Viatec is the technology leader in the utility industry working with leading customers to demonstrating that electrification today is both good practice and good business.
Mark Ferri, CEO
This is an overview of the previous and planned financings of the business, including the capital needs the business is looking to cover in the current financing.
Additional Funding Uses for capital raised outside of this Offering
The company is also raising a target of $1,000,000 in preferred equity capital through a separate offering. The equity capital will go toward funding other hires, an enterprise resource planning (ERP) system, product testing and certifications, warranty budget, legal fees, marketing and advertising expenses, website/SEO, accounting and tax services, subject matter expert consults, rent/utilities and travel not otherwise covered by operating margin dollars.
Financial projections are subject to certain risks of the business and may not be achieved. Projections only contemplate projected cash flows, are unaudited and may not be formulated in accordance with US Generally Accepted Accounting Principles. Consult the investment materials for more information on business specific risks and a discussion of the key risks that may impede the achievement of the revenue forecasts presented. There is no guarantee that an investment may achieve any level of return. Review our Risks of Investing before making an investment decision.
Provide us with some background on your products and services.
Viatec provides both products (SmartPTO and SmartPX) as well as systems engineering services.
SmartPTO is focused on electrification of utility applications like bucket trucks that require 12 volt exportable power, air conditioning, remote support and diagnostic, proactive monitoring, and hydraulic power.
SmartPX, similar to SmartPTO provides exportable power in applications like step-vans that need to operate a wider variety of equipment including air handlers, water pumps, electrical circuits (110 & 220) and handtool while powering the vehicle electronics and AC.
Systems engineering services provide solutions for customers developing their own end products, and focuses on integrating electrical, mechanical and software engineering to deliver robust solutions meant to working harmoniously.
As customers grow Viatec will add subscription and consulting services tailored to customer needs and special projects.
What is your product development timeline?
SmartPTO is built around a flexible architecture that has been adapted to a variety of applications with simple configuration. We expect to sell a smaller version of SmartPTO and an all electric unit in 2020 for utility step vans. These varieties leverage the same architecture, controls and required only minor physical repackaging. Viatec can deploy similar applications from request to field test in months .
What is your production process?
1/2 day for 2 people to assemble and test a finished shippable unit.
The drive-train and AC sub-assemblies arrive preassembled, tested and ready for installation in our system.
Frames and panels are fabricated locally.
Individual components like inverters, pump, hoses, wires, telematics module, screws and connectors are sourced from national suppliers and where possible we have local stocking agreements to ensure ready availability.
Components are mounted on our frame and bench-tested and validated.
Provide detail on your hiring plans
Viatec will focus on adding Sales and Engineering resources. We contract with national outside services providers for back-office support including HR, Benefits, and Accounting. Viatec contracts locally with partners for manufacturing, testing, shipping and installation.
What is the composition of your current team?
Our direct team includes
CEO, Mark Ferri - Founder
CTO, Neeraj Chirmulay - Founder and Engineering leader, inventor
Sachin Gupta - Founder and BI. IT data strategy adviser
VP Sales, Anjali Deodhar - West Coast
Development Adviser, Mark Housley - Utility customer development and capital funding strategy
SR. Principle Engineer, David Anderson - SmartPTO product lead
How do you sell your product or service?
Direct sales to the top 50 utilities in the country.
Channel sales through OEMs and distributors for smaller fleets and OEM customers.
How do you market your product or service?
Trade shows, web and direct marketing and warm introductions across utility leaders. There is substantial concentration in this market with roughly 200 individuals responsible for over 80% of the annual bucket truck purchases. This fact drives a targeted marketing and sales model.
Who are your target customers?
Utility companies with large bucket trucks fleets and stepvans such as Duke Energy, Nextera, the Southern Company, Dominion Power.
OEMs including Terex, Versalift, Elliot, ETI and other bucket truck upfitters. Both Terex and Versalift are already offering SmartPTO with new vehicles.
Stepvan OEMs including Utilimaster.
Do you have current customers?
Duke Energy who purchased 1 SmartPTO in 2018, 23 in 2019 and are working in 2020 fleet wide adoption with up to 150 units.
Various municipalities, state owned power providers, universities, the national Labs system, forestry companies, lighting and sign service providers.
EMS, fire and police
What is your current customer pipeline?
Viatec is expecting SmartPTO sales to grow at 10x for the next 2 to 3 years. Last year we made our 1st sales and generated income of $70,000. 2019 grew to $1.2m against a force to $450,000 and 2020 is forecasted to meet or exceed $10m.
What market(s) are you in?
North America at present and plan to expand to the European Union, the middle east and India in 2020 and 2021.
Who are your competitors?
Altec industries is the only active and viable competitor at present. Viatec currently holds a contested market leadership position and plans to lead the market through access to retrofitting existing vehicles as well as selling into their current customer base. Most SmartPTOs have been installed on Altec trucks.
What is your competitive advantage?
The incumbent Altec Inc. have sold $75Mn ePTO’s to date all as delivered on their new trucks since 2016
• Viatec intent is contested leadership market position versus Altec
• Better product ( more reliable , MUCH easier to install and to maintain )
• Better pricing ( that enables compelling payback/IRR for customers )
• Broader availability ( 3:1 market route availability targeted) via other truck OEM’s, upfitters /service centers and direct sales to largest utilities
• Set the pace in analytics already generating field reports
A senior leader with over two decades of success building effective, global teams, developing products, and delivering value through innovation. Passionate about people, technology, innovation, and culture.
