47 map plan /\ 7. Material factors that make an investment in Arowana Media Holdings, Inc. speculative or risky:
1. Our business, results of operations, and financial condition may be impacted by the recent
coronavirus (COVID-19) outbreak. With respect to the ongoing and evolving coronavirus (COVID19) outbreak, which was designated as a pandemic by the World Health Organization on March 11,
2020, the outbreak has caused substantial disruption in international and U.S. economies and markets.
The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will
depend on future developments, which are highly uncertain and cannot be predicted with confidence,
including the duration of the COVID-19 outbreak, new information which may emerge concerning
the severity of the COVID-19 pandemic, and any additional preventative and protective actions that
governments, or the Company, may direct, which may result in an extended period of continued
business disruption and reduced operations. Any resulting financial impact cannot be reasonably
estimated at this time but may have a material adverse impact on our business, financial condition and
results of operations.
2. Your shares are not easily transferable. You should not plan on being able to readily transfer and/or
resell your security. Currently there is no market or liquidity for these shares and the company does
not have any plans to list these shares on an exchange or other secondary market. At some point the
company may choose to do so, but until then you should plan to hold your investment for a
significant period of time before a “liquidation event” occurs. A “liquidation event” is when the
company either lists their shares on an exchange, is acquired, or goes bankrupt.
3. An investment in the Company involves a high degree of risk. You should carefully consider the risks
described above and those below before deciding to purchase any Shares in this Offering. If any of
these risks actually occurs, our business, financial condition or results of operations may suffer. As a
result, you could lose part or all of your investment.
4. We have a limited operating history upon which you can evaluate our performance, and accordingly,
our prospects must be considered in light of the risks that any new company encounters. We were
organized as a Wyoming corporation in October 2018. Accordingly, we have a limited history upon
which an evaluation of our prospects and future performance can be made. Our proposed operations
are subject to all business risks associated with new enterprises. The likelihood of our creation of a
viable business must be considered in light of the problems, expenses, difficulties, complications, and
delays frequently encountered in connection with the inception of a business, operation in a
competitive industry, and the continued development of advertising, promotions, and a corresponding
client base. We anticipate that our operating expenses will increase for the near future. There can be
no assurances that we will ever operate profitably. You should consider the Company’s business,
operations and prospects in light of the risks, expenses and challenges faced as an early-stage
company.
5. To date we have not generated revenues from our business operations, and we have additional capital
requirements to continue operations. If we are unable to secure additional capital on favorable terms
or at all, our ability to run our business will be significantly impaired. As of the date of this Offering,
we have limited working capital. If we are unsuccessful in securing additional funding, it may be
impossible to fulfill our business plan, expand operations or maintain our viability. We currently have
no definitive plans, agreements or arrangements to raise capital in the immediate future. There can be
no assurance that we will be able to secure necessary future financing, either equity or debt, on
favorable terms or at all, which could cause our business to fail. We will require additional financing
in the near and long term to fully execute our business plan. Our success depends on our ability to
raise such additional financing on reasonable terms and on a timely basis. Conditions in the economy
and the financial markets may make it more difficult for us to obtain necessary additional capital or
financing on acceptable terms, or at all. If we cannot secure sufficient additional financing, we may
be forced to forego strategic opportunities or delay, scale back or eliminate further development of
our goals and objectives, operations and investments or employ internal cost savings measures.
6. Our contemplated projects may not be accepted by distributors and/or the marketplace and our
business may fail as a direct result of such lack of market acceptance. The ultimate profitability of
any project, service or product we offer, depends upon its ultimate audience appeal in relation to the
cost of its production and distribution. The audience appeal of a given concept depends, among other
things, on unpredictable critical reviews and changing public tastes and such appeal cannot be
anticipated with certainty. If certain segments of the viewing public do not like, are willing to pay
for, or otherwise approve of our productions, our business may fail.
7. Our future success depends on our ability to develop services, products and projects and to sell or
license them to distribution channels. The inability to establish distribution channels, may severely
limit our growth prospects. Our future business success is completely dependent on our ability to
successfully develop services, products and projects and secure viable distribution channels. Revenues
derived therefrom will represent vital funds necessary for our continued operations. The loss or
damage of any of our business relationships and or revenues derived therefrom, will result in the
inability to market our services, products and projects.
