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PRELIMINARY OFFERING CIRCULAR APRIL 30, 2020, SUBJECT TO
COMPLETION
Atlis Motor Vehicles, Inc.
A Delaware Corporation
Maximum Offering Amount: $25,000,000
This is our initial public offering (the Offering) of
securities of Atlis Motor Vehicles, Inc, a Delaware corporation
(Atlis or the Company). We are offering for sale 3,033,981
shares of our Class A Class A common stock, $.0001 par value per
share, at $8.24 per share (the Shares) on a best efforts?
basis. This offering will terminate on the earlier of (i)
October 31, 2020, subject to extension for up to one hundred-
eighty (180) days in the sole discretion of the Company; or (ii)
the date on which the Maximum Offering is sold (in either case,
the Termination Date). There is no escrow established for this
Offering. We will hold closings upon the receipt of investors?
subscriptions and acceptance of such subscriptions by the
Company. If, on the initial closing date, we have sold less than
the Maximum Offering, then we may hold one or more additional
closings for additional sales, until the earlier of: (i) the
sale of the Maximum Offering or (ii) the Termination Date. There
is no aggregate minimum requirement for the Offering to become
effective, therefore, we reserve the right, subject to
applicable securities laws, to begin applying dollar one of
the proceeds from the Offering towards our business strategy,
development expenses, offering expenses and other uses as more
specifically set forth in this offering circular (Offering
Circular). We expect to commence the sale of the Shares as of
the date on which the offering statement, of which this Offering
Circular is a part (the Offering Statement),is qualified by
the United States Securities and Exchange Commission (the SEC
or the Commission). The offering is made in reliance upon an
exemption from registration under the federal securities laws
provided by Rule 251 of Regulation A (as promulgated by the SEC
in 17 CFR 230.251 et seq. under the Securities Act of 1933, as
amended (the Securities Act or the 1933 Act).
Investing in our Class A common stock involves a high degree of
risk. See Risk Factors for a discussion of certain risks that
you should consider in connection with an investment in Atlis.
THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON
THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR
THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR
COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION
MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION
FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION
HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES
OFFERED ARE EXEMPT FROM REGISTRATION.
Per share of Class A common stock
Price to Public $8.24
Sales Commissions (1) $1.65
Proceeds to the Company (2) $6.59
Maximum Offering
Price to Public $25,000,000
Sales Commissions (1) $5,000,000.00
Proceeds to the Company (2) $20,000,000
GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE
AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN TEN PERCENT (10%)
OF THE GREATER OF YOUR ANNUAL INCOME OR YOUR NET WORTH.
DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL
PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT
DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO
REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL
INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO
WWW.INVESTOR.GOV.
(1) Includes up to a maximum of five percent (5%) of the gross
proceeds of this Offering for sales commissions, provided that
at this time the Company has not determined if it will require
these services or such selected service providers. The Company
reserves the right to engage one or more FINRA-member broker-
dealers or placement agents in its discretion.
(2) Does not include expenses of the Offering, including but not
limited to, fees and expenses for marketing and advertising of
the Offering, media expenses, fees for administrative,
accounting, audit and legal services, FINRA filing fees, fees
for EDGAR document conversion and filing, and website posting
fees, estimated to be as much as $1,000,000.
THE SECURITIES UNDERLYING THIS OFFERING STATEMENT MAY NOT BE
SOLD UNTIL QUALIFIED BY THE SECURITIES AND EXCHANGE COMMISSION.
THIS OFFERING CIRCULAR IS NOT AN OFFER TO SELL, NOR SOLICITING
AN OFFER TO BUY, ANY SHARES OF OUR CLASS A COMMON STOCK IN ANY
STATE OR OTHER JURISDICTION IN WHICH SUCH SALE IS PROHIBITED.
INVESTMENT IN SMALL BUSINESS INVOLVES A HIGH DEGREE OF RISK, AND
INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS
THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE ?RISK
FACTORS? FOR A DISCUSSION OF CERTAIN RISKS YOU SHOULD CONSIDER
BEFORE PURCHASING ANY SHARES IN THIS OFFERING.
AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION, WHICH WE REFER TO AS THE 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 ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR
OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A
NOTICE WITHIN TWO (2) BUSINESS DAYS AFTER THE COMPLETION OF OUR
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.
THE DATE OF THIS OFFERING CIRCULAR IS APRIL 30, 2020.
TABLE OF CONTENTS
TABLE OF CONTENTS............................................3
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS....4
OFFERING SUMMARY.............................................6
REGULATION A + OFFERING......................................11
RISK FACTORS.................................................12
USE OF PROCEEDS..............................................49
DILUTION.....................................................51
MANAGEMENTS DISCUSSION AND ANALYSIS..........................55
OUR BUSINESS.................................................67
PROPERTY.....................................................73
MANAGEMENT...................................................74
EXECUTIVE COMPENSATION.......................................74
SECURITY OWNERSHIP OF MANAGEMENT.............................74
DESCRIPTION OF SECURITIES....................................75
PENNY STOCK REGULATION.......................................76
DIVIDEND POLICY..............................................76
OFFERING INCENTIVES..........................................77
PLAN OF DISTRIBUTION.........................................78
ADDITIONAL INFORMATION ABOUT THIS OFFERING...................79
OFFERING PERIOD AND EXPIRATION DATE..........................80
EXPERTS......................................................81
CERTIFICATION................................................83
INDEPENDENT AUDITOR?S REPORT.................................84
FINANCIAL STATEMENTS.........................................86
AUDIT NOTES..................................................96
We are offering to sell, and seeking offers to buy, our
securities only in jurisdictions where such offers and sales are
permitted. You should rely only on the information contained in
this Offering Circular. We have not authorized anyone to provide
you with any information other than the information contained in
this Offering Circular. The information contained in this
Offering Circular is accurate only as of its date, regardless of
the time of its delivery or of any sale or delivery of our
securities. Neither the delivery of this Offering Circular nor
any sale or delivery of our securities shall, under any
circumstances, imply that there has not been a change in our
affairs since the date of this Offering Circular. This Offering
Circular will be updated and made available for delivery to the
extent required by the federal securities laws.
Unless otherwise indicated, data contained in this Offering
Circular concerning the business of the Company are based on
information from various public sources. Although we believe
that these data are generally reliable, such information is
inherently imprecise, and our estimates and expectations based
on these data involve a number of assumptions and limitations.
As a result, you are cautioned not to give undue weight to such
data, estimates or expectations.
In this Offering Circular, unless the context indicates
otherwise, references to Atlis Motor Vehicles, Atlis, we, the
Company, our, and us refer to the activities of and the assets
and liabilities of the business and operations of Atlis Motor
Vehicles, Inc.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under Summary,Risk Factors,
Management's Discussion and Analysis of Financial Condition and
Results of Operations,Our Business and elsewhere in this
Offering Circular constitute forward-looking statements.
Forward-looking statements relate to expectations, beliefs,
projections, future plans and strategies, anticipated events or
trends and similar matters that are not historical facts. In
some cases, you can identify forward-looking statements by terms
such as anticipate, believe, could, estimate, expect,
intend, may, plan, potential, should, will and would or the
negatives of these terms or other comparable terminology.
You should not place undue reliance on forward looking
statements. The cautionary statements set forth in this Offering
Circular, including in ?Risk Factors? and elsewhere, identify
important factors which you should consider in evaluating our
forward-looking statements. These factors include, among other
things:
-Our ability to effectively execute our business plan,
including without limitation our ability to fully develop
our XP Platform, XT Pickup Truck, subscription model, mass
production, and respond to the highly competitive and
rapidly evolving marketplace and regulatory environment in
which we intend to operate;
-Our ability to manage our research, development, expansion,
growth and operating expenses;
-Our ability to evaluate and measure our business, prospects
and performance metrics, and our ability to differentiate
our business model and products;
-Our ability to compete, directly and indirectly, and
succeed in the highly competitive and evolving electric
vehicle industry.
-Our ability to respond and adapt to changes in technology
and customer behavior; and
-Our ability to protect our intellectual property and to
develop, maintain and enhance a strong brand.
Although the forward-looking statements in this Offering
Circular are based on our beliefs, assumptions and expectations,
taking into account all information currently available to us,
we cannot guarantee future transactions, results, performance,
achievements or outcomes. No assurance can be made to any
investor by anyone that the expectations reflected in our
forward-looking statements will be attained, or that deviations
from them will not be material and adverse. We undertake no
obligation, other than as may be required by law, to re-issue
this Offering Circular or otherwise make public statements
updating our forward-looking statements.
OFFERING SUMMARY
This summary highlights information contained elsewhere in this
Offering Circular, but might not contain all of the information
that is important to you. This summary is not complete and does
not contain all the information that you should consider before
deciding whether to invest in our Class A common stock. As
such, before investing in our Class A common stock, you should
read the entire Offering Circular carefully, including the ?Risk
Factors? section and our historical financial statements and the
notes thereto attached as part of this Offering Circular. For
purposes of this Offering Circular, unless otherwise indicated
or the context otherwise requires, all references herein to
Atlis Motor Vehicles, Inc., Atlis, the Company, we, us, and our
refer to Atlis Motor Vehicles, Inc., a Delaware corporation. Some
of the statements in this Offering Circular are forward-looking
statements. See the section entitled Cautionary Statement Regarding
Forward-Looking Statements.
The Company
Atlis Motor Vehicles, Inc. was formed as a Delaware corporation
on November 9, 2016. Atlis Motor Vehicles Inc is a development
and manufacturing company of plug in electric trucks. The
Company can be best described as a technology development
company providing a Vehicle as a Service platform for electric
heavy duty and light duty work vehicles. The company is
developing electrified vehicle, infrastructure, and software
platforms for work fleets. At the core of Atlis Motor Vehicles?
hardware platform is a revolutionary battery technology capable
of charging a full-size pickup truck in 15 minutes, and a
modular system architecture capable of scaling to meet the
specific vehicle or equipment application needs. We want to
build a truck with unprecedented capabilities at a reasonable
price. We also want to change the customer experience from
sales, ordering, financing, and delivery to maintenance and
service.
Principal Product and Its Market
Atlis Motor Vehicles has several pillars of product focus for
our business. These pillars are:
-Battery technology. Our goal is to offer a superior battery
technology solution that offers unparalleled performance in
charging as well as inclement weather and output
performance, Atlis Motor Vehicles is poised to become a
major player in the battery industry.
-XP Platform and connected vehicle technology. As we look to
the future of electrification, Atlis Motor Vehicles XP
Platform aims to provide a scalable technology solution
with a connected cloud, mobile, service, and charging
ecosystem that will provide unprecedented workflows and
customer experiences moving forward. This platform of
technology will be leveraged to develop new vehicle
solutions quickly while minimizing costs and time The XP
technology platform will allow Atlis Motor Vehicles to work
quickly with strategic partners looking to develop new
vehicle solutions for niche and mass-market opportunities
while leveraging the vast network of capabilities we look
to provide.
-Advanced charging stations. The Atlis Motor Vehicles
Advanced Charging Station, or AAC, technology represents
the pinnacle of charging infrastructure of the future. The
goal is for this technology to boast the highest power
solution to enter the market, a 1.5MW charging station,
that's as simple to operate as filling up your gas vehicle
today or plugging in a Tesla vehicle.
-The XT Pickup truck. The flagship vehicle product offering.
The XT Pickup truck aims to represent every key piece of
technology Atlis Motor Vehicles is developing and how this
technology can be utilized to bring capable, non-compromising
vehicle solutions through electrification. The XT Pickup
truck is our market entry solution into the world
of work, and is just the beginning of a long line of
vehicle solutions built on our XP Platform.
How We Will Generate Revenue
Atlis Motor Vehicles is still in the research and development
stage and does not currently produce a product for sale. Atlis
will soon exit the early stages of product and company
development, whereupon it will produce a working prototype. We
expect to finalize the production model and begin producing
truckes for delivery and generating sales in calendar year 2021.
Atlis Motor Vehicles has received substantial interest in its
product resulting in over $1.5 billion in sales worth of free
product reservations for our XT Pickup Truck. This projection
was generated by extrapolating the XT Pickup Truck's predicted
average sales price of $59,968 by the number of electronic
reservations made on the Company's website. These reservations
are non-deposit and require no down payment or reservation fee.
Atlis has foregone the requirement for a refundable deposit in
favor of allowing reservation holders to become investors in
Atlis Motor Vehicles through our Regulation CF offering.
Atlis Motor Vehicles is actively engaging with potential customers
for over $1 billion in reservations for the XP Platform. Expressed
interest for the XP Platform is in relation to conversations
currently underway with potential customers who have expressed
interest in development of a specialized vehicle using our XP
Platform. This expressed interest should not be taken as a
guarantee of sale. Customer interest in the XP Platform is currently
confidential. Based upon the interest shown in the XP Platform
thus far, customers have shown interest in 54,444 XP Platforms at
$27,000/platform for a total of $1.5B in reservation interest.
Market Industry
Pickup trucks have been the top three best-selling vehicles in
the US for the past five years. Altogether, including the new
and used truck market, vehicle up-fitter market, and charging
opportunity, the total market opportunity for us is north of
$241B, and we have already received over $1.5B in reservations.
Currently there are no electric pickup trucks in the market, and
Atlis is focused on winning the electric work truck market. Our
proprietary battery technology will allow us to deliver
unprecedented range and charge times, and our vertically
integrated hardware, software, and infrastructure business model
will be the first of its kind.
Target Market Demographics
We're building technology that powers work. Our target customers
for the Atlis XT are work vehicle fleet owners, and our target
customers for the Atlis XP Platform are work vehicle
manufacturers. We?re adding value for customers across multiple
target industries, including construction, agriculture, and
logistics.
The Atlis XT pickup truck will be Atlis Motor Vehicles' flagship
product, capable of 500 miles of range, 35,000 lbs. fifth wheel
towing capability, and 15 minute charge time from 0-100%. The
Atlis XT is the first application of our core product offering,
the Atlis XP Platform, our electric vehicle technology platform
designed for applications with work vehicles: RVs, box trucks,
delivery vehicles, tractors, construction equipment, and beyond.
Our modular design allows the Atlis XP Platform to easily
accommodate the sizes, shapes, and use cases of a variety of
different work vehicles.
Volume targets
We are taking a strategic approach to scale: first we will bring
the XP Platform to market to drive revenue as we work toward the
launch of the XT pickup truck. We are in talks with multiple
companies in construction, agriculture, and logistics
industries, and we are working to create a proof of concept for
one large logistics company this summer. We will ship them
initial trial XP Platforms integrated with their delivery
vehicles. For calendar year 2021, our volume targets are: 1000
XP Platforms and 100 XT Trucks. In calendar year 2022 were
targeting production of 4,000 XP Platforms and 1,000 XT Trucks.
Geographic sales territory
Ultimately, Atlis is building a technology platform that will
add value across the globe, and our long-term vision includes
expansion to the rest of the world. We are manufacturing in the
USA, and our initial sales focus is in the USA. Weve also had
multiple conversations with a Japanese logistics company, and
the opportunity is large enough to prioritize sales and
infrastructure in Japan.
Distribution Channels
Our hardware and services will be conducted online via our
website. Fleet and consumer customers will be able to purchase
the Atlis XP Platform, Atlis XT Pickup Truck, and Atlis advanced
charging solutions online.
Our advanced charging infrastructure will require users to be
able to purchase electricity at our charging stations. This
purchase will be conducted through our cloud-based mobile
application and website.
Growth Strategy
Our strategy for growth is to focus on execution. We are
completing the design work to deliver our production prototype
in the second half of 2020. From there, we will stand up
production and begin building product. Once we have started
production, we plan to leverage influencer marketing and
customer word of mouth to generate additional interest in our
products. We will develop a dedicated sales team pursuing larger
fleet customers.
Risk Factors
Our business and our ability to execute our business strategy
are subject to a number of risks as more fully described in the
section titled Risk Factors. These risks include, among
others:
-Atlis is a fledgling company without having developed any
products in the past
-Uncertainty exists as to whether Atlis will be able to raise
sufficient funds to continue developing the XP platform and XT
pickup truck
-Future capital raises may dilute current stockholders
ownership interests
-Atlis will experience losses for the foreseeable future
-Development timelines are at risk of delays outside of Atlis
control
-Competition will be stiff
-Scaling up manufacturing will be a challenge and fraught with
potential pitfalls
-Product recall could cripple growth
-Product liability could result in costly litigation
-We may face regulatory challenges
-We may not be able to successfully manage growth
-We may not be successful in developing an effective direct
sales force
-Raising capital may be costly
-Atlis stock is not marketable and initial investors should be
aware that the investment is speculative
-Lack of diversification could cause you to lose all or some of
your investment if initial products fail
-Our executive officer and executive staff will retain most of
Atlis voting rights
Corporate Information
Atlis Motor Vehicles, Inc. was incorporated under the laws of
the State of Delaware on November 9, 2016. Our Chief Executive
Officer, President and Secretary has not been in bankruptcy,
receivership or any similar proceeding. Our principal executive
offices are located at 1828 North Higley Road, Mesa, AZ 85205.
Our website address is www.atlismotorvehicles.com. Information
on our web site is not part of this Offering Circular.
REGULATION A+
We are offering our Class A common stock pursuant to recently
adopted rules by the Securities and Exchange Commission mandated
under the Jumpstart Our Business Startups Act of 2012, or the
JOBS Act. These offering rules are often referred to as
Regulation A+. We are relying upon Tier 2 of Regulation A+,
which allows us to offer of up to $50 million in a 12-month
period.
