award or Stock Bonus, to give written assurances in substance and form satisfactory to the Company and its counsel to the effect that such person is acquiring the Stock for his own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with Federal and applicable state securities laws.  Legends evidencing such restrictions may be placed on the Stock certificates.
 
12.2  Compliance with Securities Laws
 
Each Option, Restricted Stock Award, and Stock Bonus grant shall be subject to the requirement that, if at any time counsel to the Company shall determine that the listing, registration or qualification of the shares subject to such Option, Restricted Stock Award or Stock Bonus grant upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance or purchase of shares thereunder, such Option, Restricted Stock Award, or Stock Bonus grant may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Committee.  Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration or qualification.
 
12.3  Changes in Accounting Rules
 
Except as provided otherwise at the time an Award is granted, notwithstanding any other provision of the Plan to the contrary, if, during the term of the Plan, any changes in the financial or tax accounting rules applicable to Options, Restricted Stock Awards, or other Awards shall occur which, in the sole judgment of the Committee, may have a material adverse effect on the reported earnings, assets or liabilities of the Company, the Committee shall have the right and power to modify as necessary, any then outstanding and unexercised Options, outstanding Restricted Stock Awards, and other outstanding Awards as to which the applicable services or other restrictions have not been satisfied.
 
ARTICLE XIII
PLAN AMENDMENT, MODIFICATION AND TERMINATION
 
The Board may at any time terminate, and from time to time may amend or modify the Plan provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the shareholders if shareholder approval is required to enable the Plan to satisfy any applicable statutory or regulatory requirements, or if the Company, on the advice of counsel, determines that shareholder approval is otherwise necessary or desirable.
 
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No amendment, modification or termination of the Plan shall in any manner adversely affect any Options, Restricted Stock Awards, Stock Bonuses or other Award theretofore granted under the Plan, without the consent of the Participant holding such Options, Restricted Stock Awards, Stock Bonuses or other Awards.
 
ARTICLE XIV
WITHHOLDING
 
14.1  Withholding Requirement  
 
The Company’s obligation to deliver shares of Stock upon the exercise of any Option, the vesting of any Restricted Stock Award, or the grant of Stock shall be subject to the Participant’s satisfaction of all applicable federal, state and local income and other tax withholding requirements.
 
ARTICLE XV
REQUIREMENTS OF LAW
 
15.1  Requirements of Law  
 
The issuance of Stock and the payment of cash pursuant to the Plan shall be subject to all applicable laws, rules and regulations.
 
15.2  Federal Securities Law Requirements 
 
If a Participant is an officer or director of the Company within the meaning of Section 16, Awards granted hereunder shall be subject to all applicable conditions required under Rule 16b-3, or any successor rule promulgated under the Exchange Act, to qualify the Award for any exception from the provisions of Section 16(b) of the Exchange Act available under that Rule.  Such conditions shall be set forth in the agreement with the Participant which describes the Award or other document evidencing or accompanying the Award.
 
15.3  Governing Law  
 
The Plan and all agreements hereunder shall be construed in accordance with and governed by the laws of the State of Colorado.
 
ARTICLE XVI
DURATION OF THE PLAN
 
Unless sooner terminated by the Board of Directors, the Plan shall terminate at the close of business on April 5, 2021 and no Option, Restricted Stock Award, Stock Bonus, other Award or Stock shall be granted, or offer to purchase Stock made, after such termination.  Options, Restricted Stock Awards, and other Awards outstanding at the time of the Plan termination may continue to be exercised, or become free of restrictions, or paid, in accordance with their terms.
 
Dated:   April 21, 2011
 
     
  By: /s/ Herman C. DeBoard III,
   
Herman C. DeBoard III, Chairman of the Board and Chief Executive Officer
 
 
 

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EX-10.2 5 ex10x2.htm EXHIBIT 10.2 ex10x2.htm
Exhibit 10.2
 
 
BUSINESS LEASE AGREEMENT

THIS LEASE AGREEMENT made and entered into this 1st day of December, 2010 by and between POINTE WEST, INC., hereinafter called "LANDLORD,” and Malemark Inc., hereinafter called "TENANT.”

WITNESSETH:

The LANDLORD does hereby lease to the TENANT and the TENANT does hereby take and hire from the LANDLORD, certain commercial real property more particularly identified as Suite #200, #125, & #128 located at 5525 Erindale Drive, Colorado Springs, Colorado 809l8, (hereinafter referred to as the "LEASED PREMISES") upon the following expressed terms and conditions, to wit:.

1.  Lease Term:  The term of this lease shall commence on the 1st day of June, 2010, and shall continue for a period of six (6) months thereafter, expiring on the 30th day of November, 2011. TENANT shall give LANDLORD written notice of his or her intent to move out at least 30 days prior to the next rental payment date. (60 day notice)  Failure to give such notice shall bind the TENANT to pay the full amount of rent on said next ensuing rental due date whether or not TENANT remains in possession of the property for the full month.


2.  Payments:  (a)  Lease Payments:  The TENANT agrees to pay the LANDLORD as rent for the LEASED PREMISES during the primary term of the lease subject to any increases as hereinafter described the total sum of $12,000.00, which sum of money shall be payable in one payment of $12,000.00.

(b)  Late Charges:  LANDLORD may, at its election charge and collect a late charge in the amount of Ten Percent (10%) of any monthly rental installment which is delinquent ten (l0) days or more.

(c) Security Deposit:  TENANT agrees to pay to LANDLORD a security deposit in the total amount of one (1) time monthly rate which is receipted for upon execution of the Agreement.  The security deposit shall be held by LANDLORD during the continuance of this Rental Agreement and any extensions thereof, and shall be returnable to the TENANT, no later than 60 days after termination of this Agreement, provided the rent is paid in full, and the LEASED PREMISES are found by the LANDLORD, after due inspection, to be in as good order and repair as they were on the date of the signing of this Agreement, ordinary and reasonable wear and tear excepted.  In the event that the TENANT is in default or in the event that there are any repairs necessitated by TENANT'S use of the property, then any damages, costs or other fees accruing with respect thereto shall be deducted from the security deposit, and the balance returned to the TENANT not later than sixty (60) days following the termination of the lease.

(d)  Tenant Services:  In addition to the sums above stated, TENANT agrees to pay to LANDLORD for certain telephone services herein described a fee of N/A per month which payment shall be due on the same day of each month that the lease payments are due. For such consideration, LANDLORD agrees to provide to TENANT certain services as more particularly described by EXHIBIT "A" attached hereto and made a part hereof by this reference.

(e)  No Excuse for Non Payment:  No dispute between LANDLORD and TENANT as to LANDLORD or TENANT obligations under this lease shall excuse the payment of any sums herein described owing by TENANT to LANDLORD, or the faithful performance of the other conditions of said lease by either party.  TENANT waives and disclaims any present or future right to withhold any payment of any form of rent or other obligations due under this lease, or to set off against rent or any other obligation of TENANT, any obligation of LANDLORD, however incurred. TENANT agrees that it will not claim or assert any right to so withhold or set off.

3.  Use of Premises:  The TENANT expressly covenants and agrees to use the LEASED PREMISES as a General Business Office to conduct business with the General Public and no other purpose whatsoever without the prior written consent of the LANDLORD to such change in use of the LEASED PREMISES.
 

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TENANT shall comply with all governmental laws, ordinances, including zoning ordinances and regulations applicable to the use of the LEASED PREMISES.  TENANT shall promptly comply with all LANDLORD or governmental orders and directives for the correction, prevention, and abatement of nuisances in or upon, or connected with the LEASED PREMISES, all at TENANT’S sole expense.  TENANT shall not permit the LEASED PREMISES to be used in any way which would, in the opinion of the LANDLORD, be hazardous or which would in any way increase the insurance premium or render void the fire insurance on the LEASED PREMISES.

4.  No Assignment or Subletting:  This lease may not be assigned or the LEASED PREMISES sublet during the term of this lease without the prior written consent of the LANDLORD to such assignment or subletting.  The TENANT shall not transfer any ownership of TENANT without written consent of LANDLORD and will, at the request of LANDLORD provide whatever documentation is necessary to establish that TENANT is in compliance with this provision.

5.  Taxes:  The LANDLORD shall pay all real property taxes for the LEASED PREMISES during the term of this lease, and the TENANT shall pay all personal property taxes accruing during the term of this lease for personal property owned by the TENANT and kept on the leased premises.

6.  Utilities:  All utilities used on the LEASED PREMISES during the term of this lease shall be paid for by the LANDLORD. Notwithstanding, to the extent that use of the LEASED PREMISES by TENANT is of such a character as to subject the LANDLORD to any extraordinary (more than standard) utility charges then TENANT shall reimburse LANDLORD therefor.  Standard utility charges to be determined solely by the LANDLORD.

7.  Insurance:  (a) TENANT shall throughout the term of this Agreement and any extensions thereto, at its sole cost and expense, provide and keep in force with responsible insurance companies satisfactory to LANDLORD and to any mortgagee under mortgage constituting a lien upon the leased premises, public liability and property damage insurance.  The liability limits of all said insurance shall be $500,000 Single Liability and $1,000,000 Umbrella Liability, protecting LANDLORD and any such mortgagee, as well as TENANT against liability to any employees or servants of TENANT or to any other person whomsoever arising out of or in connection with TENANT'S use of the leased premises or the condition of the LEASED PREMISES.  TENANT is to furnish LANDLORD with a Certificate of Insurance or other acceptable binder at time of commencement of the lease, or LANDLORD may provide same and charge TENANT on its normal monthly billing.

(b)  TENANT shall indemnify and hold harmless LANDLORD from all loss, damage, liability or expense, including attorneys' fees, resulting from any injury to any person or any loss of or damage to any property caused by or resulting from any act, omission or negligence of TENANT or any officer, employee, agent, contractor, invitee or visitor of TENANT in or about the premises of the building, or resulting directly or indirectly from any act or neglect of any other TENANT in the leased premises.  The foregoing provision shall not be construed to make TENANT responsible for loss, damage, liability or expense resulting from injuries to third parties caused by any act, omission or negligence of LANDLORD or of any officer, employee, agent, contractor, invitee or visitor of LANDLORD.  LANDLORD shall not be liable for any loss or damage to person or property sustained by TENANT, or other persons, which may be caused by the building or premises, or any appurtenances thereto, being out of repair; or by the bursting or leakage of any water, gas, sewer or steam pipe, or by theft, or by any act of neglect of TENANT, or of any other person, or by any other cause whatsoever, unless caused by the gross neglect of the LANDLORD.  In case of any action or proceeding brought against LANDLORD by reason of any such claim, upon notice to LANDLORD, TENANT covenants to defend such action or proceeding with counsel, reasonably satisfactory to LANDLORD.

(c)  All personal property of any kind or description whatsoever in the LEASED PREMISES shall be at the TENANT'S sole risk, and the LANDLORD shall not be held liable for any damage done to or loss of such personal property or to the business of the TENANT.
 

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8.  Maintenance and Repairs:  The LANDLORD shall be responsible for the exterior maintenance of the LEASED PREMISES during the term of this lease, and the maintenance of any parking lot facility contiguous thereto which is used in conjunction with the LEASED PREMISES. Further, all replacement or major repairs to the plumbing, heating, or electrical systems on the LEASED PREMISES, which are not necessitated by the negligence of the TENANT, shall be paid by the LANDLORD.  LANDLORD shall be responsible for janitorial work including the LEASED PREMISES.

TENANT will at its own cost and expense keep in good repair and condition the interior of the LEASED PREMISES.  LANDLORD and LANDLORD'S agents and representatives shall have the right to enter and inspect the LEASED PREMISES at any time during reasonable business hours, for the purpose of assessing the condition of the LEASED PREMISES or in order to make such repairs, additions or alterations as may be required to be made by TENANT under the terms of this lease.  At the termination of this lease, TENANT shall deliver up the LEASED PREMISES with all improvements located thereon, in good repair and condition, ordinary wear and tear excepted.  The taking of possession of the LEASED PREMISES by the TENANT shall be conclusive evidence as against the TENANT that said premises were in good and satisfactory condition when possession of same was taken.

9.  Communications:  (a) The TENANT shall be responsible for the cost of integrating into Qwest access through the suites telephone system.

(b)  The TENANT shall be responsible for long distance charges incurred.

(c)  Any additional telephone sets and multiple lines are additional charges to the TENANT.

(d)  Telephone lines, equipment reprogramming and installation must be obtained through the LANDLORD and paid by TENANT.

(e)  LANDLORD'S communication equipment will be maintained by LANDLORD, except for repairs necessitated by TENANT’S negligence.

10.  Inspection:  The LANDLORD may enter and inspect the LEASED PREMISES at all reasonable times during the term hereof.

11.  Tenant Improvements: TENANT shall not make any alterations, additions or improvements to the LEASED PREMISES without prior written consent of LANDLORD.  Any such alterations, additions or improvements shall be at the TENANT'S cost and expense.  TENANT shall promptly pay the costs of all work performed and shall indemnify and hold harmless the LANDLORD against liens, costs, damages and expenses incurred in connection therewith including any attorney fees incurred by LANDLORD, and if LANDLORD shall be joined in any action or proceeding involving such work.

All improvements placed upon the LEASED PREMISES of a permanent nature and fixtures, by the TENANT shall be and become the property of the LANDLORD at the expiration of this lease, and the LANDLORD shall be under no obligation to reimburse the TENANT for any sums of money so expended in making permanent improvements on the LEASED PREMISES; provided, however, that at the expiration of the term of this lease the TENANT shall be entitled to remove the following items installed, or to be installed on the premises by the TENANT, and the provision of this paragraph shall not be construed to prevent the removal of said items, to wit there are none.

TENANT shall permit and facilitate LANDLORD'S posting of notices of non-responsibility in and about the LEASED PREMISES, pertaining to any work by, through, or under TENANT.  TENANT shall exercise its best efforts to see that such notices remain posted in any and all locations, designated by LANDLORD throughout the time in which the work is being done.
 

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12. Destruction of LEASED PREMISES.:   In the event improvements on the LEASED PREMISES are partially damaged by any casualty which is covered under an insurance policy required to be maintained pursuant to the provisions of this lease, then LANDLORD shall repair such damage as soon as reasonably possible from insurance proceeds, in which event this lease shall continue in full force and effect.  TENANT shall have no claim against LANDLORD for any damage suffered by reason of such damage, destruction, repair or restoration and there shall be an abatement of rent only for the time period and for the actual space rendered unusable during such repairs.  If the LEASED PREMISES are totally destroyed during the term of this lease from any cause whether or not covered by insurance, this lease may automatically terminate as of the date of such total destruction, at the option of the LANDLORD or the TENANT.

13.  Default:  The TENANT promises and agrees that if default be made in the payment of rents or in the performance of any other conditions of this lease, or if TENANT in its use of the premises violates any city ordinances, State or Federal Laws or if any TENANT, or any Guarantor hereof, files any petition under the bankruptcy or insolvency laws of the United States, or of any other jurisdiction, or makes an assignment for the benefit of creditors, or makes application for appointment of a trustee or receiver regarding any of TENANT’S property that this lease may be forthwith terminated at the election of the LANDLORD, subject to the prior written notice requirements hereof, and that the TENANT will, subject to the grace periods hereinafter set forth, surrender and deliver up possession of the LEASED PREMISES to the LANDLORD upon receiving written notice from the LANDLORD of the breach of conditions of this lease and the election of the LANDLORD to so terminate this lease.  In the event of such default by the TENANT, then the LANDLORD, besides other rights or remedies he may have, shall have the immediate right of re-entry.  Should the LANDLORD elect to re-enter, as herein provided, or should he take possession pursuant to legal proceedings or pursuant to any notice provided by law, he may either terminate this lease, or he may, from time to time, without terminating this lease, re-let or re-lease the LEASED PREMISES or any part thereof for such amount of rental and upon such terms and conditions as the LANDLORD, in his sole discretion and judgment, may deem advisable, and he may make such alterations, improvements and repairs to the LEASED PREMISES as he may deem advisable.  No such re-letting or re-leasing of the LEASED PREMISES by the LANDLORD, under the circumstances set forth in this paragraph, shall be construed as an election on the LANDLORD'S part to terminate or cancel this lease, unless a written notice of such termination or cancellation is mailed by the LANDLORD to the TENANT at the address set out herein for notices, nor shall such re-letting or re-leasing relieve the TENANT from liability to the LANDLORD for any and all damages, of whatsoever type or nature, which the LANDLORD may have or will suffer or incur as a result of the TENANT'S breach of any of the terms, covenants, provisions and conditions herein contained.  Notwithstanding any such re-letting or re-leasing without termination of this lease by the LANDLORD, the LANDLORD may at any time thereafter elect to terminate the lease for such previous breach of the TENANT.  In the event LANDLORD is required to retain an attorney to enforce any provision of this lease, then LANDLORD shall be entitled to recover from TENANT its actual attorney's fees reasonably incurred and its court costs.

In the event default by TENANT in the payment of rent occurs under the terms of this lease, LANDLORD shall provide TENANT with three (3) days written notice of such default.  In the event TENANT fails to cure such default within three (3) days following receipt of such notice, then LANDLORD may proceed with the remedies as above specified.  If default by the TENANT be for reasons other than non-payment of rent, then LANDLORD shall provide TENANT with ten (l0) days prior written notice to cure such default, and failing such cure by TENANT, LANDLORD shall be entitled to those remedies set forth under Paragraph 13 hereof.

Acceleration of rent.  Following default by TENANT, LANDLORD may demand, and in such case, TENANT shall immediately pay in a single accelerated payment, the entire amount of lease payments that would become due and owing to LANDLORD over the remaining portion of the lease term.  No discount for early payment shall occur by reason of the acceleration.  If TENANT shall make payment of such accelerated rent at any time prior to LANDLORD’S termination of TENANT’S right to possession of the premises, then TENANT shall be entitled to remain in possession of the premises for the remainder of the term of this lease, so long as no further default shall occur, but upon the occurrence of a further default, LANDLORD shall be entitled to recover possession of the premises without any rebate of accelerated rent.
 

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TENANT’S Property.  Any property of TENANT remaining in the LEASED PREMISES at any time after LANDLORD recovers possession of the LEASED PREMISES, shall be deemed abandoned, and LANDLORD shall have no responsibility or liability whatsoever for any of the same.  Notwithstanding the foregoing, LANDLORD may store any of the property in any public or private warehouse, and TENANT shall pay to LANDLORD, promptly upon demand, all costs incurred in connection with such property, including the costs of moving and storage, court costs and attorney's fees. LANDLORD may, at its option, without notice, sell any such personal property at any public or private sale, with or without legal process, for such prices as LANDLORD may obtain, and LANDLORD shall apply the proceeds of such sale, first, to the costs incurred in connection with such property, and then to any amounts due under the lease from TENANT to LANDLORD, and the surplus, if any to TENANT.

Remedies Not Exclusive.  Except to the extent prohibited by law, no exercise of any remedy provided in this lease, or in any statute or law, shall preclude the simultaneous or subsequent exercise of any other remedy provided in this lease, or in any statute or law.  Notwithstanding the possible availability of legal remedies, LANDLORD may obtain specific performance, mandatory or prohibitory injunctive relief, or other equitable relief requiring TENANT to cure or refrain from continuing or repeating any event of default or other breach of this lease.

14.  Forfeiture of Advance Rental Deposit:  In the event this lease is terminated by reason of the default of TENANT, it is understood and agreed that the LANDLORD shall be entitled to retain advance rental deposit herein made, if any, to partially compensate LANDLORD for damage suffered by reason of such default.  Nothing herein contained shall be construed, however, as precluding the LANDLORD from recovering from TENANT any further or additional damages which he may have suffered by reason of such default of the TENANT as provided in paragraph 13 hereof.

15.  Surrender of Premises:  Upon expiration of the term of this lease the TENANT agrees to surrender and deliver up possession of the LEASED PREMISES with all improvements located thereon to the LANDLORD in as good condition and repair as at the time of possession, ordinary wear and tear excepted.

16. Holding Over:  Should the TENANT continue in possession of the LEASED PREMISES after the expiration of this lease, without a written extension or renewal hereof, such possession shall be on a month-to-month basis only and then at a monthly rate two times the rate herein specified.

