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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Raadr Inc (PK) | USOTC:RDAR | OTCMarkets | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.0006 | 0.0006 | 0.0008 | 0.00 | 12:16:58 |
Commission File No. 024-11519
As filed with the Securities and Exchange Commission on October 3, 2023 |
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 1-A
Post-Qualification Amendment No. 7
REGULATION A OFFERING CIRCULAR UNDER THE SECURITIES ACT OF 1933
Raadr, Inc.
(Exact name of issuer as specified in its charter)
Nevada
(State of other jurisdiction of incorporation or organization)
7950 E. Redfield Road, Unit 210
Scottsdale, Arizona 85260
602-501-3836
(Address, including zip code, and telephone number,
including area code of issuer’s principal executive office)
Eric Newlan
Newlan Law Firm, PLLC
2201 Long Prairie Road, Suite 107-762
Flower Mound, TX 75022
(940) 367-6154
(Name, address, including zip code, and telephone number
including area code, of agent for service)
7372 |
| 20-4622782 |
(Primary Standard Industrial Classification Code Number) |
| (I.R.S. Employer Identification Number) |
This Post-Qualification Amendment shall only be qualified upon order of the Commission, unless a subsequent amendment is filed indicating the intention to become qualified by operation of the terms of Regulation A.
This Offering Circular is following the Offering Circular Format described in Part II (a)(1)(ii) of Form 1-A.
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Post-Qualification Offering Circular Amendment No. 7
File No. 024-11519
RAADR, INC.
Maximum offering of 3,062,500,000 Shares
This Post-Qualification Offering Circular Amendment No. 7 (the “PQA7”) amends the Offering Circular of Raadr, Inc., a Nevada corporation, dated September 17, 2021, Post-Qualification Offering Circular Amendment No. 1 dated June 17, 2022, Post-Qualification Offering Circular Amendment No. 2 dated June 22, 2022, Post-Qualification Offering Circular Amendment No. 3 dated June 27, 2022, Post-Qualification Offering Circular Amendment No. 5 dated January 5, 2023, and Post-Qualification Offering Circular Amendment No. 6 dated March 16, 2023, and as may be amended and supplemented from time to time, to: (a) to extend the expiration date of this offering to September 25, 2024; (b) to add 2,500,000,000 additional shares of common stock to be offered pursuant to this PQA7, for a revised maximum of 3,062,500,000 shares (collectively, the “Company Offering Shares”); and (c) to revise the offering price of the 2,989,663,619 shares of Company common stock that remain unsold (the “Remaining Shares”) and the Selling Shareholder Offered Shares to $[0.0005-0.0015].
This PQA7 reflects a 1-for-100 reverse split (the “Reverse Split”) of the Company’s common stock that became effective December 20, 2023 (historical share numbers in this PQA7 have been restated to reflect the Reverse Split).
This offering (the “Offering”) consists of up to 3,062,500,000 Shares of the Company’s Common Stock (the “Company Offering Shares”, or the “Shares” or, individually, each a “Share”), of which 72,836,381 shares have been sold for cash in the total amount of $682,658 and of which 2,989,663,619 shares, the Remaining Shares, are being offered at $[0.0005-0.0015] per share on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold. The Shares are being sold by the Company. There is no minimum number of Shares that needs to be sold in order for funds to be released to us and for this Offering to close.
In addition, the Selling Shareholders are offering up to a total of 296,969,230 shares of our common stock currently outstanding (the “Selling Shareholder Offered Shares”) (collectively, the Company Remaining Shares and the Selling Shareholder Offered Shares are referred to as the “Offering Shares”). We will not receive any of the proceeds from the sale of the Selling Shareholder Offered Shares in this offering. We will pay all of the expenses of the offering (other than the discounts and commissions payable with respect to the Selling Shareholder Offered Shares sold in the offering).
Title of class of Securities offered and offeror of securities |
| Total Number of Shares Offered |
| Number of Shares Sold to Date |
| Proceeds to Company to Date(1) |
| Number of Remaining Shares to Be Sold |
| Price to Public of Remaining Shares to Be Sold |
| Proceeds to Company from Remaining Shares(1) |
| Commissions(2) |
| Total Proceeds to Offeror of Securities(3) |
Common Stock offered by our company |
| 3,062,500,000 |
| 72,836,381 |
| $682,658 |
| 2,989,663,619 |
| $[0.0005-0.0015] |
| $[1,494,832- 4,484,496] |
| $-0- |
| $[2,177,490- 5,167,154] |
Common Stock offered by the Selling Shareholders |
| 296,969,230 |
| -0- |
| $-0- |
| 296,969,230 |
| $[0.0005-0.0015] |
| $[148,485-445,454] |
| $-0- |
| $[148,485-445,454] |
(1)Does not reflect payment of expenses of this Offering, which are estimated to not exceed $25,000 and which include, among other things, legal fees, accounting costs, reproduction expenses, due diligence, marketing, consulting, administrative services other costs of Blue Sky compliance, and actual out-of-pocket expenses incurred by our company selling the Shares.
(2)Neither our company nor the Selling Shareholders will pay any commissions for the sale of Offering Shares in this Offering.
(3)Assuming the sale of all 2,989,663,619 Company Remaining Shares and all 296,969,230 of the Selling Shareholder Offered Shares.
Our Common Stock currently trades on the OTC Pink market under the symbol “RDAR” and the closing price of our Common Stock on October 2, 2023, was $0.0013. Our Common Stock currently trades on a sporadic and limited basis.
We are offering our shares without the use of an exclusive placement agent. However, the Company reserves the right to retain one. The proceeds will be disbursed to us and the purchased shares will be disbursed to the investors.
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See “Risk Factors” to read about factors you should consider before buying any Remaining Shares, which are defined as “penny stock.”
Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
The United States Securities and Exchange Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.
This Offering Circular is following the offering circular format described in Part II (a)(1)(ii) of Form 1-A.
Post Qualification Offering Circular Amendment No. 7 dated October 3, 2023
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TABLE OF CONTENTS
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 20 |
24 | |
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29 | |
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32 | |
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33 |
No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this Offering Circular. You must not rely on any unauthorized information or representations. This Offering Circular is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this Offering Circular is current only as of its date.
FOR FLORIDA RESIDENTS:
PURSUANT TO SECTION 517.061(11)(A)(5) OF THE FLORIDA STATUTES, FLORIDA INVESTORS HAVE A THREE-DAY RIGHT OF RESCISSION. IF A FLORIDA INVESTOR HAS EXECUTED A SUBSCRIPTION AGREEMENT AND TENDERED THE CONSIDERATION FOR THE PURCHASE, HE MAY ELECT, WITHIN THREE BUSINESS DAYS AFTER SIGNING THE SUBSCRIPTION AGREEMENT OR BEING FIRST NOTIFIED OF THIS RIGHT, WHICHEVER IS LATER, TO WITHDRAW FROM THE SUBSCRIPTION AGREEMENT AND RECEIVE A FULL REFUND AND RETURN (WITHOUT INTEREST) OF ANY MONEY PAID BY HIM. A FLORIDA INVESTOR’S WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH SUCH WITHDRAWAL, A FLORIDA INVESTOR NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS SET FORTH IN THIS MEMORANDUM INDICATING HIS INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM MUST BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED THIRD BUSINESS DAY. IF A FLORIDA INVESTOR SENDS A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO AN OFFICER OF THE COMPANY TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME AND DATE WHEN IT IS MAILED. SHOULD A FLORIDA INVESTOR MAKE THIS REQUEST ORALLY, HE SHOULD ASK FOR WRITTEN CONFIRMATION THAT HIS REQUEST HAS BEEN RECEIVED. THE FOREGOING IS INTENDED TO CONSTITUTE THE NOTICE REQUIRED UNDER THE FLORIDA STATUTES. ACCORDINGLY, EACH PURCHASER WILL HAVE THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO VOID HIS PURCHASE OF THESE SECURITIES.
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This summary highlights information contained elsewhere in this Offering Circular. This summary does not contain all of the information that you should consider before deciding to invest in our Common Stock. You should read this entire Offering Circular carefully, including the “Risk Factors” section, our historical consolidated financial statements and the notes thereto, and unaudited pro forma financial information, each included elsewhere in this Offering Circular. Unless the context requires otherwise, references in this Offering Circular to “the Company,” “we,” “us” and “our” refer to Raadr, Inc.
The Company
Cyber bullying is a reality for over 50% of adolescents and teens, while only 1 in 10 victims will tell their parents about it. This growing crisis requires a simple, effective and adaptive solution-a tool usable by the most technically challenged among us, yet comprehensive, perceptive and state of the art. With 52% of parents worried that their children will face cyber bullying, the market for such a solution is enormous, yet no solution has reached these concerned parents and achieved a commanding market position.
Our position is that the void in this market exists because (1) legacy providers have forever controlled the larger market of internet security and previous solutions (2) were limited by poor usability for nontechnical parents and (3) required the installation of intrusive software on children’s phones, leading to circumvention and distrust. RAADR is what parents haven’t seen before: a simple, understandable, and reliable way to know when a child is in need of intervention. RAADR’s interface has been built with the layman parent in mind which allows parents to focus on protecting their children rather than trying to learn new technologies. Moreover, RAADR doesn’t require installation on a child’s phone or computer, so our product can’t be uninstalled or circumvented. In real time, we process the vast online reservoir of semi-public and public information that’s already accessible to parents, extract only that which falls within categories predefined by us or the parent, and present that extracted information in multiple, customizable levels of detail.
And just as the threats evolve, RAADR evolves. Our engineers will continually monitor trends and our customer service and marketing teams will continually interact with and learn from our customers and other market participants-all valuable market data will be incorporated into the platform. And our capacity to evolve doesn’t end there. Machine learning is now actively and effectively used by the most advanced technology companies, and RAADR will join them. Within the next 12 to 18 months, our algorithms will learn from and adapt to trends, as well as new or previously unknown or unidentified threats, and parents will be notified in real time. And then there’s our most important resource for adaptation: community interaction. Parents don’t currently have a way to efficiently communicate regarding local threats, but RAADR will change that. Our sophisticated, highly structured Community feature will allow parents to come together, and RAADR will incorporate threats and other issues raised by our communities.
Current Plan
As of October 15, 2022, RAADR is now working with Cooperative Computing, an application development firm. The total cost to RAADR for their services is $78,000.00. RAADR has completed all payments to Cooperative Computing with an additional scheduled payment planned totaling $32,413.00.
RAADR and Cooperative Computing working together were able to successfully re-launch the new RAADR 2.0 parent monitoring application on the IOS platform on February 2, 2023, and on the Google Play Store platform on January 24th, 2023. RAADR plans to launch an application subscription marketing campaign during the first quarter of 2024. We have a milestone projection of 10,000 new subscriptions a month for the projected revenue from advertisers between $29,500- $49,500. We expect recurring revenues to begin by the third quarter of 2024.
Opportunity
As of 2011, parents were spending over $1,100 per month to raise their children to the age of 17. Keeping children safe is undoubtedly the most important concern on a parent’s mind, and RAADR will cost parents as little as a quarter of one percent of that monthly expense total. Our tiered pricing starts at $1.95 per month followed by $4.95 per month and $9.95 per month with no contractual commitment (affiliate pricing is TBD). With over 35.2 million US households with children under the age of 18, it’s it is our goal to capture 50,000 of those within 12 months, 500,000 within 2 years, and 2 million of those within 5 years; these subscription figures will generate annualized revenue of between $1.7M and $2.9M by the end of the first year, $17.94M and $29.94M by the end of the second year, and $71.76M and
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$119.76M by the end of the fifth year. There is, of course, no assurance that we will be able to achieve our goals, even if we are able to obtain adequate capital, including in this offering. (See “Risk Factors” and “Business”).
Type of Stock Offering: | Common Stock |
|
|
Maximum Shares Offered by the Company: | 3,062,500,000 Shares of Common Stock, including the 2,989,663,619 Company Remaining Shares. |
|
|
Maximum Shares Offered by the Selling Shareholders: | 296,969,230 Shares of Common Stock (the Selling Shareholder Offered Shares). |
|
|
Price Per Remaining Share: | $[0.0005-0.0015] |
|
|
Maximum Offering: | $[1,494,832-4,484,496], assuming the sale of all Company Remaining Shares. |
|
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Use of Proceeds: | The funds raised in this offering will be utilized for costs of this offering and for payroll, equipment and parts, debt repayment, administrative and legal expenses, sales and marketing and for working capital. See “Use of Proceeds” for more details. The Company will derive no proceeds from sales of the Selling Shareholder Offered Shares. |
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Risk Factors: | See “Risk Factors” and other information appearing elsewhere in this Offering Circular for a discussion of factors you should carefully consider before deciding whether to invest in our Common Stock. |
This offering is being made on a self-underwritten basis without the use of an exclusive placement agent, although the Company may choose to engage a placement agent at its sole discretion. As there is no minimum offering, upon the approval of any subscription to this PQA7, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.
In the event that this offering is fully subscribed, any additional subscriptions shall be rejected and returned to the subscribing party along with any funds received.
In order to subscribe to purchase the shares, a prospective investor must complete a subscription agreement and send payment by check, wire transfer or ACH. Investors must answer certain questions to determine compliance with the investment limitation set forth in Regulation A Rule 251(d)(2)(i)(C) under the Securities Act of 1933, which states that in offerings such as this one, where the securities will not be listed on a registered national securities exchange upon qualification, the aggregate purchase price to be paid by the investor for the securities cannot exceed 10% of the greater of the investor’s annual income or net worth. In the case of an investor who is not a natural person, revenues or net assets for the investors’ most recently completed fiscal year are used instead.
The Company has not currently engaged any party for the public relations or promotion of this offering.
As of the date of this filing, there are no additional offers for shares, nor any options, warrants, or other rights for the issuance of additional shares except those described herein.
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Investing in our Common Stock involves a high degree of risk. You should carefully consider each of the following risks, together with all other information set forth in this Offering Circular, including the consolidated financial statements and the related notes, before making a decision to buy our Common Stock. If any of the following risks actually occurs, our business could be harmed. In that case, the trading price of our Common Stock could decline, and you may lose all or part of your investment.
This offering contains forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. These statements are only predictions. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our customers’ or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements, to differ. “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as other sections in this prospectus, discuss the important factors that could contribute to these differences.
The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
This prospectus also contains market data related to our business and industry. This market data includes projections that are based on a number of assumptions. If these assumptions turn out to be incorrect, actual results may differ from the projections based on these assumptions. As a result, our markets may not grow at the rates projected by these data, or at all. The failure of these markets to grow at these projected rates may have a material adverse effect on our business, results of operations, financial condition and the market price of our Common Stock.
Risk Related to our Company and our Business
We have a relatively limited operating history and no revenues to date and thus are subject to risks of business development and you have no basis on which to evaluate our ability to achieve our business objective.
Because we have a relatively limited operating history and no revenues to date, you should consider and evaluate our operating prospects in light of the risks and uncertainties frequently encountered by early-stage operating companies in rapidly evolving markets. These risks include:
·that we may not have sufficient capital to achieve our growth strategy;
·that we may not develop our product and service offerings in a manner that enables us to be profitable and meet our customers’ requirements;
·that our growth strategy may not be successful; and
·that fluctuations in our operating results will be significant relative to our revenues.
Our future growth will depend substantially on our ability to address these and the other risks described in this section. If we do not successfully address these risks, our business could be significantly harmed.
We have a history of operating losses and our auditors have indicated that there is a substantial doubt about our ability to continue as a going concern.
To date, we have not generated revenues and have incurred significant cash flow deficits. For the six months ended June 30, 2022, we reported a net loss of $________ and negative cash flow from operating activities of $______. For the fiscal years ended December 31, 2022 and 2021, we reported net losses of $_______ and $_______, respectively, and negative cash flow from operating activities of $______ and $_______, respectively. We anticipate that we will continue to report losses and negative cash flow. As a result of these net losses and cash flow deficits as well as our
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dependence on private equity and financings, there is a substantial doubt about our ability to continue as a going concern.
Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. These adjustments would likely include substantial impairment of the carrying amount of our assets and potential contingent liabilities that may arise if we are unable to fulfill various operational commitments. In addition, the value of our securities, including common stock issued in this offering, would be greatly impaired. Our ability to continue as a going concern is dependent upon generating sufficient cash flow from operations and obtaining additional capital and financing, including funds to be raised in this offering. If our ability to generate cash flow from operations is delayed or reduced and we are unable to raise additional funding from other sources, we may be unable to continue in business even if this offering is successful. For further discussion about our ability to continue as a going concern and our plan for future liquidity, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Ability to Continue as a Going Concern.”
We are in default under a promissory note, which default could lead to a change in control of our company.
In November 2022, our CEO, Jacob DiMartino, guaranteed our performance under a promissory note, $112,500 principal amount, issued to JanBella Group, LLC, by which we obtained $100,000 in cash proceeds. As part of his guaranty, Mr. DiMartino pledged his shares of Series E Preferred Stock, through which shares he has voting control of our company. As of the date of this PQA7, we were in default under this note. Should JanBella Group elect to foreclose on Mr. DiMartino’s pledge, there would be a change in control of our company. We are unable to predict the future operations of our company, should such foreclosure event occur.
Future acquisitions or strategic investments could disrupt our business and harm our business, results of operations or financial condition.
We may in the future explore potential acquisitions of companies or strategic investments to strengthen our business. Even if we identify an appropriate acquisition candidate, we may not be successful in negotiating the terms or financing of the acquisition, and our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business. Acquisitions involve numerous risks, any of which could harm our business, including:
·straining our financial resources to acquire a company;
·anticipated benefits may not materialize as rapidly as we expect, or at all;
·diversion of management time and focus from operating our business to address acquisition integration challenges;
·retention of employees from the acquired company;
·cultural challenges associated with integrating employees from the acquired company into our organization;
·integration of the acquired company’s accounting, management information, human resources and other administrative systems;
·the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies; and
·litigation or other claims in connection with the acquired company, including claims from terminated employees, former stockholders or other third parties.
Failure to appropriately mitigate these risks or other issues related to such strategic investments and acquisitions could result in reducing or completely eliminating any anticipated benefits of transactions, and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or the impairment of goodwill, any of which could have a material adverse effect on business, results of operations or financial condition.
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We may require additional funding for our growth plans, and such funding may result in a dilution of your investment.
We attempted to estimate our funding requirements in order to implement our growth plans. If the costs of implementing such plans should exceed these estimates significantly or if we come across opportunities to grow through expansion plans which cannot be predicted at this time, and our funds generated from our operations prove insufficient for such purposes, we may need to raise additional funds to meet these funding requirements.
These additional funds may be raised by issuing equity or debt securities or by borrowing from banks or other resources. We cannot assure you that we will be able to obtain any additional financing on terms that are acceptable to us, or at all. If we fail to obtain additional financing on terms that are acceptable to us, we will not be able to implement such plans fully if at all. Such financing even if obtained, may be accompanied by conditions that limit our ability to pay dividends or require us to seek lenders’ consent for payment of dividends, or restrict our freedom to operate our business by requiring lender’s consent for certain corporate actions.
Further, if we raise additional funds by way of a rights offering or through the issuance of new shares, any shareholders who are unable or unwilling to participate in such an additional round of fund raising may suffer dilution in their investment.
We may not have sufficient capital to fund our ongoing operations, effectively pursue our strategy or sustain our growth initiatives.
After launching out platform and engaging in marketing our remaining liquidity and capital resources may not be sufficient to allow us to fund our ongoing operations, effectively pursue our strategy or sustain our growth initiatives. If we require additional capital resources, we may seek such funds directly from third party sources; however, we may not be able to obtain sufficient equity capital and/or debt financing from third parties to allow us to fund our expected ongoing operations or we may not be able to obtain such equity capital or debt financing on acceptable terms or conditions. Factors affecting the availability of equity capital or debt financing to us on acceptable terms and conditions include:
·Our current and future financial results and position;
·the collateral availability of our otherwise unsecured assets;
·the market’s, investors and lenders’ view of our industry and products;
·the perception in the equity and debt markets of our ability to execute our business plan or achieve our operating results expectations; and
·the price, volatility and trading volume and history of our Common Stock.
If we are unable to obtain the equity capital or debt financing necessary to fund our ongoing operations, pursue our strategy and sustain our growth initiatives, we may be forced to scale back our operations or our expansion initiatives, and our business and operating results will be materially adversely affected.
We rely substantially on third-party platforms to make our app available to users and to collect revenue.
Our application is distributed through the main platform providers, including Apple and Google, which also provide us valuable information and data, such as the rankings of our app. Substantially all of our revenue is generated by users using those platforms. Consequently, our expansion and prospects depend on our continued relationships with these providers, and any emerging platform providers that are widely adopted by our target user base in the geographic markets in which we operate.
We are subject to the standard terms and conditions that these platform providers have for application developers, which govern the promotion, distribution and operation of applications on their platforms, and which the platform providers can change unilaterally on short or no notice. Our business would be harmed if:
·the platform providers discontinue or limit our access to their platforms;
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·governments or private parties, such as internet providers, impose bandwidth restrictions, increase charges, or restrict or prohibit access to those platforms;
·the platforms modify their current discovery mechanisms, communication channels available to developers, respective terms of service, or other policies, including fees;
·the platforms adopt changes or updates to their technology that impede integration with other software systems, such as Adobe Flash or others, or otherwise require us to modify our technology or update our app in order to ensure users can continue to access our app and content with ease;
·the platforms impose restrictions; or
·the platforms develop their own competitive offerings.
If alternative platforms increase in popularity, we could be adversely impacted if we fail to create compatible versions of our app in a timely manner, or if we fail to establish a relationship with such alternative platforms. Likewise, if our existing platform providers alter their operating platforms or browsers, we could be adversely impacted as our offerings may not be compatible with the altered platforms or browsers or may require significant and costly modifications in order to become compatible. If our platform providers were to develop competitive offerings, either on their own or in cooperation with one or more competitors, our growth prospects could be negatively impacted. If our platform providers do not perform their obligations in accordance with our platform agreements, we could be adversely impacted.
In the past, some of these providers’ platforms have been unavailable for short periods of time or experienced issues with certain features. If such events occur on a prolonged basis or other similar issues arise that impact users’ ability to download our app or access social features, it could have a material adverse effect on our revenue, operating results, and reputation.
Our business depends on the protection of our proprietary information and our owned and licensed intellectual property.
We believe that our success depends in part on protecting our owned and licensed intellectual property in the United States and other countries. Our intellectual property includes certain patents, trademarks and copyrights relating to our app, and proprietary or confidential information that is not subject to formal intellectual property protection. Our success may depend, in part, on our ability to protect the trademarks, trade dress, names, logos, or symbols under which we market our app and to obtain and maintain patent, copyright, and other intellectual property protection for the technologies, designs, software, and innovations used in our app and our business. We cannot assure that we will be able to build and maintain consumer value in our proprietary trademarks and copyrights or otherwise protect our technologies, designs, software, and innovations or that any patent, trademark, copyright, or other intellectual property right will provide us with competitive advantages.
We also rely on trade secrets and proprietary knowledge. We enter into confidentiality agreements with our employees and independent contractors regarding our trade secrets and proprietary information, but we cannot assure that the obligation to maintain the confidentiality of our trade secrets and proprietary information will be honored by such individuals.
In the future we may make claims of infringement against third parties or make claims that third-party intellectual property rights are invalid or unenforceable. These claims could cause us to incur greater costs and expenses in the protection of our intellectual property and could potentially negatively impact our intellectual property rights, for example, by causing one or more of our intellectual property rights to be ruled or rendered unenforceable or invalid.
Despite our efforts to protect our intellectual property rights, the steps we take in this regard might not be adequate to prevent or deter infringement or other misappropriation of our intellectual property by competitors or other third parties.
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The intellectual property rights of others may prevent us from developing new app and/or entering new markets or may expose us to liability or costly litigation.
Our success depends in part on our ability to continually adapt our app to incorporate new technologies as well as intellectual property related to app mechanics and procedures, and to expand into markets that may be created by these new developments. If technologies are protected by the intellectual property rights of our competitors or other third parties, we may be prevented from introducing additional features based on these technologies or expanding into markets created by these technologies.
