Item
2.01
Completion of Acquisition or Disposition of Assets
The
information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
As
described in Item 1.01 above, on June 30, 2016, the Company entered into a Share Exchange Agreement, which resulted in Venture
Track becoming our wholly owned subsidiary. The acquisition was accounted for as a recapitalization effected by a share exchange,
wherein Venture Track is considered the acquirer for accounting and financing reporting purposes.
BUSINESS
OF VENTURE TRACK
Corporate
History
Venture
Track is a development stage company originally incorporated in the state of Delaware in February 2014 as Songstress, Inc. The
Company changed its name in May 2015 to Scoocher, Inc. and then to Venture Track, Inc. in February 2016. Venture Track focused
on app development and deployment. Venture Track also intends to offer an innovation accelerator program (the “Venture Track
Program”) designed to provide early-stage technology companies (the “Innovators”) with bridge loans, support
in all areas of business development, and access to equity crowdfunding as designated under the Jumpstart Our Business Startups
Act of 2012 (the “JOBS Act”).
When
we refer to “Venture Track, Inc.,” “Venture Track”, the “Company”, “we”, “our,”
“us” or use similar words, we mean Venture Track, Inc.
The
JOBS Act, is a law intended to encourage the funding of United States small businesses by easing various securities regulations.
The JOBS Act was signed into law by President Barack Obama on April 5, 2012. The recently enacted JOBS Act reduces certain disclosure
requirements for emerging growth companies, thereby decreasing related regulatory compliance costs. We qualify as an emerging
growth company as of the date of this offering.
Venture
Track was founded by Edward C. DeFeudis, a serial entrepreneur and venture investor, with 20-plus years of experience. Since 1995,
he has helped launch numerous private and public companies, including Wiki Technologies, Inc., and has received major financing
commitments to help fund companies, startups and product launches. WikiTechnologies, Inc. is a technology company dedicated to
making financial transactions simple, secure, social and affordable. WikiTechnologies is comprised of (i) WikiPay®, a Money
Services Business, that provides a simple, low-cost alternative to existing mobile and online money transfer and payment solutions;
and (ii) WikiLoan®, a low-cost peer-to-peer lending solution. The apps use industry-leading privacy and payment security systems.
Throughout his career, Mr. DeFeudis has primarily been engaged in the development of strategic partnerships and financial strategies.
Through
Venture Track, Mr. DeFeudis is leveraging his experience and resources in capital markets and Internet marketing to provide an
innovative accelerator program and crowdfunding platform for early-stage disruptive technology companies.
Headquartered
in Santa Monica, CA, we operate throughout key markets in the United States. Our corporate office is located at 604 Arizona Ave,
Santa Monica, CA 90401, and our telephone is (424) 322-2201.
Business
Overview
Venture
Track focuses on financing, developing, and deploying apps. We own www.scoocher.com, an online content monetization engine, and
has an additional app in development. The Company’s initial focus is to develop and deploy these apps as in-house projects
(“Phase 1”).
The
Company recognizes the unique opportunity that exists in today’s app market. There are thousands of apps that have been
financed, built and deployed, but the founders of these apps do not possess the wherewithal to market the apps successfully. In
many cases, the apps are available for sale at a fraction of the development cost. It is the Company’s intention to identify,
purchase and deploy select apps with the greatest market potential (“Phase 2”).
The
Venture Track Program first aims to fund the launch of revenue ready apps and start-ups (“Innovators”) through bridge
loans. Then the Venture Track Program aims to market the apps, determine the true customer acquisition cost, fine-tune their projections
and use of proceeds, and set them on a track for a public offering facilitated through equity crowdfunding. We intend to provide
office space to Innovators with receptionist coverage, mail services, conference rooms, as well as access to on-site legal and
accounting, advertising and marketing services, networking events, investor presentations, business plan competitions, and more
(“Phase 3”).
The
Venture Track Program
Venture
Track intends on offering a three-phase, two-year program, for revenue ready Innovators. The three stages are: 1) Market Preparation,
2) Public Crowdfunding, and 3) Graduation.
In
order for Innovators to be accepted into the program, each must: 1) solve an obvious problem or make an existing solution much
more efficient; 2) be scalable; 3) have a focused team; and 4) be ready to generate revenue with a small capital infusion.
We
are seeking to accept 29 Innovators into the program over the course of our first three (3) years: five (5) Innovators in year
one (1), eight (8) in year two (2), and sixteen (16) in year three (3).
Venture
Track will receive approximately 10-30% seed-stage sweat-equity in each Innovator, a portion of which may be distributed as dividends
to shareholders based upon rules to be determined by the Board of Directors.
Investment
capital offered by Venture Track in the Market Preparation stage will be in the form of a 506c Regulation A+ offering and bridge
loan. The bridge loan amount is expected average $200,000, which shall be used by Innovators for general operating, legal, accounting,
advertising, marketing expenses related to filing a Regulation A+ offering.
Upon
approval of the Regulation A+ offering, the Innovator will move to the Public Crowdfunding stage. Venture Track will advertise
and market the offering to the public through equity crowdfunding, primarily to accredited investors, angels, venture capital
firms, and broker dealers. The Regulation A+ registration statement will offer a maximum of $50,000,000 in equity to investors.
Venture Track will retain the first right to sell its holdings in the Regulation A+ offering.
Upon
the completion of the Regulation A+ offering, the Innovator will move to the Graduation stage. In this stage, Venture Track will
continue to mentor the Innovator to manage its growth and begin the process of introducing the company to 1) registered broker
dealers with the intent of uplisting the Innovator to a national exchange, 2) strategic acquirers and/or merger candidates, and
3) strategic buyers.
Target
Market
Our
target market is early-stage technology companies that are seeking funding, business development, and access to equity crowdfunding
as designated under the JOBS Act.
Revenue
Sources
We
plan on generating most of our revenue from the Venture Track Program and generally a minimal amount from advertising and marketing
on our website, venturetrack.net.
We
plan on revamping the Venturetrack.net website within the next few months.
Competition
Today,
incubators and accelerators are a fixture in the tech community and there are more than 200 programs across the US. Venture Track
is unique, as it has keenly focused on leveraging the opportunities offered under the JOBS Act to bring Innovators to market as
fast as possible.
