Registration
No. 333-260028
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1/A
(Amendment
No. 1)
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
FDCTECH,
INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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7372
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81-1265459
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State
or Other Jurisdiction of
Incorporation
or Organization)
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(Primary
Standard Industrial
Classification
Number)
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(IRS
Employer
Identification
Number)
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200
Spectrum Drive, Floor 300, Irvine, CA 92618
(877)
445-6047
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Harvard
Business Services, Inc.
16192
Coastal Highway,
Lewes, DE 19958
Phone: (302) 645-7400
(Address,
including zip code, and telephone number, including area code, of agent for service)
Copies
to:
William
B. Barnett, Esq.
Barnett
& Linn
60
Kavenish Drive
Rancho
Mirage, CA 92270
Tel
(818) 436-6410
Approximate
date of proposed sale to the public: As soon as practicable and from time to time after the effective date of this Registration Statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act (Check One):
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Large
accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☐
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Smaller
reporting company
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☒
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(Do
not check if a smaller reporting company)
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Emerging
growth company
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☒
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION
OF REGISTRATION FEE
Title
of Each Class
of Securities to be
Registered
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Amount
to be
Registered(1)
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Proposed
Maximum
Offering Price
Per Share (2)
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Proposed
Maximum
Aggregate Offering
Price
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Amount
of
Registration Fee (3)
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Common
stock to be offered for resale by selling stockholders
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22,670,000
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$
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0.10
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$
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2,267,000
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$
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210.15
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(1)
Includes of up to 20,000,000 shares of common stock to be sold to White Lion Capital, LLC under the Investment Agreement dated September
10, 2021.
(2)
Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(c) under the Securities
Act of 1933.
(3)
Based on the closing price per share of $0.10 for FDCTech, Inc.’s common stock on September 29, 2021, as reported by the OTC Markets
Group.
THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE
IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
The
information in this preliminary Prospectus is not complete and may be changed. These securities may not be sold until the registration
statement filed with the U.S. Securities and Exchange Commission (“SEC”) is effective. This preliminary Prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale
is not permitted.
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PRELIMINARY
PROSPECTUS
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SUBJECT
TO COMPLETION, DATED OCTOBER 13, 2021
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FDCTECH,
INC.
22,670,000
Shares of Common Stock
This
Prospectus relates to the offer and resale, from time to time, by the selling stockholders identified herein of up to an aggregate of
22,670,000 shares our Common Stock par value $0.0001 per share (the “Shares”) issued or to be issued to such selling shareholders
including (i) up to 2,000,000 shares issued to AD Securities America, LLC pursuant to Subscription Agreements dated September 9 and September
16, 2021 and (ii) up to 20,000,000 issuable to White Lion Capital, LLC (“White Lion”), a selling stockholder pursuant to
a “Purchase Notice right” under an Investment Agreement (the “Investment Agreement”), dated September 10, 2021,
that we entered into with White Lion, plus 670,000 shares issued to White Lion as a commitment fee associated with the Investment Agreement.
The Investment Agreement permits us to issue Purchase Notices to White Lion for up to two million dollars ($2,000,000) in shares of our
common stock until May 01, 2022, or until $2,000,000 of such shares have been subject to a Purchase Notice.
The
selling stockholders may sell all or a portion of the shares being offered pursuant to this Prospectus at fixed prices, at prevailing
market prices at the time of sale, at varying prices, or negotiated prices.
White
Lion Capital, LLC is an underwriter within the meaning of the Securities Act of 1933, and any broker-dealers or agents that are involved
in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with
such sales. In such event, any commissions received by such broker-dealers or agents, and any profit on the resale of the shares purchased
by them, may be deemed to be underwriting commissions or discounts under the Securities Act of 1933.
The
OTC Markets Group OTCQB tier quotes our common stock under the symbol “FDCT.” On September 29, 2021, the closing price of
our common stock was $0.10 per share.
We
will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. However, we will receive proceeds
from the sale of shares of our common stock pursuant to our exercise of the Purchase Notice right offered by White Lion Capital, LLC.
We will pay for expenses of this offering, except that the selling stockholder will pay any broker discounts or commissions or equivalent
expenses and expenses of its legal counsel applicable to the sale of its shares.
INVESTING
IN OUR SECURITIES INVOLVES RISKS. YOU SHOULD REVIEW CAREFULLY THE RISKS AND UNCERTAINTIES DESCRIBED UNDER THE HEADING “RISK
FACTORS” CONTAINED ON PAGE 7 HEREIN AND IN OUR FORM S-1/A (AMENDMENT 7) FILED JULY 26, 2018, AS WELL AS OUR SUBSEQUENTLY FILED
PERIODIC AND CURRENT REPORTS, WHICH WE FILE WITH THE SECURITIES AND EXCHANGE COMMISSION AND ARE INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE YOU MAKE YOUR INVESTMENT DECISION.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This
Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
The
date of this Prospectus is October 13, 2021
TABLE
OF CONTENTS
Please
read this Prospectus carefully. It describes our business, our financial condition, and the results of operations. We have prepared this
Prospectus to have the information necessary to make an informed investment decision.
ABOUT
THIS PROSPECTUS
You
should rely only on the information we have provided or incorporated by reference into this prospectus, any applicable prospectus supplement
and any related free writing prospectus. We have not authorized anyone to provide you with information different from that contained
in this prospectus, any applicable prospectus supplement or any related free writing prospectus. No dealer, salesperson or other person
is authorized to give any information or to represent anything not contained in this prospectus, any applicable prospectus supplement
or any related free writing prospectus. You must not rely on any unauthorized information or representation. This prospectus is an offer
to sell only the Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. You should assume
that the information in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate only
as of the date on the front of the document and that any information we have incorporated by reference is accurate only as of the date
of the document incorporated by reference, regardless of the time of delivery of this prospectus or any sale of a security.
The
selling stockholders are offering the Shares only in jurisdictions where such issuances are permitted. The distribution of this prospectus
and the issuance of the Shares in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession
of this prospectus must inform themselves about, and observe any restrictions relating to, the issuance of the Shares and the distribution
of this prospectus outside the United States. This prospectus does not constitute, and may not be used in connection with, an offer to
sell, or a solicitation of an offer to buy, the Shares offered by this prospectus by any person in any jurisdiction in which it is unlawful
for such person to make such an offer or solicitation.
This
prospectus is part of a registration statement on Form S-1 that we filed with the U.S. Securities and Exchange Commission (the “Commission”),
under which the selling stockholders may offer from time to time up to an aggregate of 22,670,000 Shares in one or more offerings. If
required, each time the selling stockholders offer Shares, we will provide you with, in addition to this prospectus, a prospectus supplement
that will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses
to be provided to you that may contain material information relating to that offering. We may also use a prospectus supplement and any
related free writing prospectus to add, update or change any of the information contained in this prospectus or in documents we have
incorporated by reference. This prospectus, together with any applicable prospectus supplements, any related free writing prospectuses
and the documents incorporated by reference into this prospectus, includes all material information relating to this offering. To the
extent that any statement that we make in a prospectus supplement is inconsistent with statements made in this prospectus, the statements
made in this prospectus will be deemed modified or superseded by those made in a prospectus supplement. Please carefully read both this
prospectus and any prospectus supplement together with the additional information described below under the section entitled “Incorporation
of Certain Information by Reference” before buying any of the securities offered.
This
prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the
actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some
of the documents referred to herein have been filed, will be filed, or will be incorporated by reference as exhibits to the registration
statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the section entitled
“Where You Can Find More Information.”
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the Commission a registration statement on Form S-1 under the Securities Act of 1933, as amended (the “Securities
Act”), with respect to the Shares being offered by this prospectus. This prospectus does not contain all of the information
in the registration statement and its exhibits. For further information with respect to us and the Shares offered by the selling stockholders,
we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract
or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other
document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.
We
are subject to the information requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and, in accordance therewith, file annual, quarterly and special reports, proxy statements and other information with the Commission.
The Commission maintains an internet website at http://www.sec.gov that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the Commission. The periodic reports, proxy statements and other information
we file with the Commission are available for inspection on the Commission’s website free of charge as soon as reasonably practicable
after they are electronically filed with, or furnished to, the Commission. We maintain a website at http://www.terratechcorp.com where
you may also access these materials free of charge. We have included our website address as an inactive textual reference only and the
information contained in, and that can be accessed through, our website is not incorporated into and is not part of this prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
Commission allows us to incorporate by reference the information we file with it. This means that we can disclose information to you
by referring you to those documents. The documents that have been incorporated by reference are an important part of the prospectus,
and you should review that information in order to understand the nature of any investment by you in our common shares. We are incorporating
by reference the documents listed below:
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Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed on March 3, 2021
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Our Amendment No. 1 Annual Report
on Form 10-K/A for the fiscal year ended December 31, 2020, filed on March 3, 2021
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Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, filed on May 12, 2021;
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Our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed on August 1, 2021;
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Our
Current Reports on Form 8-K, filed on February 9 and February 25 2021, on June 7,
10, and
16, 2021,
on July 8,
2021, August
27, 2021 and September 15
and 20,
2021
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The
description of our common stock contained in our registration statement on Form 8-A12G (File No. 000-56338) filed with the Commission
on September 3, 2021 under the Exchange Act, including any amendment or report filed for the purpose of updating such description.
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All
documents subsequently filed by us with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act (other than
those made pursuant to Item 2.02 or 7.01 of Form 8-K or other information “furnished” to the Commission) prior to the filing
of a post-effective amendment to the registration statement of which this prospectus forms a part which indicates that all securities
offered pursuant to this prospectus have been sold, or which deregisters all securities then remaining unsold, shall be deemed to be
incorporated herein by reference and to be a part hereof from the filing date of such documents. Any statement contained herein or in
a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed
to be incorporated herein by reference modifies or supersedes such statement.
The
documents incorporated by reference into this prospectus are also available on our corporate website at http://www.fdctech.com.
Upon written or oral request, we will provide to each person, including any beneficial owner, to whom this prospectus is delivered, a
copy of any or all of the reports or documents that have been incorporated by reference into this prospectus contained in the registration
statement of which this prospectus forms a part but not delivered with the prospectus. If you would like a copy of any of these documents,
at no cost, please call us at (877) 445-6047.
CAUTIONARY
NOTE AND FORWARD-LOOKING STATEMENTS TO INVESTORS
This
Prospectus qualifies the distribution of securities of an entity that may receive significant revenues from the cryptocurrency business
in the United States and worldwide. Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit
of account, or a store of value. It is not legal tender. One may exchange Cryptocurrencies for U.S. dollars or other currencies worldwide,
but they are not generally backed or supported by any government or central bank. Supply and demand market forces ultimately derive their
value, and they are more volatile than traditional currencies. Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection
Corporation (SIPC) do not cover Cryptocurrencies insurance. Legislative and regulatory changes or actions at the state, federal, or international
level may adversely affect cryptocurrency use, transfer, exchange, and value. The growth in cryptocurrencies and related products and
services has attracted the attention of regulators in various jurisdictions we operate. Regulators may likely impose substantial investor
protection and safeguards regarding transparency of information, trading rules, liquidity, capital requirement, custodial services, valuation,
and other matters related to the nature of cryptocurrencies. Currently, cryptocurrency markets operate with less investor protection
than traditional securities markets, which may correspondingly lead to opportunities for fraud and manipulation. Due to these risk factors,
the Company’s ability to earn significant revenues from Cryptocurrency-related products and services may be limited.
In
March 2020, the World Health Organization declared a novel coronavirus (COVID-19) outbreak as a pandemic throughout the United States.
China started as the center of the COVID-19 epidemic; however, it spread to several other countries, including Russia and Cyprus, where
we have our offices. Many countries worldwide, including in the United States, have implemented significant governmental measures to
control the spread of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people,
and other material limitations on our business. These measures have resulted in work stoppages, absenteeism in the Company’s labor
workforce, and other disruptions. The extent to which the coronavirus impacts our operations will depend on future developments. These
developments are highly uncertain. We cannot predict them with confidence, including the duration and severity of the outbreak and the
actions required to contain the coronavirus or treat its impact. In particular, the continued spread of the coronavirus globally could
adversely impact our operations and workforce, including our marketing and sales activities and ability to raise additional capital,
which could harm our business, financial condition, and operation results.
This
Prospectus may contain certain “forward-looking” statements as such term is defined by the Securities Exchange Commission
in its rules, regulations and releases, which represent the registrant’s expectations or beliefs, including but not limited to,
statements concerning the registrant’s operations, economic performance, financial condition, growth and acquisition strategies,
investments, and future operational plans. For this purpose, any statements contained herein that are not historical fact statements
may be deemed forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,”
“expect,” “believe,” “anticipate,” “intent,” “could,” “estimate,”
“might,” “plan,” “predict” or “continue” or the negative or other variations thereof
or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks
and uncertainties, certain of which are beyond the registrant’s control, and actual results may differ materially depending on
a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing and maintaining growth,
the operations of the Company and its subsidiary, volatility of stock price, federal enforcement, and state enforcement, and any other
factors discussed in this and other registrant filings with the Securities and Exchange Commission.