We cannot assure that our business activities and our app will not infringe upon the proprietary rights of others, or that other parties will not assert infringement claims against us. A successful claim of infringement by a third party against us, our app or one of our licensees in connection with the use of our technologies, app mechanics or procedures, or an unsuccessful claim of infringement made by us against a third party or its products or apps, could adversely affect our business or cause us financial harm. Any such claim and any resulting litigation, should it occur, could:
·be expensive and time-consuming to defend or require us to pay significant amounts in damages;
·be expensive and time-consuming to defend or require us to pay significant amounts in damages;
·result in invalidation of our proprietary rights or render our proprietary rights unenforceable;
·cause us to cease making, licensing, or using apps that incorporate the intellectual property;
·require us to redesign, reengineer, or rebrand our app or limit our ability to bring apps to the market in the future;
·require us to enter into costly or burdensome royalty, licensing, or settlement agreements in order to obtain the right to use a product or process;
·impact the commercial viability of the app that are the subject of the claim during the pendency of such claim; or
·require us to stop offering the infringing features.
Our success depends upon our ability to acquire and retain users, as well as adapt to and offer features that keep pace with changing technology and evolving industry standards.
Our ability to acquire and retain users is largely driven by our success in maintaining and improving our app. To satisfy users, we need to continue to improve useful features that are more attractive than those of our competitors. This will require us to, among other things, continue to improve our technology, app mechanics, and procedures to optimize search results for our app, tailor our app offerings to additional geographic and demographic market segments, and improve the user-friendliness of our app. Our ability to anticipate or respond to changing technology and evolving industry standards and to develop and introduce new and enhanced app features on a timely basis, or at all, is a significant factor affecting our ability to remain competitive and expand and attract new users. We cannot assure that we will have the financial and technical resources needed to introduce new features on a timely basis, or at all.
Further, as technological or regulatory standards change and we modify our app to comply with those standards, we may need users to take certain actions to continue using the app, performing age-gating checks or accepting new terms and conditions. Users may stop using our app at any time.
Our users depend on our support organization to resolve any issues relating to our app. Our ability to provide effective support is largely dependent on our ability to attract, resource, and retain employees who are not only qualified to support users, but are also well versed in our app. Any failure to maintain high-quality support, or a market perception that we do not maintain high-quality support, could harm our reputation, adversely affect our ability to retain users, and adversely impact our results of operations, cash flows, and financial condition.
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Data privacy and security laws and regulations in the jurisdictions in which we do business could increase the cost of our operations and subject us to possible sanctions and other penalties.
We collect, process, store, use, and share data, some of which contains limited personal information. Consequently, our business is subject to a number of U.S. and international laws and regulations governing data privacy and security, including with respect to the collection, storage, use, transmission, sharing, and protection of personal information and other consumer data. Such laws and regulations may be inconsistent among countries or conflict with other rules.
We are subject to U.S. federal and state and foreign laws related to the privacy and protection of user data. Such regulations, such as the General Data Protections Regulation (“GDPR”) from the European Union (“EU”) and the California Consumer Privacy Act, which became effective on January 1, 2020, are new, untested laws and regulations that could affect our business, and the potential impact is unknown. See “Our business- Regulation of the industry.” We believe we have been and continue to be in compliance with the requirements of the GDPR since the regulation went into effect in 2018. In general, we do not store personal private information given that all payment processing occurs through third-party platforms, such as Apple, and Google.
There currently are a number of other proposals related to data privacy and security pending before several legislative and regulatory bodies. For example, the European Union is contemplating the adoption of the Regulation on Privacy and Electronic Communications (the “e-Privacy Regulation”). While this regulation was planned to take effect simultaneously with GDPR, it is currently still being debated and discussed by the EU member states. The e-Privacy Regulation focuses on the privacy of electronic communications and, in that respect, it contains new rules for direct marketing activities. It is highly likely that these rules will lead to new consent requirements.
Efforts to comply with these and other data privacy and security restrictions that may be enacted could require us to modify our data processing practices and policies, incorporate privacy by design into our app, and will significantly increase the cost of our operations. Failure to comply with such restrictions could subject us to criminal and civil sanctions and other penalties. In part due to the uncertainty of the legal climate, complying with regulations, and any applicable rules or guidance from self-regulatory organizations relating to privacy, data protection, information security, and consumer protection, may result in substantial costs and may necessitate changes to our business practices, which may compromise our growth strategy, adversely affect our ability to attract or retain users, and otherwise adversely affect our business, financial condition, and operating results.
Any failure or perceived failure by us to comply with our posted privacy policies or terms of use, our privacy-related obligations to users or other third parties, or any other legal obligations or regulatory requirements relating to privacy, data protection, or information security may result in governmental investigations or enforcement actions, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to us may limit the adoption and use of, and reduce the overall demand for our app.
Additionally, if third parties we work with violate applicable laws, regulations, or agreements, such violations may put our users’ data at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business. Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry, or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements or to modify their enforcement or investigation activities, which may increase our costs and risks.
Security breaches or other disruptions could compromise our information or the information of our users. If we sustain cyber-attacks or other security incidents that result in data breaches, we could suffer a loss of users and associated revenue, increased costs, exposure to significant liability, reputational harm, and other negative consequences.
Our business sometimes involves the storage, processing, and transmission of certain proprietary, confidential, and personal information of our users. We also maintain certain other proprietary and confidential information relating to our business and personal information of our personnel. Despite our security measures, our information technology may be subject to cyber-attacks, viruses, malicious software, break-ins, theft, computer hacking, employee error or malfeasance, or other security breaches. Hackers and data thieves are increasingly sophisticated and operate large-
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scale and complex automated attacks. Experienced computer programmers and hackers may be able to penetrate our security controls and misappropriate or compromise sensitive personal, proprietary, or confidential information, create system disruptions, or cause shutdowns. They also may be able to develop and deploy malicious software programs that attack our systems or otherwise exploit any security vulnerabilities.
Our systems and the data stored on those systems may also be vulnerable to security incidents or security attacks, acts of vandalism or theft, coordinated attacks by activist entities, misplaced or lost data, human errors, or other similar events that could negatively affect our systems, the data stored on those systems, and the data of our business partners. Further, third parties, such as hosted solution providers, that provide services to us, could also be a source of security risks in the event of a failure of their own security systems and infrastructure. An increasing number of online services have disclosed security breaches, some of which have involved sophisticated and highly targeted attacks on portions of their services. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not foreseeable or recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any security breach or incident that we experience could result in unauthorized access to, misuse of, or unauthorized acquisition of our or our users’ data, the loss, corruption or alteration of this data, interruptions in our operations, or damage to our computers or systems or those of our users or third-party platforms. Any of these could expose us to claims, litigation, fines, and potential liability.
The costs to eliminate or address the foregoing security threats and vulnerabilities before or after a cyber incident could be significant. Our remediation efforts may not be successful and could result in interruptions, delays or cessation of service, and loss of existing or potential suppliers or users. As threats related to cyber-attacks develop and grow, we may also find it necessary to make further investments to protect our data and infrastructure, which may impact our operations. Although we have insurance coverage for protecting against cyber-attacks, it may not be sufficient to cover all possible claims, and we may suffer losses that could have a material adverse effect on our business. We could also be negatively impacted by existing and proposed laws and regulations, and government policies and practices related to cybersecurity, data privacy, data localization, and data protection in the United States, Canada, the European Union, and other countries.
If an actual or perceived breach of our security occurs, public perception of the effectiveness of our security measures for our app and content could be harmed, and we could lose users. Data security breaches and other data security incidents may also result from non-technical means, for example, actions by employees or contractors. Any compromise of our security could result in a violation of applicable privacy and other laws, regulatory or other governmental investigations, enforcement actions, and legal and financial exposure, including potential contractual liability that is not always limited to the amounts covered by our insurance. Any such compromise could also result in damage to our reputation and a loss of confidence in our security measures. Any of these effects could have a material adverse impact on our results of operations, cash flows, and financial condition.
We operate in a highly competitive industry, and our success depends on our ability to effectively compete.
Mobile applications development is a rapidly evolving industry with low barriers to entry. Businesses can easily launch online or mobile platforms and applications at nominal cost by using commercially available software or partnering with various established companies in these markets, but may not offer the same level of sophistication or capabilities as our app. The market for our app is also characterized by rapid technological developments, frequent launches of new apps and content, changes in user needs and behavior, disruption by innovative entrants, and evolving business models and industry standards. As a result, our industry is constantly changing mobile applications and business models in order to adopt and optimize new technologies, increase cost efficiency, and adapt to user preferences.
If we do not successfully invest in, establish and maintain awareness of our app, if we incur excessive expenses promoting and maintaining our app, or if our app contain defects or objectionable content, our business, financial condition, results of operations, or reputation could be harmed.
We believe that establishing and maintaining our awareness of our app is critical to developing and maintaining favorable relationships with users, platform providers, advertisers, and content licensors, as well as competing for key management and technical talent. Increasing awareness and recognition of our app is particularly important in connection with our strategic focus on developing features based on our own intellectual property and successfully cross-promoting our app. In addition, globalizing and extending awareness and recognition of our app require significant investment and extensive management time to execute successfully. Although we make significant sales
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and marketing expenditures in connection with the launch of our app, these efforts may not succeed in increasing awareness of our app.
We rely on information technology and other systems, and any failures in our systems or errors, defects, or disruptions in our app could diminish our reputation, subject us to liability, disrupt our business, and adversely impact our results.
We rely on information technology systems that are important to the operation of our business, some of which are managed by third parties. These third parties are typically under no obligation to renew agreements and there is no guarantee that we will be able to renew these agreements on commercially reasonable terms, or at all. These systems are used to process, transmit, and store electronic information, to manage and support our business operations, and to maintain internal control over our financial reporting. In addition, we collect and store certain data, including proprietary business information, and may have access to confidential or personal information in certain of our businesses that is subject to privacy and security laws, and regulations. We could encounter difficulties in developing new systems, maintaining and upgrading current systems, and preventing security breaches. Among other things, our systems are susceptible to damage, outages, disruptions, or shutdowns due to fire, floods, power loss, break-ins, cyber-attacks, network penetration, denial of service attacks, and similar events. Any failures in our computer systems or telecommunications services could affect our ability to operate our app or otherwise conduct business.
Portions of our information technology infrastructure, including those operated by third parties, may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time-consuming, disruptive, and resource-intensive. We have no control over third parties that provide services to us and those parties could suffer problems or make decisions adverse to our business. We have contingency plans in place to prevent or mitigate the impact of these events. However, such disruptions could materially and adversely impact our ability to deliver app to users and interrupt other processes. If our information systems do not allow us to transmit accurate information, even for a short period of time, to key decision-makers, the ability to manage our business could be disrupted and our results of operations, cash flows, and financial condition could be materially and adversely affected. Failure to properly or adequately address these issues could impact our ability to perform necessary business operations, which could materially and adversely affect our reputation, competitive position, results of operations, cash flows, and financial condition.
Substantially all of our features rely on data transferred over the internet, including wireless internet. Access to the internet in a timely fashion is necessary to provide a satisfactory user experience to the users of our app. Third parties, such as telecommunications companies, could prevent access to the internet or limit the speed of our data transmissions, with or without reason, causing an adverse impact on our user experience that may materially and adversely affect our reputation, competitive position, results of operations, cash flows, and financial condition. In addition, telecommunications companies may implement certain measures, such as increased cost or restrictions based on the type or amount of data transmitted, that would impact consumers’ ability to access our app, which could materially and adversely affect our reputation, competitive position, results of operations, cash flows, and financial condition. Furthermore, internet penetration may be adversely affected by difficult global economic conditions or the cancellation of government programs to expand broadband access.
We may use open source software in a manner that could be harmful to our business.
We use open source software in connection with our technology and app on a limited basis. The original developers of the open source code provide no warranties on such code. Moreover, some open source software licenses require users who distribute open source software as part of their proprietary software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open source code on unfavorable terms or at no cost. We try to use open source software in a manner that will not require the disclosure of the source code to our proprietary software or prevent us from charging fees to our users for use of our proprietary software. However, we cannot guarantee that these efforts will be successful, and thus, there is a risk that the use of such open source code may ultimately preclude us from charging fees for the use of certain software, require us to replace certain code used in our app, pay a royalty to use some open source code, make the source code of our app publicly available, or discontinue certain features. Our results of operations, cash flows, and financial condition could be adversely affected by any of the above requirements.
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Our inability to complete potential acquisition opportunities and integrate those businesses successfully could limit our growth or disrupt our plans and operations.
In the future, we may pursue additional strategic acquisitions to further expand our operations. Our ability to succeed in implementing our strategy will depend to some degree upon our ability to identify and complete commercially viable acquisitions. We cannot assure that acquisition opportunities will be available on acceptable terms, or at all, or that we will be able to obtain necessary financing or regulatory approvals to complete potential acquisitions.
We may not be able to successfully integrate any businesses that we acquire or do so within the intended timeframes. We could face significant challenges in managing and integrating our acquisitions and our combined operations, including acquired assets, operations, and personnel. In addition, the expected cost synergies associated with such acquisitions may not be fully realized in the anticipated amounts or within the contemplated timeframes or cost expectations, which could result in increased costs and have an adverse effect on our prospects, results of operations, cash flows, and financial condition.
Our business may be adversely impacted by reductions in discretionary consumer spending as a result of downturns in the economy, global pandemics, or other factors beyond our control.
Consumer demand for mobile applications, such as ours, is sensitive to downturns in the economy and the corresponding impact on discretionary spending. Changes in discretionary consumer spending or consumer preferences brought about by factors such as perceived or actual general economic conditions, effects of declines in consumer confidence in the economy, public health concerns or pandemics, such as the COVID-19 coronavirus, the impact of high energy and food costs, the increased cost of travel, decreased disposable consumer income and wealth, political and regulatory uncertainty, or fears of war and future acts of terrorism could further reduce customer demand for the features that we offer and the amounts, if any, our users are willing to spend. These factors could impose practical limits on pricing and negatively impact our results of operations and financial condition.
Although we are seeing positive changes and expect schools to return to regular operations, any return to virtual schooling on a large scale due to further outbreaks of COVID-19 corona virus, variations of the same, or other viral/bacteria pandemics would be detrimental to business given the stationary requirements of a lock-down or limitations on activities outside of the home.
We rely on skilled employees with creative and technical backgrounds.
We rely on our highly skilled, technically trained, and creative employees to develop new technologies and create innovative features. Such employees, particularly app designers, engineers, and project managers with desirable skill sets are in high demand, and we devote significant resources to identifying, hiring, training, successfully integrating, and retaining these individuals. A lack of skilled technical workers could delay or negatively impact our business plans, ability to compete, results of operations, cash flows, and financial condition.
Our results of operations, cash flows, and financial condition could be affected by natural events in the locations in which we or our key platform providers or content suppliers operate.
We may be impacted by severe weather and other geological events, including hurricanes, earthquakes, floods or tsunamis that could disrupt our operations or the operations of our key platform providers or content suppliers. Natural disasters or other disruptions at any of our facilities, those of our key providers, such as Apple and Google, or those of our content suppliers, may impair the operation, development or provision of our app. While we insure against certain business interruption risks, we cannot assure that such insurance will compensate us for any losses incurred as a result of natural or other disasters. Any serious disruption to our operations, or those of our key providers or suppliers could have a material adverse effect on our results of operations, cash flows, and financial condition.
Our results of operations fluctuate due to seasonality and other factors and, therefore, our periodic operating results are not guarantees of future performance.
Our results of operations can fluctuate due to seasonal trends and other factors. User activity is generally slower in the second and third quarters of the year, particularly during the summer months. Certain other seasonal trends and factors that may cause our results to fluctuate include:
·holiday and vacation seasons;
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·economic and political conditions; and
·the timing of the release of new features or refreshed content, including those of our competitors.
Consequently, results for any quarter are not necessarily indicative of the results that may be achieved in another quarter or for the full fiscal year. We cannot assure that the seasonal trends and other factors that have impacted our historical results will repeat in future periods as we do not have the ability to influence these factors.
We are subject to a variety of laws worldwide, many of which are still untested and still developing and which could subject us to further extensive governmental regulation, claims, or otherwise, as well as federal, state, provincial, and local laws affecting business in general, which may harm or restrict our business.
We are subject to a variety of laws in the United States, Canada, and other jurisdictions, including laws regarding consumer protection, intellectual property, virtual items and currency, export, and national security, all of which are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly laws outside of Canada and the United States. It is also likely that as our business grows and evolves and our app are played in larger volume in a greater number of countries, we will become subject to laws and regulations in additional jurisdictions. If we are not able to comply with these laws or regulations or if we become liable under these laws or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources, modify our app, or block users from a particular jurisdiction, each of which would harm our business, financial condition, and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business and operating results.
It is possible that a number of laws and regulations may be adopted or construed to apply to us in the United States, Canada, and elsewhere that could restrict the online and mobile industries, including user privacy, advertising, taxation, copyright, distribution, and antitrust.
Changes in tax laws or tax rulings, or the examination of our tax positions, could materially affect our financial condition and results of operations.
Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In 2017, the United States enacted comprehensive tax legislation that includes significant changes to the taxation of business entities. These changes include, among others: (i) a permanent reduction to the corporate income tax rate, (ii) a partial limitation on the deductibility of business interest expense, (iii) a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a territorial system (along with certain rules designed to prevent erosion of the U.S. income tax base), and (iv) a one-time tax on accumulated offshore earnings held in cash and cash equivalents and illiquid assets, with the latter taxed at a lower rate. Because these tax law changes are relatively new, we are still evaluating the impact that they may have on our business and results of operations in the future. Although at this time we do not expect that the changes will have an overall significant adverse impact on our business and financial condition, we cannot assure you that our business and results of operations will not be adversely affected by these or other changes to tax laws.
Our existing corporate structure and intercompany arrangements have been implemented in a manner we believe is in compliance with current prevailing tax laws and related regulatory guidance. However, the tax benefits that we intend to eventually derive could be undermined due to changing tax laws. In addition, the taxing authorities in Korea and the United States regularly examine income and other tax returns and we expect that they may examine our income and other tax returns. The ultimate outcome of these examinations cannot be predicted with certainty.
Our insurance may not provide adequate levels of coverage against claims.
We believe that we maintain insurance customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Moreover, any loss incurred could exceed policy limits and policy payments made to us may not be made on a timely basis. Such losses could adversely affect our business prospects, results of operations, cash flows and financial condition.
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Risks Related to the Securities Markets and Ownership of our Equity Securities
The Common Stock is thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
The Common Stock has historically been sporadically traded on the OTC Pink Sheets, meaning that the number of persons interested in purchasing our shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common shares will develop or be sustained, or that current trading levels will be sustained.
The market price for the Common Stock is particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history and lack of revenue, which could lead to wide fluctuations in our share price. The price at which you purchase our shares may not be indicative of the price that will prevail in the trading market. You may be unable to sell your common shares at or above your purchase price, which may result in substantial losses to you.
The market for our shares of Common Stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our shares are sporadically traded. Because of this lack of liquidity, the trading of relatively small quantities of shares may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our shares is sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative investment due to, among other matters, our limited operating history and lack of revenue or profit to date, and the uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-averse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the securities of a seasoned issuer. The following factors may add to the volatility in the price of our shares: actual or anticipated variations in our quarterly or annual operating results; acceptance of our app; government regulations, announcements of significant acquisitions, strategic partnerships or joint ventures; our capital commitments and additions or departures of our key personnel. Many of these factors are beyond our control and may decrease the market price of our shares regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our shares will be at any time, including as to whether our shares will sustain their current market prices, or as to what effect the sale of shares or the availability of shares for sale at any time will have on the prevailing market price.
Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
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The market price of our common stock may be volatile and adversely affected by several factors.
The market price of our common stock could fluctuate significantly in response to various factors and events, including, but not limited to:
·our ability to integrate operations, technology, products and services;
·our ability to execute our business plan;
·operating results below expectations;
·our issuance of additional securities, including debt or equity or a combination thereof;
·announcements of technological innovations or new products by us or our competitors;
·loss of any strategic relationship;
·industry developments, including, without limitation, changes in healthcare policies or practices;
·economic and other external factors;
·period-to-period fluctuations in our financial results; and
·whether an active trading market in our common stock develops and is maintained.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. Issuers using the Alternative Reporting standard for filing financial reports with OTC Markets are often subject to large volatility unrelated to the fundamentals of the company.
Our issuance of additional shares of Common Stock, or options or warrants to purchase those shares, would dilute your proportionate ownership and voting rights.
We are entitled under our articles of incorporation to issue up to 15,000,000,000 shares of Common Stock. We have issued and outstanding, as of the date of this PQA7, 2,147,999,193 shares of Common Stock. Our board may generally issue shares of Common Stock, preferred stock or options or warrants to purchase those shares, without further approval by our shareholders based upon such factors as our board of directors may deem relevant at that time. It is likely that we will be required to issue a large amount of additional securities to raise capital to further our development. It is also likely that we will issue a large amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our stock plans. We cannot give you any assurance that we will not issue additional shares of Common Stock, or options or warrants to purchase those shares, under circumstances we may deem appropriate at the time.
The elimination of monetary liability against our directors, officers and employees under our Articles of Incorporation and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.
Our Articles of Incorporation contains provisions that eliminate the liability of our directors for monetary damages to our company and shareholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees that we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit our company and shareholders.
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Anti-takeover provisions may impede the acquisition of our company.
Certain provisions of the Nevada Revised Statutes have anti-takeover effects and may inhibit a non-negotiated merger or other business combination. These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain the approval of, our board of directors in connection with such a transaction. However, certain of these provisions may discourage a future acquisition of us, including an acquisition in which the shareholders might otherwise receive a premium for their shares. As a result, shareholders who might desire to participate in such a transaction may not have the opportunity to do so.
We may become involved in securities class action litigation that could divert management’s attention and harm our business.
The stock market in general, and the shares of early-stage companies in particular, have experienced extreme price and volume fluctuations. These fluctuations have often been unrelated or disproportionate to the operating performance of the companies involved. If these fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. If the market price or volume of our shares suffers extreme fluctuations, then we may become involved in this type of litigation, which would be expensive and divert management’s attention and resources from managing our business.
As a public company, we may also from time to time make forward-looking statements about future operating results and provide some financial guidance to the public markets. Our management has limited experience as a management team in a public company and as a result, projections may not be made timely or set at expected performance levels and could materially affect the price of our shares. Any failure to meet published forward-looking statements that adversely affect the stock price could result in losses to investors, stockholder lawsuits or other litigation, sanctions or restrictions issued by the SEC.
Our Common Stock is currently deemed a “penny stock,” which makes it more difficult for our investors to sell their shares.
The SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has 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 person’s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’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 and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, 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 if and when such shares are eligible for sale and may cause a decline in the market value of its stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commission 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 have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
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As an issuer of “penny stock,” the protection provided by the federal securities laws relating to forward-looking statements does not apply to us.
Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.
As an issuer not required to make reports to the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, holders of restricted shares may not be able to sell shares into the open market as Rule 144 exemptions may not apply.
Under Rule 144 of the Securities Act of 1933 holders of restricted shares, may avail themselves of certain exemption from registration is the holder and the issuer meet certain requirements. As a company that is not required to file reports under Section 13 or 15(d) of the Securities Exchange Act, referred to as a non-reporting company, we may not, in the future, meet the requirements for an issuer under 144 that would allow a holder to qualify for Rule 144 exemptions. In such an event, holders of restricted stock would have to utilize another exemption from registration or rely on a registration statement to be filed by the Company registered the restricted stock. Currently, the Company has no plans of filing a registration statement with the Commission.
Securities analysts may elect not to report on our Common Stock or may issue negative reports that adversely affect the stock price.
At this time, no securities analysts provide research coverage of our Common Stock, and securities analysts may not elect not to provide such coverage in the future. It may remain difficult for our company, with its small market capitalization, to attract independent financial analysts that will cover our Common Stock. If securities analysts do not cover our Common Stock, the lack of research coverage may adversely affect the stock’s actual and potential market price. The trading market for our Common Stock may be affected in part by the research and reports that industry or financial analysts publish about our business. If one or more analysts elect to cover our company and then downgrade the stock, the stock price would likely decline rapidly. If one or more of these analysts cease coverage of our company, we could lose visibility in the market, which, in turn, could cause our stock price to decline. This could have a negative effect on the market price of our Common Stock.
