PART II AND III 2 tm2025493d1_partiiandiii.htm PART II AND III

 

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. THE COMPANY MAY ELECT TO SATISFY ITS OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF THE COMPANY’S SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

 

PRELIMINARY OFFERING CIRCULAR

DATED [___], 2020

 

Future Labs VI, Inc.  dba “Piestro”

1134 11th Street, Suite 101

Santa Monica, CA 90403

 

up to

[___] shares of Common Stock

 

We are offering a minimum number of [___] shares of Common Stock and a maximum number of [___] shares of Common Stock on a “best efforts” basis to investors in this offering. 

 

Common Stock
Shares
  Price Per Share to
the Public
    Underwriting Discounts and
Commissions, per share*
    Total Number of
Shares Being
Offered
    Proceeds to Company
Before Expenses**
 
Total Minimum   $       $ .             $    
Total Maximum   $       $ .             $    

 

* The company has engaged StartEngine Primary, LLC (“StartEngine Primary”) to act as its placement agent to assist in the placement of its securities. The company will pay a cash commission of 7.0% to StartEngine Primary on sales of the Common Stock as well as for StartEngine Primary to purchase up to 2.0% of the Common Stock sold though StartEngine Primary at an exercise price of $[___] per share. The company will also pay a $15,000 advance fee for reasonable accountable out of pocket expenses actually anticipated to be incurred by StartEngine. Any unused portion of this fee not actually incurred by StartEngine will be returned to the Company. FINRA fees will be paid by the Company. See “Plan of Distribution and Selling Security Holders” for details regarding the compensation payable to third-parties in connection with this offering.

 

In each case StartEngine Capital may charge investors a fee of 3.5%, in which case the commission set forth above shall be reduced commensurately. In the event an investor invests in excess of $20,000, such investor fee shall be limited to $700 and Company shall pay the 3.5% additional commission with respect to any amount in excess of $20,000

 

The fee shall be paid in cash upon disbursement of funds from escrow at the time of each closing. Payment will be made to StartEngine directly from the escrow account maintained for the Offering. The Company acknowledges that StartEngine is responsible for providing instructions to the escrow agent for distribution of funds held pending completion or termination of the Offering.

 

 

 

 

**Future Labs VI, Inc. (the “Company”) expects that the amount of expenses of the offering that it will pay will be approximately $[___], not including commissions or state filing fees.

 

The Company is selling shares of Common Stock.

 

The Company has engaged Prime Trust, LLC (the “Escrow Agent”) to hold funds tendered by investors, and assuming we sell a minimum of [___] in shares, may hold a series of closings at which we receive the funds from the Escrow Agent and issue the shares to investors. The offering will terminate at the earlier of: (1) the date at which the maximum offering amount has been sold, (2) [____], or (3) the date at which the offering is earlier terminated by the Company in its sole discretion. In the event we have not sold the minimum amount of shares by [] or sooner terminated by the Company, any money tendered by potential investors will be promptly returned by the Escrow Agent. The Company may undertake one or more closings on a rolling basis once the minimum offering amount is sold. After each closing, funds tendered by investors will be available to the Company. The offering is being conducted on a best-efforts basis.

 

THE   UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF 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.

 

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)I OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov.

 

This offering is inherently risky. See “Risk Factors” on page 6.

 

Sales of these securities will commence on approximately [_].

 

The Company is following the “Offering Circular” format of disclosure under Regulation A.

 

 

 

 

SUMMARY 4
   
RISK FACTORS 6
   
DILUTION 8
   
USE OF PROCEEDS TO ISSUER 9
   
THE COMPANY’S BUSINESS 10
   
THE COMPANY’S PROPERTY 12
   
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 12
   
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 13
   
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS 14
   
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS 14
   
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 15
   
SECURITIES BEING OFFERED 15
   
FINANCIAL STATEMENTS FOR THE PERIODS ENDED DECEMBER 31, 2019 AND 2018 F-1

 

3

 

 

Implications of Being an Emerging Growth Company

 

As an issuer with less than $1 billion in total annual gross revenues during our last fiscal year, we will qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and this status will be significant if and when we become subject to the ongoing reporting requirements of the Exchange Act upon filing a Form 8-A. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we:

 

  will not be required to obtain an auditor attestation on our internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

 

  will not be required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”);

 

  will not be required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes);

 

  will be exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

 

  may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A; and
will be eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards.

 

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards, and hereby elect to do so. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under Section 107 of the JOBS Act.

 

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, or such earlier time that we no longer meet the definition of an emerging growth company. Note that this offering, while a public offering, is not a sale of common equity pursuant to a registration statement, since the offering is conducted pursuant to an exemption from the registration requirements. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1 billion in annual revenues, have more than $700 million in market value of our Common Stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.

 

Certain of these reduced reporting requirements and exemptions are also available to us due to the fact that we may also qualify, once listed, as a “smaller reporting company” under the Commission’s rules. For instance, smaller reporting companies are not required to obtain an auditor attestation on their assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.

 

Summary of the Offering

 

The following summary of certain information contained in this Offering Circular is not intended to be complete in itself. The summary does not provide all the information necessary for you to make an investment decision. You are encouraged to review the more detailed information in the remainder of the Offering Circular.

 

As used in this Offering Circular, unless the context otherwise requires, the terms “Corporation,” “Company” “Piestro,”, “we” “our” and “us” refer to Future Labs VI, Inc.

 

THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

4

 

 

Piestro Company Overview

 

Future Labs VI, lnc., doing business as Piestro, is building an automated vending machine that will assemble and cook artisanal pizza with the press of a button. Our team has a wealth of experience in automation and kitchen technology and we are bringing this experience to build one of the world's first pizza vending machines. We are backed by Wavemaker, a global venture capital firm, and by Wavemaker Labs (Future Labs VII, Inc.), its in-house robotics and automation corporate innovation studio. Piestro (Future Labs VI, Inc.) has common ownership with Wavermaker Labs. Both entities are majority owned by Future VC, LLC, which controls the majority (79%) of voting stock of both entities. We are based in Santa Monica, California and are currently working on version two of our prototype.

 

Industry Overview

 

The worldwide pizza market is currently $154bn and is expected to grow to over $230bn by 2023. Despite there being some large industry incumbents, the pizza industry is highly fragmented with hundreds, if not thousands, of regional players. Additionally, the pizza delivery space is extremely large and growing, especially due to recent concerns around public health and safety. We believe Piestro is well positioned to ride the wave of these trends, and help bring healthy, fresh, and quality pizza to the public using innovative technology.

 

There are some direct competitors in the pizza automation space, including Picnic, Zume, Basil Street, and Let's Pizza, among others. We believe ours is the only business that combines an experienced team of engineers with a management and advisory board that has deep experience in the restaurant industry and in food automation, including at Kitchen United and Miso Robotics. We believe our team and its background, coupled by our dual go-to-market business model (detailed below) is what sets us apart from the other players in the market.

 

Our Product

 

We have completed our first working prototype, which shows the concept of an automated pizza vending machine and allows us to test hardware and software features as we iterate towards the production ready model. The product takes flattened, unbaked pizza dough and dispenses toppings onto it. We are currently in design stages to integrate a conveyor oven, which can cook the pizza in less than 3 minutes. We currently have a team of consultants at Wavemaker Labs that manage all our product development efforts. We have already started business development efforts and have started to source partners and potential customers for our business. To date, we have not registered any IP, but we do plan to make IP generation a part of this business.

 

We are currently developing version two of our prototype, which will harness true cold to cook technology that we plan to deploy in a live location for beta testing and actual customer ordering. Capital raised in this round will help us finance this next step in our product development roadmap. We also plan to speed up business development efforts and hope to deploy our next prototype in a -Beta- rollout. By the end of this year, we hope to have made significant progress on our second prototype, with the hope of having it finished in 2021.

 

Selected Risks Associated with the Business

 

Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this summary. These risks include, but are not limited to, the following:

 

 

We have a limited operating history upon which to evaluate our performance, and have not yet generated profits or revenue.

 

  Our technology is not yet fully developed, and there is no guarantee that we will be able to develop and produce a fully working prototype of our core product.

 

  We will be required to raise additional capital in order to develop our technology and prototype.

 

  Our company does not yet hold any patents on any products or technology.

 

  We rely on a small management team to execute our business plan.

 

  Our future revenue plans partially rely on two non-binding letters of intent.

 

  We could be adversely affected by product liability, personal injury or other health and safety issues.

 

  Competitive technologies could limit our ability to successfully deploy our technologies.

 

  We plan to initially rely on third-party manufacturers.

 

  We may need to raise additional capital, which might not be available or might be available only on terms unfavorable to us or our investors.

 

  There is no current market for any shares of the Company's stock.

 

5

 

  

Offering Terms

 

Securities Offered

Minimum of [___] shares of Common Stock into which they may convert.

 

Maximum of [___] shares of Common Stock into which they may convert.

Minimum Investment  [___]
Securities outstanding before the Offering:  
Common Stock 0 shares
Class F Stock 3,000,000 shares
Preferred Stock 0 shares
Securities outstanding after the Offering:  
Common Stock [___]
Class F Stock [___]
Preferred Stock [___]
Use of Proceeds The proceeds of this offering will be used for product development, personnel, and general overhead.

 

Risk Factors

 

The SEC requires that we identify risks that are specific to our business and financial condition. We are still subject to all the same risks that all companies in our business, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as hacking and the ability to prevent hacking). Additionally, early-stage companies are inherently riskier than more developed companies. You should consider general risks as well as specific risks when deciding whether to Invest. 

