|1||Own a piece of our $100M+ global startup portfolio across 20+ verticals, 200+ cities, 35+ countries.|
|2||$4M invested from execs from Goldman Sachs, Credit Suisse, YGC, JV, Sputnik, YC & Polymath.|
|3||Ranked in the Top 50 Startups by G-Startups Worldwide (judges included Tim Draper and Sequoia)|
|4||Accelerator ranked Top 25 Accelerators Globally & Top 500 Venture Investors by Crunchbase.|
Being successful in the startup world means more than just having a great idea. Success is earned through the grit of the founder and by the team of highly capable people who surround the founder. ASTRALABS is not only solving a market need with a great idea, Ryan, a gritty founder, has surrounded himself with a highly capable team.
Since I first invested in early 2017, I have watched Ryan build his team and evolve this unprofitable early stage startup into a cash producing juggernaut by following his belief that entrepreneurs deserve a better support and preparation ecosystem, while at the same time investors of all sizes wanted to expand their startup investments beyond their local geographic borders. The market proved that Ryan's belief is spot on.
As ASTRALABS grew and met milestones I continued to invest because I believe that the best startup investments are follow on investments in winners. Furthermore, the diversification that the different business lines provide for ASTRALABS is essentially allowing me to divide the risk, inherent in all investments, across three different businesses all attacking entrepreneurs' and investors' significant market pain from different yet complementary angles.
Working with some of the startups and having assisted with the creation of educational materials for those startups, I am convinced that ASTRALABS is providing something that I wish that I had when I founded my startups and that I am glad to have today as an investor.
ASTRALABS is a team and network of hundreds of top startup founders, expert mentors, and investors around the globe focused on rebuilding the world post-COVID-19.
We are setting a new standard in the startup ecosystem by making funding, growth, and innovation accessible for every entrepreneur in this new remote global economy.
We are a Venture Studio, also known as a Startup Factory. We build, launch, and scale startups to success and profitability with an eventual exit as their goal.
We do this quickly, efficiently, and with a step-by-step playbook focused on recruiting top-talent and then engineering their success with the right balance of resources.
We take a position on the cap table in exchange and become their portfolio partners via products, services, and mentorship from the day the startup launches to the day they exit/IPO.
Having decades of entrepreneurial experience ourselves, we know what founders need and the roadblocks they face. Our Vertical is the startup ecosystem's "infrastructure" itself.
It's a big vision, we know! But we also know what we're doing, this is the time to do it. If we don't commit ourselves fully to rebuilding the world together, who else will?
Governments have been too slow with their support, communities have been devastated, and our entrepreneurs need support to drive solutions for everyone.
It's time for us to come together and pool our resources to move innovation forward. That's what we're doing at ASTRALABS and we're inviting you to join us!
Two of the most common questions we hear are “What is a venture studio?” and "What is its place in the startup investor ecosystem?".
First, a venture studio is a venture that aims to create multiple companies in rapid succession. This model is sometimes referred to as a startup factory or “parallel entrepreneurship” in some MBA textbooks.
To be classified as a venture studio, there are three generally accepted industry criteria that the studio must meet:
Source: Thibaud Elziere, Startup Studios: The Rise of Human Capital
People often confuse Venture Studios with Incubators and Accelerators:
1. An Incubator typically receives a small amount of equity in idea stage business in exchange for capital and expertise vs. just starting it from scratch.
2. An Accelerator typically operates similar to an incubator but for post-launch or post-MVP companies - think "accelerate growth" vs "build from scratch".
While ASTRALABS operates an Accelerator, at the core, we are a Venture Studio with multiple startups under the same holding company structure.
However, we also differ in that we see ourselves as an ecosystem as opposed to a single entity - we're multiple companies vertically integrated with the same mission.
We have not listed all of our projects or the potential acquisitions that we're pursuing due to confidentiality as well as stealth development/pre-market launch of new startups.