In accordance with the requirements of Tier 2 of Regulation A+,
we will be required to publicly file annual, semiannual, and
current event reports with the Securities and Exchange
Commission after the qualification of the offering statement of
which this Offering Circular forms a part.
The Offering
Securities Offered:
3,033,981 shares of Class A common stock at $8.24 per share
Class A common stock Outstanding:
Prior to the offering: 17,151,882 shares
After the offering: 20,185,863shares
(Assuming the sale of all shares offered)
Use of Proceeds:
If we sell all of the Shares being offered, our net proceeds
(after our estimated commissions, if any, but excluding our
estimated Offering expenses) will be approximately Twenty
Million Dollars ($20,000,000). We will use these net proceeds
for our product research and development, expenses associated with
the marketing and advertising of the Offering, working capital
and general corporate purposes, and such other purposes described
in the Use of Proceeds section of this Offering Circular.
Risk Factors:
Investing in our Class A common stock involves a high degree of
risk. See Risk Factors.
No Market:
There is no market for our Class A common stock and there can be
no assurance that a market will develop.
RISK FACTORS
An investment in our Class A common stock involves a high degree
of risk. You should carefully consider the risks described
below, together with all of the other information included in
this Offering Circular, before making an investment decision. If
any of the following risks actually occurs, our business,
financial condition or results of operations could suffer. In
that case, the trading price of our shares of Class A common
stock could decline and you may lose all or part of your
investment. See Cautionary Note Regarding Forward Looking
Statements above for a discussion of forward-looking statements
and the significance of such statements in the context of this
Offering Circular.
RISKS RELATED TO OUR COMPANY
ATLIS IS A FLEDGLING COMPANY
Atlis Motor Vehicles is a relatively new company that was
incorporated on November 9th 2016. Atlis has no history, no
clients, no revenues. If you are investing in this company, it's
because you think the Atlis plug in electric pickup truck is a
good idea, that Atlis will be able to successfully market,
manufacture and sell its plug in electric pickup truck, and that
it will be priced appropriately to sell sufficient units to make
Atlis profitable. We have yet to fully develop or sell any
electric vehicles. As of right now, aim to develop an electric
truck that has no commercial contemporaries. In the meantime,
other companies could develop successful alternatives. We have
never turned a profit and there is no assurance that we will
ever be profitable.
We also have no history in the automotive industry. Although
Atlis has taken significant steps in building brand awareness,
Atlis is a new company and currently has experience developing
or selling motor vehicles. As such, it is possible that Atlis
Motor Vehicles lack of history in the industry may impact our
brand, business, financial goals, operation performance, and
products.
We should be considered a Development Stage Company, and our
operations will be subject to all the risks inherent in the
establishment of a new business enterprise, including, but not
limited to, hurdles or barriers to the implementation of our
business plans. Further, because there is no history of
operations there is also no operating history from which to
evaluate our executive managements ability to manage our
business and operations and achieve our goals or the likely
performance of the Company. Prospective investors should also
consider the fact that our management team has not previously
developed or managed similar companies. No assurances can be
given that we will be able to achieve or sustain profitability.
UNCERTAINTY EXISTS AS TO WHETHER OUR BUSINESS WILL HAVE
SUFFICIENT FUNDS OVER THE NEXT 12 MONTHS, THEREBY MAKING AN
INVESTMENT IN ATLIS SPECULATIVE.
We require additional financing to complete development and
marketing of our XP Platform until the vehicle is in production
and sufficient revenue can be generated for us to be self-
sustaining. Our management projects that in order to effectively
bring the products to market, that it will require approximately
$20,000,000.00 over the next 12 months to cover costs involved
in completing the prototype and beginning to develop a supply
chain. In the event that we are unable to generate sufficient
revenues, and before all of the funds now held by us and
obtained by us through this offering are expended, an investment
made in Atlis may become worthless.
If we cannot continue to raise further rounds of funding, we
cannot succeed. Atlis will require additional rounds of funding
to complete development and begin shipments of the Atlis XT
pickup truck. If Atlis is unable to secure funding, we will be
unable to succeed in our goal of developing the worlds best
pickup truck. Atlis will require additional capital infusion to
sustain operations. We predict that we will need to raise an
additional $418 million dollars to finalize the prototype,
obtain regulatory approvals, scale production, and continue lean
production and sales for the following 4 years to our point of
predicted profitability. If we are unable to raise adequate
financing, we will be unable to sustain operations for a
prolonged period of time.
We expect to significantly increase our spending to advance the
development of our products and services and launch and
commercialize the products for commercial sale. We will require
additional capital for the further development and
commercialization of our products, as well as to fund our other
operating expenses and capital expenditures. We cannot be
certain that additional funding will be available on acceptable
terms, or at all. If we are unable to raise additional capital
in sufficient amounts or on terms acceptable to us, we may have
to significantly delay, scale back or discontinue the
development or commercialization of one or more of our products
and services. We may also seek collaborators for the products at
an earlier stage than otherwise would be desirable or on terms
that are less favorable than might otherwise be available. Any
of these events could significantly harm our business, financial
condition and prospects.
The expected gross offering proceeds of a maximum of $19,000,000
to $20,000,000 may never be realized. While we believe that such
proceeds will capitalize and sustain us to allow for the
continued development and implementation of our business plan,
if only a fraction of this Offering is sold, or if certain
assumptions contained in the business plans prove to be
incorrect, we may have inadequate funds to fully develop our
business. Although we believe that the proceeds from this
Offering will be sufficient to help sustain our development
process and business operations, there is no guarantee that we
will raise all the funds needed to adequately fund our business
plan.
WE NEED TO RAISE ADDITIONAL CAPITAL TO MEET OUR FUTURE BUSINESS
REQUIREMENTS AND SUCH CAPITAL RAISING MAY BE COSTLY OR DIFFICULT
TO OBTAIN AND COULD DILUTE CURRENT STOCKHOLDERS OWNERSHIP
INTERESTS.
We are seeking to raise $25,000,000 at $8.24 per share in this
offering on a best efforts basis to implement our plan and meet
our capital needs for the next 12 months of operations.
Additionally, we may sell equity shares in a private placement
pursuant to Regulation D. We will use the proceeds from these
offerings to complete a working prototype and prepare for
production. See the section entitled Use of Proceeds for a
description of the manner in which we plan to use proceeds from
this offering.
We have relied upon cash from financing activities and in the
future, we expect to rely on the proceeds from this Offering,
future debt and/or equity financings, and we hope to rely on
revenues generated from operations to fund all of the cash
requirements of our activities. However, there can be no
assurance that we will be able to generate any significant cash
from our operating activities in the future. Future financings
may not be available on a timely basis, in sufficient amounts or
on terms acceptable to us, if at all. Any debt financing or
other financing of securities senior to the Class A common stock
will likely include financial and other covenants that will
restrict our flexibility.
Any failure to comply with these covenants would have a material
adverse effect on our business, prospects, financial condition
and results of operations because we could lose our existing
sources of funding and impair our ability to secure new sources
of funding. However, there can be no assurance that the Company
will be able to generate any investor interest in its
securities. If we do not obtain additional financing, our
prototype will never be completed, in which case you would
likely lose the entirety of your investment in us.
At this time, we have not secured or identified any additional
financing. We do not have any firm commitments or other
identified sources of additional capital from third parties or
from our officer and director or from other shareholders. There
can be no assurance that additional capital will be available to
us, or that, if available, it will be on terms satisfactory to
us. Any additional financing will involve dilution to our
existing shareholders. If we do not obtain additional capital
on terms satisfactory to us, or at all, it may cause us to
delay, curtail, scale back or forgo some or all of our product
development and/or business operations, which could have a
material adverse effect on our business and financial results.
In such a scenario, investors would be at risk to lose all or a
part of any investment in our Company.
WE HAVE LOSSES WHICH WE EXPECT TO CONTINUE INTO THE FUTURE.
THERE IS NO ASSURANCE OUR FUTURE OPERATIONS WILL RESULT IN A
PROFIT. IF WE CANNOT GENERATE SUFFICIENT REVENUES TO OPERATE
PROFITABLY OR WE ARE UNABLE TO RAISE ENOUGH ADDITIONAL FUNDS FOR
OPERATIONS, THE SHAREHOLDERS WILL EXPERIENCE A DECREASE IN VALUE
AND WE MAY HAVE TO CEASE OPERATIONS.
We are a development-stage technology company that began
operating and commenced research and development activities in
2016. As a recently formed development-stage company, we are
subject to all of the risks and uncertainties of a new business,
including the risk that we may never develop, complete
development or market any of our products or services and we may
never generate product or services related revenues.
Accordingly, we have only a limited history upon which an
evaluation of our prospects and future performance can be made.
We only have one product currently under development, which will
require further development, significant marketing efforts and
substantial investment before it and any successors could
provide us with any revenue. As a result, if we do not
successfully develop, market and commercialize our XT pickup
truck on the XP platform, we will be unable to generate any
revenue for many years, if at all. If we are unable to generate
revenue, we will not become profitable, and we may be unable to
continue our operations. Furthermore, our proposed operations
are subject to all business risks associated with new
enterprises. The likelihood of our success must be considered in
light of the problems, expenses, difficulties, complications,
and delays frequently encountered in connection with the
expansion of a business, operation in a competitive industry,
and the continued development of advertising, promotions and a
corresponding customer base. There can be no assurances that we
will operate profitably.
We expect to incur operating losses in future periods due to the
high cost associated with developing an electric vehicle from
the ground up. We cannot be sure that we will be successful in
generating revenues in the near future and in the event we are
unable to generate sufficient revenues or raise additional funds
we will analyze all avenues of business
opportunities. Management may consider a merger, acquisition,
joint venture, strategic alliance, a roll-up, or other business
combination to increase business and potentially increase the
liquidity of the Company. Such a business combination may
ultimately fail, decreasing the liquidity of the Company and
shareholder value or cause us to cease operations, and investors
would be at risk to lose all or part of their investment in us.
WE DO NOT EXPECT TO GENERATE REVENUE IN THE NEXT 24 MONTHS
We currently do not have a product ready for sale to customers.
To date, we have funded our operations from sales of our
securities and contributions from our founders. We have not
received, and do not expect to receive any revenues from the
sale of our vehicles for at least 24 months. Such a time
estimate may be adversely affected by a number of factors,
including the inability prototype to operate properly,
mechanical hurdles, our lack of capital resources to commence an
effective marketing campaign, the success of this Offering,
competition and other factors, some of which may be beyond our
control. We may never succeed in these activities, and may not
generate sufficient revenues to continue our business operations
or achieve profitability.
COMPETITION MAY CROWD THE MARKET
We face significant barriers in development of a competitive EV
in a crowded market space. Atlis Motor Vehicles faces
significant technical, resource, and financial barriers in
development of a battery electric vehicle intended to compete in
a crowded pickup truck space. Incumbents, also known as legacy
manufacturers, have substantially deeper pockets, larger pools
of resources, and more significant manufacturing experience.
Atlis will need to contract with development partners who may
have existing relationships with incumbent manufacturers, these
relationships may pose a significant risk in our ability to
successful develop this program. The Atlis product is
differentiated from all currently announced electric trucks in
that it will be a full-size, heavy-duty truck with capabilities
that match or exceed internal combustion trucks of the same
size. However, we have a lot of work to do before we reach
production. There is a chance that other competitors may
release similar full-sized electric trucks before we exit the
research and development phase. If several competitors release
full-sized electric trucks before Atlis, it will be exceedingly
difficult to penetrate the market.
There are several potential competitors who are better
positioned than we are to take the majority of the market. We
will compete with larger, established Automotive Manufacturers
who currently have products on the markets and/or various
respective product development programs. They have much better
financial means and marketing/sales and human resources than us.
They may succeed in developing and marketing competing
equivalent products earlier than us, or superior products than
those developed by us. There can be no assurance that
competitors will not render our technology or products obsolete
or that the plug in electric pickup truck developed by us will
be preferred to any existing or newly developed technologies. It
should further be assumed that that competition will intensify.
Atlis Motor Vehicles' success depends on our ability to
continuously raise funding, keep cost under control, and
properly execute in our delivery of the Atlis Motor Vehicles XT
pickup truck, Atlis Motor Vehicles XP truck platform, and
Advanced Charging Station.
In order to be competitive, we must have the ability to respond
promptly and efficiently to the ever-changing marketplace. We
must establish our name as a reliable and constant source for
professional conversion and transmission services. Any
significant increase in competitors or competitors with better,
more efficient services could make it more difficult for us to
gain market share or establish and generate revenues. We may
not be able to compete effectively on these or other factors.
RELIABLE SUPPLIERS MAY BE HARD TO FIND
As Atlis does not currently manufacture any products, we will be
starting from scratch in creating and developing supplier
relationships. Currently, most major suppliers have agreements
with legacy manufacturers that far exceed the scale and volume
at which Atlis will operate. While we intend to make as many
components in-house as possible, we will have to rely on third
party suppliers to manufacture some of our components and
specifications. Without having already developed these
relationships, we may encounter challenges in ensuring we
receive the quality parts we need at the price and volume
required. These supplier challenges may result in unintended
delays and/or product inferiority.
SCALING UP MANUFACTURING WILL BE A CHALLENGE
Electric Vehicle Technology is changing rapidly There is
significant development and investment into electric vehicle
technology being made today. Such rapidly changing technology
conditions may adversely affect Atlis Motor Vehicles' ability to
continuously remain a market leader, provide superior
product performance, and an outstanding customer experience. If
we are unable to control the cost of development, cost of
manufacturing, and cost of operations, Atlis may be
substantially affected. If we are unable to maintain
substantially lower cost of manufacturing, developing, design,
distributing, and maintaining our vehicles, we may incur
significant cost increases which can be material substantial to
the operation of our business. We have made, and will continue
to make substantial investments into the development of Atlis
Motor Vehicles, such investments may have unforeseen costs that
we have been unable to accurately predict, which may
significantly impact our ability to execute our business as
planned. Atlis will face significant costs in development and
purchasing of materials required to build the XT pickup truck,
XP truck platform, and Advanced Charging Station through
external partnerships. These purchases are subject to conditions
outside the control of Atlis Motor Vehicles and as such, these
conditions may substantially affect our business, product,
brand, operational, and financial goals.
Atlis will continuously and diligently work towards obtaining
multiple sources of materials and components to mitigate risk in
our supply chain. However, it is possible that specific
components or solutions required to manufacturer an electric
vehicle may be subject to intellectual properly, material
availability, or expertise owned solely by a single supplier. A
condition such as a single source supplier may hinder our
ability to secure cost, schedule, and long term viability of
Atlis Motor Vehicles XT pickup truck, XP truck platform, or
Advanced Charging Station. We may be inherently subjected to
conditions which permit only a single source supplier for
specific components necessary to develop and manufacture the
Atlis Motor Vehicles XT pickup truck, XP truck platform, and
Advanced Charging Station, magnifying this risk.
UNFORSEEN FACTORS MAY ADJUST TIMELINES
Any valuation of Atlis at this stage is pure speculation. Atlis
Motor Vehicles business success, timeline, and milestones are
estimations. Atlis production projections, sales volume, and
cost models are only estimates. Atlis produced these valuations
based on existing business models of successful and unsuccessful
efforts of other companies within the technology and automotive
industries. All such projections and timeline estimations may
change as Atlis continues in development of a plug in electric
vehicle, charging station and manufacturing facilities.
We are currently in the development phase of the Atlis Motor
Vehicles XT pickup truck and have not yet started manufacturing
and sales. Cost overruns, scheduling delays, and failure to meet
product performance goals may be caused by, but not limited to,
unidentified technical hurdles, delays in material shipments, and
regulatory hurdles. We may experience delays in design and
manufacturing of the Atlis XT pickup truck We may experience
significant delays in bringing the Atlis Motor Vehicles XT pickup
truck to market due to design considerations, technical
challenges, material availability, manufacturing complications,
and regulatory considerations. Such delays could materially
damage our brand, business, financial goals, operation results,
and product.
A PRODUCT RECALL COULD CRIPPLE GROWTH
If the Atlis Motor Vehicles' XT pickup truck, XP truck platform,
or Advanced Charging Station are unable to meet performance and
quality criteria, we may be required to perform product recalls
to address said concerns. A product recall can have substantial
cost related to performing such corrective actions.
Although Atlis will perform significant internal testing and
qualifications, as well as external qualifications through
approved 3rd party vendors against industry standards and
regulatory requirements, there will be unperceived conditions
which may negatively impact the customer or Company expected
performance and safety of our vehicles. As such, Atlis may
perform a corrective action such as a recall of products,
mandatory repairs of defective components, or litigation
settlements which can materially affect our financial goals,
operation results, brand, business, and products. If we are
unable to provide significant charging stations, our business
success may be substantially affected.
A significant portion of our success is our ability to deploy
the appropriate number of charging stations, in strategic
locations relative to our customers and customer behaviors. If
Atlis is unable to deploy charging stations to specified
locations, this may negatively affect our brand, business,
financial goals, operational results, and product success in the
market. As such, to meet said availability requirements, Atlis
will require significant capital investments to rapidly deploy
said Advanced Charging Stations, as well as development of
relationships with third party members who can assist in
deployment of said charging stations. If we are unable to
address service requirements, we may negatively affect our
customer experience. As such, Atlis Motor Vehicles will require
service capabilities be stablished in locations within close
proximity to our XT pickup truck and XP truck platform owners.
Atlis Motor Vehicles ability to engage with 3rd party operates
service stations, as well as our ability to established company
operated locations, will be critical to the success of
developing a positive customer experience.