17.  No Waiver:  The failure of LANDLORD to insist, in any one or more instances, upon a strict performance of any of the obligations, covenants or agreements herein contained, or the failure of LANDLORD in any one or more instances to exercise any option, privilege or right herein contained, shall in no way be construed to constitute a waiver, relinquishment or release of such obligations, covenants or agreements, and no forbearance by the LANDLORD of any default hereunder shall in any manner be construed as constituting a waiver of such default.

18. Insolvency Proceeding:   If the TENANT shall be declared insolvent or bankrupt, or if any assignment of his property shall be made for the benefit of his creditors or others, or the TENANT'S leasehold interest herein shall be levied upon under execution, or taken by virtue of any writ of any Court of Law, or if a Trustee in Bankruptcy or a receiver is appointed for the property of the TENANT, then and upon the happening of any one of these events, the LANDLORD may, at his option, take possession of the LEASED PREMISES without thereby occasioning any forfeiture of the obligations of the TENANT previously accrued under this lease.
 


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19.  Eminent Domain:  In the event all or any part of the LEASED PREMISES shall be taken by right of eminent domain, or in the event the LANDLORD makes a conveyance of all or any part of the LEASED PREMISES in lieu of taking by right of eminent domain, then this lease shall, at the option of the LANDLORD, cease and terminate.  In such event, the TENANT shall not be required to make any further rental payments to the LANDLORD and the TENANT shall have the right to remove from the LEASED PREMISES any and all furniture, machinery and fixtures set forth in Paragraph 11 hereof.  In such event of a taking of all or part of the LEASED PREMISES by right of eminent domain or a conveyance in lieu of such taking, the LANDLORD shall receive the entire award or price which the condemning or taking governmental authority will pay for the LEASED PREMISES.

20.  Subordination:  This lease and all of the rights of TENANT hereunder are and shall be subject and subordinate to any lien of any mortgage or Deed of Trust and accompanying collateral assignments of lease or rents now or hereafter placed on the LEASED PREMISES or any part thereof and to any and all renewals, modifications, consolidations, replacements, extensions or substitutions of said sale and/or mortgage.

TENANT agrees to execute any documents required to effectuate such subordination or to make this lease subordinate to any lien or any mortgage, Deed of Trust or ground lease and accompanying assignment of lease or rents, as the case may be, within ten (10) days after such request has been made by LANDLORD.

21. Attornment:  If a purchaser under a sale or the holder of the mortgage shall succeed to the rights of the LANDLORD under this lease, whether through possession or foreclosure action, or delivery of a new lease or deed, TENANT upon the request of such successor landlord as TENANT'S LANDLORD under this lease shall promptly execute and deliver any instrument that any such successor landlord may request to further evidence such attornment.  Upon such attornment, this lease shall continue in full force and effect as, or as if it were, a direct lease between the successor landlord and TENANT upon all of the terms, conditions and covenants as are set forth in the lease.

22.  Estoppel Certificates:  Upon the request of either party, at any time, and from time to time, LANDLORD and TENANT agree to execute and to deliver to the other within ten (l0) days after such request a written instrument duly executed certifying that this lease has not been modified and is in full force and effect.

23. LANDLORD'S Lien:  TENANT hereby grants to LANDLORD, a lien upon and a security interest in all property now owned or hereafter acquired by TENANT, which shall come in or be placed upon the LEASED PREMISES, to secure the payment of rent and the performance of each and every obligation hereunder to be performed by TENANT.  Following any event of default, LANDLORD, without demand, may take possession of and sell such property without legal process of any kind at public and private sale, upon giving such notices, if any, as may be required by law.  The proceeds of any such sale shall be applied, first, to the payment of expenses thereof, second to the discharge of the unpaid rent or other liability hereunder, and the balance, if any, shall be paid to TENANT.  TENANT agrees to execute and record any financing statements and other documents necessary to perfect or record the lien herein granted.

24.  Financial Statement:  Upon request, TENANT shall furnish LANDLORD a current financial statement of TENANT and guarantors.

25.  Non-Compete:  It is understood the Lessee shall in no way compete with the services provided by Pointe West, Inc. as set forth in Exhibit “A” and “B” attached.  In the event TENANT breaches any provision of this paragraph, TENANT shall be in default hereunder and TENANT shall be entitled to exercise any rights or remedies as prescribed below, and in addition to such rights and remedies, TENANT shall pay LANDLORD the sum of $300.00 per week as liquidated damages for each such breach so long as such breach shall continue.
 


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26.  Employment of LANDLORD’S Employees:  TENANT recognizes that LANDLORD has expended considerable time, effort and expense in training LANDLORD’S employees so as to provide high quality service to TENANT, and that the hiring by  TENANT of LANDLORD’S present employees or any employee employed by LANDLORD within a six (6) six month period prior to the offer by TENANT to such employee would save TENANT, and cause LANDLORD to expend considerable time, effort and expense in training new employees, the amount of which cannot be determined with certainty.  Should TENANT, during the original or extended term of the Agreement or for twelve (12) months thereafter, offer employment to and subsequently employee an employee of LANDLORD who is  or was an employee of LANDLORD at any time during the six (6) month period immediately preceding such offer of employment by TENANT, TENANT shall pay to LANDLORD,  as a procurement fee, and not as a penalty, a sum equal to forty percent (40%) of the annual salary last payable by LANDLORD to such employee or $5,000.00 (whichever is greater).

27.  Interest, Costs and Attorney Fees:  Any amounts due but unpaid under this lease shall draw interest at the rate of eighteen percent (18%) per annum from the date due until paid.  If by reason of any default on the part of TENANT it becomes necessary for LANDLORD to employ an attorney, then and in any such event if LANDLORD prevails TENANT shall pay LANDLORD reasonable attorney fees and all costs and expenses incurred by the LANDLORD in enforcing the terms of this lease.

28.  Brokerage Commissions:  Each party warrants that it has had no dealings with broker or agent in connection with the negotiation or execution of this lease and each party agrees to indemnify and hold the other party harmless from any and all costs, expenses or liability for commissions or other compensation or charges claimed by or awarded to any broker or agent with respect to this lease occasioned by the indemnifying party's contact with such broker or agent.

29.  Relocation of TENANT: At LANDLORD'S written request; TENANT shall move from the LEASED PREMISES to other similar premises in the Office Complex.  In the event of such move, the new location and LEASED PREMISES shall be substituted for the Premises described above, but all other terms of the Lease shall remain the same, with the exception that the Minimum Rent provided for herein shall be abated during the period that TENANT is closed for business as a result of the move to the new location; provided, however, that TENANT shall not be moved to Premises of substantially less square footage than those herein located, and that LANDLORD shall bear all actual cash expenses reasonably incurred by TENANT in so moving. It is understood and agreed that LANDLORD will relocate TENANT only for sound business practices and considerations.

30.  Additional Provisions:  (a) TENANT shall be provided with one set of two access keys for the building and TENANT’S LEASED PREMISIS.  Only LANDLORD may make additional copies of keys for TENANT.  If TENANT requires additional keys such will be provided at a cost of $4.00 each.

(b)  Suite replacement keys will be provided at a cost of $10.00 each.  TENANT will be responsible for expenses incurred due to keys lost for Main Entrance Doors which facilitates complete re-keying of office complex and replacement keys to all Tenants.

(c)  Occupancy of the leased premises is based on a nine (9) hour day, 8:00 am – 5:00 pm, Monday thru Friday.  Substantial usage of the premises exceeding the allotted 45 hours per week may be subject to additional fees determined solely by Landlord.

31.  Rules:  It is agreed that the LANDLORD may adopt rules and regulations, a copy of which shall be attached hereto as EXHIBIT "B" and made a part of this lease by this reference.  TENANT agrees that its employees and agents, or any others permitted by the TENANT to occupy or enter such LEASED PREMISES will at all time abide by said rules and regulations and that a default in the performance and observance thereof shall operate the same as any other default herein.

32. General Matters:  (a) Singular/Plural:  Wherever used herein, the singular shall include the plural, and the use of any gender shall be applicable to all genders.

(b)  Binding Effect:  This lease shall bind and benefit alike the heirs, successors and assigns of the parties hereto.
 


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(c)  Colorado Law:  This lease shall be governed by the laws of the State of Colorado.

(d)  Notices:  All notices required hereunder or pertaining hereto shall be in writing and shall be deemed  delivered upon the earliest of personal service, actual delivery at the address specified below, or three days following deposit in the United States mail, certified mail, return receipt requested, with all charges prepaid, addressed as follows

 
TENANT:  
Liquid Spins, Inc.
5525 Erindale Dr. Ste. 200-125-128
Colorado Springs, CO  80918  
BILL TO:
Liquid Spins, Inc.
5525 Erindale Dr. Ste. 200
Colorado Springs, CO  80918
       
LANDLORD:  
Pointe West, Inc.
5525 Erindale Dr. Ste. 217
Colorado Springs, CO  80918 
   
       
                                                                    
    IN WITNESS WHEREOF, the parties hereto have set their hands and affixed their seals on the day and year first above written.
 
 
"LANDLORD"    "TENANT"  
Pointe West, Inc.   Liquid Spins, Inc.  
       
by: /s/ David B. Inglis   by:  /s/ Herman DeBoard  
  David B. Inglis-President         
 
    EIN #  27-0471921  
         
    Social Security #    
       
 
 
CONTINUING GUARANTEE:

I/We, the undersigned, hereby personally guarantee(s) payment and performance of all terms and provisions herein and further waive notice of any modification, extension or renewal hereof and consent to such changes.  This guarantee shall continue after such modification, extensions and/or renewals.
 
Dated this ___ day of ____________________ 2011    Emergency Contacts  
           
Print Name     Name      
 
Signature
    Address    
 
Address
    Phone    
 
Phone 
    Name      
 
 
    Address    
 
 
    Phone    
           
           
 
                                                                                                          

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EXHIBIT "A"
DESCRIPTION OF TENANT SERVICES

The following services and facilities are provided to the tenant:

·  
Non-exclusive use of two (2) fully furnished conference rooms located within the premises, on a reservation basis, provided that Landlord shall have the right to impose a charge for the use of said facilities under the circumstances described in Exhibit A hereto.

·  
Listing of your firm on the main building directory.
·  
Custodial services including carpet vacuuming and trash removal as necessary.
·  
All utilities, heating, air conditioning and parking during normal business hours.
·  
Use of tenant service areas.
·  
One telephone handset per suite.
·  
Incoming/Outgoing Mail Service.
·  
Two access keys per suite.
·  
Courtesy phone in main entrance with listing of your firm on the directory.
The following services are available to the tenants at the specified rates.  LANDLORD reserves the right to adjust the specified rates as necessary.

·  
Telephone/Voice Mail Services:
Customized to your company needs.  Monthly rates starting at  $30.00 and up.
Answering the phones with your company’s name
Pager / e-mail notification
Custom voice mail system

·  
Wide Band High Speed Internet
Installation
One Hookup
Two Hookup 
Three to Five Hookups
Over Five Hookups  
$165.00 per individual office
$40.00 / Month
$60.00 / Month
$80.00 / Month
Quoted Price
 
·  
Telephone Installation:
Installation and programming 
$125.00 per individual office
This charge is exclusive of the charge by the service provider for installation and line charges, which are paid by the Tenant directly to the phone service provider.

·  
Secretarial Services:    
$ 25.00/hour
Secretarial services are billed in 15 minute increments and can also be billed on a "per project basis".

·  
Photocopying
8 1/2 x 11 or 8 1/2 x 14
11 x 17
$      .10/page
$      .15/page
 
Discounts are available to tenants using more than 1000 copies.

Private photocopiers are allowed up to 5 amps.
Any photocopier over 5 amps are accessed a minimum of 
Rates will vary according to each copier 
$ 25.00 /monthly
$25.00 and up/monthly
 

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·  
Conference Rooms/Meeting Room within the Premises
Assuming conference room availability from 8:00 a.m. until 5:00 p.m., Monday through Friday, each TENANT is entitled to unlimited conference room usage on a reservation basis (reservations must be made through the receptionist).

 
Signage Fee
Fees for placing the tenants name on Pointe West signs is $75.00 and will be waived if signing a lease of one year or more.
 
·  
UPS Shipping             Federal Express Shipping             DHL           Airborne Express              Etc….
The cost to the tenant will include a 15 % surcharge.
 
·  
Mailing Services                                      Postal, etc….
The cost to the TENANT will include a 15 % surcharge.

 
 
 
 

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EXHIBIT "B"
RULES/REGULATIONS

It is further agreed that the following rules and regulations shall be and are hereby made a part of this lease, and TENANT agrees that its employees and agents, or any others permitted by TENANT to occupy or enter the Premises, will at all times abide by said rules and regulations, to wit:

A.  The sidewalks, entries, passages, corridors and stairways of the Building shall not be obstructed by TENANT, or its agents or employees, or used for any purpose other than ingress and egress to and from the premises.

B.  (1)   Furniture, equipment or supplies will be moved in or out of the Building only during such hours and in such manner as may be prescribed by LANDLORD.  The LANDLORD shall have the right to approve or disapprove the movers or moving company employed by TENANT, and TENANT shall cause said movers to use only the loading facilities designated by LANDLORD.  In the event TENANT'S mover’s damage any part of the Building TENANT shall forthwith pay to LANDLORD the amount required to repair said damage.

(2)   No safe or article, the weight of which may, in the opinion of LANDLORD, constitute a hazard or damage to the Building or its equipment, shall be moved into the Premises.

(3)   Safes and other equipment, the weight of which is not excessive, shall be moved into, from or about the Building only during such hours and in such manner as shall be prescribed by LANDLORD, and LANDLORD shall have the right to designate the location of such articles in the Premises.

C.  During the entire term of this lease, TENANT shall at its expense, install and maintain a chair pad to protect the carpeting under all caster chairs.
 
D.  No sign, advertisement or notice shall be inscribed, painted or affixed on any part of the inside or outside of the Building unless of such color, size and style and in such place upon or in the Building, as shall be first designated by LANDLORD, but there shall be no obligation or duty on LANDLORD to allow any sign, advertisement or notice to be inscribed, painted or affixed on any part of the inside or outside of the Building.  A Directory in a conspicuous place, with names of TENANTS, not to exceed one name per five hundred (500) square feet of space contained in the Premises, will be provided by LANDLORD; any necessary revision in this will be made by LANDLORD at TENANT'S expense, within a reasonable time after notice from TENANT of the change making the revision necessary.  No furniture shall be placed in front of the Building or in any lobby or corridor, without the prior written consent of LANDLORD.  LANDLORD shall have the right to remove all non-permitted signs and furniture, without notice to TENANT, and at the expense of TENANT.

E.  TENANT shall not do or permit anything to be done in said Premises, or bring or keep anything therein which would in any way increase the rate of fire insurance on the Building or on property kept therein, or constitute a nuisance or waste, or obstruct or interfere with the rights of other tenants, or any way injure or annoy them, or conflict with the laws relating to fire, or with any regulations of the fire department, or with any insurance policy upon the Building or any part thereof, or conflict with any of the rules or ordinances of the Department of Health of the City and County where the Building is located.

F.  TENANT shall not employ any person or persons other than the janitor of LANDLORD for the purpose of cleaning or taking care of the Premises, without the prior written consent of LANDLORD.  LANDLORD shall be in no way responsible to TENANT for any loss of property from the Premises, however occurring, or for any damage done to TENANT'S furniture or equipment by the janitor or any of his staff, or by any other person or persons whomsoever.  The janitor of the Building may at all times keep a pass key, and he and other agents of LANDLORD shall at all times be allowed admittance to said Premises.
G.  Water closets and other water fixtures shall not be used for any purpose other than that for which the same are intended, and any damage resulting to the same from misuse on the part of TENANT, its agents or employees, shall be paid by TENANT.  No person shall waste water by tying back or wedging the faucets or in any other manner.

H.  No animals shall be allowed in the offices, halls and corridors of the Building, except seeing eye dogs.  No person shall disturb the occupants of this or adjoining buildings or premises by the use of any radio, sound equipment or musical instrument or by the making of loud or improper noises.
 


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I.  Bicycles or other vehicles shall not be permitted in the offices, halls and corridors in the Building, nor shall any obstruction of sidewalks or entrances of the Building by such be permitted.

J.  TENANT shall not allow anything to be placed on the outside of the Building, nor shall anything be thrown by TENANT, its agents or employees, out of the windows or doors, or down the corridors, or ventilating ducts of the Building.

K.  No additional lock or locks shall be placed by TENANT on any door in the Building unless written consent of LANDLORD shall first have been obtained.  A reasonable number of keys to the Premises and to the toilet rooms if locked by LANDLORD will be furnished by LANDLORD, and neither TENANT, its agents nor employees shall have any duplicate keys made.  At the termination of this tenancy, Tenant shall promptly return to LANDLORD all keys to offices, toilet rooms or vaults.

L.  No window shades, blinds, screens, draperies or other window coverings will be attached or detached by TENANT without LANDLORD'S prior written consent.  TENANT agrees to abide by LANDLORD'S rules with respect to maintaining uniform curtains, draperies and/or linings at all windows and hallways.

M.  No awnings shall be placed over the windows except with the prior written consent of LANDLORD.

N.  If any TENANT desires telegraphic, telephonic or other electric connections, LANDLORD or its agents will direct the electricians as to where and how the wires may be introduced, and without such directions, no boring or cutting for wires will be permitted.  Any such installation and connection shall be made at TENANT'S expense.

O.  TENANT shall not install or operate any steam or gas engine or boiler, or carry on any mechanical business in the Premises; the use of oil, gas or flammable liquids for heating, lighting or any other purpose is expressly prohibited.  Explosives or other articles deemed extra hazardous shall not be brought into the Building Complex.

P.  Any painting or decorating as may be agreed to be done by and at the expense of LANDLORD shall be done during regular weekday working hours; should TENANT desire such work on Saturdays, Sundays, holidays or outside or regular working hours, TENANT shall pay for the extra costs thereof.

Q.  Except as permitted by LANDLORD, TENANT shall not mark upon, paint signs upon, cut, drill into, drive nails or screws into, or in any way deface the walls, ceilings, partitions or floors of the Premises or of the building, and any defacement, damage or injury caused by TENANT, its agents or employees, shall be paid for by TENANT.

R.  TENANT shall not place this lease or any memoranda thereof of record with the Clerk and Recorder of the City and County where the Building is located or in any other public record.

S.  LANDLORD has a non-smoking building policy.  TENANT shall not smoke in the office building, as it is a smoke-free environment.

T.  TENANT shall not use heating or cooling equipment other than that provided by the LANDLORD.

U.  During the lease Term, and any extensions, TENANT shall not directly or indirectly engage in offering any of the services described as “description of tenant services” in Exhibit A.

V.  TENANT shall not leave their vehicle in the office parking lot overnight.  Failure to comply will result in a towing of the vehicle at TENANT’S expense.
 
W. No refrigerating equipment, microwaves, or any other kitchen related appliances allowed on the premises other than that provided by the landlord.

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TENANT agrees that LANDLORD may amend, modify, delete or add new and additional rules and regulations for the use and care of the Premises and the Building of which the Premises are a part.  TENANT agrees to comply with all such rules and regulations upon notice to TENANT from LANDLORD thereof, in the event of any breach of any rules and regulations herein set forth or any amendments, modifications or additions thereto, LANDLORD shall have all remedies in this lease provided for in the event of default by TENANT.
 
 
 
 
 
 
 
 
 

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EX-10.3 6 ex10x3.htm EXHIBIT 10.3 ex10x3.htm
Exhibit 10.3
 
LEASE AGREEMENT


THIS LEASE entered into effective as of the       1st       day, of    March___ 2011    , between DiAffari Properties (referred to as "Landlord" ) and    Malemark, Inc.    (referred to collectively as "Tenant”.
 
W I T N E S S E T H:
 
For and in consideration of the agreements herein contained, Landlord does hereby lease to Tenant, and Tenant does take and lease from Landlord, the real estate (the "Leased Premises") herein below described on the terms and conditions stated herein.

1.           DESCRIPTION OF PREMISES.  The Leased Premises consists of an office suite (_approx. 950 sq ft., first floor, north side  )  located at     1019 17th Avenue South, Suite 100  , in Nashville, Tennessee 37212.

