Shareholders Agreement for Small Startup Company by lsg26357


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									                                                  January 17, 2011

Dear Lecere Shareholders,

Lecere has had a rough three months. First, our ability to raise operating capital dried up in late October when our
stock went to no-bid, and we languished there for several weeks. Lecere has historically raised money in tranches
of about $25,000 at a time, which is a terrible way to fund a high technology startup. However, it has been the
only choice available to us. In late October, even that source of funding dried up. This kind of financing is called
"death spiral financing", which gains its name from the diluting effect it has on shareholders, and also because it
forces companies like Lecere to keep diluting shareholders while raising small amounts of capital, which
ultimately starves the company. I certainly wish we would have had an alternative financing source, but
unfortunately we have never had such a choice.

Faced with turning out the lights and closing the doors, we turned to Stallion Assets in Dallas, Texas. Stallion
Assets helped us restructure our company and then assisted in obtaining a $500,000 line of credit (LOC) from TIB
Bank in Florida. Needless to say, this has prolonged our existence until we can find another suitable form of
equity capital to properly capitalize the company. As most of you know, we have also contracted with Stallion to
provide Investor Relations Services. We have agreed to pay Stallion $3,500 per month and a one-time payment
of 100,000 shares of Lecere common stock in return for their services for 12 months. We have found their
services extremely helpful thus far, and they have allowed myself, Gregg, our new salesperson, and Roger to stay
focused on finishing FIRMS and getting it out into the market.

Before Stallion Assets would agree to engage with us, they required us to do a reverse split that would get our
stock to about one dollar per share and in a suitable dilution range. We heard this from multiple sources before
talking to Stallion, but due to our dire capital situation in late October, Stallion Assets was the only company who
would work with us. Stallion and other financial companies have basic standards for taking on new funding
projects. Basically, they look for low dilution to shareholders, a low float, a good product that is market-ready,
some general revenues, and a good management staff. Our staff agonized over the reality of a reverse split. We
knew it would be stressful, but it was either do a reverse split and sign on with Stallion, or file for bankruptcy. We
chose to keep the company alive. I stand by this decision.

I certainly wish a reverse split would not have been necessary until a later time, but Stallion was not willing to take
a risk on us if they couldn't start out the contract with minimal possibility of future "death spiral financing" that
would likely over-dilute future shareholders. This was the only way out of this rabbit hole. Without this move we
would not have had a chance at new financing. This is the reasoning behind my decision to execute the reverse

After we obtained the LOC, I asked Stallion to begin helping us to further position the company for a proper
financing round. We are currently in the process of trying to raise $2.5 million, but this process is time-consuming,
and finding the right partner(s) is difficult, especially in the current market environment. Couple that with the
problems we've faced in getting FIRMS up and running and repairing glitches in the software after Chris
Rosebrugh’s abrupt departure, and it will be difficult to find an equity partner at this stage of the game.
Nevertheless, Stallion has assured us that it is still possible to find financing, and though our circumstances are
less than favorable, deals like ours have been financed many times in the past in all parts of the country. Stallion
has given no guarantees, nor does any financing firm. However, we remain confident that we will be able to locate
a suitable equity partner. If we are unable to locate a suitable equity partner we may be forced into more "death
spiral financing", although at this time we do not anticipate resorting to those financing methods. It is certainly not
my wish to revert back to those methods.

Since a few shareholders seem to have concerns regarding our recent reverse split and the reasons
behind our initial decision to implement such, we have decided to hold a second vote and allow "all"
shareholders to vote on an action to reverse our recent reverse split. The vote will be whether to revert
the company back to its stock structure prior to December 10, 2010, or maintain the new stock structure
implemented by an emergency session and vote of a majority of shares held in late November 2010.
Our recent dilemma in which our funding dried up has caused a few setbacks. First, we lost Chris Rosebrugh and
another engineer at about the same time. We also lost one of our consultants. Then we lost our marketing support
consultant. However, we were able to hang on to some of our most important personnel: an excellent software
development consultant, Gregg Schillinger, our QA person, and Roger Williams, our advisor. Due to the
confidential nature of our agreement with our software development consultant and the possibility of his name
becoming known to some of our competitors, we cannot name him in this letter.

One area in which we have stumbled badly since as far back as September is that of sales. We could not afford to
hire a top salesperson with the unstable funding we were able to garner, mainly because Chris Rosebrugh
persuaded us to spend all of our capital reserves on development engineers and less on sales. This caused our
sales efforts to suffer badly. I am happy to say that we have recently added a very qualified salesman who has a
history with our company. We brought him back, and he is whipping our sales into shape rapidly. I am confident
he will produce great results in both the near term and the long term.

There have been some inquiries from shareholders regarding a press release in which I stated Lecere had
acquired twelve customers. This is a good time for me to admit that I made an inaccurate statement in that press
release. I have decided to rescind this press release and re-release a new one with the corrected data. I stated
that "with the 7 customers already online with FIRMS and the 5 customers that were brought online from the
queue last week, there are now a total of 12 customers online with FIRMS." We sent out five new routers
to potential customers, which I counted as customers in the press release. After the press release occurred, those
five potentially new customers were never brought online, partly due to the fact that our investment capital dried
up. The inaccurate statement was not intentional, but was rather more fallout associated with the disaster that
beset us when we ran out of operating cash. Currently Lecere has six customers online with FIRMS, and we are
working diligently to add more. The revised press release will be launched this upcoming week.

Recently there has been a lot of criticism on iHub, Yahoo and through emails. While it is important to me that
Lecere's shareholders are in agreement with the direction of the company, I am certainly not conducting myself as
if I were in a popularity contest. Certain individuals have taken it upon themselves to cross the line in criticizing
me, my staff, and even Stallion Assets. In a few cases certain individuals have even gone so far as to state that
Lecere has filed bankruptcy and will not trade any longer. This is obviously a false statement that has been very
detrimental to our stock price and has damaged our ability to raise operating capital. This is just one example of
many. We have received many emails from investors and shareholders who are indeed being influenced by the
iHub bashers. This is affecting our stock price, which is hurting our chances of obtaining proper financing, and, in
turn, is reducing the value of our shareholders’ Lecere holdings.

This brings me to my last point: the defamation lawsuit. Contrary to iHub speculation, the lawsuit has taken up
only a minuscule amount of my time, and attorneys’ fees have been far less than our other legal fees. I would ask
all concerned Lecere investors and shareholders to help Lecere root out these stock manipulators. Help us
conserve capital by pointing out these people as the charlatans they are on iHub, Yahoo and anywhere else you
see their spew. These people are not only affecting Lecere's stock, but the stock of other companies as well. We
have been approached by other CEOs who are experiencing these same sorts of defamations and stock
manipulations, and in a few cases CEOs have agreed to explore the possibility of joining our lawsuit as a plaintiff.

Help us in our overall efforts to make Lecere's stock price the best it can be by being vigilant. We hope to resolve
the lawsuit quickly, although given the nature of court actions, it may take a while to work through.

I want to thank our supportive shareholders. I want all of you to rest assured that Lecere is on a path to become
an even stronger company than we were before our financing dried up. We are still in need of equity capital, but
we are in a better position to attract this capital than we have ever been. We have a few problems to work out in
engineering over the next few weeks that will affect our sales somewhat, but we will be on a roll when we work
out those issues. In the meantime we are pushing full steam ahead.

James B Morris, CEO

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