Prior to founding Viatec, Mark worked with the technology giant Cisco Systems for over two decades. A graduate and post-graduate of the East Carolina University in Greenville NC, Mark brings a far-reaching vision and the ability to understand and articulate the unique role of technological innovations in resolving problems from every sphere of life.
A skilled sales and customer relationship management leader, with over two-and-a-half decades of sales and business development experience in a variety of leading product and services consulting companies, Anjali is adept at building value-based relationships and achieving successful business results. She brings in expertise to build a truly customer focused organization through earnest relationship building, deep integrity and an outcome focus.
Anjali’s motivation comes from having opportunities to be the catalyst that drives successful partnerships – between the services and solutions she has represented and the real world issues that they resolve for customers. Her skills lie in being able to listen and understand the dynamics involved in client relationship management and her conviction that companies are successful only when they can derive win-win solutions for their clients.
Sachin K Gupta
With over 18 years of technology and operations experience in a Fortune 100 company, Sachin is uniquely adept at building organizational operations and achieving successful business results. Sachin brings Versatility, High Tech skills, Business Acumen, Leadership, Organization Development, Relationship Management, Consulting, and Corporate Culture and understanding to the team.
Sachin’s own aspirations are to be able to capitalize technological innovations as differentiators to drive growth, solve complex business problems and achieve outstanding results. Prior to working with Viatec, Sachin worked for several years with technology giant Cisco Systems, where he honed his skills of being a meticulous and detail-oriented leader, with a unique positive vision that permeated his every activity.
The span of domains with which he is familiar include – Large Databases and Analytics, Data Modeling, Artificial Intelligence, Digitization, IoT, Customer Data Protection, Security, Big Data, Algorithms, Machine Learning, ERP systems, Large Programs in Fortune 100 companies.
Neeraj is an innovative automotive systems integrator with cross-functional engineering experience. He brings a strong focus on high-level impact assessment and driving 'best business case' decisions. His experience ranges from vehicle architectures to sub-system design, with several quick-turnaround, innovative 'Concept To Completion' projects.
Neeraj’s passion for creating unique, innovative and high-impact solutions in the space of automotive excellence has driven him to architect the SmartLoad and SmartPTO products at Viatec. Neeraj’s experience and expertise allows him to zero in on creating architectural solutions for the engineering challenges that come up almost every day in his chosen domains. His vision drives the technical direction of our product portfolio and his engineering excellence has allowed us to scale ourselves to the levels we are at today. Following his graduate degree in Mechanical Engg. (from COEP-India) and his Masters in Automotive Engg. (from CU-ICAR), Neeraj has had a wide range of experience in working with clean-tech and hybrid solutions for automotive and he brings all his experience to bear in crafting the engineering direction for Viatec.
Neeraj holds the patent for our Viatec’s flagship electric-hydraulic hybrid products.
Terex Corporation is a diversified global manufacturer of lifting and material handling equipment, operating in two business segments: Aerial Work Platforms and Materials Processing.
Versalift manufactures bucket trucks, aerial lifts, digger derricks and cable places in the U.S.A.
Hydradyne is one of the largest motion control distribution companies in North America and a certified dealer of SmartPTO with over 35 locations throughout the Southern United States.
Controlled Motion Solutions provide motion and control technology systems and engineering services for a wide variety of commercial, mobile and industrial markets. They are also a certified distributor of SmartPTO.
Duke Energy, the utilities industry giant, piloted one of the first commercial SmartPTO units, producing the Pilot Report. They have since purchased 24 SmartPTO units for active use and have published talk about the possibility of standardizing SmartPTO on all of their utility vehicles. We are now looking into SmartPX, a stand alone power source for their fleet of step vans.
Viatec's world class power train was born and continues to be nurtured at Zero Motorcycles.
South Carolina Research Authority
A public private organization fostering innovation and business development in South Carolina
About Viatec Inc.
|Location Type||Manufacturing Facility|
|Comments||1927-B Perimeter Road, Greenville SC 29605 is Viatec's prototype and manufacturing facility in partnership with Little Roadside Management, Viatec's manufacturing partner.|
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Risks & Disclosures
Limited operating history
The Company was founded in August 2015, is an early stage company with limited operating history upon which to evaluate its business and has generated limited revenues to date. The Company is not currently profitable. Although management of the Company currently anticipates that its business strategy will be successful, the Company may not be able to achieve the revenue growth in the coming years necessary to achieve profitability. The Company's prospects also must be considered in light of the risks and difficulties frequently encountered by early stage companies in today's business environment. The Company may not be successful in addressing these risks, and the business strategy may not be successful.