PRODUCT LIABILITY
While Atlis will work diligently to meet all company and
regulatory safety requirements, there is a chance that a
component catastrophically fails. It is possible that through
unknown circumstances or conditions out of our control, some
person is injured by our product. The risk of product liability
claims and adverse publicity can always occur when
manufacturing, developing, marketing, and selling a brand new
product that was developed from scratch. If a customer or other
party were to be injured by an Atlis product, the ensuing
litigation costs and reputational damage could be irreparable.
WE MAY FACE REGULATORY CHALLENGES
We are substantially at risk of unfavorable governmental
regulations. Motor vehicles are subject to substantial
regulation under international, federal, state, local and
foreign laws regarding safety, performance, and import
regulations. Our vehicles will need to comply with many
governmental standards and regulations relating to vehicle
safety, fuel economy, emissions control, noise control, and
vehicle recycling, among others. Compliance with all of these
requirements may delay our production launch, thereby adversely
affecting our business and financial condition.
Additionally, there is a chance that some economically
advantageous governmental incentives or subsidies will be
removed or repealed before our product reaches production. Such
changes to the governmental regulatory structure could have an
adverse effect on profitability.
IF WE CANNOT CONTINUE TO INNOVATE, OUR REVENUE GROWTH RATE AND
PROFITS MAY BE REDUCED
To successfully develop and grow our business, we must develop,
distribute and commercialize our products, secure strategic
partnerships with various businesses, and bring our products to
market on schedule and in a profitable manner, as well as spend
time and resources on the development of future products,
services and business strategies that are complementary to our
initial electric vehicle and business plan. Delays or failures
in launch of the XT pickup could hurt our ability to meet our
growth objectives, which may affect our financial projections
and may impact our stock price. Moreover, if we are unable to
continually develop and evolve our business strategy and launch
additional products and services in the future, our business
will be entirely dependent on the success of the XT Pickup,
which could hurt our ability to meet our objectives. We cannot
guarantee that the XT pickup will be able to achieve our
expansion goals alone. Our ability to expand successfully will
depend on a number of factors, many of which are beyond our
control.
WE MAY HAVE DIFFICULTY PROTECTING OUR INTELLECTUAL PROPERTY
Our patents and other intellectual property could be
unenforceable or ineffective once patent reviews are completed.
For any company creating brand new products, it is imperative to
protect the proprietary intellectual property to maintain a
competitive advantage. There is no doubt that a significant
portion of Atliss current value depends on the strength and
imperviousness of these patents. We intend to continue to file
additional patent applications and build our intellectual
property portfolio as we discover new technologies related to
the development of plug in electric vehicles.
We believe that intellectual property will be critical to our
success, and that we will rely on trademark, copyright and
patent law, trade secret protection and confidentiality and/or
license agreements to protect our proprietary rights. If we are
not successful in protecting our intellectual property, it could
have a material adverse effect on our business, results of
operations and financial condition. While we believe that we
will be issued trademarks, patents and pending patent
applications help to protect our business, there can be no
assurance that our operations do not, or will not, infringe
valid, enforceable third-party patents of third parties or that
competitors will not devise new methods of competing with us
that are not covered by our anticipated patent applications.
There can also be no assurance that our patent applications will
be approved, that any patents issued will adequately protect our
intellectual property, or that such patents will not be
challenged by third parties or found to be invalid or
unenforceable or that our patents will be effective in
preventing third parties from utilizing a copycat business model
to offer the same service in one or more categories. Moreover,
it is intended that we will rely on intellectual property and
technology developed or licensed by third parties, and we may
not be able to obtain or continue to obtain licenses and
technologies from these third parties at all or on reasonable
terms. Effective trademark, service mark, copyright and trade
secret protection may not be available in every country in which
our intended services will be provided. The laws of certain
countries do not protect proprietary rights to the same extent
as the laws of the U.S. and, therefore, in certain
jurisdictions, we may be unable to protect our proprietary
technology adequately against unauthorized third party copying
or use, which could adversely affect our competitive position.
We expect to license in the future, certain proprietary rights,
such as trademarks or copyrighted material, to third parties.
These licensees may take actions that might diminish the value
of our proprietary rights or harm our reputation, even if we
have agreements prohibiting such activity. Also to the extent
third parties are obligated to indemnify us for breaches of our
intellectual property rights, these third parties may be unable
to meet these obligations. Any of these events could have a
material adverse effect on our business, results of operations
or financial condition.
The U.S. Patent and Trademark Office and various foreign
governmental patent agencies require compliance with a number of
procedural, documentary, fee payment and other provisions during
the patent process. There are situations in which noncompliance
can result in abandonment or lapse of a patent or patent
application, resulting in partial or complete loss of patent
rights in the relevant jurisdiction. In such an event,
competitors might be able to enter the market earlier than would
otherwise have been the case, which could have a material
adverse effect on our business, results of operations and
financial condition.
INTELLECTUAL PROPERTY PROTECTION IS COSTLY.
Filing, prosecuting and defending patents related to our
products and software throughout the world is prohibitively
expensive. Competitors may use our technologies in jurisdictions
where we have not obtained patent protection to develop their
own products and, further, may export otherwise infringing
products to territories where we have patent protection, but
where enforcement is not as strong as that in the U.S. These
products may compete with our products in jurisdictions where we
do not have any issued or licensed patents and our patent claims
or other intellectual property rights may not be effective or
sufficient to prevent them from so competing. Many companies
have encountered significant problems in protecting and
defending intellectual property rights in foreign jurisdictions.
The legal systems of certain countries, particularly certain
developing countries, do not favor the enforcement of patents
and other intellectual property protection, particularly those
relating to technology, which could make it difficult for us to
stop the infringement of our patents or marketing of competing
products in violation of our proprietary rights generally.
Proceedings to enforce our patent rights in foreign
jurisdictions could result in substantial cost and divert our
efforts and attention from other aspects of our business.
CONFIDENTIALITY AGREEMENTS MAY NOT ADEQUATELY PREVENT DISCLOSURE
OF TRADE SECRETS AND OTHER PROPRIETARY INFORMATION
We anticipate that a substantial amount of our processes and
technologies will be protected by trade secret laws. In order to
protect these technologies and processes, we intend to rely in
part on confidentiality agreements with our employees,
licensees, independent contractors and other advisors. These
agreements may not effectively prevent disclosure of
confidential information, including trade secrets, and may not
provide an adequate remedy in the event of unauthorized
disclosure of confidential information. In addition, others may
independently discover our trade secrets and proprietary
information, and in such cases, we could not assert any trade
secret rights against such parties. To the extent that our
employees, contractors or other third parties with which we do
business use intellectual property owned by others in their work
for us, disputes may arise as to the rights in related or
resulting know-how and inventions. Laws regarding trade secret
rights in certain markets in which we operate may afford little
or no protection to our trade secrets. The loss of trade secret
protection could make it easier for third parties to compete
with our products and related future products and services by
copying functionality, among other things. In addition, any
changes in, or unexpected interpretations of, the trade secret
and other intellectual property laws in any country in which we
operate may compromise our ability to enforce our trade secret
and intellectual property rights. Costly and time-consuming
litigation could be necessary to enforce and determine the scope
of our proprietary rights, and failure to obtain or maintain
trade secret protection could adversely affect our business,
revenue, reputation and competitive position.
FAILURE TO COMPLY WITH FEDERAL AND STATE PRIVACY LAWS COULD
ADVERSELY AFFECT OUR BUSINESS
A variety of federal and state laws and regulations govern the
collection, use, retention, sharing and security of consumer
data. The existing privacy-related laws and regulations are
evolving and subject to potentially differing interpretations.
In addition, various federal, state and foreign legislative and
regulatory bodies may expand current or enact new laws regarding
privacy matters. Several internet companies have recently
incurred penalties for failing to abide by the representations
made in their privacy policies and practices. In addition,
several states have adopted legislation that requires businesses
to implement and maintain reasonable security procedures and
practices to protect sensitive personal information and to
provide notice to consumers in the event of a security breach.
Any failure, or perceived failure, by us to comply with our
posted privacy policies or with any data-related consent orders,
Federal Trade Commission requirements or orders or other
federal, state or international privacy or consumer protection-
related laws, regulations or industry self-regulatory principles
could result in claims, proceedings or actions against us by
governmental entities or others or other liabilities, which
could adversely affect our business. In addition, a failure or
perceived failure to comply with industry standards or with our
own privacy policies and practices could adversely affect our
business. Federal and state governmental authorities continue to
evaluate the privacy implications inherent in the use of third-
party web cookies for behavioral advertising. The regulation
of these cookies and other current online advertising practices
could adversely affect our business
WE ARE DEPENDENT UPON OUR CEO FOR HIS SERVICES AND ANY
INTERRUPTION IN HIS ABILITY TO PROVIDE HIS SERVICES COULD CAUSE
US TO CEASE OPERATIONS.
The loss of the services of our CEO, Mr. Mark Hanchett, could
have a material adverse effect on us. We do not maintain any
key man life insurance on Mr. Hanchett. The loss of Mr.
Hanchetts services could cause investors to lose all or a part
of their investment. Our future success will also depend on our
ability to attract, retain and motivate other highly skilled
employees. Competition for personnel in our industry is intense.
We may not be able to retain our key employees or attract,
assimilate or retain other highly qualified employees in the
future. If we do not succeed in attracting new personnel or
retaining and motivating our current personnel, our business
will be adversely affected.
WE HAVE NO LONG-TERM EMPLOYMENT AGREEMENTS IN PLACE WITH OUR
EXECUTIVE OFFICERS
As of the date of this Offering Circular we only have short-
term, interim employment arrangements with our senior executive
officers. We are negotiating compensation packages and the terms
of long-term formal employment agreements with our executive
officers and we anticipate the any such employment agreement
entered into with our executive officers will be on terms no
less favorable to our executive officers than the terms of their
respective interim arrangement. There is a risk that the Company
and any one or more of our executive officers will not reach an
agreement with respect to their employment agreements, in part
because we expect their compensation packages will be comprised
of cash compensation, equity compensation (e.g. stock options,
warrants or stock grants), as well as standard benefits and
other terms customary for executive officers of similar
experience and tenure. Although we intend to finalize
negotiations with respect to these employment agreements with
each of our executive officers in the near future, if we fail to
reach mutually satisfactory agreements in this regard, any one
or more of such persons may terminate their association with the
Company. Additionally, we are also highly dependent on certain
consultants and service providers, including our development
partners and our marketing and advertising service providers,
some of which are affiliates of the Company and our officers and
directors. The loss of any one or more of these experienced
executives, consultants, service providers and/or development
partners would have a material and adverse effect on our Company
and our business prospects
WE ARE SIGNIFICANTLY INFLUENCED BY OUR OFFICERS AND DIRECTORS
In the aggregate, ownership of the Companys shares of common
stock by management and affiliated parties, assuming the sale of
the Maximum Offering, will represent approximately 62.4% of the
issued and outstanding shares of common stock. These
shareholders, if acting together, will be able to significantly
influence all matters requiring approval by shareholders,
including the election of directors and the approval of mergers
or other business combinations transactions. Please see
Security Ownership of Management & Certain Security Holders
below for more information.
Our future performance is dependent on the ability to retain key
personnel. The Companys performance is substantially dependent
on the performance of senior management. The loss of the
services of any of its executive officers or other key employees
could have a material adverse effect on the Company's business,
results of operations and financial condition.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY A DOWNTURN IN THE
ECONOMY AND/OR MANUFACTURING.
We are dependent upon the continued demand for electric
vehicles, making our business susceptible to a downturn in the
economy or in manufacturing. For example, a decrease in the
number of individuals investing their money in the equity
markets could result in a decrease in the number of companies
deciding to become or remain public. This downturn could have a
material adverse effect on our business, our ability to raise
funds, our production, and ultimately our overall financial
condition.
OUR BUSINESS WOULD BE ADVERSELY AFFECTED IF WE ARE NOT ABLE TO
CREATE AND DEVELOP AN EFFECTIVE DIRECT SALES FORCE.
Because a significant component of our growth strategy relates
to increasing our revenues through sales to companies and
individuals subject to the SEC disclosure and reporting
requirements, our business would be adversely affected if we
were unable to develop and maintain an effective sales force to
market our products directly to consumers. Further complicating
this matter, many states have prohibited direct to consumer
vehicle sales. Atlis will need to be effective at converting
online interest into hard sales. We currently do not employ any
sales staff to sell our products, which could have a material
adverse effect on our business, results of operations and
financial condition.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH.
We could experience growth over a short period of time, which
could put a significant strain on our managerial, operational
and financial resources. We must implement and constantly
improve our certification processes and hire, train and manage
qualified personnel to manage such growth. We have limited
resources and may be unable to manage our growth. Our business
strategy is based on the assumption that our customer base,
geographic coverage and service offerings will increase. If this
occurs it will place a significant strain on our managerial,
operational, and financial resources. If we are unable to
manage our growth effectively, our business will be adversely
affected. As part of this growth, we may have to implement new
operational, manufacturing, and financial systems and procedures
and controls to expand, train and manage our employees,
especially in the areas of manufacturing and sales. If we fail
to develop and maintain our people and processes as we
experience our anticipated growth, demand for our products and
our revenues could decrease.
WE MAY NOT BE ABLE TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGES
To remain competitive, we must continue to enhance our products
and software. The evolving nature of the electric vehicle
industry, which is characterized by rapid technological change,
c, frequent new product and service introductions and the
emergence of new industry standards and practices, could render
our existing systems, software, and services obsolete. Our
success will depend, in part, on our ability to develop,
innovate, license or acquire leading technologies useful in our
business, enhance our existing solutions, develop new solutions
and technology that address the increasingly sophisticated and
varied needs of our current and prospective customers, and
respond to technological advances and emerging industry and
regulatory standards and practices in a cost-effective and
timely manner. Future advances in technology may not be
beneficial to, or compatible with, our business. Furthermore, we
may not successfully use new technologies effectively or adapt
our proprietary technology and hardware to emerging industry
standards on a timely basis. Our ability to remain
technologically competitive may require substantial expenditures
and lead time. If we are unable to adapt in a timely manner to
changing market conditions or user requirements, our business,
financial condition and results of operations could be seriously
harmed
IF WE DO NOT SUCCESSFULLY ESTABLISH AND MAINTAIN OUR COMPANY AS
A HIGHLY TRUSTED AND RESPECTED NAME FOR ELECTRIC VEHICLES, WE
COULD SUSTAIN LOSS OF REVENUES, WHICH COULD SIGNIFICANTLY AFFECT
OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
In order to attract and retain a client base and increase
business, we must establish, maintain and strengthen our name
and the services we provide. In order to be successful in
establishing our reputation, clients must perceive us as a
trusted source for quality services. If we are unable to attract
and retain clients with our current marketing plans, we may not
be able to successfully establish our name and reputation, which
could significantly affect our business, financial condition and
results of operations.
SMALL PUBLIC COMPANIES ARE INHERENTLY RISKY AND WE MAY BE
EXPOSED TO MARKET FACTORS BEYOND OUR CONTROL. IF SUCH EVENTS
WERE TO OCCUR IT MAY RESULT IN A LOSS OF YOUR INVESTMENT.
Managing a small public company involves a high degree of risk.
Few small public companies ever reach market stability and we
will be subject to oversight from governing bodies and
regulations that will be costly to meet. Our present officer
has limited experience in managing a fully reporting public
company, so we may be forced to obtain outside consultants to
assist us with meeting these requirements. These outside
consultants are expensive and can have a direct impact on our
ability to be profitable. This will make an investment in our
Company a highly speculative and risky investment.
LIMITATIONS OF DIRECTOR LIABILITY AND DIRECTOR AND OFFICER
INDEMNIFICATION
Our Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law.
Delaware law provides that directors of a corporation will not
be personally liable for monetary damages for breach of their
fiduciary duties as directors, except for liability for any:
-breach of their duty of loyalty to us or our stockholders;
-act or omission not in good faith or that involves
intentional misconduct or a knowing violation of law;
-unlawful payments of dividends or unlawful stock repurchases
or redemptions as provided in Section 174 of the Delaware
General Corporation Law; or
-Transactions for which the directors derived an improper
personal benefit.
These limitations of liability do not apply to liabilities
arising under the federal or state securities laws and do not
affect the availability of equitable remedies such as injunctive
relief or rescission. Our corporate bylaws (Bylaws) provide
that we will indemnify our directors, officers and employees to
the fullest extent permitted by law. Our Bylaws also provide
that we are obligated to advance expenses incurred by a director
or officer in advance of the final disposition of any action or
proceeding. We believe that these Bylaw provisions are necessary
to attract and retain qualified persons as directors and
officers. The limitation of liability in our Certificate of
Incorporation and Bylaws may discourage stockholders from
bringing a lawsuit against directors for breach of their
fiduciary duties. They may also reduce the likelihood of
derivative litigation against directors and officers, even
though an action, if successful, might provide a benefit to us
and our stockholders. Our results of operations and financial
condition may be harmed to the extent we pay the costs of
settlement and damage awards against directors and officers
pursuant to these indemnification provisions.
RISKS OF BORROWING
As of the date of this Offering Circular, we have incurred
certain debt obligations in the ordinary course of our business.
While we dont intend to incur any additional debt from the
equity commitments provided in this Offering, should we obtain
secure bank debt in the future, possible risks could arise. If
we incur additional indebtedness, a portion of our future
revenues will have to be dedicated to the payment of principal
and interest on such indebtedness. Typical loan agreements also
might contain restrictive covenants, which may impair our
operating flexibility. Such loan agreements would also provide
for default under certain circumstances, such as failure to meet
certain financial covenants. A default under a loan agreement
could result in the loan becoming immediately due and payable
and, if unpaid, a judgment in favor of such lender which would
be senior to our rights. A judgment creditor would have the
right to foreclose on any of our assets resulting in a material
adverse effect on our business, ability to generate revenue,
operating results or financial condition.