 

Risks Related to Our Company 

 

We are an early stage company and have not yet generated any revenue

Future Labs VI, Inc. ("Piestro") was formed on December 4, 2017. Accordingly, the Company has a limited history upon which an evaluation of its performance and future prospects can be made. Our current and proposed operations are subject to all business risks associated with new enterprises. These include likely fluctuations in operating results as the Company reacts to developments in its market, managing its growth and the entry of competitors into the market. We will only be able to pay dividends on any shares once our directors determine that we are financially able to do so. Piestro has incurred a net loss and has had no revenues generated since inception. There is no assurance that we will be profitable in the next 3 years or generate sufficient revenues to pay dividends to the holders of the shares.

 

Any valuation at this stage is difficult to assess.

The valuation for this Offering was established by the Company and is not based on the financial results of the Company. Instead, it is based on management’s best estimates of the investment value of the Company, which is a subjective measure. This differs significantly from listed companies, which are valued publicly through market-driven stock prices. The valuation of private companies, especially early-stage companies, is difficult to assess and you may risk overpaying for your investment.

 

We have a limited operating history upon which to evaluate our performance, and have not yet generated profits or revenue.

We are a new company and have neither generated revenue, nor have we had any significant operating history. As such, it is difficult to determine how we will perform, as our core product has yet to come market.

 

Our technology is not yet fully developed, and there is no guarantee that we will be able to develop and produce a fully working prototype of our core product.

We are still developing our Piestro prototype that will go into mass production. We still have significant engineering and development work to do before we are ready to deliver a working version of our product and attain revenue. We may be unable to convert our prototype to a prototype that can easily be replicated and put into mass production. Additionally, we may not be able to make a transition to mass production, either via in house manufacturing or contract manufacturers.

 

6

 

 

We will be required to raise additional capital in order to develop our technology and prototype.

We will not be able to sell or distribute a working version of our product if we cannot raise debt or equity financing.

 

Our company does not yet hold any patents on any products or technology.

We do not yet hold any patents on our product, and so cannot guarantee that our product or technology is proprietary nor that it may be copied by another competitor. Because of this, our technology is not currently proprietary and could be easily copied by other companies.

 

We rely on a small management team to execute our business plan.

Our management team is currently small and made up of only two part-time individuals, Massimo Noja de Marco and Kevin Morris, whom we rely on to help us raise funds and help grow our business. Our partnership and relationship with Wavemaker Labs is crucial for us to achieve our growth plan.

 

Our failure to attract and retain highly qualified personnel in the future could harm our business.

As the Company grows, it will be required to hire and attract additional qualified professionals such as software engineers, robotics engineers, machine vision and machine learning experts, project managers, regulatory professionals, sales and marketing professionals, accounting, legal, and finance experts. The Company may not be able to locate or attract qualified individuals for such positions, which will affect the Company’s ability to grow and expand its business. 

 

Our future revenue plans rely on white-labeling our product to existing pizza chains.

Our largest stream of projected revenue comes from selling our pods as “white-labeled” products to existing pizza chains. If we are unable to create partnerships and achieve these sales to existing pizza chains it will greatly affect our business model and jeopardize our go-to-market strategy.

 

The Company’s business model is capital intensive. 

The amount of capital the Company is attempting to raise in this Offering is not enough to sustain the Company’s current business plan. In order to achieve near and long-term goals, the Company will need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If the Company is not able to raise sufficient capital in the future, then it will not be able to execute its business plan, its continued operations will be in jeopardy and it may be forced to cease operations and sell or otherwise transfer all or substantially all of its remaining assets, which could cause a Purchaser to lose all or a portion of his or her investment.

 

We could be adversely affected by product liability, personal injury or other health and safety issues.

As with any company serving food, we must adhere to strict health and safety standards. We could suffer significant reputational damage and financial liability if we experience any of the foregoing health and safety issues or incidents, which could have a material adverse effect on our business operations, financial condition and results of operations.

 

Many of our competitors have more resources and greater market recognition than we do.

Because we are a new entrant to the pizza vending machine market, there are already a number of companies who have more resources and greater market recognition than we do. Because of this, we may face issues developing a product and technology that can compete with other players in the market. We will be at a disadvantage as we are a new entrant with significantly less resources and minimal market recognition and penetration.

   

We may need to raise additional capital, which might not be available or might be available only on terms unfavorable to us or our investors.

In order to continue to operate and grow the business, we will likely need to raise additional capital beyond this current financing round by offering shares of our Common or Preferred Stock and/or other classes of equity. All of these would result in dilution to our existing investors, plus they may include additional rights or terms that may be unfavorable to our existing investor base. We cannot assure you that the necessary funds will be available on a timely basis, on favorable terms, or at all, or that such funds, if raised, would be sufficient. The level and timing of future expenditure will depend on a number of factors, many of which are outside our control. If we are not able to obtain additional capital on acceptable terms, or at all, we may be forced to curtail or abandon our growth plans, which could adversely impact the Company, its business, development, financial condition, operating results or prospects.

 

We may never have an operational product or service

It is possible that there may never be a fully operational Piestro vending machine or that the product may never be used to engage in transactions. It is possible that the failure to release the product is the result of a change in business model upon Company's making a determination that the business model, or some other factor, will not be in the best interest of Company and its stockholders/members/creditors.

 

Your rights as a holder of common stock may be limited by the number of shares held by Future VC, LLC.
The Company is currently controlled by one entity, Future VC, LLC, which owns, 2,373,327 shares of Class F Stock. If we raise $[___] in this offering, Future VC, LLC will control [__]% of total outstanding stock and if we raise the maximum amount, Wavemaker will control [__]% of total outstanding stock. The Class F Stock is entitled to certain protective provisions, as described in herein under “Securities Being Offered” and the Company’s Amended and Restated Certificate of Incorporation. Any vote in regard to the approval or disapproval of those items listed under the protective provisions would be either controlled by or substantially influenced by Future VC, LLC, potentially against the interests of the rest of the Common Stock holders, which have ceded their voting rights to the Company’s CEO.

 

7

 

 

Certain data and information in this offering circular were obtained from third-party sources and were not independently verified by the Company.

This offering circular contains certain data and information that we obtained from various publicly available third-party publications. We have not independently verified the data and information contained in such third-party publications and we did not commission any such third party for collecting or providing the data used in this offering circular. Data and information contained in such third-party publications and reports may be collected using third-party methodologies, which may differ from the data collection methods we would have used. In addition, these industry publications and reports generally indicate that the information contained therein is believed to be reliable, but do not guarantee the accuracy and completeness of such information. Further, none of these sources are incorporated by reference into this offering circular.

 

Risks Related to the Securities in this Offering 

 

There is no current market for any shares of the Company's stock.

There is no formal marketplace for the resale of the Preferred stock or any of the Company’s Common Stock. Shares of Common Stock may be traded on the over-the-counter market to the extent any demand exists. Investors should assume that they may not be able to liquidate their investment for some time, or be able to pledge their shares as collateral.

 

The Company has converted all outstanding shares of Common Stock into Class F Stock as of April 2020

As of April 2020, all outstanding shares of Common Stock have been converted into Class F Stock. This includes all Common Stock held by our Founders. Upon each equity financing, 10% of the shares of Class F Stock held by each holder of Class F Stock will automatically convert into shares of the subsequent series of preferred stock of the Corporation that is issued in the equity financing round at the applicable Conversion Ratio.

 

Our Certificate of Incorporation include automatic conversion provisions covering the stock issued to our Founders.

Under the terms of our Certificate of Incorporation our Class F Stock will convert into a class of preferred stock subject to the availability of a securities law exemption for the conversion. See "Securities Being Offered" for more information on these conversion terms. These conversion terms may incentivize certain purchasers to purchase shares directly from our founders, or encourage our founders to provide advantageous terms to future investors, terms at which our founders will be able to participate in a limited capacity as well. As such, there may be instances where conflicts could arise between the interests of our holders of Class F Stock and the interests of investors in this offering.

 

Dilution

 

Dilution means a reduction in value, control or earnings of the shares the investor owns.

 

Immediate dilution

 

An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity” into the Company. When the Company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders or earlier investors, which means that the cash value of your stake is diluted because each share of the same type is worth the same amount, and you paid more for your shares than earlier investors did for theirs.

 

The following table compares the price that new investors are paying for their shares with the effective cash price paid by existing shareholders, giving effect to full conversion of all outstanding stock options, and assuming that the shares are sold at $5.80 per share. The schedule presents shares and pricing as issued and reflects all transactions since inception, which gives investors a better picture of what they will pay for their investment compared to the Company’s insiders than just including such transactions for the last 12 months, which is what the SEC requires.

 

 [Table To Be Filed By Amendment]

  

The following table demonstrates the dilution that new investors will experience upon investment in the Company. This table uses the Company’s net tangible book value as of December 31, 2019 of [___] which is derived from the net equity of the Company in the December 31, 2019   audited financial statements. This tangible net book value is then adjusted to contemplate conversion of all other convertible instruments outstanding at current that would provide proceeds to the Company. The offering costs assumed in the following table includes up to $[___] in commissions to StartEngine Capital, LLC, as well as legal and accounting fees incurred for this Offering. The table presents three scenarios for the convenience of the reader: a $[___] raise from this offering, a $[___] raise from this offering, and a fully subscribed $[___] raise from this offering (maximum offering).

 

The next table is the same as the previous, but adds in consideration of authorized but unissued stock options, presenting the fully diluted basis. This adds [___] pre-financing shares outstanding and is not adjusted for potential conversion proceeds on the hypothetical exercise of these options.