Unpredictability of future revenues; Potential fluctuation in operating results
Because the Company has limited operating history, the ability to forecast revenues is limited. The Company's future financial performance and operating results may vary significantly from projected amounts and fluctuate substantially from quarter to quarter due to a number of factors, many of which are likely to be outside of the Company's control. These factors, each of which could adversely affect results of operations and future valuation, include:
- demand for the Company's products and services;
- introduction or enhancement of products and services by the Company and its competitors;
- actual capital expenditures required to bring the Company's products and services to market;
- market acceptance of new products and services of the Company and its competitors;
- price reductions by the Company or its competitors or changes in how products and services are priced;
- the Company's ability to attract, train and retain qualified personnel;
- the amount and timing of operating costs and capital expenditures related to the development and expansion of the Company's business, operations and infrastructure;
- unexpected costs and delays relating to the expansion of operations;
- change in federal or state laws and regulations;
- timing and number of strategic relationships that are established;
- loss of key business partners; and
- fluctuations in general economic conditions.
The projections of the Company's future operating costs are based upon assumptions as to future events and conditions, which the Company believes to be reasonable, but which are inherently uncertain and unpredictable. The Company's assumptions may prove to be incomplete or incorrect, and unanticipated events and circumstances may occur. Due to these uncertainties and the other risks outlined herein, the actual results of the Company's future operations can be expected to be different from those projected, and such differences may have a material adverse effect on the Company's prospects, business or financial condition. Any projections that were prepared or provided by the Company were not prepared with a view toward public disclosure or complying with the published guidelines of the American Institute of Certified Public Accountants or the Securities Exchange Commission regarding projected financial information. Under no circumstances should such information be construed to represent or predict that the Company is likely to achieve any particular results.
Reliance on key management employees and future personnel
The success of the Company is dependent on the efforts of a limited number of key people. The Company has not made plans to purchase key person life insurance. The loss of key personnel could have a serious adverse effect on the Company's prospects, business, operating results, and financial condition. To fulfill its operating plans, the Company's future success also depends on its ability to identify, attract, hire, train, retain and motivate additional highly-specialized personnel to fulfill various roles within the Company. Competition for such personnel is intense and there can be no assurance that the Company can attract, assimilate or retain sufficiently qualified personnel. The failure to attract and retain the necessary personnel could materially and adversely affect the Company's business, prospects, financial condition and results of operations.
The Company's management will have broad discretion in use of proceeds
The Company has preliminarily designated the use of the proceeds from this Offering for hiring, paying down existing debt, general working capital purposes and other necessary expenditures as determined in the discretion of management. Accordingly, the Company's management will have significant flexibility and broad discretion in applying the proceeds of the Offering. The failure of management to apply these funds effectively could have a material adverse effect on the Company's business, results of operations, prospects, and financial condition.
No assurances of sufficient financing; Additional capital is required
Although the Company believes the proceeds of this Offering, along with other planned financings, will provide adequate funding to develop and successfully support its business plans, there can be no assurances that such funds will be adequate. If the Company's cash requirements exceed current expectations, the Company may need to raise additional equity or debt capital, beyond what is being sought with current efforts. There can be no assurance that adequate additional financing on acceptable terms will be available when needed. The unavailability of sufficient financing when needed would have a material adverse effect on the Company and could require the Company to terminate its operations. The Company is in the process of securing an additional $1 million in financing through a private offering of common equity, which is being run concurrent to this Offering, to provide necessary capital for planned capital expenditures not covered under the Offering. If the Company is unable to close the additional financing on the terms and the timeline that is currently anticipated, the Company's financial and operational results may be adversely affected, and if the Company is left without sufficient capital, Investors could lose all, or a significant portion of, their investment.
Competition from other businesses
The Company will compete in a competitive market with established industry participants such as Altec, Inc. and many others. The Company expects competition to increase in the future. If and when the Company expands the scope of its product and service offerings, it may compete with a greater number of companies across a wider range of products and services. Many of the Company's current competitors and potential new competitors may have longer operating histories, greater name recognition, larger client bases and significantly greater financial, technical and marketing resources than the Company. These advantages may allow them to respond more quickly to new or emerging technologies, changes in laws or regulations, and changes in client and/or user requirements. There can be no assurance that the Company will be able to compete successfully in its chosen markets and competitive pressures may materially and adversely affect the Company's business, prospects, financial condition and results of operations. Any significant success of the Company's competitors can damage relationships with its customers and service providers, diminish the Company's market share, and present significant obstacles to the further development of the Company.
Existing and potential litigation
Although management is unaware of any threatened or pending litigation against the Company or management, there can be no assurance that future claims will not be asserted and that, even if without merit, the cost to defend against such claims would not be significant, thus having a material adverse effect on the Company's business, financial condition and results of operations. The Company has never filed any lawsuit against any other person or entity, or been the subject of a lawsuit.
Need to maintain existing, and develop new products and services
The success of the Company is dependent upon the Company's ability to maintain a certain level of quality in, and enhance existing products and services as well as to develop and introduce in a timely manner new products and services that incorporate technological advances, keep pace with evolving industry standards, and respond to changing customer requirements. If the Company is unable to develop and introduce new products and services or enhancements in a timely manner in response to changing market conditions or customer requirements, while maintaining a certain level of quality in its existing products and services, the Company's business, financial condition and results of operations would be materially adversely affected.
Control of the Company
The officers and/or directors comprising the Company's management team will have sole management authority over the business of the Company, regardless of the opposition of Investors to pursue an alternate course of action. Investors will not become shareholders of the Company and shall have no voting, dividend, minority ownership rights, or other rights or status as a shareholder of the Company as a result of his, her or its investment, unless the investment is converted to equity in the future. Investors will have no right to vote with respect to the management or to participate in any decision regarding management of the Company's business.