Below are two of our startups, of which we have whole (100%) ownership, one of our investments, some examples of startups in our overall portfolio, and exits we saw in 2020:
-$100,000,000+ Portfolio in Equity Warrants
-Generated $3,000,000+ in Revenue (300% growth)
-1,000+ New Startups Added to the Portfolio
-Expanded to 200+ Cities, 35+ Countries, & 6 Continents
Startup Portfolio Examples - Acquisitions & Exits in 2020 (Multiple in Diligence)
- Organic Candy Factory, founded by Piper Cochrane, acquired by Vertical Wellness
- Boon, founded by Ryan Vet, was acquired by CrowdfundNC
- Absorbits, founded by Elliot Harris, took on a majority private equity stake
- VZ Games, founded by Kristaps Vaivods, closing a acquisition
+ Numerous Others Currently in Due Diligence
Startup Portfolio Examples - Raised Funding in 2020 (100+ Not Listed)
- AgShift, founded by Miku Jha, raised over $1M
- ACE Recycling, founded by Nishchay Chadha, raised over $1M
- Santa Cruz Berries, founded by Andrea Freydell, raised over $500k
- Simplenight, founded by Mark Halbertstein, raised over $1.5
- Aiden, founded by Josh Aaron, raised over $450k
- Adelante Shoes, founded by Peter Saccro, raised over $800k
- Safedeploy, founded by Volker Dahm, raised over $1.5M+
+ Numerous Others Raised But Not Announced
- $120K+ Revenue Last Quarter
- 265 Active & 500+ Lifetime Clients
- Exited Beta for Launch in Q4 of 2020
Astralabs Ownership Percent: 100%
Equidam Valuation Estimate: $8,500,000
Recent Closed Round Valuation: NA / Venture Studio
Most Recent Round Date: NA/Venture Studio
-Hit $1,000,000 Annual Recurring Revenue
-20X'd Revenue Growth from Prior Year
-Partnered with Auburn & Univ of Michigan
-Raised $1,000,000 for Seed Round
Astralabs Ownership Percent: 5%
-with the Warrant Option to purchase 5% more at discount
Equidam Valuation Estimate:
Recent Closed Round Valuation: $40,000,000
Most Recent Round Date: 12/1/2020
"To all current and new prospective investors (or shareowners as we like to say),
This week we launch the ASTRALABS brand as a new type of company with a new global mission!
We are building a platform where tens of thousands of entrepreneurs around the world will be able to come, discover their passion, and build the companies of their dreams.
With the challenges we all faced in 2020, we find ourselves now in a remarkable new world, rife with risks but also opportunities.
It truly is Day One for a remote global startup economy post-COVID 19.
Given the devastation of this last year, we have a newfound passion and drive to not just focus on America but on the entire global recovery and the impact of a borderless internet.
In 2021, we will have to make many conscious and deliberate choices as consumers, entrepreneurs, investors, and operators, some of which will be bold and unconventional.
We’ve seen a lot of innovation in the past ten years, where we’ve opened our minds to things we never would have before, like letting strangers stay in our homes with us (Airbnb) or driving us to work (Uber).
In the post-Covid world, there will be room for even greater innovations.
Hopefully, some will turn out to be winners. Certainly, some will turn out to be mistakes- and in those, we aspire to only have successful failures that we learn from.
Overall, data-driven diversification is our strategy - and we commit to always test to see what the market wants because the market drives innovation.
We invent on behalf of our customers, even when they don't yet know what they want or need and we commit ourselves to a single infrastructure focus for the startup economy.
At ASTRALABS, we want to invite you to join us on this journey, we want you to win when we win, and we want you to learn as we do when we inevitably also have successful failures.
We've seen amazing growth in 2020, but you don't reach the moon in a day- in fact, it took Americans 10 years to put a man there.
We're building a company that we hope all of us can tell our grandchildren about and that you all can say "I was one of the first to be a part of it".
