Risks Specific to VLG
1. Profitability. There is no assurance that we will be profitable in 2017 and through 2020 which may negatively impact our ability to service our debt obligations.
2. Future fundraising may affect the rights of investors. In order to expand, the company is likely to raise funds again in the future, either by offerings of securities or through borrowing from banks or other sources. The terms of future capital-raising, such as loan agreements, may include covenants that give creditors greater rights over the financial resources of the company.
3. Consumers may not want our services or our products or not be willing to pay enough for the services. We will only succeed (and you will only make money) if there is sufficient demand for our offerings and projects. Consumers must think we are a better option than competitor products and priced at a level that allows the company to make a profit and still attract business.
4. The company may need more money. We might not sell enough securities in this Offering to meet our operating needs and fulfill our plans, in which case we might cease operating and you will get nothing. Even if we raise everything we are looking for, we might need to raise more funds in the future, and if we can’t get them, we might fail. Even if we do make a successful offering in the future, the terms of that offering might result in your investment in the company being less valuable, because later investors might get better terms.
5. We rely on third parties for monetization of our products. We rely on third parties such as advertising agencies, licensing groups and consultants for the monetization of our products. Although we have strong relationships with some of these partners, others may give more time and attention to other partners who are better funded or better known.
6. Economic Impact. Declines in general economic conditions and the resulting impact on consumer confidence and consumer spending, could adversely impact our results of operations. Our financial performance is subject to declines in general economic conditions and the impact of such economic conditions on levels of consumer confidence and consumer spending. Consumer confidence and consumer spending may deteriorate significantly, and could remain depressed for an extended period of time. Brands targeting consumers may reduce budgets associated with our products and services.
7. Competition. The Company's competitors may develop products or services that are similar to the Company’s products and services or that achieve greater market acceptance than the Company’s services. This could attract users away from the Company’s website and reduce the Company’s market share.
8. Industry Dynamics. We operate in a rapidly changing industry. Technological advances, the introduction of new products and new design and manufacturing techniques could adversely affect our business unless we are able to adapt to the changing conditions. To remain competitive, we must continue to incur significant costs in product development, people and invest in working capital. These costs may increase, resulting in greater fixed costs and operating expenses.
9. Projections: Forward Looking Information. Any projections or forward looking statements regarding our anticipated financial performance are hypothetical and are based on management’s best estimate of the probable results of our operations, and will not have been reviewed by our independent accountants. These projections will be based on assumptions which management believes are reasonable. Some assumptions invariably will not materialize due to unanticipated events and circumstances beyond management’s control. Therefore, actual results of operations will vary from such projections, and such variances may be material. Any projected results cannot be guaranteed.
10. Control by Majority Stockholder. Nathan Jarvinen, our Chairman, prior to this offering holds a majority of our common stock. Therefore, investors will not be able to control our management.
11. Management Discretion as to Use of Proceeds. Our success will be substantially dependent upon the discretion and judgment of our management team with respect to the application and allocation of the proceeds of this Offering. The use of proceeds described below is an estimate based on our current business plan. We, however, may find it necessary or advisable to reallocate portions of the net proceeds reserved for one category to another, and we will have broad discretion in doing so.
12. Risks of Borrowing. We may have to seek loans from financial institutions. Typical loan agreements might contain restrictive covenants which may impair our operating flexibility. A default under any loan agreement could result in a charging order that would have a material adverse effect on our business, results of operations or financial condition.
13. Label Content. We rely on our relationships with the music labels to have access to the content we deliver to our clients. The labels may at some time on the future decide to terminate this relationship or they may make the continued use of the content commercially unviable.
14. Technology Platform Risk. The VLG platform relies on third parties for hosting and streaming capabilities. These third parties are subject to downtime which would impact our ability to service our clients. These third parties may also at some time on the future decide to terminate this relationship or they may make the continued use of the content commercially unviable.
15. Cyber Security. As a technology company VLG is potentially subject to cyber attacks which may reduce our ability to operate or cause harm to our system or those that support our clients.
16. Talent. We rely on talent, whether employees or contractors, with specialized expertise in music, music business operations, technology, and more. If we are unable to attract or retain talent, the company could be adversely affected.
The holders of the SAFEs may not have control over when the SAFEs are converted into preferred stock.
The SAFEs will be converted into shares of our preferred stock upon certain circumstances, with no action on the part of the holder. As a result, the SAFEs may be converted at times or under circumstances that are out of the control of the holders. In certain circumstances, such as the sale of the company, an initial public offering or dissolution or bankruptcy, holders may only have a right to receive cash to the extent available, rather than preferred stock or other securities. In addition, if the SAFEs are so converted, the holders will lose any rights and preferences of the SAFEs that are not included in the terms of our preferred stock.
We are under no obligation to convert the SAFEs into preferred stock. We may never receive a future equity financing or experience a liquidity event, in which case, the holders could be left holding the SAFEs indefinitely. Unlike convertible notes and other securities convertible into or exchangeable for preferred stock, the SAFEs do not have any “default” provisions permitting the holders to demand repayment. We have the discretion as to whether or not to enter into a transaction that causes the conversion of the SAFEs into preferred stock, and the holders have no right to demand such a conversion. Only in limited circumstances, such as a liquidity or dissolution event, may the holders demand payment and even then, such payment will be limited to the cash available to us to make such payments.
18. Some of our officers only work part-time