The
risks and uncertainties and other factors include but are not limited to those set forth under “Risk Factors” of this Prospectus.
Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent
written and oral forward-looking statements attributable to persons acting on our behalf or to us are expressly qualified in their entirety
by these cautionary statements. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise
any forward-looking statements or the risk factors described in this Prospectus or in the documents we incorporate by reference, whether
as a result of new information, future events, changed circumstances or any other reason after the date of this Prospectus.
Actual
events or results may differ materially from those discussed in forward-looking statements due to various factors, including, without
limitation, the risks outlined under “Risk Factors” and matters described in Prospectus generally. In light of these risks
and uncertainties, there can be no assurance that the forward-looking statements contained in this Prospectus will occur. We caution
you not to place undue reliance on these forward-looking statements. In addition to the information expressly required to be included
in this Prospectus, we will provide such further material information, if any, as may be necessary to make the required statements, in
light of the circumstances under which they are made not misleading.
Except
as required by federal securities laws, we do not intend to update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
See
sections entitled “Risk Factors.”
PROSPECTUS
SUMMARY
The
following summary highlights material information contained in this Prospectus. This summary does not include all of the information
you should consider before investing in securities. Before making an investment decision, you should read the entire Prospectus carefully,
including the risk factors section, the financial statements, and the notes to the financial statements. You should also review the other
available information referred to in the section entitled “Where You Can Find More Information” in this Prospectus and any
amendment or supplement hereto.
The
Offering
This
Prospectus relates to the resale of up to 22,670,000 shares of our Common Stock issued or issuable to selling shareholders including
(i) up to 2,000,000 shares issued to AD Securities America, LLC , (ii) up to 20,000,000 issuable to White Lion Capital, LLC (“White
Lion”), r pursuant to a “Purchase Notice Right” under an Investment Agreement and (iii) 670,000 shares issued to White
Lion as a commitment fee associated with the Investment Agreement.
The
Offering
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Common
Stock Offered by the Selling Security Holders
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Twenty-two
million, Six hundred and seventy thousand (22,670,000) shares of common stock may be subject to a Purchase Notice to White Lion.
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Common
Stock Outstanding Before the Offering (1)
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90,661,264
shares of common stock as of September 20, 2021.
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Common
Stock Outstanding After the Offering
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113,331,264
shares of common stock. (1)
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Terms
of the Offering
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The
selling security holder will determine when and how to sell the common stock offered in this Prospectus.
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Termination
of the Offering
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The
offering will conclude upon such time as all of the common stock has been sold pursuant to the registration statement.
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Use
of Proceeds
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We
are not selling any shares of common stock in this offering and, as a result, will not receive any proceeds from this offering. See
“Use of Proceeds.”
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Risk
Factors
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The
common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of
their entire investment. See “Risk Factors” beginning on page 7.
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OTCQB
Symbol
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FDCT
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(1)
Includes 2,000,000 shares issued to AD Securities America, LLC pursuant to Subscription Agreements dated September 9 and September
16, 2021, 670,00 shares issued to White Lion, and assumes the purchase and sale of 20,000,000 shares to White Lion pursuant to the Investment
Agreement dated September 10, 2021.
Business
Overview
The
Company intends to build a diversified global financial services company driven by proprietary Condor trading technologies, complementary
regulatory licenses, and a proven executive team. The Company plans to acquire, integrate, transform, and scale legacy financial service
companies. The Company believes that its proprietary technology and software development capabilities allow legacy financial services
companies immediate exposure to –forex, stocks, ETFs, commodities, crypto, social/copy trading, and other high-growth fintech markets.
The
Company has completed the Condor Pro Multi-Asset Trading Platform, previously known as Condor FX Trading Platform. The Condor Pro Multi-Asset
Trading Platform is a commercial trading platform targeted at day traders and retail investors. The industry characterized such platforms
by the ease of use and various helpful features, such as the simplified front-end (user interface/user experience), back-end (reporting
system), news feeds, and charting system. The Condor Pro Multi-Asset Trading Platform further includes risk management (dealing desk,
alert system, margin calls, etc.), pricing engine (best bid/ask), and connectivity to multiple liquidity providers or market makers.
We have tailored the Condor Pro Multi-Asset Trading Platform to different markets, such as forex, stocks, commodities, cryptocurrencies,
and other financial products.
The
Company currently has six (6) licensing agreements for its Condor Pro Multi-Asset Trading Platform. The Company is continuously negotiating
additional licensing agreements with several retail forex brokers to use the Condor Pro Multi-Asset Trading Platform. The Company has
developed two versions of each Condor forex Pro Web and Mobile Trading Platform.
The
Company has upgraded its Condor Back Office (Risk Management) to meet the regulatory requirements under various jurisdictions. Condor
Back Office meets the directives under Markets in Financial Instruments Directive (MiFID II/MiFIR), legislation by European Securities
and Market Authority (ESMA) implemented across the European Union on January 3, 2018. The Company released, marketed, and distributed
its Condor Pro Multi-Asset Trading Platform, allowing traders to trade on in the second quarter of the fiscal year December 31, 2019.
The Company has developed the Condor Back Office API to integrate third-party CRM and banking systems to Condor Back Office.
The
Company completed the basic version of its Crypto Web Trader in December 2018. The Company is currently evaluating the demand for its
Crypto Web Trader and expects to launch its crypto exchange platform by the third quarter of the fiscal year ended December 31, 2021.
The Company is in the process of developing Condor Stocks and an ETF platform. The Company expects to commercialize the Condor Stocks
and ETF platform by the end of the fourth quarter of the fiscal year ended December 31, 2021.
The
Company secures and earns revenues by signing an agreement with its customers. The Company considers a signed agreement with its customers,
a binding contract with the customer, or other similar documentation reflecting the terms and conditions under which the Company will
provide products or services as persuasive evidence of an arrangement. Each agreement is specific to the customer and clearly defines
each party’s fee schedule, duties and responsibilities, renewal and termination terms, confidentiality agreement, dispute resolution,
and other clauses necessary for such contract. The material terms of contracts with customers depend on the nature of services and solutions.
Each contract is specific to the customer and clearly defines each party’s fee schedule, duties and responsibilities, renewal and
termination terms, confidentiality agreement, dispute resolution, and other clauses necessary for such contract.
The
Company acts as a technology provider and software developer in the cryptocurrency or digital asset space. We do not mine any digital
assets. We do not trade or act as a counterparty in cryptocurrencies. Consequently, the Company does not intend to register as a custodian
with state or federal regulators, including but not limited to obtaining a money service business or money transmitter license with Financial
Crimes Enforcement Network (FinCEN) and respective State’s money transmission laws. The Company also does not need to register
under the Securities Exchange Act of 1934, as amended, as a national securities exchange, an alternative trading system, or a broker-dealer,
since the Company is not a broker-dealer nor does it intend to become a broker-dealer. In some cases, customers compensate us in Bitcoin
through our custodian Gemini Trust Company, LLC (“Gemini”). Gemini is a licensed New York trust company that undergoes regular
bank exams and is subject to the cybersecurity audits conducted by the New York Department of Financial Services.
Financial
Summary
The
following information represents selected audited financial information for our Company for the years ended December 31, 2020, and 2019
and selected unaudited financial information for our Company for the six months ended June 30, 2021.
The
Company has prepared consolidated financial statements on a going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the ordinary business course. The Company has earned $1,930,850 in revenues from January
21, 2016 (inception) to June 30, 2021. At June 30, 2021, and December 31, 2020, the accumulated deficit was $1,981,526 and $1,493,984,
respectively. On June 30, 2021, and December 31, 2020, the working capital surplus and deficit were $502,371 and $1,504,678. Our cash
balance is $2,514 as of June 30, 2021. We do not believe that our cash balance is sufficient to fund our operations.
For
the three months ended June 30, 2021, and 2020, the Company earned $82,725 and $46,500 in revenues, respectively. For the six months
ended June 30, 2021, and 2020, the Company earned $147,078 and $130,407 in revenues, respectively. During the three months ended June
30, 2021, and 2020, the Company incurred a net loss of $265,705 and $163,581. During the six months ended June 30, 2021, and 2020, the
Company incurred a net loss of $487,542 and $223,166, respectively.
For
the fiscal year ended December 31, 2020, and 2019, the Company earned $215,409 and $415,162 in revenues. During the fiscal year ended
December 31, 2020, and 2019, the Company incurred a net loss of $458,490 and $255,690.
The summarized financial
information presented below is derived from and should be read in conjunction with our audited and unaudited financial statements, as
applicable, including the notes to those financial statements which are included in our Form 10-K for the year-ended December 31,
2020, filed with the SEC on March 3, 2021 and our Form 10-Q for the six months-ended June 30, 2021, filed with the SEC on August 1, 2021,
and which are incorporated herein by reference.
|
Statements
of Operations Data
|
|
Six
Month Period Ended June 30, 2021
|
|
|
Six
Month Period Ended June 30, 2020
|
|
|
Year
Ended December 31, 2020
|
|
|
Year
Ended December 31, 2019
|
|
|
Revenues
|
|
$
|
147,078
|
|
|
$
|
130,407
|
|
|
$
|
215,409
|
|
|
$
|
415,162
|
|
|
Cost of Sales
|
|
$
|
137,231
|
|
|
$
|
114,728
|
|
|
$
|
251,959
|
|
|
$
|
117,554
|
|
|
Gross
Profit
|
|
$
|
9,847
|
|
|
$
|
15,679
|
|
|
$
|
(36,550
|
)
|
|
$
|
297,608
|
|
|
Total
operating expenses
|
|
$
|
494,274
|
|
|
$
|
210,822
|
|
|
$
|
362,160
|
|
|
$
|
493,310
|
|
|
Total
other expenses
|
|
$
|
3,115
|
|
|
$
|
(28,023
|
)
|
|
$
|
(59,780
|
)
|
|
$
|
(59,988
|
)
|
|
Net
Income
|
|
$
|
(487,542
|
)
|
|
$
|
(223,166
|
)
|
|
$
|
(458,490
|
)
|
|
$
|
(255,690
|
)
|
|
Net
income (loss) per common share, basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
Balance
Sheets Data
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
|
December
31, 2019
|
|
|
Cash
and Cash Equivalents
|
|
$
|
2,514
|
|
|
$
|
22,467
|
|
|
$
|
27,884
|
|
|
Total
Current Assets
|
|
$
|
1,046,419
|
|
|
$
|
66,886
|
|
|
$
|
49,741
|
|
|
Total
Current Liabilities
|
|
$
|
544,048
|
|
|
$
|
1,571,564
|
|
|
$
|
1,348,920
|
|
|
Working
Capital (deficit)
|
|
$
|
502,371
|
|
|
$
|
(1,504,678
|
)
|
|
$
|
(1,299,179
|
)
|
|
Total
Stockholders’ Equity (deficit)
|
|
$
|
1,160,822
|
|
|
$
|
(1,038,044
|
)
|
|
$
|
(609,554
|
)
|
|
Accumulated
Deficit
|
|
$
|
(1,981,526
|
)
|
|
$
|
(1,493,984
|
)
|
|
$
|
(1,035,494
|
)
|
From
inception to June 30, 2021, the Company has raised approximately $1,342,482 in debt and equity. Between February 22, 2016, and April
24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder. Effective June 1, 2017, we raised an aggregate
of $98,000 through our common stock’s private placement to our officers, directors, friends, relatives, and business associates.
From January 29, 2019, to February 15, 2019, the Company issued 33,000 registered shares under the Securities Act of 1933 for a cash
amount of $4,950. The Company closed its offering effective February 26, 2019. On May 01, 2020, the Company received proceeds of Fifty-Thousand
Six Hundred and Thirty-Two ($50,632) from the Promissory Note (“PPP Note”) under the Paycheck Protection Program under the
Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). On May 22, 2020, the Company received proceeds of one
hundred and forty-four thousand nine hundred and 00/100 Dollars ($144,900.00). Between February and June 2021, the Company received $44,000
from the Officer for working capital purposes and recorded in related party advances.
We
are an “emerging growth company” within the meaning of the federal securities laws. For as long as we are an emerging growth
company, we will not be required to comply with the requirements that are applicable to other public companies that are not “emerging
growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval
of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer
an emerging growth company.
The
Risk Factors are an explanation of the qualifications and other requirements applicable to such emerging growth companies. It describes
certain elections that we have made due to our status as an emerging growth company.