This is a business of risk, however, in this raise, we hope to address those risks and prepare to be a public company focused on growth, transparency, and long-term opportunities.
We predict the next few years are going to be exciting and we hope that you make the choice to join us (or for current shareowners, double down) on this journey to the stars."
Once you become an investor, you'll get a monthly update with our results, information on the smaller goals that lead into larger yearly goals, and our stretch goals and initiatives that we really believe are going to rock the world through 2023.
*Future looking statements that cannot be guaranteed. Due to Reg CF's Forward-Looking Statements requirements, confidentiality to some of the plans we have from the competition, and our desire to be conservative, these are our top public/Reg CF goals, however, please see the disclosures at the bottom in regard to forward-looking statements.
ASTRALABS is the new brand and parent company of the Newchip Accelerator.
Newchip is the #1 remote accelerator that grew to international acclaim and became a world-recognized brand during COVID-19. ASTRALABS also is the parent company of bothSofos.ai and Journey Venture Partners.
We are raising concurrently from VCs and other angels via Reg D 506c. This is the public opportunity for our network of investors to join.
We intend to use the funds to continue technology development, marketing, advertising, and revenue-generating activities allowing us to grow current and future revenue streams.
We plan to spend the remainder of funds on expanding our portfolio of startups with a focus on building and or acquiring startups that we can take to profitability and grow, utilizing our unique resources within 6-12 months.
Reg CF investors get to invest alongside our Accredited Investor round. Up to $10m Total (Accredited 506c Round with Allocation for Reg CF Investors).
ASTRALABS provides a different investment opportunity from every other company raising via Equity Crowdfunding. With ASTRALABS, instead of putting all of your eggs into one basket, you get exposure to the hundreds of startups in which we take positions.
When you invest with ASTRALABS, you are investing in our umbrella level parent company that owns multiple diverse and cash-generating business units, with asset protection and significant opportunity of de-risked upside built into our model.
The core business model is based on fee for service and software packages; we also take options to purchase stock (warrants or options for equity - we call these equity warrants) in the startups we work with to help them fundraise and grow in our portfolio.
This has resulted in a diversified warrant portfolio valued over $100M, across 20+ verticals, 200+ cities, and 35+ countries; of which ASTRALABS investors benefit from, on day one.
One of the greatest values of our model is our ability to cross-sell clients across portfolio companies which results in decreased marketing costs, increased customer life-time-value, and continuity of relationship and service for the over 1,000 startups we have worked with.
The most important reason we believe you should invest in us though is that you believe in our vision and our mission. We believe that entrepreneurs have the potential to improve the quality of life for billions of people globally post-COVID-19 and we want to assist them.
Why not crowdfunding? We were there when the JOBS Acts was signed into law and we've been a part of the mission that has been equity crowdfunding since 2016.
We have VCs and professional angel investors around the world backing us to solidify and bring confidence to public investors but the why is separate.
We originally started Newchip as a platform for everyday investors to invest in startups, and from Day One we have focused on building something meant to be owned by the people that we bring the most value to; investors and entrepreneurs.
So yes, we want you to be a part of the journey with us and bring forward a different future in technology and startups!
Amazon truly is the great startup of our generation and potentially the next generation as well. That is why we've built ASTRALABS around Anderson's 14 Growth Principles of Jeff Bezos. We believe that by setting a foundation similar to what built a trillion-dollar company, we can build not just a global infrastructure, but a global culture as well.
One of the important questions when it comes to Venture Studios is how we make returns. The answer is "equity" and in our case, "equity warrants".
Equity is incredibly valuable to startup companies, particularly given the potential for massive returns with the success of even one product prototype.
Take for example a single warrant or option to invest up to $250k into a startup valued at $5M dollars.
That option "if" exercised is worth 5% of that startup. Now if you exercise it immediately, there is no immediate benefit and you take the same risk as other investors.
