|1||Best in class customers - L'Oréal, Marriott, Toyota, Deloitte, Oreo, and more - with $600k run rate|
|2||Founders’ previous company was in the same space and grew fast enough to be on the INC 5000|
|3||Cortex was one of 10 startups accepted into the super competitive Techstars Boston class in 2020|
|4||New world-class customers signing on in the past weeks - including Kraft-Heinz and Pernod Ricard|
|5||Unique technology - the only platform that can predict how people will react to something they see|
|6||Customers renewing and expanding - including L’Oreal, KAO, and Marriott|
|7||Raised $1.2M to date from impressive CEO angel investors, Revup Fund, and Techstars|
|8||14 major international brands are already in late-stage pipeline for onboarding in 2021|
I invested into Cortex, because the potential behind their AI is limitless. Today Cortex helps brands and marketers make the right decision in choosing visuals in the representation of products in categories like beauty, transportation, FMCG or travel. Cortex creates deep insights into the taste of audiences and helps drive commercial and creative decisions at some of the world’s best brands like L’Oreal, Toyota, Oreo, Bud Light or Marriot.
The founders Brennan White and Matt Peters grew up as entrepreneurs in the marketing and visual space. They founded Cortex in 2015 with the idea to identify successful patterns behind visuals that companies use to advertise for their products. In a world of social media where decisions are more and more driven by images Cortex can make the decisive difference on how efficient a campaign is. Early on the team showed strong traction and the ability to attract and retain big brand and agency names.
Cortex is a SaaS platform that uses machine learning to predict the performance of visuals. We help enterprise brands like Toyota, L’Oreal, and Oreo save up to 50% spend by predicting the performance of marketing visuals before a single dollar is spent.
We’re growing fast, and we’ll be on target to hit our 2021 target revenue by landing just 10 of the companies in our current pipeline.
*The above graphic contains forward-looking projections that cannot be guaranteed
46 companies own 2,165 total brands in our target industries, making every account we close a significant landmark. Here’s a look at our current pipeline:
We’ve developed a robust business model that will enable us to scale effectively year over year. Here’s how it works:
We’ve carved out a unique niche in the $600B global advertising market, and demand for visual content in this market is growing at a rate of 30% per year.
Our collective expertise spans decades, and we’ve built the expert team needed to make Cortex the right investment for your portfolio.
Over the next 18 months, we will remain laser focused on repeatedly executing our sales playbook. It works, we have many world class customers to reference, and we have identified 46 specific companies in those same industries that we will target. Selling to a fraction of those 46 will allow us to achieve our 2021 and 2022 goals.
As we do that, we’ll continue plugging our software API into other creative software and get paid per use. We have two examples of this in place already. Long term, this will allow us to make high margin revenue every time creatives use any software, be it our platform or others.
Cortex has financial statements ending December 31 2019. Our cash in hand is $390,404.98, as of November 2020. Over the three months prior, revenues averaged $31,000/month, cost of goods sold has averaged $4,394/month, and operational expenses have averaged $110,000/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.
Cortex is a B2B SaaS platform used by the some of the world's leading brands to know what images and videos to make, how to make them, and which images and videos to promote with advertising budgets.
Brands spend $600 billion every year on visuals without knowing these insights. Much of that $600 billion is wasted and careers can be ruined due to poor performance.
With Cortex, that entire $600 billion is de-risked. Brands can invest that money with confidence.
Cortex hopes to be the brain behind all visual creation in 5 years.
When people see things, they develop an opinion nearly instantly. That opinion often determines whether the person will buy or enjoy that thing.
Huge categories like entertainment, advertising, packaging, and product design are all impacted by people's opinions formed visually.
Cortex will be used to drive strategy in each of those spaces - reducing the risk of creating new products, ads, entertainment, and packaging. These projections cannot be guaranteed.
Cortex Automation Inc. was incorporated in the State of Delaware in May 2014.
Since then, we have:
- $600,000 run rate - Cortex hit 150% of plan in October
- Best in class customers - L'Oréal, Marriott, Toyota, Deloitte, Oreo, Jack Daniels, and more
- Customers like L’Oreal, KAO, and Marriott have increased their revenue with us in the past 10 weeks
- Cortex was one of 10 startups accepted into the super competitive Techstars Boston class in 2020
- Founders’ previous company was in the same space and grew fast enough to be on the INC 5000
- Raised $1.2M to date from really impressive CEO angel investors, Revup Fund, and Techstars
- 14 major international brands are already in late-stage pipeline for onboarding in 2021
Historical Results of Operations
Liquidity & Capital Resources
To-date, the company has been financed with $419,995 in equity and $790,000 in convertibles.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 13 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 12 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
Cortex Automation Inc. cash in hand is $390,404.98, as of November 2020. Over the last three months, revenues have averaged $31,000/month, cost of goods sold has averaged $4,394/month, and operational expenses have averaged $110,000/month, for an average burn rate of $83,394 per month. Our intent is to be profitable in 10 months.
We have graduated from TechStars Boston, which provided numerous positive benefits, including introductions, new investment, mentors, and being able to plug into an extremely valuable network. We also launched a new and improved version of our core product. Additionally since the date of our financials, COVID-19 resulted in some lost revenue from customers in the travel and hospitality space (though we expect that revenue to return as COVID-19 abates). Our current expenses are also likely to lower significantly to ~$80k/month from the average stated above. That average had numerous extra expenses such as one-time legal fees related to our previous raise.
In 6 months, we hope (but not guarantee) to be generating $85,500 in monthly revenue and $89,000 monthly expenses.
Outside of the funds the raised of this offering, we could potentially tap into our network of previous investors. Additionally, we may be able to secure annual prepayments from customers. We may also be able to raise capital through existing and future strategic partnership.
