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Invest in Tap Systems, Inc.

The Input Technology for the Metaverse

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Financials

We have financial statements ending December 31 2021. Our cash in hand is $431,889, as of October 2021. Over the three months prior, revenues averaged $55,241/month, cost of goods sold has averaged $17,999/month, and operational expenses have averaged $172,317/month.

At a Glance

Jan 1 - Dec 31 2021
$705,434
-20%
Revenue
-$1,644,240
Net Loss
$662,075
-12%
Short Term Debt
$592,075
Raised in 2021
$431,889
-20%
Cash on Hand
Net Margin:
-233%
Gross Margin:
71%
Return on Assets:
-235%
Earnings per Share:
-$0.10
Revenue per Employee:
$70,543
Cash to Assets:
61%
Revenue to Receivables:
~
Debt Ratio:
969%
2021-2020 Tap Systems Inc Audit final .pdf Tap Financial Statements for 2020 2019.pdf

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.

Overview

We have developed a wearable that allows fast, accurate input and control for any digital device, including augmented and virtual reality wearables.


Milestones

Tap Systems Inc. was incorporated in the State of Delaware in February 2015 before redomiciling to California on March 15, 2016.

Since then, we have:

  • Tap solves a critical problem in the multi-billion dollar AR and VR industry.
  • Tap has over $2 million in sales to date, tens of thousands of customers, and a 4 star Amazon rating
  • Our founders have successfully exited from previous startups via IPOs and acquisitions.
  • We have raised over $13 million to date from founders, investors, and individuals.
  • Our 2018 crowdfunding offering sold out, and was oversubscribed by almost 50%.
  • Facebook, Apple, Google & other leading companies are investing billions in developing AR/VR systems.
  • The AR/VR market is projected to be almost $300 billion by 2024.

Historical Results of Operations

  • Revenues & Gross Margin. For the period ended December 31, 2021, the Company had revenues of $705,434 compared to the year ended December 31, 2020, when the Company had revenues of $885,346.
  • Assets. As of December 31, 2021, the Company had total assets of $701,005, including $424,689 in cash. As of December 31, 2020, the Company had $688,067 in total assets, including $282,590 in cash.
  • Net Loss. The Company has had net losses of $1,644,240 and net losses of $1,924,505 for the fiscal years ended December 31, 2021 and December 31, 2020, respectively.
  • Liabilities. The Company's liabilities totaled $6,791,944 for the fiscal year ended December 31, 2021 and $6,118,205 for the fiscal year ended December 31, 2020.

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 $8mm in equity and $5mm in convertibles.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 8 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

Tap Systems Inc. cash in hand is $389,247, as of June 2021. Over the last three months, revenues have averaged $55,241/month, cost of goods sold has averaged $17,999/month, and operational expenses have averaged $172,317/month, for an average burn rate of $135,075 per month. Our intent is to be profitable in 18 months.

We began shipping the Tap Strap to customers in February 2018. Prior to that point, we had no revenues, and all manufacturing expenses were capitalized. Starting in February of 2018, the Company began to recognize revenue for the sale of our product, which amounted to $885K for the year 2020.  

In first six months of 2021, even impacted by Covid19 and the damage of 2K devices by extreme weather conditions during an ocean-shipment in November 2020, the net revenue in the first six months in 2021 is approximately $331K, which represents a decrease of about $30K, or 8%, as compared with the same period in 2020.

In the first six months of 2021, our expenses decreased about 9%, or approximately $97K.  The decrease in expenses reflects decreased spending on sales and marketing activities. We expect that our R&D expenses will grow modestly over the coming year; however, we expect that our sales and marketing expenses will increase significantly as we expand our sales activities.

In the next 6 months we expect our revenues to reach approximately $750,000, with expenses during the same period running at about $900,000. We believe we'll need approximately $3.5M in total capital to eventually reach break-even by Q4 2023. These projections cannot be guaranteed.

Since its inception in 2015, the Company has raised 8MM through the sale of equity in the form of common stock.  In addition, the Company has borrowed 5MM in the form of interest-free convertible loans made to the Company by its CEO, which may be converted into common stock at a price of $1.25 per share.  Additionally, the Company has obtained two PPP loans in the aggregate amount of $41K, which have been forgiven in March 2021 and October 2021, respectively; and SBA Economic Injury Disaster Loans in the aggregate principal amount of $500K with an interest rate of 3.75% for a term of 30 years.