8. Cost overruns could affect our results of operations and may cause the failure of our business. The
costs of completing projects are often underestimated and may be increased by factors beyond our
control. Such factors may include weather conditions, illness of technical and artistic personnel, labor
disputes, governmental regulations, equipment breakdowns and other production disruptions. While
we intend to engage production personnel who have demonstrated abilities to complete projects
within assigned budgets, the risk of a project running over budget is always significant and may have
a substantial adverse impact on our future profitability
9. Film and entertainment production budgets may and often do increase and film production spending
may exceed such budgets. It is common for future film and entertainment budgets to increase as the
production process is underway for a variety of factors including, but not limited to: (1) escalation in
compensation rates of people required to work on the projects; (2) number of personnel required to
work on the projects; (3) equipment needs; (4) the enhancement of existing or the development of
new proprietary technology; and (5) the addition of facilities to accommodate the amended or unseen
requirements of the project. Due to production exigencies, which are often difficult to predict, it is
not uncommon for film production spending to exceed film production budgets, and our projects may
not be completed within the budgeted amounts. In addition, when production of each film is
completed, we may incur significant carrying costs associated with transitioning personnel on creative
and development teams from one project to another. This situation becomes more severe if several
projects are being undertaken at the same time or planned to be done contiguously. Our limited
resources may not permit us to meet unexpected costs during productions. If such cost excesses occur
and we are unable to arrange for the necessary financial needs, our operations may cease.
10. Our content production business is substantially dependent upon the success of a limited number of
film releases and digital media productions, if any, in any given year and our inability to release any
film or digital media production or the unexpected delay or commercial failure of any one of them
could have a material adverse effect on our financial results and cash flows. Our content production
business is currently substantially dependent upon the success of a limited number of film releases
and digital media productions in any given year. The unexpected delay in release or commercial
failure of just one of these films or digital media productions, or our inability to release any
productions at all, could have a significant adverse impact on our results of operations and cash flows
in both the year of release and in the future. Historically, feature films that are successful in the
domestic theatrical market are generally also successful in the international theatrical and ancillary
markets, although each film is different and there is no way to guarantee such results. If our films fail
to achieve domestic box office success, their success in the international box office and ancillary
markets and our business, results of operations and financial condition could be adversely affected.
Further, we can make no assurances that the historical correlation between results in the domestic box
office and results in the international box office and ancillary markets will continue in the future. If
we are unable to release any film or digital media productions in a given year, or if the feature films
we release do not perform well in the domestic or international theatrical markets and ancillary
markets, or our digital media productions do not perform as anticipated, the failure to release any
productions, or the failure of any one of the productions we release, could a material adverse effect
on our financial results and cash flows.
11. In order for us to compete and grow, we must attract, recruit, retain and develop the necessary
personnel who have the needed experience. Recruiting and retaining highly qualified personnel is
critical to our success. These demands may require us to hire additional personnel and will require
our existing management personnel to develop additional expertise. We face intense competition for
personnel. The failure to attract and retain personnel or to develop such expertise could delay or halt
the sales and licensing of our product. If we experience difficulties in hiring and retaining personnel
in key positions, we could suffer from delays in our development, loss of customers and sales and
diversion of management resources, which could adversely affect operating results. Our future
consultants and advisors may be employed by third parties and may have commitments under
consulting or advisory contracts with third parties that may limit their availability to us.
12. Our success depends on the services of our chief executive officer, the loss of whom could
significantly disrupt our business. We depend to a large extent on the services of our founder and
chief executive officer, Mr. Mark B. Newbauer. Given his knowledge and experience, he is important
to our future prospects and development as we rely on his expertise in developing our business
strategies and maintaining our operations. Because we are a start-up dependent on the vision of our
founder, it will be critical to our prospects and successful development that this person remain with us
to help establish, develop and grow our business. The loss of the service of Mr. Newbauer and the
failure to find timely replacements with comparable experience and expertise could disrupt and
significantly adversely affect our business.