2.           ACCEPTANCE OF LEASED PREMISES.  Tenant accepts the Leased Premises "as is" and acknowledges that the property is taken without warranty of condition, suitability of use, or of any other matter whatsoever, except that all plumbing, heating, electrical and cooling system will be in working order on the date hereof. Tenant further accepts the Leased Premises subject to all restrictions, encumbrances and easements, whether or not of record, including but not limited to (a) building restrictions and zoning regulations, (b) any state of facts, which an accurate survey would show, (c) any mortgage, deed of trust or lien of record, and (d) all easements, covenants and restrictions affecting the Leased Premises.

3.           TERM.  The term ("Term") of this Lease is on a month to month basis commencing on March 1st, 2011.

4.           RENTAL.
 
(a)           March 1, 2011 tenant agrees to pay rent at a rate of $ 1250.00   per Month with increases agreed upon in the future.

(b)           Rent is due on the first day of the month.  If rent is not received by the 5th of the month a 10 percent late fee will be assessed every 5 days thereafter. Rent payments shall be without any setoff, abatement, deduction, or other reduction whatsoever. Late payment may create unacceptable economic risks or consequences, and this charge is stipulated to be reasonable. The assessment of interest on late payments shall not constitute a waiver of any breach by Tenant of this Lease resulting therefrom.
 
5.           REAL ESTATE TAXES AND SPECIAL ASSESSMENTS.

(a)           Taxes.  Landlord shall be responsible for all taxes on leased property.

(b)           Taxes Excluded.  It is expressly agreed that Tenant shall not be obligated to pay any income, profits, excise, inheritance or succession tax or other similar tax or charge that may be payable or chargeable to Landlord in connection with the Leased Premises under any present or future law of the United States, or the State of Tennessee, except as provided in subparagraph (b) above.
 

 
 
 

 
6.           REPAIRS AND MAINTENANCE.

(a)           Tenant shall not make or allow to be made any alterations or physical additions in or to the Leased Premises without first obtaining the written consent of Landlord. Any alterations, physical additions or improvements to the Leased Premises made by Tenant shall at once become the property of Landlord and shall be surrendered to Landlord upon the termination of this Lease. This clause shall not apply to movable equipment or furniture owned by Tenant which may be removed by Tenant at the end of the term of this Lease if Tenant is not then in default and if such equipment and furniture is not then subject to any other rights, liens and interests of Landlord.

(b)           Landlord shall, at its own cost and expense, maintain all parts of leased building and keep in good repair and condition (including all necessary improvements, whether interior or exterior, structural or non-structural, ordinary and foreseen or unforeseen, or arising by reason of a condition existing prior to the commencement of the term of this Lease. Tenant shall take good care of all the property and its fixtures.

(c)           Tenant shall not allow any damage to be committed on any portion of the Leased Premises, and at the termination of this Lease except for involuntary termination because of condemnation or casualty as set forth in Sections 8 and 10 below, by lapse of time or otherwise, Tenant shall deliver the Leased Premises to Landlord in as good condition as existed at the commencement date of this Lease, ordinary wear and tear excepted. The cost and expense of any repairs necessary to restore the condition of the Leased Premises shall be borne by Tenant, and if Landlord undertakes to restore the Leased Premises it shall have a right of reimbursement against Tenant, together with interest from the date of any such expenditures by Landlord until paid at the rate of the lesser of (i) eighteen percent ( 18%) per annum or (ii) the maximum rate of interest allowable under the laws of the State of Tennessee at such time.

7.           INSURANCE.

(a)           Tenant, at its own sole decision and cost and expense, with recommendation by landlord shall, throughout the entire term of this Lease, procure and maintain insurance to cover any and all of tenants belongings with in tenant’s leased space.  Landlord is not responsible for tenants belongings under any condition or situation that may occur.

(b)           All policies of insurance provided for or contemplated by this Lease shall name Landlord and Tenant as the insureds or additional insureds, as their respective interests may appear. To the extent required by Landlord's Mortgagee, if any, such policies shall also provide that losses thereunder shall be payable to said Landlord's Mortgagee, and/or that Landlord's Mortgagee shall be named as additional insured.
 
(c)           All policies of insurance provided for in this Section shall, to the extent obtainable, contain clauses or endorsements to the effect:
 
(d)          That no act, omission, or negligence of Tenant, or anyone acting for Tenant, which might otherwise result in a forfeiture of such insurance or any part thereof, shall in any way

2
 
 

 
8.            DAMAGE OR DESTRUCTION BY FIRE OR OTHER CASUALTY.

(a)           In the event of any damage or loss by fire or other insurable casualty to the Leased Premises, Tenant shall give immediate notice thereof and Landlord shall, with reasonable diligence, repair and restore the Leased Premises or the portion thereof so damaged, as nearly as possible to the condition of the same immediately prior to such damage.

(b)           In the event that the Leased Premises shall be totally destroyed or so substantially damaged by fire or other insurable casualty, so that the repair and restoration thereof would be impracticable, Landlord shall give notice thereof to Tenant and Tenant’s obligations herunder shall be terminated.

(c)           If by reason of any damage or destruction of improvements on the Leased Premises, any sums are paid under any insurance policy, such insurance proceeds shall be paid over to Landlord, if permitted by Landlord's Mortgagee, and Landlord shall hold the same as a trust fund to be used first for the payment of the entire cost of restoring, repairing and rebuilding the damaged or destroyed improvements before using the same for any other purpose. Each such payment shall be held by Landlord in trust and shall be used solely by Landlord for the payment of the cost of the work and materials. If there shall remain any balance of insurance monies after any damaged or destroyed improvements shall have been completely restored or replaced, as evidenced by a certificate of an independent engineer or independent architect delivered to Landlord and Tenant, such balance of insurance monies shall be paid to Landlord, if permitted by Landlord's Mortgagee.

(d)           Upon the expiration or sooner termination of this Lease, however caused, any insurance proceeds then held by Landlord shall be retained by landlord, if permitted by Landlord's Mortgagee.

(e)           Notwithstanding anything else contained in this Section, if the Leased Premises be damaged or destroyed, Landlord shall have the option within sixty (60) days from the date of such damage or destruction to terminate this Lease by giving notice to Tenant, which termination shall be effective not less than thirty (30) days after the giving of such notice, and thereupon this Lease shall cease and come to an end on the date specified in such notice, with the same force and effect as if such date were the date heretofore fixed for the expiration of the term herein demised; and Tenant thereupon shall make payment of all rent and the other sums and charges payable by Tenant hereunder, justly apportioned to the date of such termination. In the event of such termination, Tenant shall not be required to repair the damage, and all insurance monies payable as a result of such damage or destruction shall belong and be paid to Landlord and Landlord's Mortgagee, as their interests may appear.
 
(f)           No destruction of or damage to the improvements, or any part thereof, by fire or other casualty whatsoever, whether such damage or destruction be partial or total or otherwise, shall entitle or permit Tenant to surrender or terminate this Lease or shall relieve Tenant from Its liability to pay in fall all rent and other sums and charges payable by Tenant hereunder, or from any of its other obligations under this Lease, except that Tenant shall not be required to pay rent or other expenses at the time and to the extent same are paid to Landlord by loss of rent or rental value insurance.
 
(g)           Any repair, restoration or replacement work to be performed by Tenant shall be subject to Landlord’s prior written approval, including but not limited to all plans and specifications, and all architects, engineers, general contractors and major subcontractors engaged by Tenant to perform any such work.
 

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9.             UTILITIES. Water, electricity, gas, used on the Leased Premises are to be paid for by    Landlord     .  All other utilities such as phone, cable, etc. are to be paid for by tenant.

10.           CONDEMNATION.

(a)           In the event that the Leased Premises, or any part thereof, shall be taken in condemnation proceedings or by exercise of any right of eminent domain or shall be voluntarily conveyed by all parties in interest in lieu of such taking (any such taking or conveyance being hereinafter referred to as a "taking"), Landlord, as its interests may appear, shall be entitled to collect from any condemnor the entire award or the entire consideration for any voluntary conveyance (both of which are hereinafter referred to as "award"), that may be made as a result of such taking, without deduction therefrom for any estate vested in or held by tenant, subject to Tenant's rights as set forth in this Section. Tenant agrees to execute any and all documents that may be required in order to facilitate collection by Landlord of any and all such awards. Tenant and any Landlord's Mortgagee in cooperation with Landlord shall have the right to participate in any condemnation or eminent domain proceedings and be represented by counsel for the purpose of protecting their respective interests thereunder.
 
(b)            If at any time during the term of this Lease a taking of all or substantially all of the Leased Premises shall occur, such taking shall be deemed to have caused this Lease to terminate and expire on the date of such taking. The rent required to be paid by Tenant under this Lease shall be paid up to the date of such taking and Tenant shall, in all other respects, keep, observe or perform all the terms, covenants, agreements, provisions, conditions and limitations of this Lease on Tenant's part to be kept, observed or performed, up to the date of such taking. For purposes of this Section "substantially all of the Leased Premises" shall be deemed to have been taken if the portion of the Leased Premises not so taken cannot, be so repaired or reconstructed as to constitute a complete operation capable of being used for the business of Tenant.
 
(c)           If, at any time during the term of this Lease, less than substantially all of the Leased Premises shall be taken as aforesaid, this Lease and the term hereof shall continue in full force and effect. In the event of any such taking referred to above, Tenant shall give prompt notice thereof to Landlord and Tenant shall proceed, with reasonable diligence, to perform any necessary repairs, restorations, alterations or replacements at Tenant's sole cost and expense. All awards payable as a result of any such taking shall be paid (after deducting therefrom Landlord's expenses of collection, including, but not limited to, attorneys' fees and experts' fees) to Landlord for reimbursement to Tenant 'of the costs of any repairs, restorations, alterations and replacements made by Tenant pursuant to this Section as said costs become due and payable. Any excess shall be retained by Landlord.
 
(d)           In the event of any such partial taking, the rent and other charges payable hereunder which are fairly allocable to the portion of the Leased Premises taken shall be apportioned and adjusted as of the date of taking, and the rent which would otherwise have been payable for the remainder of the term shall be equitably reduced as of the date of taking to reflect the decrease in value of the Leased Premises to Tenant by reason of such taking; provided, however, that the rent shall not thereby be reduced below the then fair market  net rental value of the Leased Premises, following the taking.
 

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(e)           Notwithstanding anything contained in this Section, Tenant shall be entitled to receive, without any rights in Landlord thereto, upon any taking, (I) any and all compensation for the removal, disconnection, reinstallation, taking, impairment of value, or other damage to any of Tenant's property, whether deemed real or personal in any proceeding regarding such taking, located on the Leased Premises which is not part of the improvements, and (ii) damages for losses to or of Tenant's business.

11.           PURPOSE. Unless otherwise consented to in writing by the Landlord, the Leased Premises are to be used solely for the purpose of a Music Related Business.

12.           TENANT'S OBLIGATION TO COMPLY WITH LAWS.

(a)           Tenant covenants to comply with all laws, statutes, ordinances and regulations, now or hereinafter in-force applicable to the Leased Premises, or any improvements thereon, or the use thereof. Tenant also covenants to comply with any and all regulations and rules applicable to the Leased Premises issued by federal, state, county and local regulatory or licensing agencies, fire marshals, environmental control agencies, or by any other body exercising similar functions, and with the requirements of insurance companies writing policies covering the Leased Premises which now or hereafter may become applicable to the Leased Premises. Tenant shall pay all costs, expenses, claims, fines, penalties and damages that may in any manner arise out of or be imposed because of the failure of Tenant to comply with this paragraph, and in any event agrees to indemnify and hold Landlord harmless from all liability with reference to the same. Landlord and Tenant shall each promptly give notice to the other in writing at its notice address of any notice of violation it receives.
 
(b)           Tenant shall not cause or permit any Hazardous Substances, as defined in subsection (e) below, to be brought upon or kept or used in or about the Leased Premises by Tenant, its agents, employees, contractors, or invitees unless (i) such Hazardous Substances are necessary for Tenant's business and (ii) Tenant first obtains the written consent of Landlord. Tenant shall at all times and in all respects comply with all local, state and federal laws, ordinances, regulations, and orders (collectively, "Hazardous Substances Laws") relating to industrial hygiene, environmental protection, or the use, analysis, generation, manufacture, storage, disposal, or transportation of any Hazardous Substances. Tenant shall at its own expense procure maintain in effect, and comply with all conditions of any and all permits, licenses, and other governmental and regulatory approvals required for Tenant's use of the Leased Premises, including, without limitation, discharge of (appropriately treated) materials or wastes into or through any sanitary sewer serving the Leased Premises. Except as discharged into the sanitary sewer in strict accordance and conformity with all applicable Hazardous Substances Laws, Tenant shall cause any and all Hazardous Substances removed from the Leased Premises to be removed and transported solely by duly licensed haulers to duly licensed facilities for final disposal of such materials and wastes. Tenant shall in all respects handle, treat, deal with, and manage any and all Hazardous Substances in, on, under, or about the Leased Premises in total conformity with all applicable Hazardous Substances Laws and prudent industry practices regarding management of such Hazardous Substances. Upon expiration or earlier termination of the term of the Lease, Tenant shall cause all Hazardous Substances to be removed from the Leased Premises and to be transported for use, storage, or disposal in accordance and compliance with all applicable Hazardous Substances laws; provided, however, that Tenant shall not take any remedial action in response to the presence of any Hazardous Substances in or about the Leased Premises nor enter into any settlement agreement, consent decree, or other compromise in respect to any claims relating to any Hazardous Substances in any way connected with the Leased Premises, without first notifying Landlord of Tenant's intention to do so and affording Landlord ample opportunity to appear, intervene, or otherwise appropriately assert and protect Landlord's interest with respect thereto.
 

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(c)           If at any time Tenant shall become aware, or have reasonable cause to believe, that any Hazardous Substance has come to be located on or beneath the Leased Premises, Tenant shall, immediately upon discovering such presence or suspected presence of the Hazardous Substance, give  written notice of that condition to Landlord. In addition, Tenant shall immediately notify Landlord in writing of (i) any enforcement, cleanup, removal, or other governmental or regulatory action instituted, completed, or threatened pursuant to any Hazardous Substance Laws, (ii) any claim made or threatened by any person against Tenant or the Leased Premises, relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Substances, and (iii) any reports made to any local, state, or federal environmental agency arising out of or in connection with any Hazardous Substances in or removed from the Leased Premises, including any complaints, notices, warnings or asserted violations in connection therewith. Tenant shall also supply to Landlord as promptly as possible, and in any event within five (5) business days after Tenant first receives or sends the same, copies of all claims, reports, complaints, notices, warnings, or asserted violations relating  in any way to the Leased Premises, or Tenant's use thereof. Tenant shall promptly deliver to Landlord copies of hazardous waste manifests reflecting the legal and proper disposal of all Hazardous Substances removed from the Leased Premises.

(d)           As used in this Lease, the term "Hazardous Substance or Substances" means any hazardous or toxic substances, materials or wastes, including, but not limited to, those substances, materials, and wastes listed in the United States Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302) and amendments thereto, or such substances, materials and wastes which are or become regulated under any applicable local, state or federal law including, without limitation, any material, waste or substance which is (i) petroleum, (ii) asbestos, (iii) polychlorinated biphenyls, (iv) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251, et sea. (33 U.S.C. Section 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317), (v) defined as a "hazardous waste" pursuant to Section 10 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. (42 U.S.C. Section 6903) or (vi) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601, et seq. (42 U.S.C. Section 9601).
 
(e)         Tenant shall indemnify, defend (by counsel acceptable to Landlord), protect and hold harmless Landlord, and each of Landlord's partners, directors, officers, employees, agents, attorneys, successors and assigns, from and against any and all claims, liabilities, penalties, fines, judgments, forfeitures, losses (including, without limitation, diminution in the value of the Leased Premises, damages for the loss or restriction on use of retable or usable space or of any amenity of the Leased Premises), costs, or expenses (including attorneys' fees, consultant fees, and expert fees) for the death of or injury to any person or damage to any property whatsoever, arising from or caused in whole or in part, directly or indirectly, by (A) the presence in, on, under, or about the Leased Premises, or any discharge or release in or from the Leased Premises, of any Hazardous Substances or Tenant's use, analysis, storage, transportation, disposal, release, threatened release, discharge, or generation of Hazardous Substances to, in, on, under, about, or from the Leased Premises, or (B) Tenant's failure to comply with any Hazardous Substances Law. Tenant's obligations under this subsection (e) shall include, without limitation, and whether foreseeable or unforeseeable, any and all costs incurred in connection with any investigation of site conditions, and any and all costs of any required or necessary repair, cleanup, detoxification, or decontamination of the Leased Premises, (including, without limitation, the soil and ground water on or under the Leased Premises) and the preparation and implementation of any closure, remedial action, or other required plans in connection therewith. Tenant's obligations under this paragraph shall survive the expiration or earlier termination of the term of the Lease. For purposes of the release and indemnity provisions hereof, any acts or omissions of Tenant, or by employees, agents, assignees, contractors, or subcontractors of Tenant or others acting for or on behalf of Tenant (whether or not they are negligent, intentional, willful, or unlawful), shall be strictly attributable to Tenant.
 

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13.           DEFAULT: LANDLORD'S REMEDIES. Any of the following shall constitute a default by Tenant under this Lease:

(a)           Tenant's failure to pay rent or any other charge under this Lease when due, or Tenant's failure to comply with any other term or condition of this Lease.

(b)           Tenant shall file a petition under any section or chapter of the Bankruptcy Code, as amended, or under any similar law of statute of the United States or any state thereof; or Tenant shall be adjudged bankrupt or insolvent in proceedings filed against Tenant thereunder.

(c)           A receiver or trustee shall be appointed for all or substantially all of the assets of Tenant.

(d)           Tenant shall abandon any substantial portion of the Leased Premises.

(e)           Tenant shall do or permit to be done any act which results in a lien being filed against the Leased Premises or any part thereof.

In case of default as described above, Landlord shall have the right to the following remedies which are intended to be cumulative and in addition to any other remedies provided under Tennessee law:

(i)           Terminate this Lease, in which event Tenant shall immediately surrender the premises to Landlord. Tenant agrees to pay to Landlord on demand all reasonable cost incurred in connection with such termination and retaking of possession, including, without limitation, court costs and attorney fees, and all costs incurred in restoring the premises to the same condition as at the commencement of the Term, ordinary wear and tear excepted.

(ii)          Retake possession of the premises by summary proceedings and relet the premises upon any reasonable terms. Reletting shall not be construed as an acceptance of a surrender of Tenant's leasehold interest.

(iii)         Recover all damages of every nature and kind caused by Tenant's default which shall include, without limitation, any and all costs associated with reletting the premises, and reasonable costs and attorneys' fees relating to Tenant's default. Further, Tenant shall indemnify and hold harmless Landlord from any actual loss of rent by Landlord during the balance of the original term of the Lease or option period, whichever may be in force, as long as Landlord is using reasonable efforts to relet the premises. Landlord may sue periodically to recover damages as they occur throughout the lease term, and no action for accrued damages shall bar a later action for damages subsequently accrued. Alternatively or in addition, Landlord may elect in any one action, even after having instituted prior action for accrued damages, to recover accrued damages plus damages attributable to the remaining term of the Lease equal to the difference between the rent under the Lease and the reasonable rental value of the premises for the remainder of the term, plus interest on all rental payments past due and on such judgment from the date any rental payment was due to the date of actual payment at the rate of the lesser of (i) eighteen percent ( 18%) per annum, or (ii) the maximum lawful rate under the laws of the State of Tennessee at such time.
 

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(iv)           Make any payment or perform any obligation required of Tenant so as to cure Tenant's default, in which case Landlord shall be entitled to recover all amounts so expended from Tenant, plus interest from the date of expenditure at the lesser of (i) eighteen percent (18%) per annum or (ii) the maximum lawful rate under the laws of the State of Tennessee at such time, until the date of repayment by Tenant.

Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided by law, nor shall pursuit of any remedy herein provided constitute a forfeiture or waiver of any rent due to Landlord hereunder or of any damages accruing to Landlord by reason of the violation of any of the terms, provisions and covenants herein contained. No act or thing done by Landlord or its agents during the term hereby granted shall be deemed a termination of this Lease or an acceptance of the surrender of the premises, and no agreement to terminate this Lease or to accept a surrender of said premises shall be valid unless in writing signed by Landlord. No waiver by Landlord of any violation or breach of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions and covenants herein contained. Landlord's acceptance of the payment of rental or other payments hereunder after the occurrence of an event of default shall not be construed as a waiver of such default, unless Landlord so notifies Tenant in writing. Forbearance by Landlord to enforce one or more of the remedies herein provided upon an event of default shall not be deemed or construed to constitute a waiver of such default or of Landlord's right to enforce any such remedies with respect to such default or any subsequent default. If, on account of any breach or default by Tenant in Tenant's obligations under the terms and conditions, of this Lease, it shall be come necessary or appropriate for Landlord to employ or consult with an attorney concerning or to enforce or defend any of Landlord's rights or remedies hereunder, Tenant agrees to pay any reasonable attorneys' fees so incurred.