 

8

 

 

 [Table To Be Filed By Amendment]

 

The final table is the same as the previous two, but removes the assumptions of conversion of options, and warrants and consideration of authorized but unissued stock options, instead only presenting issued shares (common shares, plus the assumption of conversion of all issued and outstanding preferred shares).

 

 [Table To Be Filed By Amendment]

  

Future Dilution

 

Another important way of looking at dilution is the dilution that happens due to future actions by the company. The investor’s stake in a company could be diluted due to the company issuing additional shares, whether as part of a capital-raising event, or issued as compensation to the company’s employees or marketing partners. In other words, when the company issues more shares, the percentage of the company that you own will go down, even though the value of the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, another crowdfunding round, a venture capital round, angel investment), employees exercising stock options, or by conversion of certain instruments (e.g. convertible bonds, preferred shares or warrants) into stock.

 

If the company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the company offers dividends, and most development stage companies do not pay dividends for some time).

 

The type of dilution that hurts early-stage investors most occurs when the company sells more shares in a “down round,” meaning at a lower valuation than in earlier offerings. An example of how this might occur is as follows (numbers are for illustrative purposes only):

 

  In June 2014, Jane invests $20,000 for shares that represent 2% of a company valued at $1 million.

 

  In December, the company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Jane now owns only 1.3% of the company, but her stake is worth $200,000.

 

  In June 2015, the company has run into serious problems, and in order to stay afloat, it raises $1 million at a valuation of only $2 million (the “down round”). Jane now owns only 0.89% of the company, and her stake is worth only $26,660.

 

If you are making an investment expecting to own a certain percentage of the company or expecting each share to hold a certain amount of value, it’s important to realize how the value of those shares can decrease by actions taken by the company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share. In some cases, dilution can also completely wipe out the value of investments made by early investors, without any person being at fault.

 

Investors should understand how dilution works and the availability of anti-dilution protection.

 

Use of Proceeds To The Issuer

 

In each case StartEngine Capital may charge investors a fee of 3.5%, in which case the commission set forth above shall be reduced commensurately. In the event an investor invests in excess of $20,000, such investor fee shall be limited to $700 and Company shall pay the 3.5% additional commission with respect to any amount in excess of $20,000

 

The fee shall be paid in cash upon disbursement of funds from escrow at the time of each closing. Payment will be made to StartEngine directly from the escrow account maintained for the Offering. The Company acknowledges that StartEngine is responsible for providing instructions to the escrow agent for distribution of funds held pending completion or termination of the Offering.

 

Assuming a maximum raise of $[___], the net proceeds of this offering would be approximately $[___] after subtracting estimated offering costs of $[___] to StartEngine Primary, LLC in commissions, and $[___] in audit, legal, and filings fees. If Piestro successfully raises the maximum amount under this raise the Company intends to hire additional personnel in engineering and sales, spend additional on marketing to bring in more leads and customers, in addition to being able to fund a minimum viable product which can be used to begin production.

 

Assuming a raise of $[___], representing 50% of the maximum offering amount, the net proceeds would be approximately $[___] after subtracting estimated offering costs of $,[___] to StartEngine Primary, LLC in commissions and $,[___] in audit, legal, and filings fees. In such an event, Piestro would hire a few less personnel engineering, sales, and marketing, but still be able to fund its minimum viable product and move into full production of its mower. 

 

Assuming a raise of the minimum of $[___], representing 10% of the maximum offering amount, net proceeds would be approximately $,[___] after subtracting estimated offering costs of $,[___] to StartEngine Primary, LLC in commissions and $[___] in audit, legal, and filings fees. In such an event, Piestro would hire three to four engineers and be able to complete a minimum viable product, which would allow it to start production and deliver product on its two letters of intent.

 

The Company does not intend to use any proceeds from this offering to pay back any outstanding promissory notes.

 

Please see the table below for a summary our intended use of proceeds from this offering:

 

 [Table To Be Filed By Amendment]

 

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   Minimum Offering      Mid-Point Offering      Maximum Offering
Total Raise  $      $      $
Commissions  $      $      $
Fixed Costs  $      $      $
Net Proceeds  $,      $      $
                  
Percent                 
Allocation  Category  %   Category  %   Category
25%  Product Development   25%  Product Development   25%  Product Development
54%  Payroll   50%  Payroll   50%  Payroll
6%  General Administrative   10%  General Administrative   12%  General Administrative
15%  Marketing   15%  Marketing   13%  Marketing

 

Because the offering is a “best efforts”, we may close the offering without sufficient funds for all the intended purposes set out above, or even to cover the costs of this offering.

 

The Company reserves the right to change the above use of proceeds if management believes it is in the best interests of the Company.

 

Our Business

 

Company History

 

Piestro was incorporated on December 4, 2017 when the team saw the need for an automated pizza vending machine to make and deliver fresh artisanal pizza with the press of a button. With a wealth of experience in automation and kitchen technology, the team sees an increasing demand for high-quality products and quick, convenient service in the fast food industry. Not to mention the vast and growing popularity for artisanal pizza. Traditional pizza restaurants endure low profit margin due to high labor and real estate costs, and oftentimes sacrifice food quality for quick and easy delivery. Piestro provides a robotic vending machine solution that decreases the labor and real estate costs associated with traditional pizzerias, while delivering a fast, high quality food experience to feed the needs of consumers and innovative restaurants.

 

The CEO, Massimo de Marco has over 30 years of experience in the food and hospitality industry. He served as a director at Wolfgang Puck Catering and owned and operated PH+E, a boutique consulting firm focusing on opening restaurants across the US, Mexico and Europe. He co-founded Kitchen United to increase automation in the food industry and provide small restaurants with access to commercial kitchen spaces. Additionally, he created culinary expansion in the food delivery realm with Kitchen United. A seventh-generation family restaurant operator from Milan, Italy, Massimo leads Piestro’s efforts in developing an authentic, easily accessed, automated pizzeria.

 

Piestro’s development is amplified through Wavemaker Partners and Wavemaker Labs. With over $400 million assets under management and headquarters located in Singapore and Los Angeles, Wavemaker Partners serves as a strategic lead institutional investor for Piestro. Furthermore, the team at Wavemaker Labs notably launched an AI-driven robotic kitchen assistant at Miso Robotics. Wavemaker Partners and its subsidiary Wavemaker Labs provide insights to food technology, robotic R&D, and a team of strategic and technical experts in engineering the Piestro pizzeria. The advantages of being a Wavemaker company are outlined further below.

 

Product Overview

 

Piestro is building a fully-automated, fast and easily accessible pizzeria serving both direct consumers with their own Piestro Pizzerias and restaurants with white labeled pods. Currently, the team has built a semi-functional prototype that focuses on transfer mechanisms within the device along with dispensing mechanisms for the toppings. In the next iteration of the product, Piestro plans to incorporate refrigeration to keep ingredients fresh, sensors to detect capacity shortages, and a conveyor belt oven that cooks the pizza in less than 3 minutes.

 

Fully-Automated - Existing fast food, quick-service, and artisanal pizza restaurants operate under an environment where labor incurs a high operating cost. Piestro brings a start-to-finish automated pizza experience that decreases labor costs, which are very high in traditional brick and mortar restaurants. With a menu selection of over eight different toppings including sauce and cheese, consumers will be able to customize their pizza which will be assembled right in front of them without human interaction, and receive a fully baked and boxed pizza in less than 3 minutes.

 

Fast - The traditional fast food and dine in pizzeria requires an average of 20 – 30 minutes of wait time, which further increases with customization. Piestro is working towards a fast food experience that only takes 3 minutes.

 

Accessible - Since the Pizzeria is fully automated, it will be able to operate on a 24/7 basis. The current prototype only needs 24 square feet of real estate to operate, allowing the company to decreases real-estate costs required, when compared to traditional brick-and-mortar restaurants.  Through Piestro’s second go-to-market approach, white-labeling, The Company can empower existing pizza chains to expand their market reach at minimal cost and risk, when compared to opening new locations.

 

Made-to-Order - Piestro pizzerias allow customization with multiple topping choices and easy pre-ordering functionality. The touch screen pad and wireless applications enable order ahead to receive a freshly made pizza on-the-go. The features create high quality artisanal pizza with the freshest ingredients and an entertaining automated-pizzeria experience.

 

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Market

 

The worldwide pizza restaurant market had a 2019 volume of $154 billion and is expected to increase to $230 by 2023. The fast food restaurant industry in the U.S. has seen a 3.8% annual growth to $293.1 billion over the five years to 2020. Pizza restaurant sales is the highest growing segment in the United States fast food industry with $46.9 billion in revenue in 2019 and a compound annual growth rate (CAGR) of 3%. According to an IBISWorld report, consumer spending is expected to increase at a rate of 1.7% annually over the five years to 2024, and the increased spending power created a demand for high-quality food products and an increase in restaurant input costs. Pizza restaurant wages as a share of revenue increased to 40.2% in 2019 with anticipated 1.1% annualized growth rate. The report further suggests consumers in the market spaces are becoming increasing conscious of food quality and the use of fresh and organic ingredients. Piestro enters into the space addressing the challenges of both increased labor costs and the demand for higher quality food production.

 

According to the Bureau of Labor Statistics, the Consumer Price Indices for food consumed away from home have increased 3.1% in 2019, and the number of households earning over $100,000 rises at an annualized 0.8% over the five years to 2024. The growth of wealthy households will generate higher demand for more expensive pizza restaurants and gourmet pizzas, which will help boost industry growth. Through continued trends of premiumization and menu adaptation, pizza restaurant chains will experience continued growth by targeting consumers from higher income brackets. Chains catering to lower incomes are competing in a highly saturated marketplace, thus limiting opportunity for organic growth. Piestro’s ability to provide a variety of healthy made-to-order pizza options while catering toward the fast food delivery experience enables penetration in both tires of the market.