13. Competition in markets in which we operate is extensive and varied and our competitors are mostly
larger and more established than we are. Our business and the industry in which we operate are
subject to extreme competition. There can be no guarantee that we can develop or sustain a market
position or expand our business to successfully compete with other larger and more established
companies. We anticipate the intensity of future competition will increase. We compete with all
content creators ranging from very large international corporations with multifaceted business models
to small independent content creators like ourselves. Many of the larger distribution companies are
also content creators and can be both our competitor on one project and our strategic partner on
another. Many current and potential competitors are well established, have longer operating histories,
significantly greater financial, operational resources and name recognition than we have. As a result,
these competitors may have more credibility with both existing and potential customers, be able to
offer more services, and more aggressively promote and sell their services. Our competitors may also
be able to support more aggressive pricing than us, which could adversely affect sales, cause us to
decrease prices to remain competitive, or otherwise reduce the overall gross profit earned on our
services.
14. The forecasts of market growth included in this offering circular may prove to be inaccurate, and
even if the markets in which we compete achieve the forecasted growth, we cannot assure you our
business will grow at similar rates, if at all. Growth forecasts are subject to significant uncertainty
and are based on assumptions and estimates that may not prove to be accurate. The forecasts
contained in this offering circular may prove to be inaccurate. Even if these markets experience the
forecasted growth described in this offering circular, we may not grow our business at similar rates,
or at all. Our growth is subject to many factors, including our success in implementing our business
strategy, which is subject to many risks and uncertainties. Accordingly, the forecasts of market
growth included in this offering circular should not be taken as indicative of our future growth.
15. Failure of third-party distributors upon which we may rely, could adversely affect our business and
result in the loss of your investment. We will likely rely on third party distributors for marketing our
projects, both nationally and internationally. If we are able to develop a relationship with a distributor
or distributors for one or more of our projects and then lose such relationship, it would have a
material adverse effect on our business, financial condition and results of operations. Distributors
may also provide services to competing business, as well as larger, national or international entities
and may be, to varying degrees, influenced by their continued business relationships with these
companies. Independent distributors may be influenced by a large competitor if they rely on that
competitor for a significant portion of their sales. Furthermore, no assurance can be given that we
will successfully attract distributors who desire to work on our projects.
16. We cannot assure you that our original programming content will appeal to potential distributors and
viewers or that any of our original programming content will not be cancelled or removed from a
distributors’ platform when and if distributed through such platform. Our business depends on the
appeal of our content to distributors and viewers, which is difficult to predict. Our business depends
in large part upon viewer preferences and audience acceptance of our original programming content.
These factors are difficult to predict and are subject to influences beyond our control, such as the
quality and appeal of competing programming, general economic conditions and the availability of
other entertainment activities. We may not be able to anticipate and react effectively to shifts in tastes
and interests in markets. A change in viewer preferences could cause our original programming
content to decline in popularity, which could jeopardize renewal potential relationships with
distributors or renewal of future agreements with distributors. Low ratings or viewership for
programming content produced by us may lead to the cancellation, removal or non-renewal of a
program and can negatively affect potential future license fees for such program. If our original
programming content does not gain the level of audience acceptance we expect, or if we are unable to
maintain the popularity of our original programming, we may have a diminished negotiating position
when dealing with distributors, which could reduce our revenue. We cannot assure you that we will
be able to maintain the success of any of our current original programming content, or generate
sufficient demand and market acceptance for new original programming content in the future. This
could materially adversely impact our business, financial condition, operating results, liquidity and
prospects.
17. Changes in user preferences and discretionary spending may have a material adverse effect on our
revenue, results of operations and financial condition. Our future success depends, in part, upon the
popularity of projects and our ability to develop projects in a way that appeals to users. Shifts in user
preferences away from our projects could harm our business. Also, our future success depends, to a
significant extent, on discretionary user spending, which is influenced by general economic
conditions and availability of discretionary income. Accordingly, we may experience an inability to
generate revenue during economic downturns or during periods of uncertainty. Any material decline
in discretionary spending could have a material adverse effect on our future sales, results of
operations, business and financial condition.