RISK
FACTORS
This
investment has a high degree of risk. Before you invest, you should carefully consider the risks and uncertainties described below and
the other information in this Prospectus. If any of the following risks occur, it will harm our operating results and financial condition,
and the value of our stock could go down. This means you could lose all or a part of your investment.
There
could be unidentified risks involved with an investment in our securities.
The
following risk factors are not a complete list or explanation of the risks involved with an investment in the securities. Additional
risks will likely be experienced that are not presently foreseen by the Company. Prospective investors must not construe the information
provided herein as constituting investment, legal, tax, or other professional advice. Before deciding to invest in our securities, you
should read this entire Prospectus and consult with your investment, legal, tax, and other professional advisors. An investment in our
securities is suitable only for investors who can assume the financial risks of an investment in the Company for an indefinite period
of time and who can afford to lose their entire investment. The Company makes no representations or warranties of any kind with respect
to the likelihood our business will succeed, or regarding the value of our securities, any financial returns that may be generated, or
any tax benefits or consequences that may result from an investment in the Company.
In
March 2020, the World Health Organization declared a novel coronavirus (COVID-19) outbreak as a pandemic throughout the United States.
China started as the center of the COVID-19 epidemic; however, it spread to several other countries, including Russia and Cyprus, where
we have our offices. Many countries worldwide, including in the United States, have implemented significant governmental measures to
control the spread of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people,
and other material limitations on our business. These measures have resulted in work stoppages, absenteeism in the Company’s labor
workforce, and other disruptions. The extent to which the coronavirus impacts our operations will depend on future developments. These
developments are highly uncertain. We cannot predict them with confidence, including the duration and severity of the outbreak and the
actions required to contain the coronavirus or treat its impact. In particular, the continued spread of the coronavirus globally could
adversely impact our operations and workforce, including our marketing and sales activities and ability to raise additional capital,
which could harm our business, financial condition, and operation results.
Risks
Related to the Company
We
may need to obtain additional financing, which may not be available.
We
need the proceeds from this offering to implement our business plan and expand our operations as described in the “Plan of Operation”
section of this Prospectus. As of June 30, 2021, we had $2,514 cash on hand and total liabilities of $698,590. The Company has earned
$1,930,850 in revenues from January 21, 2016 (inception) to June 30, 2021. The proceeds of this offering may not be sufficient for us
to achieve future profitable operations. We need additional funds to achieve a sustainable sales level to fund ongoing operations out
of revenues. There is no assurance that any additional financing will be available or, if available, on terms that will be acceptable
to us.
We
have a limited history of operations, and accordingly, no track record would provide a basis for assessing our ability to conduct successful
commercial activities. We may not be successful in carrying out our business objectives.
The
founders incorporated the Company on January 21, 2016. Even though we have generated revenues, we are also involved in organizational
activities, obtaining growth financing, identifying acquisition targets, and developing our new technologies to meet the demand of our
customers. Accordingly, investors cannot fully assess the likelihood of our success as an emerging and rapidly growing fintech company.
At June 30, 2021, and December 31, 2020, the accumulated deficit was $1,981,526 and $1,493,984, respectively. There is a substantial
risk that we will not be successful in our development and sales activities, or if initially successful, in thereafter generating significant
operating revenues or in achieving profitable operations.
Our
business strategy may result in increased volatility of revenues and earnings, resulting in uncertainty of profitability
Our
business strategy may result in increased volatility of revenues and earnings. As we will only develop a limited number of products and
services, our overall success will depend on a limited number of products and services, which may cause variability and unsteady profits
and losses depending on the products and services offered.
Our
revenues and our profitability may be adversely affected by economic conditions and changes in the financial markets. Our business is
also subject to general economic risks that could adversely impact operations and financial conditions.
Because
of the anticipated nature of the products and services that we will attempt to develop, it is difficult to forecast revenues accurately
and operating results and these items could fluctuate in the future due to several factors. These factors may include, among other things,
the following:
|
|
●
|
Our
ability to raise sufficient capital to take advantage of opportunities and generate sufficient revenues to cover expenses.
|
|
|
|
|
|
|
●
|
Our
ability to source substantial opportunities with sufficient risk adjusted returns.
|
|
|
|
|
|
|
●
|
Our
ability to manage our capital and liquidity requirements based on changing market conditions generally and changes in the developing
forex industries.
|
|
|
|
|
|
|
●
|
The
acceptance of the terms and conditions of our licenses and the acceptance of our royalties and fees.
|
|
|
|
|
|
|
●
|
The
amount and timing of operating and other costs and expenses.
|
|
|
|
|
|
|
●
|
The
nature and extent of competition from other companies that may reduce market share and create pressure on pricing and investment
return expectations.
|
|
|
|
|
|
|
●
|
Adverse
changes in the national and regional economies in which we will participate, including, but not limited to, changes in our performance,
capital availability, and market demand.
|
|
|
|
|
|
|
●
|
Adverse
changes in the projects in which we plan to invest result from factors beyond our control, including, but not limited to, a change
in circumstances, capacity, and economic impacts.
|
|
|
|
|
|
|
●
|
Changes
in laws, regulations, accounting, taxation, and other requirements affecting our operations and business.
|
|
|
|
|
|
|
●
|
Our
operating results may fluctuate yearly due to the factors listed above and others not listed. At times, these fluctuations may be
significant.
|
We
may not earn significant revenues from Cryptocurrency-related products and services.
The
growth in cryptocurrencies and related products and services has attracted the attention of regulators in various jurisdictions we operate.
Regulators may likely impose substantial investor protection and safeguards regarding transparency of information, trading rules, liquidity,
capital requirement, custodial services, valuation, and other matters related to the nature of cryptocurrencies. Currently, cryptocurrency
markets operate with less investor protection than traditional securities markets, which may correspondingly lead to opportunities for
fraud and manipulation. Due to these risk factors, the Company’s ability to earn significant revenues from Cryptocurrency-related
products and services may be limited.
Financial
Crimes Enforcement Network (FinCEN) requires companies who deal with cryptocurrencies to be registered as money service businesses (MSBs),
which requires them to register and get an appropriate license in each U.S. state, apart from Montana.
The
Company is a technology provider and software developer in the cryptocurrency or digital asset space. We do not mine, trade, or act as
a counterparty in cryptocurrencies. Consequently, the Company does not intend to register as a custodian with state or federal regulators,
including but not limited to obtaining a money service business (MSB) or money transmitter license with Financial Crimes Enforcement
Network (FinCEN) and respective State’s money transmission laws. The Company also does not need to register under the Securities
Exchange Act of 1934, as amended, as a national securities exchange, an alternative trading system, or a broker-dealer, since the Company
is not a broker-dealer nor does it intend to become a broker-dealer. If the Company is required to register as a money service business
(MSB) or obtain a money transmitter license; in that case, the Company may not achieve the regulatory requirement given the resources
needed and costs incurred to meet ongoing compliance and operational obligations.
We
have had a concentration of customers since inception.
We
cannot assure that there will be no disputes with our significant customers who currently contribute to most of our revenues or maintain
business relationships with our existing customers. As we have been relying on a small number of customers since inception, if the current
customers cease to engage our services or decrease the scope of the relationship, and we are unable to find new customers with similar
attributable revenue within a reasonable period or at all, our business and profitability may be adversely affected.
We
may not be able to compete effectively against our competitors.
We
expect to face intense competition from well-established companies and small to medium-size public and private companies like us, resulting
in price reductions in the products and services that we sell. For many reasons, we may be at a competitive disadvantage in obtaining
the facilities, technologies, employees, financing, and other resources required to provide these products and services demanded by prospective
customers. Our financial resources and other assets may limit our opportunity to acquire customers. We expect to be less able than our
larger competitors to cope with generally increasing costs and expenses of doing business.
Our
business model may not be sufficient to ensure our success in our intended market.
Our
survival is currently dependent upon our efforts to gain market acceptance and shares of our products and services in the global market,
including but limited to North America, Europe, and Asia. Should our target market not be as responsive to our products and services
as we anticipate, we may not have in place alternate products or services that we can offer to ensure our survival. For example, the
Markets in Financial Instruments Directive (MiFID II/MiFIR) is legislation by European Securities and Market Authority (ESMA) implemented
across the European Union on January 3, 2018. MiFID II changes continue to impact the trading infrastructure of all its member firms
from front-end to back-end. Market participants will have to create new execution management systems alongside current order management
systems in the front-end. The firms providing the best execution will need to develop trading technology to guarantee they have taken
‘all-sufficient steps’ to comply. High-frequency trading firms will need to deliver timestamps that are accurate up to microseconds.
Most market participants and their technology providers need a significant upgrade in already very cost-conscious businesses. It has
negatively impacted many forex businesses and the way they operate. We may not be able to develop our products and services on time to
comply with such regulatory changes in the future.
We
depend on our intellectual property, and our failure to protect that intellectual property could adversely affect our future growth and
success.
At
present, the Company does not have any patents or trademarks on its proprietary technology solutions. We have not conducted formal evaluations
to confirm that our technology solutions and products do not or will not infringe upon the intellectual property rights of third parties.
As a result, we cannot be certain that our technology and products do not or will not infringe upon the intellectual property rights
of third parties. Such infringements disrupt our software development, sales, and distribution of such technology products and solutions.
We have generally sought to protect such proprietary intellectual property in part by confidentiality agreements and, if applicable,
inventors’ rights agreements with strategic partners and employees. However, such agreements are difficult and costly to enforce.
We cannot guarantee that these agreements protect our trade secrets and other intellectual property or proprietary rights adequately.
We operate in regions where it may be difficult for us to enforce certain intellectual property rights against third parties who may
have inappropriately acquired interests in our intellectual property rights when they file unauthorized trademark applications in foreign
countries because of familiarity with our business.
We
are significantly influenced by our officers, directors, and entities affiliated with them.
In
the aggregate, the voting power is represented by the Company’s common and preferred stock by Management and affiliated parties.
Assuming all Shares offered are sold, a group of three entities represents approximately 90.19% of the voting power of the Company’s
issued and outstanding capital stock. These shareholders, if acting together, will be able to significantly influence all matters requiring
approval by shareholders, including the election of directors and the approval of mergers or other business combinations transactions.
The
loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could
harm our business.
Our
future performance is dependent on the ability to retain key personnel. The Company’s performance is substantially dependent on
the performance of Senior Management. The loss of the services of any of its executive officers or other key employees could have a material
adverse effect on the Company’s business, results of operations, and financial condition. Four of our officers are independent
contractors and are not subject to the same control as employees, affecting productivity. Although they devote 100% of their time to
the Company’s business, there is no assurance that this will continue. The Company intends to convert all of these four officers
to employee status in the second quarter of 2018. We also plan to negotiate employment contracts with each Officer. If we do not succeed
in retaining and motivating our existing personnel, we may be unable to grow effectively.
Management
of growth will be necessary for us to be competitive
Successful
expansion of our business will depend on our ability to effectively attract and manage staff, strategic business relationships, and shareholders.
Specifically, we will need to hire skilled Management and technical personnel and manage partnerships to navigate shifts in the general
economic environment. The expansion can place significant strains on financial, Management, and operational resources, yet failure to
expand will inhibit our profitability goals.
Because
we are small and do not have much capital, our marketing campaign may not attract enough customers to operate profitably. If we do not
make a profit, our financial conditions will be adversely affected.
Since
we are small and do not have much capital, we must limit our marketing activities and may not be able to make our services known to potential
customers. Because we will be limiting our marketing activities, we may not be able to attract enough customers to operate profitably.
If we cannot operate profitably, our financial conditions will be negatively affected and limit our ability to raise additional funding
to increase our sales and marketing efforts.
We
face challenges relating to implementing our business strategy in Cryptocurrency.
Cryptocurrency
is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value. It is not legal
tender. One may exchange Cryptocurrencies for U.S. dollars or other currencies worldwide, but they are not generally backed or supported
by any government or central bank. Supply and demand market forces ultimately derive their value, and they are more volatile than traditional
currencies. Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC) do not cover Cryptocurrencies
insurance. Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect cryptocurrency
use, transfer, exchange, and value.
The
Company believes its future success in its crypto-related solutions will largely depend on the growth, if any, in the market for software
that provides crypto solutions, including access to crypto margin trading business through the Condor Pro Multi-Asset Trading Platform.
We have integrated our platform with multiple crypto liquidity providers and exchanges. To grow our business, the Company intends to
expand the functionality and usability of its crypto-related solutions to OTC brokers and financial institutions that can offer such
solutions to their end-users. It is difficult to predict customer adoption and renewal rates, customer demand for our software, the size
and growth rate of this market, the entry of competitive products, or the success of existing competitive products. Our technologically
advanced competitors have existed longer and often have a more established brand and market presence with substantially greater financial,
marketing, personnel, and other resources. These competitors may have, among other things, lower operating costs, better knowledge, better
brand awareness, better R&D facilities, better Management, more effective marketing, and more efficient operations than the Company.