 

Major players in the chained pizza restaurant market include Papa John’s, Pizza Hut Inc. and Domino’s Inc., all have recently incorporated internet-based order and delivery services and increasing health conscious menu options. Alternative players in the made-to-order pizza customizing sector include restaurants such as Blaze Pizza LLC and MOD Pizza, providing whole-wheat or gluten-free options along traditional wood fired baking methods. Piestro holds competitive advantages in both providing a made-to-order pizza with delivery services and a completely contact-free production process ensuring food safety and quality.

 

Manufacturing

 

The strategy for manufacturing will evolve with production volumes, leveraging contract manufacturers to meet initial and medium-term demand while Piestro builds and fine tunes its internal production lines to service long-term demand. In the near term, all Piestro products will be produced internally and locally in order to maintain control over quality and cost, and most importantly, to ensure there is a direct source of feedback for ongoing product improvement.

 

Initial pre-production volumes, roughly on the order of 10-50 units, will be produced in small batches internally and through local manufacturers for certain parts. This will allow Piestro to rapidly address any issues that may arise and help ensure a smooth ramp-up for the contract manufacturer. Once released for production, demand will be met by a combination of the output from the contract manufacturers along with our own internal production lines, the majority from the contract manufacturer at first. This will allow Piestro to focus on automation and quality programs without restricting production volumes. As production begins to scale, Piestro plans to use other manufacturing opportunities for faster production at lower costs.

 

Sales & Marketing

 

We believe our automated pizzeria will resonate with existing pizza chains and direct consumers because of its fast, easy and accessible features. We plan to hold a dual revenue stream approach by both offering white-labeled partnerships for existing pizza restaurants and Piestro branded machines for a direct to consumer model. In the later stage of the product development, we plan to enable additional features such as add-on beverage services and end-to-end delivery partnership. Because pizza has a popular demand globally, we also look to expand towards markets and franchises overseas.

 

For these reasons, our sales and marketing efforts are reliant upon two approaches.

 

(1)Piestro must establish real-estate locations for our Piestro owned units. A partnership with a nationwide operation such as co-working spaces, theme parks, or convenience stores would accelerate this side of the business model.
(2)Piestro must identify existing pizza restaurants, large and small, to capture as customers to white label the Piestro Pizzerias. These chains would benefit from growing their market reach without the significant costs and risks associated with opening new brick and mortar restaurants.

 

Competition

 

There are existing direct competitors in the pizza automation space including Picnic, Basil Street and Let’s Pizza. Amongst the competitors, Basil Street and Let’s Pizza have a similar start-to-finish ordering and dispensary vending machine product as Piestro, but neither of the machines allow the visionary experience for consumers to observe the whole dispensary and baking process. Picnic creates robotic pizza assembly machines that cannot accomplish the full process without human assistance. Although it is an approach toward automation, the company does not hold the same easily accessible features and direct consumer facing capabilities as Piestro.

 

Picnic – Picnic was incorporated in December 2016, with its product being an automated, modular assembly line to streamline pizza making in the kitchen of existing restaurnats. The Picnic machine performs any number of food assembly tasks in any order, completely configurable to any restaurant's process. It uses computer vision and deep learning to ensure output to exact standards.

 

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Basil Street – Basil Street is a direct competitor to Piestro. Its Automated Pizza Kitchens (APK) are robotic vending machines consisting of a freezer, patent pending three element non-microwave speed oven, touchscreen terminal, frozen pizzas and a dispensing tray. Cook time is about 3 minutes for a 10-inch pizza, offered with 3 choices of toppings. Unlike Piestro’s glass display of the pizza assembly and baking process, Basil Street’s product features a video display screen at the front of the machine.

 

Let’s Pizza – Let’s Pizza features a vending machine prototype. The machine dispenses pre-portioned and pre-packaged ingredients with automatic kneaded dough to compile the product in under 3 minutes. It takes a conventional vending machine outlook with cash dispensary and botton-press display. The company is based in Europe and first launched in 2009 with a less customizable version of their product.

 

Competition also exists in current regional and national pizza restaurants. The customization features, 24/7 access and low labor and real estate cost enables Piestro to generate a higher return and profit margin than comparable brick-and-mortar stores. Piestro’s ability to partner with delivery services and remote ordering feature further increase the competitiveness in both the traditional and automated pizza space.

 

Wavemaker Labs  

 

As a Wavemaker Labs (Future VC, LLC) company, Piestro has access to several valuable resources. Wavemaker is both a venture capital (“VC”) firm and a corporate venture studio under one roof, which brings value to Piestro in several ways:

        

Wavemaker Partners: Top-Decile Venture Capital Fund since 2003 with $400mm+ assets under management

 

  Capital - Wavemaker is the lead investor of Piestro and provides valuable insights from over 16 years in the venture ecosystem that will help Piestro in current and future capital raises.
     
  Customer Introductions - With an extensive network, Wavemaker is able to provide Piestro access to LPs, acquirers, international corporations and other business relationships. Furthermore, Wavemaker Partners is part of the Draper Venture Network, which has 800+ relationships in 550+ corporations around the world. Access to any one of these relationships is one email away.

 

  Global Network - Wavemaker is dual headquartered in LA and Singapore, which gives Piestro the ability to scale globally with extensive connections across multiple continents.

 

Wavemaker Labs: Corporate Innovation Venture Studio

 

  Connections - Wavemaker Labs has internal teams spanning finance, marketing, human resources, and operations that can assist Piestro in growing its business.

 

  Resources - Piestro benefits from free office space, accounting, legal, and various other resources to keep the business lean during its early growth stages.

 

  Product Acceleration - In-house roboticists and engineers are devoting time and energy to evaluate and build the initial software and hardware packages for Piestro.

 

  Focus and Track Record - Wavemaker Labs has a history of commercializing robotics in Food and Agriculture, which provides Piestro with valuable expertise and insights at minimal to no cost.

 

Employees

 

The Company is currently led by CEO Massimo De Marco, COO Kevin Morris, and Director James Buckly Jordan. Piestro also relies on part time contractors for a variety of functions, including marketing, business development, and finance. As a part of our capital raise, we plan to initially hire a number of engineers to assist in future research and development, with the main goal of finishing our minimum viable product and preparing for production. Additional hires will include individuals in sales, marketing, and administrative roles.

 

The Company’s Property

 

The Company currently has no long-term or short-term leases and works out of the offices of Future VC, LLC dba Wavemaker Labs in Santa Monica, CA.

 

Management’s Discussion and Analysis on Financial Condition and Results of Operations

 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this Offering Circular. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

 

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Operating Results – Fiscal Years Ended December 31, 2018 and 2019

Through fiscal years ended December 31, 2018 and 2019, the company was in an early stage of development and had not generated revenue.

 

As mentioned in the section “Wavemaker Labs,” we are able to mitigate high costs associated with early hardware development because of the shared access to exceptional engineers and equipment in the Wavemaker Labs venture studio.

 

During these years, our costs and expenses currently consist of salaries from employees and contractors related to engineering, research and development, business development, marketing, and fundraising. All of our costs in 2018 were labor costs related to business development and marketing. These totaled $23,537 which also represented our operating loss in fiscal year 2018. Similarly, all of our costs in 2019 were labor costs related to business development and marketing. These totaled $44,301 which also represented our operating loss in fiscal year 2019. The costs associated with developing our initial prototype were incurred in 2020.

 

Since the end of the period covered by our audited financial statements, we expect to have increases in our legal and professional, research and development, marketing, and administrative expenses. Labor costs from full time and part time employees will also increase as we begin to ramp up prototype development efforts.

  

Liquidity and Capital Resources – Fiscal Year Ended December 31, 2019

As of December 31, 2019, the company’s cash on hand was $130. In June 2018, the company loaned $250,000 to Wavemaker Partners V, LP at a 6% compounded interest rate. This loan is due to be repaid in 2020. Additionally, in 2019, the company borrowed a total of $4,000 from Future VC, LLC in order to fund operations. These loans are due to be repaid in August 2020 and have a 3% annual interest rate.

 

The company is not generating revenue and requires the continued infusion of new capital to continue business operations. The company plans to continue to try to raise additional capital through crowdfunding offerings, equity issuances, or any other method available to the company. Absent additional capital, the company may be forced to significantly reduce expenses and could become insolvent.

  

Plan of Operations

We have not yet generated any revenues and we currently have a small team of full time and part time employees and consultants that have helped us build a working prototype. If we raise the minimum amount set out in our “Use of Proceeds”, we will begin hiring more engineers to help us complete a fully working prototype and a minimal viable product and based on our projections, we estimate that within 12 months, we will be able to start production.

 

We believe the minimum offering amount of proceeds will satisfy our cash requirements to implement our plan of operations. If we are able to raise more than the minimum amount, we will be able to speed up production and deliver units to our corporate partners faster than 12 months. Additionally, raising more than the minimum offering will allow us to hasten development of additional features of our mower, which could result in additional revenue from our customers. If we raise the maximum amount of funds, we do not anticipate having to raise additional capital for the business. However, raising the minimum amount would likely result in us having to raise additional funds within 12 to 16 months.

 

Trend Information

The Company has had minimal expenses since launching in late 2017. This remains the case through June 30, 2020.

