Risks Specific to SpaceFab
1. The shares are speculative investments which involve a substantial risk of loss.
We plan to use the funds raised in this Wefunder campaign "seed" round to complete an engineering model of our space telescope satellite. We will need to raise $2 million dollars or more, in addition to the amount raised in this Wefunder campaign "seed" round, to complete the design, manufacture and test our flight model, and then launch our first space telescope satellite. We plan to raise the additional $2 million by showing considerable progress in designing our satellite and demonstrating market interest in use of the satellite. However, we may not make enough progress to convince a venture capital firm to provide "Series A" funding. If this happens, we may have to sell our technology, sell the company, or close the company, and investors might lose their investment.
We have a plan to obtain enough revenue to reach break-even within a year after we launch our satellite and it is operational. However, it is possible that there will be a rocket launch failure, and our satellite will be destroyed, which means there will be no revenue. We plan to mitigate this risk by purchasing launch insurance, which should allow us to build and launch a replacement satellite.
It is also possible that our satellite will make it into orbit, but then may not function correctly. We plan to mitigate this risk through extensive testing of our satellite, and having employees or consultants experienced in the manufacturing of satellites review our satellite design, testing, and manufacturing procedures. However, if we do not have sufficient funds remaining, or cannot raise additional funds to build and launch a replacement satellite, we may have to sell our technology, sell the company, or close the company, and investors might lose their investment.
4. We have an agreement with a corporate partner who will provide the launch of our satellite when their own satellite launches in mid-2019, and they will also partially subsidize our launch costs. However, the agreement is non-binding and the offer might be withdrawn. If this happens, or if our satellite is not ready when their satellite launches, we will need to raise an additional Five Hundred Thousand Dollars ($500,000) or more, and find an alternate launch provider. This may delay the start of our service, increase our costs, and we will need to raise even more funding, which may not happen.
5. It is also possible that our revenues will be lower than we project, or our costs may be higher than we project, and we may not reach profitability before running out of money. We plan to mitigate the risk of inadequate revenue projections by having customer agreements prior to the raising of "Series A" funds. We plan to mitigate the risk of inadequate cost projections by having consultants experienced in company operations review our business plan. Despite these efforts, if we run out of money and cannot raise more funds, we may have to sell our technology, sell the company, or close the company, and investors might lose their investment.
6. We are not aware of any patent infringement, but someone may accuse us of patent infringement in the future. If that happens, we: (a) will have to pay to defend ourselves; (b) may have to pay for a license; (c) may need to pay for a settlement; or (d) may need to redesign our system, thus increasing our costs.
7. Our application for a patent on our ion engine accelerator may be rejected by the U.S. Patent Office, or the technology may not work, or the advantages of the technology may not be as powerful as we expect, so our ion engine technology may not be as valuable as we project.
8. There is no public market for the shares being offered, and no market is expected to develop for the shares in the future. The shares are not being registered under the securities laws of any appropriate jurisdiction, but in reliance on exemptions from such registration requirements. The shares may not be resold or otherwise transferred unless the shares are later registered under the securities laws of any appropriate jurisdiction, or unless an exemption from such registration requirements is available. Accordingly, an investor may be unable to liquidate an investment in the shares and should be prepared to bear the economic risk of an investment in the shares for an indefinite period. In addition, an investor should be able to withstand the total loss of his/her/its investment.
9. It is our plan to launch additional space telescope satellites for use by both astronomical and Earth observation customers. However, it is possible that the astronomical market may not be as large as we project. It is also possible that the Earth observation market may be more competitive than we expect, or that our Earth observation technology may be deficient, such as having low resolution, incorrect spectral bands, or long revisit times. If our space telescope business line's revenue does not grow, we may not be able to finance and implement our asteroid mining and space manufacturing businesses, which would limit our long term business prospects.
10. Purchasers will not have an ownership claim to the Company or to any of its assets or revenues for an indefinite amount of time, and depending on when and how the Securities are converted, the Purchasers may never become equity holders of the Company. Purchasers will not become equity holders of the Company unless the Company receives a future round of financing great enough to trigger a conversion and the Company elects to convert the Securities. Purchasers will have no say in whether their securities are converted in any Equity Financing. In certain instances, such as a sale of the Company, an IPO or a dissolution or bankruptcy, the Purchasers may only have a right to receive cash, to the extent available, rather than equity in the Company.