In the crypto and blockchain space, intellectual capital is a critical component. Competition for qualified employees could also require
the Company to pay higher wages to attract a sufficient number of employees. Our crypto-related solutions are in the development stage
and are not market-tested under Company’s brand name. The Company is not certain that such solution will be well received or be
desirable to its intended market. The Company depends substantially on customers renewing their support and maintenance agreements.
Any
decline in customer renewals could adversely affect our future operating results. In general, the Company deploys a crypto-related technology
in a complex environment, and future success will depend on Company’s ability to implement the technology correctly and on time.
There are possibilities, undetected errors, failures, or bugs may occur, especially when new versions or updates are released. Such deployment
may expose undetected errors, omissions, or bugs in our software. The Company intends to use strategic indirect channel third parties
to promote and market its crypto-related solutions, such as distributors and resellers. The Company may be unable to maintain successful
relationships with third parties (indirect sales channels), business, operating results, and financial condition could be adversely affected.
The Company believes that it has to develop new solutions and continue enhancements to existing technologies to meet business demand
and future regulatory requirements. Our competitive position will be impaired and revenue diminished if new solutions or improvements
and changes do not achieve adequate acceptance in the market.
Our
customers operate in a heavily regulated environment that imposes significant compliance requirements and costs on them. Suppose we fail
to comply with the rapidly evolving laws and regulations governing Cryptocurrency, forex, and other over-the-counter businesses. In that
case, it may result in regulatory agencies acting against our customers and significant legal expenses in defending such actions, adversely
affecting our customers’ revenues and how they conduct their business.
The
U.S. and other regulators evaluate whether various cryptocurrency exchanges, trading platforms, and other crypto industry aspects comply
with various regulatory schemes. Often our customers have to follow laws applicable to money transmission and to securities and commodities
trading in the jurisdiction they operate. To the extent that cryptocurrency trading platforms are engaged in the business of “money
transmission” in the U.S., they must comply with the federal Bank Secrecy Act (BSA) as well as with certain state laws. The BSA
requires money transmitters to collect and retain information about their customers and share it with Financial Crimes Enforcement Network
(FinCEN) to prevent money laundering and terrorist financing. State laws generally require money transmitters to obtain licenses and
follow similar requirements focused primarily on consumer protection.
Usually,
platforms that allow securities trading must register with the SEC as a national securities exchange, alternative trading system, or
broker-dealer, all of which require the trading platform to follow restrictive rules addressing everything from preventing fraud to safeguarding
customer accounts. A financial instrument that meets the definition of a “security” can only be sold in the U.S. if registered
with the SEC or sold according to a specific exception to the securities laws. We believe that the cryptocurrency industry now finds
itself at a phase when additional rules and regulations are possible. The current environment presents a significant regulatory risk
to our customers if they fail to comply with money transmission, securities, and commodities trading rules and regulations.
As
far as forex and other OTC markets are concerned, our customers are regulated by governmental bodies and self-regulatory organizations
in many jurisdictions, including the U.K., Europe, and Australia. In line with the rules set for in the Markets in Financial Instruments
Directive II (“MiFID II”), many European nations have initiated new restrictions. France has introduced an exclusion on electronic
advertising to retail investors. In Italy, Corncob has issued a notice recommending that only a regulated market or an authorized multilateral
trading facility (MTF) offer retail OTC products. In Germany, Ba Fin has restricted the distribution or sale of OTC products unless accompanied
by a no debit guarantee to ensure the retail client cannot lose more than is deposited in the trading account. The Financial Conduct
Authority (FCA) in the UK has proposed restrictions that will limit leverage per the retail customer’s experience.
Recently,
China’s central bank and other Chinese government agencies stated that all cryptocurrency-related transactions are illegal in the
country, and they must be banned, citing concerns around national security and the “safety of people’s assets.” The
People’s Bank of China separately ordered internet, financial, and payment companies from facilitating cryptocurrency trading on
their platforms. According to the Chinese government, The surge in usage of cryptocurrencies has disrupted “economic and financial
order” and prompted a proliferation of “money laundering, illegal fund-raising, fraud, pyramid schemes, and other illegal
and criminal activities. Other countries may likely follow similar restrictions on crypto-related businesses. Such legal actions may
negatively impact Company’s ability to earn revenues from crypto-related solutions. At present, the Company does not conduct business
in China.
Compliance
with these regulations is complicated, time-consuming, and expensive. Even minor, inadvertent irregularities can potentially give rise
to claims that violate applicable laws and regulations. Failure to comply with all applicable laws and regulations could lead to fines
and other penalties, adversely affecting our customers’ revenues and ability to conduct business as planned. Our customers could
incur significant legal expenses in defending against and resolving actions or investigations by such regulatory agencies. As a result,
our customers may limit the use of our products and services, which would adversely affect our revenues and profitability.
The
Company has a limited history of providing consulting and technical services in the cryptocurrency and blockchain technology industry.
We
have limited experience concerning providing consulting and technical services in the cryptocurrency and blockchain technology industry.
The Company is not certain that its consulting services will be well received or be desirable to its intended market. Cryptocurrency
and blockchain technology are rapidly changing and evolving. The Company cannot guarantee that it will succeed in providing such consulting
and technical services relevant and timely. The failure to do so would have a material adverse effect on its business, prospects, financial
condition, and operating results. Our competitors are more experienced and technologically advanced, have existed longer, and often have
a proven track record as cryptocurrency and blockchain consultants with an established brand and market presence. The consulting aspect
of our business is intensely competitive, and if we do not compete effectively, our operating results could be adversely affected.
The
Company may be unable to respond to the rapid technological change in its industry, and such change may increase costs and competition
that may adversely affect its business
Rapidly
changing technologies, frequent new product and service introductions, and evolving industry standards characterize the Company’s
market. The continued growth of the Internet and intense competition in the Company’s industry exacerbate these market characteristics.
The Company’s future success will depend on its ability to adapt to rapidly changing technologies by continually improving its
products and services’ performance features and reliability. The Company may experience difficulties that could delay or prevent
its products and services’ successful development, introduction, or marketing. In addition, any new enhancements must meet the
requirements of its current and prospective users and must achieve significant market acceptance. The Company could also incur substantial
costs if it needs to modify its products and services or infrastructures to adapt to these changes.
The
Company also expects new competitors to introduce products, systems, or services that are directly or indirectly competitive. These competitors
may succeed in developing products, systems, and services that have greater functionality or are less costly than the Company’s
products, systems, and services, and maybe more successful in marketing such products, systems, and services. Technological changes have
lowered the cost of operating communications and computer systems and purchasing software. These changes reduce the Company’s cost
of providing services and facilitate increased competition by lowering competitors’ costs in providing similar services. This competition
could increase price competition and reduce anticipated profit margins.
The
Company’s services are new, and its industry is evolving.
You
should consider the Company’s prospects considering the risks, uncertainties, and difficulties frequently encountered by companies
in their early stage of development, especially companies in the rapidly evolving financial technology industry. To be successful in
this industry, the Company must, among other things:
|
|
●
|
develop
and introduce functional and attractive service offerings;
|
|
|
|
|
|
|
●
|
attract
and maintain a large base of consumers;
|
|
|
|
|
|
|
●
|
increase
awareness of the Company brand and develop consumer loyalty;
|
|
|
|
|
|
|
●
|
establish
and maintain strategic relationships with distribution partners and service providers;
|
|
|
●
|
respond
to competitive and technological developments;
|
|
|
|
|
|
|
●
|
build
an operations structure to support the Company business; and
|
|
|
|
|
|
|
●
|
attract,
retain, and motivate qualified personnel.
|
The
Company cannot guarantee that it will succeed in achieving these goals. Its failure to do so would have a material adverse effect on
its business, prospects, financial condition, and operating results.
Some
of the Company’s products and services are new and are only in the early stages of commercialization. The Company is not certain
that these products and services will function as anticipated or be desirable to its intended market. Also, some of the Company’s
products and services may have limited functionalities, limiting their appeal to consumers and putting the Company at a competitive disadvantage.
The Company could lose customers or be subject to claims if our current or future products and services fail to function correctly or
if the Company does not achieve or sustain market acceptance. The failure of our product could have a material adverse effect on the
Company’s business, financial condition, and operating results
As
is typical in a new and rapidly evolving industry, demand and market acceptance for recently introduced products and services are subject
to a high level of uncertainty and risk. Because the company’s market is new and evolving, it is difficult to predict with any
certainty the size of this market and its growth rate, if any. The Company cannot guarantee that a market for the Company will develop
or that demand for Company services will emerge or be sustainable. If the market fails to materialize, develops more slowly than expected,
or becomes saturated with competitors, the Company’s business, financial condition, and operating results would be materially adversely
affected.
Certain
Provisions of Our Articles of Incorporation and Bylaws Allow Concentration of Voting Power in One Individual, Which May, Among Other
Things, Delay or Frustrate the Removal of Incumbent Directors or A Takeover Attempt, Even If Such Events May Be Beneficial To Our Stockholders.
Provisions
of our articles of incorporation and bylaws may delay or frustrate the removal of incumbent directors. They may prevent or delay a merger,
tender offer, or proxy contest involving FDC that our board of directors does not approve, even if those events may benefit our stockholders’
interest. For example, Mitchell Eaglstein, our Chairman of the Board, President, and Chief Executive Officer, holds 2,600,000 authorized,
issued, and outstanding shares of our Class A Preferred Stock. Under our articles of incorporation, each share of Class A Preferred Stock
is entitled to 50 non-cumulative votes per share on all matters presented to our stockholders for action. Consequently, Mr. Eaglstein
has sufficient voting power to control the outcome of all the corporate matters submitted to the vote of our common stockholders. Those
matters could include the election of directors, changes in the size and composition of the board of directors, and mergers and other
business combinations involving FDC. In addition, through his control of the board of directors and voting power, he may be able to control
certain decisions, including decisions regarding the qualification and appointment of officers, dividend policy, access to capital (including
borrowing from third-party lenders and the issuance of additional equity securities), and the acquisition or disposition of assets by
FDC. In addition, the concentration of voting power in the hands of Mr. Eaglstein could have the effect of delaying or preventing a change
in control of FDC, even if the change in control would benefit our stockholders and may adversely affect the market price of our common
stock.
Our
Certificate of Incorporation and bylaws provide for indemnification of officers and directors at our expense and limit their liability,
resulting in a high cost to us and hurting our shareholders’ interests. The Company may spend corporate resources for the benefit
of officers and directors.
Our
Certificate of Incorporation and Bylaws include provisions that eliminate the personal liability of our directors for monetary damages
to the fullest extent possible under the laws of the State of Delaware or other applicable law. These provisions eliminate the liability
of our directors and our shareholders for monetary damages arising out of any violation of a director of his fiduciary duty of due care.
Under Delaware law, however, such provisions do not eliminate the personal liability of a director for (i) breach of the director’s
duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct or knowing violation of law, (iii) payment
of dividends or repurchases of stock other than from lawfully available funds, or (iv) any transaction from which the director derived
an improper benefit. These provisions do not affect a director’s liabilities under the federal securities laws or the recovery
of damages by third parties.
If
we fail to establish and maintain an effective internal control system, we may be unable to report our financial results accurately or
prevent fraud. Any ability to report and file our financial results accurately and timely could harm our reputation and adversely impact
the future 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 a result, it may harm our business and reputation.
Our small size and any current internal control deficiencies may adversely affect our financial condition, operation results, and access
to capital.
Because
of the Company’s limited resources, there are limited controls over information processing. There is inadequate segregation of
duties consistent with control objectives. Our Company’s Management is composed of a small number of individuals, resulting in
limitations on segregation of duties. To remedy this situation, we would need to hire additional staff. Currently, the Company cannot
hire other staff to facilitate greater segregation of duties but will reassess its capabilities after completing the Offering.
We
may need and may be unable to obtain additional funding on satisfactory terms, which could dilute our stockholders or impose burdensome
financial restrictions on our business.
We
have relied upon cash from financing activities, and in the future, we intend to rely on revenues generated from operations to fund all
the cash requirements of our activities. There is no assurance that we will generate any significant cash from our operating activities
in the future. Deteriorating economic conditions and the effects of ongoing military actions against terrorists may cause prolonged declines
in investor confidence in and accessibility to capital markets. Future financing may not be available timely, in adequate amounts, or
on terms acceptable to us. This financing may also dilute existing stockholders’ equity. Any debt financing or financing of securities
senior to common stock will likely include financial and other covenants that will restrict our flexibility. At a minimum, we expect
these covenants to include restrictions on our ability to pay dividends on our common stock. Any failure to comply with these covenants
would have a material adverse effect on our business, prospects, financial condition, and results of operations because we could lose
our existing sources of funding and impair our ability to secure new sources of financing.
As
an “emerging growth company” under the jobs act permits us to rely on exemptions from certain disclosure requirements.
