Form C
This filing will not be reviewed by Wefunder.
The information below will be submitted to the SEC on your behalf.
Cover Page
- Form:
- Jurisdiction of Incorporation/Organization: DE
- Date of organization: 3/4/2020
- Common Stock
- Preferred Stock
- Debt
- Other
- Yes
- No
- Pro-rata basis
- First-come, first-served basis
- Other
1 Deadline will be adjusted to be 365 days from when filed with SEC.
Most recent fiscal year-end: | Prior fiscal year-end: | |
Total Assets: | ||
Cash & Cash Equivalents: | ||
Accounts Receivable: | ||
Short-term Debt: | ||
Long-term Debt: | ||
Revenues/Sales: | ||
Cost of Goods Sold: | ||
Taxes Paid: | ||
Net Income: |
Offering Statement
Respond to each question in each paragraph of this part. Set forth each question and any notes, but not any instructions thereto, in their entirety. If disclosure in response to any question is responsive to one or more other questions, it is not necessary to repeat the disclosure. If a question or series of questions is inapplicable or the response is available elsewhere in the Form, either state that it is inapplicable, include a cross-reference to the responsive disclosure, or omit the question or series of questions.
Be very careful and precise in answering all questions. Give full and complete answers so that they are not misleading under the circumstances involved. Do not discuss any future performance or other anticipated event unless you have a reasonable basis to believe that it will actually occur within the foreseeable future. If any answer requiring significant information is materially inaccurate, incomplete or misleading, the Company, its management and principal shareholders may be liable to investors based on that information.
The Company
company eligibility
- Organized under, and subject to, the laws of a State or territory of the United States or the District of Columbia.
- Not subject to the requirement to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
- Not an investment company registered or required to be registered under the Investment Company Act of 1940.
- Not ineligible to rely on this exemption under Section 4(a)(6) of the Securities Act as a result of a disqualification specified in Rule 503(a) of Regulation Crowdfunding.
- Has filed with the Commission and provided to investors, to the extent required, the ongoing annual reports required by Regulation Crowdfunding during the two years immediately preceding the filing of this offering statement (or for such shorter period that the issuer was required to file such reports).
- Not a development stage company that (a) has no specific business plan or (b) has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies.
Directors of the Company
Director |
Principal Occupation | Main Employer |
Year Joined as Director |
Officers of the Company
Officer | Positions Held | Year Joined |
Principal Security Holders
Name of Holder | No. and Class of Securities Now Held |
% of Voting Power Prior to Offering | ||
No principal security holders. |
INSTRUCTION TO QUESTION 6: The above information must be provided as of a date that is no more than 120 days prior to the date of filing of this offering statement.
To calculate total voting power, include all securities for which the person directly or indirectly has or shares the voting power, which includes the power to vote or to direct the voting of such securities. If the person has the right to acquire voting power of such securities within 60 days, including through the exercise of any option, warrant or right, the conversion of a security, or other arrangement, or if securities are held by a member of the family, through corporations or partnerships, or otherwise in a manner that would allow a person to direct or control the voting of the securities (or share in such direction or control — as, for example, a co-trustee) they should be included as being “beneficially owned.” You should include an explanation of these circumstances in a footnote to the “Number of and Class of Securities Now Held.” To calculate outstanding voting equity securities, assume all outstanding options are exercised and all outstanding convertible securities converted.
Business and Anticipated Business Plan
INSTRUCTION TO QUESTION 7: Wefunder will provide your company’s Wefunder profile as an appendix (Appendix A) to the Form C in PDF format. The submission will include all Q&A items and “read more” links in an un-collapsed format. All videos will be transcribed.
This means that any information provided in your Wefunder profile will be provided to the SEC in response to this question. As a result, your company will be potentially liable for misstatements and omissions in your profile under the Securities Act of 1933, which requires you to provide material information related to your business and anticipated business plan. Please review your Wefunder profile carefully to ensure it provides all material information, is not false or misleading, and does not omit any information that would cause the information included to be false or misleading.
RISK FACTORS
A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment.
In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document.
The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature.
These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.
-
This offering is being conducted on an expedited basis due to circumstances relating to COVID-19 and pursuant to the Commission’s temporary regulatory COVID-19 relief.
(A) The financial information that has been omitted is not currently available and will be provided by an amendment to the offering materials;
(B) The investor should review the complete set of offering materials, including previously omitted financial information, prior to making an investment decision; and
(C) No investment commitments will be accepted until after such financial information has been provided
(D) Each investor in our offering under Regulation Crowdfunding will appoint the lead investor we have identified (“Lead Investor”) as the Investor’s true and lawful proxy and attorney, to vote the Investor’s securities related to the Company and sign related documents on the Investor’s behalf (as described further in section 31 below). Although the Lead Investor’s goal is to maximize the value of the Company and therefore the Lead Investor’s interests should be aligned with the interests of Investors, there can be no guarantee that these interests will always remain aligned or that the Lead Investor will always make decisions that maximize the value of a particular Investor’s interests.