18. If we fail to increase brand awareness, it may have an adverse effect on our results of operations. Due
to a variety of factors, our opportunity to achieve and maintain a significant market share may be
limited. Developing and maintaining awareness of our brand name, among other factors, is critical.
Further, the importance of brand recognition will increase as competition in our market increases.
Successfully promoting and positioning our brand, products and services will depend largely on the
effectiveness of our marketing efforts. Therefore, we may need to increase our financial commitment
to creating and maintaining brand awareness. If we fail to successfully promote our brand name or if
we incur significant expenses promoting and maintaining our brand name, it would have a material
adverse effect on our results of operations.
19. Producing media content relies on various intellectual property rights, including trademarks,
copyrights, and licenses. Such intellectual property rights, however, may not be sufficiently broad or
otherwise may not provide us a significant competitive advantage. In addition, the steps that we have
taken to maintain and protect our intellectual property may not prevent it from being challenged,
invalidated, circumvented or designed-around, particularly in countries where intellectual property
rights are not highly developed or protected. In some circumstances, enforcement may not be
available to us because an infringer has a dominant intellectual property position or for other business
reasons, or countries may require compulsory licensing of our intellectual property. Failure to obtain
or maintain intellectual property rights that convey competitive advantage, adequately protect our
intellectual property or detect or prevent circumvention or unauthorized use of such property, could
adversely impact our competitive position and financial results of our projects. Any dispute or
litigation regarding intellectual property involving our projects could be costly and time-consuming
due to the complexity of the law in this area, the uncertainty of intellectual property litigation, and
could divert the Company and key personnel from our business operations. A claim of intellectual
property infringement could force us to enter into a costly or restrictive license agreement, which
might not be available under acceptable terms or at all, could require us to make changes in the
project, which would be costly and time-consuming, and/or could subject us to an injunction against
development, marketing and distribution of the projects. We may have to pay substantial damages;
including damages for past infringement if it is ultimately determined that our projects infringe a
third party’s proprietary rights. Even if these claims are without merit, defending a lawsuit takes
significant time, may be expensive and may divert our attention from other business concerns
involving the project. Any public announcements related to litigation or interference proceedings
initiated or threatened against as could cause projects to be harmed. We also rely on nondisclosure
and noncompetition agreements with employees, consultants and other parties to protect, in part,
trade secrets and other proprietary rights. There can be no assurance that these agreements will
adequately protect our trade secrets and other proprietary rights and will not be breached, that we will
have adequate remedies for any breach, that others will not independently develop substantially
equivalent proprietary information or that third parties will not otherwise gain access to our trade
secrets or other proprietary rights.
20. We are not subject to Sarbanes-Oxley regulations and lack the financial controls and safeguards
required of public companies. We do not have the internal infrastructure necessary, and are not
required, to complete an attestation about our financial controls that would be required under Section
404 of the Sarbanes-Oxley Act of 2002. There can be no assurances that there are no significant
deficiencies or material weaknesses in the quality of our financial controls. We expect to incur
additional expenses and diversion of management’s time when it becomes necessary to perform the
system and process evaluation, testing and remediation required to comply with the management
certification and auditor attestation requirements.
21. We are a holding company and our only asset is the direct ownership of Mike The Pike
Entertainment, LLC, our wholly-owned subsidiary. We are a holding company and currently have no
material non-financial assets other than direct ownership of Mike The Pike Entertainment, LLC,
which we refer to as our subsidiary. We have no independent means of generating revenue. To the
extent that we will need funds beyond our own financial resources to pay liabilities or to fund
operations, and our subsidiary is restricted from making distributions to us under applicable laws or
regulations or agreements, or not have sufficient earnings to make these distributions, we may have to
borrow or otherwise raise funds sufficient to meet these obligations and operate our business and,
thus, our liquidity and financial condition could be materially adversely affected.
22. A failure of a key information technology system could adversely impact our ability to conduct
business. We rely extensively on information technology systems in order to conduct its business.
