|1||Global network of customers established, & partnerships in negotiation worth $50-75 Million ARR|
|2||Recurring revenue platform serves more than 1,000 users, 0% error rate, growing at > 100% MoM|
|3||Software poised to disrupt an industry expected to reach $38.4 Billion by 2027|
|4||COVID has led to a pressing need for remote payroll services & a unique market opportunity|
|5||Innovative, cloud-based platform addresses increasing demands for cost reduction & time efficiency|
|6||65 combined years of experience in finance and running payroll in 14 countries over 4 continents|
|7||Clear route to market with Xero accounting software integration already secured|
|8||KarbonPay delivers up to 40% savings vs existing payroll providers.|
This kind of opportunity to invest behind Brad and KarbonPay was one it was easy to be enthusiastic about. Brad has not disappointed since my first dollar was deposited. One of the strongest business principles I've lived by over the years has been to invest in people first and product second. In this case, both are winners. The truth around KarbonPay is the product is meeting a real need at a very attractive price through essentially scaling better efficiencies in the digital payroll process internationally. Now that we’ve moved on from the dreaming phase to reality, the foundation is set and I expect the growth of this product and its success to be strong in the coming months. Brad’s natural ability to define objectives and execute plans to get there gives me great confidence in the future of this product. I’m happy to be behind this with my time and money.
KarbonPay has financial statements ending December 31 2019. Our cash in hand is $12,329.40, as of October 2020. Over the three months prior, revenues averaged $12/month, cost of goods sold has averaged $3/month, and operational expenses have averaged $13,500/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.
KarbonPay automates the calculations of payroll data, across multiple countries and languages.
In five years, we hope to be operational in ~25 countries, as a primary payroll provider. We will have integrations with the biggest and best HR and accounting software tools in order to provide customers with the most seamless, automated payroll experience.
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.
KarbonPay, LLC was organized in the State of Texas in December 2019.
Since then, we have:
Historical Results of Operations
Our company was organized in December 2019 and has limited operations upon which prospective investors may base an evaluation of its performance.
Liquidity & Capital Resources
To-date, the company has been financed with $165,000 in equity.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 6 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 18 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
KarbonPay, LLC cash in hand is $12,329.40, as of October 2020. Over the last three months, revenues have averaged $10/month, cost of goods sold has averaged $3/month, and operational expenses have averaged $13,500/month, for an average burn rate of $13,493 per month. Our intent is to be break even in 9 months.
Since our entity was formed on 12/31/2019, our expenditure has increased during the fiscal year 2020.
In the next 3 - 6 months we are expecting (but cannot guarantee) monthly revenues of $32,000, and annual revenues of $384,000. Our revenue forecasts are based on getting fully-funded, continuing our existing growth rates, and charging full price (we technically received our first revenues last month as we have live, paying (monthly) beta users - they are currently heavily discounted.) Currently we have ~ 45 paying customers, and are onboarding more companies every week. During the same period, we expect monthly expenses to be about $55k. We hope to be break even 9 months from now.
In terms of other forms of capital, we have access to a business line of credit, though we have not used it to date and prefer not to.
Software Development Business. The software development business is extremely competitive. Especially given that we expect to conduct business in various countries, there can be no assurance that the Software we develop is not copied or otherwise used by a competitor. To protect against these contingencies, we are developing our Software without the use of any shared or open architecture and we are contractually requiring our developers to refrain from using our Software or the intellectual property developed in connection with our Software for anyone else. Still, there can be no assurance our Software will be successful or if successful, that it will not be copied.
Talented programmers are in high demand. Although we have a contract in place whereby our Software will be developed, there can be no assurance that we will be able to hire talented developers who may instead choose to work for another, more profitable project.
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.
Marketing Efforts. Development of our Software is only the first step in the potential success of our Company. To actually monetize our Software will require an aggressive marketing campaign. We are confident the relationship our Manager enjoys with other companies through his HR business will benefit our marketing efforts but to truly achieve the economic success we hope to enjoy, we will need to hire talented marketing personnel. As with all service industries, talented marketing personnel is hard-to-find and there can be no assurance that we can hire marketing professionals who can successfully promote our Software.
Competition. We are confident we can develop Software that is superior to the payroll software currently available. However, other, better capitalized companies may decide to devote more resources to resolving the issues associated with payroll which may negatively affect our ability to obtain and retain customers.
General Economic Trends. Although we think there is a demand for software similar to what we propose to develop, there can be no assurance that future economic downturns will not negatively affect the public’s demand for our Software. Because our Software will be specifically designed for multinational companies, world events may affect our business more directly than if we focused on only one country.
Absence of Operating History. The Company is a newly formed legal entity with no operating history. Investors should not place any undue weight upon the track record or prior performance of any person or entity when making their investment decision.
Limited Capitalization. The initial capitalization of the Company will be funded entirely by the sale of Units. Thus, the financial ability of the Company to perform the activities contemplated herein is singularly dependent upon the total and timely receipt by the Company of these funds.
Reliance upon Management and Others. The activities of the Company will be at the sole discretion of the Manager. Investors should be prepared to rely completely and exclusively upon our management’s judgment in regard to the investment of the Company’s capital. The Manager has broad discretion with respect to operations of the Company's affairs since the Manager will have the greatest understanding of the Company.
Duties and Responsibility of Manager. The Manager is accountable to the Investor Members and has a duty to exercise good faith and to deal fairly with the Investor Members in handling Company affairs. The Company Agreement contains provisions which are intended to limit the liability of the Manager for any act or omission within the scope of the authority conferred upon him by the Company Agreement if it is determined in good faith that such course of conduct was (a) undertaken in good faith and (b) did not constitute gross negligence or misconduct.
Lack of Diversification. The Company intends to only invest in the Software. If the Software is unsuccessful, the Investor Members will have no other means to recover their investment.
Uninsured Risks. There may be liabilities to which the Company is exposed that could result in uninsured liabilities to third parties reducing or eliminating Company funds available for development of the Software. Because the Investor Members are Members in the Company, Investor Members should not have any liability for the obligations of the Company past the Investor Members’ initial investment in the Company.
Restrictions on Transfer. Investors should be fully aware of the long term nature of their investment in the Company. Each Investor Member will be required to represent that he is purchasing the Units for his own account for investment purposes and not with a view to resale or distribution. The Units will not be registered under the Securities Act or under state securities law by reason of specific exemptions the availability of which is based in part upon the investment intent of each Investor Member. The Units are not readily transferable and no transfer of an Investor Member's Unit may be made if such transfer violates federal or state securities laws or affects the status of the Company for federal income tax purposes either by termination of the Company or by causing it to be classified as a corporation or association.
If, as a result of some change in circumstances arising from an event not now contemplated, an Investor Member wishes to transfer his Units, such Investor Member will in all likelihood find no market. In addition, an Investor Member may incur substantial adverse tax consequences upon any disposition of his Units. A transfer by an Investor Member must be approved by 66.67% of the Members. The remaining Members have a right of first refusal in the event an Investor Member chooses to sell his Investor Member interests to a third party. These restrictions on transferability inhibit the ability of an Investor Member to freely dispose of his Investor Member interests.
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