The
incubators and accelerators industry is highly competitive, and continues to evolve as a result of changes in regulation, technology,
product delivery systems, and the general market and economic climate. Our competitors include other incubators and accelerators,
banks, debt funds and specialty and diversified financial services intermediaries that offer lending, leasing, payments, investment,
foreign currency exchange, advisory and other financial products and services to our target client base. We also compete with
other lenders, such as “marketplace” lenders, peer-to-peer lenders and other non-traditional lenders that have merged
in recent years. In addition, we compete with hedge funds and private equity funds. The principal competitive factors in our markets
include product offerings, service, pricing, and transaction size and structure.
There
are many companies who compete directly with our products and services, for example, AngelPad, MuckerLab, TechStars and StartX,
etc. These companies may already have an established market in our industry. Most of these companies have significantly greater
financial and other resources than us and have been developing their products and services longer than we have been developing
ours. Additionally, there are no significant barriers to entry in our industry and new companies may be created that will compete
with us and other, more established companies who do not now directly compete with us, may choose to enter our markets and compete
with us in the future.
Intellectual
Property
Domain
Names
Venture
Track owns various domain names, including but not limited to
www.scoocher.com
and
www.venturetrack.net
.
Patent
Venture
Track filed a patent on its Scoocher platform technology with the United States Patent and Trademark Office on March 19, 2014.
The application is currently pending.
Employees
As
of July 2016, we employ 1 full-time employee. We plan to hire 6 additional employees within the next 6-12 months.
Properties
The
Company maintains its principal office at 604 Arizona Ave, Santa Monica, CA 90401, pursuant to a month-to-month lease at the rate
of $125 per month.
RISK
FACTORS
You
should carefully consider the risks described below together with all of the other information included in this report before
making an investment decision with regard to our securities. The statements contained in or incorporated into this offering that
are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results
to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually
occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common
stock could decline, and you may lose all or part of your investment.
RISKS
RELATED TO OUR BUSINESS
We
are a development stage company with history of operating losses and cumulative deficit.
Our
operating subsidiary, Venture Track, has been in existence for approximately two years. Our limited operating history means that
there is a high degree of uncertainty in our ability to: (i) find the target start-up companies for the Venture Track program;
(ii) raise capital to provide bridge loan to such start-up companies; (iii) respond to competition; or (iv) operate the business,
as management has not previously undertaken such actions as a company. Additionally, even if we do implement our business plan,
we may not be successful. No assurances can be given as to exactly when, if at all, we will be able to recognize profits high
enough to sustain our business. We face all the risks inherent in a new business, including the expenses, difficulties, complications,
and delays frequently encountered in connection with conducting operations, including capital requirements. Given our limited
operating history, we may be unable to effectively implement our business plan, which would result in a loss of your investment.
Adverse
economic conditions in the United States and worldwide may negatively impact our results.
We
are subject to changes in general economic conditions that are beyond our control. During periods of economic slowdown, delinquencies,
defaults, and losses, generally increase while collections decrease. These periods may also be accompanied by increased unemployment
rates and decreased consumer demand, which negatively impact businesses being lent to, weakening the collectability of the purchase
orders we finance, increasing the risk that an event of default from one of our customers will eventuate in a loss. In addition,
during an economic slowdown or recession, our servicing costs may increase without a corresponding increase in our finance charge
income. Furthermore, our business is significantly affected by monetary and regulatory policies of the U.S. federal government
and the US Federal Reserve. Changes in the policies of the institutions are influenced by macroeconomic conditions and other factors
that are beyond our control and could have a material adverse effect on us through interest rate changes, costs of compliance
with increased regulation, and other factors.
The
process we use to estimate losses inherent in our credit exposure requires complex judgments, including analysis of individual
industries, forecasts of economic conditions and how those economic conditions might impair the ability of our borrowers to repay
their facility. The degree of uncertainty concerning economic conditions may adversely affect the accuracy of our estimates, which
may, in turn, impact the reliability of the process and the quality of our assets.
Our
financial condition, liquidity, and results of operations depend on the credit performance of the credit facilities we provide
to our customers.
While
our underwriting guidelines were designed to establish that the obligors on the receivables we purchase represent a reasonable
credit risk, the receivables we purchase nonetheless are likely to experience higher default rates than a portfolio of obligors
comprised of large companies. In the event of a default, the most practical alternative may be to engage in collection action
against the obligor or, if permitted under the terms of our agreement, the customer who sold the receivable to us. The realizable
value of a receivable may not cover the outstanding account balance and costs of recovery, and if collection of the receivables
does not yield sufficient proceeds to repay the receivables in full could result in losses on those receivables.
Competition
may adversely impact our results.
The
financial services sector in which we operate is highly competitive and could become even more so, particularly in those segments
which are perceived as providing higher growth prospects. Factors contributing to this include industry deregulation,
mergers and acquisitions, changes in customers’ needs and preferences, entry of new participants, development of new distribution
and service methods and increased diversification of products by competitors. For example, changes in the financial
services sector have made it possible for non-bank financial institutions to offer products and services traditionally provided
by banks, such as automatic payment systems, mortgages and credit cards.
The
effect of competitive market conditions may have a material adverse effect on our financial performance and position. For
example, increasing competition for customers can lead to compression in our net interest margin, or increased advertising and
related expenses to attract and retain customers.
The
asset backed lending market is served by a variety of entities, including, banks, credit unions, and independent finance companies.
Our competitors may provide financing on terms more favorable to customers than we offer. Many of these competitors also have
long-standing relationships with potential clients.
We
anticipate that we will encounter greater competition as we expand our operations.
The
market for providing loans and other financial services to small to medium size businesses is highly competitive and we expect
that competition will increase. Current competitors have significantly greater financial, technical and marketing resources
than we do. We expect that more companies will enter this sector of the financial services market. We may not be able to compete
successfully against either current or future competitors. Increased competition could result in reduced revenue, lower margins
or loss of market share, any of which could significantly harm our business.
Changes
in interest rates may adversely impact our profitability and risk profile.
Interest
rate levels and fluctuations in interest rates may directly affect our profitability. As interest rates change, our gross interest
rate spread on new facilities either increases or decreases because the rates we charge on the facilities we provide is limited
by market and competitive conditions, restricting our ability to pass on increased interest costs to the consumer. Additionally,
although the majority of our clients are small to medium businesses and are not highly sensitive to interest rate movement, increases
in interest rates may reduce the volume of facilities we originate.