UNANTICIPATED OBSTACLES
Our business plan may change significantly. Many of our
potential business endeavors are capital intensive and may be
subject to statutory or regulatory requirements. Our Board of
Directors believes that the chosen activities and strategies are
achievable in light of current economic and legal conditions
with the skills, background, and knowledge of our principals and
advisors. Our Board of Directors reserve the right to make
significant modifications to our stated strategies depending on
future events.
RISKS OF OPERATIONS
Our future operating results may be volatile, difficult to
predict and may fluctuate significantly in the future due to a
variety of factors, many of which may be outside of our control.
Due to the nature of our target market, we may be unable to
accurately forecast our future revenues and operating results.
Furthermore, our failure to generate revenues would prevent us
from achieving and maintaining profitability. There are no
assurances that we can generate significant revenue or achieve
profitability. We anticipate having a sizeable amount of fixed
expenses, and we expect to incur losses due to the execution of
our business strategy, continued development efforts and related
expenses. As a result, we will need to generate significant
revenues while containing costs and operating expenses if we are
to achieve profitability. We cannot be certain that we will ever
achieve sufficient revenue levels to achieve profitability.
WE WILL INCUR INCREASED COSTS AS A RESULT OF BECOMING A PUBLIC
COMPANY.
We have plans to become a publicly traded company in the U.S. As
a public company, we will incur significant legal, accounting
and other expenses that we did not incur as a private company.
We will incur costs associated with our public company reporting
requirements. We also anticipate that we will incur costs
associated with recently adopted corporate governance
requirements, including requirements under the Sarbanes-Oxley
Act of 2002, as well as new rules implemented by the SEC and the
National Association of Securities Dealers (the NASD). We
expect these rules and regulations to increase our legal and
financial compliance costs and to make some activities more
time-consuming and costly. We also expect these new rules and
regulations may make it more difficult and more expensive for us
to obtain director and officer liability insurance, if we can
obtain such insurance at all. We may be required to accept
reduced policy limits and coverage or incur substantially higher
costs to obtain the same or similar liability coverage. As a
result, it may be more difficult for us to attract and retain
qualified individuals to serve on our board of directors or as
executive officers. We are currently evaluating and monitoring
developments with respect to these new rules, and we cannot
predict or estimate the amount of additional costs we may incur
or the timing of such costs.
NO MINIMUM CAPITALIZATION
We do not have a minimum capitalization and we may use the
proceeds from this Offering immediately following our acceptance
of the corresponding subscription agreements. It is possible we
may only raise a minimum amount of capital, which could leave us
with insufficient capital to implement our business plan,
potentially resulting in greater operating losses unless we are
able to raise the required capital from alternative sources.
There is no assurance that alternative capital, if needed, would
be available on terms acceptable to us, or at all.
MINIMAL EMPLOYEES AND INFRASTRUCTURE
We currently only have a small number of employees and are in
the process of establishing our human resources procedures,
policies, processes and registrations, which are not yet
complete. However, we expect to hire additional employees upon
receipt of the proceeds from this Offering. We also have minimal
operational infrastructure and no prior operating history. We
intent to rely on our management team, our advisors, third-party
consultants, third-party developers, service providers,
technology partners, outside attorneys, advisors, accountants,
auditors, and other administrators. The loss of services of any
of such personnel may have a material adverse effect on our
business and operations and there can be no assurance that if
any or all of such personnel were to become unavailable, that
qualified successors can be found, on acceptable terms.
LIMITATION ON REMEDIES; INDEMNIFICATION
Our Certificate of Incorporation, as amended from time to time,
provides that officers, directors, employees and other agents
and their affiliates shall only be liable to the Company and its
shareholders for losses, judgments, liabilities and expenses
that result from the fraud or other breach of fiduciary
obligations. Additionally, we intend to enter into corporate
indemnification agreements with each of our officers and
directors consistent with industry practice. Thus, certain
alleged errors or omissions might not be actionable by the
Company. Our governing instruments also provide that, under the
broadest circumstances allowed under law, we must indemnify its
officers, directors, employees and other agents and their
affiliates for losses, judgments, liabilities, expenses and
amounts paid in settlement of any claims sustained by them in
connection with the Company, including liabilities under
applicable securities laws.
FORCE MAJEURE
Our business is uniquely susceptible to unforeseen delays or
failures that are caused by forces of nature and related
circumstances. These factors are outside and beyond our control.
The delay or failure to complete the development and testing of
our XP Platform or XT Pickup and the commercial release of
related services may be due to any act of God, fire, war,
terrorism, flood, strike, labor dispute, disaster,
transportation or laboratory difficulties or any similar or
dissimilar event beyond our control. We will not be held liable
to any shareholder in the event of any such failure.
COVID-19 GLOBAL PANDEMIC
Similar to force majeure, our company is susceptible to the
effects of the COVID-19 pandemic. As a result of the pandemic,
our workforce may have to work remotely for an extended period
of time. Being forced to work remotely may cause unforeseen
delays in development. In particular, our engineering teams
often rely heavily on hands-on collaboration. Extended pandemic
concerns will likely result in decreased productivity and
efficiency throughout the Company,
Additionally, an extended pandemic may wreak havoc on
international automotive supply chains. If the pandemic makes
it difficult for us to source components from suppliers, we may
be forced to develop and manufacture certain components
ourselves, which would likely result in further delays and cost
overruns. We will not be held liable to any shareholder in the
event of any delays or catastrophic failures proximately caused
by the COVID-19 pandemic.
RISKS ASSOCIATED WITH THIS OFFERING
THERE IS NO FIRM COMMITMENT TO PURCHASE THE CLASS A SHARES OF
CLASS A COMMON STOCK BEING OFFERED, AND AS A RESULT INITIAL
INVESTORS ASSUME ADDITIONAL RISK.
This is a best effort, no minimum offering of Class A shares of
our Class A common stock being conducted solely by certain
members of our management. There is no commitment by anyone to
purchase any of the Class A shares being offered. We cannot
give any assurance that any or all of the Class A shares will be
sold. There is no minimum and we will retain any amount of
proceeds received from the sale of the Class A
shares. Moreover, there is no assurance that our estimate of
our liquidity needs is accurate or that new business development
or other unforeseen events will not occur, resulting in the need
to raise additional funds. As this offering is a best efforts
financing, there is no assurance that this financing will be
completed or that any future financing will be
affected. Initial investors assume additional risk on whether
the offering will be fully subscribed and how the Company will
utilize the proceeds.
THE SECURITIES BEING OFFERED ARE RESTRICTED CLASS A SHARES OF
OUR CLASS A COMMON STOCK AND AN INVESTMENT IN OUR CLASS A COMMON
STOCK WILL BE ILLIQUID.
We are offering Class A shares of our Class A common stock
pursuant to an exemption from registration under the Securities
Act which imposes substantial restrictions on the transfer of
such securities. All certificates which evidence the Class A
shares will be inscribed with a printed legend which clearly
describes the applicable restrictions on transfer or resale by
the owner thereof. Accordingly, each investor should be aware
of the long-term illiquid nature of his investment. In no event
may such securities be sold, pledged, hypothecated, assigned or
otherwise transferred unless such securities are registered
under the Securities Act and applicable state securities laws or
we received an opinion of counsel that an exemption from
registration is available with respect thereto. Rule 144, the
primary exemption for resales of restricted securities is only
available for securities of issuers providing current
information to the public. While we will be required to make
such information available should we conduct an initial public
offering, and assuming such public offering is in fact
successfully carried out, we do not currently make such
information available precluding reliance on Rule 144. Thus,
each investor should be prepared to bear the risk of such
investment for an indefinite period of time. See the sections
entitled Description of Securities and Placement of the
Offering.
THERE IS CURRENTLY NO MARKET FOR OUR CLASS A COMMON STOCK, AND
WE DO NOT EXPECT THAT A MARKET WILL DEVELOP IN THE FORESEEABLE
FUTURE MAKING AN INVESTMENT IN OUR CLASS A COMMON STOCK
ILLIQUID.
Prior to this Offering, there has been no public market for our
Class A common stock. We cannot predict the extent to which an
active market for our Class A common stock will develop or be
sustained after this Offering, or how the development of such a
market might affect the market price of our Class A common
stock. The initial offering price of our Class A common stock in
this offering is based on a number of factors, including market
conditions in effect at the time of the offering, and it may not
be in any way indicative of the price at which our shares will
trade following the completion of this offering.
We anticipate that we will apply for quoting of our Class A
common stock on the OTC Markets or an approved secondary
marketplace upon the qualification of the offering statement of
which this Offering Circular forms a part. However, there can no
assurance that our Class A common stock shares will be quoted.
If no active trading market for our Class A common stock
develops or is sustained following this Offering, you may be
unable to sell your shares when you wish to sell them or at a
price that you consider attractive or satisfactory. The lack of
an active market may also adversely affect our ability to raise
capital by selling securities in the future, or impair our
ability to license or acquire other product candidates,
businesses or technologies using our shares as consideration.
Investors may not be able to resell their shares at or above the
initial offering price. We do not expect that a market for our
stock will develop at any time in the foreseeable future. The
lack of a market may impair the ability to sell Class A shares
at the time investors wish to sell them or at a price considered
to be reasonable. As such, Atlis investors should not expect to
have the ability to liquidate their positions in Atlis any time
in the near future.
EVEN IF A MARKET DEVELOPS FOR OUR CLASS A SHARES, OUR CLASS A
SHARES MAY BE THINLY TRADED WITH WIDE SHARE PRICE FLUCTUATIONS,
LOW SHARE PRICES AND MINIMAL LIQUIDITY. WE MAY UTILIZE AN
ALTERNATIVE TRADING SYSTEM.
If a market for our Class A shares develops, the share price may
be volatile with wide fluctuations in response to several
factors, including:
-Potential investors anticipated feeling regarding our results of
operations;
-Increased competition;
-Our ability or inability to generate future revenues; and
-Market perception of the future of development of electric vehicles.
Our Class A common stock may not be freely quoted for trading on
any stock exchange or through any other traditional trading
platform. Our common stock may be issued, available for purchase
and may be traded exclusively on a specific trading system that
is registered with the SEC as an alternative trading system (an
ATS). We do not currently have any plans to trade our common
stock on a specific ATS. Any disruption to the operations of an
ATS or a broker-dealer's customer interface with an ATS would
materially disrupt trading in, or potentially result in a
complete halt in the trading of, our common stock. Because our
common stock may be traded exclusively on a closed trading
system, it is a possibility that there will be a limited number
of holders of our common stock. In addition, an ATS is likely to
experience limited trading volume with a relatively small number
of securities trading on the ATS platform as compared to
securities trading on traditional securities exchanges or
trading platforms. As a result, this novel trading system may
have limited liquidity, resulting in a lower or higher price or
greater volatility than would be the case with greater
liquidity. You may not be able to resell your common stock on a
timely basis or at all.
While we understand that many ATS platforms have adopted
policies and procedures such that security holders are not free
to manipulate the trading price of securities contrary to
applicable law, and while the risk of market manipulation exists
in connection with the trading of any securities, the risk may
be greater for our Class A common stock because the ATS we
choose may be a closed system that does not have the same
breadth of market and liquidity as the national market system.
There can be no assurance that the efforts by an ATS to prevent
such behavior will be sufficient to prevent such market
manipulation.
Unlike the more expansive listing requirements, policies and
procedures of the Nasdaq Global Market and other trading
platforms, there are no minimum price requirements and limited
listing requirements for securities to be traded on an ATS. As a
result, trades of our Class A common stock on an ATS may not be
at prices that represent the national best bid or offer prices
of securities that could be considered similar securities.
WE ARBITRARILY DETERMINED THE OFFERING PRICE AND THERE HAS BEEN
NO INDEPENDENT VALUATION OF THE STOCK, WHICH MEANS THAT THE
STOCK MAY BE WORTH LESS THAN THE PURCHASE PRICE.
The offering price of the Class A shares of Class A common stock
has been arbitrarily determined without independent valuation,
based on estimates of the price that purchasers of speculative
securities, such as our Class A common stock, will be willing to
pay considering our nature and capital structure, the experience
of the officers and directors and the market conditions for the
sale of equity securities in similar companies. The offering
price of the Class A shares bears no relationship to our assets,
earnings or book value, or any other objective standard of value
and thus the Class A shares may have a value significantly less
than the offering price and the shares may never obtain a value
equal to or greater than the offering price. See the section
entitled Placement of the Offering elsewhere in this
memorandum.
THE MARKET PRICE OF OUR CLASS A CLASS A COMMON STOCK SHARES MAY
FLUCTUATE, AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT
The offering price for our Class A Class A common stock shares
is based on a number of factors. The price of these shares may
decline following this Offering. The stock market in general,
and the market price of our shares will likely be subject to
fluctuation, whether due to, or irrespective of, our operating
results, financial condition and prospects. Our financial
performance, our industrys overall performance, changing
consumer preferences, technologies and advertiser requirements,
government regulatory action, tax laws and market conditions in
general could have a significant impact on the future market
price of our Class A common stock. Some of the other factors
that could negatively affect our share price or result in
fluctuations in our share price includes:
-actual or anticipated variations in our periodic operating
results;
-increases in market interest rates that lead purchasers of our
shares to demand a higher yield;
-changes in earnings estimates;
-changes in market valuations of similar companies;
-actions or announcements by our competitors;
-adverse market reaction to any increased indebtedness we may
incur in the future;
-additions or departures of key personnel;
-actions by stockholders;
-speculation in the press or investment community; and
-listing our shares on a national securities exchange
YOU WILL INCUR SUBSTANTIAL AND IMMEDIATE DILUTION OF THE PRICE
YOU PAY FOR YOUR CLASS A SHARES IN THIS OFFERING.
The offering price of our Class A common stock is substantially
higher than the net tangible book value per share of the
outstanding Class A common stock issued after this
offering. Therefore, if you purchase Class A shares of our
Class A common stock in this offering, you will incur
substantial immediate dilution in the net tangible book value
per share of Class A common stock from the price you pay for
such share.
WE DO NOT ANTICIPATE DIVIDENDS TO BE PAID ON OUR CLASS A COMMON
STOCK AND INVESTORS MAY LOSE THE ENTIRE AMOUNT OF THEIR
INVESTMENT.
A dividend has never been declared or paid in cash on our Class
A common stock and we do not anticipate such a declaration or
payment for the foreseeable future. We expect to use future
earnings, if any, to fund business growth. Therefore,
stockholders will not receive any funds absent a sale of their
Class A shares. We cannot assure stockholders of a positive
return on their investment when they sell their Class A shares
nor can we assure that stockholders will not lose the entire
amount of their investment. Any payment of dividends on our
capital stock will depend on our earnings, financial condition
and other business and economic factors affecting us at such
time as the board of directors may consider relevant. If we do
not pay dividends, our Class A common stock may be less valuable
because a return on your investment will only occur if the
common stock price appreciates.
OUR LACK OF BUSINESS DIVERSIFICATION COULD CAUSE YOU TO LOSE ALL
OR SOME OF YOUR INVESTMENT IF WE ARE UNABLE TO GENERATE REVENUES
FROM OUR PRIMARY PRODUCTS.
Our business consists of developing and manufacturing electric
vehicles and charging infrastructure. We do not have any other
lines of business or other sources of revenue if we are unable
to compete effectively in the marketplace. This lack of business
diversification could cause you to lose all or some of your
investment if we are unable to generate revenues since we do not
expect to have any other lines of business or alternative
revenue sources.
SALES OF OUR CLASS A CLASS A COMMON STOCK UNDER RULE 144 COULD
REDUCE THE PRICE OF OUR STOCK
In general, persons holding restricted securities, including
affiliates, must hold their shares for a period of at least six
(6) months, may not sell more than one percent (1%) of the total
issued and outstanding shares in any ninety (90) day period, and
must resell the shares in an unsolicited brokerage transaction
at the market price.
However, Rule 144 will only be available for resale in the
ninety (90) days after the Company files its semi-annual reports
on Form 1-SA and annual reports on Form 1-K, unless the Company
voluntarily files interim quarterly reports on Form 1-U, which
the Company has not yet decided to do. The availability for sale
of substantial amounts of Class A common stock under Rule 144
could reduce prevailing market prices for our securities.
WE DO NOT HAVE ANY CORPORATE GOVERNANCE COMMITTEES, SO
SHAREHOLDERS WILL HAVE TO RELY ON OUR DIRECTORS, NONE OF WHOM
ARE INDEPENDENT, TO PERFORM THESE FUNCTIONS
We do not have an audit committee, compensation committee or any
form of corporate governance committees comprised of an
independent director. The Board performs these functions as a
whole and no members of the Board are an independent director.
However, until such corporate governance committees and controls
are formally established, there is a significant risk that
certain members of the Board of Directors, executive management
and/or our controlling shareholder could thwart such plans and
prevent such committees and controls from being implemented.
Thus, there is a potential conflict in that board members who
are also part of management will participate in discussions
concerning management compensation and audit issues that may
affect management decisions.
FAILURE TO MAINTAIN INTERNAL CONTROLS OVER FINANCIAL REPORTING
WOULD HAVE AN ADVERSE IMPACT ON US
We are required to establish and maintain appropriate internal
controls over financial reporting. Failure to establish those
controls, or any failure of those controls once established,
could adversely impact our public disclosures regarding our
business, financial condition or results of operations. In
addition, management's assessment of internal controls over
financial reporting may identify weaknesses and conditions that
need to be addressed in our internal controls over financial
reporting or other matters that may raise concerns for
investors. Any actual or perceived weaknesses and conditions
that need to be addressed in our internal control over financial
reporting, disclosure of management's assessment of our internal
controls over financial reporting or disclosure of our public
accounting firm's attestation to or report on management's
assessment of our internal controls over financial reporting may
have an adverse impact on the price of our Class A Class A
common stock.