We have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future. Any return on investment may be limited to the value of our Common Stock.
We have never paid cash dividends on our capital stock and do not anticipate paying cash dividends on our capital stock in the foreseeable future. The payment of dividends on our capital stock will depend on our earnings, financial condition and other business and economic factors affecting us at such time as the board of directors may consider relevant. If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will only occur if the Common Stock price appreciates.
16
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We make forward-looking statements under the “Summary,” “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Offering Circular. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and uncertainties described under “Risk Factors.”
While we believe we have identified material risks, these risks and uncertainties are not exhaustive. Other sections of this Offering Circular describe additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this Offering Circular to conform our prior statements to actual results or revised expectations, and we do not intend to do so.
Forward-looking statements include, but are not limited to, statements about:
·our business’ strategies and investment policies;
·our business’ financing plans and the availability of capital;
·potential growth opportunities available to our business;
·the risks associated with potential acquisitions by us;
·the recruitment and retention of our officers and employees;
·our expected levels of compensation;
·the effects of competition on our business; and
·the impact of future legislation and regulatory changes on our business.
We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this Offering Circular.
17
As of the date of this PQA7, we have sold a total of 72,836,381 Shares, for an aggregate of $682,658 in proceeds. We have applied such proceeds for application development and launch and for operating expenses.
The table below sets forth the proceeds we would derive from the sale of all 2,989,633,619 Company Remaining Shares, assuming the sale of 100%, 75%, 50% and 25% of the Company Remaining Shares, assuming a per share purchase price of $0.001, which represents the midpoint of the offering price range herein, and assuming the payment of no sales commissions or finder’s fees and before the payment of expenses associated with this offering of approximately $25,000. There is, of course, no guaranty that we will be successful in selling any of the Company Remaining Shares.
Use of Proceeds for Assumed Percentage
Of Company Remaining Shares Sold in This Offering
| 25% |
| 50% |
| 75% |
| 100% |
Wages | $ 37,580 |
| $ 75,150 |
| $ 112,730 |
| $ 150,300 |
Software & Computers | 31,300 |
| 62,630 |
| 93,950 |
| 125,250 |
Tools and Equipment | 62,630 |
| 125,265 |
| 187,900 |
| 250,530 |
Parts | 94,000 |
| 187,900 |
| 281,850 |
| 375,800 |
Custom Gear | 31,300 |
| 62,630 |
| 93,950 |
| 125,250 |
Debt Repayment | 37,580 |
| 75,150 |
| 375,800 |
| 150,300 |
Administrative and Legal | 125,250 |
| 250,530 |
| 126,000 |
| 501,000 |
Sales and Marketing | 37,580 |
| 75,150 |
| 112,730 |
| 150,300 |
Vendors | 31,300 |
| 62,630 |
| 93,950 |
| 125,250 |
Hosting | 94,000 |
| 125,265 |
| 187,900 |
| 250,530 |
Working Capital | 164,888 |
| 392,517 |
| 575,466 |
| 785,124 |
Total Net Proceeds | $ 747,408 |
| $ 1,494,817 |
| $ 2,242,226 |
| $ 2,989,634 |
18
We have not declared or paid any dividends on our Common Stock. We intend to retain earnings for use in our operations and to finance our business. Any change in our dividend policy is within the discretion of our board of directors and will depend, among other things, on our earnings, debt service and capital requirements, restrictions in financing agreements, if any, business conditions, legal restrictions and other factors that our board of directors deems relevant.
Dilution in net tangible book value per share to purchasers of our common stock in this offering represents the difference between the amount per share paid by purchasers of the Company Remaining Shares in this offering and the net tangible book value per share immediately after completion of this offering. In this offering, dilution is attributable primarily to our negative net tangible book value per share.
If you purchase Company Remaining Shares in this offering, your investment will be diluted to the extent of the difference between your purchase price per Company Remaining Share and the net tangible book value of our common stock after this offering. Our net tangible book value as of June 30, 2023, was $(10,871,188) (unaudited), or $(0.040) per share. Net tangible book value per share is equal to total assets minus the sum of total liabilities and intangible assets divided by the total number of shares outstanding.
The tables below illustrate the dilution to purchasers of the Company Remaining Shares in this offering at a purchase price of $0.001, which represents the midpoint of the offering price range herein, on a pro forma basis, assuming 100%, 75%, 50% and 25% of the Remaining Shares are sold.
Assuming the Sale of 100% of the Company Remaining Shares |
| |
Assumed offering price per share | $ | 0.001 |
Net tangible book value per share as of June 30, 2023 (unaudited) | $ | (0.040) |
Increase in net tangible book value per share after giving effect to this offering | $ | 0.038 |
Pro forma net tangible book value per share as of June 30, 2023 (unaudited) | $ | (0.002) |
Dilution in net tangible book value per share to purchasers of Company Remaining Shares in this offering | $ | 0.003 |
|
|
|
Assuming the Sale of 75% of the Company Remaining Shares |
|
|
Assumed offering price per share | $ | 0.001 |
Net tangible book value per share as of June 30, 2023 (unaudited) | $ | (0.040) |
Increase in net tangible book value per share after giving effect to this offering | $ | 0.037 |
Pro forma net tangible book value per share as of June 30, 2023 (unaudited) | $ | (0.003) |
Dilution in net tangible book value per share to purchasers of Company Remaining Shares in this offering | $ | 0.004 |
|
|
|
Assuming the Sale of 50% of the Company Remaining Shares |
|
|
Assumed offering price per share | $ | 0.001 |
Net tangible book value per share as of June 30, 2023 (unaudited) | $ | (0.040) |
Increase in net tangible book value per share after giving effect to this offering | $ | 0.035 |
Pro forma net tangible book value per share as of June 30, 2023 (unaudited) | $ | (0.005) |
Dilution in net tangible book value per share to purchasers of Company Remaining Shares in this offering | $ | 0.006 |
|
|
|
Assuming the Sale of 25% of the Company Remaining Shares |
|
|
Assumed offering price per share | $ | 0.001 |
Net tangible book value per share as of June 30, 2023 (unaudited) | $ | (0.040) |
Increase in net tangible book value per share after giving effect to this offering | $ | 0.030 |
Pro forma net tangible book value per share as of June 30, 2023 (unaudited) | $ | (0.010) |
Dilution in net tangible book value per share to purchasers of Company Remaining Shares in this offering | $ | 0.011 |
19
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this Report. Our actual results or actions may differ materially from these forward-looking statements for many reasons. Our discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes and with the understanding that our actual future results may be materially different from what we currently expect. See “CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION” above. As used herein, the terms “we,” “us,” “our” and the “Company” refers to Raadr, Inc., a Nevada corporation, and its subsidiaries unless otherwise stated.
Overview
The Company was incorporated in the state of Nevada on March 29, 2006 as White Dental Supply, Inc. On January 7, 2013, the Company changed its name to Pitooey!, Inc. On October 12, 2015, the Company changed its name to Raadr, Inc. As the digital world of the 21st Century continues to evolve, parents, guardians, and children are faced with challenges and threats not just in the real world, but in the omnipresent realm of Social Media as well. The Company is a maker of the proprietary technology application have developed a web-based tool that provides families with peace of mind when it comes to knowing that children are safe from bullying and predatory behavior unfortunately so prevalent today. By customizing their own unique monitoring and alert settings, parents and guardians can be alerted when their children Facebook, Twitter, Instagram and other pertinent social media platforms under scrutiny become posted with inappropriate language. By utilizing customized keywords chosen by the user that are added to an already existing database, parents and guardians can carry a sense of assuredness that the youth they love and are responsible for are safe and acting in a fun, yet appropriate manner. RAADR, Inc. makers of the proprietary technology application RAADR is a software development and mobile application developer formed in late 2012. The Company core competency is focused on building and acquiring apps and other products, services and companies to build a nationwide network of related businesses that are positioned to serve the mobile app development needs of small businesses and individuals.
Results of Operations
The Company is currently developing its products for sale and has not yet commenced sales.
Revenues
For the six months ended June 30, 2023 and 2022, and for the years ended December 31, 2022 and 2021, the Company did not generate any revenues.
Operating Expenses
For the six months ended June 30, 2023 and 2022, the Company’s operating expenses totaled $414,606 (unaudited) and $613,207 (unaudited), respectively. For the six months ended June 30, 2023, operating expenses consisted of $595 (unaudited) in advertising and marketing, $90,000 (unaudited) in executive compensation, $19,877 (unaudited) in general and administrative expenses and $304,134 (unaudited) in professional fees. For the six months ended June 30, 2022, operating expenses consisted of $34,408 (unaudited) in advertising and marketing, $90,000 (unaudited) in executive compensation, $103,652 (unaudited) in general and administrative expenses and $385,147 (unaudited) in professional fees.
For the year ended December 31, 2022, the Company’s operating expenses totaled $1,098,038 (unaudited) and consisted of $42,729 (unaudited) in advertising and marketing, $180,000 (unaudited) in executive compensation, $268,424 (unaudited) in general and administrative expenses and $606,885 (unaudited) in professional fees. For the year ended December 31, 2021, the Company’s operating expenses totaled $1,334,929 (unaudited) and consisted of $6,516 (unaudited) in advertising and marketing, $147,796 (unaudited) in executive compensation, $433,865 (unaudited) in general and administrative expenses, $734,293 (unaudited) in professional fees and $22,459 (unaudited) in salaries and wages.
20
Net Loss
For the six months ended June 30, 2023, we reported net income of $2,621,491, due to other income of $3,036,096 (unaudited), which was comprised of interest expense of $174,252 (unaudited) which was offset by gain on change in fair value of derivatives of $3,210,348 (unaudited). For the six months ended June 30, 2022, we reported a net loss of $1,217,438 (unaudited), due to a loss from operations of $613,207 (unaudited), plus $324,084 (unaudited) in interest expense and $280,147 (unaudited) lost in change in fair value of derivatives.
For the year ended December 31, 2022, we incurred a net loss of $4,050,139 (unaudited), due to a loss from operations of $1,098,038 (unaudited), plus $573,368 (unaudited) in interest expenses and $2,378,733 (unaudited) lost in change in fair value of derivatives. For the year ended December 31, 2021, we incurred a net loss of $6,253,566 (unaudited), due to a loss from operations of $1,344,929 (unaudited), plus $1,116,649 (unaudited) in interest expenses, $122,500 (unaudited) in other losses and $3,669,488 (unaudited) lost in change in fair value of derivatives.
Liquidity and Capital Resources
In light of our company’s need for additional capital with which to implement our business plan, our management intends to pursue, as may be necessary, a variety of strategies for obtaining needed capital, including, without limitation, the issuance of shares of preferred stock with rights superior to our common stock, the issuance of additional debt securities, including debt securities that are convertible into shares of our common stock, and instituting a reverse split of our then-outstanding shares of common stock. No determination in this regard has been made.
Operating Activities
Our cash used in operating activities for the nine months ended June 30, 2023 and 2022, were $(102,789) (unaudited) and $(294,727) (unaudited), respectively.
Our cash used in operating activities for the year ended December 31, 2022, was $(705,515) (unaudited) compared to $(623,630) (unaudited) for the year ended December 31, 2021.
Investing Activities
Our net cash used in investing activities was $0 (unaudited) and $1,828 (unaudited) for the six months ended June 30, 2023 and 2022, respectively.
Our net cash used in investing activities was $1,828 (unaudited) and $0 (unaudited) for the years ended December 31, 2022, and December 31, 2021.
Financing Activities
Our net cash provided from financing activities for the six months ended June 30, 2023, was $102,000 (unaudited), consisting of $61,250 (unaudited) from sales of stock and $43,686 (unaudited) from notes payable, which was offset by $2,936 (unaudited) in line of credit repayments. Our net cash provided from financing activities for the six months ended June 30, 2022, was $369,965 (unaudited), consisting of $95,000 (unaudited) from sales of stock, $268,395 (unaudited) from notes payable, $35,000 (unaudited) from line of credit proceeds, which was offset by $8,000 (unaudited) in offering costs and $20,430 (unaudited) in payments on notes payable.
Our net cash provided from financing activities for the year end December 31, 2022, was $706,045 (unaudited), consisting of $400,045 (unaudited) in proceeds from notes payable, $42,590 (unaudited) in line of credit proceeds and $318,500 (unaudited) from sales of common stock, which was offset by $8,000 (unaudited) in repayments of advances, $1,532 (unaudited) in line of credit repayments, $8,000 (unaudited) in offering costs and $37,558 (unaudited) in notes payable repayments. Our net cash provided from financing activities for the year end December 31, 2021, was $625,799 (unaudited) and consisted of $355,000 (unaudited) in proceeds convertible notes payable, $(1,099) (unaudited) for repayment of related party convertible notes payable, $20,000 (unaudited) in proceeds from advances, $14,700 (unaudited) from notes payable and $235,000 (unaudited) from sales of common stock.
21
Going Concern
The Company sustained continued operating losses during the years ended December 31, 2022 and 2021. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, in which it has not been successful, and/or obtaining additional financing from its shareholders or other sources, as may be required.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company’s ability to do so. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
Management is endeavoring to increase revenue-generating operations. While priority is on generating cash from operations through the sale of the Company’s products, management is also seeking to raise additional working capital through various financing sources, including the sale of the Company’s equity and/or debt securities, which may not be available on commercially reasonable terms if at all. If such financing is not available on satisfactory terms, we may be unable to continue our business as desired and our operating results will be adversely affected. In addition, any financing arrangement may have potentially adverse effects on us and/or our stockholders. Debt financing (if available and undertaken) will increase expenses, must be repaid regardless of operating results and may involve restrictions limiting our operating flexibility. If we issue equity securities to raise additional funds, the percentage ownership of our existing stockholders will be reduced, and the new equity securities may have rights, preferences or privileges senior to those of the current holders of our common stock.
Critical Accounting Policies and Estimates
Our financial statements and related public financial information are based on the application of generally accepted accounting principles in the United States (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in Note 2 of our financial statements. While all of these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our results of operations, financial position or liquidity for the periods presented in this report.
We recognize revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.
Use of estimates
The preparation of the unaudited financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
22
Revenue recognition
The Company follows ASC 605-10 “Revenue Recognition” and recognizes revenue when all the conditions for revenue recognition are met: (i) persuasive evidence of an arrangement exists, (ii) collection of the fee is probable, (iii) the sales price is fixed and determinable and (iv) services have been rendered.
The Company reports its revenue at gross amounts in accordance with ASC 605-45 “Principal Agent Considerations” because it is responsible for fulfillment of the service, has substantial latitude in setting price, assumes the credit risk and it is responsible for the payment of all obligations incurred for legal and debt collection fees. The Company bears the credit risks if it does not collect the settlement fees and will be responsible to pay for fees including, but not limited to, court filing fees, collection fees, travel costs, deposition reporter, video, and transcript fees, expert fees and expenses, investigation costs, messenger and process service fees, computer-assisted legal research fees, document duplication and/or imaging expenses, electronic-data vendor fees, and any fees or costs that a court may order to pay to a party or third party.
Derivative Liabilities
The Company follows the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging - Contracts in an Entity’s Own Stock”, for the embedded conversion options that were accounted for as derivative liabilities at the date of issuance and adjusted to fair value through earnings at each reporting date. In accordance with ASC 815, the Company has bifurcated the conversion feature of the convertible Debentures, along with any free-standing derivative instruments and recorded derivative liabilities on their issuance date. The Company uses the Black-Scholes model to value the derivative liabilities.
23
This PQA7 includes market and industry data that we have developed from publicly available information; various industry publications and other published industry sources and our internal data and estimates. Although we believe the publications and reports are reliable, we have not independently verified the data. Our internal data, estimates and forecasts are based upon information obtained from trade and business organizations and other contacts in the market in which we operate and our management’s understanding of industry conditions.
As of the date of the preparation of this PQA7, these and other independent government and trade publications cited herein are publicly available on the Internet without charge. Upon request, the Company will also provide copies of such sources cited herein.
The Company
Cyber bullying is a reality for over 50% of adolescents and teens, while only 1 in 10 victims will tell their parents about it. This growing crisis requires a simple, effective and adaptive solution-a tool usable by the most technically challenged among us, yet comprehensive, perceptive and state-of-the-art. With 52% of parents worried that their children will face cyber bullying, the market for such a solution is enormous, yet no solution has reached these concerned parents and achieved a commanding market position.
Our position is that the void in this market exists because (1) legacy providers have forever controlled the larger market of internet security and previous solutions (2) were limited by poor usability for nontechnical parents and (3) required the installation of intrusive software on children’s phones, leading to circumvention and distrust. RAADR is what parents haven’t seen before: a simple, understandable, and reliable way to know when a child is in need of intervention. RAADR’s interface has been built with the layman parent in mind which allows parents to focus on protecting their children rather than trying to learn new technologies. Moreover, RAADR doesn’t require installation on a child’s phone or computer, so our product can’t be uninstalled or circumvented. In real time, we process the vast online reservoir of semi public and public information that’s already accessible to parents, extract only that which falls within categories predefined by us or the parent, and present that extracted information in multiple, customizable levels of detail.
And just as the threats evolve, RAADR evolves. Our engineers will continually monitor trends and our customer service and marketing teams will continually interact with and learn from our customers and other market participants-all valuable market data will be incorporated into the platform. And our capacity to evolve doesn’t end there. Machine Learning is now actively and effectively used by the most advanced technology companies, and RAADR will join them. Within the next 12 to 18 months, our algorithms will learn from and adapt to trends, as well as new or previously unknown or unidentified threats, and parents will be notified in real time. And then there’s our most important resource for adaptation: community interaction. Parents don’t currently have a way to efficiently communicate regarding local threats, but RAADR will change that. Our sophisticated, highly structured Community feature will allow parents to come together, and RAADR will incorporate threats and other issues raised by our communities.
Current Plan
As of October 15, 2022, RAADR is now working with Cooperative Computing, an application development firm. The total cost to RAADR for their services is $78,000.00. RAADR has completed all payments to Cooperative Computing with an additional scheduled payment planned totaling $32,413.00.
RAADR and Cooperative Computing working together were able to successfully re-launch the new RAADR 2.0 parent monitoring application on the IOS platform on February 2, 2023, and on the Google Play Store platform on January 24th, 2023. RAADR plans to launch an application subscription marketing campaign during the first quarter of 2024. We have a milestone projection of 10,000 new subscriptions a month for the projected revenue from advertisers between $29,500- $49,500. We expect recurring revenues to begin by the third quarter of 2024.
24
The Competition
RAADR has many competitors in the Social Media Monitoring and Anti-Bullying market. However RAADR offers more in terms of services and platform expansion. Other competitors like Net Nanny and UKnowKids are not user friendly and do not monitor social media accounts with the same precision and scope as RAADR. These two competitors require the child to download the monitoring application onto their phone, RAADR does not.
Other examples include Anonymous Alert which does not feature an administrative dashboard. Our platform provides parents and school administrators a platform for tracking and responding directly in real time.
BARK, another social monitoring app, has a higher price point than RAADR and has less features included. RAADR’s price point is significantly lower while using state of the art AI, Facial Recognition, & Anonymous Reporting Tools.
The Market & Industry
The Social Media Monitoring and Anti-Bullying app market is booming because these types of online safety tools are in high demand. Whether this demand comes from individuals, families, school administrators, or law enforcement, RAADR has a competitive advantage by being able to serve all three of these client groups effectively.
It is a known fact that Instagram, Facebook and Twitter struggle to contain the epidemic of online bullying. Bullying on social media is a big problem among teens. More than half of teens say they have been bullied or harassed online, according to a study released by Pew last September of 2020.
As teens and young adults are increasingly using popular social media platforms to communicate, we know that RAADR can be a major competitor in this key market by having the most comprehensive app and platform to help stop online bullying and abuse.
Opportunity
As of 2011, parents were spending over $1,100 per month to raise their children to the age of 17. Keeping children safe is undoubtedly the most important concern on a parent’s mind, and RAADR will cost parents as little as a quarter of one percent of that monthly expense total. Our tiered pricing starts at $1.95 per month followed by $4.95 per month and $9.95 per month with no contractual commitment (affiliate pricing is TBD). With over 35.2 million US households with children under `the age of 18, it’s our goal to capture 50,000 of those within 12 months, 500,000 within 2 years, and 2 million of those within 5 years; these subscription figures will generate annualized revenue of between $1.7M and $2.9M by the end of the first year, $17.94M and $29.94M by the end of the second year, and $71.76M and $119.76M by the end of the fifth year.
Employees
We currently have one employee.
Property
Our company owns no real property. Currently, we rent a small office that is adequate for our current level of operations, at a monthly rental of $700.
25
Directors of the corporation are elected by the stockholders to a term of one year and serve until a successor is elected and qualified. Officers of the corporation are appointed by the Board of Directors to a term of one year and serves until a successor is duly appointed and qualified, or until he or he is removed from office. The Board of Directors has no nominating, auditing or compensation committees. The Board of Directors also appointed our officers in accordance with the Bylaws of the Company, and per employment agreements negotiated between the Board of Directors and the respective officer. Currently, there are no such employment agreements. Officers listed herein are employed at the whim of the Directors and state employment law, where applicable.
The name, address, age and position of our officer and director is set forth below:
Name |
| Age |
| First Year as a Director or officer |
| Office(s) held |
Jacob DiMartino |
| 42 |
| 2012 |
| Director, CEO |
The term of office of each director of the Company ends at the next annual meeting of the Company’s stockholders or when such director’s successor is elected and qualifies. No date for the next annual meeting of stockholders is specified in the Company’s bylaws or has been fixed by the Board of Directors. The term of office of each officer of the Company ends at the next annual meeting of the Company’s Board of Directors, expected to take place immediately after the next annual meeting of stockholders, or when such officer’s successor is elected and qualifies.
Directors are entitled to reimbursement for expenses in attending meetings but receive no other compensation for services as directors. Directors who are employees may receive compensation for services other than as director. No compensation has been paid to directors for services.
Biographical Information
Jacob DiMartino embarked on his career path in 1998, joining Phase 2 Solutions, a startup company based in Scottsdale, Arizona. He started as an inside sales rep and even though he was only 18 years old, quickly advanced to Sales Manager within his first 90 days.
Two years later, Jacob was promoted to Director of Project Management and entrusted with the responsibility of handling the company’s largest account. He earned several awards and achievements during his tenure with the company, including “Employee of the Year” and “Salesman of the Year”. He was also named “Mentor of the Year,” and honor based on employee votes and awarded to the manager who motivated and continually inspired others.
Inspired by his own lifelong dream of working in the entertainment industry, Jacob moved to Los Angeles in 2004 and scored work on several popular television series: “Law and Order SVU,” “Cold Case,” “Alias.” “Gilmore Girls.” He was also featured in the movie, “Mr. and Mrs. Smith.”
Jacob returned to Arizona in 2011 and founded Choice One Solutions, a social media services agency. In only 18 months, he guided the company to $1.2 million in annual sales. Directly on the heels of that accomplishment, he was appointed CEO of PITOOEY!, Inc. and was instrumental in taking the company public. The company has now changed its name to RAADR, Inc.
Jacob is now guiding RAADR, Inc. towards the social media monitoring space. His mission is to help parents and loved ones prevent “cyber bullying” and other dangers children in today’s world face.
Name and Principal Position | Year Ended 12/31 | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation Earnings | Non- Qualified Deferred Compensation Earnings | All Other Compensation | Total |
Jacob DiMartino, | 2022 | $180,000 | $0 | $0 | $0 | $0 | $0 | $0 | $180,000 |
Chief Executive Officer | 2021 | $180,000 | $0 | $0 | $0 | $0 | $0 | $0 | $180,000 |
26
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In November 2022, our CEO, Jacob DiMartino, guaranteed our performance under a promissory note, $112,500 principal amount, issued to JanBella Group, LLC, by which we obtained $100,000 in cash proceeds. As part of his guaranty, Mr. DiMartino pledged his shares of Series E Preferred Stock, through which shares he has voting control of our company. As of the date of this PQA7, we were in default under this note. Should JanBella Group elect to foreclose on Mr. DiMartino’s pledge, there would be a change in control of our company. We are unable to predict the future operations of our company, should such foreclosure event occur.