However, if you wait until the startup is worth $25M to exercise, your 5% warrant for $250k is now worth 5x more ($25M divided by $5M = multiple of value warrant is worth)
That warrant is now worth exercising as you're making an immediate portfolio return.
We've taken this to a global scale with hundreds of startups in our portfolio and overtime these portfolio companies may increase in value and eventually exit, providing returns.
When you invest in Berkshire Hathaway, you are investing in Warren Buffet and the entire portfolio that he curates and manages.
ASTRALABS is similar to Berkshire Hathaway in this respect, except that we're focused on private equity and startups (i.e. early-stage ventures).
Our goal is to eventually go public. That would allow liquidity for investors and a publically traded investment asset that is focused on early-stage startups.
As with any investment, it is impossible to guarantee what will happen in the future, but we can tell you what we hope to achieve in terms of returns to decide for yourself.
First off, the markets for software around the (1) building, (2) growing, and (3) investment into startups are all massive multi-billion-dollar global industries.
We believe ASTRALABS is the type of company that can transform it. When you invest in ASTRALABS you are buying direct stock in the company, not a SAFE or a loan note.
It's like investing in Disney back when it was just Walt and Roy. It started as a dream, it had a few challenges and it is now a global empire today.
As a pre-IPO startup, an investment in ASTRALABS carries risk, and on the other hand, startups that succeed can change the world and provide staggering returns for investors.
The price you are investing at is, at a $69 million pre-money valuation. If we're successful, we believe ASTRALABS could someday be a significant player in the industry that sets the standard for startups and investors around the globe in multiple trillion-dollar markets.
We don't believe this will be our last raise, but we will continually push for opportunities, transparency, and the ability to create shareholder liquidity outside of an IPO.
Our goal is to be public and tradeable within 24 months and we believe we'll have the valuation in the next 24 months to make that a reality.
We believe in ASTRALABS and so do our 500+ current investors that have continued to invest in us, become passionate ambassadors, and many I am proud to call friends.
All of our investors (and even myself as the CEO) are in the same boat -- we make money together so our interests are aligned because I want to be your CEO for the long haul.
Yes, we're swinging for the fences, and while no one can guarantee success, we're doing everything in our power to make this the best investment you've ever made.
*FORWARD LOOKING STATEMENTS: THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT”, "GOALS", AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE THE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO THE RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
NOT AN INVESTMENT VEHICLE OR INVESTMENT COMPANY: WHILE ASTRALABS MAY MAKE INVESTMENTS, IT IS NOT WHOLLY AN INVESTMENT VEHICLE, VENTURE CAPITAL FUND, HEDGE FUND, SPECIAL PURPOSE VEHICLE, OR OTHER POOLED INVESTMENT VEHICLE. THE MAJORITY OF FUNDS RAISED AND REVENUES MAY GO TOWARD OPERATIONS OF THE BUSINESSES, EXPANSION OF NEW REVENUE LINES OR NEW VENTURE STUDIO PROJECTS, IN ADDITION TO POTENTIAL ACQUISITIONS THAT MANAGEMENT BELIEVES WOULD VERTICALLY SERVE AND EXPAND THE POTENTIAL AND SERVICES OF THE GROUP OF ENTERPRISES & OTHER USES PER THE USE OF FUNDS AND OR TO THE NEEDS OF EACH SUBSIDIARY.
ASTRALABS has financial statements ending December 31 2019. Our cash in hand is $354,909, as of January 2021. Over the three months prior, revenues averaged $400,269.47/month, cost of goods sold has averaged $25,289.33/month, and operational expenses have averaged $423,824.94/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
ASTRALABS is a team of startup operators and investors focused on building the infrastructure to set the standard for the startup and investor ecosystem. We source and build teams from the ground up that can utilize our methodology to quickly develop and scale around our core vision of startup oriented product software and services to profitability within 6-12 months post-launch.
Our goal is to be publically traded, increasingly profitable, and generating over $100M a year in revenue with a multi-billion dollar portfolio of global startups. This projection cannot be guaranteed.