MANAGEMENT HAS ULTIMATE DISCRETION OVER THE ACTUAL USE OF
PROCEEDS DERIVED FROM THIS OFFERING
The net proceeds from this Offering will be used for the
purposes described under Use of Proceeds. However, we reserve
the right to use the funds obtained from this Offering for other
similar purposes not presently contemplated which we deem to be
in the best interests of the Company and our shareholders in
order to address changed circumstances or opportunities. As a
result of the foregoing, our success will be substantially
dependent upon the discretion and judgment of the Board of
Directors with respect to application and allocation of the net
proceeds of this Offering. Investors who purchase our Class A
common stock will be entrusting their funds to our Board of
Directors, upon whose judgment and discretion the investors must
depend. The failure of our management to apply these funds
effectively could harm our business. Pending their use, we may
also invest the net proceeds from this offering in a manner that
does not produce income or that loses value.
OUR EXECUTIVE OFFICER AND MAJORITY STOCKHOLDER MAY SIGNIFICANTLY
INFLUENCE MATTERS TO BE VOTED ON AND THEIR INTERESTS MAY DIFFER
FROM, OR BE ADVERSE TO, THE INTERESTS OF OUR OTHER STOCKHOLDERS.
The Companys executive officer and majority stockholder, Mark
Hanchett, controls 84.11 % of our outstanding Class D stock
prior to this Offering. As a Majority stockholder, Mark
Hanchett controls 84.11% of the voting rights for Atlis Motor
Vehicles.
Accordingly, the Companys executive officer and majority
stockholder possesses significant influence over the Company on
matters submitted to the stockholders for approval, including
the election of directors, mergers, consolidations, the sale of
all or substantially all of our assets, and also the power to
prevent or cause a change in control. This amount of control
gives them substantial ability to determine the future of our
Company, and as such, they may elect to close the business,
change the business plan or make any number of other major
business decisions without the approval of shareholders. The
interest of our majority stockholders may differ from the
interests of our other stockholders and could therefore result
in corporate decisions that are adverse to other stockholders.
GENERAL SECURITIES INVESTMENT RISKS
All investments in securities involve the risk of loss of
capital. No guarantee or representation is made that an investor
will receive a return of its capital. The value of our Class A
common stock can be adversely affected by a variety of factors,
including development problems, regulatory issues, technical
issues, commercial challenges, competition, legislation,
government intervention, industry developments and trends, and
general business and economic conditions.
MULTIPLE SECURITIES OFFERINGS AND POTENTIAL FOR INTEGRATION OF
OUR OFFERINGS
We are currently and will in the future be involved in one or
more additional offers of our securities in other unrelated
securities offerings. Any two or more securities offerings
undertaken by us could be found by the SEC, or a state
securities regulator, agency, to be integrated and therefore
constitute a single offering of securities, which finding could
lead to a disallowance of certain exemptions from registration
for the sale of our securities in such other securities
offerings. Such a finding could result in disallowance of one or
more of our exemptions from registration, which could give rise
to various legal actions on behalf of a federal or state
regulatory agency and the Company.
THIS OFFERING WAS NOT REVIEWED BY INDEPENDENT PROFESSIONALS
We have not retained any independent professionals to review or
comment on this Offering or otherwise protect the interest of
the investors hereunder. Although we have retained our own
counsel, neither such counsel nor any other counsel has made, on
behalf of the investors, any independent examination of any
factual matters represented by management herein. Therefore, for
purposes of making a decision to purchase our Class A common
stock, you should not rely on our counsel with respect to any
matters herein described. Prospective investors are strongly
urged to rely on the advice of their own legal counsel and
advisors in making a determination to purchase our Class A
common stock.
WE HAVE NOT UNDERGONE UNDERWRITING DUE DILIGENCE, AND WE CANNOT
GUARANTEE THAT WE WILL SELL ANY SPECIFIC NUMBER OF COMMON STOCK
SHARES IN THIS OFFERING
There is no commitment by anyone to purchase all or any part of
the Class A Shares offered hereby and, consequently, we can give
no assurance that all of the Class A shares in this Offering
will be sold. Additionally, there is no underwriter for this
Offering; therefore, you will not have the benefit of an
underwriter's due diligence efforts that would typically include
the underwriter being involved in the preparation of this
Offering Circular and the pricing of our Class A common stock
shares offered hereunder. Therefore, there can be no assurance
that this Offering will be successful or that we will raise
enough capital from this Offering to further our development and
business activities in a meaningful manner. Finally, prospective
investors should be aware that we reserve the right to withdraw,
cancel, or modify this Offering at any time without notice, to
reject any subscription in whole or in part, or to allot to any
prospective purchaser fewer Class A common stock Shares than the
number for which he or she subscribed.
INVESTORS IN THIS OFFERING WILL LIKELY EXPERIENCE ADDITIONAL
DILUTION
If you purchase our Class A common stock in this Offering, you
will experience immediate and substantial dilution because the
price you pay will be substantially greater than the net
tangible book value per share of the shares you acquire. Since
we will require funds in addition to the proceeds of this
Offering to conduct our planned business, we will raise such
additional funds, to the extent not generated internally from
operations, by issuing additional equity and/or debt securities,
resulting in further dilution to our existing stockholders
(including purchasers of our Class A common stock in this
Offering).
WE MAY TERMINATE THIS OFFERING AT ANY TIME
We reserve the right to terminate this Offering at any time,
regardless of the number of Class A common stock shares sold. In
the event that we terminate this Offering at any time prior to
the sale of all of the Class A common stock shares offered
hereby, whatever amount of capital that we have raised at that
time will have already been utilized by the Company and no funds
will be returned to subscribers.
WE MAY BE UNABLE TO MEET OUR CAPITAL REQUIREMENTS
Our capital requirements depend on numerous factors, including
but not limited to the rate and success of our research and
development efforts, marketing efforts, market acceptance of our
products, our ability to establish and maintain our agreements
with suppliers, our ability to ramp up production, product
demand and other factors. The capital requirements relating to
development of our technology and the implementation of our
business plan will be significant. We cannot accurately predict
the timing and amount of such capital requirements. However, we
are dependent on the proceeds of this Offering as well as
additional financing that will be required in order to develop
our products and fully implement our proposed business plans.
However, in the event that our plans change, our assumptions
change or prove to be inaccurate, or if the proceeds of this
Offering prove to be insufficient to implement our business
plan, we would be required to seek additional financing sooner
than currently anticipated. There can be no assurance that any
such financing will be available to us on commercially
reasonable terms, or at all. Furthermore, any additional equity
financing may dilute the equity interests of our existing
shareholders (including those purchasing shares pursuant to this
Offering), and debt financing, if available, may involve
restrictive covenants with respect to dividends, raising future
capital and other financial and operational matters. If we are
unable to obtain additional financing as and when needed, we may
be required to reduce the scope of our operations or our
anticipated business plans, which could have a material adverse
effect on our business, future operating results and financial
condition.
IF WE PURSUE STRATEGIC INVESTMENTS, THEY MAY RESULT IN LOSSES
We may elect periodically to make strategic investments in
various public and private companies with businesses or
technologies that may complement our business. The market values
of these strategic investments may fluctuate due to market
conditions and other conditions over which we have no control.
Other-than-temporary declines in the market price and valuations
of the securities that we hold in other companies would require
us to record losses related to our investment. This could result
in future charges to our earnings. It is uncertain whether or
not we will realize any long-term benefits associated with these
strategic investments.
THE MARKET PRICE OF OUR COMMON STOCK MAY FLUCTUATE AND OUR
SHAREHOLDERS MAY LOSE ALL OR PART OF THEIR INVESTMENT
If a market for our Class A common stock develops following this
Offering, the trading price of our Class A common stock could be
subject to wide fluctuations in response to various factors,
some of which are beyond our control. The market prices for
securities of startup companies have historically been highly
volatile, and the market has from time to time experienced
significant price and volume fluctuations that are unrelated to
the operating performance of particular companies. The market
price of our Class A common stock may fluctuate significantly in
response to numerous factors, some of which are beyond our
control, such as:
-actual or anticipated adverse results or delays in our
research and development efforts;
-our failure to commercialize our XP Platform and XT pickup;
-unanticipated serious safety concerns related to the use of
our products;
-adverse regulatory decisions;
-legal disputes or other developments relating to proprietary
rights, including patents, litigation matters and our ability
to obtain patent protection for our intellectual property,
government investigations and the results of any proceedings
or lawsuits, including patent or stockholder litigation;
-changes in laws or regulations applicable to the electric
vehicle industry;
-our dependence on third party suppliers;
-announcements of the introduction of new products by our
competitors;
-market conditions in the electric vehicle industry;
-announcements concerning product development results or
intellectual property rights of others;
-future issuances of our common stock or other securities;
-the addition or departure of key personnel;
-actual or anticipated variations in quarterly operating
results;
-announcements of significant acquisitions, strategic
partnerships, joint ventures or capital commitments by us or
our competitors;
-our failure to meet or exceed the estimates and projections
of the investment community;
-issuances of debt or equity securities;
-trading volume of our common stock;
-sales of our Class A common stock by us or our stockholders
in the future;
-overall performance of the equity markets and other factors
that may be unrelated to our operating performance or the
operating performance of our competitors, including changes
in market valuations of similar companies;
-failure to meet or exceed any financial guidance or
expectations regarding development milestones that we may
provide to the public;
-ineffectiveness of our internal controls;
-general political and economic conditions;
-effects of natural or man-made catastrophic events;
-scarcity of raw materials necessary for battery production;
-other events or factors, many of which are beyond our
control.
Further, price and volume fluctuations may result in volatility
in the price of our Class A common stock, which could cause a
decline in the value of our stock. Price volatility of our Class
A common stock might worsen if the trading volume of our shares
is low. The realization of any of the above risks or any of a
broad range of other risks, including those described in these
Risk Factors, could have a dramatic and material adverse
impact on the market price of our Class A common stock.
A SALE OF A SUBSTANTIAL NUMBER OF SHARES OF THE CLASS A COMMON
STOCK MAY CAUSE THE SHARE PRICES TO DECLINE
If our stockholders sell, or the market perceives that our
stockholders intend to sell for various reasons, substantial
amounts of our Class A common stock in the public market,
including shares issued in connection with the exercise of
outstanding options or warrants, the market price of our shares
could fall. Sales of a substantial number of shares of our
common stock may make it more difficult for us to sell equity or
equity-related securities in the future at a time and price that
we deem reasonable or appropriate. We may become involved in
securities class action litigation that could divert
managements attention and harm our business. The stock markets
have from time to time experienced significant price and volume
fluctuations that have affected the market prices for the common
stock of pharmaceutical companies. These broad market
fluctuations may cause the market price of our common stock to
decline. In the past, securities class action litigation has
often been brought against a company following a decline in the
market price of a companys securities. We may become involved
in this type of litigation in the future. Litigation often is
expensive and diverts managements attention and resources,
which could adversely affect our business.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE
We expect our operating results to be subject to quarterly
fluctuations. Our net loss and other operating results will be
affected by numerous factors, including:
-variations in the level of expenses related to our
development programs;
-any intellectual property infringement lawsuit in which we
may become involved;
-regulatory developments affecting our products and related
services; and
-our execution of any collaborative, licensing or similar
arrangements, and the timing of payments we may make or
receive under these arrangements.
If our quarterly operating results fall below the expectations
of investors or securities analysts, the price of our Class A
common stock could decline substantially. Furthermore, any
quarterly fluctuations in our operating results may, in turn,
cause the price of our Class A common stock to fluctuate
substantially.
OUR DIRECTORS AND OFFICERS HAVE A SUBSTANTIAL AMOUNT OF VOTING
POWER
As of the date of this Offering Circular, our directors,
executive officers and principal stockholders beneficially
owned, in the aggregate, substantially all of our outstanding
voting securities. As a result, if some or all of them acted
together, they would have the ability to exert significant
influence over the election of our board of directors and the
outcome of issues requiring approval by our stockholders. This
concentration of ownership may also have the effect of delaying
or preventing a change in control of our company that may be
favored by other stockholders. This could prevent transactions
in which stockholders might otherwise recover a premium for
their shares over current market prices.
OUR ABILITY TO UTILIZE LOSS CARRY FORWARDS MAY BE LIMITED
Generally, a change of more than fifty percent (50%) in the
ownership of a companys stock, by value, over a three-year
period constitutes an ownership change for U.S. federal income
tax purposes. An ownership change may limit our ability to use
our net operating loss carryforwards attributable to the period
prior to the change. As a result, if we earn net taxable income,
our ability to use our pre-change net operating loss
carryforwards to offset U.S. federal taxable income may become
subject to limitations, which could potentially result in
increased future tax liability for us.
WE MAY BE REQUIRED TO EXPEND FUNDS TO INDEMNIFY OFFICERS AND
DIRECTORS
Our Certificate of Incorporation, as amended, Bylaws and
applicable Delaware law provide for the indemnification of our
directors, officers, employees, and agents, under certain
circumstances, against attorneys fees and other expenses
incurred by them in any litigation to which they become a party
arising from their association with or activities on our behalf.
We will also bear the expenses of such litigation for any of our
directors, officers, employees, or agents, upon such persons
promise to repay us, therefore if it is ultimately determined
that any such person shall not have been entitled to
indemnification. This indemnification policy could result in
substantial expenditures by us, which we will be unable to
recover. Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted
to directors, officers and controlling persons of our Company
pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by us of expenses incurred or paid by a director, officer, or
controlling person of our Company in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
THE REQUIREMENTS OF BEING A PUBLIC COMPANY MAY STRAIN OUR
RESOURCES AND DIVERT MANAGEMENTS ATTENTION FROM OPERATIONS
As a public company, we will incur significant legal, accounting
and other expenses that we have not incurred as a private
company, including costs associated with public company
reporting requirements. We also will incur costs associated with
the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the
Dodd-Frank Act and related rules implemented or to be
implemented by the SEC. The expenses incurred by public
companies generally for reporting and corporate governance
purposes have been increasing. We expect the rules and
regulations associated with being a public company to increase
our legal and financial compliance costs and to make some
activities more time-consuming and costly, although we are
currently unable to estimate these costs with any degree of
certainty. These laws and regulations could also make it more
difficult or costly for us to obtain certain types of insurance,
including director and officer liability insurance, and we may
be forced to accept constraints on policy limits and coverage or
incur substantially higher costs to obtain coverage. These laws
and regulations could also make it more difficult for us to
attract and retain qualified persons to serve on our Board, our
board committees or as our executive officers and may divert
managements attention. Furthermore, if we are unable to satisfy
our obligations as a public company, we could be subject to
delisting of our common stock, fines, sanctions and other
regulatory action and potentially civil litigation.
THE PREPARATION OF OUR FINANCIAL STATEMENTS REQUIRES ESTIMATES,
JUDGMENTS, AND ASSUMPTIONS THAT ARE INHERENTLY UNCERTAIN
Financial statements prepared in accordance with accounting
principles generally accepted in the United States of America
(GAAP) typically require the use of estimates, judgments and
assumptions that affect the reported amounts. Often, different
estimates, judgments and assumptions could reasonably be used
that would have a material effect on such financial statements,
and changes in these estimates, judgments and assumptions may
occur from period to period over time. These estimates,
judgments and assumptions are inherently uncertain and, if our
estimates were to prove to be wrong, we would face the risk that
charges to income or other financial statement changes or
adjustments would be required. Any such charges or changes could
harm our business, including our financial condition and results
of operations and the price of our securities. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations for a discussion of the accounting estimates,
judgments and assumptions that we believe are the most critical
to an understanding of our consolidated financial statements and
our business.
UNFAVORABLE SECURITIES INDUSTRY REPORTS COULD HAVE A NEGATIVE
EFFECT ON OUR SHARE PRICE
Any trading market for our Class A common stock will be
influenced in part by any research reports that securities
industry analysts publish about us. We do not currently have and
may never obtain research coverage by securities industry
analysts. If no securities industry analysts commence coverage
of us, the market price and market trading volume of our Class A
common stock could be negatively affected. In the event we are
covered by analysts, and one or more of such analysts downgrade
our securities, or otherwise reports on us unfavorably, or
discontinues coverage or us, the market price and market trading
volume of our Class A common stock could be negatively affected.
USE OF PROCEEDS
Assuming the sale by us of the Maximum Offering of $25,000,000
and estimated commissions and offering related expenses of
$5,000,000, the total net proceeds to us would be $20,000,000
which we currently intend to use as set forth below.
We expect from time to time to evaluate the acquisition of
businesses, products and technologies for which a portion of the
net proceeds may be used, although we currently are not planning
or negotiating any such transactions. As of the date of this
Offering Circular, we cannot specify with certainty all of the
particular uses for the net proceeds to us from the sale of
Class A common stock. Accordingly, we will retain broad
discretion over the use of these proceeds, if any. The following
table represents managements best estimate of the uses of the
net proceeds received from the sale of Class A common stock
assuming the sale of, respectively, 100%, 67%, and 33% of the
Class A common stock shares offered for sale in this Offering.