The Company is currently consuming cash on a monthly basis. Absent any other source of funds, the funds to be raised in future Offerings are necessary for the continued viability of the Company.

Furthermore, to the extent necessary and depending on its eligibility, the Company may apply for lines of credit or other credit facilities from banks or other financial institutions. The Company also has an investor who has committed $100k in equity purchases per month through 2021 which will help cover short-term burn.

Risks

1

Uncertain Risk


An investment in the Company (also referred to as “we”, “us”, “our", or "Company") involves a high degree of risk and should only be considered by those who can afford the loss of their entire investment. Furthermore, the purchase of any of the Common Stock should only be undertaken by persons whose financial resources are sufficient to enable them to indefinitely retain an illiquid investment. Each investor in the Company should consider all of the information provided to such potential investor regarding the Company as well as the following risk factors, in addition to the other information listed in the Company's Form C. The following risk factors are not intended, and shall not be deemed to be, a complete description of the commercial and other risks inherent in the investment in the Company.

2

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.

3

Our business projections are only projections

There can be no assurance that the Company will meet our projections. There can be no assurance that the Company will be able to find sufficient demand for our product, or even if we do, that we will able to make a profit. To date, the Company has not had any profits.


Other Disclosures

The Board of Directors

Director Occupation Joined
David Schick CEO @ Tap Systems Inc. 2015
Sabrina Kemeny, PhD. President & Secretary @ Tap Systems Inc. 2015
Alec Marshall Managing Partner @ 1Silicone Drive 2019
Eli Schick Managing Member @ Amidon Nurse Staffing 2019

Officers

Officer Title Joined
David Schick CEO   2015
Sabrina Kemeny, PhD. President   Secretary   2015

Voting Power

Holder Securities Held Voting
David Schick 5,574,454 Stock, Warrants, Convertible Notes 34.3%

Past Fundraises

Date Security Amount
Current Priced Round $1,863,239
08/2021 Loan $350,000
07/2021 Loan $73,000
05/2021 Loan $150,000
02/2021 Loan $19,075
10/2020 Priced Round $1,065,000
04/2020 Loan $21,847
03/2020 Priced Round $395,503
03/2020 Loan $32,000
11/2019 Convertible Note $40,000
11/2019 Priced Round $1,067,513
05/2019 Priced Round $600,000
04/2019 Convertible Note $4,750,000
08/2018 Priced Round $506,250
03/2017 Priced Round $2,711,250
04/2016 Convertible Note $100,000
05/2015 Priced Round $775,000

Convertible Notes Outstanding

Issued Amount Valuation Cap
04/30/2016
$100,000
None
04/25/2019
$4,750,000
None
11/14/2019
$40,000
None

Outstanding Debts

Issued Lender Outstanding
02/02/2021 PPP Loan
$19,075
05/19/2021 SBA Loan
$151,334
07/28/2021 Amazon (Line of Credit)
$47,521
08/24/2021 SBA Loan
$351,330

Related Party Transactions

Use of Funds

$200,001 Funds will be used as follows: 60% for Research & Development costs; 25.5% for Sales & Marketing costs; 8% for General & Administrative costs; and 6.5% for the Wefunder intermediary fee.

$5,000,000 In the event that the Company raises its maximum for the offering, it will be able to augment its marketing efforts, as well as its R&D.  This will enable faster product improvements, as well as more rapid expansion of the customer base. Funds will be used as follows: 40% for Research & Development costs; 25.5% for Sales & Marketing costs; 18% for General & Administrative costs; 10% for line-of-credit repayment; and 6.5% for the Wefunder intermediary fee. 

Capital Structure

Class of Security Securities
(or Amount)
Authorized
Securities
(or Amount)
Outstanding
Common Stock 50,000,000 16,270,607

The Funding Portal

Tap Systems, Inc. is conducting a Regulation Crowdfunding offering via Wefunder Portal LLC. CRD Number: #283503.

Form C Filing on EDGAR

The Securities and Exchange Commission hosts the official Form C on their EDGAR web site.

Details