 

The Company had begun ramping up research and development of its prototype in early 2020, and by May 2020, had a preliminary prototype which focuses on transfer and dispensing mechanisms related to assembling pizzas. The Company expects to start production and deliver the first batch of working pods by June 2021. Prior to that date, we anticipate increased expenses associated with engineering, research and development, business development, marketing, and fundraising. Any delays in the development process can possibly have an effect on the Company’s ability to meet this deadline. These delays could be the result of inadequate financing and capital, lack of manufacturing resources, or unforeseen delays in the development process.

 

Directors, Executive Officers, and Significant Employees

 

Name  Position   Age   Term in Office
Executive Officers            
James Jordan  Chairman    40   Indefinite, appointed December 2017
Massimo Noja de Marco  CEO    57   Indefinite, appointed May 2020
Kevin Morris  COO    37   Indefinite, appointed September 2019
Directors            
James Jordan  Director    40   Indefinite, appointed December 2017

 

 Massimo De Marco, CEO

 

Massimo founded Kitchen United in 2017, a commercial kitchen service for brick & mortar and online restaurants where he also served as the CEO. He also owned and operated PH+E, a boutique consulting firm focusing on opening restaurants, hotels and bars across the US, Mexico and Europe from 2014 to 2019. Previously, he was the Vice President of Operations Hospitality at Wolfgang Puck Catering and Events, overseeing operations for all venues in southern California. Formerly, Massimo owned and operated restaurants in NYC and LA and ran the Food and Beverage Department for The Ritz Carlton in Marina Del Rey and Hillcrest Country Club in Beverly Hills. Massimo is a seventh-generation Hospitality professional in the Lake District outside of Milan, Italy, where he graduated with a degree in Hospitality Management and a Bachelors in Public Relations from IULM University in Milan. For three years he ran his family’s business composed of boutique hotels and restaurants in Italy.

 

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Kevin Morris, COO

 

Kevin oversees operations, finance and strategy at Wavemaker Labs, a corporate venture studio founded in 2016. He also serves as the CFO of Miso Robotics, a robotic kitchen assistant company in Southern California. Prior to that, Kevin was a COO/CFO of Denim.LA, Inc. (dba “DSTLD”), where he oversaw operations, finance, customer service and market strategy and analytics from 2014-2019. Before DSTLD, Kevin was the Vice President of Sales at Elegant Sports (Adidas Gymnastics) from 2013 to 2014 and worked at the International Revenue Management sector of American Airlines from 2012-2013. Kevin obtained an MBA from the UCLA Anderson School of Management in 2011.

 

James Buckly Jordan, Director

 

James has been a Partner at Wavemaker Partners since 2018 and founded Wavemaker Labs, a corporate venture studio in 2016. He also serves as the CEO of Miso Robotics, a company that produces robotic kitchen assistants in Southern California. Prior to that, James was Manager Partner at early stage venture fund Canyon Creek Capital, a position he has held since 2010. James (“Buck”) is a technologist and early stage venture investor with a successful track record of building businesses at the leading edge of technology and in transformative high growth markets, such as robotics, digital media, and consumer products. He has led investments in successful startups such as Relativity Space, Gyft, Winc, Miso Robotics, ChowNow, Jukin Media and others. His operating expertise was honed during his time as a management consultant, working on Capitol Hill in Senator Arlen Spector’s office, and as an Army Blackhawk Pilot.

 

Compensation of Directors and Executive Officers

 

Through December 31, 2019, we compensated our three highest paid directors and executive officers as follows:

 

Name  Capacity in which compensation was received  Cash
Compensation
   Other
Compensation
   Total
Compensation
 
James Jordan  Chairman  $0   $0   $0 
Kevin Morris  COO  $0   $0   $0 

  

The Company hired Massimo Noja de Marco as CEO in April 2020. His compensation includes cash compensation of $1,500 per month starting May, 2020 and equity compensation of 164,838 common shares of the Company to be granted as stock options, which will fully vest over 4 years with a 1 year cliff. Vesting start date of April 1, 2020.

 

The Company hired Kevin Morris as COO in September of 2019. His compensation includes equity equal to 62,967 of the Company granted as stock options, which fully vest over 4 years with a 1-year cliff.

 

Security Ownership of Management and Certain Security Holders

 

Title of Class   Name and
address of
beneficial owner
  Amount and
nature of
beneficial
ownership
  Amount and
nature of
beneficial
ownership
acquirable
    Percent of class  
Class F Stock   James Jordan   12,500 shares held directly, and 2,373,327 shares held through Future VC, LLC.     N/A       79.52 %
Class F Stock   Future VC, LLC   2,373,327 shares held directly     N/A       79.11 %
Common Stock   Kevin Morris   N/A     62,967 shares held as stock options       9.55 %
Common Stock   Massimo Noja De Marco   N/A     164,835 shares held as stock options       4.46 %
Common Stock   All directors and officers as a group   N/A     227,802 shares held as stock options in total       14.01 %
Class F Stock   All directors and officers as a group   2,385,827 Class F shares held in total     N/A        79.52 %

 

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Amounts are as of May 2020. The final column (Percent of Class) includes a calculation of the amount the person owns now, plus the amount that person is entitled to acquire. That amount is then shown as a percentage of the outstanding amount of securities in that class if no other people exercised their rights to acquire those securities. The result is a calculation of the maximum amount that person could ever own based on their current and acquirable ownership, which is why the amounts in this column will not add up to 100%.

 

James Jordan owns a majority of the voting control of Future VC, LLC via his ownership of 2,373,327 shares.

 

Stock Incentive Plan 

Effective January 31, 2020, the Company adopted its Stock Incentive Plan, with 659,340 shares of Common Stock are to be reserved for issuance under the plan. All officers and employees of the company, and certain advisors and contractors will be able to participate in the plan on equal basis.  To date, options to acquire 577,005 have been issued under the plan, which includes 164,835 issued to Massimo Noja de Marco identified above.

 

Interest of Management and Others in Certain Transactions

 

In June 2018, the Company issued a loan to Wavemaker Partners V LP, with a total principal of $250,000 with a 6% compounded per annum interest rate. The original maturity date of this loan was October 31, 2018, however, in May 2019, the maturity date was extended to October 31, 2020. This loan remained unpaid as of year-end 2018. Wavemaker Partners V LP is a partial owner in Future VC, LLP, which currently owns 79.11% of the Company’s Common Stock  .

 

On November 1, 2018, the Company loaned $40,000 to a related party, Future VC, LLC, under a secured promissory note. The loan bears 3% simple interest per annum. The loan principal and interest was repaid in full on April 1, 2019. During the years ended December 31, 2019 and December 31, 2018, the Company recognized $300 and $200 in interest income, respectively.

 

On March 21, 2019, the Company borrowed $800 under a secured promissory note with a related party. The note bears interest at 3% per annum. The note is payable in full on March 21, 2020, the maturity date. During the year ended December 31, 2019, the Company had recognized $1 of interest expense. This note was repaid during 2019.

 

On August 22, 2019, the Company borrowed $4,000 under a secured promissory note with a related party. The note bears interest at 3% per annum. The note is payable in full on August 22, 2020, the maturity date. During the year ended December 31, 2019, the Company had recognized $46 of interest expense, all of which remains unpaid as of December 31, 2019.

 

Securities Being Offered

 

General

The Company is offering Common Stock to investors in this offering. As such, under this Offering Statement, of which this Offering Circular is part, the Company is qualifying up to [___] shares of Common Stock.

 

The following description summarizes important terms of our capital stock. This summary does not purport to be complete and is qualified in its entirety by the provisions of our Amended and Restated Certificate of Incorporation and our Bylaws, copies of which have been filed as Exhibits to the Offering Statement of which this Offering Circular is a part. For a complete description of our capital stock, you should refer to our Amended and Restated Certificate of Incorporation, and our Bylaws, and applicable provisions of the Delaware General Corporation Law.

 

Immediately following the completion of this offering, our authorized capital stock will consist of [__] shares of Common Stock, $ [__] par value per share. Additionally, our authorized capital stock will consist of 3,000,000 shares of Class F Stock, $ [__] par value per share.    

 

Common Stock

 

Voting Rights

Each holder of Common Stock has the right to one vote per share of Common Stock, and be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote upon such matters and in such manner as may be provided by law. The holders of Class F Stock and Common Stock will vote together as a single class on all matters, except as required by applicable law.

 

Election of Directors

 

Elections of directors don’t need to be by written ballot unless the Bylaws of the Corporation shall so provide.

 

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Dividend Rights

 

Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, the holders of the Class F Stock and Common Stock shall be entitled to receive, on a pari passu basis, when and as declared by the Board of Directors, out of any assets of the Corporation legally available therefor, such dividends as may be declared from time to time by the Board of Directors; provided, however, that in the event that such dividends are paid in the form of shares of Common Stock or rights to acquire Common Stock, the holders of shares of Class F Stock shall, in lieu thereof, receive shares of Class F Stock or rights to acquire shares of Class F Stock, as the case may be, and the holders of shares of Common Stock shall receive shares of Common Stock or rights to acquire shares of Common Stock, as the case may be.

 

Liquidation Rights

 

In the event of any Liquidation Event, whether voluntary or involuntary, the entire assets and funds of the Corporation legally available for distribution will be distributed among the holders of the Class F Stock and the Common Stock pro rata based on the number of shares of Common Stock held by each (assuming conversion of all such Class F Stock into Common Stock).

 

Other Rights

 

Neither the Class F Stock nor the Common Stock is redeemable by any holder thereof

 

Class F Stock

 

General

 

The Company has the authority to issue 3,000,000 shares of Class F Stock, an amount sufficient for the current Offering as well as potential conversion of all outstanding convertible notes.