14.           SIGNAGE.  One   small sign will be allowed to be visable on the outside of the building or from the inside of the building, appearance and placement must be approved my the landlord. Art work for the sign must be approved by landlord. No  signage will be allowed on the main front door. PLEASE INITIAL THIS SIGNAGE PORTION OF THE LEASE._________________intitials.

15.           ASSIGNMENT OR SUBLETTING.

(a)           Subject to the provisions of subparagraph (b) of this Article, Tenant shall not assign or sublet its interests, or any portion thereof, under this Lease without first obtaining Landlord's consent in writing, which consent may not be unreasonably withheld by Landlord. However, such assignment or subletting shall not relieve Tenant of continuing direct and primary liability under the Lease. Consent in one instance shall not prevent this provision from applying to each subsequent instance. This provision shall apply to all transfers by operation of law including, but not limited to, mergers or any change of ownership of Tenant.
 

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(b)           Tenant shall have the right to assign or sublet the premises to any of its subsidiaries or affiliates or any other entity controlled by the Tenant upon written notice to Landlord, provided that Tenant shall remain obligated under the provisions of this Lease. Upon such subletting or assignment, if requested by Landlord, Tenant shall execute a guarantee of the obligation of the performance of its affiliate or subsidiary of all terms of the Lease. No assignment or subletting shall relieve Tenant of continuing direct and primary liability under this Lease without written consent of Landlord. Landlord must approve anything and anyone regarding subletting.

16.           SUCCESSORS AND ASSIGNS.  The covenants and agreements in this Lease shall, subject to the provisions of this Lease, bind and inure to the benefit of Landlord, its successors and assigns, and Tenant, its permitted successors and assigns.

17.           END OF TERM.   Tenant covenants that on the last day of the term it will peaceably and quietly leave and surrender the Leased Premises. Premises must be clean and orderly.

18.           ESTOPPEL CERTIFICATES.   Tenant agrees, from time to time and within ten (l0) days after request by Landlord, to deliver to Landlord, or Landlord's designee, an Estoppel certificate stating that this Lease is in full force and effect, the date to which rent has been paid, the unexpired term of this Lease and such other matters pertaining to this Lease as may be reasonably requested by Landlord. It is understood and agreed that Tenant's obligation to furnish such estoppel certificates in a timely fashion is a material inducement for Landlord's execution of this Lease.

19.           MEMORANDUM OF LEASE.   The parties agree that they will upon request, execute and acknowledge a memorandum of lease for recording purposes.

20.           Intentionally omitted

21.          RIGHT TO INSPECT PREMISES.  Landlord and its agents and representatives shall have the right to enter into or upon the Leased Premises at reasonable times for the purpose of examining the same.

Landlord or its agents shall have the right to show the Leased Premises to persons wishing to purchase or lease the same. During the last year prior to the expiration of the term of the Lease, Landlord or its agents shall have the right to place the usual "for lease" or "for sale" notices on the Leased Premises, and Tenant agrees to permit the same to remain thereon without hindrance or molestation.

22.           ENTIRE AGREEMENT.   It is expressly understood and agreed by and between Landlord and Tenant that this Lease sets out the understandings between Landlord and Tenant relative to the Leased Premises and that there are no promises, agreements, conditions, understandings, inducements, warranties or representations, either oral or written, express or implied, between them other than as set forth in this Lease and its attachments and this Lease shall not be modified in any manner except by a writing signed by Landlord and Tenant.

23.           QUIET ENJOYMENT.  Landlord represents and warrants that it has full authority and right to enter into this Lease and that Tenant, upon paying the rental herein set forth and performing its other covenants and agreements herein set forth, shall peaceably and quietly have, hold and enjoy the premises for the term hereof without hindrance or molestation from Landlord, subject to (i) the terms and provisions of this Lease, and (ii) all actions, including, but not limited to, condemnation, by any governmental authority. No failure by Landlord to comply with the foregoing covenant shall give Tenant any right to cancel or terminate this Lease, or to perform any obligation due herein under. Notwithstanding the foregoing, Tenant shall have a right, by separate and independent action, to pursue any claim against Landlord as a result of any breach of the covenants contained herein, provided that the aggregate liability of Landlord, its successors and assigns hereunder and under all other provisions of this Lease shall be limited to its equity in the Leased Premises.
 

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24.          NOTICES.   Each provision of this instrument regarding notice shall be deemed to be complied with when and if the following steps are taken:

(a)           All rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at the address herein below set forth or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith. Tenant's obligation to pay rent and any other amounts to Landlord under the terms of this Lease shall not be deemed satisfied until such rent and other amounts have been actually received by Landlord.

(b)           Any payments required to be made by Landlord to Tenant hereunder shall be payable to Tenant at the address herein below set forth, or at such other address within the continental United States as Tenant may specify from time to time by written notice delivered in accordance herewith.

(c)            Any notice or document required or permitted to be delivered hereunder shall be deemed to be delivered whether actually received or not when deposited in the United States Mail, postage prepaid, certified or registered mail, addressed to the parties hereto at the respective addresses set out below, or at such other address as they have specified by written notice delivered in accordance herewith:
 
  LANDLORD:
Di Affari Properties
Christy or Rebecca DiNapoli 615-400-6590
Scott or Sandi Borchetta  615-482-7077
       
  PAYMENTS:   Payable to: Di Affari Properties
    Mailed to: 
Attention: Julie Boyett
148 Dalton Circle
Rockvale, TN. 37153
       
  TENANT: Name:   Malemark, Inc.
       
  Billing Address:
Attention: Accounts Payables
5525 Erindale Drive Suite 200
Colorado Springs, CO 80918
 
All parties included with the terms "Landlord" and "Tenant"  shall be bound by notices given in accordance with the provisions of this paragraph to the same effect as if each had received such notice.

25.           MECHANICS' AND OTHER LIENS.  Tenant shall have no authority, express or implied, to create or place any lien or encumbrance, of any kind or nature whatsoever upon the Leased Premises, including those who may furnish materials or perform labor for any construction or repairs, and each such claim shall affect and each such lien shall attach, if at all, only to the leasehold interest granted to Tenant by this instrument, which claim Tenant shall promptly satisfy and remove or bond off and duly dispose of.
 

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26.           INDEMNIFICATION.  During the entire term of this Lease, and at all times thereafter, the Tenant will indemnify and save harmless the Landlord against any and all claims, debts, demands, or obligations which may be made against the Landlord or against the Landlord's title in the premises, arising out of, or in connection with, any alleged act or omission of the Tenant or any person claiming under, by, or through the Tenant; and if it becomes necessary for the Landlord to defend any action seeking to impose any such liability, the Tenant will pay the Landlord all costs of court and reasonable attorneys' fees incurred by the Landlord in effecting such defense in addition to any other sums which the Landlord may be called upon to pay by reason of the entry of a judgment against the Landlord in the litigation in which such claim is asserted.
 
27.          SUCCESSOR LANDLORD.  In case Landlord (herein called the "Conveying Landlord") shall convey or otherwise dispose of its interest in the Leased Premises and/or turn over to the transferee any funds held by it hereunder in which Tenant has an interest, all liabilities and obligations on the part of the Conveying Landlord under this Lease, accruing after such conveyance or disposal, shall terminate upon such conveyance or disposal, provided the transferee has acknowledged in writing its assumption of all such liabilities and obligations of the Conveying Landlord, and thereafter all such liabilities and obligations shall be binding upon only the new owner of the Leased Premises and the conveying Landlord will thereby be released and discharged from any further liability under this Lease.
 
28.           VENUE.  The parties hereby agree that the only proper and convenient venue and/or jurisdiction for any litigation between them related to this Lease or the relationship of the parties as evidenced by this Lease shall be in the Circuit Court of Davidson County, Tennessee, the Chancery Court of Davidson County, Tennessee, or the United States District Court for the Middle District of Tennessee.
 
29.          Void.

30.          MISCELLANEOUS.

(a)            The terms, provisions, covenants and conditions contained in this Lease shall apply to, inure to the benefits of, and be binding upon the parties hereto and upon their respective heirs, legal representatives, successors and permitted assigns, except as otherwise herein expressly provided.

(b)           The captions inserted in this Lease are for convenience only and in no way limit or otherwise describe the scope or intent of this Lease, nor are they intended to in any way affect its interpretation.

(c)            This lease may not be altered, changed or amended except by an instrument in writing signed by both parties hereto.
 

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(d)           All obligations of Tenant hereunder not fully performed as of the expiration or earlier termination of the term of this Lease shall survive the expiration or earlier termination of the term hereof, including without limitation, all payment obligations with respect to taxes and insurance and. all obligations concerning the condition of the premises. Upon the expiration or earlier termination of the term hereof, and prior to Tenant vacating the premises, Tenant shall pay to Landlord any amount reasonably estimated by Landlord for Tenant's obligation hereunder for taxes and insurance premiums for the year in which this Lease expires or terminates. All such amounts shall be used and held by Landlord for payment of such obligations of Tenant hereunder, with Tenant being liable for any additional costs therefor upon demand by Landlord, or with any excess to be returned to Tenant after all such obligations have been determined and satisfied, as the case may be.
 
(e)  If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future laws effective during the term of this Lease, then and in that event, it is the intention of the parties hereto that the remainder of this Lease remaining shall not be affected thereby, and each remaining term, condition, covenant, or provision of this Lease shall be valid and be enforced to the fullest extent permitted by law; and it is further the intention of the parties that in lieu of such illegal, invalid or unenforceable provision, the parties (or any court having jurisdiction) shall substitute a legal, valid and enforceable provision consistent, to the maximum extent practicable, with the intention of the parties as to such illegal, invalid or unenforceable provision.
 
(f)  No pets are allowed
 
(g)  HOLDOVER PERIOD ( ie. Automatic extension of lease): If Tenant is in good standing and maintains possession of the Property for any period after the termination of this Lease (ie. Holdover Period), a rent increase of an additional ___10___% per month will begin as an automatic holdover fee for a period of six months or until a new lease agreement is reached which ever comes first. Landlord has the option of accepting or declining Tenant to take an automatic extension of lease or “Holdover period”.  Tenant must still notify landlord 60 days  in advance  if tenant elects to terminate lease during this holdover period and during any extensions of this lease agreement. 
 
(h)  Keys and Locks: Tenant will be given a key to the property. All keys must be returned to the Landlord at the end of the lease term or Tenant will be charged a $50.00 lost key charge.  Tenant is not allowed to change or re-key the locks at any time during the lease unless approved by Landlord in advance and in writing. If Landlord is required to supply duplicate keys or let tenant into the property due to a lock out, Tenant will be subject to a $50.00 service fee.
 
(i)  Remodeling or Improvements: NO remodeling, renovating, repainting, or any other changes are allowed to property by Tenant unless written approval is given by Landlord.  If Landlord agrees is writing to changes requested by Tenant, all work, fixtures, etc. become a part of structure and may not be removed at any time after installation.
 
 

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31.  TENNESSEE LAW.  This Lease shall be construed according to the laws of the State of   Tennessee.
 
32.  PARKING: Tenant may park one vehicle in the back parking lot on the property per guarantor of lease which will be 2 spaces. Please park on the NORTH side which is the side that your suite is on. Guests of the tenant or assistants will need to park in the front of the building.

33.  This is a legal binding contract between landlord and tenant.

34.  There will be an additional $25.00 charged to tenant for each bounced check given to landlord in addition to all late fees.

By signing below, Tenant acknowledges, understands and agrees to all terms of this lease.

IN WITNESS WHEREOF, this Lease is executed as of the day and year first above written.
 
    “LANDLORD”     /s/ Christy DiNapoli                                 Date: 3-1-2011
             Di Affari Properties/Scott Borchetta and/or Christy DiNapoli


             “TENANT”  /s/ Herman DeBoard, III                                   Date: 3-1-2011
                                   Malemark, Inc. Herman DeBoard, III, President


 
 
13
EX-10.4 7 ex10x4.htm EXHIBIT 10.4 ex10x4.htm
Exhibit 10.4
 
 
CONSULTING SERVICES AGREEMENT

CONSULTING SERVICES AGREEMENT (this “Agreement”) is entered into as of December 1st, 2010 by and between Malemark, Inc., a Colorado corporation (the “Company”), and MCM Capital Management, Inc. (“Consultants”).
 
 
RECITALS

A.  The Company desires to be assured of the association and services of Consultants and to avail itself of Consultant’s experience, skills, abilities, knowledge and background and is therefore willing to engage Consultants upon the terms and conditions set forth herein; and

B. Consultants agree to be engaged and retained by the Company upon the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the covenants, agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.  Consulting Services.  Consultants shall, on a part-time basis, provide corporate development and strategic management consulting services to the Company (the “Consulting Services”), including but not limited to: evaluation and due diligence of potential business opportunities, target acquisitions and assistance with all applicable guidelines and responsibilities of being a publically traded company.

2.  Term.  The term of this Agreement shall commence as of the date hereof and shall be effective for a period of one year (the “Term”).  This agreement may be extended under the same terms by mutual agreement between Consultants and the Company.

3.  Direction, Control and Coordination. Consultants shall perform the Consulting Services under the sole direction and with the approval of the Company’s Board of Directors.  Since the Consultants are members of the Company’s Board of Directors, Consultants shall perform the consulting services under the direction of an officer of the Company to whom such direction is delegate by resolution of the remaining Board of Directors.

4.  Dedication of Resources.  Consultants shall devote such time, attention and energy as is necessary to perform and discharge the duties and responsibilities under this Agreement in an efficient, trustworthy and professional manner.

5.  Standard of Performance.  Consultants shall use their best reasonable efforts to perform the consulting services as an advisor to the Company in an efficient, trustworthy and professional manner.  Consultants shall perform their consulting services to the sole satisfaction of, and in conjunction and cooperation with, the Company.
 

 
 
 

 
6.  Compensation.  The Company shall pay to Consultants a total of two thousand dollars ($2,000.00) per month in advance on the first day of each month in exchange for the Consulting Services.

7.  Confidential Information.  Consultants recognize and acknowledge that by reason of performance of Consultant’s services and duties to the Company (both during the Term and before or after it) Consultants have and will continue to have access to confidential information of the Company and its affiliates, including, without limitation, information and knowledge pertaining to innovations, designs, ideas, plans, trade secrets, proprietary information, advertising, distribution and sales methods and systems, and relationships between the Company and its affiliates and customers, clients, suppliers and others who have business dealings with the Company and its affiliates (“Confidential Information”). Consultants acknowledge that such Confidential Information is a valuable and unique asset and covenants that it will not, either during or for three (3) years after the term of this Agreement, disclose any such Confidential Information to any person for any reason whatsoever or use such Confidential Information (except as its duties hereunder may require) without the prior written authorization of the Company, unless such information is in the public domain through no fault of the Consultants or except as may be required by law.  Upon the Company’s request, the Consultants will return all tangible materials containing Confidential Information to the Company.  The Consultants also realize that as members of the Board of Directors, they have a fiduciary duty to keep confidential any and all matters sensitive to the Company.

8.  Relationship.  The only relationship that exists is that Consultants are members of the Board of Directors and this agreement does not create, and shall not be construed to create, any joint venture or partnership between the parties, and may not be construed as an employment agreement.  No officer, employee, agent, servant, or independent contractor of Consultants nor its affiliates shall at any time be deemed to be an employee, agent, servant, or broker of the Company for any purpose whatsoever solely as a result of this Agreement, and Consultants shall have no right or authority to assume or create any obligation or liability, express or implied, on the Company’s behalf, or to bind the Company in any manner or thing whatsoever.

9.  Notices.  Any notice required or desired to be given under this Agreement shall be in writing and shall be deemed given when personally delivered, sent by an overnight courier service, or sent by certified or registered mail to the following addresses, or such other address as to which one party may have notified the other in such manner:

If to the Company:          
Malemark, Inc.
5525 Erindale Dr, Suite 200
Colorado Springs, Colorado 80918
719-260-8509
719-260-8516 (fax)
 
If to the Consultants:
MCM Capital Management, Inc.
5525 Erindale Dr, Suite 201
Colorado Springs, CO 80918
719-260-8509
719-260-8516 fax
 
2
 
 

 
10.  Applicable Law.  The validity, interpretation and performance of this Agreement shall be controlled by and construed under the laws of the State of Colorado.

11.  Severability.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provisions of this Agreement.

12.  Waiver of Breach.  The waiver by either party of a breach of any provision of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach by such party.  No waiver shall be valid unless in writing and signed by an authorized officer of the Company or Consultant.

13.  Assigns and Assignment.  This Agreement shall extend to, inure to the benefit of and be binding upon the parties hereto and their respective permitted successors and assigns; provided, however, that this Agreement may not be assigned or transferred, in whole or in part, by the Consultants except with the prior written consent of the Company.

14.  Entire Agreement.  This Agreement contains the entire understanding of the parties with respect to its subject matter. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.

15.  Counterparts.  This Agreement may be executed by facsimile and in counterparts each of which shall constitute an original document, and both of which together shall constitute the same document.






Remainder of Page Left Blank Intentionally
 
 
 
 
 
 
 
 
3
 
 

 
 
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

 
  The Company:   
MALEMARK, INC.
 
       
    By: /s/ Herman DeBoard  
     
Herman DeBoard, President
 
       
 
  The Consultants: 
MCM CAPITAL MANAGEMANT, INC.
 
       
    By: /s/ Raymond E. McElhaney  
     
Raymond E. McElhaney, President
 
       
 
 
 
 
 
 
 
4

 
 

 














EX-10.5 8 ex10x5.htm EXHIBIT 10.5 ex10x8.htm
Exhibit 10.5
 
 
EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement"), effective as of the 1st day of October, 2009, by and between MALEMARK, INC., a Colorado corporation with its principal place of business located at 5525 Erindale Dr., Suite 201, Colorado Springs, CO 80918 (hereinafter referred to as "Company" or "Employer") and Herman Deboard, III (hereinafter referred to as the "Employee").
 
RECITALS
 
NOW THEREFORE, in consideration of the Recitals and the mutual covenants, promises, agreements, representations and warranties contained in this Agreement, the parties hereby accept employment on the terms and conditions hereinafter set forth.

1.           Term.         Subject to the provisions for termination hereinafter provided, the initial two (2) year term of this Agreement shall commence on October 1, 2009 and terminate on September 30, 2012, and shall continue thereafter on a year to year basis unless terminated by the Company by delivery of written notice to the Employee not later than sixty (60) days prior to the date for termination as indicated in said notice.

2.           Compensation and Performance Review.

a)            For all services rendered by the Employee under this Agreement, commencing October 01, 2009, the Company shall be obligated to pay the Employee a salary of $7,500.00 per month, payable in accordance with the Employer's regular payroll procedure.

b)           At the end of every yearly period after the commencement of the term of this agreement, the Company shall grant the Employee a performance and salary review for the purposes of gauging the performance of the Employee for the preceding year and adjusting the salary of the Employee hereunder looking to the results of such review and the Company's financial progress, among other things, as guides in such adjustments; provided, however, compensation payable to the Employee pursuant to this provision shall in no event be reduced from that fixed by Subparagraph (a) in this Section 2.

3.           Duties.       Employee is engaged as the President of the Company.  In such capacity, Employee shall exercise detailed supervision over the operations of the Company subject, however, to control by the Board of Directors.  The Employee shall perform all duties incident to the title of President and such other duties as from time to time may be assigned to him by the Board of Directors.

4.           Best Efforts of Employee.      The Employee shall devote his full time efforts to the business of the Company and to all of the duties that may be required by the terms of this Agreement to the reasonable satisfaction of the Company.   The Employee shall at all times faithfully, with diligence and to the best of his ability, experience and talents, perform all the duties that may be required of and from his pursuant to the express and implicit terms hereof to the reasonable satisfaction of the Company.  Such services shall be rendered at such other place or places as the Company shall in good faith require or as the interest, needs, business or opportunity of the Company shall require.  The Employee agrees not to engage in any employment or consulting work or any trade or business for his account or for or on behalf of any other person, firm or corporation, unless the Employee obtains prior written consent from the Board of Directors of the Company.
 