These systems include, but are not limited to, programs and processes relating to communicating
within our Company and with other parties, ordering and managing materials from suppliers,
shipping products to customers and distributors, processing transactions, summarizing and reporting
results of operations, complying with regulatory legal or tax requirements and other processes
involved in managing the business. The systems may be vulnerable to computer viruses, security
breaches and other similar disruptions from unauthorized users. If the systems are damaged or cease
to function properly due to any number of causes, including the poor performance or failure of thirdparty service providers, catastrophic events, power outages, security breaches, network outages, failed
upgrades or other similar events, and if the business continuity plans do not effectively resolve such
issues on a timely basis, we may suffer interruptions in the ability to manage or conduct business
which may adversely impact our business.
23. Our revenues and results of operations may fluctuate from period to period. Cash flow and
projections for any entertainment company producing original content can be expected to fluctuate
until the content and ancillary consumer products are in the market and could fluctuate thereafter
even when the content and products are in the marketplace. There is significant lead time in
developing and producing content before that content is in the marketplace. Unanticipated delays in
entertainment production can delay the release of the content into the marketplace. Structured retail
windows that dictate when new products can be introduced at retail are also out of our control. Any
delays in the production and release of our content and products or any changes in the preferences of
our customers could result in lower than anticipated cash flows. As with our cash flows, our revenues
and results of operations depend significantly upon the appeal of our content to our customers, the
timing of releases of our products and the commercial success of our products, none of which can be
predicted with certainty. Accordingly, our revenues and results of operations may fluctuate from
period to period. The results of one period may not be indicative of the results of any future period.
Any quarterly fluctuations that we report in the future may not match the expectations of market
analysts and investors. This could cause the price of our common stock to fluctuate.
24. We may not be able to manage future growth effectively, which could adversely affect our operations
and financial performance. The ability to manage and operate our business as we execute our business
plan will require effective planning. If we should experience significant rapid growth in the future, it
could strain management and internal resources that would adversely affect financial performance.
We anticipate that future growth could place a serious strain on personnel, management systems,
infrastructure and other resources. Our ability to manage future growth effectively will require
attracting, training, motivating, retaining and managing new employees and continuing to update and
improve operational, financial and management controls and procedures. If we do not manage growth
effectively, our operations could be adversely affected resulting in slower growth and a failure to
achieve or sustain profitability.
25. Piracy of any original motion pictures that we plan to produce or distribute may reduce our revenues
and potential earnings. Based on our best knowledge, we believe that piracy losses in the motion
picture industry have increased substantially over the past decade. In certain regions of the world,
motion picture piracy has been a major issue for some time. With the proliferation of the DVD
format around the globe, along with other digital recording and playback devices, losses from piracy
have spread more rapidly in North America and Europe. Piracy of original motion pictures that we
produce and/or distribute may adversely impact the gross receipts realized from these films, which
could have a material adverse effect on our future business, results of operations or financial
condition.
26. Our sole member of the Board of Directors, Mr. Newbauer, will make all decisions concerning
compensation of our executive officers for the foreseeable future. These decisions may not be in the
best interests of other investors. Mr. Newbauer will make all decisions determining the amount and
timing of compensation, including his own compensation, for the foreseeable future until, if ever, we
establish a compensation committee of the board of directors. Their decisions about compensation
may not be in the best interests of other shareholders.
27. Success in the entertainment industry is highly unpredictable and there is no guarantee our content
will be successful in the market. Our success will depend on the popularity of our entertainment
projects. Viewer tastes, trends and preferences frequently change and are notoriously difficult to
predict. If we fail to anticipate future viewer preferences in the entertainment business, our business
and financial performance will likely suffer. The entertainment industry is fiercely competitive. We
may not be able to develop projects that will become profitable. We may also invest in projects that
end up losing money. Even if one of our projects is successful, we may lose money in others.
28. If we are unable to adapt to changing client demands, social and cultural trends or emerging
technologies, we may not remain competitive and our business, revenues and operating results could
suffer. We operate in an industry characterized by rapidly changing client expectations, marketing
technologies, and social media and cultural trends that impact our target audiences. The entertainment
industry continues to undergo significant developments as advances in technologies and new methods
of message delivery and consumption emerge. These developments drive changes in our target
audiences’ behavior to which we must adapt in order to reach our target audiences. In addition, our
success depends on our ability to anticipate and respond to changing social and cultural trends that
impact the entertainment industry and our target audiences. We must adapt our business to these
trends, as well as shifting patterns of content consumption and changing behaviors and preferences of
our target audiences, through the adoption and exploitation of new technologies. If we cannot
successfully exploit emerging technologies or if the marketing strategies we choose misinterpret
cultural or social trends and prove to be incorrect or ineffective, any of these could have a material
adverse effect on our business, financial condition, operating results, liquidity and prospects.