We
depend on the accuracy and completeness of information about our clients and obligors and any misrepresented information could
adversely affect our business, results of operations and financial condition.
In
deciding whether to enter into other transactions with our clients and their obligors, we rely on information furnished to us
by or on behalf of our clients and counterparties, including financial statements and other financial information. We are vulnerable
to fraud by our customers and employees. We also rely on representations made by our clients and counterparties as to the accuracy
and completeness of that information and, with respect to financial statements, on reports of independent third parties. If any
of this information is intentionally or negligently misrepresented, such as a fraudulent invoice, and such misrepresentation is
not detected, purchased invoices may be worthless, or worth significantly less than expected. Whether a misrepresentation is made
by our client, another party, or one of our employees, we generally bear the risk of loss associated with the misrepresentation.
Any such misrepresented information could adversely affect our business, financial condition, and results of operations.
Our
growth strategies require significant capital investments and may require us to seek external financing, which may not be available
on terms favorable to us.
Our
business operations and growth strategies require substantial capital investments, the availability of which depends on our ability
to generate cash flow from operations, borrow funds on satisfactory terms and raise funds in the capital markets. Our ability
to arrange for financing to support our capital expenditures and the cost of such financing are dependent on numerous factors,
including general economic and capital markets conditions, interest rates and credit availability from banks or other lenders,
many of which are beyond our control. In addition, increases in interest rates or the failure to obtain external financing on
terms favorable to us will affect our financing costs and our results of operations. We may not be able to obtain financing in
amounts or on terms acceptable to us,
RISKS
RELATED TO THE COMPANY
There
is serious doubt regarding our ability to continue as a going concern.
At
March 31, 2016, Venture Track had accumulated losses of $115,934. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or the amount of liabilities that might be necessary should the Company be unable
to continue as a going concern. The Company’s continued existence is dependent upon its ability to generate sufficient cash
flows from operations to support its daily operations as well as provide sufficient resources to retire existing liabilities and
obligations on a timely basis. It is the intent of management and significant stockholders to provide sufficient working capital
necessary to support and preserve the integrity of the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist.
We
depend on our key management personnel and the loss of their services could adversely affect our business.
We place
substantial reliance upon the efforts and abilities of Edward C. DeFeudis, our sole director and officer. Though no individual
is indispensable, the loss of the services of Mr. DeFeudis could have a material adverse effect on our business, operations, revenues
or prospects. We do not maintain key man life insurance on the life of Mr. DeFeudis.
We
may not be able to effectively control and manage our growth, which would negatively impact our operations.
If
our business and markets grow and develop it will be necessary for us to finance and manage expansion in an orderly fashion. We
may face challenges in managing the expansion of our business and in integrating any acquired businesses with our own. Such eventualities
will increase demands on our existing management, workforce and facilities. Failure to satisfy increased demands could interrupt
or adversely affect our operations and cause administrative inefficiencies.
We
may be unable to successfully execute our identified business opportunities or other business opportunities that we determine
to pursue.
We
currently have a limited corporate infrastructure. In order to pursue business opportunities, we will need to continue to build
our infrastructure and operational capabilities. Our ability to do any of these successfully could be affected by any one or more
of the following factors:
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our
ability to raise substantial amounts of additional capital if needed to fund the implementation of our business plan;
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our
ability to execute our business strategy;
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the
ability of our products to achieve market acceptance;
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our
ability to manage the expansion of our operations and any acquisitions we may make, which could result in increased costs,
high employee turnover or damage to customer relationships;
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our
ability to attract and retain qualified personnel;
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our
ability to manage our third party relationships effectively; and
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our
ability to accurately predict and respond to the rapid market changes in our industry and the evolving demands of the markets
we serve.
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Our
failure to adequately address any one or more of the above factors could have a significant impact on our ability to implement
our business plan and our ability to pursue other opportunities that arise.
The
obligations associated with being a public company will require significant resources and management attention, which will increase
our costs of operations and may divert focus from our business operations.
As
a publicly traded company, we are required to file with the SEC periodic reports containing our consolidated financial statements
within a specified time following the completion of quarterly and annual periods. As a public company, we incur significant legal,
accounting, insurance, and other expenses. Compliance with these reporting requirements and other rules of the SEC will increase
our legal and financial compliance costs and make some activities more time consuming and costly. Furthermore, the need to establish
the corporate infrastructure demanded of a public company may divert management’s attention from implementing our strategy,
which could prevent us from successfully implementing our strategic initiatives and improving our business, results of operations,
and financial condition. We have made, and will continue to make, changes to our internal controls and procedures for financial
reporting and accounting systems to meet our reporting obligations as a public company. However, we cannot predict or estimate
the amount of additional costs we may incur in order to comply with these requirements. We anticipate that these costs will materially
increase our total costs and expenses.
We
are required to make significant estimates and assumptions in the preparation of our financial statements and our estimates and
assumptions may not be accurate.
The
preparation of our consolidated financial statements in conformity with generally accepted accounting principles in the United
States of America (“GAAP”) requires our management to make significant estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial
statements, and the reported amounts of income and expense during the reporting periods. We use estimates and assumptions in determining
the residual values of delinquent receivables. Critical estimates are made by management in determining, among other things, the
allowance for loan losses, amounts of impairment, and valuation of income tax assets or tax refunds. If our underlying estimates
and assumptions prove to be incorrect, our financial condition and results of operations may be materially different from that
reported in our financial statements.
We
may incur significant costs to ensure compliance with United States corporate governance and accounting requirements.
We
may incur significant costs associated with our company reporting requirements, costs associated with newly applicable corporate
governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities
and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial
compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations
may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required
to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a
result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive
officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot
predict or estimate the amount of additional costs we may incur or the timing of such costs.
RISKS
RELATED TO THE SECURITIES
There
is currently a limited trading market for our common stock and an active, liquid trading market for our common stock may not develop,
which could adversely affect the liquidity and price of our common stock.
Our
common stock is quoted on the OTCQX quotation service. There is currently a limited trading market for our common stock. If
an active, liquid trading market does not develop, you may have difficulty selling your shares of common stock at an attractive
price, or at all. An inactive market may also impair our ability to raise capital by selling our common stock and may impair our
ability to acquire other companies, products or technologies by using our common stock as consideration.