The Company is obligated to indemnify its management
Executive officers and directors of the Company owe certain duties to the Company they serve in connection with the use of its assets. Executive officers and directors are fiduciaries, and as such are under obligations of trust and confidence to the Company and owners to act in good faith and for the interest of the Company and its owners, with due care and diligence. Notwithstanding the foregoing, the Company is obligated to indemnify officers and directors of the Company for actions or omissions to act by such officers and directors of the Company on behalf of the Company that are authorized under the organizational documents of the Company. In addition, an officer may be entitled to advancement of expenses they may incur associated with or in defense of charges, claims or legal action arising from such person's position as an officer or director of the Company, which could result in a decrease in the assets available for Investors in certain circumstances. The assets of the Company will be available to satisfy these indemnification obligations. Such obligations will survive dissolution of the Company. There are very limited circumstances under which the management of the Company can be held liable to the Company. Accordingly, it may be very difficult for the Company or any Investor to pursue any form of action against the management of the Company.
Limited ability to protect intellectual property rights
The Company's business model is dependent on proprietary technology. As such, licensing, developing and protecting the proprietary nature of this technology is crucial to the success of the Company. The Company will rely on intellectual property laws, all of which offer only limited protection. Competitors may infringe upon any patents or trademarks that the Company takes out on its proprietary technology. The Company has applied for certain intellectual property protection through patents, including US utility patent numbers #9738162B2 and 10,493,852. Failure to adequately protect its intellectual property from current competitors or new entrants to the market could have a material adverse effect on the Company's business, operating results, and financial condition. Additionally, the Company may become subject to third-party claims that it infringed upon their proprietary rights or trademarks. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against the Company or the payment of damages by the Company.
Need to establish new and maintain existing customer relationships
The market for the Company's products and services is rapidly evolving. The Company is unable to predict whether its products and services will continue to satisfy new and existing customer demands or if they will be supplanted by new products and services. To date, the Company has developed limited customer relationships. The Company's efforts to market and sell its services could be significantly affected by competitive and technological developments. If this occurs and if the Company is unable to adapt quickly enough to the change, it may fail to develop additional customer relationships, and maintain those relationships, and its business, financial condition and results of operations could be materially adversely affected.
Employees or related third parties may engage in misconduct or other improper activities
The Company is exposed to the risk that employee fraud or other misconduct could occur. Misconduct by employees could include misappropriation of trade secrets or other intellectual property or proprietary information of the Company or other persons or entities and failing to disclose unauthorized activities. It is not always possible to deter or detect employee misconduct, and the precautions taken to prevent and detect this activity may not be effective in controlling unknown or unmanaged risks or losses. The misconduct of one or more of the Company's employees or key third party partners may have a material adverse effect on the Company's business, results of operations, prospects, and financial condition.
Reliance on third parties for product inputs
The Company will rely on various third parties to provide its product inputs and other goods and services. These third parties may become unable to or refuse to continue to provide these goods and services on commercially reasonable terms consistent with the Company's business practices, or otherwise discontinue a service important for the Company to continue to operate under normal conditions. If the Company fails to replace these goods and services in a timely manner or on commercially reasonable terms, the operating results and financial condition of the Company could be harmed. In addition, the Company exercises limited control over third-party vendors, which increases vulnerability to problems with goods and services those vendors provide. If the goods and services of the third parties were to fail to perform as expected, it could subject the Company to potential liability, adversely affect renewal rates, and have an adverse effect on the Company's financial condition and results of operations.
No audited financial statements
The Company has not yet sought to have its financial information audited by an independent certified public accountant and there is no assurance that it will do so in the future. All financial information provided in the Offering Materials has been prepared by the Company's management team and has not been reviewed or compiled by an independent accounting firm.
The Company may not obtain sufficient insurance coverage
The cost of insurance policies maintained by the Company to protect the Company's business and assets could increase in the future. In addition, some types of losses, such as losses resulting from natural disasters, generally are not insured because they are uninsurable or it is not economically practical to obtain insurance to cover them. Moreover, insurers recently have become more reluctant to insure against these types of events. Should an uninsured loss or a loss in excess of insured limits occur, this could have a material adverse effect on the Company's business, results of operations and financial condition.
Failure to maintain current lease agreement
The Company has entered into a lease agreement for its operating location, which expires in 2023. The Company believes it has entered into a lease agreement under market terms and will be able to comply with the terms of the lease including making monthly rent payments. Should the Company fail to comply with the terms of the lease, it will need to renegotiate more favorable terms with the owner of the building. If the Company is unable to comply with the terms of the lease, renegotiate more favorable terms or renew the lease upon expiration, the Company will need to find a suitable replacement location with a reasonable lease cost. Failure to find a suitable replacement location in this situation may have an adverse material affect on the Company's operational and financial performance.
The Company's revenues are highly dependent on a limited number of customers
The Company is expected to be highly dependent on sales to its largest 5 expected customers, approximately 64% of overall revenues are expected to be sourced from this group. If sales to these customers were not to materialize, or were to decrease materially from expectations, the Company’s revenues would be significantly impacted, the Company may not be able to replace such revenues, and the Company may be forced to terminate operations, thereby resulting in a complete loss of an investment.