29. We rely on third party distributors to distribute our projects, whether a TV Series, feature film or
other project, and their failure to perform or promote our projects could negatively impact our ability
to generate revenues and have a material adverse effect on our future operating results. Our projects
will be primarily distributed and marketed by third party distributors. If any of these third-party
distributors fails to perform under their respective arrangements, such failure could negatively impact
the success of our projects and have a material adverse effect on our business, reputation and ability
to generate revenues. We generally do not control the timing and manner in which our distributors
distribute our films, TV series or other media projects; their decisions regarding the timing of release
and promotional support are important in determining success. Any decision by those distributors not
to distribute or promote one of our films or to promote our competitors’ films or related products to
a greater extent than they promote ours could have a material adverse effect on our business, cash
flows and operating results. Additionally, because third parties are the principal distributors of our
media projects, the amount of revenue that is recognized from films in any given period is dependent
on the timing, accuracy and sufficiency of the information received from our distributors. As is
typical in the film industry, our distributors may make adjustments in future periods to information
previously provided to us that could have a material impact on our operating results in later periods.
30. The popularity and commercial success of our future digital media productions and feature films are
subject to numerous factors, over which we may have limited or no control. The popularity and
commercial success of our future digital media productions and films depends on many factors
including, but not limited to, the key talent involved, the timing of release, the promotion and
marketing of the digital media production or film, the quality and acceptance of other competing
productions released into the marketplace at or near the same time, the availability of alternative
forms of entertainment, general economic conditions, the genre and specific subject matter of the
future digital media production or film, its critical acclaim and the breadth, timing and format of its
initial release. We cannot predict the impact of such factors on any digital media production or film,
and many are factors that are beyond our control. As a result of these factors and many others, our
future digital media productions and films may not be as successful as we anticipate, and as a result,
our results of operations may suffer
31. Affiliates of our Company, including officers, directors and existing stockholder of our Company,
may invest in this Offering and their funds will be counted toward our achieving the Minimum
Amount. There is no restriction on our affiliates, including officers, directors and existing
stockholders, investing in the Offering. As a result, it is possible that if we have raised some funds,
but not reached the Minimum Amount, affiliates can contribute the balance so that there will be a
closing. The Minimum Amount is typically intended to be a protection for investors and gives
investors the confidence that other investors, along with them, are sufficiently interested in the
Offering and our Company and its prospects to make an investment of at least the Minimum Amount.
By permitting affiliates to invest in the Offering and make up any shortfall between what nonaffiliate investors have invested and the Minimum Amount, this protection is largely eliminated.
Investors should be aware that no funds other than their own and those of affiliates investing along
with them, may be invested in this Offering.
32. We are subject to income taxes as well as non-income-based taxes, such as payroll, sales, use, valueadded, net worth, property and goods and services taxes, in both the U.S. and foreign jurisdictions.
Significant judgment is required in determining our provision for income taxes and other tax
liabilities. In the ordinary course of our business, there are many transactions and calculations where
the ultimate tax determination is uncertain. Although we believe that our tax estimates are reasonable:
(i) there is no assurance that the final determination of tax audits or tax disputes will not be different
from what is reflected in our income tax provisions, expense amounts for non-income based taxes and
accruals; and (ii) any material differences could have an adverse effect on our financial position and
results of operations in the period or periods for which determination is made.
33. We have the right to extend the Offering deadline. We may extend the Offering deadline beyond what
is currently stated herein. This means that your investment may continue to be held in escrow while
we attempt to raise the Minimum Amount even after the Offering deadline stated herein is reached.
Your investment will not be accruing interest during this time and will simply be held until such time
as the new Offering deadline is reached without our Company receiving the Minimum Amount, at
which time it will be returned to you without interest or deduction, or until we receive the Minimum
Amount, at which time it will be released to us to be used as set forth herein. Upon or shortly after
release of such funds to us, the Shares will be issued and distributed to you.