% of Offering Sold: 100%
Equipment and Machinery $10,800,000
Research and Development (1) $6,700,000
Facilities $900,000
SG&A Expenses (2) $1,400,000
Other Opex $200,000
Commissions & Offering Expenses $5,000,000
TOTAL OFFERING SALES $25,000,000
% of Offering Sold: 67%
Equipment and Machinery $7,236,000
Research and Development (1) $4,489,000
Facilities $603,000
SG&A Expenses (2) $938,000
Other Opex $134,000
Commissions & Offering Expenses $3,350,000
TOTAL OFFERING SALES $16,750,000
% of Offering Sold: 33%
Equipment and Machinery $3,564,000
Research and Development (1) $2,211,000
Facilities $297,000
SG&A Expenses (2) $462,000
Other Opex $66,000
Commissions & Offering Expenses $1,650,000
TOTAL OFFERING SALES $8,250,000
(1) Once research and development has been completed, we will
need to invest significant funds to acquire or build a
factory, purchase machinery and robotics, and equip it for
mass production.
(2)Includes up to $100,000 that will be used to pay salaries
and related compensation of executive officers and
directors of the Company during 2020-2021, pursuant to
employment offer letters and contemplated employment
agreements with such persons. See Management Executive
Compensation elsewhere in this offering Circular.
The amounts set forth above are estimates, and we cannot be
certain that actual costs will not vary from these estimates.
Our management has significant flexibility and broad discretion
in applying the net proceeds received in this Offering. We
cannot assure you that our assumptions, expected costs and
expenses and estimates will prove to be accurate or that
unforeseen events, problems or delays will not occur that would
require us to seek additional debt and/or equity funding, which
may not be available on favorable terms, or at all. See Risk
Factors.
This expected use of the net proceeds from this Offering
represents our intentions based upon our current financial
condition, results of operations, business plans and conditions.
As of the date of this Offering Circular, we cannot predict with
certainty all of the particular uses for the net proceeds to be
received upon the closing of this Offering or the amounts that
we will actually spend on the uses set forth above. The amounts
and timing of our actual expenditures may vary significantly
depending on numerous factors. As a result, our management will
retain broad discretion over the allocation of the net proceeds
from this Offering.
We may also use a portion of the net proceeds for the investment
in strategic partnerships and possibly the acquisition of
complementary businesses, products or technologies, although we
have no present commitments or agreements for any specific
acquisitions or investments. Pending our use of the net proceeds
from this Offering, we intend to invest the net proceeds in a
variety of capital preservation investments, including short-
term, investment grade, interest bearing instruments and U.S.
government securities.
DILUTION
If you purchase shares in this Offering, your ownership interest
in our Class A common stock will be diluted immediately, to the
extent of the difference between the price to the public charged
for each share in this Offering and the net tangible book value
per share of our Class A common stock after this Offering.
On December 31, 2019 there were an aggregate of 16,055,117
shares of Class A and Class D common stock issued and
outstanding. In addition, between December 2019 and March 31st,
2020, we received subscriptions for $888,698 of our Class A
common stock shares from 1194 investors in our Regulation CF
campaign, that, by their terms, automatically convert into
225,576 shares of our Class A common stock as of the date of
this Offering Circular (at a conversion price of $3.94 per
share). In addition we have awarded 817,862 shares to employees
and contractors. Accordingly, as at date of this Offering
Circular, an aggregate of 17,151,882 shares of our Class A and
Class D common stock are issued and outstanding.
Our net tangible book value as of December 31, 2019, was
($33,022) or ($0.002)per then-outstanding share of our common
stock, based on 16,055,117 outstanding shares of common stock at
December 31, 2019. Our net tangible book value as of the date of
this Offering Circular was $$61,950.61 or $0.0036 per share of our
common stock, based on 17,151,882 outstanding shares of Class A
and Class D common stock as at the date of this Offering Circular.
Net tangible book value per share equals the amount of our total
tangible assets less total liabilities, divided by the total number
of shares of our Class A and Class D common stock outstanding, all
as of the date specified.
If the maximum 3,033,981 shares of Class A common stock in this
Offering at the initial public offering price of $8.24 per
share, after deducting approximately $5,000,000 in maximum sales
commissions and other offering expenses payable by us, our pro
forma as adjusted net tangible book value would have been
approximately $20,061,950.60 ($0.994 per share) as at December
31, 2019. This amount represents an immediate increase in pro
forma net tangible book value of $0.994 per share to our
existing stockholders at the date of this Offering Circular, and
an immediate dilution in pro forma net tangible book value of
approximately $7.24 per share to new investors purchasing shares
of Class A common stock in this Offering at a price of $8.24 per
share.
The following table illustrates the per share dilution to new
investors discussed above, assuming the sale of, respectively,
100%, 67% and 33% of the shares offered for sale in this
offering (after our estimated offering expenses of $5,000,000,
$3,350,000 and $1,650,000, respectively)
The following tables set forth, assuming the sale of,
respectively, 100%, 67%, and 33% of the shares offered for sale
in this offering (after our estimated offering expenses of
$5,000,000, $3,350,000,and $1,650,000, respectively), the total
number of shares previously sold to existing stockholders, the
total consideration paid for the foregoing and the respective
percentages applicable to such purchased shares and
consideration paid based on an average price of $0.0001 per
share paid by existing stockholders and $8.24 per share paid by
investors in this Offering.
Funding Level $25,000,000
Offering Price $8.24
Pro forma net tangible book
value per Class A common
stock share before the Offering $0.0036
Increase per common share
attributable to investors
in this Offering $8.2364
Pro forma net tangible book
value per Class A common
stock share after the Offering $0.994
Dilution to investors $7.243
Dilution as a percentage
of Offering Price 87.89%
Funding Level $13,400,000
Offering Price $8.24
Pro forma net tangible book
value per Class A common
stock share before the Offering $0.0036
Increase per common share
attributable to investors
in this Offering $8.2364
Pro forma net tangible book
value per Class A common
stock share after the Offering $0.702
Dilution to investors $7.535
Dilution as a percentage
of Offering Price 91.40%
Funding Level $6,600,000
Offering Price $8.24
Pro forma net tangible book
value per Class A common
stock share before the Offering $0.0036
Increase per common share
attributable to investors
in this Offering $8.2364
Pro forma net tangible book
value per Class A common
stock share after the Offering $0.367
Dilution to investors $7.869
Dilution as a percentage
of Offering Price 95.50%
Shares Purchased
Total Consideration
Assuming 100% of Shares Sold:
Shares Purchased
Existing stockholders
Shares Purchased Number: 17,151,882
Shares Purchased Percentage: 84.97%
New Investors
Shares Purchased Number: 3,033,981
Shares Purchased Percentage: 15.03%
Total Shares Purchased Number: 20,185,863
Total Shares Purchased Percentage: 100.00%
Total Consideration
Existing stockholders
Total Consideration Amount: $1,715
Total Consideration Percentage: 0.01%
New Investors
Total Consideration Amount: $25,000,000
Total Consideration Percentage: 99.9%
Total Consideration Amount: $25,001,715
Total Consideration Percentage: 100.00%
Assuming 67% of Shares Sold:
Shares Purchased
Existing stockholders
Shares Purchased Number: 17,151,882
Shares Purchased Percentage: 89.40%
New Investors
Shares Purchased Number: 2,032,767
Shares Purchased Percentage: 10.60%
Total Shares Purchased Number: 19,184,649
Total Shares Purchased Percentage: 100.00%
Total Consideration
Existing stockholders
Total Consideration Amount: $1,715
Total Consideration Percentage: 0.01%
New Investors
Total Consideration Amount: $13,400,000
Total Consideration Percentage: 99.99%
Total Consideration Amount: $13,401,715
Total Consideration Percentage: 100.00%
Assuming 33% of Shares Sold:
Shares Purchased
Existing stockholders
Shares Purchased Number: 17,151,882
Shares Purchased Percentage: 94.48%
New Investors
Shares Purchased Number: 1,001,214
Shares Purchased Percentage: 5.52%
Total Shares Purchased Number: 18,153,096
Total Shares Purchased Percentage: 100.00%
Total Consideration
Existing stockholders
Total Consideration Amount: $1,715
Total Consideration Percentage: 0.03%
New Investors
Total Consideration Amount: $6,600,000
Total Consideration Percentage: 99.97%
Total Consideration Amount: $6,601,715
Total Consideration Percentage: 100.00%
MANAGEMENTS DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
You should read the following discussion and analysis of our
financial condition and results of our operations together with
our consolidated financial statements and the notes thereto
appearing elsewhere in this Offering Circular. This discussion
contains forward-looking statements reflecting our current
expectations, whose actual outcomes involve risks and
uncertainties. Actual results and the timing of events may
differ materially from those stated in or implied by these
forward-looking statements due to a number of factors, including
those discussed in the sections entitled Risk Factors,
Cautionary Statement regarding Forward-Looking Statements and
elsewhere in this Offering Circular. Please see the notes to our
Financial Statements for information about our Significant
Accounting Policies and Recent Accounting Pronouncements
Statement of Operations
Fiscal year 2019
Operating Income $2,287
Sales $2,275
Gross Profit $12
Operating Expense
Salaries $182,176
Legal & Professional $89,159
General & Administrative $89,021
Research & Development $50,428
Advertising $34,141
Payroll Taxes $14,486
Depreciation $4,130
Rent $630
Total Operating Expenses $464,171
Net Income from Operations ($464,159)
Other Income (Expense)
Interest Expense (6,219)
Net Income (470,378)
Revenues. Atlis is a pre-revenue development stage company
purposed to design, develop, and produce electric vehicles. The
design and research phases are very protracted. No significant
revenues have been generated since inception and no revenues are
expected in the 2020 fiscal year.
Cost of Goods Sold. The Company remains in developmental stage
and, in conjunction with having minimal operational revenue, it
has incurred limited Cost of Goods Sold.
Salaries. Salaries in 2019 were $182,176.
Legal and Professional expenses were $89,159 in 2019.
General and Administrative expenses totaled $89021 in 2019.
Selling and Marketing Expenses. Selling and marketing expenses
for fiscal year 2019 were $34,141.
Product Development. Product development expenses for the fiscal
year 2019 were $50,428.
Net Loss. For the foregoing reasons, our net loss from fiscal
year 2019 was $464,159
Liquidity, Capital Resources and Plan of Operations
Going Concern
Our financial statements appearing elsewhere in this Offering
Circular 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. Atlis Motor
Vehicles ability to continue as a going concern is contingent
upon its ability to raise additional capital as required. In
fiscal year 2019, we reported a net loss of $750,000. Initially,
we intend to finance our operations through equity and debt
financings.
As of December 31, 2019, our cash and cash equivalents
(immediately marketable securities) was $5,075. Unless we
receive additional private financing or we receive a minimum of
$5,000,000 from the proceeds of this Offering, we will not be
able to conduct our planned operations. We estimate that if we
receive a minimum of $5,000,000 of private financing or from the
proceeds of this Offering, our existing capital resources will
permit us to conduct our planned operations for only
approximately 180 days following the date of this Offering
Circular. Development of an electric vehicle on this scale is a
very cash intensive proposition. Accordingly, our business plan
is dependent on our raising sufficient proceeds from this
Offering. In addition, we may have to raise additional interim
capital from other private sources. There can be no assurance
that such needed capital will be available or even if available
that it will not be extremely dilutive to the equity of
potential investors in this Offering.
Our auditors have indicated that these conditions raise
substantial doubt about the Companys ability to continue as a
going concern. These financial statements do not include any
adjustments relating to the recoverability and classification of
recorded asset amounts, or amounts and classification of
liabilities that might result from this uncertainty.
Financings and Securities Offerings
Name of person: Mark Hanchett
Relationship to company: Officer
Nature / amount of interest in the transaction: Mark Hanchett
loaned money to Atlis Motor Vehicles to ensure continued
operations in the business.
Material terms of transaction: There are no material terms. Loan
will be paid back as appropriate to ensure continued operation
of the business. As of December 31, 2019, the company owes Mark
Hanchett $10,483.49.
We have made the following issuances of securities within the
last three years:
Date of offering: February 28, 2018
Type of security sold: Common Stock
Final dollar amount sold: $2,000.13
Use of proceeds: Stock Purchase
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 6897
Date of offering: February 28, 2018
Type of security sold: Common Stock
Final dollar amount sold: $4,995.25
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 17225
Date of offering: February 28, 2019
Type of security sold: Common Stock
Final dollar amount sold: $1,066,607.53
Use of proceeds: Product Development Develop the prototype
Atlis Motor Vehicles Advanced Charging Station Develop the
prototype Atlis Motor Vehicles 100T pickup truck Facilities
and Location Establish a permanent residence and prototype
facility will be established. Two locations are currently
in the running. Team Members Atlis Motor Vehicles will
bring on full-time team members who have previously worked
part time on efforts Atlis Motor Vehicles will lean on
industry experts to assist in developing prototype
components and final vehicle assembly. Seed Funding
Campaign Continue social media campaign to raise funding
Create campaign video for Startengine.com page. Vehicle
interest campaign Launch marketing campaign to take pre-
order interest for the Atlis Motor Vehicles PEV Pickup
truck.
Offering exemption relied upon: Regulation CF
Shares Sold: 3677957
Date of offering: May 2, 2019
Type of security sold: Common Stock
Final dollar amount sold: $58,000.00
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 200000
Date of offering: May 21, 2019
Type of security sold: Common Stock
Final dollar amount sold: $4,350.00
Use of proceeds: Stock Purchase
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 15000
Date of offering: May 21, 2019
Type of security sold: Common Stock
Final dollar amount sold: $6,090.00
Use of proceeds: Stock Purchase
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 21000
Date of offering: September 17, 2019
Type of security sold: Common Stock
Final dollar amount sold: $1,500.17
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 5173
Date of offering: September 17, 2019
Type of security sold: Common Stock
Final dollar amount sold: $10,000.07
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 34483
Date of offering: September 18, 2019
Type of security sold: Common Stock
Final dollar amount sold: $5,000.18
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 17242
Date of offering: September 17, 2019
Type of security sold: Common Stock
Final dollar amount sold: $2,000.13
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 6897
Date of offering: September 18, 2019
Type of security sold: Common Stock
Final dollar amount sold: $4,500.22
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 15518
Date of offering: September 18, 2019
Type of security sold: Common Stock
Final dollar amount sold: $1,100.26
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 3794
Date of offering: September 18, 2019
Type of security sold: Common Stock
Final dollar amount sold: $3,000.15
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 10345
Date of offering: October 30, 2019
Type of security sold: Common Stock
Final dollar amount sold: $19,999.85
Use of proceeds: Investment - Private
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 6896547,269
Date of offering: March 10 , 2020
Type of security sold: Common Stock
Final dollar amount sold: $32,551.65
Use of proceeds: Product Development Develop the prototype
Atlis Motor Vehicles Advanced Charging Station Develop the
prototype Atlis Motor Vehicles XT pickup truck Facilities
and Location Establish a permanent residence and prototype
facility will be established
Shares sold: 6,684
Date of offering: April 10 , 2020
Type of security sold: Common Stock
Final dollar amount sold: $30,119.95
Use of proceeds: Product Development Develop the prototype
Atlis Motor Vehicles Advanced Charging Station Develop the
prototype Atlis Motor Vehicles XT pickup truck Facilities
and Location Establish a permanent residence and prototype
facility will be established
Shares sold: 6,219
The Company presently intends to raise additional capital to
fund its research, development and operating expenses prior to
the commencement of this Offering under Regulation A+, and plans
to conduct a private placement of its Common Stock pursuant to
Regulation D and/or Regulation S prior to the qualification of
this Offering by the SEC. The Company must raise additional
equity or debt financing, both now and in the future following
this Offering. However, no assurances can be made that the
Company will be successful obtaining additional equity or debt
financing, or that ultimately the Company will achieve
profitable operations and positive cash flow.
Since inception, our principal sources of operating funds have
been proceeds from equity financing including Regulation CF
crowdfunding equity financing and including the sale of our
Common Stock to initial investors known to management and
principal shareholders of the Company. We do not expect that our
current cash on hand will fund our existing operations. We will
need to raise additional capital in order execute our business
plan and growth goals for at least the next twelve-month period
thereafter. If Atlis is unable to raise sufficient additional
funds, it will have to execute a slower than planned growth
path, reduce overhead and scale back its business plan until
sufficient additional capital is raised to support further
operational expansion and growth. There can be no assurance that
such a plan will be successful.
Current Plan of Operations
Our plan of operations is currently focused on the development
of our XP platform and XT pickup. We expect to incur substantial
expenditures in the foreseeable future for the extended
development and testing of our technology and the potential
commercialization of the products. At this time, we cannot
reliably estimate the nature, timing or aggregate amount of such
costs. Our products will require extensive technical
evaluation, potential regulatory review and approval,
significant marketing efforts and substantial investment before
it or any successors could provide us with any revenue. Further,
we intend to continue to build our corporate and operational
infrastructure and to build interest in our products with the
goal of becoming the market leader in electric trucks.
As noted above, the continuation of our current plan of
operations requires us to raise significant additional capital
immediately. If we are successful in raising capital through the
sale of shares offered for sale in this Offering Circular we
believe that the Company will have sufficient cash resources to
fund its plan of operations for the next twelve months. If we
are unable to do so, our ability to continue as a going concern
will be in jeopardy, likely causing us to curtail and possibly
cease operations.
We continually evaluate our plan of operations discussed above
to determine the manner in which we can most effectively utilize
our limited cash resources. The timing of completion of any
aspect of our plan of operations is highly dependent upon the
availability of cash to implement that aspect of the plan and
other factors beyond our control. There is no assurance that we
will successfully obtain the required capital or revenues, or,
if obtained, that the amounts will be sufficient to fund our
ongoing operations. The inability to secure additional capital
would have a material adverse effect on us, including the
possibility that we would have to sell or forego a portion or
all of our assets or cease operations. If we discontinue our
operations, we will not have sufficient funds to pay any amounts
to our stockholders. If in the future we are not able to
demonstrate adequate progress in the development of our product,
we will not be able to raise the capital we need to continue our
then current business operations and business activities, and we
will likely not have sufficient liquidity or cash resources to
continue operating.