ASTRALABS INC. was incorporated in the State of Delaware in June 2016.
Since then, we have:
Historical Results of Operations
Related Party Transaction
Refer to Question 26 of this Form C for disclosure of all related party transactions.
Liquidity & Capital Resources
To-date, the company has been financed with $154,800 in debt, $377,085 in equity, $1,063,201 in convertibles, and $2,000,000 in SAFEs.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 12 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 6 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
ASTRALABS INC. cash in hand is $354,909, as of January 2021. Over the last three months, revenues have averaged $400,269.47/month, cost of goods sold has averaged $25,289.33/month, and operational expenses have averaged $423,824.94/month, for an average burn rate of $48,844.80 per month. Our intent is to be profitable in 6 months.
2020 was a year of significant revenue growth with the year closing out at $3M in Accelerator Receipts and $100k from other product lines. Note that the 2020 statements have yet to be reviewed or audited. The focus was on growth and building which required increased expenditures. If the focus was on profitability it could be achieved but with slower growth. The company is also growing new product lines, and the recent name change is a reflection of where we see things moving.
We expect to see significant revenue growth off this capital raise, though we also expect expenses to increase, but the focus will be on keeping expense growth below revenue growth so that we may start to generate cashflows that we intend to reinvest into the company for the foreseeable future.
The company has a few additional sources of capital that can be tapped with various costs attached should the need arise, however the expense of this capital has the potential to hamper growth. The company also has a deep list of investors that it could tap via a private raise such as Reg D, but management is wary about overdiluting the existing cap table without commensurate increases in the valuation. The current capital raise is the best path forward for the company, and any future capital raises will be judged against the value-add that the additional capital can bring just like this time. However, if economic conditions deteriorate dramatically or there are other unexpected conditions, the company does have various sources of capital to rely on. These include various types of debt and an issuance of stock to existing or new investors.
We are an early-stage company and have not yet generated any profits. ASTRALABS was formed originally in 2016 as Newchip Inc. Accordingly, the company has a limited history upon which an evaluation of its performance and future prospects can be made. Our current and proposed operations are subject to all the business risks associated with new enterprises. These include likely fluctuations in operating results as the company reacts to developments in its market, managing its growth, and the entry of competitors into the market. We will only be able to pay dividends on any shares once our directors determine that we are financially able to do so. ASTRALABS has incurred a net loss and has had limited revenues generated since inception. There is no assurance that we will be profitable in the next three years or generate sufficient revenues to pay dividends to the holders of the shares.
Our financial statements were prepared on a “going concern” basis. Certain matters, as described below and in the accompanying financial statements indicate there may be substantial doubt about the Company's ability to continue as a going concern. However, based on management's assessment of operations and financing, they determined that the substantial doubt is alleviated. We have not generated profits since inception, and we have had a history of losses. Our ability to continue operations is dependent upon our ability to generate sufficient cash flows from operations to meet our obligations, which the company has not been able to accomplish to date, and/or to obtain additional capital financing.
Any valuation at this stage is difficult to assess. The valuation for the offering was established by the company. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment.
We depend on key personnel and face challenges in recruiting needed personnel. Our future success depends on the efforts of a small number of key personnel, including our founder and Chief Executive Officer, Ryan Rafols, Cofounder Nihar Patel, and our advisory, engineering, and marketing teams. In addition, due to our limited financial resources and the specialized expertise required, we may not be able to recruit the individuals needed for our business needs or to meet the advisory burden that may be placed on us in the future. There can be no assurance that we will be successful in attracting and retaining the personnel we require to operate and be innovative.
ASTRALABS and its subsidiaries are vulnerable to hackers and cyber-attacks. As an internet-based business, we may be vulnerable to hackers who may access the data of our investors, customers, and partners. Further, any significant disruption in service on the Newchip Accelerator platform or in its computer systems could reduce the attractiveness of the Newchip Accelerator, a core revenue stream of ASTRALABS. Further, we rely on a third-party technology provider to provide some of our back-up technologies. Any disruptions of services or cyber attacks either on our technology providers or on ASTRALABS could harm our reputation and materially negatively impact our financial condition and business.