We
qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to and intend to rely on exemptions
from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
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have
an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
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●
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provide
an auditor attestation concerning Management’s report on the effectiveness of our internal controls over financial reporting;
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●
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comply
with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement
to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion
and analysis);
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●
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submit
certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;”
and
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●
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disclose
certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons
of the Chief Executive’s compensation to median employee compensation.
|
In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging
growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have elected to take advantage of the benefits of this extended transition period. Therefore, our financial statements may not be
comparable to those of companies that comply with such new or revised accounting standards.
We
will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal
year in which our total annual gross revenues is $1.07 billion, (ii) the date that we become a “large accelerated filer”
as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that
are held by non-affiliates is $700 million as of the last business day of our most recently completed second fiscal quarter or (iii)
the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Until
such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
If some investors find our common stock less attractive, there may be a less active trading market for our common stock, and our stock
price may be more volatile.
RISKS
RELATING TO OUR COMMON STOCK
There
is limited liquidity for our common stock, and we may not be successful in obtaining a quotation on a recognized quotation service. In
such an event, it may be difficult to sell your shares.
Our
common stock is currently quoted for public trading on the OTCQB. The trading price of our common stock has been subject to wide fluctuations.
Trading prices of our common stock may fluctuate in response to many factors, many of which will be beyond our control. The stock market
has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance
of companies with no current business operation. There can be no assurance that trading prices and price-earnings ratios previously experienced
by our common stock will be matched or maintained. These broad market and industry factors may adversely affect the market price of our
common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s
securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial
costs for us and a diversion of Management’s attention and resources.
Our
common stock will be subject to the “penny stock” rules of the Securities and Exchange Commission. The trading market in
our securities may be limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
Under
U.S. federal securities legislation, our common stock will constitute “penny stock.” Penny stock is any equity security with
a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require that a broker or dealer approve a potential investor’s account for transactions in penny stocks. The broker or
dealer receives a written agreement to the transaction from the investor, setting forth the identity and quantity of the penny stock
to be purchased. To approve an investor’s account for transactions in penny stocks, the broker or dealer must obtain financial
information and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks
are suitable for that person. The person has sufficient knowledge and experience in financial matters to evaluate the risks of penny-stock
transactions. Before any transaction in a penny stock, the broker or dealer must also deliver a disclosure schedule prepared by the Commission
relating to the penny stock market, which, in highlight form, sets forth the basis on which the broker or dealer made the suitability
determination. Brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This
may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. The disclosure
also must be made about the risks of investing in penny stocks in both public offerings and secondary trading and about the commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities, and the rights and remedies
available to an investor in cases of fraud in penny stock transactions. 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.
FINRA
sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
In
addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (known as “FINRA”)
has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing
that the investment is suitable for that customer. Before recommending speculative low priced securities to their non-institutional customers,
broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment
objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative
low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers
to recommend that their customers buy our common shares, which may limit your ability to buy and sell our stock and harm the market for
our shares.
Since
our shares of Common Stock have low or thin liquidity, it is more susceptible to extreme rises or declines in price, and you may not
be able to sell your shares at or above the price paid.
Since
our shares of Common Stock have low or thin liquidity, its trading price is likely to be highly volatile. It could be subject to extreme
fluctuations in response to various factors, many of which are beyond our control, including (but not necessarily limited to): the trading
volume of our shares, the number of analysts, market-makers, and brokers following our shares of Common Stock, new products or services
introduced or announced by our competitors or us, actual or anticipated variations in quarterly operating results, conditions or trends
in our business industries, additions or departures of key personnel, sales of our shares of Common Stock and general stock market price
and volume fluctuations of publicly traded, and particularly microcap, companies.
Investors
may have difficulty reselling shares of our Common Stock, either at or above the price they paid for our stock or even at fair market
value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual
companies, and because our shares of Common Stock have low or tin liquidity, it is particularly susceptible to such changes. These broad
market changes may cause the market price of our shares of Common Stock to decline regardless of how well we perform as a company. In
addition, there is a history of securities class action litigation following periods of volatility in the market price of a company’s
securities. Although there is no such litigation currently pending or threatened against us, such a suit against us could result in the
incursion of substantial legal fees, potential liabilities, and the diversion of Management’s attention and resources from our
business. Moreover, as noted below, our shares are currently traded on the OTCQB and subject to the penny stock regulations. Price fluctuations
in such shares are particularly volatile and subject to potential manipulation by market-makers, short-sellers, and options traders.
We
may, in the future, issue additional common shares, which would reduce investors’ percent of ownership and may dilute our share
value.
Our
Articles of Incorporation authorize the issuance of 250,000,000 shares of common stock. As of the date of this Prospectus, the Company
had 90,661,264 shares of common stock outstanding. Accordingly, we may issue up to an additional 160,008,736 shares of common stock.
The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing
shareholders. We may value any common stock in the future on an arbitrary basis. The issuance of common stock for future services or
acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors and might harm
any trading market for our common stock.
The
sale of our stock could encourage short sales by third parties, contributing to the future decline of our stock price.
In
many circumstances, the provision of financing based on the distribution of equity for companies traded on the OTCQB can cause significant
downward pressure on the common stock price. It is especially the case if the shares being placed into the market exceed the market’s
ability to take up the increased stock or if we have not performed in such a manner to show that the equity funds raised will be used
to grow our business. Such an event could place further downward pressure on the price of our common stock. Regardless of our activities,
the opportunity exists for short sellers and others to contribute to the future decline of our stock price. If there are significant
short sales of our common stock, the price decline from this activity will cause the share price to decline more, which may cause other
stockholders of the stock to sell their shares, thereby contributing to sales of common stock in the market. If there are many more shares
of our common stock on the market for sale than the market will absorb, the price of our common shares will likely decline.
We
are not likely to issue dividends for the foreseeable future.
We
cannot assure you that our proposed operations will result in adequate revenues to enable profitable operations or to generate positive
cash flow. For the foreseeable future, we anticipate that we will use any funds available to finance the growth of the Company and that
we will not pay cash dividends to stockholders. Unless we pay dividends, our stockholders will not receive a return on their shares unless
they sell them. There is no assurance that stockholders will be able to sell shares when desired.
White
Lion will pay less than the then-prevailing market price for our common stock.
Upon
delivery of a purchase notice to White Lion, which is at our
sole discretion, White Lion to purchase our common stock at a 12% discount to the five-day VWAP average
of the traded price of the Common Stock the five business days before the Closing Date per the Investment Agreement dated September 10,
2021. White Lion has a financial incentive to immediately sell our common stock upon receiving the shares to realize the profit equal
to the difference between the discounted and market prices. If White Lion sells the shares, the price of our common stock could decrease.
If our stock price decreases, White Lion may have a further incentive to sell the shares of our common stock that it holds. These sales
may have an additional impact on our stock price.
Your
ownership interest may be diluted, and the value of our common stock may decline by our exercising the Purchase Notice right according
to the Investment Agreement with White Lion.
Per
the Investment Agreement with White Lion, when we deem it necessary, we may raise capital through the private sale of our common stock
to White Lion at a discounted price. Because the Purchase Notice price is lower than the prevailing market price of our common stock,
to the extent White Lion exercises the right in the Purchase Notice, the ownership interest of shareholders may get diluted.
We
may not have access to the total amount available under the Investment Agreement with White Lion.
Our
ability to draw down funds and sell shares under the Investment Agreement with White Lion requires that the registration statement of
which this Prospectus forms a part be declared effective and continue to be effective. The registration statement of which this Prospectus
includes the resale of 20,000,000 shares issuable under the Investment Agreement with White Lion, and our ability to sell any remaining
shares issuable under the Investment Agreement with White Lion is subject to our ability to prepare and file one or more additional registration
statements registering the resale of these shares. These registration statements may be subject to review and comment by the Securities
and Exchange Commission staff. They will require the consent of our independent registered public accounting firm. Therefore, we cannot
assure the timing of the effectiveness of the registration statements. The effectiveness of these registration statements is a condition
precedent to our exercising discretion to issue Purchase Notices and sell shares of our common stock to White Lion under
the Investment Agreement. Even if we are successful in causing one or more registration statements to be effective by the Securities
and Exchange Commission on time, resulting in the registering some or all of the shares issuable under the Investment Agreement with
White Lion. We may not be able to sell the shares unless certain other conditions are met, Such as having an adequate number
of authorized shares to issue. Any increase in our authorized shares would require board and stockholder approval. Accordingly,
because our ability to draw down any amounts under the Investment Agreement with White Lion our subject to many conditions outside of
the Investor’s control, there is no guarantee that we will draw down any portion or all of the proceeds of $2,000,000 under
the investment with White Lion.
Certain
restrictions on the extent of puts and the delivery of advance notices may have little, if any, effect on the adverse impact of our issuance
of shares in connection with the investment agreement with White Lion. As such, White Lion may sell many shares, resulting in substantial
dilution to the value of shares held by existing stockholders.
White
Lion has agreed, subject to certain exceptions listed in the investment agreement, to refrain from holding shares, resulting in White
Lion or its affiliates owning more than 4.99% of the then-outstanding shares of our common stock at any one time. These restrictions,
however, do not prevent White Lion from selling shares of our common stock received in connection with a Purchase Notice and then acquiring
additional shares of our common stock in connection with a subsequent Purchase Notice. In this way, White Lion could sell more than 4.99%
of the outstanding common stock in a relatively short time frame while never holding more than 4.99% at one time.
USE
OF PROCEEDS
We
will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. However, we will receive proceeds
from the sale of shares of our common stock according to our exercise of the Purchase Notice offered by White Lion Capital, LLC. We will
use these proceeds for general corporate and working capital purposes and acquisitions or assets, software development, businesses or
operations, or for other purposes that our board of directors, in its good faith, deems to be in the Company’s best interest.
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One-third
of shares sold
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|
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Two-third
of shares sold
|
|
|
Hundred
percent (100%) of shares sold
|
|
|
Net
proceeds from the offering (1) (2)
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|
$
|
720,000.00
|
|
|
$
|
1,440,000.00
|
|
|
$
|
2,160,000.00
|
|
|
Software
Development, Sales & Marketing
|
|
|
216,000.00
|
|
|
|
432,000.00
|
|
|
|
648,000.00
|
|
|
Corporate
Development
|
|
|
216,000.00
|
|
|
|
432,000.00
|
|
|
|
648,000.00
|
|
|
Working
Capital
|
|
|
288,000.00
|
|
|
|
576,000.00
|
|
|
|
864,000.00
|
|
|
Total
|
|
$
|
720,000.00
|
|
|
$
|
1,440,000.00
|
|
|
$
|
2,160,000.00
|
|
(1)
Expenditures for the 12 months following the completion of this offering. We have categorized the expenditures by significant area
of activity. Please see a detailed description of the use of proceeds in the “Plan of Operations” section of this Prospectus.
(2)
Excludes estimated offering expenses of $40,000.
The
Company may change the use of proceeds if it feels it is in the best interest of the shareholders to use the proceeds to discharge indebtedness
of outstanding SBA, PPP, or Officer’s loan or carry out the acquisition of strategic business assets relevant to the Company’s
business. We will pay for expenses of this offering, except that the selling stockholder will pay any broker discounts or commissions
or equivalent costs and costs of its legal counsel applicable to the sale of its shares.
DILUTION
The
sale of our common stock to White Lion Capital, LLC following the Investment Agreement dated September 10, 2021, will negatively impact
our stockholders. As a result, our net loss per share could increase in future periods, and the market price of our common stock could
decline. In addition, the lower our stock price is when we exercise our Purchase Notice, the more shares of our common stock we will
have to issue to White Lion to drawdown according to the investment agreement. If our stock price decreases during the pricing period,
then our existing stockholders would experience more significant dilution.
The
Company has estimated our offering price of 20,000,000 shares at $0.10 per share to White Lion. This price is significantly higher than
the prices per share paid by our founders, collectively representing 61,450,518 of the 87,345,412 as of June 30, 2021.
Dilution
represents the difference between the offering price and the net tangible book value per share immediately after completion of this offering.
Net tangible book value is the amount that results from subtracting total liabilities and intangible assets from total assets. Dilution
arises mainly because of our arbitrary determination of the offering price of the shares being offered. Dilution of the value of the
shares you purchase is also a result of our existing stockholders’ lower book value. The following tables compare the differences
of your investment in our shares with the investment of our current stockholders.
As
of June 30, 2021, the net tangible book value of our shares of common stock was $1,160,822 or approximately $0.0129 per share based upon
90,661,264 shares outstanding as of September 20, 2021.