The
market price of our common stock may be volatile, which could cause the value of an investment in our common stock to decline.
The
market price of our common stock may fluctuate substantially due to a variety of factors, many of which are beyond our control,
including:
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General
market conditions;
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Domestic
and international economic factors unrelated to our performance;
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Actual
or anticipated fluctuations in our quarterly operating results;
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Changes
in or failure to meet publicly disclosed expectations as to our future performance;
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Downgrades
in securities analysts’ estimates of our financial performance or lack of research
and reports by industry analysts;
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Changes
in market valuations or earnings of similar companies;
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Any
future sales of our common stock or other securities;
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Additions
or departures of key personnel;
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Fluctuations
in foreign exchange rates;
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Regulatory
developments in Australia affecting us or our competitors; and
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Release
or expiry of transfer restrictions on our outstanding shares.
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The
stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of
particular companies. These types of broad market fluctuations may adversely affect the trading price of our common stock. In
the past, stockholders have sometimes instituted securities class action litigation against companies following periods of volatility
in the market price of their securities. Any similar litigation against us could result in substantial costs, divert management’s
attention and resources, and harm our business or results of operations. For example, we are currently operating in, and have
benefited from, a protracted period of historically low interest rates that will not be sustained indefinitely, and future fluctuations
in interest rates could cause an increase in volatility of the market price of our common stock.
Certain
provisions of our amended and restated certificate of incorporation may have anti-takeover effects, which could limit the price
investors might be willing to pay in the future for our common stock. In addition, Delaware law may inhibit takeovers of us and
could limit our ability to engage in certain strategic transactions our board of directors believes would be in the best interests
of stockholders.
Certain
provisions of our amended and restated certificate of incorporation and bylaws could discourage unsolicited takeover proposals
that stockholders might consider to be in their best interests. Among other things, our amended and restated certificate of incorporation
and bylaws may include provisions that:
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Do
not permit cumulative voting in the election of directors, which would otherwise allow
less than a majority of stockholders to elect director candidates;
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Limit
the ability of our stockholders to nominate candidates for election to our board of directors;
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Authorize
the issuance of “blank check” preferred stock without any need for action
by stockholders; and
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Limit
the ability of stockholders to call special meetings of stockholders.
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The
foregoing factors, as well as the significant common stock ownership by Hugh Evans, could impede a merger, takeover, or other
business combination or discourage a potential investor from making a tender offer for our common stock, which, under certain
circumstances, could reduce the market value of our common stock.
In
addition, Section 203 of the Delaware General Corporation Law (the “DGCL”), generally affects the ability of an “interested
stockholder” to engage in certain business combinations, including mergers, consolidations, or acquisitions of additional
shares, for a period of three years following the time that the stockholder becomes an “interested stockholder.” An
“interested stockholder” is defined to include persons owning directly or indirectly 15% or more of the outstanding
voting stock of a corporation.
You
will experience dilution of your ownership interest because of the future issuance of additional shares of our common stock and
our preferred stock.
In
the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership
interests of our present stockholders. We may also issue additional shares of our common stock or other securities that are convertible
into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future
sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional
shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can
be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future
in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital
raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of
our common stock are trading.
Our
common stock is considered a penny stock, which may be subject to restrictions on market ability, so you may not be able to sell
your shares.
Our
common stock is considered a penny stock, subject to the penny stock rules adopted by the SEC that require brokers to provide
extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction
in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their
securities.
Penny
stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny
stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations
for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements
showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special
written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the
secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers
by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the
market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common
stock and may affect your ability to resell our common stock.
Our
executive officers and directors will continue to beneficially own the majority of our outstanding Common Stock.
As
of the date of this Report, our executive officers and directors beneficially own approximately 73% of our outstanding common
stock, all of which are beneficially owned by our sole director and officer, Edward C. DeFeudis. As a result, Mr. DeFeudis may
have substantial influence over all matters submitted to shareholders for approval.
We
do not expect to pay dividends.
We
have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future
earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends
on our common stock in the foreseeable future.
The
declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend
upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements,
and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and,
if dividends are paid, there is no assurance with respect to the amount of any such dividend. If the Company does not pay dividends,
the Company’s common stock may be less valuable because a return on an investor’s investment will only occur if the
Company’s stock price appreciates.
If
we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results
accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation
and adversely impact the trading price of our common stock.
Effective
internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial
reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment
existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control
deficiencies may adversely affect our financial condition, results of operation and access to capital. We have not performed an
in-depth analysis to determine if historical un-discovered failures of internal controls exist, and may in the future discover
areas of our internal control that need improvement.
Management’s
Discussion And Analysis Of Financial Condition
AND
RESULTS Of Operations
This
Current Report on Form 8-K contains forward-looking statements within the meaning of the federal securities laws. These include
statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such
as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,”
“management believes” and similar language. Except for the historical information contained herein, the matters discussed
in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere
in this Current Report are forward-looking statements that involve risks and uncertainties. The factors listed in the section
captioned “Risk Factors,” as well as any cautionary language in this Current Report, provide examples of risks, uncertainties
and events that may cause our actual results to differ materially from those projected. Except as may be required by law, we undertake
no obligation to update any forward-looking statement to reflect events after the date of this Current Report on Form 8-K.
The
following management’s discussion and analysis is intended to provide additional information regarding the significant changes
and trends which influenced our financial performance for the quarters ended March 31, 2016 and 2015, and the years ended December
31, 2015 and 2014. This discussion should be read in conjunction with the audited financial statements and notes as set forth
in this Report.
Our
Business
Venture
Track is a development stage company and was originally incorporated in the state of Delaware in February 2014 as Songstress,
Inc. The Company changed its name in May 2015 to Scoocher, Inc. and then to Venture Track, Inc. in February 2016. Venture Track
focused on app development and deployment. Venture Track intends to offer an innovation accelerator program (the “Venture
Track Program”) designed to provide early-stage technology companies (the “Innovators”) with bridge loans, support
in all areas of business development, and access to equity crowdfunding as designated under the JOBS Act.