The following table sets forth information as to the shares of Common Stock beneficially owned as of the date of this PQA7, by (i) each person known to us to be the beneficial owner of more than 5% of our Common Stock; (ii) each Director; (iii) each Executive Officer; and (iv) all of our Directors and Executive Officers as a group. Unless otherwise indicated in the footnotes following the table, the persons as to whom the information is given had sole voting and investment power over the shares of Common Stock shown as beneficially owned by them. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act, which generally means that shares of Common Stock subject to options currently exercisable or exercisable within 60 days of the date hereof are considered to be beneficially owned, including for the purpose of computing the percentage ownership of the person holding such options, but are not considered outstanding when computing the percentage ownership of each other person. The footnotes below indicate the amount of unvested options for each person in the table. None of these unvested options vest within 60 days of the date hereof.
|
| Share Ownership Before This Offering |
| Share Ownership After This Offering |
|
| ||||
Name of Shareholder |
| Number of Shares Beneficially Owned |
| % Beneficially Owned(1) |
| Number of Shares Beneficially Owned |
| % Beneficially Owned(2) |
| Effective Voting Power |
Common Stock | ||||||||||
Executive Officers and Directors | ||||||||||
Jacob DiMartino, CEO & Sole Director |
| 500,000 |
| * |
| 500,000 |
| * |
| See Note 3 and Note 6 |
5% Owners | ||||||||||
Brenda Whitman |
| 500,000,000 |
| 23.28% |
| 500,000,000 |
| 9.73% |
|
|
Dean Richards |
| 500,000,000 |
| 23.28% |
| 500,000,000 |
| 9.73% |
|
|
Christina P. Upham |
| 703,500,000 |
| 32.75% |
| 600,000,000(4) |
| 11.68% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Series E Preferred Stock(5) | ||||||||||
Jacob DiMartino |
| 1,000,000 |
| 100% |
| 1,000,000 |
| 100% |
|
|
*Less than 1%.
(1)Based on 2,147,999,193 shares outstanding, before this offering.
(2)Based on 5,137,662,812 shares outstanding, assuming the sale of all of the Company Remaining Shares, after this offering.
(3) Our CEO and Sole Director, Jacob DiMartino, owns all of the outstanding shares of Series E Preferred Stock. By such ownership, Mr. DiMartino controls the management and affairs of our company, as well as matters requiring the approval by our shareholders, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, and any other significant corporate transaction. (See Note 6).
(4)Assumes Ms. Upham sells 103,500,000 of the Selling Shareholder Offered Shares
(5)The shares of Series E Preferred Stock have the following voting rights: At all times the aggregate of all Series E Preferred Shares shall have the right to vote for exactly sixty-six and two-thirds percent (66-2/3%) of all voting rights on all matters. (See “Description of Capital”).
27
SELLING SHAREHOLDERS
The shareholders named in the table below are the “Selling Shareholders.” The Selling Shareholders intend to sell a total of 296,969,230 shares of our common stock (the Selling Shareholder Offered Shares) in this offering. All of the Selling Shareholders are third parties. The Selling Shareholder Offered Shares to be offered by the Selling Shareholders named in this PQA7 are “restricted securities” under applicable federal and state securities laws.
We will pay all of the expenses of this offering (other than the selling commissions payable with respect to the Selling Shareholder Offered Shares sold in this offering), but will not receive any of the proceeds from the sale of Selling Shareholder Offered Shares in this offering.
None of the Selling Shareholders is a broker-dealer or affiliated with a broker-dealer. The Selling Shareholders may be deemed to be underwriters of the shares of our common stock offered by them in this offering.
The Selling Shareholders intend to sell the Selling Shareholder Offered Shares is market transactions or in negotiated private transactions at the per share offering price of the Offering Shares, $[0.0005-0.015].
The table below assumes that all of the Remaining Shares offered in this offering will be sold.
| Prior to this Offering |
| After this Offering | |||
Name of Selling Shareholder | Position, Office or Other Material Relationship | # of Shares Beneficially Owned | % Beneficially Owned (1) | # of Shares to be Offered for the Account of the Selling Shareholder | # of Shares Beneficially Owned | % Beneficially Owned (2) |
Elliott Polatoff | None | 98,234,615 | 5.12% | 98,234,615 | 0 | 0% |
Leonard Tucker LLC | None | 96,234,615 | 2.56% | 96,234,615 | 0 | 0% |
Christina P. Upham | None | 703,500,000 | 32.75% | 600,000,000 | 11.68 | 0% |
*Less than 1%.
(1)Based on 2,147,999,193 shares outstanding, before this offering.
(2)Based on 5,137,662,812 shares outstanding, assuming the sale of all of the Company Remaining Shares, after this offering.
28
The following summary is a description of the material terms of our capital stock and is not complete. You should also refer to our articles of incorporation, as amended and our bylaws, as amended, which are included as exhibits to the registration statement of which this Offering Circular forms a part.
Common Stock
Voting
Each holder of our Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of stockholders. Any action at a meeting at which a quorum is present will be decided by a majority of the votes cast. Cumulative voting for the election of directors is not permitted.
Dividends
Holders of our Common Stock are entitled to receive dividends when, as and if declared by our Board of Directors out of funds legally available for payment, subject to the rights of holders, if any, of our preferred stock. Any decision to pay dividends on our Common Stock will be at the discretion of our Board of Directors. Our Board of Directors may or may not determine to declare dividends in the future. See “Dividend Policy.” The Board’s determination to issue dividends will depend upon our profitability and financial condition, and other factors that our Board of Directors deems relevant.
Liquidation Rights
In the event of a voluntary or involuntary liquidation, dissolution or winding up of our company, the holders of our Common Stock will be entitled to share ratably on the basis of the number of shares held in any of the assets available for distribution after we have paid in full all of our debts and after the holders of all outstanding preferred stock, if any, have received their liquidation preferences in full.
Series A Preferred Stock
We are authorized to issue up to 20,000,000 shares of Series A Preferred Stock with such rights and obligations as described below. There are currently 0 shares of Series A Preferred Stock issued and outstanding.
Voting
Except as otherwise required by law, the holders of the shares of Series A Preferred Stock shall not have the right to vote on matters that come before the shareholders.
Conversion Rights
Each share of Series A Preferred Stock shall be convertible into one (1) (the “Conversion Rate”) fully paid and nonassessable share of Common Stock for each share of Series A Preferred Stock to be converted by holder.
Liquidation Rights
After the payment of all preferential amounts required to be paid to the holders of any class or series of stock ranking senior to the Series A Preferred Stock in respect of liquidation that may be authorized from time to time, upon the dissolution, liquidation, or winding up of the Corporation, all of the remaining assets and funds of the Corporation available for distribution to its holders of Common Stock shall be distributed ratably among the holders of the Series A Preferred Stock, such other series of Preferred Stock as are constituted as similarly participating. and the Common Stock, with each share of Series A Preferred Stock being deemed, for such purpose, to be equal to the number of shares of Common Stock, including fractions of a share, into which such share of Series A Preferred Stock is convertible immediately prior to the close of business on the business day fixed for such distribution.
29
Series E Preferred Stock
We are authorized to issue up to 1,000,000 shares of Series E Preferred Stock with such rights and obligations as described below. There are currently 1,000,000 shares of Series E preferred Stock issued and outstanding.
Voting
At all times the aggregate of all Series E Preferred Shares shall have the right to vote for exactly sixty six and two thirds (66 2/3) of all voting rights on all matters.
Conversion Rights
There are no conversion rights for the Series E Preferred Stock.
Liquidation Rights
Series E Preferred shares have no liquidation rights.
Limitations on Liability and Indemnification of Officers and Directors
Nevada law authorizes corporations to limit or eliminate (with a few exceptions) the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors. Our articles of incorporation and bylaws include provisions that eliminate, to the extent allowable under Nevada law, the personal liability of directors or officers for monetary damages for actions taken as a director or officer, as the case may be. Our articles of incorporation and bylaws also provide that we must indemnify and advance reasonable expenses to our directors and officers to the fullest extent permitted by Nevada law. We are also expressly authorized to carry directors’ and officers’ insurance for our directors, officers, employees and agents for some liabilities. We currently maintain directors’ and officers’ insurance covering certain liabilities that may be incurred by directors and officers in the performance of their duties.
The limitation of liability and indemnification provisions in our articles of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to the indemnification provisions in our articles of incorporation and bylaws.
There is currently no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.
Transfer Agent
Our transfer agent is Manhattan Transfer Registrar Co., having its address at 38B Sheep Pasture Road, Port Jefferson, NY 11777.
30
SHARE ELIGIBLE FOR FUTURE SALE
Future sales of substantial amounts of our Common Stock in the public market after this offering could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities. We are unable to estimate the number of shares of Common Stock that may be sold in the future.
Upon the sales of all of the Remaining Shares in this offering, we will have 5,137,662,812 outstanding shares of Common Stock if we complete the maximum offering hereunder. All of the shares sold in this offering will be freely tradable without restriction under the Securities Act unless purchased by one of our affiliates as that term is defined in Rule 144 under the Securities Act, which generally includes directors, officers or 5% stockholders.
Rule 144
Shares of our Common Stock held by any of our affiliates, as that term is defined in Rule 144 of the Securities Act, may be resold only pursuant to further registration under the Securities Act or in transactions that are exempt from registration under the Securities Act. In general, under Rule 144 as currently in effect, any of our affiliates would be entitled to sell, without further registration, within any three-month period a number of shares that does not exceed the greater of:
·1% of the number of shares of Common Stock then outstanding; or
·the average weekly trading volume of the unrestricted Common Stock during the four calendar weeks preceding the filing of a Form 144 with respect to the sale.
Sales under Rule 144 by our affiliates will also be subject to manner of sale provisions and notice requirements and to the availability of current public information about us.
The Offering will be sold by our officers and directors.
This is a self-underwritten offering. This Offering Circular is part of an exemption under Regulation A that permits our officers and directors to sell the Shares directly to the public in those jurisdictions where the Offering Circular is approved, with no commission or other remuneration payable for any Shares sold. There are no plans or arrangements to enter into any contracts or agreements to sell the Shares with a broker or dealer. After the qualification by the Commission and acceptance by those states where the offering will occur, the Officer and Directors intends to advertise through personal contacts, telephone, and hold investment meetings in those approved jurisdictions only. We do not intend to use any mass-advertising methods such as the Internet or print media. Officers and Directors will also distribute the prospectus to potential investors at meetings, to their business associates and to his friends and relatives who are interested the Company as a possible investment, so long as the offering is an accordance with the rules and regulations governing the offering of securities in the jurisdictions where the Offering Circular has been approved. In offering the securities on our behalf, the Officers and Directors will rely on the safe harbor from broker dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934. We may pay finder’s fees to persons who refer investors to us. We may also pay consulting fees to consultants who assist us with this offering, based on invoices submitted by them for advisory services rendered. Consulting compensation, finder’s fees and brokerage commissions may be paid in cash, shares of our common stock, including Offered Shares, or warrants to purchase shares of our common stock.
In addition, the Selling Shareholders are offering a maximum of 296,969,230 Selling Shareholder Offered Shares. We will not receive any of the proceeds from the sale of the Selling Shareholder Offered Shares in this offering. We will pay all of the expenses of the offering (other than the discounts and commissions payable with respect to the Selling Shareholder Offered Shares sold in the offering).
Terms of the Offering
The Company is offering, on a best-efforts, self-underwritten basis, a maximum of 3,062,500,000 shares of its Common Stock, including the 501,061,350 Company Remaining Shares at a fixed price of $[0.001-0.005] per share. The price shall be fixed for the duration of the offering, unless an amendment is properly filed with the Commission. There is no minimum investment required from any individual investor. The shares are intended to be sold directly
31
through the efforts of our officers and directors. The offering will terminate on the earlier of: (i) the date when the sale of all shares is completed, or (ii) December 21, 2023.
The validity of the securities offered hereby will be passed upon by Newlan Law Firm, PLLC. Newlan Law Firm, PLLC owns no securities of our company.
As a Tier 1, Regulation A filer, we are not required to file any reports with the SEC.
INDEX TO UNAUDITED FINANCIAL STATEMENTS
AS OF JUNE 30, 2023 AND DECEMBER 31, 2022
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2022 AND 2021
(UNAUDITED)
| Pages |
Consolidated Balance Sheets as of December 31, 2022 and 20210 | F-15 |
Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 | F-16 |
Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2022 and 2021 | F-17 |
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 | F-18 |
F-19 |
32
RAADR, Inc.
(Unaudited)
| As of June 30, 2023 |
| As of December 31, 2022 | ||||
Assets: |
|
|
| ||||
| Current assets |
|
|
| |||
|
| Cash and cash equivalents | $ | 82 |
| $ | 871 |
| Total current assets |
| 82 |
|
| 871 | |
|
|
|
|
|
| ||
Property and equipment, net |
| - |
|
| - | ||
Total assets | $ | 82 |
| $ | 2,699 | ||
|
|
|
|
|
| ||
Liabilities and Stockholders’ Deficit: |
|
|
|
|
| ||
| Current liabilities: |
|
|
|
|
| |
| Account payable | $ | 508,460 |
| $ | 508,751 | |
| Accrued liabilities |
| 3,016,544 |
|
| 2,833,536 | |
| Advances |
| 105,700 |
|
| 105,700 | |
| Preferred stock to be issued |
| 259,900 |
|
| 259,900 | |
| Common stock to be issued |
| 1,066,138 |
|
| 1,066,138 | |
| Line of credit |
| 38,998 |
|
| 41,934 | |
| Convertible notes payable |
| 1,617,598 |
|
| 1,611,386 | |
| Notes payable |
| 757,863 |
|
| 730,096 | |
| Related party notes payable |
| 118,104 |
|
| 118,104 | |
| Derivative liabilities |
| 3,235,196 |
|
| 6,445,544 | |
| Total current liabilities |
| 10,724,501 |
|
| 13,721,089 | |
|
|
|
|
|
| ||
| Long term liabilities - |
|
|
|
|
| |
| Notes payable |
| 146,769 |
|
| 147,500 | |
Total liabilities |
| 10,871,270 |
|
| 13,868,589 | ||
|
|
|
|
|
| ||
Commitments and contingencies (Note 5) |
|
|
|
|
| ||
|
|
|
|
|
| ||
Stockholders’ Deficit: |
|
|
|
|
| ||
| Preferred stock; $0.001 par value; 80,000,000 shares authorized; 0 and 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively |
| - |
|
| - | |
| Preferred stock, Series A; $0.001 par value; 20,000,000 shares authorized; 0 and 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively |
| 1 |
|
| 1 | |
| Preferred stock, Series E; $0.001 par value; 1,000,000 shares authorized; 1,000,000 and 1,000,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively |
| 1,000 |
|
| 1,000 | |
| Common stock, $0.001 par value; 9,000,000,000 shares authorized, 265,202,102 and 82,634,170 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively |
| 265,203 |
|
| 82,635 | |
| Common stock, owed but not issued; 6 and 6 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively |
| - |
|
| - | |
| Additional paid-in capital |
| 23,195,916 |
|
| 23,005,273 | |
| Accumulated deficit |
| (34,333,308) |
|
| (36,9564,799) | |
Total stockholders’ deficit |
| (10,871,188) |
|
| (13,865,890) | ||
Total liabilities and stockholders’ deficit | $ | 82 |
| $ | 2,699 | ||
See accompanying notes to the consolidated financial statements.
F-1
RAADR, Inc.
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended June 30, |
| For the Six Months Ended June 30, | |||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
|
|
|
|
|
|
|
| |||||
| Revenue, net | $ | - |
| $ | - |
| $ | - |
| $ | - |
| Cost of goods sold |
| - |
|
| - |
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| |
Gross profit |
| - |
|
| - |
|
| - |
|
| - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |
| Advertising and marketing |
| - |
|
| - |
|
| 595 |
|
| 34,408 |
| Executive compensation |
| 45,000 |
|
| 45,000 |
|
| 90,000 |
|
| 90,000 |
| General and administrative expenses |
| 31 |
|
| 58,551 |
|
| 19,877 |
|
| 103,652 |
| Professional fees |
| 71,500 |
|
| 338,011 |
|
| 304,134 |
|
| 385,147 |
Total operating expenses |
| 116,531 |
|
| 441,562 |
|
| 414,606 |
|
| 613,207 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
| (116,531) |
|
| (441,562) |
|
| (414,606) |
|
| (613,207) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| |
| Interest expense |
| (87,126) |
|
| (151,229) |
|
| (174,252) |
|
| (324,084) |
| Gain on derivative liabilities |
| 1,247,458 |
|
| (1,470,736) |
|
| 3,210,348 |
|
| (280,147) |
| Total other income (expense) |
| 1,160,332 |
|
| (1,621,965) |
|
| 3,036,096 |
|
| (604,231) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
| 1,043,801 |
|
| (2,063,527) |
|
| 2,621,490 |
|
| (1,217,438) | |
|
|
|
|
|
|
|
|
|
|
|
| |
Provision for income taxes |
| - |
|
| - |
|
| - |
|
| - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income | $ | 1,043,801 |
| $ | (2,063,527) |
| $ | 2,621,490 |
| $ | (1,217,438) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share attributable to common stockholders | $ | 0.00 |
| $ | (0.04) |
| $ | 0.01 |
| $ | (0.03) | |
Diluted net income (loss) per common share attributable to common stockholders | $ | 0.00 |
| $ | (0.04) |
| $ | 0.00 |
| $ | (0.03) | |
Weighted-average number of shares used in computing basic per share amounts |
| 220,512,433 |
|
| 46,027,602 |
|
| 197,815,696 |
|
| 43,687,335 | |
Weighted-average number of shares used in computing dilutive per share amounts |
| 9,000,000,000 |
|
| 46,027,602 |
|
| 9,000,000,000 |
|
| 43,687,335 | |
See accompanying notes to the consolidated financial statements.
F-2
RAADR, Inc.
Consolidated Statement of Stockholders’ Deficit
(Unaudited)
|
|
|
|
|
|
|
|
|
| Total |
|
| Preferred Stock, Series A | Preferred Stock, Series E | Common Stock | Additional | Accumulated | Stockholders’ | |||
|
| Shares | Amount | Shares | Amount | Shares | Amount | Paid-in Capital | Deficit | Deficit |
Balance, December 31, 2022 |
| - | $ 1 | 1,000,000 | $ 1,000 | 82,634,170 | $ 82,636 | $ 23,005,273 | $ (36,954,799) | $ (13,865,889) |
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes payable and derivative liabilities into common stock |
| - | - | - | - | 16,774,000 | 16,774 | (6,337) | - | 10,437 |
Common stock issued for services |
| - | - | - | - | 127,820,746 | 127,821 | 173,703 | - | 301,524 |
Common stock issued for cash |
| - | - | - | - | 24,500,000 | 24,500 | 36,750 | - | 61,250 |
Common stock issued for anti-dilution clause |
| - | - | - | - | 13,473,186 | 13,473 | (13,473) | - | - |
Net loss |
| - | - | - | - | - | - | - | 2,621,490 | 2,621,490 |
Balance, June 30, 2023 |
| - | $ 1 | 1,000,000 | $ 1,000 | 265,202,102 | $ 265,204 | $ 23,195,916 | $ (34,333,309) | $ (10,871,188) |
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred Stock, Series A | Preferred Stock, Series E | Common Stock | Additional | Accumulated | Stockholders’ | |||
|
| Shares | Amount | Shares | Amount | Shares | Amount | Paid-in Capital | Deficit | Deficit |
Balance, December 31, 2021 |
| - | $ 1 | 1,000,000 | $ 1,000 | 4,088,009,348 | $ 4,088,009 | $ 18,253,299 | $ (32,904,660) | $ (10,562,351) |
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
| - | - | - | - | 561,157,726 | 561,158 | (336,158) | - | 225,000 |
Common stock issued for cash |
| - | - | - | - | 356,250,000 | 356,250 | (261,250) | - | 95,000 |
Net loss |
| - | - | - | - | - | - | - | (1,217,438) | (1,217,438) |
Balance, June 30, 2022 |
| - | $ 1 | 1,000,000 | $ 1,000 | 5,005,417,074 | $ 5,005,417 | $ 17,655,891 | $ (34,122,098) | $ (11,459,789) |
See accompanying notes to the consolidated financial statements.
F-3
RAADR, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
|
| For the Six Months Ended June 30, | ||||
|
| 2023 |
| 2022 | ||
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
| ||
Net income |
| $ | 2,621,491 |
| $ | (1,217,438) |
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
Stock-based compensation |
|
| 301,524 |
|
| 225,000 |
Depreciation |
|
| 1,828 |
|
| - |
Gain on derivative liability |
|
| (3,210,348) |
|
| 297,647 |
Accretion of debt discount |
|
| - |
|
| 146,323 |
Additional interest expense on conversion of notes payable and derivative liabilities |
|
| - |
|
| 39,631 |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts payable |
|
| (292) |
|
| 14,940 |
Accrued liabilities |
|
| 183,008 |
|
| 199,170 |
Net cash used in operating activities |
|
| (102,789) |
|
| (294,727) |
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchase of property and equipment |
|
| - |
|
| (1,828) |
Net cash provided by investing activities |
|
| - |
|
| (1,828) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from issuance of convertible notes payable |
|
| 16,650 |
|
| - |
Payments on line of credit |
|
| (2,936) |
|
| 35,000 |
Offering costs paid for notes payable |
|
| - |
|
| (8,000) |
Payment of notes payable |
|
| - |
|
| (20,430) |
Proceeds from notes payable |
|
| 27,036 |
|
| 268,395 |
Proceeds from sale of common stock |
|
| 61,250 |
|
| 95,000 |
Net cash provided by financing activities |
|
| 102,000 |
|
| 369,965 |
|
|
|
|
|
|
|
Change in cash and cash equivalents |
|
| (789) |
|
| 73,410 |
Cash and cash equivalents, beginning of period |
|
| 871 |
|
| 2,169 |
Cash and cash equivalents, end of period |
| $ | 82 |
| $ | 75,579 |
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
Cash paid for interest |
| $ | - |
| $ | 9,401 |
Cash paid for income taxes |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
Conversions of notes payable and derivative liabilities into common stock |
| $ | 10,437 |
| $ | - |
Notes payable issued for services |
| $ | - |
| $ | 39,631 |
See accompanying notes to the consolidated financial statements.
F-4
RAADR, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - History and Organization
Organization
Raadr, Inc. (the “Company”) was organized March 29, 2006 (Date of Inception) under the laws of the State of Nevada, as White Dental Supply, Inc. On December 27, 2012, the Company formed two wholly owned subsidiaries, Choice One Mobile, Inc. and PITOOEY! Mobile, Inc., under the laws of the State of Nevada. On January 7, 2013, the Board of Directors of the Company authorized and a majority of the stockholders of the Company ratified, by written consent, resolutions to change the name of the Company to PITOOEY!, Inc. The name change was effective with the State of Nevada February 7, 2013. On February 6, 2013, the Company formed a wholly owned subsidiary, Rockstar Digital, Inc., under the laws of the State of Nevada. On October 31, 2013, the Company, as part of its settlement agreement with the employees of Rockstar Digital, ceased operations of its wholly owned subsidiary, Rockstar Digital, Inc. On July 29, 2015, the Company changed their name to Raadr, Inc. The name change was effective with the State of Nevada on July 29, 2015.
Business
The Company offers a unique software tool in www.raadr.com that allows individuals to monitor social media activity online. As the digital world of the 21st Century continues to evolve, parents, guardians, and children are faced with challenges and threats not just in the real world, but in the omnipresent realm of Social Media as well. PITOOEY! INC., makers of the proprietary technology application RAADR© have developed a web based tool that provides families with peace of mind when it comes to knowing that children are safe from bullying and predatory behavior unfortunately so prevalent today.