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Existing
stockholders if all the shares are sold
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Price
per share (estimated)
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|
$
|
|
0.10
|
|
|
Net
tangible book value per share before offering
|
|
$
|
|
0.0129
|
|
|
Net
tangible book value per share after offering
|
|
$
|
|
0.030
|
|
|
Potential
gain to existing shareholders, book value
|
|
$
|
|
2,160,000
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|
|
Increase
to present stockholders in net tangible book value per share after offering
|
|
$
|
|
0.0173
|
|
|
Net
Capital contributions (1)
|
|
$
|
|
2,160,000
|
|
|
Number
of shares outstanding before the offering
|
|
|
|
90,661,264
|
|
|
Number
of shares outstanding after offering
|
|
|
|
109,991,264
|
|
|
Percentage
of ownership after offering
|
|
|
|
81.82
|
%
|
|
Purchasers
of shares in this offering
|
|
if
all of the shares are sold
|
|
|
if
all of the shares are sold
|
|
|
Price
per share
|
|
$
|
0.10
|
|
|
|
0.10
|
|
|
Dilution per share
|
|
$
|
0.070
|
|
|
|
0.080
|
|
|
Net
tangible book value per share after offering
|
|
$
|
0.030
|
|
|
|
0.020
|
|
|
Net
Capital contributions by new investors (1)
|
|
$
|
2,160,000
|
|
|
|
1,060,000
|
|
|
Capital
contributions (directors, officers, and others) (2)
|
|
$
|
1,342,482
|
|
|
|
1,342,482
|
|
|
Percentage
of capital contributions
|
|
%
|
61.67
|
|
|
|
44.12
|
|
|
Number
of shares after offering held by White Lion
|
|
|
20,000,000
|
|
|
|
10,000,000
|
|
|
Percentage
of ownership of White Lion after the offering
|
|
%
|
18.18
|
%
|
|
|
9.09
|
%
|
(1)
Excludes estimated offering expenses of $40,000, where new investors are White Lion and AD Securities America.
(2)
Includes Founders, FRH Group, promoters, affiliates SBA, and PPP loans.
PRIVATE
PLACEMENT TRANSACTIONS
Investment
Agreement with White Lion Capital, LLC
On
September 10, 2021, we entered into an investment agreement with White Lion Capital, LLC, a Nevada limited liability company (“White
Lion”). Pursuant to the investment agreement terms, White Lion committed to purchasing up to $2,000,000 of our common stock for
up to May 01, 2022. From time to time, after the effectiveness of the registration statement, we may deliver a Purchase Notice to White
Lion, which states the Company shall have the right, but not the obligation, to require White Lion to purchase up to 250% of the Average
Daily Trading Volume of the common stock during the five (5) trading days (‘Valuation Period’) before the Purchase Notice
date. The minimum Purchase Notice amount must exceed $20,000. White Lion may waive the Purchase Notice Limit in writing at any time.
The Purchase price is eighty-eight percent (88%) multiplied by the lowest daily volume-weighted average price (VWAP) of the Company’s
stock during the valuation period.
In
accordance with the investment agreement, the Company issued 670,000 shares of its common stock to White Lion as a commitment fee, which
are also registered herein.
In
connection with the investment agreement with White Lion, we also entered into a registration rights agreement with White Lion, pursuant
to which we agreed to use our best efforts to, within 60 business days of September 10, 2021, file with the Securities and Exchange Commission
a registration statement, covering the resale of 20,000,000 shares of our common stock underlying the investment agreement with White
Lion. The 20,000,000 shares being offered pursuant to the investment agreement with White Lion represents 18.07% of the shares issued
and outstanding, assuming that the selling stockholders will sell all of the shares offered for sale. The 20,000,000 shares being offered
pursuant to this prospectus represent 44.47% of the shares issued and outstanding held by non-affiliates of our company. The investment
agreement with White Lion is not transferable, and any benefits attached thereto may not be assigned.
At
an assumed purchase price under the Investment Agreement of $0.097 (equal to 97% of the closing price of our common stock of $0.10 on
September 20, 2021, we will be able to receive up to $1,940,000 in gross proceeds, assuming the sale of the entire 20,000,000 Purchase
Notice Shares being registered hereunder pursuant to the Investment Agreement. At an assumed purchase price of $0.097 under the Investment
Agreement, we would be required to register 618,557 additional shares to obtain the balance of $60,000 under the Investment Agreement.
Due to the floating offering price, we are unable to determine the exact number of shares that we will issue under the Investment Agreement.
There
are substantial risks to investors due to the issuance of shares of our common stock under the investment agreement with White Lion.
These risks include dilution of stockholders’ percentage ownership, a significant decline in our stock price, and our inability
to draw sufficient funds when needed. We intend to sell White Lion periodically our common stock under the investment agreement, and
White Lion will, in turn, sell such shares to investors in the market at the market price. This may cause our stock price to decline,
which will require us to issue increasing numbers of common shares to White Lion to raise the same amount of funds as our stock price
declines.
The
aggregate investment amount of $2,000,000 was determined based on numerous factors, including the following: The proceeds received from
any Purchase Notices tendered to White Lion under the investment agreement will be used for general corporate, software development,
sales and marketing, working capital purposes and acquisitions or assets, businesses or operations or for other purposes that our board
of directors, in its good faith deem to be in the best interest of the Company. The Company may change the use of proceeds if it feels
it is in the best interest of the shareholders to use the proceeds to discharge indebtedness of outstanding SBA, PPP, or Officer’s
loan or carry out the acquisition of strategic business assets relevant to the Company’s business.
We
may have to increase our authorized shares to issue the shares to White Lion if we reach our current authorized shares of common stock.
Increasing the number of our authorized shares will require board and stockholder approval. There is no guarantee that we will be able
to draw down any portion or all of the proceeds of $2,000,000 under the investment agreement with White Lion because our ability to draw
down any amounts under the Investment Agreement with White Lion is subject to many conditions.
Investment
Agreements with AD Securities America, LLC
On
September 9 and 16, 2021, the Company sold an aggregate of 2,000,000 shares of its common stock to AD Securities America LLC, one of
the selling stockholders, for $200,000 (the “Purchase Price”). The Investor is an independent non-affiliate entity. In accordance
with the Subscription Agreement, the Registrant has agreed to include the Shares in its next Form S-1 filing with the SEC for the sale
of shares by Selling Shareholders. The offer and sale of the Shares under the Subscription Agreement were made in reliance on the exemption
from registration afforded under the Securities and Exchange Act of 1933, as amended by Rule 4(a)(2) and/or Rule 506 of Regulation D
promulgated thereunder. Such offer and sale was not conducted in connection with a public offering, and no public solicitation or advertisement
was made or relied upon by the Investor in connection with the offerings.
SELLING
STOCKHOLDERS
This
prospectus relates to the resale of 22,670,000 shares of our common stock, par value $0.0001 per share, of which 2,000,000 shares were
issued to AD Securities America LLC, 20,000,000 shares are issuable to White Lion Capital, LLC (“White Lion”) and 670,000
shares were issued to White Lion.
This
Prospectus relates to the resale of up to 20,000,000 shares of the Common Shares, issuable to White Lion, a selling stockholder pursuant
to a Purchase Notice under an investment agreement dated September 10, 2021, that we entered into with White Lion. The Investment Agreement
permits us to Purchase Notices for up to two million dollars ($2,000,000) in shares of our common stock to White Lion for up to eight
(8) months or until $2,000,000 such shares have been subject to Purchase Notices.
AD
Securities and White Lion may offer and sell, from time to time any, or all of the 2,000,000 shares and 670,000 shares, respectively,
they own, and White Lion may offer and sell, from time to time, any or all of the shares of our common stock to be sold to White Lion
under the Investment Agreement dated September 10, 2021.
The
following table sets forth certain information regarding the beneficial ownership of shares of common stock by the selling stockholder
as of September 10, 2021, and the number of shares of our common stock being offered according to this prospectus. We believe that the
selling stockholder has sole voting and investment powers over its shares. Because White Lion may offer and sell all or only some portion
of the 20,000,000 shares of our common stock being offered pursuant to this prospectus, the numbers in the table below representing the
amount and percentage of these shares of our common stock that White Lion will hold upon the termination of the offering are only estimates
based on the assumption that White Lion will sell all of its shares of our common stock being offered in the offering.
In
consideration for the White Lion’s execution and delivery of, and performance under the Investment Agreement, the Company issued
670,000 Consideration Shares to the White Lion on September 10, 2021, which are also registered herein.
The
selling stockholders have not had any position or office, or other material relationship with us or any of our affiliates over the past
three years. To our knowledge, the selling stockholders are not a broker-dealer or an affiliate of a broker-dealer. We may require the
selling stockholders to suspend the sales of the shares of our common stock being offered pursuant to this prospectus upon the occurrence
of any event that makes any statement in this Prospectus, or the related registration statement untrue in any material respect or that
requires the changing of statements in those documents to make statements in those documents not misleading.
|
|
|
Shares
Owned
by the
Selling
Stockholder
|
|
|
Total
Shares
|
|
|
Number of Shares to Be
Owned by Selling
Stockholder After the
Offering and Percent of
Total Issued and
Outstanding Shares(1)
|
|
|
Name of the Selling Stockholder
|
|
before the
Offering(1)
|
|
|
Offered in
the Offering
|
|
|
# of
Shares(2)
|
|
|
% of
Class(2),(3)
|
|
|
White Lion Capital, LLC (4)
|
|
$
|
670,000
|
|
|
|
20,670,000
|
|
|
|
20,670,000
|
|
|
|
18.68
|
%
|
|
AD Securities America LLC (5)
|
|
|
4,000,000
|
|
|
|
2,000,000
|
|
|
|
2,000,000
|
|
|
|
3.61
|
%
|
(1)
Beneficial ownership is determined in accordance with Securities and Exchange Commission rules and generally includes voting or
investment power with respect to shares of common stock. Shares of common stock subject to options and warrants currently exercisable,
or exercisable within 60 days, are counted as outstanding for computing the percentage of the person holding such options or warrants
but are not counted as outstanding for computing the percentage of any other person.
(2)
We have assumed that the selling stockholder will sell all of the shares being offered in this offering.
(3)
Based on 90,661,264 shares of our common stock issued and outstanding as of September 20, 2021. Shares of our common stock being
offered pursuant to this prospectus by a selling stockholder are counted as outstanding for computing the percentage of the selling stockholder.
(4)
Dmitriy Slobodskiy has the voting and dispositive power over the shares owned by White Lion Capital, LLC.
(5)
Douglas Post has the voting and dispositive power over the shares owned by AD Securities America, LLC.
PLAN
OF DISTRIBUTION
This
prospectus relates to the resale of 22,670,000 shares of our common stock, par value $0.0001 per share, of which 2,000,000 shares were
issued to AD Securities America LLC (“AD Securities”), 670,000 shares were issued to White Lion and up to 20,000,000 shares
are issuable to White Lion Capital, LLC (“White Lion”). The 20,000,000 shares of the common shares, issuable to White Lion,
a selling stockholder, were pursuant to a Purchase Notice under an investment agreement dated September 10, 2021, that we entered into
with White Lion. The Investment Agreement permits us to Purchase Notices for up to two million dollars ($2,000,000) in shares of our
common stock to White Lion for up to May 01, 2022, or until $2,000,000 such shares have been subject to Purchase Notices. The 670,000
shares issued to White Lion was a commitment fee relating to the investment agreement and are registered herein.
The
Investment Agreement with White Lion is not transferable.
At
an assumed purchase price under the Investment Agreement of $0.097 (equal to 97% of the closing price of our common stock of $0.10 on
September 20, 2021, we will be able to receive up to $1,940,000 in gross proceeds, assuming the sale of the entire 20,000,000 Purchase
Notice Shares being registered hereunder pursuant to the Investment Agreement. At an assumed purchase price of $0.097 under the Investment
Agreement, we would be required to register 618,557 additional shares to obtain the balance of $60,000 under the Investment Agreement.
Due to the floating offering price, we are unable to determine the exact number of shares that we will issue under the Investment Agreement.
From
time to time, the selling stockholders may sell any or all of the shares of our common stock covered hereby on the OTCQB or any other
stock exchange, market, or trading facility on which the shares are traded or in private transactions. A selling stockholder may sell
all or a portion of the shares being offered pursuant to this prospectus at fixed prices, at prevailing market prices at the time of
sale, at varying prices, or at negotiated prices. A selling stockholder may use any one or more of the following methods when selling
securities:
|
|
●
|
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
|
|
|
|
|
|
●
|
block
trades in which the broker-dealer will attempt to sell the shares as an agent but may position and resell a portion of the block
as principal to facilitate the transaction;
|
|
|
|
|
|
|
●
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
|
|
|
|
|
|
|
●
|
an
exchange distribution following the rules of the applicable exchange;
|
|
|
|
|
|
|
●
|
privately
negotiated transactions;
|
|
|
|
|
|
|
●
|
in
transactions through broker-dealers that agree with the selling stockholder to sell a specified number of such securities at a stipulated
price per security;
|
|
|
|
|
|
|
●
|
through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
|
|
|
|
|
|
|
●
|
a
combination of any such methods of sale; or
|
|
|
|
|
|
|
●
|
any
other method permitted pursuant to applicable law.
|
If
available, the selling stockholders may also sell securities under Rule 144 under the Securities Act of 1933, rather than under this
Prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholder (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as outlined in a supplement to this prospectus, in the case of an agency transaction not over
a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown
in compliance with FINRA IM-2440.