 
 
 

 
5.           Working Facilities.    The Employee shall be furnished with all such facilities and services suitable to his position and adequate for the performance of his duties.

6.           Expenses.     The Employee is authorized to incur reasonable expenses for promoting the business of the Company, including his out-of-pocket expenses for entertainment, travel and similar items.  The Company shall reimburse the Employee for all such expenses on the presentation by the Employee, from time to time, of an itemized account of such expenditures in accordance with the guidelines set forth by the Internal Revenue Service for travel and entertainment.

7.           Benefits.     The Employee shall be entitled to receive any and all health, insurance, disability or any other benefit plan adopted by the Board of Directors from time to time for the benefit of its employees.

8.           Vacation.    The Employee shall be entitled each year to a vacation of a reasonable amount during which time his compensation shall be paid in full.

9.           Disability.

a)  Should the Employee, by reason of illness or incapacity, be unable to perform his job for a period of up to and including a maximum of three (3) months, the compensation payable for and during such period under this Agreement shall be unabated. The Board of Directors shall have the right to determine the incapacity of the Employee for the purposes of this provision, and any such determination shall be evidenced by its written opinion delivered to the Employee.  Such written opinion shall specify with particularity the reasons supporting such opinion and be manually signed by at least a majority of the Board.  Should the Board of Directors determine the Employee incapable of the performance of his duties, the Employee's compensation thereafter shall be reduced to zero.

b)  The Employee shall receive full compensation upon his return to employment and regular discharge of his full duties hereunder.  Should the Employee be absent from his employment for whatever cause for a continuous period of more than 365 calendar days, the Company may terminate this Agreement and all obligations of the Company hereunder shall cease upon such termination.
 
 
 
 

 
10.           Termination.
 
a)  The Company may terminate this Agreement with cause at any time with immediate notice to the Employee thereof, and such notice having been given, this Agreement shall terminate in accordance therewith.  For the purpose of this section, "cause" shall be defined as meaning such conduct by the Employee which constitutes in fact and/or law a breach of fiduciary duty or felonious conduct having the effect, in the opinion of the Board of Directors, of materially adversely affecting the Company and/or its reputation.

b)  The Company may terminate this Agreement without cause by giving sixty (60) days written notice to the Employee, and such notice having been given, this Agreement shall terminate in accordance therewith.

c)  The Employee may terminate this Agreement without cause by giving sixty (60) days written notice to the Company, and such notice having been given, this Agreement shall terminate in accordance therewith.

d)  In the event of termination without cause or being asked to resign as part of a merger, acquisition, buyout or any corporate restructure, the Employee shall be entitled to receive compensation through the original term specified in paragraph one (1).  Such compensation shall be paid in full at the date of termination only if the Employment Agreement is terminated without cause.  After the date of termination, all benefit and incentive programs of any kind or nature then in place shall terminate.

11.           Notices.  All notices, demands, elections, opinions or requests (however characterized or described) required or authorized hereunder shall be deemed given sufficiently if in writing and sent by registered or certified mail, return receipt requested and postage prepaid, or by tested telex, telegram or cable to, in the case of the Company:
 
Malemark, Inc.
5525 Erindale Dr.
Suite 201
Colorado Springs, CO 80918
 
and in the case of the Employee:
 
Herman DeBoard, III
        Colorado Springs, CO 80918
 
 
 
 
 

 
12.            Confidential Information.       During the term of this Agreement, the Employee will have access to certain confidential information and materials, including but not limited to  information, originated by the Company or disclosed to the Company by others under agreements to hold the same confidential (“Confidential Information”).  Confidential Information further includes, but is not limited to, all technical, engineering, property and  information, financial, business practices, customer lists, customer identities and commercial information heretofore or hereafter disclosed or transmitted by the Company in any form and manner to the Employee or otherwise received by the Employee, whether orally or in writing.  Employee acknowledges that Employee shall not either directly or indirectly use, disclose or communicate to any person or entity any Confidential Information for any purpose at all whether during or after the term of this Agreement, except to the extent any such information becomes generally known to the public through no fault of Employee.   Furthermore, the terms of this provision survive the Term of this Agreement, or any termination thereof.

13.           Remedies.    Employee acknowledges that any failure to carry out an obligation under this Agreement, or a breach by the Employee of any provision herein, will constitute immediate and irreparable damage to the Company, which cannot be fully and adequately compensated in money damages and which will warrant preliminary and other injunctive relief, an order for specific performance, and other equitable relief.   Employee also understands that other actions may be taken and remedies enforced against the Employee, including termination of any other agreements the Employee may have with the Company.

14.           Entire Agreement.     This Agreement contains the entire agreement between the Company and the Employee, regarding employment of the Employee.  This Agreement shall not be modified except by written agreement signed by both parties.

15.           Headings.    The subject headings of the articles and sections contained in this Agreement are included for convenience purposes only and shall not control or affect the meaning, construction or interpretation of any provision hereof.

16.           Assigns.     This Agreement shall be binding upon the Company and Employee, their respective heirs, executors, legal representatives, successors and assigns.

17.           Waiver and Severability.    No waiver by either party of any breach or default hereof by the other shall be deemed to be a waiver of any preceding or succeeding breach or default hereof, and no waiver shall be operative unless the same shall be in writing.   Should any provision of this Agreement be declared invalid by a court of competent jurisdiction, the remaining provisions hereof shall remain in full force and effect regardless of such declaration.

18.           Arbitration.     Any dispute regarding the subject matter of this Agreement shall be resolved by binding arbitration to be conducted by an arbitration association upon mutual written agreement of the parties.  The prevailing party shall be entitled to an award of attorney's fees, costs and expenses.  The award may be converted to an order of a court of competent jurisdiction, and each party voluntarily submits to personal jurisdiction in the federal and state courts located in Colorado.  Notwithstanding the aforementioned, the Company shall be entitled to seek injunctive relief for violation of the provisions of Section 12 herein, as provided in Section 13 herein.
 

 
 
 

 
19.            Counterparts.    This Agreement may be executed in several counterparts, and as to executed shall constitute one Agreement, binding on all parties hereto, notwithstanding that all parties are not signatory as to other original or the same counterpart.  Facsimile signatures are acceptable.

20.            Time.   Time is of the essence.

21.           Governing Law.   This Agreement shall be construed under the laws of the State of Colorado.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
 
 
THE COMPANY:  
MALEMARK, INC.
 
   
THE EMPLOYEE:
 
/s/ Christina B.T. DeBoard
   
/s/ Herman C. Deboard, III
 
Christina B.T. DeBoard, Secretary
   
Herman C. Deboard, III
 
 
   
 
 




 
 

 


AGREEMENT

I, Herman C. DeBoard III, hereby agree to accept six thousand five hundred dollars ($6500.00) per month as payment in full for my services until July 1, 2010, in which my monthly amount will raised to eight thousand one hundred sixty six dollars and sixty seven cents ($8166.67) per month. This amount supersedes the amount as outlined in my Employment Agreement dated October 1, 2009 by and between myself and Malemark, Inc. All other terms and conditions of the Employment Agreement dated October 1, 2009 remain in full force and effect.

Agreed to this 1st day of October, 2009.

By
 
 
/s/ Herman C. DeBoard III      
Herman C. DeBoard III
     
       
 










































EX-10.6 9 ex10x6.htm EXHIBIT 10.6 ex10x9.htm
Exhibit 10.6
MALEMARK, INC.
 
SUBSCRIPTION AGREEMENT

All persons who wish to subscribe for Shares of Malemark, Inc. (the "Company"), must carefully complete the attached Subscription Agreement according to the following instructions and return them to Malemark, Inc. 5525 Erindale Dr, Suite 201, Colorado Springs, CO 80918.

INSTRUCTIONS

A.           Complete and execute the Subscription Agreement as follows:

i.           Insert the number of Shares subscribed for and the total purchase price in the spaces provided in the first paragraph.

ii.          Fill in the blank in paragraph 3 with the name of the appropriate state.

iii.         Indicate in paragraph 6 whether you were assisted or advised by your own professional advisor in connection with your investment in the Shares.  If you were so assisted or advised, you must furnish the information requested in paragraph 6(b).

iv.         Indicate in paragraph 7 the type of ownership which you desire the certificates to reflect.

v.          Date and sign in the appropriate spaces.  Print your name, residence address, social security or tax identification number and telephone number in the spaces provided.  If the Shares are being subscribed for by an entity, the Certificate of Signatory which follows the signature page must also be signed.

B.           Return the completed agreement with a check, wire transfer or certified funds payable to the order of Malemark, Inc. in the amount of $.25 per Share subscribed to: Malemark, Inc. 5525 Erindale Dr, Suite 201, Colorado Springs, CO 80918.
 
 
 
 
 

 
IMPORTANT:  PLEASE READ CAREFULLY BEFORE SIGNING.
THIS DOCUMENT REQUIRES SIGNIFICANT REPRESENTATIONS
BY THE INVESTOR

SUBSCRIPTION AGREEMENT

Malemark, Inc.
5525 Erindale Dr Suite 201
Colorado Springs, Colorado 80918

Gentlemen:

The undersigned hereby tenders this subscription for the purchase of  _________________ (_______) Shares for the sum of $___________________, upon the terms and conditions as set forth below.  A check, wire transfer or certified funds payable to “Malemark, Inc.”(The Company) in the amount of $____________________ is delivered herewith.  The undersigned understands that a subscription for the Shares may be rejected for any reason and that, in the event that this subscription is rejected, the funds delivered herewith will be promptly returned, without interest thereon or deduction therefrom.

By execution below, the undersigned acknowledges that the Company is relying upon the accuracy and completeness of the representations contained herein in complying with their obligations under applicable securities laws.

1.           The undersigned acknowledges and represents as follows:

(a)           That the undersigned is in a financial position to hold the Shares for an indefinite period of time and is able to bear the economic risk and withstand a complete loss of the undersigned's investment in the Shares;

(b)           That the undersigned, either alone or with the assistance of the undersigned's own professional advisor, has such knowledge and experience in financial and business matters that the undersigned is capable of reading and interpreting financial statements and evaluating the merits and risk of an investment in the Shares and has the net worth to undertake such risks;

(c)           That the undersigned has obtained, to the extent the undersigned deems necessary, the undersigned's own personal professional advice with respect to the risks inherent in the investment in the Shares, and the suitability of an investment in the Shares in light of the undersigned's financial condition and investment needs;

(d)           That the undersigned believes that an investment in the Shares is suitable for the undersigned based upon the undersigned's investment objectives and financial needs, and the undersigned has adequate means of providing for the undersigned's current financial needs and personal contingencies and has no need for liquidity of investment with respect to the Shares;
 
1
 
 

 
(e)           That the undersigned has been given access to full and complete information regarding the Company and has utilized such access to the undersigned's satisfaction for the purpose of obtaining such information regarding the Company as the undersigned has reasonably requested; and, particularly, the undersigned has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and to obtain any additional information, to the extent reasonably available;

(f)           That the undersigned recognizes that the Company has a limited operating history and that the Shares as an investment involve a high degree of risk, including but not limited to the risk of economic losses from operations of the Company;

(g)           That the undersigned realizes that (i) the purchase of the Shares is a long-term investment; (ii) the purchaser of the Shares must bear the economic risk of investment for an indefinite period of time because the Shares have not been registered under the Securities Act of 1933 or under the securities laws of any state and, therefore, the Shares cannot be resold unless the Shares are subsequently registered under said laws or exemptions from such registrations are available; (iii) there is presently no public market for the  Shares and the undersigned may be unable to liquidate the undersigned's investment in the event of an emergency, or pledge the Shares as collateral for a loan; (iv)  the transferability of the Shares will be restricted and requires conformity with the restrictions contained in paragraph 2 below; and (v) legends will be placed on the certificate(s) representing the Shares referring to the applicable restrictions on transferability; and

(h)           That the undersigned certifies, under penalties of perjury, that the undersigned is NOT subject to the backup withholding provisions of Section 3406(a)(i)(C) of the Internal Revenue Code.

2.           The undersigned acknowledges that the Shares have not been registered under the Securities Act of 1933 or applicable state securities laws and that the Shares are being offered and sold pursuant to exemptions from such laws and that the Company's reliance upon such exemptions is predicated in part on the undersigned's representations as contained herein.  The undersigned represents and warrants that the Shares are being purchased for the account of the undersigned and for investment purposes only, and without the intention of reselling or redistributing the same, that the undersigned has made no agreement with others regarding any of the Shares, and that the undersigned's financial condition is such that it is not likely that it will be necessary to dispose of any of such securities in the foreseeable future.  The undersigned is aware that, in the view of the Securities and Exchange Commission, a purchase of Shares with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market value, or any change in the condition of the Company, or in connection with a contemplated liquidation or settlement of any loan obtained for the acquisition of such securities and for which such securities were pledged, would represent an intent inconsistent with the representations set forth above.  The undersigned further represents and agrees that if, contrary to the foregoing intentions, the undersigned should later desire to dispose of or transfer any of such securities in any manner, the undersigned shall not do so without first obtaining (i) the opinion of counsel to the Company that such proposed disposition or transfer may be lawfully made without the registration of such securities pursuant to the Securities Act of 1933, as then amended, and applicable state securities laws, or (ii) such registration (it being understood that the Company has no obligation to register any securities).
 
2
 
 

 
3.           The undersigned represents and warrants that the undersigned is a bona fide resident of, is domiciled in and received the offer and made the decision to invest in the Shares in the State of _________________ and the Shares are being purchased by the undersigned in the undersigned's name solely for the undersigned's own beneficial interest and not as nominee for, or on behalf of, or for the beneficial interest of, or with the intention to transfer to, any other person, trust or organization.

4.           The undersigned is informed of the significance to the Company of the foregoing representations, agreements and consents, and they are made with the intention that the Company will rely on them.

5.           The undersigned, if other than an individual, makes the following additional representations:

(a)           The undersigned was not organized for the specific purpose of acquiring the Shares; and

(b)           This Subscription Agreement has been duly authorized by all necessary action on the part of the undersigned, has been duly executed by an authorized officer or representative of the undersigned, and is a legal, valid and binding obligation of the undersigned enforceable in accordance with its terms.

6.           The undersigned further represents and warrants that (place and X in one space below):
 
   (a)     the undersigned was not assisted or advised by the undersigned's own professional advisor in connection with the undersigned's investment in the Shares.
         
   (b)     the undersigned was assisted or advised by the undersigned's own professional advisor in connection with the undersigned's investment in the Shares.  The advisor's name, address and occupation are as follows:
 
     
     
     
 
 
3
 
 

 
7.           Manner in Which Title is To Be Held.

Place an "X" in one space below.
 
   (a)     Individual Ownership
   (b)     Community Property
   (c)     Joint Tenant with Right of Survivorship (both parties must sign)
   (d)     Partnership
   (e)     Tenants in Common
   (f)     Corporation
   (g)     Trust
   (h)     Other
 
                      
 
 
 
 
4
 
 

 
SIGNATURES
 
   
Dated: ____________, 2009
 
 
 
 
 
INDIVIDUAL
 
Address to Which Correspondence
Should be Directed
 
 
 
     
Signature (Individual)
 
     
       
Signature (all record holders should sign) 
 
  City, State and Zip Code  
       
Names(s)Typed or Printed
 
 
Tax Identification or Social
Security Number
 
 
 
  (       )  
   
Telephone Number
 
   
 
 
 
   
E-mail Address
 
         
         

 
   
 
 
 
CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY
 
Address to Which Correspondence
Should be Directed
 
 
 
     
Name of Entity
 
     
By:        
     Signature   City, State and Zip Code  
 
     
Its:        
     Title   Tax Identification or Social
Security Number
 
 
     
 
  (       )  
Name Typed or Printed   
Telephone Number
 

*If Shares are being subscribed for by an entity, the Certificate of Signatory must also be completed.
 
5
 
 

 
CERTIFICATE OF SIGNATORY

To be completed if Shares are being subscribed for by an entity.

I, _____________________________, am the                                            of                                                                   (the "Entity").

I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of the Subscription Agreement to purchase and hold the Shares, and certify further that the Subscription Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.

IN WITNESS WHEREOF, I have hereto set my hand this           day of                        , 2009


 
     
  (Signature)  
 

6
 
 

 
ACCEPTANCE

This Subscription Agreement is accepted as of   __________________________, 2009.

 
 
   
MALEMARK, INC.
 
 
  By:     
     Name                                          Title  
 


 
 
 
 
7
 
 

 
EX-10.7 10 ex10x7.htm EXHIBIT 10.7 ex10x10.htm
Exhibit 10.7

IMPORTANT:  PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.

SUBSCRIPTION AGREEMENT
and
LETTER OF INVESTMENT INTENT

Malemark, Inc.         
5525 Erindale Dr Suite 200
Colorado Springs, Colorado 80918

Gentlemen:

All persons who wish to subscribe for common stock of Malemark, Inc. (the "Company") must carefully complete the attached Subscription Agreement according to the following instructions and return it to Malemark, Inc., 5525 Erindale Dr, Suite 200, Colorado Springs, CO 80918.

1.           Subscription Commitment.  The Subscriber hereby subscribes for the purchase of the number of shares of common stock at a purchase price of $0.40 per share for an aggregate purchase price set forth below. The full purchase price is paid contemporaneously in the form of cashier’s check or by wire transfer to “Malemark, Inc.”

$_______________
Amount of Subscription

The Subscriber understands that this subscription is not binding on the Company until accepted by the Company, which acceptance is at the sole discretion of the Company and is to be evidenced by the Company's execution of this Subscription Agreement where indicated.  If the subscription is rejected, the Company shall return to the Subscriber, without interest or deduction, any payment tendered by the Subscriber, and the Company and the Subscriber shall have no further obligation to each other hereunder.  Unless and until rejected by the Company, this subscription shall be irrevocable by the Subscriber.  You acknowledge that the Company has the right to close the subscription books at any time without notice and to accept or reject any subscription, in whole or in part, in its sole discretion.

The subscriber further understands that the shares are being sold on a “best efforts” basis. Accordingly the proceeds from any sale of common stock from this offering will be retained by us and deposited into our bank account and made available for all corporate purposes.

2.           Representations and Warranties.  In order to induce the Company to accept this subscription, the Subscriber hereby represents and warrants to, and covenants with, the Company as follows:

(a)           Receipt of Document; Access to Information.  Subscriber has been provided with a copy of the Company’s Confidential Private Placement Memorandum (the “Memorandum”) dated September 7, 2010, and the attachments thereto.  The Memorandum and this Subscription Agreement are referred to herein as the “Documents.”  The Subscriber has carefully reviewed and is familiar with all of the terms of the Documents, including the Risk Factors contained in the Memorandum.  The Subscriber has been given access to full and complete information regarding the Company and has utilized such access to the Subscriber’s satisfaction for the purpose of obtaining such information regarding the Company as the Subscriber has reasonably requested; and, particularly, the Subscriber has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and to obtain any additional information, to the extent reasonably available.
 

1
 
 

 
(b)           Reliance.  The Subscriber has relied on nothing other than the Documents (including any exhibits thereto) in deciding whether to make an investment in the Company.  Except as set forth in the Documents, no representations or warranties have been made to the Subscriber by the Company, any selling agent of the Company, or any agent, employee, or affiliate of the Company or such selling agent.

(c)           Economic Loss.  The Subscriber believes that an investment in the Securities is suitable for the Subscriber based upon the Subscriber’s investment objectives and financial needs.  The Subscriber (i) has adequate means for providing for the Subscriber’s current financial needs and personal contingencies; (ii) has no need for liquidity in this investment; (iii) at the present time, can afford a complete loss of such investment; and (iv) does not have overall commitments to investments which are not readily marketable and disproportionate to the Subscriber's net worth, and the Subscriber's investment in the Securities will not cause such overall commitments to become excessive.

(d)           Sophistication.  The Subscriber, in reaching a decision to subscribe, has such knowledge and experience in financial and business matters that the Subscriber is capable of reading and interpreting financial statements and evaluating the merits and risk of an investment in the Securities and has the net worth to undertake such risks.  The investment contemplated hereby is the result of arm’s length negotiation between the Subscriber and the Company.