Venture
Track was founded by Edward C. DeFeudis, a serial entrepreneur and venture investor, with 20-plus years of experience in the financial
industry. Since 1995, he has helped launch numerous private and public companies, including Wiki Technologies, Inc., and has received
major financing commitments to help fund companies, startups and product launches. WikiTechnologies, Inc. is a technology company
dedicated to making financial transactions simple, secure, social and affordable. WikiTechnologies is comprised of (i) WikiPay®,
a Money Services Business, that provides a simple, low-cost alternative to existing mobile and online money transfer and payment
solutions; and (ii) WikiLoan®, a low-cost peer-to-peer lending solution. The apps use industry-leading privacy and payment
security systems. Throughout his career, Mr. DeFeudis has primarily been engaged in the development of strategic partnerships
and financial strategies.
Through
Venture Track, Mr. DeFeudis is leveraging his experience and resources in capital markets and Internet marketing to provide an
innovative accelerator program and crowdfunding platform for early-stage disruptive technology companies.
Venture
Track focuses on financing, developing, and deploying apps. We own www.scoocher.com, an online content monetization engine, and
have an additional app in development. The Company’s initial focus is to develop and deploy these apps as in-house projects
(“Phase 1”).
The
Company recognizes the unique opportunity that exists in today’s app market. There are thousands of apps that have been
financed, built and deployed, but the founders of these apps do not possess the wherewithal to market the apps successfully. In
many cases, the apps are available for sale at a fraction of the development cost. It is the Company’s intention to identify,
purchase and deploy select apps with the greatest market potential (“Phase 2”).
The
Venture Track Program first aims to fund the launch of revenue ready Innovators through bridge loans. Then the Venture Track Program
aims to market the apps, determine the true customer acquisition cost, fine-tune their projections and use of proceeds, and set
them on a track for a public offering facilitated through equity crowdfunding. We intend to provide office space to Innovators
with receptionist coverage, mail services, conference rooms, as well as access to on-site legal and accounting, advertising and
marketing services, networking events, investor presentations, business plan competitions, and more (“Phase 3”).
Plan
of Operation
We
have the following short-term goals for our business operations:
|
●
|
Raise
capital to fund operations and provide bridge loans;
|
|
|
|
|
●
|
Attract
high-performing talent; and
|
|
●
|
Finance
high performance/profile Innovators that grow our brand and bottom-line.
|
We
have the following long-term goals for our business operations:
|
●
|
Build
our brand to become a market leader;
|
|
|
|
|
●
|
Leverage
partners that allow us to provide more value than peers; and
|
|
●
|
Continuously
innovate to deliver value to our customers.
|
We
intend to establish a culture recognized for excellence, attract high performing team members and execution will be the foundation
of which we will grow our company.
In
order to move forward it is critical that we raise capital to fund our operations. Raising capital is our primary goal and we
are focusing most of our attention to identify prospective investors and strategic partners.
If
we do not obtain additional funding, we will continue to operate on a reduced budget until such time as more capital is raised.
We
are focused on securing $2-6 million in financing, which would accelerate our business plan and allow us to hire up to 6 to 8
more staff members, increase our office space and operations, and increase our advertising and marketing budget, all of which
would directly affect the performance and business operation of the company.
Results
of Operations
Comparison
of results of operations for the three months ended March 31, 2016, as compared to March 31, 2015
Revenues
The
Company has not generated any revenue for the three months ended March 31, 2016 and 2015.
Operating
Expenses
Our
expenses during the three months ended March 31, 2016 and 2015 consisted of general and administrative expenses in the amount
of $5,606 and $5,343, respectively.
Net
Loss
We
are currently operating at a loss and we have a net loss of $5,606 for the three months ended March 31, 2016 as compared to $8,343
for the three months ended March 31, 2015. The decrease in net loss was primarily contributed to lower development expenses.
Comparison
of results of operations for the year ended December 31, 2015, as compared to December 31, 2014
Revenues
The
Company has not generated any revenue for the years ended December 31, 2015 and 2014.
Operating Expenses
Our
expenses during the year ended December 31, 2015 and 2014 consisted of general and administrative expenses in the amount of $10,740
and $82,654, respectively. The higher expenses in fiscal year December 31, 2014 were mainly incurred in relation to developing
our web technology and establishing the necessary infrastructure to launch our services.
Net
Loss
We
are currently operating at a loss and we have a net loss of $18,538 for the year ended December 31, 2015 as compared to $91,790
for the year ended December 31, 2014. The decrease in net loss was primarily contributed to lower development expenses.
Liquidity
and Capital Resources
As
of March 31, 2016, we had cash of $77. Due to our limited history with limited revenue, we require additional funds
to continue to operate. We will continue to operate on a reduced budget until such time as more capital is raised. We
have no written agreement to legally insure that funding will be provided for our operations. Although we have no commitments
for capital, other than verbal assurances, we may raise additional funds through:
|
-
|
public
offerings of equity, securities convertible into equity or debt,
|
|
-
|
private
offerings of securities or debt, or other sources.
|
At
this time, we have not identified any sources of additional financing. Upon developing a trading market for the common stock we
intend to seek additional sources of financing through hedge funds and/or licensed broker-dealers, however, given our precarious
financial condition and our lack of business, a trading market may not develop in the foreseeable future.
We
have no written agreement to legally insure that funding will be provided for our operations. Although we have no commitments
for capital, other than verbal assurances, we may attempt to raise additional funds through public offerings of equity, securities
convertible into equity or debt, and private offerings of securities or debt, as our previous efforts raised $110,000. Given
our history of raising money, there is no guarantee that we will be successful in obtaining funds through public or private offerings
in order to fund our operations. Our investors should assume that any additional funding will cause substantial dilution to current
stockholders. In addition, we may not be able to raise additional funds on favorable terms, if at all.
As
to the following serious conditions:
1)
|
As
of March 31, 2016, we had cash of $77;
|
2)
|
We
received $100,000 from the sale of promissory notes in fiscal 2014;
|
3)
|
Our
auditor has determined that based on our financial condition there is substantial doubt as to whether we can continue to operate
as a going concern.
|
To
date, we have been able to secure $110,000 that we raised through convertible promissory notes over the past two years. We may
also rely on sources to borrow funds in the form of loans.
Our
investors should assume that any additional funding may cause substantial dilution to current stockholders. In addition, we may
not be able to raise additional funds on favorable terms, if at all.