34. The offering price in this Offering may not represent the value of our Shares. The price of the Shares
being sold in this Offering has been determined based on a number of factors and does not necessarily
bear any relationship to our book value, assets, operating results or any other established criteria of
value. Prices for our Shares may not be indicative of the fair market value of our Shares now or in
the future
35. We do not anticipate paying any cash dividends for the foreseeable future. We currently intend to
retain future earnings, if any, for the foreseeable future, to repay indebtedness and to support our
business and planned growth strategies. We do not intend in the foreseeable future to pay any
dividends to holders of our Shares.
36. In addition to the risks listed above, businesses are often subject to risks not foreseen or fully
appreciated by management. It is not possible to foresee all risks that may affect us. Moreover, we
cannot predict whether we will successfully effectuate our current business plan. Each prospective
Purchaser is encouraged to carefully analyze the risks and merits of an investment in the Shares and
should take into consideration when making such analysis, among other, the Risk Factors discussed
above.
37. 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.
You should not rely on the fact that our Form C, and if applicable Form D is accessible through the
U.S. Securities and Exchange Commission’s EDGAR filing system as an approval, endorsement or
guarantee of compliance as it relates to this Offering.
38. Neither the Offering nor the Securities have been registered under federal or state securities laws,
leading to an absence of certain regulation applicable to the Company.
The securities being offered have not been registered under the Securities Act of 1933 (the
"Securities Act"), in reliance on exemptive provisions of the Securities Act. Similar reliance has been
placed on apparently available exemptions from securities registration or qualification requirements
under applicable state securities laws. No assurance can be given that any offering currently qualifies
or will continue to qualify under one or more of such exemptive provisions due to, among other
things, the adequacy of disclosure and the manner of distribution, the existence of similar offerings in
the past or in the future, or a change of any securities law or regulation that has retroactive effect. If,
and to the extent that, claims or suits for rescission are brought and successfully concluded for failure
to register any offering or other offerings or for acts or omissions constituting offenses under the
Securities Act, the Securities Exchange Act of 1934, or applicable state securities laws, the Company
could be materially adversely affected, jeopardizing the Company's ability to operate successfully.
Furthermore, the human and capital resources of the Company could be adversely affected by the
need to defend actions under these laws, even if the Company is ultimately successful in its defense.
39. The Company has the right to extend the Offering Deadline, conduct multiple closings, or end the
Offering early.
The Company may extend the Offering Deadline beyond what is currently stated herein. This means
that your investment may continue to be held in escrow while the Company attempts to raise the
Minimum Amount even after the Offering Deadline stated herein is reached. While you have the
right to cancel your investment up to 48 hours before an Offering Deadline, if you choose to not
cancel your investment, your investment will not be accruing interest during this time and will simply
be held until such time as the new Offering Deadline is reached without the Company receiving the
Minimum Amount, at which time it will be returned to you without interest or deduction, or the
Company receives the Minimum Amount, at which time it will be released to the Company to be
used as set forth herein. Upon or shortly after release of such funds to the Company, the Securities
will be issued and distributed to you. If the Company reaches the target offering amount prior to the
Offering Deadline, they may conduct the first of multiple closings of the Offering prior to the
Offering Deadline, provided that the Company gives notice to the investors of the closing at least five
business days prior to the closing (absent a material change that would require an extension of the
Offering and reconfirmation of the investment commitment). Thereafter, the Company may conduct
additional closings until the Offering Deadline. The Company may also end the Offering early; if the
Offering reaches its target offering amount after 21-calendar days but before the deadline, the
Company can end the Offering with 5 business days’ notice. This means your f
ailure to participate in
the Offering in a timely manner, may prevent you from being able to participate – it also means the
Company may limit the amount of capital it can raise during the Offering by ending it early.
40. The Company's management may have broad discretion in how the Company uses the net proceeds of
the Offering.
Despite that the Company has agreed to a specific use of the proceeds from the Offering, the
Company's management will have considerable discretion over the allocation of proceeds from the
Offering. You may not have the opportunity, as part of your investment decision, to assess whether
the proceeds are being used appropriately.