We are dependent on general economic conditions. Our business model is dependent on growth in the number of startups and entrepreneurs. These in turn are affected by investment dollars and disposable income. Our business model is thus dependent on national and international economic conditions. Adverse national and international economic conditions may reduce the number of new entrepreneurs and new company formations, which would negatively impact our revenues and possibly our ability to continue operations. It is not possible to accurately predict the potential adverse impacts on the company, if any, of current economic conditions on its financial condition, operating results and cash flow.
We face increased market competition especially as traditional physical accelerators and programs move online due to the COVID-19 pandemic. Some competitors and future competitors may be better capitalized than us, which would give them a significant advantage in marketing and operations.
Our revenues and profits are subject to fluctuations. It is difficult to accurately forecast our revenues and operating results, and these could fluctuate in the future due to a number of factors. These factors may include adverse changes in: the number of startups and activity in the angel investing, venture capital, and other early-stage financing markets, the success of world securities markets, general economic conditions, our ability to market our platform to companies and investors, headcount and other operating costs, and general industry and regulatory conditions and requirements. The company's operating results may fluctuate from year to year due to the factors listed above and others not listed. At times, these fluctuations may be significant and could impact our ability to operate our business.
Voting Control is concentrated in the hands of a small number of shareholders. Even if the shares were not subject to the proxy, you would not be able to influence our policies or any other corporate matter, including the election of directors, changes to our company’s governance documents, expanding the employee option pool, and any merger, consolidation, sale of all or substantially all of our assets, or other major action requiring stockholder approval. These few people and/or entities make all major decisions regarding the company. As a minority shareholder and a signatory to any potential proxy agreements for voting, you will not have a say in these decisions.
Future fundraising may affect the rights of investors. In order to expand, the company is likely to raise funds again in the future, either by offerings of securities or through borrowing from banks or other sources. The terms of future capital raising, such as loan agreements, may include covenants that give creditors greater rights over the financial resources of the company.
We are offering a discount to certain classes of investors. These investments may immediately dilute the value of your stock. Therefore, the value of shares of investors who pay the full price in this offering will be diluted by investments made by investors entitled to a discount, who will pay less for the same stake in the company based on an earlier investment.
Holders of our Preferred Stock are entitled to potentially significant liquidation preferences over holders of our Common Stock if we are liquidated, including upon a sale of our company. Holders of our outstanding Preferred Stock have liquidation preferences over holders of Common Stock. This liquidation preference is paid if the amount a holder of Preferred Stock would receive under the liquidation preference in greater than the amount such holder would have received if such holder’s shares of Preferred Stock had been converted to Common Stock immediately prior to the liquidation event. If a liquidation event, including a sale of our company, were to occur that resulted in a distribution of less than expected to our stockholders, the holders of our Preferred Stock could be entitled to all proceeds of cash distributions.
There is no current market for our stock. There is no formal marketplace for the resale of our stock. The shares may be traded over-the-counter to the extent any demand exists. These securities are illiquid and there will not be an official current price for them, as there would be if we were a publicly-traded company with a listing on a stock exchange. Investors should assume that they may not be able to liquidate their investment for some time, or be able to pledge their shares as collateral. Further, some investors are required to assign their voting rights as a condition to investing. This assignment of voting rights may further limit an investor’s ability to liquidate their investment. Since we have not established a trading forum for our stock, there will be no easy way to know what the Common Stock is “worth” at any time. Even if we seek a listing on the “OTCQX” or the “OTCQB” markets or others over time, there may not be frequent trading and therefore no market price for our stock.
The Company may never undergo a liquidity event such as a sale of the Company or an IPO. If a liquidity event never occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with potentially no secondary market on which to sell them.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
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