By customizing their own unique monitoring and alert settings, parents and guardians can be alerted when their children’s Facebook, Twitter, Instagram and other pertinent social media platforms under scrutiny become posted with inappropriate language. By utilizing customized keywords chosen by the user that are added to an already existing database, parents and guardians can carry a sense of assuredness that the youth they love and are responsible for are safe and acting in a fun, yet appropriate manner.
Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying consolidated financial statements, the Company has limited assets and a working capital deficit of approximately $10.9 million.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is significantly dependent upon its ability, and will continue to attempt, to secure equity and/or additional debt financing. The Company is attempting to conduct private placements of its preferred and common stock to raise proceeds to finance its plan of operation. There are no assurances that the Company will be successful, and without sufficient financing, it would be unlikely for the Company to continue as a going concern.
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might arise from this uncertainty.
Unaudited and Unreviewed Financial Statements
The accompanying consolidated financial statements have been prepared by the Company’s management pursuant to the rules and regulations of the United States Securities and Exchange Commission. These consolidated financial statements have not been audited or reviewed by an independent third party.
F-5
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Principles of Consolidation
The consolidated financial statements include the accounts of Raadr, Inc., Choice One Mobile, Inc., PITOOEY! Mobile, Inc. and Rockstar Digital, Inc. All significant intercompany balances and transactions have been eliminated. Raadr, Inc., Choice One Mobile, Inc., PITOOEY! Mobile, Inc. and Rockstar Digital, Inc. will be collectively referred herein to as the “Company”.
Risks and Uncertainties
The Company has a limited operating history and has not generated revenues from our planned principal operations.
The Company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the U.S. and world economy. A host of factors beyond the Company’s control could cause fluctuations in these conditions, including the political environment and acts or threats of war or terrorism. Adverse developments in these general business and economic conditions, including through recession, downturn or otherwise, could have a material adverse effect on the Company’s consolidated financial condition and the results of its operations.
The Company currently has limited sales and marketing and/or distribution capabilities. The Company has limited experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our current and future products. Developing a marketing and sales force is also time consuming and could delay launch of our future products. In addition, the Company will compete with many companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote sales and marketing.
The Company’s industry is characterized by rapid changes in technology and customer demands. As a result, the Company’s products may quickly become obsolete and unmarketable. The Company’s future success will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and enhance our current products on a timely and cost-effective basis. Further, the Company’s products must remain competitive with those of other companies with substantially greater resources. The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, the Company may not be able to adapt new or enhanced products to emerging industry standards, and the Company’s new products may not be favorably received. We also may not have the capital resources to further the development of existing and/or new ones.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.
Loss Per Common Share
Net loss per share is provided in accordance with ASC Subtopic 260-10. The Company presents basic loss per share (“EPS”) and diluted EPS on the face of the statements of operations. Basic EPS is computed by dividing reported losses by the weighted average shares outstanding. Except where the result would be anti-dilutive to income from continuing operations, diluted earnings per share has been computed assuming the conversion of the convertible long-
F-6
term debt and the elimination of the related interest expense, and the exercise of stock warrants. Loss per common share has been computed using the weighted average number of common shares outstanding during the year.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability.
The three levels of the fair value hierarchy are described below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
As of June 30, 2022 and 2022, the derivative liabilities are considered a level 2 item; see Note 4.
The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.
Recent Pronouncements
Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s consolidated financial statement presentation or disclosures.
Note 3 – Financial Statement Elements
Accrued liabilities as of June 30, 2023 and December 31, 2022 consisted of:
|
| June 30, 2023 |
| December 31, 2022 | ||
|
|
|
|
| ||
Accrued payroll and taxes |
| $ | 188,030 |
| $ | 188,117 |
Executive compensation |
|
| 645,113 |
|
| 636,270 |
Accrued interest |
|
| 1,586,763 |
|
| 1,412,511 |
Other |
|
| 596,638 |
|
| 596,638 |
|
| $ | 3,016,544 |
| $ | 2,833,536 |
In August 2015, the Company entered into a settlement agreement with their former Chief Executive Officer. In connection with the agreement, the Company has the obligation to issue 1 share of common stock in settlement of amounts payable to the former Chief Executive Officer for accrued salaries and an investment in Series B preferred stock. The Company has yet to issue the required shares, and thus, as of June 30, 2023 and December 31, 2022, the liabilities remain.
See Note 7 for discussion of accrued wages due to the Company’s Chief Executive Officer.
F-7
Note 4 - Notes Payable
Notes payable as of June 30, 2023 and December 31, 2022 consisted of:
|
| June 30, 2023 |
| December 31, 2022 | ||
|
|
|
|
| ||
Third Party Notes: |
|
|
|
| ||
Convertible promissory notes |
| $ | 1,617,598 |
| $ | 1,488,236 |
Debentures with warrants |
|
| 327,664 |
|
| 327,664 |
Notes under Investment Agreement |
|
| 69,333 |
|
| 69,333 |
Promissory notes |
|
| 507,635 |
|
| 203,306 |
Subtotal - third party notes |
|
| 2,522,230 |
|
| 1,893,090 |
|
|
|
|
|
|
|
Related Party Notes: |
|
|
|
|
|
|
Debentures with warrants |
|
| 87,445 |
|
| 87,445 |
Demand notes |
|
| 30,659 |
|
| 30,659 |
Subtotal - related party notes |
|
| 118,104 |
|
| 118,104 |
Total |
|
| 2,640,334 |
|
| 2,607,086 |
Current portion |
|
| (2,493,565) |
|
| (2,459,586) |
Long-term portion |
| $ | 146,769 |
| $ | 147,500 |
As of the date of this filing, all notes outstanding as of June 30, 2023 and December 31, 2022, with exception of $146,769 are in default.
Convertible Promissory Notes
Commencing in December 2014 and through September 2018, the Company issued various convertible promissory notes to third parties to be used for operations. In most cases, these convertible promissory notes are convertible upon issuance into a variable number of shares of common stock. Based on the requirements of ASC 815, we determined that a derivative liability was triggered upon issuance due to the variable conversion price. Using the Black-Scholes pricing model, we calculated the derivative liability upon issuance and recorded the fair market value of the derivative liability as a discount to the convertible promissory notes. When a derivative liability associated with a convertible note is in excess of the face value of the convertible note, the excess of fair value of derivative is charged to the statement of operations. The derivative liability is required to be revalued at each conversion event and at each reporting period. The Company doesn’t account for the derivative liability until the convertible promissory note is convertible. In addition, these convertible promissory notes include various default provisions in which increase the interest rate to rates ranging from 12% to 35% and at times the principal balance at rates ranging from 5% to 50%. Additionally, most convertible promissory notes have prepayment penalties in which range from 15% to 50%.
In May, June, September, October, November and December 2020, a total of $90,000 in convertible notes were received. The notes bear an interest rate of 10% and mature on April 1, 2021. The notes are convertible into common stock based upon a 50% discount to the lowest traded price within the 20 trading days preceding the conversion. The note contains various prepayment and default provisions, similar to those disclosed above.
On July 23, 2020, the Company entered into a convertible note payable with a third party for proceeds of $25,000. The convertible note incurs interest at 20% per annum, is due 180 days from the date of issuance and is convertible upon issuance into shares of the Company’s common stock at a 50% discount to the average closing bid price during the preceding 10 trading days. The note contains various prepayment and default provisions, similar to those disclosed above.
On August 13, 2020, the Company entered into a convertible note payable with a third party for proceeds of $60,000. The convertible note incurs interest at 25% per annum, is due 180 days from the date of issuance and is convertible upon issuance into shares of the Company’s common stock at a 50% discount to the average closing bid price during the preceding 10 trading days. The note contains various prepayment and default provisions, similar to those disclosed above.
F-8
In September 2020, a $40,000 convertible note was sold from one third party to another. Under the terms of the new note agreement, principal of $98,367 is due on year from the date of issuance. The notes bear an interest rate of 10% and mature on April 1, 2021. The notes are convertible into common stock based upon a 50% discount to the lowest traded price within the 20 trading days preceding the conversion. The note contains various prepayment and default provisions, similar to those disclosed above. The difference between the carry value of the new note and the old not plus accrued interest was $38,405 and recorded as interest expense.
In November 2020, a $50,000 convertible note with accrued interest of $23,877 was sold from one third party to another. Under the terms of the new note agreement, principal of $73,877 is due on year from the date of issuance. The notes bear an interest rate of 10% and mature on April 1, 2021. The notes are convertible into common stock based upon a 50% discount to the lowest traded price within the 20 trading days preceding the conversion. The note contains various prepayment and default provisions, similar to those disclosed above.
At various times during the year ended December 31, 2021, the Company entered into convertible notes payable totaling $437,536 receiving proceeds of $355,000. The terms of the notes range from six months to one year, interest ranging from 8-20% and conversion prices with discounts of up to 50% of the lowest bid prices in days prior ranging from five to 25 days. In addition, the Company issued $500,000 in convertible notes payable for services for which the terms are similar to those noted above.
In March 2021, a note with $472,431 in principal and $299,456 in accrued interest was sold to a third party for which the Company entered into a new convertible note of $771,887. Under the terms of the new note agreement, principal of $73,877 is due one year from the date of issuance. The notes bear an interest rate of 10% and mature in one year. The note is convertible into common stock based upon a 50% discount to the lowest traded price within the 20 trading days preceding the conversion. The note contains various prepayment and default provisions, similar to those disclosed above.
During the year ended December 31, 2021, the Company issued 27,952,829 shares of common stock in satisfaction of $1,520,840 in principal and interest. In connection with the conversion, derivative liabilities of $2,637,806 were relieved.
At various times during the year ended December 31, 2022, the Company entered into convertible notes payable totaling $150,900 receiving proceeds of $126,650. The terms of the notes range from six months to one year, interest ranging from 4-8% and conversion prices ranging from $0.00025 - $0.0005.
During the year ended December 31, 2022, the Company issued 5,550,000 shares of common stock in satisfaction of $27,750 in principal and interest. In connection with the conversion, derivative liabilities of $83,250 were relieved and a loss of $34,500 was recorded.
At various times during the six months ended June 30, 2023, the Company entered into convertible notes payable totaling $16,650 receiving proceeds of $16,650. The terms of the notes range from six months to one year, interest ranging from 8% - $20% and conversion prices ranging from $0.00025 - $0.0005, which are at a 65% discount to the previous 10 closing prices.
2018 Issuances
During the year ended December 31, 2018, the Company received $45,775 in proceeds from the issuance of six convertible notes payable. Under the terms of the agreements, the notes are due in 180 days from the date of issuance, incur interest at rates ranging from 10%- 25% per annum and are convertible into common stock at a 50% discount to the average closing bid price per share of common stock during the 10 consecutive trading days immediately prior to conversion. In addition, the notes include a 50% prepayment penalty. Due to the variable conversion price, the Company recorded a derivative liability in connection with these notes.
Discounts and Conversions
The convertible notes issued were fully discounted at issuance due to the associated derivative liabilities being in excess of the convertible notes payable. The discounts are being amortized over the terms of the notes. As of June 30, 2023 and December 31, 2022, discounts of $0 remained. Amortization expense for the year ended December 31, 2022 and 2021 was $282,600 and $377,000. At June 30, 2023, the derivative liabilities were re-valued at $4,482,654 which
F-9
resulted in a loss on change in the fair market value of derivative liabilities of approximately $2.0 million. See below for weighted average variables used.
As of June 30, 2023, these convertible notes were convertible into approximately 32.0 billion shares of common stock, which is in excess of the total authorized shares.
Derivative Liabilities
During the six months ended June 30, 2023 and the year ended December 31, 2022, the range of inputs used to calculate the derivative liability were as follows:
|
| June 30, 2023 |
|
| December 31, 2022 |
|
|
|
|
|
|
Exercise price per share |
| $0.00050 |
|
| $0.00005 |
Expected life (years) |
| 0.50 |
|
| 0.50 |
Risk-free interest rate |
| 3.92% |
|
| 3.92% |
Expected volatility |
| 1712% |
|
| 1712% |
Debentures with Warrants
At various dates in 2014 and 2013, the Company issued debentures with warrants totaling $347,664. These debentures contain interest rates ranging from 8% to 20% and matured at various times from July 2014 through July 2015. As of December 31, 2022 and 2021, these notes were in technical default. The warrants issued with these debentures contain an exercise price of $2,500 per share and expired three years from the date of issuance.
Notes Issued Under an Investment Agreement
On April 29, 2013, the Company entered into an Investment Agreement, in which an investor agreed to purchase debentures up to a total principal amount of $1,100,000. This commitment was increased to $2,000,000 based on an agreement modification entered into on December 2, 2013. Each debenture will accrue interest on the unpaid principal of each individual debenture at the rate of 8% per year from the date each debenture is issued until paid. Maturity dates of the debentures issued range from April 2014 through May 2015. In March 2021, the holder transferred $472,431 in principal and $299,456 in accrued interest to a third party for which the Company entered into a new convertible note, see above. As December 31, 2022 and 2021, the remaining balance of the notes is in default. As of June 30, 2023 and December 31, 2022, the principle balance owed on these debentures was $69,333 and $69,333, respectively, plus accrued interest.
Promissory Notes
On July 25, 2012, the Company entered into an Intellectual Property Assignment Agreement. In accordance with the terms and conditions contained therein, the Company has agreed to pay the Seller $8,000 in two installments: The first payment of $4,000 was due July 25, 2013, and second payment of $4,000 was due July 25, 2014. The note is currently in default due to non-payment.
During the year ended December 31, 2013, the Company issued a $50,000 promissory note bearing interest at 10% and due on May 31, 2014. The note is payable in monthly payments of principal and interest. As of June 30, 2023 and December 31, 2022, the remaining principal balance of $10,606 and $10,606, respectively, is past due and in default.
In June 2015, the Company received $20,000 in proceeds from convertible notes payable. The notes are convertible, only at the Company’s option, for a minimum of $40,000 in common stock based upon the closing stock price on the date of conversion for a period of one year. In addition, the notes incur interest at 12% per annum and is due June 1, 2016. Since the note is only convertible at the Company’s option, the accounting for such will be triggered if the option is exercised.
On July 13, 2020, the Company entered into a $150,000 loan with the Small Business Administration. The note incurs interest at 3.75% per annum with principal and interest due over the period of thirty years. The note is secured by substantially all of the Company’s asset and requires the funds to be used for operational purposes. As of June 30, 2023 and December 31, 2022, the remaining principal balance was $147,500 and $147,500, respectively.
F-10
During the year ended December 31, 2022, the Company issued $209,145 in short-term promissory notes to various parties with interest rates ranging from 20%-50%. The Company also issued approximately $40,000 in short-term promissory notes to various third parties for expenses paid by the third parties on behalf of the Company. These mature on demand or on various dates from April 2022 through September 2022. During the year ended December 31, 2022, the Company repaid approximately $37,558 of these promissory notes.
During the year ended December 31, 2022, the Company also entered into two 18-month business loan agreements totaling $160,000. The loans require fixed weekly payments of principal and interest totaling $2,897 through November 2023 and have effective interest rates ranging from 34% to 63%. These loans are also secured by substantially all assets of the Company and have various default provisions as defined within the agreement, whereby the debt can be called immediately. As certain of these default provisions have been triggered, the full amount of the remaining principal balance of the loans of $145,942 as of December 31, 2022 has been presented as current although default has not been called by the lender. Net proceeds of $158,175 were received from these loans. An additional $8,000 was paid to a third party for brokering the deal. The on-issuance discount and additional fees paid were recorded as a discount to the loans and are being amortized over the life of the loan. During the year ended December 31, 2022, all of the discount was amortized to interest.
Debentures with Warrants Issued to Related Parties
At various times in 2014 and 2013, the Company issued debentures with warrants to several related parties for $87,445. These debentures bear interest at 8% and mature at various times from July 2014 through February 2015. As of December 31, 2022 and 2021, all the notes are in default as they are past the maturity dates. The warrants issued with these debentures contain an exercise price of $2,500 per share and expired three years from the date of issuance.
Demand Notes Issued to Related Parties
The Company has various notes outstanding to related parties totaling $30,659 and $30,659 as of June 30, 2023 and December 31, 2022. These notes are due on demand and have no stated interest rate. The Company records imputed interest in connection with these related party notes.
Advances
As of June 30, 2023 and December 31, 2022, the Company received advances from a third parties totaling $105,700 and $105,700, respectively. These advances bear interest at 20% per annum and are due 90 days after the funds are received. As of the date of this filing, these advances are considered in default as they are past their maturity date.
Line of Credit
During the year ended December 31, 2022, the Company took out a business line of credit with a financial institution that provides a credit line of up to $35,000. Advances under this line incur interest as an annual rate of 12.25% plus various other periodic finance charges. As of June 30, 2023 and December 31, 2022, $38,998 and $41,934 was outstanding on the line of credit, respectively.
Note 5 - Commitments and Contingencies
Consulting Agreements
On December 30, 2015, effective January 1, 2016, the Company entered into an agreement with two consultants to promote the Company’s RAADR mobile app for a period of 60 days. Under the terms of the agreement, the consultants received a total of 20 shares of common stock and were to be paid a total of $50,000 for their services. In addition, the consultants were to receive 50% of all revenues generated from the RAADR mobile app. As of June 30, 2023 and December 31, 2022, no amounts had been earned under the revenue arrangement.
On June 27, 2018, the Company entered into an agreement with an individual whereby the individual is to provide consulting services in exchange for 40 shares of common stock. The shares were valued at $2,000 based upon the closing price of the Company’s common stock on the date of the agreement. The agreement does not provide for a performance commitment, and thus, the common stock was expensed upon issuance.
F-11
During the year ended December 31, 2018, the Company entered into an agreement with an individual whereby the individual is to provide consulting services in exchange for 100 shares of common stock. The shares were valued at $5,000 based upon the closing price of the Company’s common stock on the date of the agreement. The agreement does not provide for a performance commitment, and thus, the common stock was expensed upon issuance. Additionally, the agreement notes a signing bonus of $10,000 as well as bonuses for certain milestones, none of which have been paid.
See Note 6 for additional agreements.
Legal
On February 6, 2013, we formed a wholly owned subsidiary, Rockstar Digital, Inc. (“Rockstar”), under the laws of the State of Nevada. Rockstar was organized to specialize in internet branding through social media marketing, mobile marketing and iPhone ® app development Company. On October 31, 2013, the Company entered into a settlement agreement with certain former employees to assume responsibility for certain payroll taxes of Rockstar Digital, Inc. (“Rockstar”) and assign its ownership of Mobile Application and Transition Services intellectual property rights to Rockstar. In addition, the Company agreed to not assert a claim against certain computer equipment (cost of $28,307) in use at Rockstar. The Company agreed to assume liability for any payroll taxes owed on payroll paid by the Company on behalf of Rockstar’s employees. The Company estimated this liability at $30,000 which they have recorded in accrued liabilities as of June 30, 2023 and December 31, 2022.
On July 29, 2014, a default judgment was issued against the Company in Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. This judgment stems from a legal filing by a consulting firm, with which the Company entered into an agreement for consulting services, on February 20, 2013. On September 25, 2013, the Company cancelled the agreement because it determined that services had not been provided by consulting firm, as promised per the agreed-upon contract terms. In November 2014, we entered into a settlement agreement whereby the Company shall pay the plaintiff $13,246, in monthly installments of $1,472. In addition, the Company issued options to purchase 20 shares of the Company’s common stock at an exercise price of $8,750 expiring in two years. The Company valued the options on the date of issuance at $21,424 using the Black-Sholes model. The required payments on the settlement have not been made, however, the full amount of the liability has been recorded within accrued liabilities as of June 30, 2023 and December 31, 2022.
On April 5, 2017, the Circuit Courts within the Twelfth Judicial Circuit of Florida entered an order approving the stipulation of the parties (the “Stipulation”) in the matter of Northbridge Financial, Inc. (“NBF”) v. Raadr Inc. Under the Stipulation, the Company agreed to issue, as settlement of liabilities owed by the Company to NBF in the aggregate amount of $272,250 (the “Claim Amount”) and the following:
(a) In one or more tranches as necessary, 7,000 shares of common stock (the “Initial Issuance”) and $27,500 in fees.
(b) Through the Initial Issuance and any required additional issuances, that number of shares of common stock with an aggregate value equal to the Purchase Price (defined under the Stipulation as the market price (defined as the lowest closing bid price of the Company’s common stock during the valuation period set forth in the Stipulation) less the product of the Discount (equal to 50%) and the market price.
(c) If at any time during the valuation period the closing bid price of the Company’s common stock is below 90% of the closing bid price on the day before an issuance date, the Company will immediately cause to be issued to BF such additional shares as may be required to affect the purposes of the Stipulation.
(d) Notwithstanding anything to the contrary in the Stipulation, the number of shares beneficially owned by NBF will not exceed 4.99% of the Company’s outstanding common stock.
In connection with the Settlement Shares, the Company relied on the exemption from registration provided by Section 3(a)(10) under the Securities Act.
The Company cannot reasonably estimate the amount of proceeds NBF expects to receive from the sale of these shares which be used to satisfy the liabilities. Thus, the Company accounts for the transaction as the shares are sold and the liabilities are settled. All amounts are included within accounts payable. Shares in which are held by NBF at each reporting period are accounted for as issued but not outstanding. During the year ended December 31, 2017, the
F-12
Company issued 626,250 shares of common stock in settlement of $219,250 in accounts payable. The Company valued the common stock issued at $847,250 based upon the closing market price of the common stock on the settlement date. The difference between the fair market value of the common stock and accounts payable relieved of $628,000 was recorded as additional interest expense. As of June 30, 2023 and December 31, 2022, amounts payable to NBF included within accounts payable were $53,000.
Note 6 - Stockholders’ Deficit
Authorized Shares
As of June 30, 2023 and December 31, 2022, the Company is authorized to issue 9,000,000,000 shares of $0.001 par value common stock and 101,000,000 shares of $0.001 par value preferred stock (of which 20,000,000 have been designated as Series A Preferred Stock, 1,000,000 have been designated as Series E Preferred Stock, and 80,000,000 shares of preferred stock available for the Company to assign or designate such provisions or preferences as may be assigned by the Board of Directors).
Effective December 20, 2022, the Company enacted a 100 to 1 reverse stock split. All share and per share amount have been revised to reflect the reverse stock split.
Series A Preferred Stock
On January 3, 2013, the Company filed a Certificate of Designation with the State of Nevada to designate up to 20,000,000 shares of preferred stock as “Series A”. The Series A holds no voting rights but is automatically convertible into shares of the Company’s common stock immediately upon the effectiveness of a Certificate of Change filed by the Company to increase the number of shares of common stock the Company would become authorized to issue.
Series B Preferred Stock
As of the date of these consolidated financial statements the designations for the Series B have not been filed with the State, and thus, the proceeds received for sale of these shares to date are reflected as a liability on the accompanying balance sheets at June 30, 2023 and December 31, 2022. The rights and preferences are not valid until the designations are filed. Once approved, the holders are expected to receive warrants to purchase one share of common stock at $50.00 per share. In addition, each share of Series B converted the holder would receive two shares of common stock.
Series E Preferred Stock
On January 27, 2016, the Company filed a Certificate of Designation with the State of Nevada to designate up to 1,000,000 shares of preferred stock as “Series E”. The Series E hold voting rights equal to twice the number of votes of all outstanding shares of capital stock such that the holders of outstanding shares of Series E shall always constitute 66.67% of the voting rights of the Corporation. All shares of Series E rank subordinate to all of the Company’s common and preferred stock and are not entitled to participate in the distribution of the Company’s assets upon liquidation.
Year Ended December 31, 2022
During the six months ended June 30, 2023, the Company sold 24,500,000 shares of common stock for total proceeds of $61,250. The Company also issued approximately 128 million shares of common stock for consulting services. In connection with these issuances, the Company recorded stock-based compensation expense of $301,524 during the six months ended June 30, 2023 based on the closing market price of the Company’s stock on the date of grant. During the six months ended June 30, 2023, 13,473,186 shares were issued with full-ratchet anti-dilution protection rights.
During the year ended December 31, 2022, the Company sold 30,412,500 shares of common stock for total proceeds of $318,500. The Company also issued 5,791,577 shares of common stock for consulting services. In connection with these issuances, the Company recorded stock-based compensation expense of $282,600 during the year ended December 31, 2022, 2022 based on the closing market price of the Company’s stock on the date of grant. 2,000,000 of these shares were issued with full-ratchet anti-dilution protection rights.