(e)           No General Solicitation.  The Subscriber was not offered or sold the Securities, directly or indirectly, by means of any form of general advertising or general solicitation, including, but not limited to, the following:  (1) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar medium or broadcast over television or radio; or (2) any seminar or meeting whose attendees had been invited by any general solicitation or general advertising.

(f)           Seek Advice.  The Subscriber has obtained, to the extent the Subscriber deems necessary, the Subscriber’s own personal professional advice with respect to the risks inherent in the investment in the securities, and the suitability of an investment in the Securities in light of the Subscriber's financial condition and investment needs;

(g)           Investment Risks.  The Subscriber recognizes that the Securities as an investment involves a high degree of risk, including those set forth under the risk factors contained in the Documents.

(h)           Effect and Time of Representations.  The information provided by the Subscriber contained in this Subscription Agreement is true, complete and correct in all material respects as of the date hereof.  The Subscriber understands that the Company's determination that the exemption from the registration provisions of the Securities Act of 1933, as amended (the "Securities Act"), which is based upon non-public offerings and applicable to the offer and sale of the Securities, is based, in part, upon the representations, warranties, and agreements made by the Subscriber herein.  The Subscriber consents to the disclosure of any such information, and any other information furnished to the Company, to any governmental authority or self-regulatory organization, or, to the extent required by law, to any other person.

(i)           Restrictions on Transfer; No Market for Securities.  The Subscriber acknowledges that (i) the purchase of the Securities is a long-term investment; (ii) the Subscriber must bear the economic risk of investment for an indefinite period of time because the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, the Securities cannot be resold unless they are subsequently registered under said laws or exemptions from such registrations are available;  (iii) no representation has been made as to the required holding period for the securities ; and (iv) there is presently no public market for the Securities and the Subscriber may be unable to liquidate the Subscriber’s investment in the event of an emergency, or pledge the Securities as collateral for a loan; and (v) the transferability of the Securities is restricted and (A) requires conformity with the restrictions contained in paragraph 3 below and (B) legends will be placed on the certificate(s) representing the Securities referring to the applicable restrictions on transferability.
 

2
 
 

 
(j)           No Backup Withholding.  The Subscriber certifies, under penalties of perjury, that the Subscriber is NOT subject to the backup withholding provisions of Section 3406(a)(i)(C) of the Internal Revenue Code.

(k)           Restrictive Legend.  Stop transfer instructions will be placed with the transfer agent for the Securities, and a legend may be placed on any certificate representing the Securities substantially to the following effect:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN THE ACT AND REGULATION D UNDER THE ACT AND HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS.  AS SUCH, THE PURCHASE OF THIS SECURITY WAS NECESSARILY WITH THE INTENT OF INVESTMENT AND NOT WITH A VIEW FOR DISTRIBUTION.  THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE UNLAWFUL UNLESS IT IS REGISTERED UNDER THE ACT AND ANY STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. FURTHERMORE, IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, WITHOUT THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT THE PROPOSED TRANSFER OR SALE DOES NOT AFFECT THE EXEMPTIONS RELIED UPON BY THE COMPANY IN ORIGINALLY DISTRIBUTING THE SECURITY AND THAT REGISTRATION IS NOT REQUIRED.

(l)           Notice of Change.  The Subscriber agrees that it will notify the Company in writing promptly (but in all events within thirty (30) days after the applicable change) of any actual or anticipated change in any facts or circumstances, which change would make any of the representations and warranties in this Subscription Agreement untrue if made as of the date of such change (after giving effect thereto).

3.           Restricted Nature of the Securities; Investment Intent. The Subscriber has been advised and understands that (a) the Securities have not been registered under the Securities Act or applicable state securities laws and that the securities are being offered and sold pursuant to exemptions from such laws; (b) the Documents have not been filed with or reviewed by any federal, state or local securities administrators because of the limited nature of the offering; (c) the Company is under no obligation to register the Securities under the Act or any state securities laws, or to take any action to make any exemption from any such registration provisions available. The Subscriber represents and warrants that the Securities are being purchased for the Subscriber’s own account and for investment purposes only, and without the intention of reselling or redistributing the same; the Subscriber has made no agreement with others regarding any of the Securities; and the Subscriber’s financial condition is such that it is not likely that it will be necessary to dispose of any of such Securities in the foreseeable future.  The Subscriber is aware that, in the view of the SEC, a purchase of such securities with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market value, or any change in the condition of the Company, or in connection with a contemplated liquidation settlement of any loan obtained for the acquisition of such securities and for which such securities were pledged, would represent an intent inconsistent with the representations set forth above.  The Subscriber further represents and agrees that if, contrary to the foregoing intentions, the Subscriber should later desire to dispose of or transfer any of such Securities in any manner, the Subscriber shall not do so unless and until (i) said Securities shall have first been registered under the Act and all applicable securities laws; or (ii) the Subscriber shall have first delivered to the Company a written notice declaring such holder's intention to effect such transfer and describe in sufficient detail the manner and circumstances of the proposed transfer, which notice shall be accompanied either by a written opinion of legal counsel who shall be reasonably satisfactory to the Company, which opinion shall be addressed to the Company and reasonably satisfactory in form and substance to the Company's counsel, to the effect that the proposed sale or transfer is exempt from the registration provisions of the Act and all applicable state securities laws, or by a "no action" letter from the SEC to the effect that the transfer of the Securities without registration will not result in recommendation by the staff of the Commission that action be taken with respect thereto.
 

3
 
 

 
4.           Residence.  The Subscriber represents and warrants that the Subscriber is a bona fide resident of, is domiciled in and received the offer and made the decision to invest in the Securities in the state set forth on the signature page hereof, and the Securities are being purchased by the Subscriber in the Subscriber’s name solely for the Subscriber’s own beneficial interest and not as nominee for, or on behalf of, or for the beneficial interest of, or with the intention to transfer to, any other person, trust or organization, except as specifically set forth in this Subscription Agreement.
 
 
5.           Investor Qualification.  The Subscriber represents and warrants that the Subscriber is an “accredited investor” as that term is defined in Regulation D under the Securities Act because the Subscriber comes within at least one category marked below.  The Subscriber further represents and warrants that the information set forth below is true and correct.  ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL EXCEPT AS REQUIRED BY LAW.  The Subscriber agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.  (Please check all that apply.)
 
 
Category I  _______
 
The Subscriber is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with the Subscriber’s spouse, presently exceeds $1,000,000.
 
 
 
 
Explanation.  In calculation of net worth the Subscriber may include cash, short term investments, stocks and securities, and equity in property and real estate (excluding the Subscriber’s principal residence). Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.
 
 
Category II  _______
 
The Subscriber is an individual (not a partnership, corporation, etc.) who had an individual net income in excess of $200,000 in each of the last two years, or joint income with his/her spouse in excess of $300,000 in each of the last two years, and has a reasonable expectation of reaching the same income level in the current year.
 
 
Category III  _______
 
The Subscriber is an executive officer or director of the Company.
                     
 

4
 
 

 
 
 
 
Category IV _______
 
The Subscriber is a bank as defined in Section 3(a)(2) of the Securities Act; a savings and loan as defined in Section 3(a)(5)(A) of the Securities Act; an insurance company as defined in Section 2(13) of the Securities Act; a broker or dealer registered pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”); an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), or a business development company as defined in Section 2(a)(48) of the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors (this includes IRAs).  (Note: If you check this category, the Company may request additional information regarding investment company and ERISA issues.)
 
 
 
 
 
                     
 
 
 
 
 
 
 
 (describe entity)
 
 
Category V   _______
 
The Subscriber is a private business development company as defined inSection 202(a)(22) of the Investment Advisers Act of 1940, as amended.
                     
 
 
 
 
                     
 
 
 
 
 
 
 
 (describe entity)
 
 
 
 
 

 
 
 
Category VI  _______
  The Subscriber is an entity with total assets in excess of $5,000,000 which was not formed for the purpose of investing in the Securities and which is one of the following:
 
 
 
   
a corporation; or
 
 
 
   
a partnership; or
                 
 
 
   
a business trust; or
 
 
 
   
a tax-exempt organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
                                
 
 
 
 
 
 
 
 (describe entity)
 
 
Category VII  _______
 
The Subscriber is an entity all the equity owners of which are “accredited investors” within one or more of the above categories.  If relying upon this category alone, each equity owner must complete a separate copy of this Agreement.
                     
 
 
 
 
                     
 
 
 
 
 
 
 
 (describe entity)
 
 
Category VIII _______
 
The Subscriber is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.
                     
6.

           Authority.  The undersigned, if other than an individual, makes the following additional representations:

(a)           The Subscriber was not organized for the specific purpose of acquiring the Securities;

(b)           The Subscriber is fully authorized, empowered and qualified to execute and deliver this Subscription Agreement, to subscribe for and purchase the Securities and to perform its obligations under, and to consummate the transactions that are contemplated by the Subscription Agreement; and

(c)           This Subscription Agreement has been duly authorized by all necessary action on the part of the Subscriber, has been duly executed by an authorized officer or representative of the Subscriber, and is a legal, valid and binding obligation of the Subscriber enforceable in accordance with its terms.

7.           Use of Proceeds.  The Subscriber acknowledges that any proceeds from the sale of the Units will be used by the Company for working capital as further described in the Memorandum.
 

6
 
 

 
8.           Compliance with Laws; No Conflict.  The execution and delivery of the Subscription Agreement by or on behalf of the Subscriber and the performance of the Subscriber’s obligations under, and the consummation of the transactions contemplated by, the Subscription Agreement do not and will not conflict with or result in any violation of, or default under, any provision of any charter, bylaws, trust agreement, partnership agreement or other governing instrument applicable to the Subscriber, or other agreement or instrument to which the Subscriber is a party, or by which the Subscriber is, or any of its assets are, bound, or any permit, franchise, judgment, decree, statute, rule, regulation or other law applicable to the Subscriber or the business or assets of the Subscriber.

9.           Reliance on Representations.  The Subscriber understands the meaning and legal consequences of the representations, warranties, agreements, covenants, and confirmations set out above and agrees that the subscription made hereby may be accepted in reliance thereon.  The Subscriber acknowledges that the Company has relied and will rely upon the representations and warranties of the Subscriber in this Subscription Agreement.  The Subscriber agrees to indemnify and hold harmless the Company and any selling agent (including for this purpose their employees, and each person who controls either of them within the meaning of Section 20 of the Exchange Act) from and against any and all loss, damage, liability or expense, including reasonable costs and attorney's fees and disbursements, which the Company, or such other persons may incur by reason of, or in connection with, any representation or warranty made herein not having been true when made, any misrepresentation made by the Subscriber or any failure by the Subscriber to fulfill any of the covenants or agreements set forth herein, or in any other document provided by the Subscriber to the Company.

10.           Transferability and Assignability.  Neither this Subscription Agreement nor any of the rights of the Subscriber hereunder may be transferred or assigned by the Subscriber.  The Subscriber agrees that the Subscriber may not cancel, terminate, or revoke this Subscription Agreement or any agreement of the Subscriber made hereunder (except as otherwise specifically provided herein) and that this Subscription Agreement shall survive the death or disability of the Subscriber and shall be binding upon the Subscriber's heirs, executors, administrators, successors, and assigns.

11.            Survival.  The representations and warranties of the Subscriber set forth herein shall survive the sale of the Securities pursuant to this Subscription Agreement.

12.           Notices.  All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or mailed by certified or registered mail, return receipt requested, postage prepaid, as follows:  if to the Subscriber, to the address set forth below; and if to the Company to the address at the beginning of this Subscription Agreement, or to such other address as the Company or the Subscriber shall have designated to the other by like notice.

13.           Counterparts.  This Subscription Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

14.           Governing Law.  This Subscription Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Colorado.  The parties hereby consent to the non-exclusive jurisdiction of the courts of the State of Colorado and any federal or state court located in Denver, Colorado for any action arising out of this Subscription Agreement.

15.           Entire Agreement.  This Agreement, including the appendices hereto, constitutes the entire agreement, and supersedes all prior agreements or understandings, among the parties hereto with respect to the subject matter hereof.
 
7
 
 

 
IN NO EVENT WILL THE COMPANY, OR ANY OF THEIR AFFILIATES OR THE PROFESSIONAL ADVISORS ENGAGED BY THEM BE LIABLE IF FOR ANY REASON RESULTS OF OPERATIONS OF THE COMPANY ARE NOT AS PROJECTED IN THE MEMORANDUM.  INVESTORS MUST LOOK SOLELY TO, AND RELY ON, THEIR OWN ADVISORS WITH RESPECT TO THE FINANCIAL, TAX AND OTHER CONSEQUENCES OF INVESTING IN THE SECURITIES.
 
 
 

8
 
 

 
16.           Title.  Manner in Which Title is To Be Held.

Place an “X” in one space below:
 
   (a)     Individual Ownership
   (b)     Community Property
   (c)     Joint Tenant with Right of Survivorship (both parties must sign)
   (d)     Partnership
   (e)     Tenants in Common
   (f)     Corporation
   (g)     Trust
   (h)     Other (Describe):
         
         
         
         
    Please print above the exact name(s) in which the Securities are to be held.


17.           Date of Birth.  (If an individual) The Subscriber’s date of birth is:______________________




SIGNATURES BEGIN ON NEXT PAGE
 
 
 
 
9
 
 

 
SIGNATURES

The Subscriber hereby represents that it has read this entire Subscription Agreement.
 
 
   
Dated: ____________
 
 
 
 
   INDIVIDUAL (includes Community Property, Joint Tenants, Tenants-in-Common)
 
 
 
 
Address to Which Correspondence
Should be Directed
 
 
 
     
Signature (Individual)
 
     
       
Signature (all record holders should sign) 
 
  City, State and Zip Code  
       
Names(s)Typed or Printed
 
 
Tax Identification or Social Security Number
 
 
 
  (       )  
   
Telephone Number
 
   
 
 
 
   
E-mail Address
 
         
         

 
10
 
 
 

 
 
 
CORPORATION, PARTNERSHIP, TRUST, RETIREMENT ACCOUNT OR OTHER ENTITY
 
 
 
 
     
 
 
     
Name of Entity
 
 
Address to Which Correspondence Should be Directed
 
       
By:    
 
 
 
     *Signature   City, State and Zip Code  
 
     
Its:        
     Title   Tax Identification or Social Security Number  
 
     
 
  (       )  
Name Typed or Printed   
Telephone Number
 
   
 
 
 
    Email Address  

*If Securities are being subscribed for by an entity, the Certificate of Signatory must also be completed.
 


CERTIFICATE OF SIGNATORY

To be completed if Securities are being subscribed for by an entity.

I, _________________________ , am the  _____________________ of _________________________________(the “Entity”).

I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of the Subscription Agreement and Letter of Investment Intent and to purchase and hold the Securities, and certify that the Subscription Agreement and Letter of Investment Intent has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.

IN WITNESS WHEREOF, I have hereto set may hand this ______ day of _______, 2011.


 
 
     
  (Signature)  
 



 
 

 

ACCEPTANCE


This Subscription Agreement is accepted as of  ______________________, 2010
 
 
 
   
MALEMARK, INC.
 
 
  By:     
   
Herman DeBoard III
President, CFO, & COB 
 
       
  Date:    
 


 
                       
 
 

 


MALEMARK, INC.
 
 
SUBSCRIPTION INSTRUCTIONS


All persons who wish to subscribe for the securities of Malemark, Inc. (the "Company") in accordance with the terms of the Subscription Agreement (attached) must carefully read and execute the attached documents according to the following instructions and return them to Malemark, Inc., 5525 Erindale Drive, Suite 200 Colorado Springs, CO 80918, attention: Paul Myers.

INSTRUCTIONS

1.           Complete and execute the Subscription Agreement as follows:

a.          Complete the information on pages 1, 4-8 if appropriate.

b.          Date and sign in the appropriate spaces on page 9 if subscribing as an individual (includes Community Property, Joint Tenants, Tenants-in-Common) or on page 10 if subscribing as a Corporation, Partnership, Trust, Retirement Account or other entity .

c.          Be sure to complete the information on the signature page, including address, telephone number, and Social Security or Tax Identification Number.
 
2.           Return the completed documents to 5525 Erindale Drive Suite 200, Colorado Springs, CO  80918 along with your check payable to "Malemark, Inc.”; or wire your subscription funds to the Malemark, Inc. account as follows:
 
 
Receiving Bank Name: 
ENT Federal Credit Union
7250 Campus Drive
Colorado Springs, CO 80920
  ABA Routing Number: 307070005
  Account Number: 516076
  Name of Account:    Malemark, Inc.
 
                                                                                                                           
If you have any questions please call Paul D. Myers at (800) 595-1641 EXT 602.





EX-10.8 11 ex10x8.htm EXHIBIT 10.8 ex10x11.htm
Exhibit 10.8

IMPORTANT:  PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.

SUBSCRIPTION AGREEMENT
and
LETTER OF INVESTMENT INTENT

Liquid Spins, Inc.         
5525 Erindale Dr Suite 200
Colorado Springs, Colorado 80918

Gentlemen:

All persons who wish to subscribe for common stock of Liquid Spins, Inc. (the "Company") must carefully complete the attached Subscription Agreement according to the following instructions and return it to Liquid Spins, Inc., 5525 Erindale Dr, Suite 200, Colorado Springs, CO 80918.

1.           Subscription Commitment.  The Subscriber hereby subscribes for the purchase of the number of shares of common stock at a purchase price of $0.40 per share for an aggregate purchase price set forth below. The full purchase price is paid contemporaneously in the form of cashier’s check or by wire transfer to “Liquid Spins, Inc.”

$_______________
Amount of Subscription

The Subscriber understands that this subscription is not binding on the Company until accepted by the Company, which acceptance is at the sole discretion of the Company and is to be evidenced by the Company's execution of this Subscription Agreement where indicated.  If the subscription is rejected, the Company shall return to the Subscriber, without interest or deduction, any payment tendered by the Subscriber, and the Company and the Subscriber shall have no further obligation to each other hereunder.  Unless and until rejected by the Company, this subscription shall be irrevocable by the Subscriber.  You acknowledge that the Company has the right to close the subscription books at any time without notice and to accept or reject any subscription, in whole or in part, in its sole discretion.

The subscriber further understands that the shares are being sold on a “best efforts” basis. Accordingly the proceeds from any sale of common stock from this offering will be retained by us and deposited into our bank account and made available for all corporate purposes.

2.           Representations and Warranties.  In order to induce the Company to accept this subscription, the Subscriber hereby represents and warrants to, and covenants with, the Company as follows:

(a)           Receipt of Document; Access to Information.  Subscriber has been provided with a copy of the Company’s Confidential Private Placement Memorandum (the “Memorandum”) dated May 16, 2011, and the attachments thereto.  The Memorandum and this Subscription Agreement are referred to herein as the “Documents.”  The Subscriber has carefully reviewed and is familiar with all of the terms of the Documents, including the Risk Factors contained in the Memorandum.  The Subscriber has been given access to full and complete information regarding the Company and has utilized such access to the Subscriber’s satisfaction for the purpose of obtaining such information regarding the Company as the Subscriber has reasonably requested; and, particularly, the Subscriber has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and to obtain any additional information, to the extent reasonably available.
 
1
 
 

 
(b)           Reliance.  The Subscriber has relied on nothing other than the Documents (including any exhibits thereto) in deciding whether to make an investment in the Company.  Except as set forth in the Documents, no representations or warranties have been made to the Subscriber by the Company, any selling agent of the Company, or any agent, employee, or affiliate of the Company or such selling agent.

(c)           Economic Loss.  The Subscriber believes that an investment in the Securities is suitable for the Subscriber based upon the Subscriber’s investment objectives and financial needs.  The Subscriber (i) has adequate means for providing for the Subscriber’s current financial needs and personal contingencies; (ii) has no need for liquidity in this investment; (iii) at the present time, can afford a complete loss of such investment; and (iv) does not have overall commitments to investments which are not readily marketable and disproportionate to the Subscriber's net worth, and the Subscriber's investment in the Securities will not cause such overall commitments to become excessive.

(d)           Sophistication.  The Subscriber, in reaching a decision to subscribe, has such knowledge and experience in financial and business matters that the Subscriber is capable of reading and interpreting financial statements and evaluating the merits and risk of an investment in the Securities and has the net worth to undertake such risks.  The investment contemplated hereby is the result of arm’s length negotiation between the Subscriber and the Company.