  

Dividend Rights

 

Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, the holders of the Class F Stock and Common Stock shall be entitled to receive, on a pari passu basis, when and as declared by the Board of Directors, out of any assets of the Corporation legally available therefor, such dividends as may be declared from time to time by the Board of Directors; provided, however, that in the event that such dividends are paid in the form of shares of Common Stock or rights to acquire Common Stock, the holders of shares of Class F Stock shall, in lieu thereof, receive shares of Class F Stock or rights to acquire shares of Class F Stock, as the case may be, and the holders of shares of Common Stock shall receive shares of Common Stock or rights to acquire shares of Common Stock, as the case may be.

  

Election of Directors

 

Elections of directors don’t need to be by written ballot unless the Bylaws of the Corporation shall so provide.

 

Voting Rights

 

Each holder of the Class F is entitled to one vote for each share of Common Stock, which would be held by each stockholder if all of the Class F was converted into Common Stock. Fractional votes are not permitted and if the conversion results in a fractional share, it will be rounded to the closest whole number. Holders of Class F Stock are entitled to vote on all matters submitted to a vote of the stockholders as a single class with the holders of Class F Stock, Common Stock, and Preferred Stock provided that in accordance with the terms of the Company’s Amended and Restated Certificate of Incorporation

   

Liquidation Rights

 

In the event of any Liquidation Event, whether voluntary or involuntary, the entire assets and funds of the Corporation legally available for distribution will be distributed among the holders of the Class F Stock and the Common Stock pro rata based on the number of shares of Common Stock held by each (assuming conversion of all such Class F Stock into Common Stock).

 

Conversion Rights

 

Upon each equity financing ten percent (10%) of the shares of Class F Stock held by each holder of Class F Stock will automatically convert into shares of the subsequent series of preferred stock of the Corporation that is issued.

 

Each share of Class F Stock is convertible at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into one fully paid and nonassessable share of Common Stock.

 

Other Rights

 

Neither the Class F Stock nor the Common Stock is redeemable by any holder thereof.

 

Provisions of Note in Our Bylaws

 

Under Article VII of our Bylaws, the sole and exclusive judicial forum for the following actions will be the Court of Chancery of the State of Delaware:

 

(1) Any derivative action or proceeding brought on behalf of the Corporation;

 

(2) Any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders;

 

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(3) Any action asserting a claim against the Corporation arising pursuant to any provision of the Delaware General Corporation Law or the Certificate of Incorporation or Bylaws;

 

(4) Any action to interpret, apply, enforce or determine the validity of the Certificate of Incorporation or the Bylaws; or

 

(5) Any action asserting a claim against the Corporation governed by the internal affairs doctrine.

 

Although we believe the provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies and in limiting our litigation costs, the forum selection provision may limit investors’ ability to bring claims in judicial forums that they find favorable to such disputes and may discourage lawsuits with respect to such claims. The company has adopted the provision to limit the time and expense incurred by its management to challenge any such claims. As a company with a small management team, this provision allows its officers to not lose a significant amount of time travelling to any particular forum so they may continue to focus on operations of the company. This provision is not interpreted to apply to actions arising under the Securities Act. Further, it does not apply to actions arising under the Exchange Act as Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Investors will not be deemed to have waived the company’s compliance with the federal securities laws and the rules and regulations thereunder.

 

Plan of Distribution and Selling Security Holders

 

Plan of Distribution  

 

The company is offering up to [___] shares of Non-voting Common Stock on a best efforts basis (not including Bonus Shares). We intend for this offering to continue until _________, 2021, one year following qualification by the SEC, or until sooner terminated by the company. The Non-voting Common Stock will convert into voting Common Stock of the company automatically upon the occurrence of an initial public offering or a merger of the company into another entity. As such, the company is qualifying up to [___] shares of Non-voting Common Stock and up to [___] shares of voting Common Stock under this Offering Statement, of which this Offering Circular is part.

 

The company has engaged StartEngine Primary, LLC (“StartEngine Primary”) as its placement agent to assist in the placement of its securities in those states it is registered to undertake such activities, including soliciting potential investors on a best efforts basis. As such, StartEngine Primary is an "underwriter" within the meaning of Section 2(a)(11) of the Securities Act. StartEngine Primary is under no obligation to purchase any securities or arrange for the sale of any specific number or dollar amount of securities. Persons who desire information about the offering may find it at www.startengine.com. This Offering Circular will be furnished to prospective investors via download 24 hours per day, 7 days per week on the startengine.com website.

 

Commissions and Discounts

 

The following table shows the total discounts and commissions payable to the placement agents in connection with this offering

 

Public Offering Price  $  
Placement Agent Commission  $0 
Proceeds, before expenses, to us  $0 

 

The company will also be required to issue to StartEngine Primary warrants for the purchase of our Non-voting Common Stock in an amount equal to [__]% at an exercise price of $[___] per share. Shares issued to StartEngine Primary will be subject to a lock-up provision in accordance with FINRA requirements. If we raise the maximum amount in this offering, we would issue [____] shares to StartEngine Primary.

 

The warrants will be exercisable up to [__,_,20_] . The warrants and shares issuable upon exercise of the warrants may shall not be sold during the offering, or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of qualification or commencement of sales of the public offering pursuant to which the warrants were issued, except as provided in FINRA Rule 5110(g)(2). The warrants include customary adjustment provisions for stock splits, stock dividends, recapitalizations, mergers and other similar transactions. 

   

Other Terms

 

StartEngine Primary has also agreed to perform the following services in exchange for the compensation discussed above:

 

·  design, build, and create the company’s campaign page,
·  provide the company with a dedicated account manager and marketing consulting services,
·  provide a standard purchase agreement to execute between the company and investors, which may be used at Company’s option and
·  coordinate money transfers to the company.

 

17

 

 

In addition to the commission described above, the company will also pay $15,000 to StartEngine Primary for out of pocket accountable expenses paid prior to commencing. This fee will be used for the purpose of coordinating filings with regulators and conducting a compliance review of the company’s offering. Any portion of this amount not expended and accounted for will be returned to the company. Assuming the full amount of the offering is raised, we estimate that the total fees and expenses of the offering payable by the company to StartEngine Primary will be approximately $[____].

 

StartEngine Primary will charge you a non-refundable processing fee equal to [___]% of the amount you invest at the time you subscribe for our securities, equivalent to $[___] per share. This fee will be refunded in the event the company does not raise any funds in this offering.

 

StartEngine Primary intends to use an online platform provided by StartEngine Crowdfunding, Inc. (“StartEngine Crowdfunding”), an affiliate of StartEngine Primary, at the domain name www.startengine.com (the “Online Platform”) to provide technology tools to allow for the sales of securities in this offering. In addition, StartEngine Crowdfunding will assist with the facilitation of credit and debit card payments through the Online Platform. Fees for credit and debit card payments will be passed onto investors at cost and the company will reimburse StartEngine Crowdfunding for transaction fees and return fees that it incurs for returns and chargebacks, pursuant to a Credit Card Services Agreement.

 

Split Fee

 

In each case StartEngine Capital may charge investors a fee of 3.5%, in which case the commission set forth above shall be reduced commensurately. In the event an investor invests in excess of $20,000, such investor fee shall be limited to $700 and Company shall pay the 3.5% additional commission with respect to any amount in excess of $20,000

 

The fee shall be paid in cash upon disbursement of funds from escrow at the time of each closing. Payment will be made to StartEngine directly from the escrow account maintained for the Offering. The Company acknowledges that StartEngine is responsible for providing instructions to the escrow agent for distribution of funds held pending completion or termination of the Offering.

 

Bonus Shares for Certain Investors

 

Certain investors in this offering are eligible to receive bonus shares of Non-Voting Common Stock, which effectively gives them a discount on their investment. Those investors will receive, as part of their investment, additional shares for their shares purchased (“Bonus Shares”) equal to [__]% or [__]% of the shares they purchase, depending upon the investment level of such investors. Investors that invest at least $[__] in this offering will receive a [__]% bonus over $[__] on their investment. Investors that invest at least $[__] will receive a [__]% bonus over $[__]. Investors receiving the [__]% bonus will pay an effective price of approximately $[__] per share before the StartEngine processing fee, while investors receiving the [__]% bonus will pay an effective price of approximately $[__] per share before the StartEngine processing fee.

 

Additionally, investors in this offering who also participated in the Company’s Regulation CF offering with StartEngine Capital, will receive, as a part of their investment, additional shares for their shares purchased (“Bonus Shares”) equal to [__]% of the shares they purchase.

 

The StartEngine processing fee will be assessed on the full share price of $[__] and not the effective, post bonus, price.  

 

Selling Security holders

 

No securities are being sold for the account of security holders; all net proceeds of this offering will go to the Company.

 

Transfer Agent and Registrar 

 

Transfer Agent services (StartEngine Secure, LLC) will serve as transfer agent to maintain shareholder information on a book-entry basis. We will not issue shares in physical or paper form. Instead, our shares will be recorded and maintained on our shareholder register.

 

Investor’s Tender of Funds

 

After the Offering Statement has been qualified by the Commission, the Company will accept tenders of funds to purchase the Common Stock. The Company may close on investments on a “rolling” basis (so not all investors will receive their shares on the same date), provided that the minimum offering amount has been met. Investors may subscribe by tendering funds via wire or ACH only, checks will not be accepted, to the escrow account to be setup by the Escrow Agent. Tendered funds will remain in escrow until both the minimum offering amount has been reached and a closing has occurred. However, in the event we have not sold the minimum amount of shares by the date that is one year from the qualification of this offering with the Commission, or sooner terminated by the Company, any money tendered by potential investors will be promptly returned by the Escrow Agent. Upon closing, funds tendered by investors will be made available to the Company for its use.