See Note 4 for additional common stock issuance.
F-13
Note 7 - Related Party Transactions
As of June 30, 2023 and December 31, 2022, amounts included within accrued liabilities related to payroll due to Jacob DiMartino, our Chief Executive Officer, were $645,113 and $636,270, respectively. The Company accrues $15,000 per month in connection with the CEO’s services.
During the six months ended the Company made contributions of approximately $6,000 to a youth sports not for profit for which the Company’s Chief Executive Officer has significant influence.
See Note 4 discussion related to notes payable and Note 6 for shares issued to related parties.
Note 8 - Subsequent Events
The Company has evaluated events subsequent to December 31, 2022 and through the date these financial statements have been posted on OTC Markets and has determined no events, other than those disclosed above, have occurred that would materially affect the consolidated financial statements above.
F-14
RAADR, Inc.
(Unaudited)
| As of December 31, | ||||||
| 2022 |
| 2021 | ||||
Assets: |
|
|
| ||||
| Current assets |
|
|
| |||
|
| Cash and cash equivalents | $ | 2,169 |
| $ | 2,169 |
| Total current assets |
| 2,169 |
|
| 2,169 | |
|
|
|
|
|
| ||
Total assets | $ | 2,169 |
| $ | 2,169 | ||
|
|
|
|
|
| ||
Liabilities and Stockholders’ Deficit: |
|
|
|
|
| ||
| Current liabilities: |
|
|
|
|
| |
| Account payable | $ | 508,751 |
| $ | 493,973 | |
| Accrued liabilities |
| 2,833,536 |
|
| 2,452,554 | |
| Advances |
| 105,700 |
|
| 113,700 | |
| Preferred stock to be issued |
| 259,900 |
|
| 259,900 | |
| Common stock to be issued |
| 1,066,138 |
|
| 1,066,138 | |
|
|
| 41,934 |
|
| - | |
| Convertible notes payable, net of discount of $0 and $195,449, respectively |
| 1,611,386 |
|
| 1,292,787 | |
| Notes payable |
| 730,096 |
|
| 450,303 | |
| Related party notes payable |
| 118,104 |
|
| 118,104 | |
| Derivative liabilities |
| 6,445,544 |
|
| 4,167,061 | |
| Total current liabilities |
| 13,721,089 |
|
| 10,414,520 | |
|
|
|
|
|
| ||
| Long term liabilities |
|
|
|
|
| |
|
| Notes payable |
| 147,500 |
|
| 150,000 |
Total liabilities |
| 13,868,589 |
|
| 10,564,520 | ||
|
|
|
|
|
| ||
Commitments and contingencies (Note 5) |
|
|
|
|
| ||
|
|
|
|
|
| ||
Stockholders’ Deficit: |
|
|
|
|
| ||
| Preferred stock; $0.001 par value; 80,000,000 shares authorized; 0 and 0 shares issued and outstanding as of December 31, 2022 and 2021, respectively |
| - |
|
| - | |
| Preferred stock, Series A; $0.001 par value; 20,000,000 shares authorized; 0 and 0 shares issued and outstanding as of December 31, 2022 and 2021, respectively |
| 1 |
|
| 1 | |
| Preferred stock, Series E; $0.001 par value; 1,000,000 shares authorized; 1,000,000 and 1,000,000 shares issued and outstanding as of December 31, 2022 and 2021, respectively |
| 1,000 |
|
| 1,000 | |
| Common stock, $0.001 par value; 9,000,000,000 shares authorized, 82,634,170 and 40,880,093 shares issued and outstanding as of December 31, 2022 and 2021, respectively |
| 82,635 |
|
| 40,879 | |
| Additional paid-in capital |
| 23,005,273 |
|
| 22,300,429 | |
| Accumulated deficit |
| (36,954,799) |
|
| (32,904,660) | |
Total stockholders’ deficit |
| (13,865,890) |
|
| (10,562,351 | ||
Total liabilities and stockholders’ deficit | $ | 2,699 |
| $ | 2,169 | ||
See accompanying notes to the consolidated financial statements.
F-15
RAADR, Inc.
Consolidated Statements of Operations
(Unaudited)
|
| For the Year Ended December 31, | |||||
|
| 2022 |
| 2021 | |||
|
|
|
|
| |||
| Revenue, net |
| $ | - |
| $ | - |
| Cost of goods sold |
|
| - |
|
| - |
|
|
|
|
|
|
| |
Gross profit |
|
| - |
|
| - | |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
| |
| Advertising and marketing |
|
| 42,729 |
|
| 6,516 |
| Executive compensation |
|
| 180,000 |
|
| 147,796 |
| General and administrative expenses |
|
| 268,424 |
|
| 433,865 |
| Professional fees, including stock-based compensation of $282,600 and $377,000 respectively |
|
| 606,885 |
|
| 756,752 |
Total operating expenses |
|
| 1,098,038 |
|
| 1,344,929 | |
|
|
|
|
|
|
|
|
Loss from operations |
|
| (1,098,038) |
|
| (1,344,929) | |
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
| |
| Interest expense |
|
| (573,368) |
|
| (1,239,149) |
| Loss on derivative liabilities |
|
| (2,378,733) |
|
| (3,669,488) |
| Total other income (expense) |
|
| (2,952,101) |
|
| (4,908,637) |
|
|
|
|
|
|
|
|
Net loss |
| $ | (4,050,139) |
| $ | (6,253,566) | |
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share attributable to common stockholders |
| $ | (0.07) |
| $ | (0.27) | |
Weighted-average number of shares used in computing basic and diluted per share amounts |
|
| 57,692,053 |
|
| 23,058,949 | |
See accompanying notes to the consolidated financial statements.
F-16
RAADR, Inc.
Consolidated Statement of Stockholders’ Deficit
(Unaudited)
|
| Preferred Stock, Series A | Preferred Stock, Series E | Common Stock |
|
|
| |||
|
| Shares | Amount | Shares | Amount | Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Deficit |
Balance, December 31, 2020 |
| - | $1 | 1,000,000 | $1,000 | 6,127,264 | $6,127 | $17,412,037 | $(26,651,094) | $(9,231,930) |
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes payable and derivative liabilities into common stock |
| - | - | - | - | 27,952,829 | 27,953 | 4,130,692 | - | 4,158,645 |
Common stock issued for services |
| - | - | - | - | 2,500,000 | 2,500 | 374,500 | - | 377,000 |
Common stock issued for cash |
| - | - | - | - | 2,350,000 | 2,350 | 232,650 | - | 235,000 |
Common stock issued for settlement |
| - | - | - | - | 1,750,000 | 1,750 | 120,750 | - | 122,500 |
Common stock issued with notes payable |
| - | - | - | - | 200,000 | 200 | 19,800 | - | 20,000 |
Contributed capital |
| - | - | - | - | - | - | 10,000 | - | 10,000 |
Net loss |
| - | - | - | - | - | - | - | (6,253,566) | (6,253,566) |
Balance, December 31, 2021 |
| - | $1 | 1,000,000 | $1,000 | 40,880,093 | $40,880 | $22,300,429 | $(32,904,660) | $(10,562,351) |
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes payable and derivative liabilities into common stock |
| - | - | - | - | 5,550,000 | 5,550 | 139,950 | - | 145,500 |
Common stock issued for services |
| - | - | - | - | 5,791,577 | 5,793 | 276,807 | - | 282,600 |
Common stock issued for cash |
| - | - | - | - | 30,412,500 | 30,413 | 288,087 | - | 318,500 |
Net loss |
| - | - | - | - | - | - | - | (4,050,139) | (4,050,139) |
Balance, December 31, 2022 |
| - | $1 | 1,000,000 | $1,000 | 82,634,170 | $82,636 | $23,005,273 | $(36,954,799) | $(13,865,890) |
See accompanying notes to the consolidated financial statements.
F-17
RAADR, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
|
| For the Year Ended December 31, | ||||
|
| 2022 |
| 2021 | ||
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
| ||
Net loss |
| $ | (4,050,139) |
| $ | (6,253,566) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Stock-based compensation |
|
| 282,600 |
|
| 377,000 |
Increase in principal on note exchange, default or services |
|
| - |
|
| 616,204 |
Loss on derivative liability |
|
| 2,378,733 |
|
| 3,669,488 |
Accretion of debt discount |
|
| 229,523 |
|
| 412,415 |
Additional interest expense on conversion of notes payable and derivative liabilities |
|
| 39,631 |
|
| 57,500 |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts payable |
|
| 32,278 |
|
| (145) |
Accrued liabilities |
|
| 381,859 |
|
| 497,474 |
Net cash used in operating activities |
|
| (705,515) |
|
| (623,630) |
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchase of property and equipment |
|
| (1,828) |
|
| - |
Net cash provided by investing activities |
|
| (1,828) |
|
| - |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from issuance of convertible notes payable |
|
| 150,900 |
|
| 355,000 |
Repayment on related party notes payable |
|
| - |
|
| 1,099 |
Repayments of advances |
|
| (8,000) |
|
| 20,000 |
Proceeds from line of credit |
|
| 42,590 |
|
| - |
Payments on line of credit |
|
| (1,532) |
|
| - |
Offering costs paid for notes payable |
|
| (8,000) |
|
| - |
Payment of notes payable |
|
| (37,558) |
|
| - |
Proceeds from notes payable |
|
| 249,145 |
|
| 14,700 |
Proceeds from sale of common stock |
|
| 318,500 |
|
| 235,000 |
Net cash provided by financing activities |
|
| 706,045 |
|
| 625,799 |
|
|
|
|
|
|
|
Change in cash and cash equivalents |
|
| (1,298) |
|
| 2,169 |
Cash and cash equivalents, beginning of period |
|
| 2,169 |
|
| - |
Cash and cash equivalents, end of period |
| $ | 871 |
| $ | 2,169 |
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
Cash paid for interest |
| $ | 6,045 |
| $ | - |
Cash paid for income taxes |
| $ | - |
| $ | - |
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
Conversions of notes payable and derivative liabilities into common stock |
| $ | - |
| $ | 3,947,985 |
Notes payable and accrued interest exchanged for convertible notes payable |
| $ | - |
| $ | 771,887 |
Notes payable issued for services |
| $ | - |
| $ | 500,000 |
See accompanying notes to the consolidated financial statements.
F-18
RAADR, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - History and Organization
Organization
Raadr, Inc. (the “Company”) was organized March 29, 2006 (Date of Inception) under the laws of the State of Nevada, as White Dental Supply, Inc. On December 27, 2012, the Company formed two wholly owned subsidiaries, Choice One Mobile, Inc. and PITOOEY! Mobile, Inc., under the laws of the State of Nevada. On January 7, 2013, the Board of Directors of the Company authorized and a majority of the stockholders of the Company ratified, by written consent, resolutions to change the name of the Company to PITOOEY!, Inc. The name change was effective with the State of Nevada February 7, 2013. On February 6, 2013, the Company formed a wholly owned subsidiary, Rockstar Digital, Inc., under the laws of the State of Nevada. On October 31, 2013, the Company, as part of its settlement agreement with the employees of Rockstar Digital, ceased operations of its wholly owned subsidiary, Rockstar Digital, Inc. On July 29, 2015, the Company changed their name to Raadr, Inc. The name change was effective with the State of Nevada on July 29, 2015.
Business
The Company offers a unique software tool in www.raadr.com that allows individuals to monitor social media activity online. As the digital world of the 21st Century continues to evolve, parents, guardians, and children are faced with challenges and threats not just in the real world, but in the omnipresent realm of Social Media as well. PITOOEY! INC., makers of the proprietary technology application RAADR© have developed a web based tool that provides families with peace of mind when it comes to knowing that children are safe from bullying and predatory behavior unfortunately so prevalent today.
By customizing their own unique monitoring and alert settings, parents and guardians can be alerted when their children’s Facebook, Twitter, Instagram and other pertinent social media platforms under scrutiny become posted with inappropriate language. By utilizing customized keywords chosen by the user that are added to an already existing database, parents and guardians can carry a sense of assuredness that the youth they love and are responsible for are safe and acting in a fun, yet appropriate manner.
Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying consolidated financial statements, the Company has limited assets and a working capital deficit of approximately $13.7 million.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is significantly dependent upon its ability, and will continue to attempt, to secure equity and/or additional debt financing. The Company is attempting to conduct private placements of its preferred and common stock to raise proceeds to finance its plan of operation. There are no assurances that the Company will be successful, and without sufficient financing, it would be unlikely for the Company to continue as a going concern.
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might arise from this uncertainty.
F-19
Unaudited and Unreviewed Financial Statements
The accompanying consolidated financial statements have been prepared by the Company’s management pursuant to the rules and regulations of the United States Securities and Exchange Commission. These consolidated financial statements have not been audited or reviewed by an independent third party.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Principles of Consolidation
The consolidated financial statements include the accounts of Raadr, Inc., Choice One Mobile, Inc., PITOOEY! Mobile, Inc. and Rockstar Digital, Inc. All significant intercompany balances and transactions have been eliminated. Raadr, Inc., Choice One Mobile, Inc., PITOOEY! Mobile, Inc. and Rockstar Digital, Inc. will be collectively referred herein to as the “Company”.
Risks and Uncertainties
The Company has a limited operating history and has not generated revenues from our planned principal operations.
The Company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the U.S. and world economy. A host of factors beyond the Company’s control could cause fluctuations in these conditions, including the political environment and acts or threats of war or terrorism. Adverse developments in these general business and economic conditions, including through recession, downturn or otherwise, could have a material adverse effect on the Company’s consolidated financial condition and the results of its operations.
The Company currently has limited sales and marketing and/or distribution capabilities. The Company has limited experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our current and future products. Developing a marketing and sales force is also time consuming and could delay launch of our future products. In addition, the Company will compete with many companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote sales and marketing.
The Company’s industry is characterized by rapid changes in technology and customer demands. As a result, the Company’s products may quickly become obsolete and unmarketable. The Company’s future success will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and enhance our current products on a timely and cost-effective basis. Further, the Company’s products must remain competitive with those of other companies with substantially greater resources. The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, the Company may not be able to adapt new or enhanced products to emerging industry standards, and the Company’s new products may not be favorably received. We also may not have the capital resources to further the development of existing and/or new ones.
F-20
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.
Loss Per Common Share
Net loss per share is provided in accordance with ASC Subtopic 260-10. The Company presents basic loss per share (“EPS”) and diluted EPS on the face of the statements of operations. Basic EPS is computed by dividing reported losses by the weighted average shares outstanding. Except where the result would be anti-dilutive to income from continuing operations, diluted earnings per share has been computed assuming the conversion of the convertible long-term debt and the elimination of the related interest expense, and the exercise of stock warrants. Loss per common share has been computed using the weighted average number of common shares outstanding during the year. Dilutive loss per share for the years ended December 31, 2022 and 2021 excludes all potential dilutive common shares as their effects are anti-dilutive.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability.
The three levels of the fair value hierarchy are described below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
As of December 31, 2022 and 2021, the derivative liabilities are considered a level 2 item; see Note 4.
The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.
Recent Pronouncements
Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s consolidated financial statement presentation or disclosures.
F-21
Note 3 - Financial Statement Elements
Accrued liabilities as of December 31, 2022 and 2021 consisted of:
|
| December 31, 2022 |
| December 31, 2021 | ||
|
|
|
|
| ||
Accrued payroll and taxes |
| $ | 188,117 |
| $ | 188,117 |
Executive compensation |
|
| 636,270 |
|
| 596,712 |
Accrued interest |
|
| 1,412,511 |
|
| 1,076,087 |
Other |
|
| 596,638 |
|
| 591,638 |
|
| $ | 2,833,536 |
| $ | 2,452,554 |
In August 2015, the Company entered into a settlement agreement with their former Chief Executive Officer. In connection with the agreement, the Company has the obligation to issue 1 share of common stock in settlement of amounts payable to the former Chief Executive Officer for accrued salaries and an investment in Series B preferred stock. The Company has yet to issue the required shares, and thus, as of December 31, 2022 and 2021, the liabilities remain.
See Note 7 for discussion of accrued wages due to the Company’s Chief Executive Officer.
Note 4 - Notes Payable
Notes payable as of December 31, 2022 and 2021 consisted of:
|
| December 31, 2022 |
| December 31, 2021 | ||
|
|
|
|
| ||
Third Party Notes: |
|
|
|
| ||
Convertible promissory notes |
| $ | 1,611,386 |
| $ | 1,488,236 |
Debentures with warrants |
|
| 327,664 |
|
| 327,664 |
Notes under Investment Agreement |
|
| 69,333 |
|
| 69,333 |
Promissory notes |
|
| 480,599 |
|
| 203,306 |
Less: unamortized discount |
|
| - |
|
| (195,449) |
Subtotal - third party notes |
|
| 2,488,982 |
|
| 1,893,090 |
|
|
|
|
|
|
|
Related Party Notes: |
|
| 87,445 |
|
|
|
Debentures with warrants |
|
| 30,659 |
|
| 87,445 |
Demand notes |
|
| 118,104 |
|
| 30,659 |
Subtotal - related party notes |
|
| 2,607,086 |
|
| 118,104 |
Total |
|
|
|
|
| 2,011,194 |
Current portion |
|
| (2,459,586) |
|
| (1,861,194) |
Long-term portion |
| $ | 147,500 |
| $ | 150,000 |
As of the date of this filing, all notes outstanding as of December 31, 2022 and 2021, with exception of $150,900 are in default.
F-22
Convertible Promissory Notes
On April 29, 2013, the Company entered into an Investment Agreement, in which an investor agreed to purchase debentures up to a total principal amount of $1,100,000. This commitment was increased to $2,000,000 based on an agreement modification entered into on December 2, 2013. Each debenture will accrue interest on the unpaid principal of each individual debenture at the rate of 8% per year from the date each debenture is issued until paid. Maturity dates of the debentures issued range from April 2014 through May 2015. In March 2021, the holder transferred $472,431 in principal and $299,456 in accrued interest to a third party for which the Company entered into a new convertible note, see above. As December 31, 2022 and 2021, the remaining balance of the notes is in default. As of December 31, 2022 and 2021, the principle balance owed on these debentures was $69,333 and $69,333, respectively, plus accrued interest.
Promissory Notes
On July 25, 2012, the Company entered into an Intellectual Property Assignment Agreement. In accordance with the terms and conditions contained therein, the Company has agreed to pay the Seller $8,000 in two installments: The first payment of $4,000 was due July 25, 2013, and second payment of $4,000 was due July 25, 2014. The note is currently in default due to non-payment.
During the year ended December 31, 2013, the Company issued a $50,000 promissory note bearing interest at 10% and due on May 31, 2014. The note is payable in monthly payments of principal and interest. As of December 31, 2022 and 2021, the remaining principal balance of $10,606 and $10,606, respectively, is past due and in default.
In June 2015, the Company received $20,000 in proceeds from convertible notes payable. The notes are convertible, only at the Company’s option, for a minimum of $40,000 in common stock based upon the closing stock price on the date of conversion for a period of one year. In addition, the notes incur interest at 12% per annum and is due June 1, 2016. Since the note is only convertible at the Company’s option, the accounting for such will be triggered if the option is exercised.
On July 13, 2020, the Company entered into a $150,000 loan with the Small Business Administration. The note incurs interest at 3.75% per annum with principal and interest due over the period of thirty years. The note is secured by substantially all of the Company’s asset and requires the funds to be used for operational purposes. As of December 31, 2022 and 2021, the remaining principal balance was $147,500 and $150,000, respectively.
During the year ended December 31, 2022, the Company issued $209,145 in short-term promissory notes to various parties with interest rates ranging from 20%-50%. The Company also issued approximately $40,000 in short-term promissory notes to various third parties for expenses paid by the third parties on behalf of the Company. These mature on demand or on various dates from April 2022 through September 2022. During the year ended December 31, 2022, the Company repaid approximately $37,558 of these promissory notes.
During the year ended December 31, 2022, the Company also entered into two 18-month business loan agreements totaling $160,000. The loans require fixed weekly payments of principal and interest totaling $2,897 through November 2023 and have effective interest rates ranging from 34% to 63%. These loans are also secured by substantially all assets of the Company and have various default provisions as defined within the agreement, whereby the debt can be called immediately. As certain of these default provisions have been triggered, the full amount of the remaining principal balance of the loans of $145,942 as of December 31, 2022 has been presented as current although default has not been called by the lender. Net proceeds of $158,175 were received from these loans. An additional $8,000 was paid to a third party for brokering the deal. The on-issuance discount and additional fees paid were recorded as a discount to the loans and are being amortized over the life of the loan. During the year ended December 31, 2022, all of the discount was amortized to interest.
Debentures with Warrants Issued to Related Parties
At various times in 2014 and 2013, the Company issued debentures with warrants to several related parties for $87,445. These debentures bear interest at 8% and mature at various times from July 2014 through February 2015. As of December 31, 2022 and 2021, all the notes are in default as they are past the maturity dates. The warrants issued with these debentures contain an exercise price of $2,500 per share and expired three years from the date of issuance.
F-23
Demand Notes Issued to Related Parties
The Company has various notes outstanding to related parties totaling $30,659 and $30,659 as of December 31, 2022 and 2021, respectively. These notes are due on demand and have no stated interest rate. The Company records imputed interest in connection with these related party notes.
Advances
As of December 31, 2022 and 2021, the Company received advances from a third parties totaling $105,700 and $113,700, respectively. These advances bear interest at 20% per annum and are due 90 days after the funds are received. As of the date of this filing, these advances are considered in default as they are past their maturity date.
Line of Credit
During the year ended December 31, 2022, the Company took out a business line of credit with a financial institution that provides a credit line of up to $35,000. Advances under this line incur interest as an annual rate of 12.25% plus various other periodic finance charges. As of December 31, 2022, $41,934 was outstanding on the line of credit.
Note 5 - Commitments and Contingencies
Consulting Agreements
On December 30, 2015, effective January 1, 2016, the Company entered into an agreement with two consultants to promote the Company’s RAADR mobile app for a period of 60 days. Under the terms of the agreement, the consultants received a total of 20 shares of common stock and were to be paid a total of $50,000 for their services. In addition, the consultants were to receive 50% of all revenues generated from the RAADR mobile app. As of December 31, 2022 and 2021, no amounts had been earned under the revenue arrangement.
On June 27, 2018, the Company entered into an agreement with an individual whereby the individual is to provide consulting services in exchange for 40 shares of common stock. The shares were valued at $2,000 based upon the closing price of the Company’s common stock on the date of the agreement. The agreement does not provide for a performance commitment, and thus, the common stock was expensed upon issuance.
During the year ended December 31, 2018, the Company entered into an agreement with an individual whereby the individual is to provide consulting services in exchange for 100 shares of common stock. The shares were valued at $5,000 based upon the closing price of the Company’s common stock on the date of the agreement. The agreement does not provide for a performance commitment, and thus, the common stock was expensed upon issuance. Additionally, the agreement notes a signing bonus of $10,000 as well as bonuses for certain milestones, none of which have been paid.
See Note 6 for an additional agreements.
Legal
On February 6, 2013, we formed a wholly owned subsidiary, Rockstar Digital, Inc. (“Rockstar”), under the laws of the State of Nevada. Rockstar was organized to specialize in internet branding through social media marketing, mobile marketing and iPhone ® app development Company. On October 31, 2013, the Company entered into a settlement agreement with certain former employees to assume responsibility for certain payroll taxes of Rockstar Digital, Inc. (“Rockstar”) and assign its ownership of Mobile Application and Transition Services intellectual property rights to Rockstar. In addition, the Company agreed to not assert a claim against certain computer equipment (cost of $28,307) in use at Rockstar. The Company agreed to assume liability for any payroll taxes owed on payroll paid by the Company on behalf of Rockstar’s employees. The Company estimated this liability at $30,000 which they have recorded in accrued liabilities as of December 31, 2022 and 2021.