Because our working capital requirements depend upon numerous
factors there can be no assurance that our current cash
resources will be sufficient to fund our operations. At present,
we have no committed external sources of capital, and do not
expect any significant product revenues for the foreseeable
future. Thus, we will require immediate additional financing to
fund future operations. There can be no assurance, however, that
we will be able to obtain funds on acceptable terms, if at all.
Capital Expenditures
We will require significant capital expenditures to secure the
facilities and equipment necessary to complete development and
begin producing our products. Due to the size and scope of the
operations, it will be necessary to expand facilities and
equipment as production operations ramp. This will require
exponentially more capital.
Contractual Obligations, Commitments and Contingencies
Atlis Motor Vehicles has signed a 5 year and 3 month lease
agreement with Majestic Mesa Partners, to occupy a 42,828 Sq. Ft
industrial facility at 1828 North Higley Road, Suite 100, Mesa
AZ , commencing on April 1st, 2020. Base rent obligation for
Months 1 through 7 is $14,133, Months 8-12 is $28,266.48 with
subsequent annual increase of 3% for Years 2-5. In addition to
Base rent, Atlis Motor Vehicles is responsible for Property
Taxes, utilities and maintenance costs related to the property,
which are estimated at a monthly rate of $7,265 for 2020, are
commencing from Month 1 of the lease obligation and will be
annually adjusted as needed.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not
currently have, any off-balance sheet arrangements.
Quantitative and Qualitative Disclosures about Market Risk
In the ordinary course of our business, we are not exposed to
market risk of the sort that may arise from changes in interest
rates or foreign currency exchange rates, or that may otherwise
arise from transactions in derivatives. We do not currently
invest in any securities as all capital is being diverted to
developing our products.
Contingencies
Certain conditions may exist as of the date the financial
statements are issued, which may result in a loss to the
Company, but which will only be resolved when one or more future
events occur or fail to occur. Atlis Motor Vehicles Management,
in consultation with its legal counsel as appropriate, assesses
such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss
contingencies related to legal proceedings that are pending
against Atlis or unasserted claims that may result in such
proceedings, Atlis, in consultation with legal counsel,
evaluates the perceived merits of any legal proceedings or
unasserted claims, as well as the perceived merits of the amount
of relief sought or expected to be sought therein. If the
assessment of a contingency indicates it is probable that a
material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued
in the Atlis Motor Vehicles financial statements. If the
assessment indicates a potentially material loss contingency is
not probable, but is reasonably possible, or is probable, but
cannot be estimated, then the nature of the contingent
liability, together with an estimate of the range of possible
loss, if determinable and material, would be disclosed. Loss
contingencies considered remote are generally not disclosed
unless they involve guarantees, in which case the guarantees
would be disclosed.
Relaxed Ongoing Reporting Requirements
Upon the completion of this Offering, we may elect to become a
public reporting company under the Exchange Act. If we elect to
do so, we will be required to publicly report on an ongoing
basis as an emerging growth company (as defined in the
Jumpstart Our Business Startups Act of 2012, which we refer to
as the JOBS Act) under the reporting rules set forth under the
Exchange Act. As defined in the JOBS Act, an emerging growth
company is defined as a company with less than $1.0 Billion in
revenue during its last fiscal year. An emerging growth company
may take advantage of specified reduced reporting and other
burdens that are otherwise applicable generally to public
companies.
For so long as we remain an emerging growth company, we may
take advantage of certain exemptions from various reporting
requirements that are applicable to other Exchange Act reporting
companies that are not emerging growth companies, including
but not limited to:
-not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act;
-taking advantage of extensions of time to comply with
certain new or revised financial accounting standards;
-being permitted to comply with reduced disclosure
obligations regarding executive compensation in our
periodic reports and proxy statements; and
-being exempt from the requirement to hold a non-binding
advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously
approved.
If we are required to publicly report under the Exchange Act as
an emerging growth company, we expect to take advantage of
these reporting exemptions until we are no longer an emerging
growth company. We would remain an emerging growth company for
up to five years, though if the market value of our Common Stock
that is held by non-affiliates exceeds $700 million, we would
cease to be an emerging growth company.
If we elect not to become a public reporting company under the
Exchange Act, we will be required to publicly report on an
ongoing basis under the reporting rules set forth in Regulation
A for Tier 2 issuers. The ongoing reporting requirements under
Regulation A are more relaxed than for emerging growth
companies under the Exchange Act. The differences include, but
are not limited to, being required to file only annual and semi-
annual reports, rather than annual and quarterly reports. Annual
reports are due within one hundred twenty (120) calendar days
after the end of the issuer's fiscal year, and semi-annual
reports are due within ninety (90) calendar days after the end
of the first six (6) months of the issuer's fiscal year
OUR BUSINESS
Overview
ATLIS AND INDUSTRY BACKGROUND
Atlis Motor Vehicles is a technology development company
providing a Vehicle as a Service platform for electric heavy
duty and light duty work vehicles. The company is developing
electrified vehicle, infrastructure, and software platforms for
work fleets. At the core of Atlis Motor Vehicles hardware
platform is a revolutionary battery technology capable of
charging a full-size pickup truck in 15 minutes, and a modular
system architecture capable of scaling to meet the specific
vehicle or equipment application needs. We want to build a truck
with unprecedented capabilities at a reasonable price. We also
want to change the customer experience from sales, ordering,
financing, and delivery to maintenance and service.
Principal Product and its market
Atlis Motor Vehicles has several pillars of product focus for
our business. These pillars are:
Battery technology. Our goal is to offer a superior battery
technology solution that offers unparalleled performance in
charging as well as inclement weather and output performance,
Atlis Motor Vehicles is poised to become a major player in the
battery industry.
XP Platform and connected vehicle technology. As we look to
the future of electrification, Atlis Motor Vehicles XP
Platform aims to provide a scalable technology solution with a
connected cloud, mobile, service, and charging ecosystem that
will provide unprecedented workflows and customer experiences
moving forward. This platform of technology will be leveraged
to develop new vehicle solutions quickly while minimizing
costs and time The XP technology platform will allow Atlis
Motor Vehicles to work quickly with strategic partners looking
to develop new vehicle solutions for niche and mass-market
opportunities while leveraging the vast network of
capabilities we look to provide.
Advanced charging stations. The Atlis Motor Vehicles Advanced
Charging Station, or AAC, technology represents the pinnacle
of charging infrastructure of the future. The goal is for this
technology to boast the highest power solution to enter the
market, a 1.5MW charging station, that's as simple to operate
as filling up your gas vehicle today or plugging in a Tesla
vehicle.
The XT Pickup truck. The flagship vehicle product offering.
The XT Pickup truck aims to represent every key piece of
technology Atlis Motor Vehicles is developing and how this
technology can be utilized to bring capable, non-compromising
vehicle solutions through electrification. The XT Pickup truck
is our market entry solution into the world of work, and is
just the beginning of a long line of vehicle solutions built
on our XP Platform.
How We Will Generate Revenue
Atlis Motor Vehicles does not current generate sales for our
software and hardware services. Atlis Motor Vehicles is in the
early stages of the product and company development. Atlis Motor
Vehicles expects to begin generating sales by June 2020.
Atlis Motor Vehicles has received over $1.5 billion in projected
reservation interest for our XT Pickup Truck and XP Platform.
This projection is based on a predicted average sales price of
Atlis XT Truck of $59,968 and average sales price of Atlis XP
Platofrm of $27,000, using electronic reservations made on the
Company's website. These reservations are non-deposit and
require no down payment to place. Atlis Motor Vehicles has
chosen to forego the requirement for a refundable deposit in
favor of allowing reservation holders to become a potential
investor in Atlis Motor Vehicles through our Regulation CF
offering.
Atlis Motor Vehicles is actively engaging in contact development
with potential customers for interest for the XP Platform.
Expressed interest for the XP Platform is in relation to
conversations currently underway with potential customers who
have expressed interest in development of a specialized vehicle
using our XP Platform. This expressed interest should not be
taken as a guarantee of sale. Customer interest here is
anonymous until further public disclosure agreements have been
put in place.
Distribution Channels
Our hardware and services will be conducted online via our
website. Fleet and consumer customers will be able to purchase
the Atlis XP Platform, Atlis XT Pickup Truck, and Atlis advanced
charging solutions online.
Our advanced charging infrastructure will require users to be
able to purchase electricity at our charging stations. This
purchase will be conducted through our cloud-based mobile
application and website.
Growth Strategy
Our strategy for growth is to focus on execution. We are
completing the design work to deliver our production prototype
in the second half of 2020. From there, we will stand up production
and begin building product. Once we have started production, we
plan to leverage influencer marketing and customer word of mouth
the generate additional interest in our products. We will
develop a dedicated sales team pursuing larger fleet customers.
Need for Government Approval of Principal Products or Services
As we progress, we may need to obtain government approval for
meeting federal transportation safety guidelines.
Our Team Members
Mark Hanchett, Chief Executive Officer - Mark Hanchett has
over ten years of product development experience with 16
successful electromechanical and software product launches.
Mark Hanchett brings a passion for solving hard problems in
product strategy, design, manufacturing, and business
operations, while continuously driving a focus on the best
possible customer experience. Mark has served as Founder,
Director, and CEO of Atlis Motor Vehicles since inception in
2016. Before starting Atlis Motor Vehicles, Mark was a
director at Axon Enterprise Inc from 2012 to 2017, leading
teams in the development of innovative hardware and software
products for law enforcement. From 2007 to 2012 he served as a
senior mechanical engineer and project manager leading cross-
functional teams through design and development of innovative
conductive electrical weapons at Axon Enterprise inc. He lives
in Mesa, Arizona with his wife and two kids. Mark is full time
with Atlis.
Annie Pratt, President - Annie is a creative problem solver
with a background in product management, design, and business.
After studying Product Design at Stanford's design school, she
kicked off her career as a Product Manager at Axon Enterprise,
launching in-car video solutions for law enforcement. Most
recently she served as the Director of Consumer Products at
Axon, where she built an independent business unit and doubled
both revenue and profit in three years. She has brought a
passion for design thinking, user experience, and business
strategy to Atlis.
Ross Compton, Lead Vehicle Designer - Ross is an independently
contracted award winning designer with a varied background
within automotive design. After completing the famous Coventry
University Automotive and Transport design course he went
straight to Turin, Italy where he was lucky enough to work on
the interior to the Willys AW380 show car shown in Bologna
2014. From there Ross has been on many smaller scale projects
for new and developing brands, designing everything from
supercars to trucks. Perhaps the most notable experience is
his work at Bollinger Motors where Ross, alongside the owner,
designed the Bollinger B1. His growing collection of works can
be found on his own site www.macchinadesign.com.
Derek Duff, Vehicle Dynamics Engineer - Dereks love for the
automotive industry started with his first truck since he
can remember, he's been researching trucks and imagining ways
to design and modify them. After graduating with a degree in
Mechanical Engineering from the University of Maine, he moved
to Michigan to work with IAV Automotive Engineering at the
Chrysler Proving Grounds. A truck guy through-and-through,
Derek spends most of his personal time designing and
implementing his ideas into truck builds. He is currently
designing, testing and validating the suspension and chassis
designs for the Atlis Motor Vehicles XT and XP.
Matthew Wilkins, Mechanical Design Engineer - Matt has an
experienced background in a wide variety of fields. While
pursuing his Mechanical Engineering degree, he competed in the
SAE Super mileage competition as a body design team lead. Matt
then pursued his creative side and achieved his Masters in
Design, New Product Innovation with Arizona State University.
He has worked at TASER International as an industrial
designer, performed consumer research, prototyping, and UI
design at Nautilus Fitness, and has done freelance design.
Matt is our swiss-army-knife here at Atlis, able to grind out
CAD work on our platform and body for weeks on end, and then
switch gears into creative UI, graphics, and video work at a
moment's notice. In his spare time, Matt is a competitive
cyclist and ultramarathoner.
Liam Burke, Senior Engineer - Liam has a passion for emerging
technologies, innovative ideas, and scrappy teams. A
mechanical engineer by education, he has worked across a broad
range of fields, from manufacturing technologies, to aerospace
hardware, to consumer products. Before Atlis, Liam led the
consumer engineering team at Axon/Taser, where he planned and
developed mechanical, electrical, and software systems.
Growing up between Montana and Washington, Liam loves the
outdoors and believes a great product should be much like
nature: inspiring, durable, sustainable, and simple, yet full
of detail.
Abel Saucedo, Senior Electrical Engineer - An Electrification
enthusiast, Abel has been involved in the EV scene for over 15
years. Throughout his career, hes designed products across a
range of fields, from aerospace hardware, to utility power and
consumer products. He also founded his own portable energy
company. A home-grown Arizonan, Abel enjoys running, rock
climbing and crossfit with his daughter and pups.
Current Roles Being Filled as part of this offering.
VP of Engineering
Atlis Motor Vehicles is seeking and talking with a talented
individual with at minimum 10 years of experience in automotive
development programs. A preference for electric vehicle
development is desired for this position. Startup mindset and a
focus on frugal spending will be key. We are primarily seeking
individuals who may currently be, or who are currently exiting
existing EV startups such as, but not limited to, Faraday
Future, Lucid Motors, Tesla, Rivian, and Byton.
VP of Operations
Atlis Motor Vehicles is seeking and talking with talented
individuals with a minimum of 10 years of experience in
automotive development and manufacturing programs. A key
indicator is an individual with automotive startup experience.
This individual must possess key talents in supplier
development, operational excellence, and lean startup processes.
We are primarily seeking individuals who may currently be, or
who are currently exiting existing EV startups such as, but not
limited to, Faraday Future, Lucid Motors, Tesla, Rivian, and
Byton.
Core Engineering and Technical talent.
Atlis Motor Vehicles currently hiring over 65 engineers with
automotive experience or significant talents that will allow
them to tackle key technical areas of expertise. Our core focus
is on battery, drive systems, vehicle dynamics, vehicle
structures, and electronic systems.
Product and Program Management
Atlis Motor Vehicles is currently hiring key leadership roles in
program management and product management to lead our technical
teams in development of hardware, software, and firmware
systems. Each program is divided based on technical and product
expertise. These individuals will be key factors in managing
expectations, schedules, budgets, and team coordination efforts.
Significant Purchases of Plant and Equipment
Mechanical Fabrication Equipment (CNCs,
Lathes, Laser Cutters, Lifts, Welders, etc.) $1,620,451
Power Tools $573
Electrical Equipment (Meters, ESD
Tables, Power Supplies, etc.) $5,128
Battery Fabrication Equipment (Welders,
Testers, Safety Equipment, Storage) $65,352
Quality & Validation Test Equipment $69,499
Office Equipment (Desks, Conference
Rooms, Computers, etc.) $100,773
Paint Booth $31,000
TOTAL $1,892,776
Liquidity & Capital Resources
As of April 20, 2020, Atlis Motor Vehicles has a balance of
$198,744.40 in cash available. As of April 20, 2020 Atlis Motor
Vehicles does not have available revolving credit.
PROPERTY
Atlis has occupied 1828 Higley Road, Mesa AZ, for all its
operations
LEGAL PROCEEDINGS
No proceedings are pending to which the Company or any of its
property is subject, nor to the knowledge of the Company, are
any such legal proceedings threatened against the Company.
MANAGEMENT
Executive Officer and Director
Our executive officers and directors, and their ages and
positions as of the date of this memorandum, are as follows:
Mr. Mark Hanchett, CEO, Director,
Ms. Annie Pratt, President
Ms. Tamica Sears, VP of Talent
EXECUTIVE COMPENSATION
Cash compensation $200,000
Other compensation $0
Total compensation $200,000
Mark Hanchett, Chief Executive Officer
Cash compensation $200,000
Other compensation $0
Total compensation $200,000
Annie Pratt, President
Cash compensation $200,000
Other compensation $0
Total compensation $200,000
Tamica Sears, VP of Talent
Cash compensation $120,000
Other compensation $0
Total compensation $1200,000
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Name: Mark Hanchett
Securities owned: 10,000,000 Class D Stock
Total voting power: 84.1%
Name: Annie Pratt
Securities owned: 1,269,626 Class D Stock
Total voting power: 10.7%
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Name of Entity: Mark Hanchett
Relationship to Company: Officer
Nature/amount of interest in the transaction: Mark Hanchett
loaned money to Atlis Motor Vehicles to ensure continued
operations in the business.
Material Terms: There are no material terms. Loan will be paid
back as appropriate to ensure continued operation of the
business. As of January 1, 2020 the company owes Mark Hanchett
$10,483.49.
DESCRIPTION OF COMMON STOCK
We have authorized capital stock consisting of 60,000,000 shares
of common stock, $0.0001 par value per share. Atlis Motor
Vehicles has several classes of common stock shares.
Class A
Class A common stock has 1 vote per share.
As of March 31st, 2020. Atlis Motor Vehicles has issued
4,871,129
Class A shares outstanding.
Class B
Class B common stock has no voting power. This Class B
classification is reserved for future issues of common stock.
As of March 1st, 2020. Atlis Motor Vehicles has 0 Class B shares
outstanding.
Class C
Class C common stock is Non-participating Preferred Class A
common stock. This Class C Class A common stock has 1 vote per
share. Class C stock receives non-participating preferred
liquidation preference. Upon a sale or transfer of Class C
stock, Class C stock shall be converted to Class A stock. Holder
of Class C stock has the right to a board seat.
As of March 1st, 2020. Atlis Motor Vehicles has 0 Class C shares
outstanding.