(e)           No General Solicitation.  The Subscriber was not offered or sold the Securities, directly or indirectly, by means of any form of general advertising or general solicitation, including, but not limited to, the following:  (1) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar medium or broadcast over television or radio; or (2) any seminar or meeting whose attendees had been invited by any general solicitation or general advertising.

(f)           Seek Advice.  The Subscriber has obtained, to the extent the Subscriber deems necessary, the Subscriber’s own personal professional advice with respect to the risks inherent in the investment in the securities, and the suitability of an investment in the Securities in light of the Subscriber's financial condition and investment needs;

(g)           Investment Risks.  The Subscriber recognizes that the Securities as an investment involves a high degree of risk, including those set forth under the risk factors contained in the Documents.

(h)           Effect and Time of Representations.  The information provided by the Subscriber contained in this Subscription Agreement is true, complete and correct in all material respects as of the date hereof.  The Subscriber understands that the Company's determination that the exemption from the registration provisions of the Securities Act of 1933, as amended (the "Securities Act"), which is based upon non-public offerings and applicable to the offer and sale of the Securities, is based, in part, upon the representations, warranties, and agreements made by the Subscriber herein.  The Subscriber consents to the disclosure of any such information, and any other information furnished to the Company, to any governmental authority or self-regulatory organization, or, to the extent required by law, to any other person.
 
2
 
 

 
(i)           Restrictions on Transfer; No Market for Securities.  The Subscriber acknowledges that (i) the purchase of the Securities is a long-term investment; (ii) the Subscriber must bear the economic risk of investment for an indefinite period of time because the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, the Securities cannot be resold unless they are subsequently registered under said laws or exemptions from such registrations are available;  (iii) no representation has been made as to the required holding period for the securities ; and (iv) there is presently no public market for the Securities and the Subscriber may be unable to liquidate the Subscriber’s investment in the event of an emergency, or pledge the Securities as collateral for a loan; and (v) the transferability of the Securities is restricted and (A) requires conformity with the restrictions contained in paragraph 3 below and (B) legends will be placed on the certificate(s) representing the Securities referring to the applicable restrictions on transferability.

(j)           No Backup Withholding.  The Subscriber certifies, under penalties of perjury, that the Subscriber is NOT subject to the backup withholding provisions of Section 3406(a)(i)(C) of the Internal Revenue Code.

(k)           Restrictive Legend.  Stop transfer instructions will be placed with the transfer agent for the Securities, and a legend may be placed on any certificate representing the Securities substantially to the following effect:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN THE ACT AND REGULATION D UNDER THE ACT AND HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS.  AS SUCH, THE PURCHASE OF THIS SECURITY WAS NECESSARILY WITH THE INTENT OF INVESTMENT AND NOT WITH A VIEW FOR DISTRIBUTION.  THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE UNLAWFUL UNLESS IT IS REGISTERED UNDER THE ACT AND ANY STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. FURTHERMORE, IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, WITHOUT THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT THE PROPOSED TRANSFER OR SALE DOES NOT AFFECT THE EXEMPTIONS RELIED UPON BY THE COMPANY IN ORIGINALLY DISTRIBUTING THE SECURITY AND THAT REGISTRATION IS NOT REQUIRED.

(l)           Notice of Change.  The Subscriber agrees that it will notify the Company in writing promptly (but in all events within thirty (30) days after the applicable change) of any actual or anticipated change in any facts or circumstances, which change would make any of the representations and warranties in this Subscription Agreement untrue if made as of the date of such change (after giving effect thereto).

3.           Restricted Nature of the Securities; Investment Intent. The Subscriber has been advised and understands that (a) the Securities have not been registered under the Securities Act or applicable state securities laws and that the securities are being offered and sold pursuant to exemptions from such laws; (b) the Documents have not been filed with or reviewed by any federal, state or local securities administrators because of the limited nature of the offering; (c) the Company is under no obligation to register the Securities under the Act or any state securities laws, or to take any action to make any exemption from any such registration provisions available. The Subscriber represents and warrants that the Securities are being purchased for the Subscriber’s own account and for investment purposes only, and without the intention of reselling or redistributing the same; the Subscriber has made no agreement with others regarding any of the Securities; and the Subscriber’s financial condition is such that it is not likely that it will be necessary to dispose of any of such Securities in the foreseeable future.  The Subscriber is aware that, in the view of the SEC, a purchase of such securities with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market value, or any change in the condition of the Company, or in connection with a contemplated liquidation settlement of any loan obtained for the acquisition of such securities and for which such securities were pledged, would represent an intent inconsistent with the representations set forth above.  The Subscriber further represents and agrees that if, contrary to the foregoing intentions, the Subscriber should later desire to dispose of or transfer any of such Securities in any manner, the Subscriber shall not do so unless and until (i) said Securities shall have first been registered under the Act and all applicable securities laws; or (ii) the Subscriber shall have first delivered to the Company a written notice declaring such holder's intention to effect such transfer and describe in sufficient detail the manner and circumstances of the proposed transfer, which notice shall be accompanied either by a written opinion of legal counsel who shall be reasonably satisfactory to the Company, which opinion shall be addressed to the Company and reasonably satisfactory in form and substance to the Company's counsel, to the effect that the proposed sale or transfer is exempt from the registration provisions of the Act and all applicable state securities laws, or by a "no action" letter from the SEC to the effect that the transfer of the Securities without registration will not result in recommendation by the staff of the Commission that action be taken with respect thereto.
 
3
 
 

 
4.           Residence.  The Subscriber represents and warrants that the Subscriber is a bona fide resident of, is domiciled in and received the offer and made the decision to invest in the Securities in the state set forth on the signature page hereof, and the Securities are being purchased by the Subscriber in the Subscriber’s name solely for the Subscriber’s own beneficial interest and not as nominee for, or on behalf of, or for the beneficial interest of, or with the intention to transfer to, any other person, trust or organization, except as specifically set forth in this Subscription Agreement.
 
 
5.           Investor Qualification.  The Subscriber represents and warrants that the Subscriber is an “accredited investor” as that term is defined in Regulation D under the Securities Act because the Subscriber comes within at least one category marked below.  The Subscriber further represents and warrants that the information set forth below is true and correct.  ALL INFORMATION IN RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL EXCEPT AS REQUIRED BY LAW.  The Subscriber agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.  (Please check all that apply.)
 
 
Category I  _______
 
The Subscriber is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with the Subscriber’s spouse, presently exceeds $1,000,000.
 
 
 
 
Explanation.  In calculation of net worth the Subscriber may include cash, short term investments, stocks and securities, and equity in property and real estate (excluding the Subscriber’s principal residence). Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.
 
 
Category II  _______
 
The Subscriber is an individual (not a partnership, corporation, etc.) who had an individual net income in excess of $200,000 in each of the last two years, or joint income with his/her spouse in excess of $300,000 in each of the last two years, and has a reasonable expectation of reaching the same income level in the current year.
 
 
Category III  _______
 
The Subscriber is an executive officer or director of the Company.
                     
 
4
 
 

 
 
 
 
Category IV _______
 
The Subscriber is a bank as defined in Section 3(a)(2) of the Securities Act; a savings and loan as defined in Section 3(a)(5)(A) of the Securities Act; an insurance company as defined in Section 2(13) of the Securities Act; a broker or dealer registered pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”); an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), or a business development company as defined in Section 2(a)(48) of the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors (this includes IRAs).  (Note: If you check this category, the Company may request additional information regarding investment company and ERISA issues.)
 
 
 
 
 
                     
 
 
 
 
 
 
 
 (describe entity)
 
 
Category V   _______
 
The Subscriber is a private business development company as defined inSection 202(a)(22) of the Investment Advisers Act of 1940, as amended.
                     
 
 
 
 
                     
 
 
 
 
 
 
 
 (describe entity)
 
 
5

 
 

 
 
 
Category VI  _______
  The Subscriber is an entity with total assets in excess of $5,000,000 which was not formed for the purpose of investing in the Securities and which is one of the following:
 
 
 
   
a corporation; or
 
 
 
   
a partnership; or
                 
 
 
   
a business trust; or
 
 
 
   
a tax-exempt organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
                                
 
 
 
 
 
 
 
 (describe entity)
 
 
Category VII  _______
 
The Subscriber is an entity all the equity owners of which are “accredited investors” within one or more of the above categories.  If relying upon this category alone, each equity owner must complete a separate copy of this Agreement.
                     
 
 
 
 
                     
 
 
 
 
 
 
 
 (describe entity)
 
 
Category VIII _______
 
The Subscriber is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.
                     
6.           Authority.  The undersigned, if other than an individual, makes the following additional representations:

(a)           The Subscriber was not organized for the specific purpose of acquiring the Securities;

(b)           The Subscriber is fully authorized, empowered and qualified to execute and deliver this Subscription Agreement, to subscribe for and purchase the Securities and to perform its obligations under, and to consummate the transactions that are contemplated by the Subscription Agreement; and

(c)           This Subscription Agreement has been duly authorized by all necessary action on the part of the Subscriber, has been duly executed by an authorized officer or representative of the Subscriber, and is a legal, valid and binding obligation of the Subscriber enforceable in accordance with its terms.

7.           Use of Proceeds.  The Subscriber acknowledges that any proceeds from the sale of the Units will be used by the Company for working capital as further described in the Memorandum.

8.           Compliance with Laws; No Conflict.  The execution and delivery of the Subscription Agreement by or on behalf of the Subscriber and the performance of the Subscriber’s obligations under, and the consummation of the transactions contemplated by, the Subscription Agreement do not and will not conflict with or result in any violation of, or default under, any provision of any charter, bylaws, trust agreement, partnership agreement or other governing instrument applicable to the Subscriber, or other agreement or instrument to which the Subscriber is a party, or by which the Subscriber is, or any of its assets are, bound, or any permit, franchise, judgment, decree, statute, rule, regulation or other law applicable to the Subscriber or the business or assets of the Subscriber.
 
6
 
 

 
9.           Reliance on Representations.  The Subscriber understands the meaning and legal consequences of the representations, warranties, agreements, covenants, and confirmations set out above and agrees that the subscription made hereby may be accepted in reliance thereon.  The Subscriber acknowledges that the Company has relied and will rely upon the representations and warranties of the Subscriber in this Subscription Agreement.  The Subscriber agrees to indemnify and hold harmless the Company and any selling agent (including for this purpose their employees, and each person who controls either of them within the meaning of Section 20 of the Exchange Act) from and against any and all loss, damage, liability or expense, including reasonable costs and attorney's fees and disbursements, which the Company, or such other persons may incur by reason of, or in connection with, any representation or warranty made herein not having been true when made, any misrepresentation made by the Subscriber or any failure by the Subscriber to fulfill any of the covenants or agreements set forth herein, or in any other document provided by the Subscriber to the Company.

10.           Transferability and Assignability.  Neither this Subscription Agreement nor any of the rights of the Subscriber hereunder may be transferred or assigned by the Subscriber.  The Subscriber agrees that the Subscriber may not cancel, terminate, or revoke this Subscription Agreement or any agreement of the Subscriber made hereunder (except as otherwise specifically provided herein) and that this Subscription Agreement shall survive the death or disability of the Subscriber and shall be binding upon the Subscriber's heirs, executors, administrators, successors, and assigns.

11.            Survival.  The representations and warranties of the Subscriber set forth herein shall survive the sale of the Securities pursuant to this Subscription Agreement.

12.           Notices.  All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or mailed by certified or registered mail, return receipt requested, postage prepaid, as follows:  if to the Subscriber, to the address set forth below; and if to the Company to the address at the beginning of this Subscription Agreement, or to such other address as the Company or the Subscriber shall have designated to the other by like notice.

13.           Counterparts.  This Subscription Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.

14.           Governing Law.  This Subscription Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Colorado.  The parties hereby consent to the non-exclusive jurisdiction of the courts of the State of Colorado and any federal or state court located in Denver, Colorado for any action arising out of this Subscription Agreement.

15.           Entire Agreement.  This Agreement, including the appendices hereto, constitutes the entire agreement, and supersedes all prior agreements or understandings, among the parties hereto with respect to the subject matter hereof.

IN NO EVENT WILL THE COMPANY, OR ANY OF THEIR AFFILIATES OR THE PROFESSIONAL ADVISORS ENGAGED BY THEM BE LIABLE IF FOR ANY REASON RESULTS OF OPERATIONS OF THE COMPANY ARE NOT AS PROJECTED IN THE MEMORANDUM.  INVESTORS MUST LOOK SOLELY TO, AND RELY ON, THEIR OWN ADVISORS WITH RESPECT TO THE FINANCIAL, TAX AND OTHER CONSEQUENCES OF INVESTING IN THE SECURITIES.
 
7
 
 

 
16.           Title.  Manner in Which Title is To Be Held.

Place an “X” in one space below:
 
   (a)     Individual Ownership
   (b)     Community Property
   (c)     Joint Tenant with Right of Survivorship (both parties must sign)
   (d)     Partnership
   (e)     Tenants in Common
   (f)     Corporation
   (g)     Trust
   (h)     Other (Describe):
         
         
         
         
    Please print above the exact name(s) in which the Securities are to be held.

 
17.           Date of Birth.  (If an individual) The Subscriber’s date of birth is:_______________________




SIGNATURES BEGIN ON NEXT PAGE
 
 
 
8
 
 

 
SIGNATURES

The Subscriber hereby represents that it has read this entire Subscription Agreement.

Dated:                                                      

 
   
Dated: ____________
 
 
 
 
   INDIVIDUAL (includes Community Property, Joint Tenants, Tenants-in-Common)
 
 
 
 
Address to Which Correspondence
Should be Directed
 
 
 
     
Signature (Individual)
 
     
       
Signature (all record holders should sign) 
 
  City, State and Zip Code  
       
Names(s)Typed or Printed
 
 
Tax Identification or Social Security Number
 
 
 
  (       )  
   
Telephone Number
 
   
 
 
 
   
E-mail Address
 
         
         
 
 

 
 

 



 
CORPORATION, PARTNERSHIP, TRUST, RETIREMENT ACCOUNT OR OTHER ENTITY
 
 
 
 
     
 
 
     
Name of Entity
 
 
Address to Which Correspondence Should be Directed
 
       
By:    
 
 
 
     *Signature   City, State and Zip Code  
 
     
Its:        
     Title   Tax Identification or Social Security Number  
 
     
 
  (       )  
Name Typed or Printed   
Telephone Number
 
   
 
 
 
    Email Address  


*If Securities are being subscribed for by an entity, the Certificate of Signatory must also be completed.
 

CERTIFICATE OF SIGNATORY

To be completed if Securities are being subscribed for by an entity.

I, _________________________ , am the  _____________________ of _________________________________(the “Entity”).

I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of the Subscription Agreement and Letter of Investment Intent and to purchase and hold the Securities, and certify that the Subscription Agreement and Letter of Investment Intent has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.

IN WITNESS WHEREOF, I have hereto set may hand this ______ day of _______, 2010.


 
 
     
  (Signature)  
 

 
 

 


ACCEPTANCE


This Subscription Agreement is accepted as of  __________________________, 2011
 
 
 
   
LIQUID SPINS, INC.
 
 
  By:     
   
Herman DeBoard III
President, CFO, & COB 
 
       
  Date:    
 



                                                                
 
 

 


LIQUID SPINS, INC.
SUBSCRIPTION INSTRUCTIONS


All persons who wish to subscribe for the securities of Liquid Spins, Inc. (the "Company") in accordance with the terms of the Subscription Agreement (attached) must carefully read and execute the attached documents according to the following instructions and return them to Liquid Spins, Inc., 5525 Erindale Drive, Suite 200 Colorado Springs, CO 80918, attention: Paul Myers.

INSTRUCTIONS

1.           Complete and execute the Subscription Agreement as follows:

a.          Complete the information on pages 1, 4-8 if appropriate.

b.          Date and sign in the appropriate spaces on page 9 if subscribing as an individual (includes Community Property, Joint Tenants, Tenants-in-Common) or on page 10 if subscribing as a Corporation, Partnership, Trust, Retirement Account or other entity .

c.          Be sure to complete the information on the signature page, including address, telephone number, and Social Security or Tax Identification Number.


2.           Return the completed documents to 5525 Erindale Drive Suite 200, Colorado Springs, CO  80918 along with your check payable to "Liquid Spins, Inc.”; or wire your subscription funds to the Liquid Spins, Inc. account as follows:
 
 
Receiving Bank Name: 
ENT Federal Credit Union
7250 Campus Drive
Colorado Springs, CO 80920
  ABA Routing Number: 307070005
  Account Number: 516076
  Name of Account:    Malemark, Inc.
 


If you have any questions please call Paul D. Myers at (800) 595-1641 EXT 602.





EX-10.9 12 ex10x9.htm EXHIBIT 10.9 ex10x12.htm
Exhibit 10.9
 
 
CONSULTING SERVICES AGREEMENT

CONSULTING SERVICES AGREEMENT (this “Agreement”) is entered into as of November 1, 2010 by and between Malemark, Inc., a Colorado corporation (the “Company”), and Jesse Griffith, (“Consultant”).
 
RECITALS

A.   The Company desires to be assured of the association and services of Consultant and to avail itself of Consultant’s experience, skills, abilities, knowledge and background and is therefore willing to engage Consultant upon the terms and conditions set forth herein; and

B.   Consultant agrees to be engaged and retained by the Company upon the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the covenants, agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.    Consulting Services.  Consultant shall, on a part-time basis, provide corporate development services to the Company (the “Consulting Services”), including but not limited to: availability for travel to Company presentations, assisting with developing products and advertisements and as the spokesman for the Company, for in person and video presentations.

2.    Term.  The term of this Agreement shall commence as of the date hereof and shall be effective until February 28, 2011. Any extension beyond February 28, 2011 will be on a month to month basis (the “Term”).  This agreement may be amended by mutual agreement between Consultant and the Company.

3.    Direction, Control and Coordination. Consultant shall perform the Consulting Services under the sole direction and with the approval of the Company’s Board of Directors.  
 
4.    Dedication of Resources.  Consultant shall devote such time, attention and energy as is necessary to perform and discharge the duties and responsibilities under this Agreement in an efficient, trustworthy and professional manner.

5.    Standard of Performance.  Consultant shall use his best reasonable effort to perform the consulting services as an advisor to the Company in an efficient, trustworthy and professional manner.  Consultants shall perform their consulting services to the sole satisfaction of, and in conjunction and cooperation with, the Company.

6.    Compensation.  The Company shall pay to Consultants a total of four thousand dollars ($4,000.00) per month, increasing to five thousand dollars ($5,000.00) per month beginning March 1, 2011, on a month to month basis in exchange for the Consulting Services. Consultant reimbursement on any preapproved expenses Consultant occurs in conjunction with performing the services outlined in 1. Consulting Services above.
 

 
 
 

 
7.    Confidential Information.  Consultant recognizes and acknowledges that by reason of performance of Consultant services and duties to the Company (both during the Term and before or after it) Consultant has and will continue to have access to confidential information of the Company and its affiliates, including, without limitation, information and knowledge pertaining to innovations, designs, ideas, plans, trade secrets, proprietary information, advertising, distribution and sales methods and systems, and relationships between the Company and its affiliates and customers, clients, suppliers and others who have business dealings with the Company and its affiliates (“Confidential Information”). Consultant acknowledges that such Confidential Information is a valuable and unique asset and covenants that it will not, either during or for three (3) years after the term of this Agreement, disclose any such Confidential Information to any person for any reason whatsoever or use such Confidential Information (except as its duties hereunder may require) without the prior written authorization of the Company, unless such information is in the public domain through no fault of the Consultant or except as may be required by law.  Upon the Company’s request, the Consultant will return all tangible materials containing Confidential Information to the Company.  The Consultant also realizes that they have a fiduciary duty to keep confidential any and all matters sensitive to the Company.

8.    Relationship. This agreement does not create, and shall not be construed to create, any joint venture or partnership between the parties, and may not be construed as an employment agreement.  No officer, employee, agent, servant, or independent contractor of Consultant nor his affiliates shall at any time be deemed to be an employee, agent, servant, or broker of the Company for any purpose whatsoever solely as a result of this Agreement, and Consultant shall have no right or authority to assume or create any obligation or liability, express or implied, on the Company’s behalf, or to bind the Company in any manner or thing whatsoever.

