CMGO ~~~~~ The information posted here is from ~~~~ Blue ~~~~ on the CMGO IBox. If you guys want a great bounce stock, please check out CMGO. The information posted is concerning CMGO's subsidary Audioeye going public.
QUESTIONS AND ANSWERS
Q: What transactions are being proposed?
A: The board of directors of CMGO has approved a plan to restructure its business by separating out AE by (a) distributing to the CMGO shareholders by way of dividend 5% of the outstanding capital stock of AE and (c) exchanging 80% of the capital stock of AE for all of the capital stock of AEAC.
Q: When will the Separation occur?
A: The Separation is expected to occur in the first quarter of 2012 . The board of directors of CMGO will set the record date for the Separation after the special meeting. The timing of the Separation will ultimately depend upon the satisfaction or waiver of certain conditions, including obtaining shareholder approval of the Separation.
Q: What will I receive in connection with the Separation?
A: As a result of the Separation, you will be entitled to receive ___ share of AE common stock for every _____ shares of CMGO common stock held by you on the record date for the Separation.
Q: What are the U.S. federal income tax consequences of the spin-off to CMGO shareholders?
A: CMGO believes that the elements of the Separation represent taxable transactions to CMGO in connection with the exchange and to its shareholders in connection with the distribution of AE stock for U.S. federal income tax purposes. For more information, see “The Separation — Material U.S. Federal Income Tax Consequences of the Spin-Off,” included elsewhere in this prospectus/proxy statement.
Q: What will be the relationship between CMGO and AE following the spin-off?
A: Prior to the spin-off, AE is a wholly owned subsidiary of CMGO. Following the spin-off, CMGO will retain approximately a 15% interest in AE and receive certain payments and other consideration pursuant to a Services Agreement and Royalty Agreement. See “Certain Relationships and Related Party Transactions—Relationships Between CMGO and AE.”
Q: Will I receive physical certificates representing shares of common stock of AE?
A: In connection with the spin-off transaction, AE will issue physical certificates representing shares of its common stock to stockholders of CMGO as of the Record Date with the assistance of its transfer agent who will also act as the distribution agent. For CMGO stockholders who have shares in “street name” CMGO will electronically issue shares to their bank or brokerage firm on their behalf.
Q: Will I receive fractional shares of CMGO common stock in connection with the Separation?
A: No fractional shares of New CMGO common stock will be issued in connection with the Separation. Instead, in the case of a fractional share, there will be a rounding up to the next whole share with the aggregate amount of the additional shares to be so issued to reduce the amount of shares otherwise to be retained by CMGO.
Q: Will I still own my shares of CMGO after the completion of the transactions?
A: Yes. The Separation will not affect the ownership of your CMGO shares.
Q: How will the rights of CMGO stockholders change following the Separation?
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A: Upon the Separation, CMGO shareholders as of the record date for the Separation will also become stockholders of AE. The rights of the stockholders of AE following the Separation will be governed by the Delaware General Corporation Law (the “DGCL”) and the provisions of the certificate of incorporation and bylaws of AE as described in this proxy statement/prospectus. After the Separation, CMGO will no longer own and control AE. The former shareholders of AEAC will own 80% of AE, CMGO will own 15% of AE, and the shareholders of CMGO will own 5% of AE. Prior to the Separation, approximately 44% of AEAC common stock is owned by related parties of AEAC .
Q: When will I be able to trade shares of AE common stock?
A: At present, there is no public market for the common stock of AE. We anticipate that AE will become subject to quotation on the OTCQB, the OTC Bulletin Board or the new BX Venture Market established by NASDAQ following the effective date of the Separation.
Q: Who will pay the costs of the Separation?
A: AE will pay all costs associated with the Separation that are incurred prior to the Separation. All costs relating to the Separation incurred after the Separation will be borne by the party incurring such costs.
Q: What items of business am I being asked to vote on at the special meeting?
A: At the special meeting, you will be asked to consider and vote on the following proposals:
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a proposal to approve the Separation (Proposal No. 1);
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a proposal to adjourn the special meeting to a later date, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Separation (Proposal No. 2).
Q: What will be the effect on the proposals if the Separation is not approved by CMGO shareholders?
A: A condition to the Separation is that the Separation has been approved by CMGO shareholders. Even if shareholder approval of the Separation has been obtained, the Separation will not proceed unless all other required conditions to the Separation have been satisfied or waived.
Q: How does the board of directors of CMGO recommend that I vote?
A: The board of directors of CMGO has unanimously approved the Separation and has determined that these actions are advisable and in the best interests of CMGO and its shareholders. The board of directors of CMGO unanimously recommends that you vote your shares “FOR” approval of the Separation, and “FOR” the adjournment proposal.