INSTRUCTION TO QUESTION 8: Avoid generalized statements and include only those factors that are unique to the issuer. Discussion should be tailored to the issuer’s business and the offering and should not repeat the factors addressed in the legends set forth above. No specific number of risk factors is required to be identified.
The Offering
The Company intends to use the net proceeds of this offering for working capital and general corporate purposes, which includes the specific items listed in Item 10 below. While the Company expects to use the net proceeds from the Offering in the manner described above, it cannot specify with certainty the particular uses of the net proceeds that it will receive from from this Offering. Accordingly, the Company will have broad discretion in using these proceeds.
INSTRUCTION TO QUESTION 10: An issuer must provide a reasonably detailed description of any intended use of proceeds, such that investors are provided with an adequate amount of information to understand how the offering proceeds will be used. If an issuer has identified a range of possible uses, the issuer should identify and describe each probable use and the factors the issuer may consider in allocating proceeds among the potential uses. If the issuer will accept proceeds in excess of the target offering amount, the issuer must describe the purpose, method for allocating oversubscriptions, and intended use of the excess proceeds with similar specificity. Please include all potential uses of the proceeds of the offering, including any that may apply only in the case of oversubscriptions. If you do not do so, you may later be required to amend your Form C. Wefunder is not responsible for any failure by you to describe a potential use of offering proceeds.
Delivery & Cancellations
Book Entry and Investment in the Co-Issuer. Investors will make their investments by investing in interests issued by one or more co-issuers, each of which is a special purpose vehicle (“SPV”). The SPV will invest all amounts it receives from investors in securities issued by the Company. Interests issued to investors by the SPV will be in book entry form. This means that the investor will not receive a certificate representing his or her investment. Each investment will be recorded in the books and records of the SPV. In addition, investors’ interests in the investments will be recorded in each investor’s “Portfolio” page on the Wefunder platform. All references in this Form C to an Investor’s investment in the Company (or similar phrases) should be interpreted to include investments in a SPV.
NOTE: Investors may cancel an investment commitment until 48 hours prior to the deadline identified in these offering materials.
The intermediary will notify investors when the target offering amount has been met. If the issuer reaches the target offering amount prior to the deadline identified in the offering materials, it may close the offering early if it provides notice about the new offering deadline at least five business days prior to such new offering deadline (absent a material change that would require an extension of the offering and reconfirmation of the investment commitment).
If an investor does not cancel an investment commitment before the 48-hour period prior to the offering deadline, the funds will be released to the issuer upon closing of the offering and the investor will receive securities in exchange for his or her investment.
If an investor does not reconfirm his or her investment commitment after a material change is made to the offering, the investor’s investment commitment will be cancelled and the committed funds will be returned.
An Investor’s right to cancel. An Investor may cancel his or her investment commitment at any time until 48 hours prior to the offering deadline.
If there is a material change to the terms of the offering or the information provided to the Investor about the offering and/or the Company, the Investor will be provided notice of the change and must re-confirm his or her investment commitment within five business days of receipt of the notice. If the Investor does not reconfirm, he or she will receive notifications disclosing that the commitment was cancelled, the reason for the cancellation, and the refund amount that the investor is required to receive. If a material change occurs within five business days of the maximum number of days the offering is to remain open, the offering will be extended to allow for a period of five business days for the investor to reconfirm.
If the Investor cancels his or her investment commitment during the period when cancellation is permissible, or does not reconfirm a commitment in the case of a material change to the investment, or the offering does not close, all of the Investor’s funds will be returned within five business days.
Within five business days of cancellation of an offering by the Company, the Company will give each investor notification of the cancellation, disclose the reason for the cancellation, identify the refund amount the Investor will receive, and refund the Investor’s funds.
The Company’s right to cancel. The Investment Agreement you will execute with us provides the Company the right to cancel for any reason before the offering deadline.
If the sum of the investment commitments from all investors does not equal or exceed the target offering amount at the time of the offering deadline, no securities will be sold in the offering, investment commitments will be cancelled and committed funds will be returned.
Ownership and Capital Structure
The Offering
- Yes
- No
See the above description of the Proxy to the Lead Investor.
Restrictions on Transfer of the Securities Being Offered:
The securities being offered may not be transferred by any purchaser of such securities during the one year period beginning when the securities were issued, unless such securities are transferred:
- to the issuer;
- to an accredited investor;
- as part of an offering registered with the U.S. Securities and Exchange Commission; or
- to a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.
NOTE: The term “accredited investor” means any person who comes within any of the categories set forth in Rule 501(a) of Regulation D, or who the seller reasonably believes comes within any of such categories, at the time of the sale of the securities to that person.