9.    Notices.  Any notice required or desired to be given under this Agreement shall be in writing and shall be deemed given when personally delivered, sent by an overnight courier service, or sent by certified or registered mail to the following addresses, or such other address as to which one party may have notified the other in such manner:

 
If to the Company:  
Malemark, Inc.
5525 Erindale Dr, Suite 200
Colorado Spri,ngs, Colorado 80918
1-800-595-1641
719-260-8516 (fax)
   
 
If to the Consultant:
Jesse Griffith
19912 Lexington Lane
Huntington Beach, Ca 92646
714-624-7030
615-250-4845 fax
 

2
 
 

 
10.  Applicable Law.  The validity, interpretation and performance of this Agreement shall be controlled by and construed under the laws of the State of Colorado.

11.  Severability.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provisions of this Agreement.

12.  Waiver of Breach.  The waiver by either party of a breach of any provision of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach by such party.  No waiver shall be valid unless in writing and signed by an authorized officer of the Company or Consultant.

13.  Assigns and Assignment.  This Agreement shall extend to, inure to the benefit of and be binding upon the parties hereto and their respective permitted successors and assigns; provided, however, that this Agreement may not be assigned or transferred, in whole or in part, by the Consultant except with the prior written consent of the Company.

14.  Entire Agreement.  This Agreement contains the entire understanding of the parties with respect to its subject matter. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.

15.  Counterparts.  This Agreement may be executed by facsimile and in counterparts each of which shall constitute an original document, and both of which together shall constitute the same document.

 





Remainder of Page Left Blank Intentionally
 
 
 
 
3
 
 
 

 
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

  The Company:  
MALEMARK, INC.
 
         
 
 
By:
/s/ Herman DeBoard  
     
Herman DeBoard, President
 
         
         

  The Consultant:  
Jesse Griffith
 
         
 
 
By:
/s/ Jesse Griffith  
     
Jesse Griffith
 
         
         


 
 
 
4
 
 

 

















EX-10.10 13 ex10x10.htm EXHIBIT 10.10 ex10x13.htm
Exhibit 10.10
 
 
DISTRIBUTION AGREEMENT

THIS DISTRIBUTION AGREEMENT (the “Agreement”), dated July 19, 2011, (the “Effective Date”), is entered into by and between Interactive Communications International, Inc., a Florida corporation with its principal offices at 250 Williams Street, Suite M-100, Atlanta, GA 30303 (“InComm”), and Liquid Spins, Inc.5525 Erindale Drive, Suite 200, Colorado Springs, CO 80918 (“Company”).

WHEREAS, InComm, directly and through its affiliates, is in the business of selling, marketing and distributing various prepaid and other stored-value products; and

WHEREAS, Company directly and through its third part retail providers, is in the business of selling music digitally and through download codes placed on other physical products; and

WHEREAS, Company has created certain prepaid and/or stored-value products and services each of which operate only through a unique personal identification number; and

WHEREAS, Company acknowledges that InComm competes in the world-wide market for prepaid and/or stored-value products and services and has an established international marketing and distribution network for such products and services; and

WHEREAS, Company desires to contract exclusively with InComm to distribute and sell the Company’s  products through retail locations throughout the United States; and

WHEREAS, InComm desires to sell, market and distribute Company’s products at and from retail locations throughout the United States; and

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.           Card Program; Production.

(a)           Products.  The Company offers prepaid and/or stored-value products to consumers (collectively, the “Products”).  The initial Products to be offered by Company hereunder are Pre-Paid Gift Cards that sells digital music from our website and the Products offered hereunder shall include such other Products now or hereafter offered by Company via a PIN-based or card-based program.  Each of the Products will operate through a unique personal identification number (each a “PIN” and, collectively, the “PINs”), and shall be available in various denominations as agreed upon by the parties (“Face Values”).

(b)           Grant of Exclusive Rights.  Company hereby grants to InComm and its Affiliates the exclusive right to promote, market, distribute and sell the Products at retail locations throughout the United States.

(c)           Program.  InComm or Company will generate the PINs as mutually agreed by the parties which PINs will be distributed to retail stores, and ultimately sold to consumers in accordance with the terms of this Agreement.  The PINs will be printed by InComm on a physical card medium (the “Cards”), as set forth hereinbelow, with a designated or stored value.  The Cards may be in any form or design not in violation of this Agreement.  Company shall accept the Cards when properly presented and provide the applicable products or services to the consumer for the full Face Value of the Cards.  Company shall provide each consumer that acquires the Products from an InComm retailer with uninterrupted use of the Products in accordance, and consistent with, (i) all applicable federal, state and local statutes, laws, rules, regulations and ordinances and (ii) all marketing and promotional materials provided to the retail stores and consumers relating to the Products.
 

1
 
 

 
(d)           Card Production.  InComm will be responsible for the production of the Cards and delivery of the Cards to retailers.  The appearance of the Cards will be as determined by Company and InComm; provided, however, in any event each Card and its packaging shall be designed in a manner that enables the Cards to be activated at the point-of-sale in accordance with the requirements of InComm’s proprietary FastCard® POSA System.  Company shall be solely responsible for all disclosures required to be included on the Cards or packaging, including, without limitation, any disclosures required by applicable federal, state or local law.  Prior to InComm’s provision of Card production services, Company shall issue to InComm a purchase order reasonably satisfactory to InComm for the full cost of production of the Cards, pay the amount included in each such purchase order and, if applicable, supply InComm with PINs for each of the Cards to be produced by InComm.

2.           Term.  The initial term of this Agreement will commence upon the Effective Date and continue through January 1, 2013, unless earlier terminated in accordance with the termination provisions hereof (the “Initial Term”).  This Agreement shall be automatically extended after the Initial Term for successive consecutive terms of one (1) year (a “Renewal Term”) unless either party gives notice of termination at least ninety (90) days prior to the expiration of the term in effect or unless otherwise terminated in accordance with the termination provisions hereof.  The Initial Term and any Renewal Terms are sometimes collectively referred to herein as the "Term".

3.           Termination.

(a)           Material Breach.  Either party may terminate this Agreement upon a material breach by the other party, which the breaching party does not cure within thirty (30) days after receiving written notice thereof from the other party.
 
(b)           Accrued Rights.  No termination of this Agreement shall affect any accrued rights or obligations of either party as of the effective date of such termination, nor shall it affect any rights or obligations of either party, which are intended by their nature to survive any such termination, including, without limitation, the parties’ respective indemnification obligations under Section 7 and the limitations of liability under Section 8.

4.           Settlement; Payment and Returns.

(a)           Settlement.  InComm shall prepare and provide to Company each month, a summary report detailing the number of PINs activated from the retailers’ stores and the denomination of those PINs activated (i.e., the amount PINs activated per denomination and for the current month).  InComm shall deliver the activation summary report to Company by the fifth day of the month following the month that is covered by the summary report.  InComm will remit payment to Company for the full face value of the PINs activated at the retailers’ stores during that month, less (i) a commission and/or discount equal to 15% of the face value of the PINs activated (the “Commission/Discount”) and (ii)  the net value of all PINs deactivated or returned during the applicable period.

(b)           Payment Terms.  InComm shall pay Company the full activation value of the PINs, less the Commission/Discount and less the net value of all PINs deactivated or returned during the applicable period, no later than forty-five (45) days after the end of the applicable period.  InComm may offset against any and all amounts owed to Company any amounts owed to InComm or its Affiliates by Company under this Agreement or any other agreement with InComm or any of its Affiliates.

(c)           Billing Disputes.  The parties agree to negotiate in good faith for the purpose of resolving any billing disputes.
 
5.           Representations, Warranties and Covenants.

(a)           Company represents, warrants, covenants and agrees that (i) it will perform its obligations under this Agreement, including, without limitation, providing the Card program to consumers, in accordance with all applicable federal, state and local laws, rules and regulations; (ii) the Cards, Card packaging and all point of sale materials, created by or at the direction of Company, will fully comply with all applicable laws, rules and regulations, whether federal, state or local, and will not infringe upon or violate any other party’s intellectual property rights, including, without limitation, any patent, trademark or copyright; (iii) it has all licenses required to provide and sell the PINs and operate the Card program.
 

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(b)           Each party represents and warrants that it is authorized to enter into and fully perform its respective obligations under this Agreement.

(c)           Company shall be solely responsible for providing the Card program to any consumer who presents a Card for redemption to Company.  Company further agrees to treat any Card presented with a stored value the same as a gift certificate and redeem the value stored on the Card the same as if presented in United States currency.
 
6.           Proprietary Information.  Except as expressly set forth herein, InComm and Company shall maintain in confidence the terms of this Agreement.  Pursuant to discussions which have taken place to date and pursuant to this Agreement, the Parties may disclose to one another certain information, as defined herein, which is considered by the disclosing party to be proprietary or confidential information (the "Proprietary Information").  Proprietary Information is defined as any information, communication or data, in any form, including, but not limited to oral, written, graphic or electronic forms, models or samples, which the disclosing party identifies as confidential or which is of such a nature that the receiving party should reasonably understand that the disclosing party desires to protect such information, communication or data against unrestricted disclosure or use, including without limitation, business information, financial data and marketing data.  All Proprietary Information shall remain the sole property of the disclosing party and its confidentiality shall be maintained and protected by the receiving party with the same degree of care as the receiving party uses for its own confidential and proprietary information, but in no event, less than a reasonable degree of care.  The receiving party shall not use the Proprietary Information of the other party except as necessary to fulfill its obligations under this Agreement, nor shall it disclose such Proprietary Information to any third party without the prior written consent of the disclosing party.  The restrictions on the use or disclosure of any Proprietary Information shall not apply to any Proprietary Information: (i) after it has become generally available to the public without breach of this Agreement by the receiving party; (ii) is rightfully in the receiving party's possession prior to disclosure as evidenced by competent written proof; (iii) is independently developed by the receiving party without reliance on the Proprietary Information; (iv) is rightfully received by the receiving party from a third party without a duty of confidentiality; or (v) is disclosed under operation of law.  In the event the receiving party is required to disclose any Proprietary Information under operation of law, the receiving party shall: (i) give at least thirty (30) days prior written notice of such disclosure to the disclosing party; (ii) limit such disclosure to the extent practicable; and (iii) make such disclosure only to the extent so required.

7.           Indemnification.  Each party shall defend, indemnify and hold the other party its Affiliates and their respective officers, employees and agents harmless from and against any third party claim, action, loss, damage, liability (including without limitation any liability arising under federal, state or other tax laws) and expense, including without limitation reasonable attorney’s fees and costs, arising from or in connection with (i) the indemnifying party’s breach of this Agreement and/or (ii) the negligent acts or omissions of the indemnifying party.

8.           Limitation of Liability.  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ARISING FROM BREACH OF CONTRACT OR WARRANTY OR FROM NEGLIGENCE OR STRICT LIABILITY), INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, REVENUE, DATA, OR USE, OR FOR INTERRUPTED COMMUNICATIONS, OR FROM ANY DEFECT, ERROR, OR MALFUNCTION OF ANY SERVICE; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATION WILL NOT APPLY TO DAMAGES OR OTHER AMOUNTS PAYABLE UNDER PARAGRAPHS 1(b), 6, 7, 10, 13 AND 14(e) EVEN IF THE OTHER PARTY OR ANY OTHER PERSON HAS BEEN ADVISED OR SHOULD KNOW OF THE POSSIBILITY OF SUCH DAMAGES.
 
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9.           Equitable Relief.  Notwithstanding any provision of this Agreement to the contrary, the Company acknowledges and agrees that any breach or attempted breach of the Grant of Exclusive Rights set forth in paragraph 1(b) above or the non-circumvention obligations in Section 13 below will cause InComm to suffer irreparable injury, including, but not limited to, harm to goodwill, diminishment of competitive positions in the marketplace, and lost opportunities to distribute unique products, the dollar value of which will be difficult, if not impossible, to determine.  Therefore, in the event of any such breach or attempted breach of InComm’s exclusive rights or Company’s non-circumvention obligations, InComm shall be entitled to the entry of temporary or permanent injunctions and orders of specific performance enforcing its exclusive rights and/or Company’s non-circumvention obligations under this Agreement.  To the extent permitted by applicable law, such relief shall be available without the necessity of posting a bond, cash or otherwise.  Such equitable relief shall be in addition to, and in no way shall limit, any other rights or remedies which InComm may have at law or in equity.

10.           Logos.  The parties acknowledge and agree that the products and services marketed, distributed, serviced or otherwise covered under or contemplated by this Agreement may contain names, images and/or logos provided by Company or at Company’s request.  As a condition of the execution and delivery of this Agreement by Company, and as an ongoing condition of this Agreement, Company represents and warrants to InComm and its affiliates that it has the right to use, whether by ownership or license, such names, images and/or logos without the consent or approval of any person or entity and the use thereof does not violate any agreement binding upon Company nor any patent, copyright, trademark, service mark or other right of any person.  Company shall indemnify, hold harmless and defend InComm and its affiliates in connection with any claim, damage, liability, loss, judgment or other deficiency against InComm and/or any of its affiliates arising out of, resulting from or related to the use of such names, images and/or logos.  Company agrees that InComm and its affiliates and its retailers shall have the right to use both photographic and artistic depictions of cards produced under this Agreement for marketing, advertising, sales and promotional purposes.

11.           InComm Technology.  Title and ownership of the technology that may be utilized to provide the transaction processing services to activate the PINs, including without limitation, any communications specifications supplied by InComm, InComm's FastCard POSA System, InComm FastPIN Electronic PIN Delivery System and any other services delivered by InComm to Company, the retailers or the consumers under this Agreement, including any modifications or enhancements thereto or derivative works created therefrom (collectively, the “InComm Technology”), shall remain vested solely in InComm.  Company shall have no ownership rights or other rights in the InComm Technology.

12.           Intentionally omitted.

13.           Non-Circumvention.   Company shall not for themselves, or any third party, directly or indirectly solicit or induce, or in any manner attempt to solicit or induce, any client, supplier, strategic partner, strategic alliance, or consultant of InComm and/or its Affiliates (each an “InComm Contact”) (i) to take any action to cause or encourage any InComm Contact to cease being in or take any action to discontinue any relationship with InComm and/or its Affiliates; (ii) to cause or encourage any InComm Contact to divert any business from InComm and/or its Affiliates or attempt to deal directly with any InComm Contact in an attempt to circumvent InComm and/or its Affiliates; or (iii) to otherwise interfere with, disrupt or attempt to interfere with or disrupt the relationship, contractual or otherwise, between InComm and/or its Affiliates and any InComm Contact provided, however, that nothing contained in this paragraph 13 shall prevent Company from transacting with any InComm Contact without InComm and/or its Affiliates being part of such transaction so long as Company does not cause or encourage such InComm Contact not to include InComm and/or its Affiliates as part of such transaction.
 
 
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14.           Miscellaneous.

(a)           Notice.  Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given if delivered personally or sent by a reputable and recognized receipted overnight delivery service (such as FedEx), to the party to be notified at the addresses set forth below:
 
  If to InComm: 
InComm
250 Williams Street 
Suite M-100
Atlanta, GA  30303
Attn: Brooks Smith, CEO
If to Company: 
Liquid Spins, Inc.
5525 Erindale Drive
Suite 200
Colorado Springs, CO 80918
Attn: Herman DeBoard, CEO
         
  With a copy to: Legal Department With a copy to:      Legal Department
         
         
         
                                                                                                    
or such other address as may be designated by either party hereto by written notice to the other as hereinabove provided.  No notice will be deemed given unless actually received or unless delivery thereof has been refused.

(b)           No waiver of rights.  Failure of either party at any time to require the other party’s performance of any obligation under this Agreement shall not affect the right to require performance of this obligation.  Any waiver by either party of any breach of any provision hereof shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver or modification of the provision itself, or a waiver of modification of any right under this Agreement.

(c)           Governing Law.  This Agreement shall be construed in accordance with and governed by the laws of the State of Florida, regardless of conflict of law principals.  The parties irrevocably and unconditionally submit to the exclusive jurisdiction of the courts of the State of Florida located in Palm Beach County or in the United States District Court for the Southern District of Florida, for the purposes of any suit, action or other proceeding arising out of this Agreement or the subject matter hereof brought by any party hereto; and hereby waive and agree not to assert as a defense or otherwise, in any such suit action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced by such court.

(d)           Severability.  In the event any portion of this Agreement may be determined by any governmental body having jurisdiction hereover, or by any court of competent jurisdiction, to be unenforceable, the balance of the Agreement shall be severed therefrom and shall remain in full force and effect unless a failure of consideration would thereby result.

(e)           Attorneys’ Fees.  If any legal action is necessary in order to enforce any of the terms of the Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and costs from the non-prevailing party.

(f)           Assignment.   Neither party may assign this Agreement to any other party without the prior written consent of the non-assigning party, which consent shall not be unreasonably withheld; provided however, that no consent from the non-assigning party shall be necessary in the event this Agreement is assigned to a party’s Affiliate, provided that such Affiliate (i) is not a competitor of the non-assigning party, (ii) agrees in writing to be bound by and comply with the terms and conditions of this Agreement prior to the effective date of such assignment, and (iii) has creditworthiness that is equal to or greater than the assigning party’s creditworthiness.  The assigning party shall promptly notify the other party in writing of assignment of this Agreement to an Affiliate.  For purposes hereof, “Affiliate” means a Person, which, directly or indirectly, owns or controls, is owned or is controlled by or is under common ownership or control with, another Person.  As used herein, “control” means the power to direct the management or affairs of an entity, and “ownership” means the beneficial ownership of more than 50% of the voting equity securities or other equivalent voting interests of the Person.  As used herein “Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, firm or other entity, or a government or any political subdivision or agency, department or instrumentality thereof or any trustee, receiver, custodian or similar official.
 
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(g)           No Agency/Independent Contractor Status.  This Agreement does not create an employer-employee relationship between Company and InComm.  Nothing in the Agreement will be construed to create, authorize or constitute a partnership, joint venture or agency relationship of any kind.  Neither party shall have the authority to bind the other to any obligation or liability except as provided in this Agreement.

(h)           Amendment.  This Agreement may be amended or modified only by an instrument in writing signed by authorized representatives of the parties hereto.

(i)           Headings/Counterparts.  The headings of the items and paragraphs contained in this Agreement are for convenience of reference only and do not form a part hereof and in no way modify the meaning of such items and paragraphs.  Any number of counterparts of this Agreement may be signed and delivered and each shall be considered an original and together they shall constitute one agreement.

(j)           Press Releases.  Any press releases or public announcements regarding the subject matter hereof must have prior written approval of both parties prior to distribution, which approval shall not be unreasonably withheld or delayed.

(k)           Conflicts Between Agreements.  In the event of a conflict between the provisions of this Agreement and any other agreement to which InComm and Company are parties with respect to InComm’s marketing and/or distribution of the Cards, this Agreement shall control.

(l)           Entire Agreement.  This Agreement sets forth the entire understanding and supersedes prior agreements between the parties relating to the subject matter contained herein and merges all prior discussions between them, and neither party shall be bound by any definition, condition, provision, representation, warranty, covenant or promise other than as expressly stated in this Agreement or as it contemporaneously or subsequently set forth in writing and executed by a duly authorized officer or representative of the party to be bound thereby.

 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.
 
INTERACTIVE COMMUNICATIONS                                                                                                Liquid Spins, Inc.
INTERNATIONAL, INC.

By: /s/ Brian Parlotto                                                                                                                              By:  /s/ Herman DeBoard                               
Printed Name: Brian Parlotto                                                                                                                Printed Name: Herman DeBoard                   
Title:  SVP, Consumer Products                                                                                                           Title: CEO                                                          
Date: 6/9/2011                                                                                                                                          Date: 6/13/2011                                                 

 
 
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EX-23.1 14 ex23x1.htm EXHIBIT 23.1 ex23x1.htm
Exhibit 23.1
 
 
 

 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANING FIRM

We hereby consent to the use in this Form S-1 Registration Statement under the Securities Act of 1933 of our report dated July 29, 2011 relating to the financial statements of Liquid Spins, Inc., which appear in such Registration Statement and related Prospectus for the registration of  14,241,875 shares of Liquid Spins, Inc. common stock.

We also consent to the references to us under the heading “Experts” in such Registration Statement.
 
 
/s/ StarkSchenkein, LLP
StarkSchenkein, LLP
 
Denver, Colorado
August 5, 2011

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