 

The minimum investment in this offering is $[___] , or [___] shares of Common Stock. 

 

Investors will be required to subscribe to the Offering via the Online Platform and agree to the terms of the Offering, the subscription agreement, and any other relevant exhibit attached thereto. The subscription agreement includes a representation by the investor to the effect that, if you are not an “accredited investor” as defined under securities law, you are investing an amount that does not exceed the greater of 10% of your annual income or 10% of your net worth (excluding your principal residence).

 

Provisions of Note in Our Subscription Agreement

 

Forum Selection Provision

The subscription agreement that investors will execute in connection with the offering includes a forum selection provision that requires any claims against the Company based on the agreement to be brought in a state or federal court of competent jurisdiction in the State of California, for the purpose of any suit, action or other proceeding arising out of or based upon the agreement. To the extent it is enforceable, the forum selection provision may limit investors’ ability to bring claims in judicial forums that they find favorable to such disputes and may discourage lawsuits with respect to such claims. The Company has adopted the provision to limit the time and expense incurred by its management to challenge any such claims. As a company with a small management team, this provision allows its officers to not lose a significant amount of time travelling to any particular forum so they may continue to focus on operations of the Company. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. We believe that the exclusive forum provision applies to claims arising under the Securities Act, but there is uncertainty as to whether a court would enforce such a provision in this context. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Investors will not be deemed to have waived the Company’s compliance with the federal securities laws and the rules and regulations thereunder.

 

Jury Trial Waiver 

The subscription agreement that investors will execute in connection with the offering provides that subscribers waive the right to a jury trial of any claim they may have against us arising out of or relating to the agreement, including any claim under federal securities laws.  By signing the subscription agreement an investor will warrant that the investor has reviewed this waiver with the investor’s legal counsel, and knowingly and voluntarily waives his or her jury trial rights following consultation with the investor’s legal counsel. If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable given the facts and circumstances of that case in accordance with applicable case law. In addition, by agreeing to the provision, subscribers will not be deemed to have waived the Company’s compliance with the federal securities laws and the rules and regulations promulgated thereunder. 

 

18

 

 

Future Labs VI, Inc.

d/b/a Piestro

A Delaware Corporation

 

Financial Statements and Independent Auditor’s Report

December 31, 2019 and 2018

 

 

 

 

Future Labs VI, Inc.

 

TABLE OF CONTENTS

 

 

  Page
   
Independent Auditor’s Report F-1 - F-2
   
Financial Statements as of December 31, 2019 and 2018 and for the years then ended:  
   
Balance Sheets F-3
   
Statements of Operations F-4
   
Statements of Changes in Stockholders’ Equity (Deficit) F-5
   
Statements of Cash Flows F-6
   
Notes to Financial Statements F-7 - F-12

 

 

 

 

 

 

To the Board of Directors of

Future Labs VI, Inc.

Santa Monica, California

 

INDEPENDENT AUDITOR’S REPORT

 

Report on the Financial Statements

 

We have audited the accompanying financial statements of Future Labs VI, Inc., which comprise the balance sheets as of December 31, 2019 and 2018, and the related statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes to the financial statements.

 

Management’s Responsibility for the Financial Statements

 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditor’s Responsibility

 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Artesian CPA, LLC
1624 Market Street, Suite 202 | Denver, CO 80202
p: 877.968.3330 f: 720.634.0905
info@ArtesianCPA.com | www.ArtesianCPA.com

 

 

 

Opinion

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Future Labs VI, Inc. as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.

 

Emphasis of Matter Regarding Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the financial statements, the Company has not yet commenced planned principal operations, has not generated revenues or profits since inception, incurred net losses of $28,588 and $15,652 and had negative operating cash flows for the years ended December 31, 2019 and 2018, respectively, has an accumulated deficit of $44,240 as of December 31, 2019, and has limited available liquid assets with just $130 of cash held as of December 31, 2019. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

 

/s/ Artesian CPA, LLC 

 

Artesian CPA, LLC

 

Denver, Colorado

March 20, 2020

 

Artesian CPA, LLC
1624 Market Street, Suite 202 | Denver, CO 80202
p: 877.968.3330 f: 720.634.0905
info@ArtesianCPA.com | www.ArtesianCPA.com

 

 

Future Labs VI, Inc.

BALANCE SHEETS

As of December 31, 2019 and 2018

 

   2019   2018 
ASSETS          
  Current Assets:          
      Cash and cash equivalents  $130   $- 
      Loan receivable, related party   250,000    290,000 
      Interest receivable, related party   23,213    7,885 
          Total Current Assets   273,343    297,885 
TOTAL ASSETS  $273,343   $297,885 
           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
  Current Liabilities:          
      Note payable, related party  $4,000   $- 
      Interest payable, related party   46    - 
          Total Current Liabilities   4,046    - 
           
  Stockholders' Equity (Deficit):          
Preferred Stock, $0.0001 par, 5,000,000 shares authorized, 0 and 0 shares issued and outstanding, as of December 31, 2019 and 2018, respectively.   -    - 
Common Stock, $0.0001 par, 10,000,000 shares authorized, 3,000,000 and 3,000,000 shares issued and outstanding as of December 31, 2019 and 2018, respectively.   300    300 
    Additional paid-in capital   313,237    313,237 
    Accumulated deficit   (44,240)   (15,652)
          Total Stockholders' Equity (Deficit)   269,297    297,885 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  $273,343   $297,885 

 

See Independent Auditor’s Report and accompanying notes, which are an integral part of these financial statements.

 

F-3

 

 

Future Labs VI, Inc.

STATEMENTS OF OPERATIONS

For the years ended December 31, 2019 and 2018

 

   2019   2018 
         
Net revenues  $-   $- 
Costs of net revenues   -    - 
Gross profit   -    - 
           
Operating Expenses:          
    General & administrative   34,256    23,537 
    Sales & marketing   10,045    - 
       Total Operating Expenses   44,301    23,537 
           
Loss from operations   (44,301)   (23,537)
           
Other Income/(Expense):          
    Interest income   15,760    7,885 
    Interest expense   (47)   - 
       Total Other Income/(Expense)   15,713    7,885 
           
Provision for income taxes   -    - 
           
Net Loss  $(28,588)  $(15,652)
           
           
Weighted-average vested common shares outstanding          
       -Basic and Diluted   3,000,000    2,486,321 
Net loss per common share          
       -Basic and Diluted  $(0.01)  $(0.01)

 

See Independent Auditor’s Report and accompanying notes, which are an integral part of these financial statements.

 

F-4

 

 

Future Labs VI, Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the years ended December 31, 2019 and 2018

 

   Preferred Stock   Common Stock           Total 
   Shares   Amount   Shares   Amount   Additional Paid-
In Capital
   Accumulated
Deficit
   Stockholders'
Equity (Deficit)
 
Balance at December 31, 2017             -   $          -    626,673   $63   $313,274   $-   $313,337 
                                    
Issuance of common stock   -    -    2,373,327    237    (37)   -    200 
Net loss   -    -    -    -    -    (15,652)   (15,652)
Balance at December 31, 2018   -    -    3,000,000    300    313,237    (15,652)   297,885 
                                    
Net loss   -    -    -    -    -    (28,588)   (28,588)
Balance at December 31, 2019   -   $-    3,000,000   $300   $313,237   $(44,240)  $269,297 

 

See Independent Auditor’s Report and accompanying notes, which are an integral part of these financial statements.

 

F-5

 

 

Future Labs VI, Inc.

STATEMENTS OF CASH FLOWS

For the years ended December 31, 2019 and 2018

 

   2019   2018 
Cash Flows From Operating Activities          
Net Loss  $(28,588)  $(15,652)
Adjustments to reconcile net loss to net cash used in operating activities:          
Changes in operating assets and liabilities:          
Increase/(Decrease) in interest payable, related party   46      
(Increase)/Decrease in interest receivable, related party   (15,328)   (7,885)
Net Cash Used In Operating Activities   (43,870)   (23,537)
           
Cash Flows From Investing Activities          
(Issuance)/repayment of loan to related party   40,000    (290,000)
Net Cash Provided by/(Used In) Investing Activities   40,000    (290,000)
           
Cash Flows From Financing Activities          
Loan from related party   4,000    - 
Proceeds from issuance of common stock   -    200 
Net Cash Provided By Financing Activities   4,000    200 
           
Net Change In Cash   130    (313,337)
           
Cash at Beginning of Period   -    313,336 
Cash at End of Period  $130   $- 
           
Supplemental Disclosure of Cash Flow Information:          
Cash paid for interest  $1   $- 
Cash paid for income taxes  $-   $- 

 

See Independent Auditor’s Report and accompanying notes, which are an integral part of these financial statements.

 

F-6

 

 

Future Labs VI, Inc. 

NOTES TO FINANCIAL STATEMENTS 

As of December 31, 2019 and 2018 and for the years ended

 

NOTE 1: NATURE OF OPERATIONS

 

Future Labs VI, Inc. (the “Company”), doing business as Piestro, is a corporation formed on December 4, 2017 under the laws of Delaware. The Company was formed to sell automated pizza vending machines.

 

As of December 31, 2019, the Company has not commenced planned principal operations nor generated revenue. The Company’s activities have consisted of formation activities, research and development, and capital raising. Once the Company commences its planned principal operations, it will incur significant additional expenses. The Company is dependent upon additional capital resources for the commencement of its planned principal operations and is subject to significant risks and uncertainties; including failing to secure funding to operationalize the Company’s planned operations or failing to profitably operate the business.

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The Company adopted the calendar year as its basis of reporting.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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 those estimates.