The term “member of the family of the purchaser or the equivalent” includes a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the purchaser, and includes adoptive relationships. The term “spousal equivalent” means a cohabitant occupying a relationship generally equivalent to that of a spouse.
Description of Issuer's Securities
Class of Security | Securities (or Amount) Authorized |
Securities (or Amount) Outstanding |
Voting Rights |
||
---|---|---|---|---|---|
error |
Class of Security | Securities Reserved for Issuance upon Exercise or Conversion |
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Warrants: | |
Options: |
Or contact support@wefunder.com
For example, the shareholders may change the terms of the articles of incorporation for the company, change the terms of securities issued by the Company, change the management of the Company, and even force out minority holders of securities. The shareholders may make changes that affect the tax treatment of the Company in ways that are unfavorable to you but favorable to them. They may also vote to engage in new offerings and/or to register certain of the Company’s securities in a way that negatively affects the value of the securities the Investor owns. Other holders of securities of the Company may also have access to more information than the Investor, leaving the Investor at a disadvantage with respect to any decisions regarding the securities he or she owns.
The shareholders have the right to redeem their securities at any time. Shareholders could decide to force the Company to redeem their securities at a time that is not favorable to the Investor and is damaging to the Company. Investors’ exit may affect the value of the Company and/or its viability.
In cases where the rights of holders of convertible debt, SAFES, or other outstanding options or warrants are exercised, or if new awards are granted under our equity compensation plans, an Investor’s interests in the Company may be diluted. This means that the pro-rata portion of the Company represented by the Investor’s securities will decrease, which could also diminish the Investor’s voting and/or economic rights. In addition, as discussed above, if a majority-in-interest of holders of securities with voting rights cause the Company to issue additional stock, an Investor’s interest will typically also be diluted.
These are examples and would need to be tailored to the particular instrument offered. This should be used as a guide only. It is important that you accurately describe your current and planned valuation methods and include all information that would be material to investors with respect to their decision to invest in the securities you are offering, and that you do not omit any information that would cause the included information to be false or misleading.
In the future, we will perform valuations of our common stock that take into account factors such as the following:
- unrelated third party valuations of our common stock;
- the price at which we sell other securities, such as convertible debt or preferred stock, in light of the rights, preferences and privileges of our those securities relative to those of our common stock;
- our results of operations, financial position and capital resources;
- current business conditions and projections;
- the lack of marketability of our common stock;
- the hiring of key personnel and the experience of our management;
- the introduction of new products;
- the risk inherent in the development and expansion of our products;
- our stage of development and material risks related to our business;
- the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given the prevailing market conditions and the nature and history of our business;
- industry trends and competitive environment;
- trends in consumer spending, including consumer confidence;
- overall economic indicators, including gross domestic product, employment, inflation and interest rates; and
- the general economic outlook.
We will analyze factors such as those described above using a combination of financial and market-based methodologies to determine our business enterprise value. For example, we may use methodologies that assume that businesses operating in the same industry will share similar characteristics and that the Company’s value will correlate to those characteristics, and/or methodologies that compare transactions in similar securities issued by us that were conducted in the market.
An Investor in the Company will likely hold a minority position in the Company, and thus be limited as to its ability to control or influence the governance and operations of the Company.
The marketability and value of the Investor’s interest in the Company will depend upon many factors outside the control of the Investor. The Company will be managed by its officers and be governed in accordance with the strategic direction and decision-making of its Board Of Directors, and the Investor will have no independent right to name or remove an officer or member of the Board Of Directors of the Company.
Following the Investor’s investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the Investor in the Company. The Investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured.
The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the Investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the Investor’s interest in the Company.
Additional issuances of securities. Following the Investor’s investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the Investor in the Company. The Investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured. The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the Investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the Investor’s interest in the Company.
Issuer repurchases of securities. The Company may have authority to repurchase its securities from shareholders, which may serve to decrease any liquidity in the market for such securities, decrease the percentage interests held by other similarly situated investors to the Investor, and create pressure on the Investor to sell its securities to the Company concurrently.
A sale of the issuer or of assets of the issuer. As a minority owner of the Company, the Investor will have limited or no ability to influence a potential sale of the Company or a substantial portion of its assets. Thus, the Investor will rely upon the executive management of the Company and the Board of Directors of the Company to manage the Company so as to maximize value for shareholders. Accordingly, the success of the Investor’s investment in the Company will depend in large part upon the skill and expertise of the executive management of the Company and the Board of Directors of the Company. If the Board Of Directors of the Company authorizes a sale of all or a part of the Company, or a disposition of a substantial portion of the Company’s assets, there can be no guarantee that the value received by the Investor, together with the fair market estimate of the value remaining in the Company, will be equal to or exceed the value of the Investor’s initial investment in the Company.