In
connection with the sale of the securities or interests therein, the selling stockholder may enter into hedging transactions with broker-dealers
or other financial institutions, which may, in turn, engage in short sales of the securities in the course of hedging the positions they
assume. The selling stockholder may also sell securities short and deliver these securities to close out its short positions or loan
or pledge the securities to broker-dealers that in turn may sell these securities. The selling stockholder may also enter into option
or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the
delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such as broker-dealer
or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
Any
broker-dealers or agents involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities
Act of 1933 in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933.
We are required to pay certain fees and expenses incurred by us incident to the registration of the securities. The selling stockholder
will be subject to the prospectus delivery requirements of the Securities Act of 1933, including Rule 172 thereunder.
The
selling stockholders will sell the resale securities only through registered or licensed brokers or dealers if required under applicable
state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is
complied with applicable laws.
Under
applicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in distributing the resale securities
may not simultaneously engage in market-making activities concerning the common stock for the applicable restricted period, as defined
in Regulation M, before the commencement of the distribution. In addition, the selling stockholder will be subject to applicable provisions
of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of securities of the common stock by the selling stockholder or any other person. We will make copies of this prospectus
available to the selling stockholders. We will inform them of the need to deliver a copy of this prospectus to each purchaser at or before
the time of the sale (including by compliance with Rule 172 under the Securities Act of 1933).
DESCRIPTION
OF SECURITIES
GENERAL
The
Company is authorized to issue two Classes of shares of stock. The total number of shares which the Company is authorized to issue is
two hundred and sixty million (260,000,000) shares, consisting of one hundred million (250,000,000) shares of Common Stock, $.0001 par
value, and ten million (10,000,000) shares of preferred stock, $.0001 par value. As of June 30, 2021, there were 87,345,412 shares of
our common stock issued and outstanding that [55] stockholders of the record held, and 4,000,000 shares of preferred stock issued and
outstanding held by three (3) stockholders.
Between
February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder (“FRH”).
The Company executed Convertible Promissory Notes, due between February 28, 2018, and April 24, 2019. The Notes were convertible into
common stock initially at $0.10 per share but maybe discounted under certain circumstances. In no event will the conversion price be
less than $0.05 per share with a maximum of 20,000,000 shares if FRH converts the entire subject to adjustments in certain circumstances.
On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation.
The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080
of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH
Group Corporation, an entity also owned by Mr. Hong.
COMMON
STOCK
The
following is a summary of the material rights and restrictions associated with our common stock. This description does not purport to
be a complete description of all the rights of our stockholders and is subject to, and qualified in its entirety by, the provisions of
our most current Articles of Incorporation and Bylaws, which are included as exhibits to this Registration Statement.
The
holders of our common stock currently have (i) equal ratable rights to dividends from funds legally available, therefore, when, as and
if declared by the Board of Director of the Company; (ii) are entitled to share ratably in all of the assets of the Company available
for distribution to holders of common stock upon liquidation, dissolution or winding up of the affairs of the Company (iii) do not have
pre-emptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights applicable thereto; and
(iv) are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.
Our
Bylaws provide that at all meetings of the stockholders for the election of directors, a plurality of the votes cast shall be sufficient
to elect. On all other matters, except as otherwise required by Delaware law or the Articles of Incorporation, a majority of the votes
cast at a meeting of the stockholders shall be necessary to authorize any corporate action to be taken by vote of the stockholders. A
“plurality” means the excess of the votes cast for one candidate over any other. When there are more than two competitors
for the same office, the person who receives the greatest number of votes has a plurality.
PREFERRED
STOCK
Preferred
Stock in General
The
Company may issue the Preferred Stock from time to time in one or more series. The Board of Directors is authorized to fix the number
of shares of any series of Preferred Stock and determine any such series’ designation. The Board of Directors is also authorized
to determine or alter the rights, preferences, privileges, and restrictions granted to or imposed upon any wholly unissued series of
Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors initially fixing
the number of shares constituting any series, to increase or decrease (but not below the number of shares of such series than outstanding)
the number of shares of any such series after the issue of shares of that series. Currently, there are 4,000,000 shares of Series A Preferred
Stock issued and outstanding.
Series
A Preferred Stock
Our
Series A Preferred Stock shares do not rank senior to our common stock as to dividends and distributions. The holders of outstanding
shares of Series A Preferred Stock are entitled to receive dividends out of assets legally available at times and in amounts as the board
of directors may from time to time determine before any dividend is paid on common stock.
Holders
of Series A Preferred Stock are entitled to 50 non-cumulative votes per share on all matters presented to our stockholders for action.
This right could adversely affect the voting power of the holders of common stock. It could make it more difficult for a third party
to acquire or could discourage or delay a third party from acquiring a majority of our outstanding stock. In addition, the affirmative
vote of the holders of a majority of the Series A Preferred Stock then outstanding, voting as a separate Series, is required for FDC
to do any of the following:
|
|
●
|
amend,
alter or repeal any of the preferences or rights of the Series A Preferred Stock;
|
|
|
●
|
authorize
any reclassification of the Series A Preferred Stock;
|
|
|
●
|
increase
the authorized number of shares of the Series A Preferred Stock; or
|
|
|
●
|
create
any series of shares ranking before the Series A Preferred Stock as to dividends or upon liquidation.
|
Series
A Preferred Stock does not convert into common stock of the Company.
Shares
of Series A Preferred Stock are not entitled to preemptive rights, nor are they redeemable by the Company.
Warrants
Effective
June 1, 2017, the Company planned to raise $600,000 through a Private Placement Memorandum (the “Memorandum”) of up to 4,000,000
Units. Each unit (a “Unit”) consists of one share of Common Stock, par value $.0001 per share (the “Common Stock) and
one redeemable Class A Warrant (the “Class A Warrant(s)”) of the Company. The Company closed the private placement effective
December 15, 2017.
Each
Class A Warrant entitles the holder to purchase one (1) share of Common Stock for $0.30 per share at any time until April 30, 2019 (‘Expiration
Date’). As of the date of this Prospectus, the holders have not exercised any Class A Warrants. All Class A Warrants have expired.
LEGAL
PROCEEDINGS
The
Company discloses a loss contingency if at least a reasonable possibility that a material loss has been incurred. The Company records
its best estimate of loss related to pending legal proceedings when the loss is considered probable, and the amount can be reasonably
estimated. The Company records the minimum estimated liability where it can reasonably estimate a range of loss with no best estimate.
As additional information becomes available, the Company assesses the potential liability related to pending legal proceedings, revises
its estimates, and updates its disclosures accordingly. The Company’s legal costs associated with defending itself are recorded
to expenses as incurred. The Company currently is not involved in any litigation.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following table lists, as of September 20, 2021, the number of shares of common and Series A Preferred Stock of our Company that is beneficially
owned by (i) each person or entity is known to our Company to be the beneficial owner of more than 5% of the outstanding common stock;
(ii) each officer and director of our Company; and (iii) all sole officer and director as a group. Information relating to beneficial
ownership of the common stock by our principal shareholders and management is based upon each person’s information using “beneficial
ownership” concepts under the Securities and Exchange Commission rules. Under these rules, a person is deemed to be a beneficial
owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security,
or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial
owner of any security of which that person has a right to acquire beneficial ownership within sixty (60) days. Under the Securities and
Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed
to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each
person has sole voting and investment power.
The
percentages below are calculated based on 90,661,264 shares of our common stock issued and outstanding as of September 20, 2021.
|
Name
and Address(1)
|
|
Title
of
Class
|
|
|
Number
of Shares
Beneficially
Owned
|
|
|
Percent
of
Class
|
|
|
Mitch
Eaglstein
|
|
|
Common
|
|
|
|
20,768,105
|
|
|
|
22.98
|
%
|
|
Imran
Firoz
|
|
|
Common
|
|
|
|
14,310,000
|
|
|
|
15.8
|
%
|
|
Brian
Platt
|
|
|
Common
|
|
|
|
500,000
|
|
|
|
0.55
|
%
|
|
Jonathan
Baumgart
|
|
|
Common
|
|
|
|
100,000
|
|
|
|
0.11
|
%
|
|
Charles
R. Provini
|
|
|
Common
|
|
|
|
100,000
|
|
|
|
0.11
|
%
|
|
FRH
Group Ltd (2)
|
|
|
Common
|
|
|
|
26,372,413
|
|
|
|
29.01
|
%
|
|
Officers
and Directors as a group (5 persons)
|
|
|
Common
|
|
|
|
35,778,105
|
|
|
|
39.4
|
%
|
|
Name
and Address(1)
|
|
Title
of
Class
|
|
|
Number
of Shares
Beneficially
Owned
|
|
|
Percent
of
Class
|
|
|
Mitch
Eaglstein
|
|
|
Series
A Preferred
|
|
|
|
2,600,000
|
|
|
|
65.00
|
%
|
|
Imran
Firoz
|
|
|
Series
A Preferred
|
|
|
|
400,000
|
|
|
|
10.00
|
%
|
|
FRH
Group Ltd (2)
|
|
|
Series
A Preferred
|
|
|
|
1,000,000
|
|
|
|
25.00
|
%
|
|
Officers
and Directors as a group (2 persons)
|
|
|
Series
A Preferred
|
|
|
|
3,000,000
|
|
|
|
75.00
|
%
|
In
the fiscal year ending December 31, 2016, the Company collectively issued 30,000,000 and 5,310,000 common shares at par value to Mitchell
Eaglstein and Imran Firoz, respectively, as the founders in consideration of services rendered the Company. Further, the Company agreed
to issue 2,600,000, 400,000, and 1,000,000 shares of Preferred Stock to Mitchell Eaglstein, Imran Firoz, and FRH Group, respectively,
as the founders in consideration of services rendered the Company.
(1)
Addresses for all officers and directors are 200 Spectrum Drive, Suite 300, Irvine, CA 92618.
(2)
In the event if the Noteholder converts the entire Notes with a maximum of 20,000,000 shares subject to adjustments in certain
circumstances. Mr. Felix Hong is the principal shareholder of FRH Group and is considered the beneficial owner of the shares. The percentages
for FRH Group are calculated based on 90,661,264 shares of our common stock issued and outstanding based on the note’s entire conversion.
(3)
Series A Preferred Stock is entitled to fifty (50) non-cumulative votes per share on all matters presented to stockholders for
action. As a result, on a vote per share basis, 4,000,000 Series A Preferred Shares represent 69.29% voting percentage on a fully diluted
basis.
Long-Term
Incentive Plans
There
are no arrangements or plans in which we provide pension, retirement, or similar benefits for directors or executive officers, except
that our directors and executive officers receive stock options at the discretion of our Board. We do not have any material bonus or
profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except
that stock options may be granted at the discretion of our Board.
Changes
in Control
We
are unaware of any contract or other arrangement the operation of which may result in a change in control of our company at a subsequent
date.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
In
April 2016, the Company established its wholly-owned subsidiary – FRH Prime Ltd. (“FRH Prime”), a company incorporated
under section 14 of the Companies Act 1981 of Bermuda. In January 2017, FRH Prime established its wholly-owned subsidiary – FXClients
Limited (“FXClients”), under the United Kingdom Companies Act 2006 as a private company. The Company established FRH Prime
and FXClients to conduct financial technology service activities. At present, both companies have ceased to exist.
For
the three and six months ending June 30, 2021, and 2020, FRH Prime has generated volume rebates of $0 and $1,861, respectively, from
Condor Risk Management Back Office. The Company has included rebates in revenue in the consolidated income statements. There have been
no significant operating activities in FXClients.
Between
February 22, 2016, and April 24, 2017, the Company borrowed $1,000,000 from FRH Group, a founder and principal shareholder (“FRH”).
The Company executed Convertible Promissory Notes, due between February 28, 2018, and April 24, 2019. The Notes were convertible into
common stock initially at $0.10 per share but maybe discounted under certain circumstances. In no event will the conversion price be
less than $0.05 per share with a maximum of 20,000,000 shares if FRH converts the entire subject to adjustments in certain circumstances.
On February 22, 2021, the Company entered into an Assignment of Debt Agreement (the “Agreement”) with FRH and FRH Group Corporation.