41. The Securities issued by the Company will not be freely tradable until one year from the initial
purchase date. Although the Securities may be tradable under federal securities law, state securities
regulations may apply, and each Investor should consult with his or her attorney.
You should be aware of the long-term nature of this investment. There is not now and likely will not
be a public market for the Securities. Because the Securities offered in this Offering have not been
registered under the Securities Act or under the securities laws of any state or non-United States
jurisdiction, the Securities have transfer restrictions and cannot be resold in the United States except
pursuant to Rule 501 of Regulation CF. It is not currently contemplated that registration under the
Securities Act or other securities laws will be affected. Limitations on the transfer of the shares of
Securities may also adversely affect the price that you might be able to obtain for the shares of
Securities in a private sale. Investors should be aware of the long-term nature of their investment in
the Company. Investors in this Offering will be required to represent that they are purchasing the
Securities for their own account, for investment purposes and not with a view to resale or distribution
thereof.
42. Investors will not be entitled to any inspection or information rights other than those required by
Regulation CF.
Investors will not have the right to inspect the books and records of the Company or to receive
financial or other information from the Company, other than as required by Regulation CF. Other
security holders of the Company may have such rights. Regulation CF requires only the provision of
an annual report on Form C and no additional information – there are numerous methods by which
the Company can terminate annual report obligations, resulting in no information rights, contractual,
statutory or otherwise, owed to Investors. This lack of information could put Investors at a
disadvantage in general and with respect to other security holders.
43. The shares of Securities acquired upon the Offering may be significantly diluted as a consequence of
subsequent financings.
Company equity securities will be subject to dilution. Company intends to issue additional equity to
future employees and third-party financing sources in amounts that are uncertain at this time, and as a
consequence, holders of Securities will be subject to dilution in an unpredictable amount. Such
dilution may reduce the purchaser’s economic interests in the Company.
44. The amount of additional financing needed by Company will depend upon several contingencies not
foreseen at the time of this Offering. Each such round of financing (whether from the Company or
other investors) is typically intended to provide the Company with enough capital to reach the next
major corporate milestone. If the funds are not sufficient, Company may have to raise additional
capital at a price unfavorable to the existing investors. The availability of capital is at least partially a
function of capital market conditions that are beyond the control of the Company. There can be no
assurance that the Company will be able to predict accurately the future capital requirements
necessary for success or that additional funds will be available from any source. Failure to obtain
such financing on favorable terms could dilute or otherwise severely impair the value of the
investor’s Company securities.
45. There is no present public market for these Securities and we have arbitrarily set the price.
The offering price was not established in a competitive market. We have arbitrarily set the price of
the Securities with reference to the general status of the securities market and other relevant factors.
The Offering price for the Securities should not be considered an indication of the actual value of the
Securities and is not based on our net worth or prior earnings. We cannot assure you that the
Securities could be resold by you at the Offering price or at any other price.
46. In addition to the risks listed above, businesses are often subject to risks not foreseen or fully
appreciated by the management. It is not possible to foresee all risks that may affect us. Moreover,
the Company cannot predict whether the Company will successfully effectuate the Company’s current
business plan. Each prospective Investor is encouraged to carefully analyze the risks and merits of an
investment in the Securities and should take into consideration when making such analysis, among
other, the Risk Factors discussed above.
47. THE SECURITIES OFFERED INVOLVE A HIGH DEGREE OF RISK AND MAY RESULT IN
THE LOSS OF YOUR ENTIRE INVESTMENT. ANY PERSON CONSIDERING THE
PURCHASE OF THESE SECURITIES SHOULD BE AWARE OF THESE AND OTHER
FACTORS SET FORTH IN THIS OFFERING STATEMENT AND SHOULD CONSULT WITH
HIS OR HER LEGAL, TAX AND FINANCIAL ADVISORS PRIOR TO MAKING AN
INVESTMENT IN THE SECURITIES. THE SECURITIES SHOULD ONLY BE PURCHASED
BY PERSONS WHO CAN AFFORD TO LOSE ALL OF THEIR INVESTMENT.