Transactions with related parties. The Investor should be aware that there will be occasions when the Company may encounter potential conflicts of interest in its operations. On any issue involving conflicts of interest, the executive management and Board of Directors of the Company will be guided by their good faith judgement as to the Company’s best interests. The Company may engage in transactions with affiliates, subsidiaries or other related parties, which may be on terms which are not arm’s-length, but will be in all cases consistent with the duties of the management of the Company to its shareholders. By acquiring an interest in the Company, the Investor will be deemed to have acknowledged the existence of any such actual or potential conflicts of interest and to have waived any claim with respect to any liability arising from the existence of any such conflict of interest.
Loan | |
Lender | UpCounsel Inc. |
Issue date | 03/11/20 |
Amount | $1,800,000.00 |
Outstanding principal plus interest | $1,384,216.92 as of 06/01/21 |
Interest rate | 4.0% per annum |
Maturity date | 03/11/24 |
Current with payments | Yes |
As a part of an Assets Purchase Agreement with UpCounsel Inc. dated 3/11/2020, the Company issued a $1,800,000 promissory note to UpCounsel Inc. in lieu of consideration for the assets acquired. The note is payable in four annual installments including three installments $500,000 each due on 3/11/2021, 3/11/2022 and 3/11/2023, with the balance payment due on 3/11/2024. The note accrued interest of 4% p.a., where accrued interest is due on the date of each annual installment. The Company has successfully paid the first installment in March 2021. As of this date, the Company owes $1,384.216.92 to UpCounsel Inc, of which $12,179.19 is interest accrued to date, and $457,335.40 is payable within the following 12 months. |
INSTRUCTION TO QUESTION 24: name the creditor, amount owed, interest rate, maturity date, and any other material terms.
Offering Date | Exemption | Security Type | Amount Sold | Use of Proceeds |
---|---|---|---|---|
- any director or officer of the issuer;
- any person who is, as of the most recent practicable date, the beneficial owner of 20 percent or more of the issuer’s outstanding voting equity securities, calculated on the basis of voting power;
- if the issuer was incorporated or organized within the past three years, any promoter of the issuer;
- or any immediate family member of any of the foregoing persons.
- Yes
- No
Name | Enduring Retail Audit LLC, Rural Wireless LLC, EV Holdings LLC, EV Holdings 1 LLC |
Amount Invested | $373,981.00 |
Transaction type | Other |
Issue date | 12/21/21 |
Relationship | Related parties under common control |
Transaction occurred throughout 2021 and are operational expenses paid on behalf of a related party. There is an outstanding balance of $122,822 due from related parties. Closings took place throughout 2021. |
Name | Enduring Technologies Inc. |
Amount Invested | $49,000.00 |
Transaction type | Other |
Issue date | 06/21/21 |
Relationship | stockholder |
The transaction was issued between March-June 2021 as a working capital advance with no maturity date or interest rate. The working capital advance was subsequently consumed in February - March 2022 by operational cross-charge expenses billed to the stockholder |
Name | Enduring Ventures Inc. |
Amount Invested | $1,963.00 |
Transaction type | Other |
Issue date | 11/21/21 |
Relationship | Stockholder (former, before November 2021) |
The transaction consists of $1,963 in operational expenses paid on behalf of a former sole shareholder throughout 2021. There is an outstanding balance of $1,951 due from the former stockholder. Closings took place throughout 2021. |
Name | Enduring Technologies Inc. |
Amount Invested | $5,000.00 |
Transaction type | Other |
Issue date | 12/21/21 |
Relationship | Stockholder (as of November 2021) |
The transaction occurred throughout 2021 and is for board fee expense. Currently, there is $10,000 in accrued expenses due to a related party. Closings took place throughout 2021. |
INSTRUCTIONS TO QUESTION 26: The term transaction includes, but is not limited to, any financial transaction, arrangement or relationship (including
any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships.
Beneficial ownership for purposes of paragraph (2) shall be determined as of a date that is no more than 120 days
prior to the date of filing of this offering statement and using the same calculation described in Question 6 of this
Question and Answer format.
The term “member of the family” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse or
spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law
of the person, and includes adoptive relationships. The term “spousal equivalent” means a cohabitant occupying a
relationship generally equivalent to that of a spouse.
Compute the amount of a related party’s interest in any transaction without regard to the amount of the profit or loss
involved in the transaction. Where it is not practicable to state the approximate amount of the interest, disclose the
approximate amount involved in the transaction.
FINANCIAL CONDITION OF THE ISSUER
- Yes
- No
This section should be tailored to the financial condition, activities, and historical trends of each company. Below is an example of the types of discussions a company may include. This should be used as a guide only. It is important that you include all information that would be material to investors with respect to their decision to invest in the securities you are offering, and that you do not omit any information that would cause the included information to be false or misleading.
Please note that for this question, the SEC has specified that companies must account for the performance of any predecessor companies.