The Company eliminated all four FRH Group convertible notes, including interest, of $1,256,908, in return for the issuance of 12,569,080
of unregistered common stock of the Company (the “Shares”) to FRH. Following the Agreement, FRH assigned the Shares to FRH
Group Corporation, an entity also owned by Mr. Hong.
LEGAL
MATTERS
Barnett
& Linn, Attorneys at Law, will render a legal opinion as to the validity of the shares of the common stock to be registered hereby.
Mr. Barnett, a principal in the firm, owns shares in the Company representing less than 0.005% of the Company’s issued and outstanding
common stock.
EXPERTS
The
financial statements of our company included in this prospectus, for the fiscal years ended December 31, 2020, and 2019, were audited
by Farber Hass Hurley LLP (“FHH”) to the extent and for the period outlined in their report appearing elsewhere in the prospectus,
and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
No
expert named in the registration statement of which this prospectus forms a part as having prepared or certified any part thereof (or
is named as having prepared or certified a report or valuation for use in connection with such registration statement) or counsel named
in this prospectus as having given an opinion upon the validity of the securities being offered pursuant to this prospectus, or upon
other legal matters in connection with the registration or offering such securities was employed for such purpose on a contingency basis.
Also, at the time of such preparation, certification or opinion or at any time thereafter, through the date of effectiveness of such
registration statement or that part of such registration statement to which such preparation, certification or opinion relates, no such
person had or is to receive, in connection with the offering, a substantial interest, as defined in Item 509 of Regulation SK, in our
company or any of its parents or subsidiaries. Nor was any such person connected with our company or any of its parents or subsidiaries
as a promoter, managing or principal underwriter, or voting trustee.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our
Articles of Incorporation and Bylaws provide that we may indemnify our officers and directors to the maximum extent permitted by Delaware
law, and we have entered into agreements with our directors to provide contractual indemnification in addition to the indemnification
provided in our Bylaws. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors,
officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion
of the Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer
or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
FDCTECH,
INC.
22,670,000
Shares
of Common Stock
October
13, 2021
PROSPECTUS
Part
II
Information
Not Required in Prospectus
Item
13. Other Expenses of Issuance and Distribution
The
following table sets forth the costs and expenses in connection with the issuance and distribution of the securities being registered
hereunder. The selling stockholder will bear no expenses associated with this offering except for any broker discounts and commissions
or equivalent expenses and expenses of the selling stockholder’s legal counsel applicable to the sale of its shares. All of the
amounts shown are estimates, except for the Securities and Exchange Commission registration fees.
|
Securities
and Exchange Commission registration fees
|
|
$
|
247.33
|
|
|
|
|
|
|
|
|
Accounting
fees and expenses
|
|
$
|
2,000.00
|
|
|
|
|
|
|
|
|
Legal
fees and expenses
|
|
$
|
7,500.00
|
|
|
|
|
|
|
|
|
Miscellaneous
fees and expenses
|
|
$
|
2,500.00
|
|
|
Total
|
|
$
|
12,247.33
|
|
Item
14. Indemnification of Directors and Officers
Section
102(b)(7) of the Delaware General Corporation Law, or DGCL, allows a corporation to provide in its certificate of incorporation that
a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional
misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware
corporate law or obtained an improper personal benefit. Our amended and restated certificate of incorporation will provide for this limitation
of liability.
Section
145 of the DGCL, or Section 145, provides, among other things, that a Delaware corporation may indemnify any person who was, is or is
threatened to be made, 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 such corporation), because such person is or was an officer, director, employee
or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include 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 such person
acted in good faith and in a manner they reasonably believed to be in or not opposed to the corporation’s best interests and, concerning
any criminal action or proceeding, had no reasonable cause to believe that their conduct was illegal. A Delaware corporation may indemnify
any persons who were or are a party to any threatened, pending, or completed action or suit by or in the right of the corporation by
reason of the fact that such person is or was a director, officer, employee, or agent of another corporation or enterprise. The indemnity
may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit, provided such person acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the corporation’s best interests, provided further that no indemnification is permitted without judicial approval
if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on
the merits or otherwise in defense of any action referred to above, the corporation must indemnify him against the expenses which such
officer or director has actually and reasonably incurred.
Section
145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who 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
corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity or arising out of his
or her status as such, whether or not the corporation would otherwise have the power to indemnify him or her under Section 145.
Our
bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by the DGCL and must also pay expenses
incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an
indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified
under this section or otherwise. Notwithstanding the foregoing, we shall not be obligated to indemnify a director or officer in respect
of a proceeding (or part thereof) instituted by such director or officer, unless such proceeding (or part thereof) has been authorized
by the Board of Directors pursuant to the applicable procedure outlined in the bylaws.
Section
174 of the DGCL provides, among other things, that a director, who willfully or negligently approves of an unlawful payment of dividends
or unlawful stock purchase or redemption, may be held jointly and severally liable for such actions. A director who was either absent
when the unlawful actions were approved or dissented at the time may avoid liability by causing his or her dissent to such actions to
be entered in the books containing the minutes of the meetings of the board of directors at the time such action occurred or immediately
after such absent director receives notice of the unlawful acts.
The
indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire
under any statute, provision of our amended and restated certificate of incorporation, our bylaws, agreement, the vote of stockholders
or disinterested directors, or otherwise.
Item
15. Recent Sales of Unregistered Securities
On
January 15, 2019, the Company issued 60,000 restricted common shares for professional services to ten (10) consultants valued at $9,000.
From
January 29, 2019 to February 15, 2019, the Company issued 33,000 registered shares under the Securities Act of 1933 for a cash amount
of $4,950. On February 26, 2019, the Company filed the Post-Effective Amendment No. 1 (the “Amendment”) related to the Registration
Statement on Form S-1and its amendments thereto, filed with the U.S. Securities and Exchange Commission on November 22, 2017, and declared
effective on August 7, 2018 (Registration No. 333-221726) (the “Registration Statement”) of FDCTech, Inc., a Delaware corporation
(the “Registrant”), amended the Registration Statement to remove from registration all shares of common stock that were offered
for sale by the Registrant but were not sold prior to the termination of the offering made pursuant to the Registration Statement. At
the termination of the offering made pursuant to the Registration Statement, 2,967,000 shares of common stock that were offered for sale
by the Registrant were not sold or issued.
Effective
June 03, 2020, the Company issued 2,745,053 shares to Benchmark Investments, Inc. (“Broker-Dealer” or “Kingswood Capital
Markets”) of common stock at $0.25 per share for a total value of $686,263. The Broker-Dealer is retained to provide general financial
advisory to the Company for the next twelve months. The Company has expensed the prepaid compensation through the income statement following
a regular straight-line amortization schedule over the contract’s life, which is for twelve months—the time during which
Kingswood Capital Markets presumably will produce benefits for the Company. On August 25, 2020, the Company and Broker-Dealer terminated
all obligations other than maintaining confidentiality, with no fees to the Broker-Dealer. The Broker-Dealer agreed to return the 2,745,053
shares of the Company’s common stock.
On
January 27, 2021, the Company issued 2,300,000 restricted common shares to two consultants valued at $621,000. The Company issued the
securities with a restrictive legend.
On
May 19, 2021, Company issued 1,750,000 restricted common shares to a consultant valued at $350,000. The Company issued the securities
with a restrictive legend.
On
June 02, 2021, Company issued 1,750,000 restricted common shares to a consultant valued at $437,500. The Company issued the securities
with a restrictive legend.
On
June 15, 2021, Company issued 100,000 restricted common shares to one of the Directors valued at $21,000. The Company issued the securities
with a restrictive legend.
On
July 26, 2021, the Company issued 100,000 restricted common shares to one of the Directors, valued at $22,000. The Company issued the
securities with a restrictive legend.
The
Company relied upon the exemption provided by Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act of 1933 in connection
with issuance and sale of the securities described above. The persons who acquired these shares were sophisticated investors and were
provided full information regarding the Company’s business and operations. There were no general solicitations in connection with
the offer or sale of these securities. The persons who acquired these securities acquired them for their own accounts.
On
September 9 and 16, 2021, the Company sol an aggregate of 2,000,000 shares of its common stock to AD Securities America LLC, one of the
selling stockholders, for $200,000 (the “Purchase Price”). The Investor is an independent non-affiliate entity. In accordance
with the Subscription Agreement, the Registrant has agreed to include the Shares in its next Form S-1 filing with the SEC for the sale
of shares by Selling Shareholders. The offer and sale of the Shares under the Subscription Agreement were made in reliance on the exemption
from registration afforded under Securities and Exchange Act of 1933, as amended by Rule 4(a)(2) and/or Rule 506 of Regulation D promulgated
thereunder. Such offer and sale was not conducted in connection with a public offering, and no public solicitation or advertisement was
made or relied upon by the Investor in connection with the offerings.
Item
16 Exhibits and Financial Statement Schedules
|
(a)
|
The
exhibits to the registration statement are set forth within the Exhibit Index below.
|
|
|
|
|
(b)
|
No
financial statement schedules are provided because the information called for is not required or is shown either in the financial
statements or notes.
|
Exhibit
Index
|
Exhibit
|
|
Description
|
|
|
|
|
|
3.1
|
|
Articles of Incorporation(1)
|
|
3.2
|
|
By-Laws (1)
|
|
5.0*
|
|
Opinion
of Counsel on legality of securities being registered
|
|
10.1
|
|
Convertible Promissory Note dated Feb. 22, 2016 for $100,000 between the Registrant and FRH Group Ltd.(1)
|
|
10.2
|
|
Convertible Promissory Note dated May 16, 2016 for $400,000 between the Registrant and FRH Group Ltd.(1)
|
|
10.3
|
|
Convertible Promissory Note dated Nov. 17, 2016 for $250,000 between the Registrant and FRH Group Ltd.(1)
|
|
10.4
|
|
Convertible Promissory Note dated April 24, 2017 for $250,000 between the Registrant and FRH Group Ltd.(1)
|
|
10.5
|
|
Amendment to Promissory Note dated February 22, 2016 between Registrant and FRH Group Ltd.(1)
|
|
10.6
|
|
Assignment of Debt Agreement dated February 22, 2021, between the Company and FRH Group Ltd.(2)
|
|
10.7
|
|
Equity Purchase Agreement dated September 10, 2021.(3) Equity Purchase Agreement dated September 10, 2021.
|
|
10.8
|
|
Registration Rights Agreement dated September 10, 2021.(3)
|
|
10.9
|
|
Subscription Agreement dated September 9, 2021(3)
|
|
10.10
|
|
Subscription Agreement dated September 16, 2021(4)
|
|
23.1*
|
|
Consent
of Independent PCOAB public accounting firm.
|
|
23.2*
|
|
Consent of Attorney (filed as part of Exhibit 5.0)
|
|
(1)
|
Incorporated
by reference to Current Report on Form S-1 filed with the Commission on November 22, 2017
|
|
(2)
|
Incorporated
by reference to Current Report on Form 8-K filed with the Commission on February 25, 2021
|
|
(3)
|
Incorporated
by reference to Current Report on Form 8-K filed with the Commission on September 15, 2021
|
|
(4)
|
Incorporated
by reference to Current Report on Form 8-K filed with the Commission on September 20, 2021
|
|
|
|
|
*
|
Filed
herewith
|
Item
17. Undertakings
The
undersigned Registrant hereby undertakes:
(a)(1)
To file, during any period in which offers, or sales of securities are being made, a post-effective amendment to this registration statement
to:
(i)
Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (ss.230.424(b) of this chapter) if, in the
aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the
“Calculation of Registration Fee” table in the effective registration statement.
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i)
If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall
be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however,
that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated
or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as
to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first
use.
(5)
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or our securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to our directors,
officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
In
the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one
of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of
our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of
our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of
such issue.
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-1 and has authorized this registration statement to be signed on its behalf by
the undersigned, in Irvine, California, on October 13, 2021.
|
|
FDCTECH,
INC
|
|
|
(Registrant)
|
|
|
|
|
|
|
By:
|
/s/
Mitchell Eaglstein
|
|
|
Name:
|
Mitchel
Eaglstein
|
|
|
Title:
|
President
and CEO (principal executive officer
|
|
|
|
|
|
|
By:
|
/s/
Imran Firoz
|
|
|
Name:
|
Imran
Firoz
|
|
|
Title:
|
CFO
(principal financial and accounting officer)
|
In
accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the
capacities and on the dates stated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/
Mitchell Eaglstein
|
|
President,
CEO and Director
|
|
October
13, 2021
|
|
|
|
|
|
|
|
/s/
Imran Firoz
|
|
CFO,
Secretary and Director
|
|
October
13, 2021
|
|
|
|
|
|
|
|
/s/
Jonathan Baumgart
|
|
Director
|
|
October
13, 2021
|
|
|
|
|
|
|
|
/s/
Charles R. Provini
|
|
Director
|
|
October
13, 2021
|
FDCTech (PK) (USOTC:FDCT)
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