Provision of services by management and their affiliates
The officers of the Company and their affiliates may have conflicts in allocating time, services and functions of management and staff between and among the Company and any other business entities in which they may be employees or officers and other business ventures in which they are involved. The officers and their affiliates believe that they are fully capable of discharging such responsibilities.
Loans from Shareholders of the Company
Certain individuals, some of whom are shareholders of the Company, or hold instruments convertible into shares of the Company, also hold loans to the Company with an aggregate outstanding amount of principal and interest of $285,435.04, which are coming due at various dates in 2020. The Company plans to attempt to renegotiate the terms and maturities of some or all of these loans. However, should the shareholders choose to require the Company to make payment on the loans, the Company will have to use cash on hand to repay the outstanding principal and interest on the loans. If the Company does not have sufficient cash on hand to meet a negotiated obligation or is unable to reach satisfactory terms with the shareholders who hold the loans, the Company's operational and financial performance may be adversely affected.
The Notes are offered on a best efforts basis
The Notes are being offered by the Company on a best efforts basis as specified herein. The Company will begin using the net proceeds of the Offering immediately. To the extent that the Company does not raise the full $400,000 amount that it is seeking in this Offering, some or all of the business objectives and financial forecasts of the Company may be delayed and/or unfilled. There can be no assurances that the Company will raise the full amount of $400,000 sought through this Offering.
No market; Lack of liquidity
There currently is no public or other trading market for the Notes being offered or any other securities of the Company and there can be no assurance that any market may ever exist for the Notes being offered or any other securities of the Company. If a public market does develop, factors such as competitors' announcements about performance, failure to meet securities analysts' expectations, changes in laws, government regulatory action, and market conditions for the industry in which the Company operates in general could harm the price of the Company's publicly traded securities. The Company has no obligation to register the Notes being offered or any other securities under the Securities Act or any state securities laws. Investors should be prepared to hold their Notes for an indefinite period.
Restrictions on transferability
The Notes offered by the Company have not been registered under the Securities Act, nor any applicable state securities laws, in reliance on the exemption from registration in Securities Act Sections 3(b) and 4(2) thereof and in the rules of Regulation D promulgated thereunder. As a result, the Notes are subject to restrictions on transferability and resale and may not be transferred or resold by any Investor except as permitted under the Securities Act and applicable state securities laws, pursuant to registration or exemption from these laws, or if the Company has received an opinion of counsel satisfactory to it that registration under such laws is not required. In addition, there is no market for the Notes being offered and the Company does not expect that any market will be developed in the foreseeable future.
Investors may not receive a return of their investment amounts and there is no guarantee of return
Investors will be entitled to receive a return on their investment only through the Notes and the interest and principal payments thereunder, unless converted to equity. The only source of funds for the repayment of the Investors' investment amounts and a return on such investment amounts is the Company's operations. The return to Investors and the future value of the investment will depend on a number of factors which cannot be predicted at this time and which may be beyond the control of the Company. These include the general, local, and industry-related economic conditions. In the event that the Company does not generate sufficient revenues from operations, the Investors may not receive any return at all and may lose a substantial portion (or possibly all) of their investment amounts. Neither the Company nor the Placement Agent makes any representations or warranties with respect to any return on an investment in the Company. There can be no assurance that an Investor will receive any return on an investment in the Company or realize any profits on such Investor's investment in the Company.
Investors will not become shareholders of the Company, unless the Notes are converted to equity in the future
Investors will not become shareholders of the Company and shall have no rights to share in the Company’s net assets (other than pursuant to their Notes), cash flow, or net income, and shall have no voting or dividend rights, as a result of his, her or its investment, unless the Notes are converted to equity in the future.
The obligations of the Company under the Notes will be unsecured obligations
The Company's obligations under the Notes will be unsecured obligations. Therefore, upon the occurrence of an event of default under the Notes, an Investor will have no recourse against the assets of the Company and rights that the Investor may have under the Notes will be subordinate and inferior to the Company's other creditors at such time, if any.
Disputes may be resolved only through mandatory binding arbitration
The Notes provide that any claims or disputes between the Investor and the Company and its affiliates and agents (including the Placement Agent) must be resolved by confidential mandatory binding arbitration before a private dispute resolution service and forum provider. Investors will not have a right to litigate claims through a trial, and will be required to knowingly and voluntarily waive their rights to litigate any claims in a court.
Investors are required to indemnify and reimburse the Administrative Agent; There will be little or no recourse against the Administrative Agent.
As a condition of agreeing to the terms of the Notes, the Investor has agreed to indemnify and reimburse the Administrative Agent, ratably from and against any and all actual liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (other than those expenses and costs to be borne by the Administrative Agent in the ordinary course of its or its agents’ fulfillment of administrative agent services), which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of the Notes or any action taken or omitted under the Notes, provided that the Investor shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct.
Investors are reliant on the Administrative Agent for servicing and collections
The Investors will not be able to pursue collection against the Company themselves. If the Administrative Agent were to become subject to a bankruptcy or similar proceeding or were to otherwise become unable to perform its duties under the Notes, enforcement of Investors’ rights could be uncertain, recovery of funds due on the Notes may be substantially delayed, and any funds recovered may be substantially less than the amounts due or to become due on the Notes. There is no provision in the Notes for a party to replace the Administrative Agent.