Overview. [First, generally describe the business.] [As an example: “We are a growing provider of technology-enabled business-to-business solutions for the financial process, procurement and asset management needs of businesses. We leverage our proprietary technology, deep expertise and supplier and vendor relationships to help enterprises and organizations of varying sizes manage complex and dynamic operational and administrative processes that are frequently managed internally and have required substantial internal resources.”]
[Then, generally describe the composition of the Company’s revenue:] Our [type of business activities that primarily generate revenue – if there is more than one, describe each] represented [X]% of our total revenue during the year ended [date].
[Next, describe the specific primary activities in more detail and identify how they result in revenue.] [As an example: “These solutions consist primarily of our cloud-based technology offerings that automate accounts receivable and accounts payable processes for our clients, including e-invoicing, credit and collections management, working capital management, and reporting analytics. We generated this revenue from two principal products: [X and X].”] [In this section, also describe trends in the relative value of the identified activities; if appropriate, describe any activities that have become less important:] Our [activity] revenue was a rapidly growing area of our business, with growth in the year ended [date] of [X]% as compared to the same period in the prior year. This recent growth was largely driven by [what and why]. In contrast, our revenue from [activity diminishing in importance] dropped in the year ended [date], at [X]% as compared to the same period in the prior year. This decrease was largely driven by [what and why].
[Describe milestones in the Company’s history:] We originally founded our business in [year] to [do what activities?]. As we have grown and evolved since that time, we had the following key milestones in the development of our business:
- [List]
[Describe general trends in growth of the Company. For example:] [As we have expanded our capacity, availability and capabilities, particularly [identify major areas of growth in capacity, etc.], our growth has [generally] [gradually] accelerated.] OR [Our growth has been consistent in recent years.] OR [As an early-stage company, we have experienced losses thus far in our operating history, [although these losses are diminishing]:
- Our total revenue [grew/fell] [X]% to $[X] million during the year ended [date], [up/down] from $[X] during the previous year.
- Our net income was $[X] million during the year ended [date], an [increase/decrease] of $[X] million from $[X] million during the prior year.
- [Etc. – describe trends.]
[Describe expectations for the near future:] [We expect to continue to grow our business. Although there is no guarantee that our historical results or cash flows (as described below and in our financial statements) will continue to develop in the same way as they have in the past few years, we expect generally to grow in the coming years. Nonetheless, it may be years before Investors see a return on their investment, if they do at all.]
OR
[Although our business has not grown in recent years, we expect it to do so in the coming years, due to [what has changed?]. Although there is no guarantee that our predictions are correct, we generally expect to see new trends in our revenue and cash flows in the coming years. Nonetheless, it may be years before Investors see a return on their investment, if they do at all.]
OR
[We do not expect to see a growth in our business in the current fiscal year, because [why?]. However, we believe that in the long-term, we have significant potential for growth, due to [what?]. Nonetheless, it may be years before Investors see a return on their investment, if they do at all.]
[Describe trends and uncertainties that could affect the Company’s financial condition:] The following trends or uncertainties could affect our financial condition, including the liquidity, cash flow and capital resources described below:
- [List]
Liquidity. The following table summarizes our [cash and cash equivalents, accounts receivable, net working capital and cash flows] for the periods indicated: [If you use this table, only include categories relevant to you.]
some table that can’t be put in text
Our cash and cash equivalents at [date] were held for working capital purposes. [If applicable, add language such as the following:] [We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve capital and provide liquidity. Accordingly, our cash and cash equivalents are invested primarily in demand deposit accounts, certificates of deposit and money market funds that are currently providing only a minimal return.]
We anticipate using our available cash [for operations] within [time period]. We base this estimate on [describe – historical cash flows; anticipated major expenditures; etc.].
We expect that the proceeds of this offering will improve our liquidity and provide additional [working capital for our Company] [capital to pursue [name project/activities]]. [Include one or the other of the following sentences, or a variation thereof:] [Although the proceeds of this offering are not necessary to the viability of our business, it will be integral to developing [X – describe the nature of the activities and why they will improve liquidity and cash flow if appropriate.]] OR [The proceeds of this offering will enable the business to continue to pursue its main activities and are necessary to our viability. [Discuss why the proceeds will improve liquidity and cash flow in the future.]]
[In additional discussion, provide an overview of any trends over time in cash flows (for example, whether they have increased or decreased). For example:] [Our cash held as of [date] was [X]% [greater] [less] than cash held as of the same date in [prior year; add for other years as appropriate]. This [increase] [decrease] resulted primarily from an [increase] [decrease] in [cash from what source], due to [why?].
Then describe any significant components of the Company’s cash flow and why they have contributed to cash flows in a material way. The following is provided as an example. Please include any discussion that would be relevant to an Investor’s decision to invest. For example, consider discussions of any cash provided by or used in investing activities, financing activities, and any other material components.