Going
Concern
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal course of business. At March 31, 2016, the Company
had accumulated losses of $115,934. These conditions raise substantial doubt about the Company’s ability to continue as
a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amount of liabilities that might be necessary should the Company be unable to continue as a going
concern. The Company’s continued existence is dependent upon its ability to generate sufficient cash flows from operations
to support its daily operations as well as provide sufficient resources to retire existing liabilities and obligations on a timely
basis. It is the intent of management and significant stockholders to provide sufficient working capital necessary to support
and preserve the integrity of the corporate entity. However, no formal commitments or arrangements to advance or loan funds to
the Company or repay any such advances or loans exist.
Critical
Accounting Policies
The
discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of
these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate
our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
A
summary of significant accounting policies is included in Note 1 to the audited financial statements for the year ended December
31, 2015. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable
financial information about our Company's operating results and financial condition.
Recently
Issued Accounting Pronouncements
We
do not believe that any recently issued accounting pronouncements, if adopted, would have a material effect on the accompanying
consolidated financial statements.
Off
Balance Sheet Arrangements
We
do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons,
also known as “special purpose entities” (SPEs).
MANAGEMENT
Directors
and Executive Officers
The
following table sets forth certain information regarding our sole director and officer as of the date of this report:
Name
|
|
Age
|
|
Position
|
Edward
C. DeFeudis
|
|
43
|
|
President,
Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors
|
A
summary description of the principal occupation and business experience of our sole director and officer for at least the last
five years, is fully described in Item 5.02, which is incorporated herein by reference.
During
the past five years none of our officers and directors has been involved in any legal proceedings that are material to an evaluation
of their ability or integrity as director or an executive officer of us, and none of them have been affiliated with any company
that been involved in bankruptcy proceedings.
Our
Board of Directors
Our
directors hold office until the next annual meeting of our shareholders or until their successors are duly elected and qualified.
There have been no material changes to the procedures by which stockholders can nominate directors.
Director
Independence
We
are not subject to listing requirements of any national securities exchange or national securities association and, as a result,
we are not at this time required to have our Board comprised of a majority of “independent directors,” nor is our
sole director considered to be independent under the definition of independence used by any national securities exchange or any
inter-dealer quotation system.
Leadership
Structure
Our
chairman of the board of directors also serves as our sole officer. Our board of directors does not have an independent director.
Our board of directors has determined that its leadership structure is appropriate and effective in light of the limited number
of individuals in our management team and that we currently only have one director. Our board of directors believes having a single
individual serve as both chairman and chief executive officer provides clear leadership, accountability and promotes strategic
development and execution as our company executes our strategy. Our board of directors also believes that there is a high degree
of transparency among the board of directors and company management.
Risk
Management
Our
board of directors oversees the risk management of our company and each of our subsidiaries. Our board of directors regularly
reviews information provided by management in order for our board of directors to oversee the risk identification, risk management
and risk mitigation strategies. Our board considers, as appropriate, risks among other factors in reviewing our strategy, business
plan, budgets and major transactions.
Committees
of Our Board of Directors
The
Board of Directors has no nominating, or compensation committee, and does not have an “audit committee financial expert”.
Our board of directors currently acts as our audit committee. There are no family relationships among members of management or
the Board of Directors of the Company.
Code
of Ethics
We
have adopted a code of ethics that applies to our Chief Executive Officer and Chief Financial Officer containing written standards
that are reasonably designed to deter wrongdoing and to promote:
|
●
|
Honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships
|
|
●
|
Full,
fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to,
the Securities & Exchange Commission and in other public communications made by the Company
|
|
●
|
Compliance
with applicable governmental law, rules and regulations
|
|
●
|
The
prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
|
|
●
|
Accountability
for adherence to the code
|
EXECUTIVE
COMPENSATION
Venture
Track Summary Compensation
The
following table sets forth information for Venture Track’s most recently completed fiscal year concerning the compensation
of Edward C. DeFeudis, sole officer of Company, during the most recently completed fiscal years ended December 31, 2015 and 2014.
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Option
Awards
($) (1)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward
C. DeFeudis (1)
|
|
|
2015
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
8,427
|
|
|
$
|
8,427
|
|
President,
CEO & CFO
|
|
|
2014
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
76,592
|
|
|
$
|
76,592
|
|
|
(1)
|
Venture
Track paid $8,427 and $76,592 for consulting services to Mr. DeFeudis, the President
of Venture Track, for the year ended December 31, 2015 and for the period from February
28, 2014 through December 31, 2014, respectively.
|
No
retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by us for
the benefit of our employees. We had no options outstanding as of December 31, 2013.
Compensation
of Directors
Directors
are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority
to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
Employment
Agreements
We
do not have any employment agreements with our officers or directors currently.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common
stock as of July 7, 2016, including shares issuable upon conversion of the Series C Preferred Stock, and by the officers and directors,
individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possess
sole voting and investment power with respect to the shares shown.
|
|
Title
of Class
|
|
|
|
Series
C Convertible
Preferred Stock
|
|
|
Common
Stock
|
|
|
|
|
Name
and Address of Beneficial Owner
(1)
|
|
Number
of shares Beneficially Owned
|
|
|
%
of Class
|
|
|
Number
of Shares Beneficially Owned
|
|
|
%
of Class
|
|
|
Total
Voting Power
(2)
|
|
Directors
and Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward
C. DeFeudis
(3)
|
|
|
4,164
|
|
|
|
92.53
|
%
|
|
|
2,919,572
|
|
|
|
50.3
|
%
|
|
|
73.08
|
%
|
All
current directors and officers as a group (1 person)
|
|
|
4,164
|
|
|
|
92.53
|
%
|
|
|
2,919,572
|
|
|
|
50.3
|
%
|
|
|
73.08
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5%
shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spider
Investments, LLC
(3)
|
|
|
2,082
|
|
|
|
46.27
|
%
|
|
|
1,429,786
|
|
|
|
25.15
|
%
|
|
|
36.31
|
%
|
(1)
|
Except
as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information
contained in the footnotes to this table. Unless otherwise indicated, the address of the beneficial owner is Source Financial,
Inc., 604 Arizona Avenue Santa Monica, CA 90401.