The Company anticipates borrowing additional debt senior to the Notes
The Company’s management anticipates authorizing the issuance of additional debt financing, which may effect its ability to service the obligations under the Notes, in the event the Notes are not converted to equity. The Company intends to pursue a line of credit to finance additional inventory purchases from an undetermined financial institution (the "Senior Lender") for a minimum amount of $300,000 (a "Senior Loan"). Any Senior Loan documents will likely contain various representations, covenants (affirmative and negative) and other provisions. Such restrictions, while relatively common in today's small business financing market, increase the risks of an investment in the Company. If the Company fails to satisfy the covenants, the Senior Lender may declare the Senior Loan in default, in which case, Investors could lose their entire investment in the Company. In addition, if the Company’s gross proceeds from the Senior Loan do not cover the estimated costs associated with the Company's inventory purchases, the Company may not be able to achieve its revenue goals, jeopardizing the Company’s ability to repay investor obligations under the Notes in the event the Notes are not converted to equity.
The Notes may never convert to equity
The Company may never receive a future equity financing which would convert the Notes to equity. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Notes nor a liquidity event occurs, the Company may be required to pay off the debt obligation under the Notes. If the Company is unable to pay off that obligation at the maturity of the Notes, the Company could be placed in default and Investors may not receive a return on their investment.
Equity securities acquired upon conversion of Notes may be significantly diluted as a consequence of subsequent financings
Any equity securities issued by the Company will be subject to dilution. The Company intends to issue additional equity to third-party financing sources in amounts that are uncertain at this time, and as a consequence holders of equity securities resulting from conversion of the Notes will be subject to dilution in an unpredictable amount. Such dilution may reduce the Investor's control and economic interests in the Company. The amount of additional financing needed by the Company will depend upon several contingencies not foreseen at the time of the 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, the Company may have to raise additional capital at a price unfavorable to the existing investors.
The terms of the Notes may be amended without the consent of the Investor
Any term of the Notes may be amended or waived with the written consent of the Company, the Administrative Agent and the Investor. In addition, any term of the Notes may be amended or waived with the written consent of the Company, the Administrative Agent and Investors holding at least fifty percent (50%) of the outstanding principal amount of all Notes issued. Such an amendment would be effective to, and binding against all Investors in the Notes. As such, the Investor should be aware that it is possible for the Notes to be amended without their consent.
An investment in the Notes is speculative and involves a high degree of risk
An investment in the Company should not be made by persons unable to bear the risk of loss of their entire investment or by persons who may have a need for liquidity from their investment. In making an investment decision, you must rely on your examination of the Company and the terms of the Offering, including the merits and the risks involved. Like all investments, an investment in the Company involves the risk of the loss of capital, and the Notes should not be purchased by anyone who cannot afford the loss of his, her or its entire investment. Investors must be prepared to bear the economic risk of an investment in the Company for an indefinite period of time and be able to withstand a total loss of their investment. Investors are encouraged to consult their own investment or tax advisors, accountants, legal counsel, or other advisors to determine whether an investment in the Notes is appropriate.
The Notes have not been registered under the Securities Act
The Notes offered by the Company have not been registered under the Securities Act, nor any applicable state securities laws, in reliance on the exemption from registration in Securities Act Sections 3(b) and 4(2) thereof and in the rules of Regulation D promulgated thereunder. The investment contemplated by the Notes has not been recommended, approved, or disapproved by the SEC, or any state securities commission, or other regulatory authority, nor have any of these authorities passed upon or endorsed the merits of this Offering or the accuracy, completeness, or adequacy of the Offering Materials. Any representation to the contrary is a criminal offense.
Investors will be subject to certain suitability requirements
The Notes will not be sold to an Investor until such Investor delivers an executed representation, as contained in the Qualified Investor Questionnaire and Subscription Agreement, that he, she or it is a Qualified Investor and meets certain standards. Persons who are not Qualified Investors are not permitted to invest. The fact that a person is a Qualified Investor represents the minimum suitability requirement for an Investor, and compliance with such standards does not necessarily indicate that this would be a suitable investment for such person.
There is no market for the Notes and no such market is expected to develop
The Notes are subject to restrictions on transferability and resale and may not be transferred or resold by any Investor except as permitted under the Securities Act and applicable state securities laws, pursuant to registration or exemption from these laws, or if the Company has received an opinion of counsel satisfactory to it that registration under such laws is not required. Investors may be required to bear the financial risks of the investment in the Company for an indefinite period of time. Persons who desire liquidity from this investment should not invest.
The Company will have the right to refuse any subscription in its sole discretion
The Company will have the right to refuse any subscription in its sole discretion and for any reason (or no reason), including the Company's belief that an Investor does not meet the applicable suitability requirements or that exemptions from the registration requirements of any applicable jurisdiction are not available with respect to the issuance of the Notes to any Investor under this Offering. The Company may make or cause to be made such further inquiry and obtain such additional information as it deems appropriate with regard to the suitability of Investors. The Company reserves the right to modify the suitability standards with respect to certain Investors in order to comply with any applicable state or local laws, rules, regulations or otherwise.