Cash [provided by] [used in] operating activities. Net cash [provided by] [used in] operating activities consisted of [net income adjusted for certain non-cash items including depreciation and amortization, bad debt expense, stock-based compensation and deferred income taxes, as well as the effect of changes in working capital and other activities].
Net cash provided by operating activities was $[X] million for the year ended [date for most recent fiscal year], which was driven by [describe various components].
Net cash provided by operating activities was $[X] million for the year ended [date for previous year], which was driven by [describe various components]. [Include an analysis and comparison for each year for which you provide financials.].
Capital Resources. We have financed our operations through [Describe: e.g.:] [private sales of common equity, issuances of convertible debt and other debt securities, internally generated positive cash flow, borrowings under asset-based lines of credit, short- and/or long-term notes payable, etc.].
[Generally describe each source and its material terms. The following are examples that can be modelled for drafting discussions of your company’s particular resources, but you should include any and all capital resources that would be material to investors’ decisions to invest. Note that your discussion should include any pending sources of capital as well as existing ones. If available resources include required contributions by shareholders, be sure to discuss that here as well.]
Asset-based senior credit facility. We have a revolving loan facility with [bank], which we refer to herein as our senior credit facility, under which we are permitted to borrow up to [amount]. We primarily use this line of credit to support [activities]. [Describe why needed for these activities – e.g., “Often, we are required to pay invoices on behalf of our customers faster than we collect those amounts from customers. As a result, during periods of increasing transaction volume, our cash used in the operations from those solutions exceeds our cash flows from those operations.”]
[Describe terms:] The senior credit facility expires in [date]. Interest on borrowings under the senior credit facility accrues at [interest rate or rate to which it is pegged]. A commitment fee ranging from [rates] on the average unused portion of the loan commitment is payable [how often] in [arrears]. As of [date], the amount of available borrowings based on our eligible receivables was $[X] million of which $[X] was outstanding.
[Describe any restrictive covenants.] [The senior credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, incur indebtedness, grant liens, make distributions to holders of our equity interests or make investments.] We were in compliance with such covenants as of [date].
Our obligations under the senior credit facility are secured by [property].
Interim finance line of credit. We have a $[X] million uncommitted credit agreement with [bank], which we refer to as our interim finance line of credit. We use this line to finance [X]. [Describe any conditions, e.g., “All borrowings under the interim finance line of credit must be approved by the lender on a transaction by transaction basis.”] Interest on loans made under our interim finance line of credit accrue at [rate] and is payable [monthly in arrears]. All borrowings under the interim finance line of credit are due within [X] days of borrowing. The interim finance line of credit terminates in [date]. As of [date], we had $[X] outstanding under our interim finance line of credit.
The interim finance line of credit contains customary events of default and affirmative covenants. [Describe anything unusual.] We were in compliance with such covenants as of [date].
Our obligations under the interim line of credit are secured by [property].
Historical Results of Operations. [First, describe general trends.] Our total revenue increased by $[X] million, or [X]%, from the prior year to $[X] million in the year ended [date]. This increase was primarily driven by [describe major components], which increased by [X]% from the prior year. Offsetting these increases were decreases in [components], which decreased [X]% from the prior year.
Our overall direct costs of revenue [(excluding depreciation and amortization)] decreased by $[X] million, or [X]% from the prior year to $[X] million in the year ended [date]. This was largely driven by [components], which decreased $[X] million or [X]% compared to the prior year. The decrease was partially offset by an increase of $[X] million, or [X]% in [component].
[Describe your expectations regarding future trends.] For example: [We expect these trends to continue in the current fiscal year and in the coming few fiscal years, due to [why?].] OR [We expect our revenue to grow at increasing rates in the current fiscal year and in the coming few fiscal years, due to [why?].] OR [We do not expect significant growth in revenue in the current fiscal year or in the coming few fiscal years, due to [why?].] [Etc. – describe as appropriate.]
[After this overview, include a discussion of each major component referenced above. The discussion should mirror the above discussion and state why each increase or decrease occurred across the years. You should address, as a major area of focus, whether the results and trends in the results are representative and why, or why you expect historical development to change. Address each major source of revenue and expenses. Also describe what’s included in each component.]
INSTRUCTIONS TO QUESTION 28: The discussion must cover each year for which financial statements are provided. For issuers with no prior operating history, the discussion should focus on financial milestones and operational, liquidity and other challenges. For issuers with an operating history, the discussion should focus on whether historical results and cash flows are representative of what investors should expect in the future. Take into account the proceeds of the offering and any other known or pending sources of capital. Discuss how the proceeds from the offering will affect liquidity, whether receiving these funds and any other additional funds is necessary to the viability of the business, and how quickly the issuer anticipates using its available cash. Describe the other available sources of capital to the business, such as lines of credit or required contributions by shareholders. References to the issuer in this Question 28 and these instructions refer to the issuer and its predecessors, if any.