Q: What votes are required?
A: The Separation. The affirmative vote of a majority of the outstanding shares of CMGO common stock present, either in person or represented by proxy, at the special meeting and entitled to vote on the proposal is required to approve the Separation. If you “ABSTAIN” from voting on approval of the Separation, the effect will be the same as a vote against the Separation. Please note that shareholder approval of the Separation is not required by applicable law, although it is a condition to the completion of the Separation. See “The Proposals—Proposal No. 1—Approval of the Separation—Conditions to the Separation.” CMGO will not complete the Separation as contemplated in this proxy statement/ prospectus if CMGO’s shareholders do not approve the Separation at the special meeting. However, if shareholder approval is not obtained, CMGO reserves the right to consider and implement without shareholder approval, if permitted by applicable law, other restructuring plans in the future, and such plans may be substantially similar to the transactions proposed in this proxy statement/prospectus.
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Adjournment of the Special Meeting. The affirmative vote of a majority of the outstanding shares of CMGO common stock present, either in person or represented by proxy, at the special meeting and entitled to vote on the proposal is required to adjourn the special meeting to a later date, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Separation. If you “ABSTAIN” from voting on approval of the adjournment, the effect will be the same as a vote against the adjournment of the special meeting.
Q: How many shares of CMGO common stock must be present or represented to conduct business at the special meeting?
A: The holders of a majority in voting power of the outstanding shares of CMGO common stock entitled to vote at the special meeting will constitute a quorum for the transaction of business at the special meeting and any adjournments or postponements thereof. If you submit a proxy or voting instructions, your shares will be counted for purposes of determining the presence of a quorum, even if you “ABSTAIN” from voting your shares on the proposals. If a quorum is not present at the special meeting, the special meeting may be adjourned until a quorum is obtained.
Q: Who is entitled to vote at the special meeting?
A: Only shareholders of record at the close of business on _______________, 2012 , the record date for the special meeting, will be entitled to notice of and to vote at the special meeting. At the close of business on the record date for the special meeting, __________ shares of CMGO common stock were outstanding and entitled to vote.
As of the close of business on the record date for the special meeting, executive officers and directors of CMGO held an aggregate of _______ shares of CMGO common stock, which represents approximately ___% of all shares entitled to vote at the special meeting.
Q: What is the difference between a “stockholder of record” and a “beneficial stockholder”?
A: Whether you are a stockholder of record or a beneficial stockholder depends on how you hold your shares of CMGO common stock.
Stockholders of Record. If your shares of CMGO common stock are registered directly in your name with CMGO’s transfer agent, Corporate Stock Transfer, Inc., you are considered the stockholder of record with respect to those shares, and the proxy materials for the special meeting are being mailed to you directly by CMGO.
Beneficial Stockholders. Most of CMGO’s shareholders hold their shares through a bank, broker or other nominee (that is, in “street name”) rather than directly in their own name. If you hold your shares of CMGO common stock in street name, you are a “beneficial stockholder,” and the proxy materials are being mailed to you by the organization holding your shares. This organization, or its nominee, is considered the stockholder of record for purposes of voting at the special meeting. As a beneficial stockholder, you have the right to instruct that organization on how to vote the shares held in your account.
Q: May I vote in person?
A: If you are a stockholder of record as of the close of business on the record date for the special meeting, you may attend the special meeting and vote your shares of CMGO common stock in person rather than signing and returning your proxy card or otherwise providing your proxy instructions. Your name will be verified against the list of shareholders of record on the record date for the special meeting prior to your being admitted to the special meeting.
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If you are a beneficial stockholder, you are also invited to attend the special meeting but you may not vote these shares of CMGO common stock in person at the special meeting unless you obtain a “legal proxy” from the bank, broker or other nominee, giving you the right to vote the shares at the special meeting. You will be asked to provide proof of beneficial ownership on the record date for the special meeting, such as your most recent account statement, a copy of the voting instruction form provided by your bank, broker or other nominee, or other similar evidence of ownership, prior to your being admitted to the special meeting.
If you do not comply with the procedures outlined above, you will not be admitted to the special meeting. Even if you plan to attend the special meeting, it is recommended that you submit your proxy or voting instructions in advance of the special meeting as described below so that your vote will be counted if you later decide not to attend the special meeting.
Q: How can I vote my shares without attending the special meeting?