The information presented in the Offering Materials was prepared by the Company and contains "forward-looking" statements
The Offering Materials (together with any amendments or supplements and any other information that may be furnished by the Company) includes or may include certain forward-looking statements, estimates, and projections with respect to the Company's anticipated future performance. Examples of forward-looking statements include statements regarding the Company's future sales, purchase orders, financial results, operating results, acquisitions, business and monetization strategies, projected costs, revenues, products, competitive positions and plans and objectives of management for future operations. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "would," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Such forward-looking statements, estimates, and projections are not guarantees of future performance and reflect various assumptions of the Company's management that may or may not prove correct and involve various risks and uncertainties over which the Company may have no influence or control. No independent party has verified or confirmed the reasonableness of the assumptions that form the basis of the forecasts. These and many other factors could affect the Company's future financial and operating results, and could cause actual results to differ materially from expectations based on forward-looking statements made in the Offering Materials or elsewhere by the Company (or on its behalf). The likelihood of the Company's success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with growing an early-stage business. There can be no assurance that the Company will generate any particular level of revenue or will be able to continue to operate profitably. The Placement Agent expressly disclaims any representation or warranty regarding involvement in or responsibility for any forward looking statements contained in the Offering Materials.
Only the Offering Materials may be relied upon in connection with this Offering
Only the information expressly set forth in the Offering Materials or contained in documents furnished by the Company upon request may be relied upon in connection with this Offering. No person has been authorized to give any information or to make any representations other than those contained in the Offering Materials and, if given or made, such information or representations must not be relied upon. Access to the Offering Materials at this time does not imply that information therein is correct as of any time subsequent to this date.
The Offering Materials do not purport to be all-inclusive
The Offering Materials provided to Investors do not purport to be all-inclusive or contain all of the information that you may desire in investigating the Company. You must rely on your own examination of the Company and the terms of the Offering, including the merits and risks involved in making an investment in the Notes. Prior to making an investment decision, you should consult your own counsel, accountants, and other advisors and carefully review and consider all of the Offering Materials provided and the other information that you acquire. You should not construe any statements made in the Offering Materials provided as investment, tax or legal advice.
The Company reserves the right to reject some or all of any prospective investment
The offer of the Notes by the Company is subject to prior sale and certain other conditions. The Company reserves the right, in the Company's sole discretion and for any reason, to withdraw, cancel, or modify the Offering and to accept or reject some or all of any prospective investment. The Company will have no liability to any Investor in the event that the Company takes any of these actions.
The terms, conditions and restrictions of the Notes are fully set forth in the Note
The terms, conditions and restrictions of the Notes are fully set forth in the Note, which you will be required to execute if you decide to invest, the form of which has been provided to you in the Offering Materials section for this Offering on the Company Offering Profile. You should not invest unless you have completely and thoroughly reviewed the provisions of the Note. In the event that any of the terms, conditions, or other provisions of the Note are inconsistent with or contrary to the information provided in the Offering Materials, that agreement will control. Any additional information or representations given or made by the Company in connection with the Offering, whether oral or written, are qualified in their entirety by the information set forth in the Offering Materials, including, but not limited to, the risks of investment.
No solicitation in any state or other jurisdiction in which such solicitation is not authorized
The Offering Materials do not constitute an offer to sell, or a solicitation of an offer to buy, any security in any state or other jurisdiction in which such an offer or solicitation is not authorized. Except as otherwise indicated, the offering materials speak as of the date the Offering was initiated. Neither access to the Offering Materials nor any sale of the Notes shall, under any circumstances, create an implication that there has been no change in the Company's affairs from the date the Offering was initiated.
Each investment is subject to the terms and conditions of the Investor Registration Agreement
Each Investor's subscription for and purchase of the Notes is governed by, and subject to, the terms and conditions of the Investor Registration Agreement entered into between the Placement Agent and such Investor, including, without limitation, the investment limits established by the Placement Agent for such Investor, the Placement Agent's rights to terminate the offering or any Investor's registration with the Placement Agent.
The Company will be available to you to answer questions and furnish additional information
The Company will make available to you, upon request, copies of material agreements and other documents relating to the Company and will afford you the opportunity to ask questions and receive answers from the Company concerning its business and financial condition. The Company will also provide you an opportunity to meet with representatives of the Company to obtain other additional information.
Securities to be offered to investors
The offering materials being accessed by you (the "Offering Materials") on the Company's profile page (located at https://localstake.com/businesses/viatec-inc) (the "Company Offering Profile") relate to the offer and sale of convertible promissory notes (collectively, the "Notes") in Viatec Inc., a corporation organized in Delaware (the "Company"). The Company is seeking to raise up to $400,000 (the "Offering Amount") from potential investors (each, an "Investor" and collectively, the "Investors") through the offer and sale of the Notes.
Closing procedures for the Offering
The Offering shall be available to potential Investors until the final closing of the sale and purchase of the Notes (the "Final Closing"), which will occur upon the earlier of (i) the date the Company has closed on the purchase and sale of Notes for the entire Offering Amount, (ii) 12 months from the date the Offering was initiated, or (iii) the Company terminates the Offering in its sole and absolute discretion (the "Termination Date").