FINANCIAL INFORMATION
This offering is being conducted on an expedited basis due to circumstances relating to COVID-19 and pursuant to Reg. CF Temporary Rule 201(bb), which provides temporary relief from certain financial information requirements by allowing issuers to omit the financial statements required by Rule 201(t) in the initial Form C filed with the Commission. This offering has commenced in reliance on Temporary Rule 201(bb) and, as a result, the following must be disclosed: (i) the financial information that has been omitted is not currently available and will be provided by an amendment to the offering materials; (ii) the investor should review the complete set of offering materials, including previously omitted financial information, prior to making an investment decision; and (iii) no investment commitments will be accepted until after such financial information has been provided.
Refer to Appendix C, Financial Statements
I, [MAIN_CONTACT_NAME], certify that:
- (1) the financial statements of UpCounsel Technologies, Inc. included in this Form are true and complete in all material respects ; and
- (2) the financial information of UpCounsel Technologies, Inc. included in this Form reflects accurately the information reported on the tax return for UpCounsel Technologies, Inc. filed for the most recently completed fiscal year.
[MAIN_CONTACT_NAME]
[MAIN_CONTACT_TITLE]
STAKEHOLDER ELIGIBILITY
(1) Has any such person been convicted, within 10 years (or five years, in the case of issuers, their predecessors and affiliated issuers) before the filing of this offering statement, of any felony or misdemeanor:
- in connection with the purchase or sale of any security? Yes No
- involving the making of any false filing with the Commission? Yes No
- arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser, funding portal or paid solicitor of purchasers of securities? Yes No
(2) Is any such person subject to any order, judgment or decree of any court of competent jurisdiction, entered within five years before the filing of the information required by Section 4A(b) of the Securities Act that, at the time of filing of this offering statement, restrains or enjoins such person from engaging or continuing to engage in any conduct or practice:
- in connection with the purchase or sale of any security? Yes No
- involving the making of any false filing with the Commission? Yes No
- arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser, funding portal or paid solicitor of purchasers of securities? Yes No
(3) Is any such person subject to a final order of a state securities commission (or an agency or officer of a state performing like functions); a state authority that supervises or examines banks, savings associations or credit unions; a state insurance commission (or an agency or officer of a state performing like functions); an appropriate federal banking agency; the U.S. Commodity Futures Trading Commission; or the National Credit Union Administration that:
- at the time of the filing of this offering statement bars the person from:
- association with an entity regulated by such commission, authority, agency or officer? Yes No
- engaging in the business of securities, insurance or banking? Yes No
- engaging in savings association or credit union activities?Yes No
- constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct and for which the order was entered within the 10-year period ending on the date of the filing of this offering statement? Yes No
(4) Is any such person subject to an order of the Commission entered pursuant to Section 15(b) or 15B(c) of the Exchange Act or Section 203(e) or (f) of the Investment Advisers Act of 1940 that, at the time of the filing of this offering statement:
- suspends or revokes such person’s registration as a broker, dealer, municipal securities dealer, investment adviser or funding portal? Yes No
- places limitations on the activities, functions or operations of such person? Yes No
- bars such person from being associated with any entity or from participating in the offering of any penny stock? Yes No
(5) Is any such person subject to any order of the Commission entered within five years before the filing of this offering statement that, at the time of the filing of this offering statement, orders the person to cease and desist from committing or causing a violation or future violation of:
- any scienter-based anti-fraud provision of the federal securities laws, including without limitation Section 17(a)(1) of the Securities Act, Section 10(b) of the Exchange Act, Section 15(c)(1) of the Exchange Act and Section 206(1) of the Investment Advisers Act of 1940 or any other rule or regulation thereunder? Yes No
- Section 5 of the Securities Act? Yes No
(6) Is any such person suspended or expelled from membership in, or suspended or barred from association with a member of, a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade?
(7) Has any such person filed (as a registrant or issuer), or was any such person or was any such person named as an underwriter in, any registration statement or Regulation A offering statement filed with the Commission that, within five years before the filing of this offering statement, was the subject of a refusal order, stop order, or order suspending the Regulation A exemption, or is any such person, at the time of such filing, the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued?
(8) Is any such person subject to a United States Postal Service false representation order entered within five years before the filing of the information required by Section 4A(b) of the Securities Act, or is any such person, at the time of filing of this offering statement, subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the United States Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations?
If you would have answered “Yes” to any of these questions had the conviction, order, judgment, decree, suspension, expulsion or bar occurred or been issued after May 16, 2016, then you are NOT eligible to rely on this exemption under Section 4(a)(6) of the Securities Act.
INSTRUCTIONS TO QUESTION 30: Final order means a written directive or declaratory statement issued by a federal or state agency, described in Rule 503(a)(3) of Regulation Crowdfunding, under applicable statutory authority that provides for notice and an opportunity for hearing, which constitutes a final disposition or action by that federal or state agency.