On July 29, 2014, a default judgment was issued against the Company in Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. This judgment stems from a legal filing by a consulting firm, with which the Company entered into an agreement for consulting services, on February 20, 2013. On September 25, 2013, the Company cancelled the agreement because it determined that services had not been provided by consulting firm, as promised per the agreed-upon contract terms. In November 2014, we entered into a settlement agreement whereby the
F-24
Company shall pay the plaintiff $13,246, in monthly installments of $1,472. In addition, the Company issued options to purchase 20 shares of the Company’s common stock at an exercise price of $8,750 expiring in two years. The Company valued the options on the date of issuance at $21,424 using the Black-Sholes model. The required payments on the settlement have not been made, however, the full amount of the liability has been recorded within accrued liabilities as of December 31, 2022 and 2021.
On April 5, 2017, the Circuit Courts within the Twelfth Judicial Circuit of Florida entered an order approving the stipulation of the parties (the “Stipulation”) in the matter of Northbridge Financial, Inc. (“NBF”) v. Raadr Inc. Under the Stipulation, the Company agreed to issue, as settlement of liabilities owed by the Company to NBF in the aggregate amount of $272,250 (the “Claim Amount”) and the following:
(a)In one or more tranches as necessary, 7,000 shares of common stock (the “Initial Issuance”) and $27,500 in fees.
(b)Through the Initial Issuance and any required additional issuances, that number of shares of common stock with an aggregate value equal to the Purchase Price (defined under the Stipulation as the market price (defined as the lowest closing bid price of the Company’s common stock during the valuation period set forth in the Stipulation) less the product of the Discount (equal to 50%) and the market price.
(c)If at any time during the valuation period the closing bid price of the Company’s common stock is below 90% of the closing bid price on the day before an issuance date, the Company will immediately cause to be issued to BF such additional shares as may be required to affect the purposes of the Stipulation.
(d)Notwithstanding anything to the contrary in the Stipulation, the number of shares beneficially owned by NBF will not exceed 4.99% of the Company’s outstanding common stock.
In connection with the Settlement Shares, the Company relied on the exemption from registration provided by Section 3(a)(10) under the Securities Act.
The Company cannot reasonably estimate the amount of proceeds NBF expects to receive from the sale of these shares which be used to satisfy the liabilities. Thus, the Company accounts for the transaction as the shares are sold and the liabilities are settled. All amounts are included within accounts payable. Shares in which are held by NBF at each reporting period are accounted for as issued but not outstanding. During the year ended December 31, 2017, the Company issued 6,263 shares of common stock in settlement of $219,250 in accounts payable. The Company valued the common stock issued at $847,250 based upon the closing market price of the common stock on the settlement date. The difference between the fair market value of the common stock and accounts payable relieved of $628,000 was recorded as additional interest expense. As of December 31, 2022 and 2021, amounts payable to NBF included within accounts payable were $53,000.
Note 6 - Stockholders’ Deficit
Authorized Shares
As of December 31, 2022 and 2021, the Company is authorized to issue 9,000,000,000 shares of $0.001 par value common stock and 101,000,000 shares of $0.001 par value preferred stock (of which 20,000,000 have been designated as Series A Preferred Stock, 1,000,000 have been designated as Series E Preferred Stock, and 80,000,000 shares of preferred stock available for the Company to assign or designate such provisions or preferences as may be assigned by the Board of Directors).
Effective December 20, 2022, the Company enacted a 100 to 1 reverse stock split. All share and per share amount have been revised to reflect the reverse stock split.
Series A Preferred Stock
On January 3, 2013, the Company filed a Certificate of Designation with the State of Nevada to designate up to 20,000,000 shares of preferred stock as “Series A”. The Series A holds no voting rights but is automatically convertible into shares of the Company’s common stock immediately upon the effectiveness of a Certificate of Change filed by the Company to increase the number of shares of common stock the Company would become authorized to issue.
F-25
Series B Preferred Stock
As of the date of these consolidated financial statements the designations for the Series B have not been filed with the State, and thus, the proceeds received for sale of these shares to date are reflected as a liability on the accompanying balance sheets at December 31, 2022 and 2021. The rights and preferences are not valid until the designations are filed. Once approved, the holders are expected to receive warrants to purchase one share of common stock at $50.00 per share. In addition, each share of Series B converted the holder would receive two shares of common stock.
Series E Preferred Stock
On January 27, 2016, the Company filed a Certificate of Designation with the State of Nevada to designate up to 1,000,000 shares of preferred stock as “Series E”. The Series E hold voting rights equal to twice the number of votes of all outstanding shares of capital stock such that the holders of outstanding shares of Series E shall always constitute 66.67% of the voting rights of the Corporation. All shares of Series E rank subordinate to all of the Company’s common and preferred stock and are not entitled to participate in the distribution of the Company’s assets upon liquidation.
Year Ended December 31, 2022
During the year ended December 31, 2022, the Company sold 30,412,500 shares of common stock for total proceeds of $318,500. The Company also issued 5,791,577 shares of common stock for consulting services. In connection with these issuances, the Company recorded stock-based compensation expense of $282,600 during the year ended December 31, 2022, 2022 based on the closing market price of the Company’s stock on the date of grant. 2,000,000 of these shares were issued with full-ratchet anti-dilution protection rights.
See Note 4 for additional common stock issuance.
Year Ended December 31, 2021
During the year ended December 31, 2021, the Company issued 2,500,000 shares of common stock to three individuals for consulting services. In connection with these issuances, the Company recorded stock-based compensation expense of $377,000 based on the closing market price of the Company’s stock on the date of grant.
Note 7 - Related Party Transactions
As of December 31, 2022 and 2021, amounts included within accrued liabilities related to payroll due to Jacob DiMartino, our Chief Executive Officer, were $636,270 and $580,801, respectively. The Company accrues $8,000 per month in connection with the CEO’s services, which was increased to $15,000 per month effective June 2021.
See Note 4 discussion related to notes payable and Note 6 for shares issued to related parties.
Note 8 - Subsequent Events
The Company has evaluated events subsequent to December 31, 2022 and through the date these financial statements have been posted on OTC Markets and has determined no events, other than those disclosed above, have occurred that would materially affect the consolidated financial statements above.
F-26
Exhibit Index
|
|
| Date of Filing |
~ | Articles of Incorporation | 5/5/2021 | |
~ | Certificate of Change (Increase Authorized) dated June 19, 2018 | 5/5/2021 | |
~ | Certificate of Designation (Creation of Series A Preferred) dated January 3, 2013 | 5/5/2021 | |
~ | Certificate of Amendment (Name Change to Pitooey!, Inc.) dated January 18, 2013 | 5/5/2021 | |
~ | Certificate of Amendment (Name Change to Raadr, Inc.) dated June 29, 2015 | 5/5/2021 | |
~ | Certificate of Designation (Creation of Series E Preferred ) dated January 27, 2016 | 5/5/2021 | |
~ | Certificate of Amendment (Increase in Authorized) dated March 21, 2016 | 5/5/2021 | |
~ | Certificate of Amendment (Increase in Authorized) dated May 9, 2016 | 5/5/2021 | |
~ | Certificate of Amendment (Increase in Authorized) dated May 3, 2017 | 5/5/2021 | |
~ | Certificate of Amendment (Increase in Authorized) dated August 4, 2017 | 5/5/2021 | |
~ | Certificate of Amendment (Increase in Authorized) dated May 6, 2022 | 12/27/2022 | |
~ | Certificate of Amendment (Reverse Split: 1-for-1,000) dated August 31, 2022 | 12/27/2022 | |
~ | Certificate of Amendment (Reverse Split: 1-for-100) dated September 28, 2022 | 12/27/2022 | |
~ | Bylaws | 1/29/2007 | |
~ | Form of Subscription Agreement | 5/19/2021 | |
~ | Stock Purchase Agreement between Raadr, Inc. and Elliott Polatoff | 6/17/2022 | |
~ | Consulting Agreement between the Company and Leonard Tucker LLC | 6/22/2022 | |
~ | Consulting Agreement between the Company and Christina P. Upham | 6/22/2022 | |
~ | Promissory Note issued by the Company to JanBella Group, LLC and Guaranty between JanBella Group, LLC and Jacob DiMartino. | 3/6/2023 | |
# | Forbearance Agreement between the Company and Dean Richards. | Herewith | |
# | Forbearance Agreement between the Company and Tina Upham. | Herewith | |
# | Forbearance Agreement between the Company and Brenda Whitman. | Herewith | |
* | Consent of Newlan Law Firm, PLLC |
| |
# | Opinion of Newlan Law Firm, PLLC |
|
~ Previously filed
*Included in Exhibit 12.1
# Filed herewith.
32
Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Phoenix, Arizona on this 3rd day of October, 2023.
By: /s/ Jacob DiMartino | October 3, 2023 |
Jacob DiMartino Chief Executive Officer Sole Director Chief Financial Officer Chief Accounting Officer |
|
33
FORBEARANCE AGREEMENT
This Forbearance Agreement (the “Agreement”) is entered into as of the 5th day of September, 2023, by and between Raadr, Inc., a Nevada corporation (the “Company”), and Dean Richards (“Lender”).
RECITALS
A.The Company is indebted to Lender in the aggregate principal amount of $43,900.00 (the “Lender Debt”), the Lender Debt being evidenced by certain debt instruments, copies of which are attached hereto as Exhibit A and made a part hereof (collectively, the “Lender Notes”).
B.The Company is in default (the “Existing Default”) with respect to the repayment of the Lender Debt and the Company does not currently possess funds with which to repay the Lender Debt.
C.The Company has requested that Lender temporarily forbear from suing to collect the Lender Debt, and Lender has agreed to forbear temporarily, subject to the terms and conditions contained herein and without waiving the Company’s Existing Default under the Lender Debt.
D.This Agreement is one of three similar agreements pursuant to which the Company is to issue a total of 1,700,000,000 shares of its common stock.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:
1.Acknowledgment of Recitals. The Company and Lender each acknowledge that the Recitals herein are true and correct statements of fact.
2.Existing Default/Conditional Forbearance. The Company hereby acknowledges and agrees that (a) the Existing Default has occurred and is continuing under the terms of the Lender Debt and that all of the outstanding amounts owed by the Company to Lender under the Lender Debt are due and owing without any defense, right of setoff or counterclaim of the Company or any other person; and (b) Lender has the immediate right to exercise all rights and remedies under the Lender Debt.
Subject to the terms and conditions of this Agreement, Lender agrees to forbear for a period of six (6) months (the “Forbearance Period”) from the date of this Agreement from exercising its remedies under the Lender Debt; provided, however, that such agreement by Lender to forbear temporarily shall immediately terminate on the occurrence of an Event of Default (as defined below). If this Agreement is terminated, then Lender may exercise all of its rights on account of the Existing Default, as well as any additional Events of Default.
This Agreement will expire on March 5, 2024 (the “Expiration Date”). Upon expiration, if the Existing Default has not been cured, Lender may pursue and enforce any and all of its remedies against the Company under the Lender Debt.
3.The Company’s Acknowledgment. The Company acknowledges and agrees that, as of the date of this Agreement, the outstanding principal balance on the Lender Debt is $43,900.00.
FORBEARANCE AGREEMENT | 1
4.The Company’s Agreement. In consideration of Lender’s agreement to forbear temporarily from exercising its remedies under the Lender Debt, the Company agrees that it shall issue to Lender a total of 700,000,000 shares of its common stock (the “Forbearance Shares”).
5.Representations and Warranties of the Company. The Company hereby represents and warrants to Lender, as follows:
(a)Organization and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted.
(b)Authorization; Enforcement.
(1)The Company has all requisite corporate power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby and to issue the Forbearance Shares, in accordance with the terms hereof.
(2)The execution and delivery of this Agreement and the consummation by it of the transactions contemplated hereby (including, without limitation, the issuance of the Forbearance Shares, has been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors or its shareholders is required.
(3)This Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly.
(4)This Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.
(c)Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 30,000,000,000 authorized shares of Common Stock, $0.001 par value per share, of which 259,529,963 shares are issued and outstanding and 10,000,000 authorized shares of preferred stock, $0.001 par value per share, of which 1,000,000 shares of Series E Preferred Stock are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.
(d)Issuance of Forbearance Shares. The Forbearance Shares are duly authorized and will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company.
(e)No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated hereby will not (1) conflict with or result in a violation of any provision of the Articles of Incorporation or Bylaws; (2) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company is a party; or (3) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the
FORBEARANCE AGREEMENT | 2
Company or its securities are subject) applicable to the Company or by which any property or asset of the Company is bound or affected.
(f)OTC Markets Documents; Financial Statements. On or before September 15, 2023, the Company shall have filed all reports, schedules, forms, statements and other documents required to be filed by it with OTC Markets pursuant to its reporting requirements as an Alternative Reporting Standard company (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “OTC Documents”). Upon written request the Company will deliver to the Buyer true and complete copies of the OTC Documents, except for such exhibits and incorporated documents. As of their respective dates or if amended, as of the dates of the amendments, the OTC Documents complied in all material respects with applicable requirements relating to the OTC Documents, and none of the OTC Documents, at the time they were filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such OTC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates or if amended, as of the dates of the amendments, the financial statements of the Company included in the OTC Documents complied as to form in all material respects applicable thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The Company is not subject to the reporting requirements of the Securities Exchange Act of 1934 (the “1934 Act”)
(g)Absence of Certain Changes. There has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations or prospects of the Company, since the Company’s last filing of an OTC Document.
(h)Absence of Litigation. Except for the currently pending lawsuit filed against the Company by JanBella Group, LLC in Charlotte, North Carolina, and as otherwise set forth in the OTC Documents, there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing.
(i)No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Forbearance Shares to Lender. The issuance of the Forbearance Shares to Lender will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.
6.Representations and Warranties of Lender. Lender represents and warrants to the Company that:
(a)Investment Purpose. Lender is taking the Forbearance Shares for Lender’s own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales
FORBEARANCE AGREEMENT | 3
registered or exempted from registration under the Securities Act of 1933 Act, as amended (the “Securities Act”).
(b)Investor Status. Lender is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D or is a sophisticated investor capable of evaluating an investment in the Forbearance Shares.
(c)Reliance on Exemptions. Lender understands that the Forbearance Shares are being offered and sold to Lender in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and Lenders’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Lender set forth herein in order to determine the availability of such exemptions and the eligibility of Lender to acquire the Forbearance Shares.
(d)Information. The Company has not disclosed to Lender any material non-public information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to Lender.
(e)Legends. Lender understands that the Forbearance Shares have not been registered under the 1933 Act and shall bear a restrictive legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE BUYER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY ACCEPTABLE TO THE ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue a certificate without such legend to Lender upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to an exemption from registration without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such party provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. Lender agrees to sell all securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.
(f)No Legal Disability. Lender is under not legal disability with respect to Lender’s entering into, and performing under, this Agreement. This Agreement constitutes a valid and binding agreement of Lender enforceable in accordance with its terms.
FORBEARANCE AGREEMENT | 4
7.Events of Default. The occurrence of one or more of the following shall constitute an “Event of Default” within the meaning of this Agreement:
(a)the Company shall fail to abide by or observe any term, condition or covenant of this Agreement, or any representation made by the Company herein was materially false when made; or
(b)the Company makes an assignment for the benefit of creditors, or a custodian, trustee or receiver is appointed for the Company or for any of its properties, or bankruptcy, reorganization or liquidation proceedings are instituted by or against the Company.
Upon the occurrence of any Event of Default or at any time thereafter, Lender, or the holder of all or any of the Lender Debt, may declare all amounts owed under the Lender Debt to be due and payable, and all such amounts shall immediately become due and payable, and Lender shall be entitled to the immediate exercise of all its rights and remedies available to it under the Lender Debt and applicable law.
8.Enforcement. The Company acknowledges that:
(a)Lender expects and anticipates, and has the unqualified right, to require full and prompt payment and performance by the Company of its obligations hereunder and under the Lender Debt.
(b)Lender intends, and has the unqualified power, to utilize promptly and fully the rights and remedies available to it under the Lender Debt and under applicable law, upon the occurrence of an Event of Default or breach of any of the terms of this Agreement or as otherwise provided in this Agreement.
(c)Lender shall be entitled to recover all attorney’s fees and costs resulting from any default hereunder.
9.No Waiver. The execution of this Agreement and acceptance of any documents related hereto shall not be deemed to be a waiver of any event of default (including the Existing Default) under the Lender Debt, whether or not known to Lender and whether or not existing on the date of this Agreement. The Company acknowledges that Lender is not waiving the Existing Default, but is simply agreeing to forbear from exercising its rights with respect to the Existing Default to the extent expressly set forth in this Agreement. Without limiting the generality of the foregoing, the Company acknowledges and agrees that, immediately upon expiration of the Forbearance Period, Lender has all of its rights and remedies with respect to the Existing Default to the same extent, and with the same force and effect, as if the forbearance had not occurred. The Company will not assert and hereby forever waives any right to assert that Lender is obligated in any way to continue beyond the Forbearance Period to forbear from enforcing its rights or remedies or that Lender is not entitled to act on the Existing Default after the termination of the Forbearance Period as if such default had just occurred and the Forbearance Period had never existed. The Company acknowledges that Lender has made no representations as to what actions, if any, Lender will take after the Forbearance Period, and Lender must and does hereby specifically reserve any and all rights and remedies it has with respect to the Existing Default and each other default or Event of Default that may occur.
10.Release. The Company hereby absolutely and unconditionally releases and forever discharges Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising at law or in equity or upon contract or tort or under any state or federal law or otherwise, which the Company has had, now has or has made claim against any such person for or by reason of any act, omission, matter, cause or thing whatsoever
FORBEARANCE AGREEMENT | 5
arising from the beginning of time to and including the date of this Agreement, whether such claims, demands and causes of action are matured or unmatured or known or unknown, and the Company hereby further acknowledges and agrees that, as of the date hereof, it has no existing defenses to the enforcement of the Lender Debt and, to the extent that any exist as of the date hereof, each of them is hereby absolutely and forever waived, as further consideration for Lender’s forbearance under this Agreement.
11.Reaffirmation of Lender Debt; Entire Agreement. Except as specifically modified herein, the terms and conditions of the Lender Debt remain in full force and effect in accordance with their original terms, not subject to any defense, right of setoff or counterclaim against Lender. All prior oral and written communications, commitments, alleged commitments, promises, alleged promises, agreements and alleged agreements by or among Lender and the Company related to the Lender Debt are hereby merged into this Agreement and the Lender Debt, and shall not be enforceable, unless expressly set forth in this Agreement and the Lender Debt.
This Agreement may not be modified except in writing signed by all parties hereto. Nothing contained in this Agreement shall constitute or be deemed to be a commitment or agreement on the part of the Company to restructure the Lender Debt or to amend any of the provisions of the Lender Debt or to forbear from exercising any of Lender’s rights and remedies under the Lender Debt, except to the limited extent specifically agreed to herein.
12.Further Assurances and Additional Documents. The Company shall, at the request of Lender, at any time and from time to time following the execution of this Agreement, promptly execute and deliver, or cause to be executed and delivered, to Lender all such further documents and instruments and take all such further action as may be reasonably necessary or appropriate to confirm or carry out the provisions and intent of this Agreement.
13.Cumulative Rights. Each right, power or remedy herein conferred upon Lender or by the Lender Debt is cumulative and in addition to every other right, power or remedy, express or implied, now or hereafter arising, available to Lender at law or in equity or under the Lender Debt, or under any other agreement, and each and every right, power and remedy herein set forth or otherwise existing may be exercised from time to time as often and in such order as may be deemed expedient by Lender, and shall not be a waiver of the right to exercise at any time thereafter any other right, power or remedy. No delay or omission by Lender in the exercise of any right, power or remedy shall impair any such right, power or remedy or the right of any such party to resort thereto at a later date. Nor shall any such delay or omission be construed to be waiver of any default.
14.Severability of Provisions. Any provision of this Agreement that is prohibited or unenforceable shall be ineffective to the extent of such portion, without invalidating the remaining provisions of this Agreement, or any other agreement executed between Lender, on the one hand, and the Company, on the other hand, or affecting the validity or enforceability of such provisions.
15.Successors and Assigns. This Agreement is binding upon the parties and their respective successors, assigns, heirs and personal representatives, except that the Company may not assign or transfer its rights or obligations hereunder without the prior written consent of Lender.
16.Governing Law. This Agreement shall be governed by, and construed in accordance with, the substantive laws of the State of Nevada.
17.No Third Party Reliance. No third party shall be entitled to rely upon this Agreement or to have any of the rights or benefits hereunder.
FORBEARANCE AGREEMENT | 6
18.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.
[SIGNATURE PAGE FOLLOWS]
FORBEARANCE AGREEMENT | 7
IN WITNESS WHEREOF, the parties have executed this Forbearance Agreement effective as of the date first above stated.
COMPANY: | LENDER: |
|
|
RAADR, INC. | /s/ Dean Richards |
| Dean Richards |
By: /s/ Jacob DiMartino |
|
Jacob DiMartino |
|
Chief Executive Officer |
|
FORBEARANCE AGREEMENT | 8
Exhibit A
Copies of Lender Notes
FORBEARANCE AGREEMENT
This Forbearance Agreement (the “Agreement”) is entered into as of the 5th day of September, 2023, by and between Raadr, Inc., a Nevada corporation (the “Company”), and Brenda Whitman (“Lender”).
RECITALS
A.The Company is indebted to Lender in the aggregate principal amount of $161,348.00 (the “Lender Debt”), the Lender Debt being evidenced by certain debt instruments, copies of which are attached hereto as Exhibit A and made a part hereof (collectively, the “Lender Notes”).
B.The Company is in default (the “Existing Default”) with respect to the repayment of the Lender Debt and the Company does not currently possess funds with which to repay the Lender Debt.
C.The Company has requested that Lender temporarily forbear from suing to collect the Lender Debt, and Lender has agreed to forbear temporarily, subject to the terms and conditions contained herein and without waiving the Company’s Existing Default under the Lender Debt.
D.This Agreement is one of three similar agreements pursuant to which the Company is to issue a total of 1,700,000,000 shares of its common stock.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:
1.Acknowledgment of Recitals. The Company and Lender each acknowledge that the Recitals herein are true and correct statements of fact.
2.Existing Default/Conditional Forbearance. The Company hereby acknowledges and agrees that (a) the Existing Default has occurred and is continuing under the terms of the Lender Debt and that all of the outstanding amounts owed by the Company to Lender under the Lender Debt are due and owing without any defense, right of setoff or counterclaim of the Company or any other person; and (b) Lender has the immediate right to exercise all rights and remedies under the Lender Debt.
Subject to the terms and conditions of this Agreement, Lender agrees to forbear for a period of six (6) months (the “Forbearance Period”) from the date of this Agreement from exercising its remedies under the Lender Debt; provided, however, that such agreement by Lender to forbear temporarily shall immediately terminate on the occurrence of an Event of Default (as defined below). If this Agreement is terminated, then Lender may exercise all of its rights on account of the Existing Default, as well as any additional Events of Default.
This Agreement will expire on March 5, 2024 (the “Expiration Date”). Upon expiration, if the Existing Default has not been cured, Lender may pursue and enforce any and all of its remedies against the Company under the Lender Debt.
3.The Company’s Acknowledgment. The Company acknowledges and agrees that, as of the date of this Agreement, the outstanding principal balance on the Lender Debt is $161,348.00.
FORBEARANCE AGREEMENT | 1
4.The Company’s Agreement. In consideration of Lender’s agreement to forbear temporarily from exercising its remedies under the Lender Debt, the Company agrees that it shall issue to Lender a total of 700,000,000 shares of its common stock (the “Forbearance Shares”).
5.Representations and Warranties of the Company. The Company hereby represents and warrants to Lender, as follows:
(a)Organization and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted.
(b)Authorization; Enforcement.
(1)The Company has all requisite corporate power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby and to issue the Forbearance Shares, in accordance with the terms hereof.
(2)The execution and delivery of this Agreement and the consummation by it of the transactions contemplated hereby (including, without limitation, the issuance of the Forbearance Shares, has been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors or its shareholders is required.
(3)This Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly.
(4)This Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.
(c)Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 30,000,000,000 authorized shares of Common Stock, $0.001 par value per share, of which 259,529,963 shares are issued and outstanding and 10,000,000 authorized shares of preferred stock, $0.001 par value per share, of which 1,000,000 shares of Series E Preferred Stock are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.