|
(2)
|
Calculated
pursuant to rule 13d-3(d) of the Exchange Act. Beneficial ownership is calculated based on 5,804,317 shares of common stock
and 4,500 shares of Series C Preferred Stock issued and outstanding on a fully diluted basis as of July 7, 2016. Each share
of Series C Preferred Stock is convertible into 1531.80 shares of common stock. Holders of the Series C Preferred Stock are
entitled to vote on all matters submitted to the Company’s stockholders and are entitled to such number of votes as
is equal to the aggregate number of shares of common stock into which such holder’s shares of Series C Preferred Stock
are convertible. Under Rule 13d-3(d) of the Exchange Act, shares not outstanding which are subject to options, warrants, rights
or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage
owned by such person, but are not deemed outstanding for the purpose of calculating the percentage owned by each other person
listed.
|
|
|
(3)
|
Includes
1,489,786 shares of common stock and 2,082 shares of Series C Preferred Stock held directly by Mr. DeFeudis, and 1,429,786
shares of common stock and 2,082 shares of Series C Preferred Stock held by Spider Investments, LLC, which Mr. DeFeudis is
the Managing Member. Mr. DeFeudis may be deemed to have voting and dispositive power with respect to and have beneficial ownership
of the shares owned by Spider Investments, LLC.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS,
AND
DIRECTOR INDEPENDENCE
In
2014, Venture Track received advances of $100,000 from an affiliate of Venture Track. In 2015, Venture Track received an additional
$10,000 in advances. These advances have an interest rate of 12% per annum. As of December 31, 2015 and 2014, the interest accrued
is $0 and $9,136, respectively. On August 21, 2015, Venture Track issued 110,000 shares of its common stock for the advances and
the interest was forfeited.
Venture
Track paid $8,427 and $76,592 for consulting services to the president of Venture Track for the year ended December 31, 2015 and
for the period from February 28, 2014 through December 31, 2014, respectively.
On
February 9, 2016, Venture Track purchased from an affiliate of the company, all rights, title and interest in and to the development
of the apps and the business plan of Venture Track, in exchange for the issuance of 1,400,000 shares of its common stock for a
total value of $18.
Venture
Track receives advances from an affiliate of the company for operation expenses. These advances, which are due on demand, have
an interest rate of 12% per annum and have no collateral. As of March 31, 2016, the Company has advances outstanding of $1,005.
On
March 23, 2016, Venture Track entered into a promissory note agreement of $5,000 with a shareholder. The note payable, which is
due on September 23, 2016, has an interest rate of 12% per annum and has no collateral. As of March 31, 2016, the company has
an outstanding balance of $5,000.
DESCRIPTION
OF SECURITIES
General
Our
amended and restated certificate of incorporation authorizes us to issue 12,000,000 shares of common stock, $0.001 par value per
share, and 10,000 shares of preferred stock, $0.01 par value per share. As of July 7, 2016, we had outstanding 5,804,317
shares of common stock and 4,500 shares of Series C Preferred Stock.
Common
Stock
Voting
Rights
Holders
of common stock will be entitled to one vote per share on all matters to be voted upon by the stockholders. The holders of common
stock will not have cumulative voting rights in the election of directors.
Dividend
Rights
Holders
of common stock will be entitled to ratably receive dividends if, as and when declared from time to time by our board of directors
at its own discretion out of funds legally available for that purpose, after payment of dividends required to be paid on outstanding
preferred stock, if any. Under Delaware law, we can only pay dividends either out of “surplus” or out of the current
or the immediately preceding year’s net profits. Surplus is defined as the excess, if any, at any given time, of the total
assets of a corporation over its total liabilities and statutory capital. The value of a corporation’s assets can be measured
in a number of ways and may not necessarily equal their book value.
Liquidation
Rights
Upon
liquidation, dissolution or winding up, the holders of common stock will be entitled to receive ratably the assets available for
distribution to the stockholders after payment of all liabilities and accrued but unpaid dividends and liquidation preferences
on any outstanding preferred stock.
Other
Matters
The
common stock will have no preemptive or conversion rights pursuant to the terms of our amended and restated certificate of incorporation
and bylaws. There will be no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of our
common stock will be fully paid and non-assessable, and the shares of our common stock offered in this offering, upon payment
and delivery in accordance with the underwriting agreement, will be fully paid and non-assessable.
Preferred
Stock
Pursuant
to our amended and restated certificate of incorporation, our board of directors from time to time by resolution (and without
further stockholder approval) may authorize the issuance of shares of preferred stock, in one or more series, with the designations
of the series, the voting rights of the shares of the series (if any), the powers, preferences and relative, participation, optional
or other special rights (if any), and any qualifications, limitations or restrictions thereof set forth in the resolution authorizing
the series, subject to certain limitations. Each series will consist of that number of shares as will be stated and expressed
in the certificate of designations providing for the issuance of the stock of the series.
Series
B Preferred Stock
On
the Closing Date, 5,000 shares of Series B Preferred Stock were cancelled in connection with the Spinout transaction.
Series
C Preferred Stock
On
July 6, 2016, the Company filed the certificate of designation of the Series C Preferred Stock with the Secretary of State of
the State of Delaware. The newly designation class of preferred stock consists of 4,500 shares. Each holder of the Series C Preferred
Stock may, from time to time and at any time, convert any or all of such holder’s shares of Series C Preferred Stock into
fully paid and non-assessable shares of common stock of the Company in an amount equal to the number of shares of Series C Preferred
Stock to be converted multiple by 1531.80. Holders of the Series C Preferred Stock are entitled to vote on all matters submitted
to the Company’s stockholders and are entitled to such number of votes as is equal to the aggregate number of shares of
common stock into which such holder’s shares of Series C Preferred Stock are convertible. In any liquidation, holders of
our Series B Preferred will receive dividend preference and liquidation preference.
In
connection with our acquisition of Venture Track, we issued 4,500 shares of our Series C Preferred Stock to the Venture Track
Shareholders.
Certain
Anti-Takeover Provisions of Delaware Law and our Amended and Restated Certificate of Incorporation and Bylaws
Certain
provisions of Delaware law and certain provisions that may be included in our amended and restated certificate of incorporation
and bylaws summarized below may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover
attempt that a stockholder might consider to be in its best interests, including attempts that might result in a premium being
paid over the market price for the shares held by stockholders.
Preferred
Stock
Our
amended and restated certificate of incorporation contains provisions that permit our board of directors to issue, without any
further vote or action by the stockholders, shares of preferred stock in one or more series and, with respect to each such series,
to fix the number of shares constituting the series and the designation of the series, the voting rights (if any) of the shares
of the series, and the powers, preferences and relative, participation, optional and other special rights, if any, and any qualifications,
limitations or restrictions, of the shares of such series.