No matters are required to be disclosed with respect to events relating to any affiliated issuer that occurred before the affiliation arose if the affiliated entity is not (i) in control of the issuer or (ii) under common control with the issuer by a third party that was in control of the affiliated entity at the time of such events.
OTHER MATERIAL INFORMATION
- (1) any other material information presented to investors; and
- (2) such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made, not misleading.
The Lead Investor. As described above, each Investor that has entered into the Investor Agreement will grant a power of attorney to make voting decisions on behalf of that Investor to the Lead Investor (the “Proxy”). The Proxy is irrevocable unless and until a Successor Lead Investor takes the place of the Lead Investor, in which case, the Investor has a five (5) calendar day period to revoke the Proxy. Pursuant to the Proxy, the Lead Investor or his or her successor will make voting decisions and take any other actions in connection with the voting on Investors’ behalf.
The Lead Investor is an experienced investor that is chosen to act in the role of Lead Investor on behalf of Investors that have a Proxy in effect. The Lead Investor will be chosen by the Company and approved by Wefunder Inc. and the identity of the initial Lead Investor will be disclosed to Investors before Investors make a final investment decision to purchase the securities related to the Company.
The Lead Investor can quit at any time or can be removed by Wefunder Inc. for cause or pursuant to a vote of investors as detailed in the Lead Investor Agreement. In the event the Lead Investor quits or is removed, the Company will choose a Successor Lead Investor who must be approved by Wefunder Inc. The identity of the Successor Lead Investor will be disclosed to Investors, and those that have a Proxy in effect can choose to either leave such Proxy in place or revoke such Proxy during a 5-day period beginning with notice of the replacement of the Lead Investor.
The Lead Investor will not receive any compensation for his or her services to the SPV. The Lead Investor may receive compensation if, in the future, Wefunder Advisors LLC forms a fund (“Fund”) for accredited investors for the purpose of investing in a non-Regulation Crowdfunding offering of the Company. In such as circumstance, the Lead Investor may act as a portfolio manager for that Fund (and as a supervised person of Wefunder Advisors) and may be compensated through that role.
Although the Lead Investor may act in multiple roles with respect to the Company’s offerings and may potentially be compensated for some of its services, the Lead Investor’s goal is to maximize the value of the Company and therefore maximize the value of securities issued by or related to the Company. As a result, the Lead Investor’s interests should always be aligned with those of Investors. It is, however, possiblethat in some limited circumstances the Lead Investor’s interests could diverge from the interests of Investors, as discussed in section 8 above.
Investors that wish to purchase securities related to the Company through Wefunder Portal must agree to give the Proxy described above to the Lead Investor, provided that if the Lead Investor is replaced, the Investor will have a 5-day period during which he or she may revoke the Proxy. If the Proxy is not revoked during this 5-day period, it will remain in effect.
Tax Filings. In order to complete necessary tax filings, the SPV is required to include information about each investor who holds an interest in the SPV, including each investor’s taxpayer identification number (“TIN”) (e.g., social security number or employer identification number). To the extent they have not already done so, each investor will be required to provide their TIN within the earlier of (i) two (2) years of making their investment or (ii) twenty (20) days prior to the date of any distribution from the SPV. If an investor does not provide their TIN within this time, the SPV reserves the right to withhold from any proceeds otherwise payable to the Investor an amount necessary for the SPV to satisfy its tax withholding obligations as well as the SPV’s reasonable estimation of any penalties that may be charged by the IRS or other relevant authority as a result of the investor’s failure to provide their TIN. Investors should carefully review the terms of the SPV Subscription Agreement for additional information about tax filings.
INSTRUCTIONS TO QUESTION 30: If information is presented to investors in a format, media or other means not able to be reflected in text or portable document format, the issuer should include:
(a) a description of the material content of such information;
(b) a description of the format in which such disclosure is presented; and
(c) in the case of disclosure in video, audio or other dynamic media or format, a transcript or
description of such disclosure.
ONGOING REPORTING
The issuer must continue to comply with the ongoing reporting requirements until:
- the issuer is required to file reports under Exchange Act Sections 13(a) or 15(d);
- the issuer has filed at least one annual report and has fewer than 300 holders of record;
- the issuer has filed at least three annual reports and has total assets that do not exceed $10 million;
- the issuer or another party purchases or repurchases all of the securities issued pursuant to Section 4(a)(6), including any payment in full of debt securities or any complete redemption of redeemable securities; or the issuer liquidates or dissolves in accordance with state law.
APPENDICES
- Appendix A: Business Description & Plan
- Appendix B: Investor Contracts
- Appendix C: Financial Statements
- Appendix D: Director & Officer Work History
- Appendix E: Supporting Documents