 

Risks and Uncertainties

 

The Company is dependent upon additional capital resources for its planned principal operations and is subject to significant risks and uncertainties; including failing to secure funding to continue to operationalize the Company’s plans or failing to profitably operate the business.

 

Cash Equivalents and Concentration of Cash Balance

 

The Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. As of December 31, 2019, and 2018, the Company’s cash balances exceeded FDIC insured limits by $0 and $0, respectively.

 

Property and Equipment

 

Property and equipment are recorded at cost when purchased. Depreciation is recorded for property and equipment using the straight-line method over the estimated useful lives of assets. The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might note be recoverable. The Company capitalizes assets with a useful life greater than 1 year and whose cost is greater than $2,500. No property and equipment has been recorded through December 31, 2019.

 

See accompanying Independent Auditor’s Report

  

F-7

 

   

Future Labs VI, Inc. 

NOTES TO FINANCIAL STATEMENTS 

As of December 31, 2019 and 2018 and for the years ended

 

Fair Value of Financial Instruments

 

Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

 

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).

 

Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

 

The carrying amounts reported in the balance sheets approximate their fair value.

 

Revenue Recognition

 

The Company recognizes revenue when performance obligations have been met under the agreement terms and collection is reasonably assured. No revenue has been earned or recognized as of December 31, 2019 or 2018.

 

Organizational Costs

 

In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 720, organizational costs, including accounting fees, legal fees, and costs of incorporation, are expensed as incurred.

 

Net Earnings or Loss per Share

 

Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share.  Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding.

 

As no potentially dilutive items exist as of December 31, 2019 and 2018, diluted net loss per share is the same as basic net loss per share for each year.

  

See accompanying Independent Auditor’s Report

 

F-8

 

   

Future Labs VI, Inc. 

NOTES TO FINANCIAL STATEMENTS 

As of December 31, 2019 and 2018 and for the years ended

 

Income Taxes

 

The Company uses the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes.  Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse.  A valuation allowance is recorded when it is unlikely that the deferred tax assets will be realized.

   

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date.  In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements. The Company has determined that there are no material uncertain tax positions.

 

The Company accounts for income taxes with the recognition of estimated income taxes payable or refundable on income tax returns for the current period and for the estimated future tax effect attributable to temporary differences and carryforwards.  Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized in the immediate future. The Company had net operating loss carryforwards of $44,193 and $15,562 as of December 31, 2019 and 2018, respectively. The Company pays Federal and California income taxes, and has used an effective blended rate of 28% to derive net deferred tax assets of $12,367 and $4,380 as of December 31, 2019 and 2018, respectively, resulting from its net operating loss carryforwards and other temporary book-to-tax differences from tax basis to GAAP basis.

 

Due to uncertainty as to the Company’s ability to generate sufficient taxable income in the future to utilize the net operating loss carryforwards before they begin to expire in 2038, the Company has recorded a full valuation allowance to reduce the net deferred tax asset to zero.

 

In December 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contains several key tax provisions that affected the Company, including a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. The Company is required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring deferred tax assets and liabilities, as well as reassessing the net realizability of our deferred tax assets and liabilities. The Company used the new tax rates in calculating its 2018 and 2019 deferred tax assets.

 

The Company files U.S. federal and state income tax returns. All tax periods since inception remain open to examination by the taxing jurisdictions to which the Company is subject.

 

NOTE 3: GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

   

As of December 31, 2019, the Company has not commenced planned principal operations and activities have consisted of those related to formation, research and development, and capital raising.

 

See accompanying Independent Auditor’s Report

 

F-9

 

 

Future Labs VI, Inc. 

NOTES TO FINANCIAL STATEMENTS 

As of December 31, 2019 and 2018 and for the years

 

The Company has not yet generated any revenues since inception, has sustained net losses of $28,588 and $15,652 and had negative operating cash flows during the years ended December 31, 2019 and 2018, respectively, has an accumulated deficit of $44, 240 as of December 31, 2019, and has limited available liquid assets as of December 31, 2019 with just $130 of cash available.

 

The Company’s ability to continue as a going concern in the next twelve months following the date the financial statements were available to be issued is dependent upon its ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and plans to generate revenues and raise capital as needed to satisfy its capital needs. No assurance can be given that the Company will be successful in these efforts.

 

These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities.

 

NOTE 4: STOCKHOLDERS’ EQUITY (DEFICIT)

 

Common Stock

 

The Company has authorized 10,000,000 shares of common stock with par value of $0.0001 per share.

 

In December 2017, the Company issued to its founder and outside investors a total of 626,673 shares of common stock at $0.50 per share for total proceeds of $313,337.

 

During March 2018, the Company issued 2,373,327 shares of common stock to its founder for total proceeds of $200. No additional compensation expense was recorded for the fair value of these shares as they were authorized for issuance upon formation in 2017 when the fair value of the Company’s stock was de minimus.

 

These stock issuances were conducted under terms of a shareholder agreement, which includes restrictions on transfer and a Company repurchase option if certain triggering events occur, but contains no vesting provisions.

 

As of December 31, 2019 and 2018, the Company had 3,000,000 and 3,000,000 shares of common stock issued and outstanding, respectively.

 

Preferred Stock

 

The Company has authorized 5,000,000 shares of preferred stock with par value of $0.0001 per share.

 

As of December 31, 2019 and 2018, no shares were issued and outstanding.

 

The preferred stock may be divided into such number of series as the Board of Directors may determine. The Board of Directors is authorized to determine and alter the rights, preferences, privileges and restrictions granted to or imposed upon any unissued series of preferred stock, and to fix the number of shares of any series of preferred stock and the designation of any such series of preferred stock.

 

See accompanying Independent Auditor’s Report

 

F-10

 

 

Future Labs VI, Inc. 

NOTES TO FINANCIAL STATEMENTS 

As of December 31, 2019 and 2018 and for the years ended

 

NOTE 5: COMMITMENTS AND CONTINGENCIES

 

The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial condition or results of operations.

 

NOTE 6: RELATED PARTY LOAN RECEIVABLE

 

On June 27, 2018, the Company loaned $250,000 to a related party, Wavemaker Partners V, LP. The loan bears 6% compounded interest per annum. The loan was payable in full by October 31, 2018, however, the maturity date of the loan was extended by the parties until February 29, 2020 subsequent to December 31, 2019. During the years ended December 31, 2019 and 2018, the Company had recognized $15,460 and $7,685 in interest income, respectively, all of which has remain unpaid as of December 31, 2019.

 

On November 1, 2018, the Company loaned $40,000 to a related party, Future VC, LLC, under a secured promissory note. The loan bears 3% simple interest per annum. The loan principal and interest was repaid in full on April 1, 2019. During the years ended December 31, 2019 and December 31, 2018, the Company recognized $300 and $200 in interest income, respectively.

 

NOTE 7: RELATED PARTY NOTE PAYABLE

 

On March 21, 2019, the Company borrowed $800 under a secured promissory note with a related party. The note bears interest at 3% per annum. The note is payable in full on March 21, 2020, the maturity date. During the year ended December 31, 2019, the Company had recognized $1 of interest expense. This note was repaid during 2019.

 

On August 22, 2019, the Company borrowed $4,000 under a secured promissory note with a related party. The note bears interest at 3% per annum. The note is payable in full on August 22, 2020, the maturity date. During the year ended December 31, 2019, the Company had recognized $46 of interest expense, all of which remains unpaid as of December 31, 2019.

 

For all notes, upon the occurrence of a change of control of the noteholder, all outstanding indebtedness under these notes will become immediately due and payable upon the closing of an acquisition.

 

NOTE 8: RECENT ACCOUNTING PRONOUNCEMENTS

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, "Revenue from Contracts with Customers" (Topic 606). This ASU supersedes the previous revenue recognition requirements in ASC Topic 605—Revenue Recognition and most industry-specific guidance throughout the ASC. The core principle within this ASU is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration expected to be received for those goods or services.

 

See accompanying Independent Auditor’s Report

 

F-11

 

 

Future Labs VI, Inc. 

NOTES TO FINANCIAL STATEMENTS 

As of December 31, 2019 and 2018 and for the years ended

 

In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers", which deferred the effective date for ASU 2014-09 by one year to fiscal years beginning after December 15, 2017, while providing the option to early adopt for fiscal years beginning after December 15, 2016. Transition methods under ASU 2014-09 must be through either (i) retrospective application to each prior reporting period presented, or (ii) retrospective application with a cumulative effect adjustment at the date of initial application. We are continuing to evaluate the impact of this new standard on our financial reporting and disclosures, including but not limited to a review of accounting policies, internal controls and processes. The Company adopted this new standard effective January 1, 2018.

 

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU is effective for annual and interim periods beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. We are continuing to evaluate the impact of this new standard on our financial reporting and disclosures.

 

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

 

NOTE 9: SUBSEQUENT EVENTS

 

Management’s Evaluation

 

Management has evaluated subsequent events through March 20, 2020, the date the financial statements were available to be issued. Based on this evaluation, no material events were identified which require adjustment or disclosure in these financial statements.

 

See accompanying Independent Auditor’s Report

 

F-12

 

 

Exhibits

 

1.1 Posting Agreement with Start Engine Primary

 

2.1 Amended and Restated Certificate of Incorporation

  

2.2 Amended and Restated Bylaws

 

3.1 Stock Option Agreement with Massimo de Marco

  

4.1 Subscription agreement*

 

8.1 Escrow agreement with The Bryn Mawr Trust Company

 

11.1 Consent of Independent Auditor

  

12.1 Opinion of counsel as to the legality of the securities*

 

13.1 Testing the Water Materials*

 

* To be provided by amendment to this offering circular.