Many aspects of our software rely on third-party data sources such as Facebook and Instagram. If those data sources were to become unavailable or were to have significant costs required for their continued access, it may have an adverse effect on the Company. Our current plans and projections assume maintaining access to third-party data and being able to establish partnerships that give us access to new data, but there is no guarantee we will be able to form those data partnerships.
Laws and regulations around marketing and use of online data are subject to change. We cannot predict what laws and regulations might come into effect in the future which might have an adverse effect on our business.
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.
As an internet-based software company, any major factors that restrict peoples' access to the internet and/or cause major changes to how the internet is used by businesses and consumers may have an adverse effect on the Company.
Unprecedented global pandemics (such as COVID-19) can cause significant economic damage, and marketing budgets may be cut at an organization facing economic difficulties. Such cuts are unforeseen and beyond our control but may have an adverse effect on the Company.
Economic slowdowns or recessions are beyond our control and, as a B2B software company, if budgets are reduced or eliminated in our target markets, this could have an adverse effect on our ability to gain new customers and retain existing customers.
Any projections or forward-looking statements regarding the Company's anticipated financial or operational performance are management's good faith estimates using current assumptions as to future events and conditions. Projections do not, and cannot, take into account such factors as market fluctuations, unforeseeable events such as natural disasters, the terms and conditions of any possible financing, and other possible occurrences that are beyond our ability to control or even to predict. Some assumptions may not materialize due to unanticipated events and circumstances beyond management's control. Projections are inherently uncertain and unpredictable. Any projected results cannot be guaranteed.
As a startup organization, the company is still very dependent on its co-founders. If anything catastrophic were to happen to the Company's founding team, the future of the Company may be compromised.
The success of the Company will depend on its ability to compete for and retain qualified key personnel to enhance our growth. The Company's business would be adversely affected if we were unable to recruit qualified personnel when necessary or if we were to lose the services of certain key personnel and were unable to locate suitable replacements in a timely manner. Finding and hiring such replacements, if any, could be costly and might require the Company to grant significant equity awards or incentive compensation, which could have a material adverse effect on the Company’s financial results and on your investment. The loss, through untimely death, unwillingness to continue or otherwise, of any such persons could have a materially adverse effect on the Company and its business.
The nature of our business model and plan will likely necessitate future fundraises. There can be no guarantee that we will be able to secure adequate funding in the future and the inability to raise adequate funds may adversely affect the business. Even if we do make successful offering(s) in the future, the terms of that offering might result in your investment in the company being worth less because of the terms of future investment rounds.
Our space may become more competitive. We can provide no assurance that our current or potential competitors will not provide products or services comparable or superior to those provided by us or adapt more quickly than we do to evolving industry or market trends. Increased competition may result in price reductions, reduced gross margins and loss of market share, any of which would materially and adversely affect our business, prospects, financial condition or results of operations. We cannot assure investors that we will be able to compete effectively against current and future competitors.
We are an early-stage company with a limited track record. As with all early-stage startups, our current and any future operations are subject to significant business risk.
In the future, there may be reasons to seek patents on our IP. There can be no guarantee that we will be able to secure patents for our technology. Lack of patent protection may have an adverse affect on our business.
We are continually developing and improving our software products. However, like any company with limited resources, we will need to make choices about which new developments, features, and functionalities to prioritize in order to give the Company the best chance at success. There can be no guarantee that management chooses the right product roadmap to pursue and right ways to market those products/features, and therefore it is possible that time, money, and resources might be devoted to features and functionality that do not resonate with the market. Both the launch of new products and advertising campaigns are inherently uncertain, especially as to their appeal to customers. Failure of product improvements to generate market traction may have an adverse effect on our business.
Our choices about where, how, and when to deploy capital and resources may change over time based on what management deems best for the company. As these choices will be based on numerous assumptions, market data, and projections, there can be no guarantee that these choices will be the optimal ones.
Although the Company is not aware of any third party rights that are infringed by our existing or contemplated business activities, there is no guarantee that we will not be sued for infringement by third parties or that we will not need to modify our brand or products to avoid infringement.
Cortex may become reliant on one or more large customers that make up substantial portions of our revenue. There is no assurance that the loss of one or more large customers would not have a negative impact on the Company.
Rapid customer and revenue growth places strain on operations in a number of ways. Managing this growth effectively may have an impact on the magnitude of our success.
The Company’s technology infrastructure involves several third party software services including: Amazon Web Services, Google, GitHub, Hubspot, and others. The Company’s internal communication involves third party tools including: Slack and Google Apps. The Company is dependent on third party social media platforms to increase exposure and brand awareness including: Facebook, Twitter, Instagram, YouTube, and LinkedIn. Costs of cloud infrastructure and other third-party software services could increase at an unexpected rate and make operating the business become unsustainable.
We rely on nondisclosure and noncompetition agreements with vendors, consultants and other parties to protect, in part, trade secrets and other proprietary rights. There can be no assurance that these agreements will adequately protect our trade secrets and other proprietary rights and will not be breached, that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary information or that third parties will not otherwise gain access to our trade secrets or other proprietary rights. As we expand our business, protecting our intellectual property will become increasingly important. The protective steps we have taken may be inadequate to deter our competitors from using our proprietary information. In order to protect or enforce our intellectual property rights, we may be required to initiate litigation against third parties, such as infringement lawsuits. Also, these third parties may assert claims against us with or without provocation. These lawsuits could be expensive, take significant time and could divert management’s attention from other business concerns. We cannot assure you that we will prevail in any of these potential suits or that the damages or other remedies awarded, if any, would be commercially valuable.
There are factors an events such as natural disasters, acts of terrorism, wars, government actions, and others that cannot be predicted or controlled by us and may, if they occur, have an adverse effect on our business.
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