The Notes are offered by the Company on a best efforts basis as specified herein. There is no aggregate minimum amount of Notes that must be sold in the Offering, and each individual investment transaction will be closed on an Investor-by-Investor basis upon the Company's acceptance of an Subscriber's subscription for the Notes by its execution of such Subscriber's Qualified Investor Questionnaire and Subscription Agreement, and counterpart signature page to the Note (collectively, the "Subscription Documents") together with a form of payment as specified on the Localstake Marketplace Platform. There is no provision for the escrow of any part of the proceeds from the sale of the Notes prior to the termination of the Offering, and unless a Subscriber cancels their investment commitment in the Notes within forty-eight (48) hours after the Company's acceptance of such Subscriber's Subscription Documents by its execution thereof, there will be no refunds of amounts tendered unless the subscription is rejected by the Company. The Company will immediately use the net proceeds of this Offering as such funds are raised.
Certain risks associated with best efforts offerings
There can be no assurances that the Company will raise the entire Offering Amount or the entire amount of any targeted amount of commitments set forth on the Company Offering Profile. Potential investors that have expressed an interest in the Offering and indicated a commitment amount may subsequently cancel their investment commitment, fail to fund all or a portion of their commitment amount, or the Company may reject all or a portion of their commitment amount. Subscribers should not place any reliance on the Company's receipt of commitments in an amount equal to or greater than the targeted minimum amount of commitments set forth on the Company Offering Profile as an indication that the Company has or will receive such amount. Upon a Subscriber's subscription for the Notes becoming irrevocable as set forth herein, such Subscriber shall be required to pay his, her or its investment funds to the Company regardless of the amount of Offering proceeds received by the Company as of such date.
The Company's acceptance of investments and cancellations
The Company reserves the right to accept, through execution of a countersignature on the Subscription Documents, an Investor's subscription for Notes at any time prior to the Termination Date of the Offering and may reject the Subscription Documents based upon the Company's review thereof for any reason or for no reason. Should the Company receive investment commitments for greater than the Offering Amount, the Company will determine, in its sole discretion, which subscriptions to accept up to the Offering Amount.
If the Investor has chosen to transfer their investment funds electronically, these funds will be transferred from their linked bank account as specified on the Company Offering Profile to a deposit account in the name of the Company, forty-eight (48) hours after the Company's acceptance thereof. If the Investor has chosen another form of funds transfer, the Investor will receive a notice containing instructions for transferring funds to the deposit account in the name of the Company. Investors may cancel their investment commitment in the Notes, using the methods made available on the Company Offering Profile, and have their investment funds returned (if applicable) for any reason up to forty-eight (48) hours after the Closing applicable to the Investor's investment. If an Investor has not canceled his, her or its investment commitment in the Notes prior to such deadline, the Investor's subscription for the Notes shall be irrevocable by the Investor, and will be documented through the receipt of an executed copy of the Notes, which will also be recorded and maintained on the books of the Company. The Company does not intend to employ the services of a transfer agent.
Securities laws being utilized and investor qualifications
This Offering is made in reliance upon an exemption from registration under the federal Securities Act of 1933, as amended (the "Securities Act") as set forth in Sections 3(b) and 4(2) thereof and in the rules of Regulation D promulgated thereunder. Regulation D sets forth certain restrictions as to the nature of purchasers of securities offered pursuant thereto. The Notes will be offered and sold only to persons who meet certain qualifications, including, but not limited to, being "accredited investors" ("Accredited Investors") as defined in Rule 501(a) of Regulation D promulgated by the United States Securities and Exchange Commission under the Securities Act (collectively referred to as the "Qualified Investors"). The minimum investment that will be accepted by the Company from a Qualified Investor is $5,000.
Use of proceeds in the Offering
The Company intends to use the net proceeds of this Offering for hiring, paying down existing debt, general working capital purposes and other necessary expenditures as determined in the discretion of management of the Company, as explained in further detail on the Funding tab of the Company Offering Profile.
Subscribing for an investment and transferring funds
Investors interested in subscribing for the Notes will be required to complete and return to the Company the Subscription Documents, as described herein. Payment of the investment amount is preferred via electronic ACH transfer, but may also be made by check or domestic wire in limited circumstances. Instructions for each method of payment will be provided upon investment via the Company Offering Profile.
Fees for placement agent services
As compensation for Localstake Marketplace LLC's services in connection with the Offering, Localstake Marketplace LLC shall be entitled to receive a placement fee paid by the Company (the "Placement Fee"). Below is a breakdown of the Gross Proceeds, estimated Placement Fee and Net Proceeds for the Offering.
- Gross Proceeds: $400,000
- Estimated Placement Fee: $15,000
- Net Proceeds: $385,000
No analysis has been done of potential federal, state or local tax consequences
Investors should consider potential federal, state and local tax consequences of an investment in the Notes and they are urged to consult their own tax advisor to determine the federal, state and local income tax consequences of acquiring, owning, and disposing of, the Notes. Depending upon applicable state and local laws, tax benefits that are available for federal income tax purposes may not be available to Investors for state and local income tax purposes. The Offering Materials make no attempt to summarize the federal, state and local tax consequences to potential investors.
Is it anticipated that any 'related parties' will be investing in the Offering?
Not to my knowledge.
An investment in the Company involves a high degree of risk, and should be regarded as speculative. Prospective investors should carefully consider these investment risks, among others, in addition to the other information presented in the Offering Materials, in evaluating the Company for investment. The risks listed herein are not a complete list of potential risks facing the Company and it may encounter unexpected risks in the future, which, may adversely affect its performance.
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