Vacancies
Vacancies
on our board of directors may be filled only by election at an annual meeting or at a special meeting of stockholders called for
that purpose, subject to the rights of the Board of Directors to designate replacements to fill vacancies created by the departure
of directors.
No
Cumulative Voting
Our
amended and restated certificate of incorporation provides that stockholders do not have the right to cumulative votes in the
election of directors.
Business
Combinations with Interested Stockholders
We
are subject to Section 203 of the Delaware General Corporation Law (“DGCL”), which generally prohibits a publicly
held Delaware corporation from engaging in a business combination, such as a merger, with a person or group owning 15% or more
of the corporation’s voting stock, for a period of three years following the date on which the person became an interested
stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested
stockholder is approved in accordance with Section 203.
Limitation
on Liability and Indemnification of Directors and Officers
The
DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders
for monetary damages for breaches of directors’ fiduciary duties. Our amended and restated certificate of incorporation
includes a provision that eliminates the personal liability of directors for monetary damages for breach of fiduciary duty as
a director, except:
|
●
|
for
breach of duty of loyalty;
|
|
●
|
for
acts or omissions not in good faith or involving intentional misconduct or knowing violation of law;
|
|
●
|
under
Section 174 of the DGCL (unlawful dividends); or
|
|
●
|
for
transactions from which the director derived an improper personal benefit.
|
Our
amended and restated certificate of incorporation and bylaws provide that we must indemnify our directors and officers to the
fullest extent authorized by the DGCL. We are expressly authorized to, and do, carry directors’ and officers’ insurance
providing coverage for our directors, officers and certain employees for some liabilities. We believe that these indemnification
provisions and insurance are useful to attract and retain qualified directors and executive directors.
The
limitation on liability and indemnification provisions in our amended and restated certificate of incorporation and bylaws may
discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also
have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action,
if successful, might otherwise benefit our stockholders and us. In addition, your investment may be adversely affected to the
extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Transfer
Agent and Registrar
Standard
Registrar & Transfer Co., Inc., 12528 S 1840 E, Draper, Utah 84020 is the transfer agent and registrar for the common stock.
Penny
Stock Regulations
The
Securities and Exchange Commission has adopted regulations, which generally define “penny stock” to be an equity security
that has a market price of less than $5.00 per share. Our common stock, when and if a trading market develops, may fall within
the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited investors (generally those with assets in excess
of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse).
For
transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such
securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction,
other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose
the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and,
if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed
control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict
the ability of broker-dealers to sell our common stock and may affect the ability of investors to sell their Common Stock in the
secondary market.
Dividend
Policy
Any
future determination as to the declaration and payment of dividends on shares of our common stock will be made at the discretion
of our board of directors out of funds legally available for such purpose. We are under no contractual obligations or restrictions
to declare or pay dividends on our shares of common stock. In addition, we currently have no plans to pay such dividends. Our
board of directors currently intends to retain all earnings for use in the business for the foreseeable future. See “Risk
Factors.”
Equity
Compensation Plan Information
Currently,
there is no equity compensation plan in place.
LEGAL
PROCEEDINGS
There
are no material proceedings to which any director or officer, or any associate of any such director or officer, is a party that
is adverse to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries.
No director or executive officer has been a director or executive officer of any business, which has filed a bankruptcy petition,
or had a bankruptcy petition filed against it during the past ten years. No director or executive officer has been convicted of
a criminal offense or is the subject of a pending criminal proceeding during the past ten years. No director or executive officer
has been the subject of any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or banking activities during the past ten years. No director
or officer has been found by a court to have violated a federal or state securities or commodities law during the past ten years.
In
addition, there are no material proceedings to which any affiliate of our Company, or any owner of record or beneficially of more
than five percent of any class of voting securities of our Company, is a party that is adverse to our Company or any of our subsidiaries
or has a material interest adverse to our Company or any of our subsidiaries. Currently there are no legal proceedings pending
or threatened against us. We are not currently involved in any litigation that we believe could have a materially adverse effect
on our financial condition or results of operations.
There
is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened
against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’
officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
However,
from time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business.
Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that
may harm our business.
RECENT
SALES OF UNREGISTERED SECURITIES
Reference
is made to Item 3.02 of this Current Report on Form 8-K for a description of recent sales of unregistered securities, which is
hereby incorporated by reference.
INDEMNIFICATION
OF OFFICERS AND DIRECTORS
Section 102(b)(7)
of the Delaware General Corporation Law (the “DGCL”) permits a corporation to provide in its certificate of incorporation
that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (1) for any breach of the director’s duty of loyalty
to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (3) under Section 174 of the DGCL (regarding, among other things, the payment of unlawful
dividends or unlawful stock purchases or redemptions) or (4) for any transaction from which the director derived an improper
personal benefit. Our amended and restated certificate of incorporation provides for such limitation of liability.
Section 145(a)
of the DGCL empowers a corporation to indemnify any director, officer, employee or agent, or former director, officer, employee
or agent, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason
of such person’s service as a director, officer, employee or agent of the corporation, or such person’s service, at
the corporation’s request, as a director, officer, employee or agent of another corporation or enterprise, against expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding; provided that such director or officer acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the corporation; and, with respect to any criminal action
or proceeding, provided that such director or officer had no reasonable cause to believe his conduct was unlawful.
Section 145(b)
of the DGCL empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys’
fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit; provided that such
director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests
of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which such director
or officer shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery
or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such director or officer is fairly and reasonably entitled to indemnity for
such expenses that the court shall deem proper. Notwithstanding the preceding sentence, except as otherwise provided in the by-laws,
we shall be required to indemnify any such person in connection with a proceeding (or part thereof) commenced by such person only
if the commencement of such proceeding (or part thereof) by any such person was authorized by the Board of Directors.
In
addition, our amended and restated certificate of incorporation provides that we must indemnify our directors and officers to
the fullest extent authorized by law. We are also expressly required to advance certain expenses to our directors and officers
and carry directors’ and officers’ insurance providing indemnification for our directors and officers for some liabilities.
We believe that these indemnification provisions and the directors’ and officers’ insurance are useful to attract
and retain qualified directors and executive officers.