(d)Issuance of Forbearance Shares. The Forbearance Shares are duly authorized and will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company.
(e)No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated hereby will not (1) conflict with or result in a violation of any provision of the Articles of Incorporation or Bylaws; (2) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company is a party; or (3) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the
FORBEARANCE AGREEMENT | 2
Company or its securities are subject) applicable to the Company or by which any property or asset of the Company is bound or affected.
(f)OTC Markets Documents; Financial Statements. On or before September 15, 2023, the Company shall have filed all reports, schedules, forms, statements and other documents required to be filed by it with OTC Markets pursuant to its reporting requirements as an Alternative Reporting Standard company (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “OTC Documents”). Upon written request the Company will deliver to the Buyer true and complete copies of the OTC Documents, except for such exhibits and incorporated documents. As of their respective dates or if amended, as of the dates of the amendments, the OTC Documents complied in all material respects with applicable requirements relating to the OTC Documents, and none of the OTC Documents, at the time they were filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such OTC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates or if amended, as of the dates of the amendments, the financial statements of the Company included in the OTC Documents complied as to form in all material respects applicable thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The Company is not subject to the reporting requirements of the Securities Exchange Act of 1934 (the “1934 Act”)
(g)Absence of Certain Changes. There has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations or prospects of the Company, since the Company’s last filing of an OTC Document.
(h)Absence of Litigation. Except for the currently pending lawsuit filed against the Company by JanBella Group, LLC in Charlotte, North Carolina, and as otherwise set forth in the OTC Documents, there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing.
(i)No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Forbearance Shares to Lender. The issuance of the Forbearance Shares to Lender will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.
6.Representations and Warranties of Lender. Lender represents and warrants to the Company that:
(a)Investment Purpose. Lender is taking the Forbearance Shares for Lender’s own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales
FORBEARANCE AGREEMENT | 3
registered or exempted from registration under the Securities Act of 1933 Act, as amended (the “Securities Act”).
(b)Investor Status. Lender is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D or is a sophisticated investor capable of evaluating an investment in the Forbearance Shares.
(c)Reliance on Exemptions. Lender understands that the Forbearance Shares are being offered and sold to Lender in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and Lenders’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Lender set forth herein in order to determine the availability of such exemptions and the eligibility of Lender to acquire the Forbearance Shares.
(d)Information. The Company has not disclosed to Lender any material non-public information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to Lender.
(e)Legends. Lender understands that the Forbearance Shares have not been registered under the 1933 Act and shall bear a restrictive legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE BUYER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY ACCEPTABLE TO THE ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue a certificate without such legend to Lender upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to an exemption from registration without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such party provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. Lender agrees to sell all securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.
(f)No Legal Disability. Lender is under not legal disability with respect to Lender’s entering into, and performing under, this Agreement. This Agreement constitutes a valid and binding agreement of Lender enforceable in accordance with its terms.
FORBEARANCE AGREEMENT | 4
7.Events of Default. The occurrence of one or more of the following shall constitute an “Event of Default” within the meaning of this Agreement:
(a)the Company shall fail to abide by or observe any term, condition or covenant of this Agreement, or any representation made by the Company herein was materially false when made; or
(b)the Company makes an assignment for the benefit of creditors, or a custodian, trustee or receiver is appointed for the Company or for any of its properties, or bankruptcy, reorganization or liquidation proceedings are instituted by or against the Company.
Upon the occurrence of any Event of Default or at any time thereafter, Lender, or the holder of all or any of the Lender Debt, may declare all amounts owed under the Lender Debt to be due and payable, and all such amounts shall immediately become due and payable, and Lender shall be entitled to the immediate exercise of all its rights and remedies available to it under the Lender Debt and applicable law.
8.Enforcement. The Company acknowledges that:
(a)Lender expects and anticipates, and has the unqualified right, to require full and prompt payment and performance by the Company of its obligations hereunder and under the Lender Debt.
(b)Lender intends, and has the unqualified power, to utilize promptly and fully the rights and remedies available to it under the Lender Debt and under applicable law, upon the occurrence of an Event of Default or breach of any of the terms of this Agreement or as otherwise provided in this Agreement.
(c)Lender shall be entitled to recover all attorney’s fees and costs resulting from any default hereunder.
9.No Waiver. The execution of this Agreement and acceptance of any documents related hereto shall not be deemed to be a waiver of any event of default (including the Existing Default) under the Lender Debt, whether or not known to Lender and whether or not existing on the date of this Agreement. The Company acknowledges that Lender is not waiving the Existing Default, but is simply agreeing to forbear from exercising its rights with respect to the Existing Default to the extent expressly set forth in this Agreement. Without limiting the generality of the foregoing, the Company acknowledges and agrees that, immediately upon expiration of the Forbearance Period, Lender has all of its rights and remedies with respect to the Existing Default to the same extent, and with the same force and effect, as if the forbearance had not occurred. The Company will not assert and hereby forever waives any right to assert that Lender is obligated in any way to continue beyond the Forbearance Period to forbear from enforcing its rights or remedies or that Lender is not entitled to act on the Existing Default after the termination of the Forbearance Period as if such default had just occurred and the Forbearance Period had never existed. The Company acknowledges that Lender has made no representations as to what actions, if any, Lender will take after the Forbearance Period, and Lender must and does hereby specifically reserve any and all rights and remedies it has with respect to the Existing Default and each other default or Event of Default that may occur.
10.Release. The Company hereby absolutely and unconditionally releases and forever discharges Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising at law or in equity or upon contract or tort or under any state or federal law or otherwise, which the Company has had, now has or has made claim against any such person for or by reason of any act, omission, matter, cause or thing whatsoever
FORBEARANCE AGREEMENT | 5
arising from the beginning of time to and including the date of this Agreement, whether such claims, demands and causes of action are matured or unmatured or known or unknown, and the Company hereby further acknowledges and agrees that, as of the date hereof, it has no existing defenses to the enforcement of the Lender Debt and, to the extent that any exist as of the date hereof, each of them is hereby absolutely and forever waived, as further consideration for Lender’s forbearance under this Agreement.
11.Reaffirmation of Lender Debt; Entire Agreement. Except as specifically modified herein, the terms and conditions of the Lender Debt remain in full force and effect in accordance with their original terms, not subject to any defense, right of setoff or counterclaim against Lender. All prior oral and written communications, commitments, alleged commitments, promises, alleged promises, agreements and alleged agreements by or among Lender and the Company related to the Lender Debt are hereby merged into this Agreement and the Lender Debt, and shall not be enforceable, unless expressly set forth in this Agreement and the Lender Debt.
This Agreement may not be modified except in writing signed by all parties hereto. Nothing contained in this Agreement shall constitute or be deemed to be a commitment or agreement on the part of the Company to restructure the Lender Debt or to amend any of the provisions of the Lender Debt or to forbear from exercising any of Lender’s rights and remedies under the Lender Debt, except to the limited extent specifically agreed to herein.
12.Further Assurances and Additional Documents. The Company shall, at the request of Lender, at any time and from time to time following the execution of this Agreement, promptly execute and deliver, or cause to be executed and delivered, to Lender all such further documents and instruments and take all such further action as may be reasonably necessary or appropriate to confirm or carry out the provisions and intent of this Agreement.
13.Cumulative Rights. Each right, power or remedy herein conferred upon Lender or by the Lender Debt is cumulative and in addition to every other right, power or remedy, express or implied, now or hereafter arising, available to Lender at law or in equity or under the Lender Debt, or under any other agreement, and each and every right, power and remedy herein set forth or otherwise existing may be exercised from time to time as often and in such order as may be deemed expedient by Lender, and shall not be a waiver of the right to exercise at any time thereafter any other right, power or remedy. No delay or omission by Lender in the exercise of any right, power or remedy shall impair any such right, power or remedy or the right of any such party to resort thereto at a later date. Nor shall any such delay or omission be construed to be waiver of any default.
14.Severability of Provisions. Any provision of this Agreement that is prohibited or unenforceable shall be ineffective to the extent of such portion, without invalidating the remaining provisions of this Agreement, or any other agreement executed between Lender, on the one hand, and the Company, on the other hand, or affecting the validity or enforceability of such provisions.
15.Successors and Assigns. This Agreement is binding upon the parties and their respective successors, assigns, heirs and personal representatives, except that the Company may not assign or transfer its rights or obligations hereunder without the prior written consent of Lender.
16.Governing Law. This Agreement shall be governed by, and construed in accordance with, the substantive laws of the State of Nevada.
17.No Third Party Reliance. No third party shall be entitled to rely upon this Agreement or to have any of the rights or benefits hereunder.
FORBEARANCE AGREEMENT | 6
18.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.
[SIGNATURE PAGE FOLLOWS]
FORBEARANCE AGREEMENT | 7
IN WITNESS WHEREOF, the parties have executed this Forbearance Agreement effective as of the date first above stated.
COMPANY: | LENDER: |
|
|
RAADR, INC. | /s/ Brenda Whitman |
| Brenda Whitman |
By: /s/ Jacob DiMartino |
|
Jacob DiMartino |
|
Chief Executive Officer |
|
FORBEARANCE AGREEMENT | 8
Exhibit A
Copies of Lender Notes
FORBEARANCE AGREEMENT
This Forbearance Agreement (the “Agreement”) is entered into as of the 5th day of September, 2023, by and between Raadr, Inc., a Nevada corporation (the “Company”), and Tina Upham (“Lender”).
RECITALS
A.The Company is indebted to Lender in the aggregate principal amount of $_______ (the “Lender Debt”), the Lender Debt being evidenced by certain debt instruments, copies of which are attached hereto as Exhibit A and made a part hereof (collectively, the “Lender Notes”).
B.The Company is in default (the “Existing Default”) with respect to the repayment of the Lender Debt and the Company does not currently possess funds with which to repay the Lender Debt.
C.The Company has requested that Lender temporarily forbear from suing to collect the Lender Debt, and Lender has agreed to forbear temporarily, subject to the terms and conditions contained herein and without waiving the Company’s Existing Default under the Lender Debt.
D.This Agreement is one of three similar agreements pursuant to which the Company is to issue a total of 1,700,000,000 shares of its common stock.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:
1.Acknowledgment of Recitals. The Company and Lender each acknowledge that the Recitals herein are true and correct statements of fact.
2.Existing Default/Conditional Forbearance. The Company hereby acknowledges and agrees that (a) the Existing Default has occurred and is continuing under the terms of the Lender Debt and that all of the outstanding amounts owed by the Company to Lender under the Lender Debt are due and owing without any defense, right of setoff or counterclaim of the Company or any other person; and (b) Lender has the immediate right to exercise all rights and remedies under the Lender Debt.
Subject to the terms and conditions of this Agreement, Lender agrees to forbear for a period of six (6) months (the “Forbearance Period”) from the date of this Agreement from exercising its remedies under the Lender Debt; provided, however, that such agreement by Lender to forbear temporarily shall immediately terminate on the occurrence of an Event of Default (as defined below). If this Agreement is terminated, then Lender may exercise all of its rights on account of the Existing Default, as well as any additional Events of Default.
This Agreement will expire on March 5, 2024 (the “Expiration Date”). Upon expiration, if the Existing Default has not been cured, Lender may pursue and enforce any and all of its remedies against the Company under the Lender Debt.
3.The Company’s Acknowledgment. The Company acknowledges and agrees that, as of the date of this Agreement, the outstanding principal balance on the Lender Debt is $___________.
FORBEARANCE AGREEMENT | 1
4.The Company’s Agreement. In consideration of Lender’s agreement to forbear temporarily from exercising its remedies under the Lender Debt, the Company agrees that it shall issue to Lender a total of 700,000,000 shares of its common stock (the “Forbearance Shares”).
5.Representations and Warranties of the Company. The Company hereby represents and warrants to Lender, as follows:
(a)Organization and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted.
(b)Authorization; Enforcement.
(1)The Company has all requisite corporate power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby and to issue the Forbearance Shares, in accordance with the terms hereof.
(2)The execution and delivery of this Agreement and the consummation by it of the transactions contemplated hereby (including, without limitation, the issuance of the Forbearance Shares, has been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors or its shareholders is required.
(3)This Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly.
(4)This Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.
(c)Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 30,000,000,000 authorized shares of Common Stock, $0.001 par value per share, of which 259,529,963 shares are issued and outstanding and 10,000,000 authorized shares of preferred stock, $0.001 par value per share, of which 1,000,000 shares of Series E Preferred Stock are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.
(d)Issuance of Forbearance Shares. The Forbearance Shares are duly authorized and will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company.
(e)No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated hereby will not (1) conflict with or result in a violation of any provision of the Articles of Incorporation or Bylaws; (2) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company is a party; or (3) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the
FORBEARANCE AGREEMENT | 2
Company or its securities are subject) applicable to the Company or by which any property or asset of the Company is bound or affected.
(f)OTC Markets Documents; Financial Statements. On or before September 15, 2023, the Company shall have filed all reports, schedules, forms, statements and other documents required to be filed by it with OTC Markets pursuant to its reporting requirements as an Alternative Reporting Standard company (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “OTC Documents”). Upon written request the Company will deliver to the Buyer true and complete copies of the OTC Documents, except for such exhibits and incorporated documents. As of their respective dates or if amended, as of the dates of the amendments, the OTC Documents complied in all material respects with applicable requirements relating to the OTC Documents, and none of the OTC Documents, at the time they were filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such OTC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates or if amended, as of the dates of the amendments, the financial statements of the Company included in the OTC Documents complied as to form in all material respects applicable thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The Company is not subject to the reporting requirements of the Securities Exchange Act of 1934 (the “1934 Act”)
(g)Absence of Certain Changes. There has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations or prospects of the Company, since the Company’s last filing of an OTC Document.
(h)Absence of Litigation. Except for the currently pending lawsuit filed against the Company by JanBella Group, LLC in Charlotte, North Carolina, and as otherwise set forth in the OTC Documents, there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing.
(i)No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Forbearance Shares to Lender. The issuance of the Forbearance Shares to Lender will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.
6.Representations and Warranties of Lender. Lender represents and warrants to the Company that:
(a)Investment Purpose. Lender is taking the Forbearance Shares for Lender’s own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales
FORBEARANCE AGREEMENT | 3
registered or exempted from registration under the Securities Act of 1933 Act, as amended (the “Securities Act”).
(b)Investor Status. Lender is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D or is a sophisticated investor capable of evaluating an investment in the Forbearance Shares.
(c)Reliance on Exemptions. Lender understands that the Forbearance Shares are being offered and sold to Lender in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and Lenders’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Lender set forth herein in order to determine the availability of such exemptions and the eligibility of Lender to acquire the Forbearance Shares.
(d)Information. The Company has not disclosed to Lender any material non-public information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to Lender.
(e)Legends. Lender understands that the Forbearance Shares have not been registered under the 1933 Act and shall bear a restrictive legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE BUYER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY ACCEPTABLE TO THE ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue a certificate without such legend to Lender upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to an exemption from registration without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such party provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. Lender agrees to sell all securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.
(f)No Legal Disability. Lender is under not legal disability with respect to Lender’s entering into, and performing under, this Agreement. This Agreement constitutes a valid and binding agreement of Lender enforceable in accordance with its terms.
FORBEARANCE AGREEMENT | 4
7.Events of Default. The occurrence of one or more of the following shall constitute an “Event of Default” within the meaning of this Agreement:
(a)the Company shall fail to abide by or observe any term, condition or covenant of this Agreement, or any representation made by the Company herein was materially false when made; or
(b)the Company makes an assignment for the benefit of creditors, or a custodian, trustee or receiver is appointed for the Company or for any of its properties, or bankruptcy, reorganization or liquidation proceedings are instituted by or against the Company.
Upon the occurrence of any Event of Default or at any time thereafter, Lender, or the holder of all or any of the Lender Debt, may declare all amounts owed under the Lender Debt to be due and payable, and all such amounts shall immediately become due and payable, and Lender shall be entitled to the immediate exercise of all its rights and remedies available to it under the Lender Debt and applicable law.
8.Enforcement. The Company acknowledges that:
(a)Lender expects and anticipates, and has the unqualified right, to require full and prompt payment and performance by the Company of its obligations hereunder and under the Lender Debt.
(b)Lender intends, and has the unqualified power, to utilize promptly and fully the rights and remedies available to it under the Lender Debt and under applicable law, upon the occurrence of an Event of Default or breach of any of the terms of this Agreement or as otherwise provided in this Agreement.
(c)Lender shall be entitled to recover all attorney’s fees and costs resulting from any default hereunder.
9.No Waiver. The execution of this Agreement and acceptance of any documents related hereto shall not be deemed to be a waiver of any event of default (including the Existing Default) under the Lender Debt, whether or not known to Lender and whether or not existing on the date of this Agreement. The Company acknowledges that Lender is not waiving the Existing Default, but is simply agreeing to forbear from exercising its rights with respect to the Existing Default to the extent expressly set forth in this Agreement. Without limiting the generality of the foregoing, the Company acknowledges and agrees that, immediately upon expiration of the Forbearance Period, Lender has all of its rights and remedies with respect to the Existing Default to the same extent, and with the same force and effect, as if the forbearance had not occurred. The Company will not assert and hereby forever waives any right to assert that Lender is obligated in any way to continue beyond the Forbearance Period to forbear from enforcing its rights or remedies or that Lender is not entitled to act on the Existing Default after the termination of the Forbearance Period as if such default had just occurred and the Forbearance Period had never existed. The Company acknowledges that Lender has made no representations as to what actions, if any, Lender will take after the Forbearance Period, and Lender must and does hereby specifically reserve any and all rights and remedies it has with respect to the Existing Default and each other default or Event of Default that may occur.
10.Release. The Company hereby absolutely and unconditionally releases and forever discharges Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising at law or in equity or upon contract or tort or under any state or federal law or otherwise, which the Company has had, now has or has made claim against any such person for or by reason of any act, omission, matter, cause or thing whatsoever
FORBEARANCE AGREEMENT | 5
arising from the beginning of time to and including the date of this Agreement, whether such claims, demands and causes of action are matured or unmatured or known or unknown, and the Company hereby further acknowledges and agrees that, as of the date hereof, it has no existing defenses to the enforcement of the Lender Debt and, to the extent that any exist as of the date hereof, each of them is hereby absolutely and forever waived, as further consideration for Lender’s forbearance under this Agreement.
11.Reaffirmation of Lender Debt; Entire Agreement. Except as specifically modified herein, the terms and conditions of the Lender Debt remain in full force and effect in accordance with their original terms, not subject to any defense, right of setoff or counterclaim against Lender. All prior oral and written communications, commitments, alleged commitments, promises, alleged promises, agreements and alleged agreements by or among Lender and the Company related to the Lender Debt are hereby merged into this Agreement and the Lender Debt, and shall not be enforceable, unless expressly set forth in this Agreement and the Lender Debt.
This Agreement may not be modified except in writing signed by all parties hereto. Nothing contained in this Agreement shall constitute or be deemed to be a commitment or agreement on the part of the Company to restructure the Lender Debt or to amend any of the provisions of the Lender Debt or to forbear from exercising any of Lender’s rights and remedies under the Lender Debt, except to the limited extent specifically agreed to herein.
12.Further Assurances and Additional Documents. The Company shall, at the request of Lender, at any time and from time to time following the execution of this Agreement, promptly execute and deliver, or cause to be executed and delivered, to Lender all such further documents and instruments and take all such further action as may be reasonably necessary or appropriate to confirm or carry out the provisions and intent of this Agreement.
13.Cumulative Rights. Each right, power or remedy herein conferred upon Lender or by the Lender Debt is cumulative and in addition to every other right, power or remedy, express or implied, now or hereafter arising, available to Lender at law or in equity or under the Lender Debt, or under any other agreement, and each and every right, power and remedy herein set forth or otherwise existing may be exercised from time to time as often and in such order as may be deemed expedient by Lender, and shall not be a waiver of the right to exercise at any time thereafter any other right, power or remedy. No delay or omission by Lender in the exercise of any right, power or remedy shall impair any such right, power or remedy or the right of any such party to resort thereto at a later date. Nor shall any such delay or omission be construed to be waiver of any default.
14.Severability of Provisions. Any provision of this Agreement that is prohibited or unenforceable shall be ineffective to the extent of such portion, without invalidating the remaining provisions of this Agreement, or any other agreement executed between Lender, on the one hand, and the Company, on the other hand, or affecting the validity or enforceability of such provisions.
15.Successors and Assigns. This Agreement is binding upon the parties and their respective successors, assigns, heirs and personal representatives, except that the Company may not assign or transfer its rights or obligations hereunder without the prior written consent of Lender.
16.Governing Law. This Agreement shall be governed by, and construed in accordance with, the substantive laws of the State of Nevada.
17.No Third Party Reliance. No third party shall be entitled to rely upon this Agreement or to have any of the rights or benefits hereunder.
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18.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.
[SIGNATURE PAGE FOLLOWS]
FORBEARANCE AGREEMENT | 7
IN WITNESS WHEREOF, the parties have executed this Forbearance Agreement effective as of the date first above stated.
COMPANY: | LENDER: |
|
|
RAADR, INC. | ______________________________ |
| Tina Upham |
By: ______________________________ |
|
Jacob DiMartino |
|
Chief Executive Officer |
|
FORBEARANCE AGREEMENT | 8
Exhibit A
Copies of Lender Notes
NEWLAN LAW FIRM, PLLC
2201 Long Prairie Road - Suite 107-762
Flower Mound, Texas 75022
940-367-6154
October 3, 2023
Raadr, Inc.
7950 E. Redfield Road
Unit 210
Scottsdale, Arizona 85260
Re:Offering Statement on Form 1-A
Gentlemen:
We have been requested by Raadr, Inc., a Nevada corporation (the “Company”), to furnish you with our opinion as to the matters hereinafter set forth in connection with its offering statement on Form 1-A, including Post-Qualification Amendment No. 7 thereto (collectively, the “Offering Statement”), relating to the qualification of shares of the Company’s $.001 par value common stock (the “Common Stock”) under Regulation A promulgated under the Securities Act of 1933, as amended. Specifically, this opinion relates to (a) 3,062,500,000 shares of the Company’s Common Stock (the “Company Shares”) to be offered by the Company and (b) 296,969,230 shares of the Company’s Common Stock (the “Selling Shareholder Shares”) to be offered by Elliott Polatoff, Leonard Tucker LLC and Christina P. Upham, as selling shareholders.
In connection with this opinion, we have examined the Offering Statement, the Company’s Articles of Incorporation and Bylaws (each as amended to date), copies of the records of corporate proceedings of the Company and such other documents as we have deemed necessary to enable us to render the opinion hereinafter expressed.
For purposes of this opinion, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as copies and the authenticity of the originals of all documents submitted to us as copies. We have also assumed the legal capacity of all natural persons, the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto other than the Company and the due authorization, execution and delivery of all documents by the parties thereto other than the Company. We have not independently established or verified any facts relevant to the opinions expressed herein, but have relied upon statements and representations of officers and other representatives of the Company and others.
Based upon and subject to the foregoing qualifications, assumptions and limitations and the further limitations set forth below, we are of the opinion that the 3,062,500,000 Company Shares being offered by the Company will, when issued in accordance with the terms set forth in the Offering Statement, be legally issued, fully paid and non-assessable shares of Common Stock of the Company. We are of the further opinion that the 296,969,230 Selling Shareholder Shares have been duly authorized and are validly issued, fully paid and non-assessable shares of Common Stock of the Company.
Our opinions expressed above are subject to the qualification that we express no opinion as to the applicability of, compliance with, or effect of any laws except the Nevada Revised Statutes (including the statutory provisions and reported judicial decisions interpreting the foregoing).
We hereby consent to the use of this opinion as an exhibit to the Offering Statement and to the reference to our name under the caption “Legal Matters” in the Offering Statement and in the offering circular included in the Offering Statement. We confirm that, as of the date hereof, we own no shares of the Company’s common stock, nor any other securities of the Company.
Sincerely,
/s/ Newlan Law Firm, PLLC
NEWLAN LAW FIRM, PLLC
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