A: Whether you are a stockholder of record or a beneficial stockholder, you may direct how your shares of CMGO common stock are voted without attending the special meeting. If you are a stockholder of record, you may submit a proxy to instruct how your shares of CMGO common stock are to be voted at the special meeting. You can submit a proxy by mail by completing, signing, dating and returning the proxy card enclosed with the proxy materials you received or by telephone or Internet by following the instructions provided on the proxy card. If you are a beneficial stockholder, you may submit voting instructions to your bank, broker or other nominee to instruct how your shares of CMGO common stock are to be voted at the special meeting. Your voting instructions can be submitted by mail by completing, signing, dating and returning the voting instruction form enclosed with the proxy materials you received or by telephone or Internet, if those voting options are available to you, by following the instructions provided on the voting instruction form.
Q: May I change or revoke my proxy or voting instructions?
A: You have the power to revoke or change your proxy or voting instructions before your shares of CMGO common stock are voted at the special meeting. If you are a stockholder of record, you may do this by submitting a written notice of revocation to CMGO’s Secretary, by submitting a duly executed written proxy bearing a date that is later than the date of your original proxy or by submitting a later dated proxy electronically via the Internet or by telephone. A previously submitted proxy will not be voted if the stockholder of record who executed it is present at the special meeting and votes the shares of CMGO common stock represented by the proxy in person at the special meeting. If you are a beneficial stockholder, you may change your vote by submitting new voting instructions to your bank, broker or other nominee, or, if you have obtained a legal proxy from your bank, broker or other nominee giving you the right to vote your shares of CMGO common stock, by attending the special meeting and voting in person. Please note that attendance at the special meeting will not by itself constitute revocation of a proxy.
Q: How will my shares be voted if I do not provide specific instructions in the proxy or voting instruction form I submit?
A: If you submit a proxy or voting instruction form but do not indicate your specific voting instructions on one or more of the proposals listed in the notice of the special meeting, your shares of CMGO common stock will be voted as recommended by the board of directors of CMGO on those proposals and, in the case of a proxy, as the proxyholders may determine in their discretion with respect to any other matters properly presented for a vote at the special meeting.
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Q: If my shares are held in “street name” by a bank, broker or other nominee, how will my shares be voted?
A: You should instruct your bank, broker or other nominee how to vote your shares of CMGO common stock, following the directions provided to you. If you do not instruct your broker, your broker will generally not have the discretion to vote your shares of CMGO common stock without your instructions on matters that are not considered routine. CMGO believes that the Separation proposal, and the proposal to adjourn the special meeting are each considered not to be routine matters. Therefore, your broker cannot vote shares of CMGO common stock that it holds in “street name” on any of the proposals unless you return the voting instruction form you received from your broker. Accordingly, CMGO does not believe that there will be any broker non-votes occurring in connection with any of the proposals at the special meeting. Please note, however, that if you properly return the voting instruction form to your broker but do not indicate how you want your shares of CMGO common stock to be voted, CMGO believes your shares of CMGO common stock generally will be voted “FOR” all of the proposals listed in the notice for the special meeting.
Q: Am I entitled to dissenters’ or appraisal rights?
A: Under Nevada law, you are not entitled to dissenters’ or appraisal rights in connection with the Separation.
Q: What if I want to transfer my shares of CMGO common stock?
A: You should consult with your financial advisor, such as your broker, bank or tax advisor. Neither CMGO nor AE makes recommendations concerning the purchase, retention or sale of shares of CMGO common stock or of the AE common stock you will receive if the Separation is completed.
The record date for the special meeting is earlier than the record date for the Separation. Therefore, if you sell your shares of CMGO common stock after the record date of the special meeting, but prior to the record date for the Separation (which has yet been determined), you will retain the right to vote at the special meeting, but the right to receive AE common stock in connection with the Separation will transfer with the shares of CMGO common stock.
Q: As a CMGO shareholder, what should I consider in deciding whether to vote in favor of the Separation?
A: You should carefully review this proxy statement/prospectus, including the section entitled “Risk Factors” which sets forth certain risks and uncertainties related to the Separation and certain risks and uncertainties to which AE will be subject if these transactions are implemented.
Q: Who is paying for this proxy solicitation?
A: CMGO is making this solicitation, but AE will pay the entire cost of preparing and distributing these proxy materials and soliciting proxies. CMGO’s directors, executive officers and other employees may also solicit proxies or votes in person, by telephone or by other means of communication. Directors, executive officers and employees will not be paid any additional compensation for soliciting proxies. CMGO will also reimburse banks, brokers and other nominees for their costs in forwarding proxy materials to CMGO’s beneficial stockholders.
Q: Who can help answer my questions?
A: If you have any questions or need further assistance in voting your shares of CMGO common stock, or if you need additional copies of this proxy statement/prospectus or the proxy card, please contact:
CMG Holdings Group, Inc.
5601 Biscayne Boulevard
Miami, Florida 33137
Attention: Investor Relations
Telephone number: 305-751-0558