Class D
Class D classification of common stock has 10 votes per share.
This Class D classification may be used for future issues of
common stock.
As of March 31st, 2020. Atlis Motor Vehicles had 12,225,048
Class
D shares outstanding.
PENNY STOCK REGULATION
The SEC has adopted regulations which generally define penny
stock to be any equity security that has a market price of less
than Five Dollars ($5.00) per share or an exercise price of less
than Five Dollars ($5.00) per share. Such securities are subject
to rules that impose additional sales practice requirements on
broker-dealers who sell them. For transactions covered by these
rules, the broker-dealer must make a special suitability
determination for the purchaser of such securities and have
received the purchasers written consent to the transaction
prior to the purchase. Additionally, for any transaction
involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure schedule
prepared by the SEC relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both
the broker-dealer and the registered representative, current
quotations for the securities and, if the broker-dealer is the
sole market-maker, the broker-dealer must disclose this fact and
the broker-dealers presumed control over the market. Finally,
among other requirements, monthly statements must be sent
disclosing recent price information for the penny stock held in
the account and information on the limited market in penny
stocks. As our Common Stock immediately following this Offering
may be subject to such penny stock rules, purchasers in this
Offering will in all likelihood find it more difficult to sell
their Common Stock shares in the secondary market
DIVIDEND POLICY
We have never declared or paid cash dividends. We intend to
retain earnings, if any, to support the development of the
business and therefore, do not anticipate paying cash dividends
for the foreseeable future. Payment of future dividends, if any,
will be at the discretion of our board of directors after taking
into account various factors, including current financial
condition, operating results and current and anticipated cash
needs.
OFFERING INCENTIVES
High Dollar Investor Perks
$500+ Investment - Get $500 off the purchase of XT Pickup Truck
or subscription membership
$1,500+ Investment - Get $1500 off the purchase of XT Pickup
Truck or subscription membership
$5,000+ Investment - Get $5000 off the purchase of XT Pickup
Truck or subscription membership
$20,000+ Investment - Get $20,000 off the purchase of XT Pickup
Truck or subscription membership
$100,000+ Investment - Get an XT pickup truck configuration of
choice
Early Investor Bonuses
Any investor who invests in the first 36 hours of the campaign
going live will receive a bonus 30% additional shares. Any
investor who invests within the first 7 days of the campaign
going live will receive a bonus 20% additional shares. Any
investor who invests within the first 10 days of the campaign
going live will receive a bonus 10% additional shares
PLAN OF DISTRIBUTION
The shares are being offered by us on a best-efforts basis by
our officers, directors and employees, with the assistance of
independent consultants, and possibly through registered broker-
dealers who are members of the Financial Industry Regulatory
Authority (FINRA) and finders. As of the date of this Offering
Circular, unless otherwise permitted by applicable law, we do
not intend to accept subscriptions from investors in this
Offering who reside in certain states, unless and until the
Company has complied with each such states registration and/or
qualification requirements or a FINRA-member broker-dealer has
been engaged by the Company to consummate and process sales to
investors in such states. We reserve the right to temporarily
suspend and/or modify this Offering and Offering Circular in the
future, during the Offering Period, in order to take such
actions necessary to enable the Company to accept subscriptions
in this Offering from investors residing in such states
identified above.
There is no aggregate minimum to be raised in order for the
Offering to become effective and therefore the Offering will be
conducted on a rolling basis. This means we will be entitled
to begin applying dollar one of the proceeds from the Offering
towards our business strategy, offering expenses,
reimbursements, and other uses as more specifically set forth in
the Use of Proceeds contained elsewhere in this Offering
Circular.
We may pay selling commissions to participating broker-dealers
who are members of FINRA for shares sold by them, equal to a
percentage of the purchase price of the Class A common stock
shares. We may pay finders fees to persons who refer investors
to us. We may also pay consulting fees to consultants who assist
us with the Offering, based on invoices submitted by them for
advisory services rendered. Consulting compensation, finders
fees and brokerage commissions may be paid in cash, Class A
common stock or warrants to purchase our Class A common stock.
We may also issue shares and grant stock options or warrants to
purchase our Class A common stock to broker-dealers for sales of
shares attributable to them, and to finders and consultants, and
reimburse them for due diligence and marketing costs on an
accountable or non-accountable basis. We have not entered into
selling agreements with any broker-dealers to date, though we
may engage a FINRA registered broker-dealer firm for offering
administrative services. Participating broker-dealers, if any,
and others may be indemnified by us with respect to this
offering and the disclosures made in this Offering Circular.
Our Offering will expire on the first to occur of (a) the sale
of all 3,033,981 shares of Class A common stock offered hereby,
(b) November 30, 2020, subject to extension for up to one
hundred-eighty (180) days in the sole discretion of the Company,
or (c) when our board of directors elects to terminate the
Offering.
ADDITIONAL INFORMATION ABOUT THE OFFERING
Investment Limitations
Generally, no sale may be made to you in this Offering if the
aggregate purchase price you pay is more than ten percent (10%)
of the greater of your annual income or net worth (please see
below on how to calculate your net worth). Different rules apply
to accredited investors and non-natural persons. Before making
any representation that your investment does not exceed
applicable thresholds, we encourage you to review Rule
251(d)(2)(i)(C) of Regulation A. For general information on
investing, we encourage you to refer to www.investor.gov.
Because this is a Tier 2, Regulation A offering, most investors
must comply with the ten percent (10%) limitation on investment
in the Offering. The only investor in this Offering exempt from
this limitation is an accredited investor as defined under
Rule 501 of Regulation D under the Securities Act (an
Accredited Investor). If you meet one of the following tests
you should qualify as an Accredited Investor:
(i)You are a natural person who has had individual income in
excess of $200,000 in each of the two (2) most recent
years, or joint income with your spouse in excess of
$300,000 in each of these years, and have a reasonable
expectation of reaching the same income level in the
current year;
(ii)You are a natural person and your individual net worth,
or joint net worth with your spouse, exceeds $1,000,000
at the time you purchase Shares (please see below on how
to calculate your net worth);
(iii)You are an executive officer or general partner of the
issuer or a manager or executive officer of the general
partner of the issuer;
(iv)You are an organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, or the
Code, a corporation, a Massachusetts or similar business
trust or a partnership, not formed for the specific
purpose of acquiring the Shares, with total assets in
excess of $5,000,000;
(v)You are a bank or a savings and loan association or other
institution as defined in the Securities Act, a broker or
dealer registered pursuant to Section 15 of the Exchange
Act, an insurance company as defined by the Securities
Act, an investment company registered under the
Investment Company Act of 1940 (the "Investment Company
Act"), or a business development company as defined in
that act, any Small Business Investment Company licensed
by the Small Business Investment Act of 1958 or a private
business development company as defined in the Investment
Advisers Act of 1940;
(vi)You are an entity (including an Individual Retirement
Account trust) in which each equity owner is an
accredited investor;
(vii)You are a trust with total assets in excess of
$5,000,000, your purchase of Shares is directed by a
person who either alone or with his purchaser
representative(s) (as defined in Regulation D
promulgated under the Securities Act) has such
knowledge and experience in financial and business
matters that he is capable of evaluating the merits and
risks of the prospective investment, and you were not
formed for the specific purpose of investing in the
Shares; or
(viii)You are a plan established and maintained by a state,
its political subdivisions, or any agency or
instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such
plan has assets in excess of $5,000,000.
Offering Period and Expiration Date
This Offering will start on or immediately prior to the date on
which the SEC initially qualifies this Offering Statement (the
Qualification Date) and will terminate on the Termination Date
(the Offering Period).
Procedures for Subscribing
If you decide to subscribe for our Class A common stock shares
in this Offering, you should:
1.Electronically receive, review, execute and deliver to us a
subscription agreement; and
2.Deliver funds directly by wire or electronic funds transfer
via ACH to the Companys bank account designated in the
Companys subscription agreement.
Any potential investor will have ample time to review the
subscription agreement, along with their counsel, prior to
making any final investment decision. We shall only deliver such
subscription agreement upon request after a potential investor
has had ample opportunity to review this Offering Circular.
Right to Reject Subscriptions
After we receive your complete, executed subscription agreement
and the funds required under the subscription agreement have
been transferred to our designated account, we have the right to
review and accept or reject your subscription in whole or in
part, for any reason or for no reason. We will return all monies
from rejected subscriptions immediately to you, without interest
or deduction.
Acceptance of Subscriptions
Upon our acceptance of a subscription agreement, we will
countersign the subscription agreement and issue the shares
subscribed at closing. Once you submit the subscription
agreement and it is accepted, you may not revoke or change your
subscription or request your subscription funds. All accepted
subscription agreements are irrevocable.
Under Rule 251 of Regulation A, non-accredited, non-natural
investors are subject to the investment limitation and may only
invest funds which do not exceed ten percent (10%) of the
greater of the purchaser's revenue or net assets (as of the
purchaser's most recent fiscal year end). A non-accredited,
natural person may only invest funds which do not exceed ten
percent (10%) of the greater of the purchaser's annual income or
net worth (please see below on how to calculate your net worth).
NOTE: For the purposes of calculating your net worth, it is
defined as the difference between total assets and total
liabilities. This calculation must exclude the value of your
primary residence and may exclude any indebtedness secured by
your primary residence (up to an amount equal to the value of
your primary residence). In the case of fiduciary accounts, net
worth and/or income suitability requirements may be satisfied by
the beneficiary of the account or by the fiduciary, if the
fiduciary directly or indirectly provides funds for the purchase
of the Shares.
In order to purchase our Class A common stock shares and prior
to the acceptance of any funds from an investor, an investor
will be required to represent, to the Companys satisfaction,
that he is either an accredited investor or is in compliance
with the ten percent (10%) of net worth or annual income
limitation on investment in this Offering.
EXPERTS
The financial statements of the Atlis appearing elsewhere in
this Offering Circular have been included herein in reliance
upon the report, which includes an explanatory paragraph as to
the Company's ability to continue as a going concern, of LLC, an
independent certified public accounting firm, appearing
elsewhere herein, and upon the authority of that firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Regulation A Offering Statement on
Form 1-A under the Securities Act of 1993, as amended, with
respect to the shares of Class A common stock offered hereby.
This Offering Circular, which constitutes a part of the Offering
Statement, does not contain all of the information set forth in
the Offering Statement or the exhibits and schedules filed
therewith. For further information about us and the Class A
common stock offered hereby, we refer you to the Offering
Statement and the exhibits and schedules filed therewith.
Statements contained in this Offering Circular regarding the
contents of any contract or other document that is filed as an
exhibit to the Offering Statement are not necessarily complete,
and each such statement is qualified in all respects by
reference to the full text of such contract or other document
filed as an exhibit to the Offering Statement. Upon the
completion of this Offering, we will be required to file
periodic reports, proxy statements, and other information with
the SEC pursuant to the Securities Exchange Act of 1934. You may
read and copy this information at the SEC's Public Reference
Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You
may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet website that contains reports, proxy
statements and other information about issuers, including us,
that file electronically with the SEC. The address of this site
is www.sec.gov.
[SIGNATURES - See Ex96]
FINANCIAL STATEMENTS
ATLIS MOTOR VEHICELS, INC.
Audited Financial Statements For The Years
Ended December 31, 2019 and 2018
Independent Auditor's Report
To Management
Atlis Motor Vehicles, Inc.
Mesa, AZ
We have audited the accompanying balance
sheet of Atlis Motor Vehicles, Inc. as of
April 21, 2020, and the related statements
of income, retained earnings, and cash
flows for the year 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 misstatement. 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 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.
Opinion
In our opinion, the financial statements
referred to above present fairly, in all
material respects, the financial position
of Atlis Motor Vehicles, Inc. as of April
21, 2020, and the results of its operations
and its cash flows for the year then ended
in accordance with accounting principles
generally accepted in the United States of
America.
Going Concern
The accompanying financial statements have
been prepared assuming that the Company
will continue as a going concern. As
discussed in Note B, certain conditions
raise an uncertainty about the Company's
ability to continue as a going concern.
Management's plans in regard to these
manners are also described in Note B. The
accompanying financial statements do not
include any adjustments that might result
from the outcome of this uncertainty. Our
conclusion is not modified with respect to
this manner.
Jason M. Tyra, CPA, PLLC
Dallas, TX
April 21, 2020
1700 Pacific Avenue, Suite 4710
Dallas, TX 75201
(P) 972-201-9008
(F) 972-201-9008
info@tyracpa.com
www.tyracpa.com
FINANCIAL STATEMENTS
ATLIS MOTOR VEHICLES, INC.
INCOME STATEMENT
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2019 2018
Operating Income
Sales $ 2,287 $ -
2,275
Gross Profit 12 -
Operating Expense
Salaries 182,176 209,595
Legal & Professional 89,159 77,806
General & Administrative 89,021 30,340
Research & Development 50,428 106,720
Advertising 34,141 147,355
Payroll Taxes 14,486 14,563
Depreciation 4,130 4,130
Rent 630 -
464,171 590,508
Net Income from Operations (464,159) (590,508)
Other Income (Expense)
Interest Expense (6,219) (5,354)
Net Income $ (470,378) $ (595,862)
ATLIS MOTOR VEHICLES, INC. BALANCE SHEET 2018 and 2019
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2019 2018
ASSETS
CURRENT ASSETS
Cash $ 5,074 $ (1,500)
TOTAL CURRENT ASSETS 5,074 (1,500)
NON-CURRENT ASSETS
Fixed Assets 20,648 20,648
Accumulated Depreciation (8,260) (4,130)
TOTAL NON-CURRENT ASSETS 12,388 16,518
TOTAL ASSETS 17,462 15,018
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Accounts Payable - 2,988
Accrued Taxes Payable 32,545 41,531
TOTAL CURRENT LIABILITIES 32,545 44,519
NON-CURRENT LIABILITIES
Related Party Loan 10,483 24,124
Loans Payable 7,737 41,174
TOTAL LIABILITIES 50,765 109,817
SHAREHOLDERS' EQUITY
Common Stock (17,857,143
shares authorized,
14,782,630 issued; $0.0001
par value) 1,478 1,478
Additional Paid in Capital 1,082,041 550,165
Retained Earnings (1,116,821) (646,443)
TOTAL SHAREHOLDERS' EQUITY (33,302) (94,800)
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 17,462 $ 15,018
ATLIS MOTOR VEHICLES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2019 2018
Cash Flows From Operating Activities
Net Income (Loss) For The Period $ (470,378) $ (595,862)
Change in Accrued Payroll Tax Payable (8,987) 41,531
Change in Accounts Payable (2,988) 2,988
Change in Payroll Corrections 11 -
Depreciation 4,130 4,130
Net Cash Flows From Operating Activities (478,212) (547,214)
Cash Flows From Investing Activities
Purchase of Fixed Assets - (20,648)
Net Cash Flows From Investing Activities - (20,648)
Cash Flows From Financing Activities
Payment toward Related Party Loan (13,641) (27,956)
Payment toward Loan Payable (33,452) 41,174
Issuance of Common Stock - 1,478
Increase in Additional Paid In Capital 531,876 550,165
Net Cash Flows From Financing Activities 484,783 564,861
Cash at Beginning of Period (1,500) 1,500
Net Increase (Decrease) In Cash 6,571 (3,001)
Cash at End of Period $ 5,074 $ (1,500)
ATLIS MOTOR VEHICLES, INC.
Audit Notes for years ending 2018 and 2019
NOTE A- ORGANIZATION AND NATURE OF ACTIVITIES
Atlis Motor Vehicles, Inc. (the Company) is a corporation
organized under the laws of Delaware and domiciled in Arizona.
The Company intends to develop and manufacture electric vehicles
and other energy sustainable products.
NOTE B- GOING CONCERN MATTERS
The financial statements have been prepared on the going concern
basis, which assumes that the Company will continue in operation
for the foreseeable future. However, management has identified
the following conditions and events that created an uncertainty
about the ability of the Company to continue as a going concern.
The company sustained net losses of $470,378 in 2019 and
$595,862 in and had no cash available as of December 31, 2018.
The following describes management's plans that are intended to
mitigate the conditions and events that raise substantial doubt
about the Company's ability to continue as a going concern. The
Company plans to raise additional funds to meet obligations and
further operations through a Reg CF campaign. The Company's
ability to meet its obligations as they become due is dependent
upon the success of management's plans, as described above.
These conditions and events create an uncertainty about the
ability of the Company to continue as a going concern through
April 21, 2021 (one year after the date that the financial
statements are available to be issued). The financial statements
do not include any adjustments that might be necessary should
the Company be unable to continue as a going concern.
NOTE C- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America (US GAAP).
Significant Risks and Uncertainties
The Company is subject to customary risks and uncertainties
associated with development of new technology including, but not
limited to, the need for protection of proprietary technology,
dependence on key personnel, costs of services provided by third
parties, passing regulatory testing, meeting manufacturing and
environmental requirements, the need to obtain additional
financing, and limited operating history.
The Company currently has no developed products for
commercialization and there can be no assurance that the
Companys research and development will be successfully
commercialized. Developing and commercializing a product
requires significant capital, and based on the current operating
plan, the Company expects to continue to incur operating losses
as well as cash outflows from operations in the near term.
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
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances, and highly
liquid investments with maturities of three months or less when
purchased.
Stockholders Equity
During 2018, the company issued 14,782,630 shares of common
stock at Par Value $0.0001.
Fixed Assets
The Company capitalizes assets with an expected useful life of
one year or more, and an original purchase price of $1,000 or
more. Depreciation is calculated on a straight-line basis over
managements estimate of each assets useful life.
Revenue
Revenue is recognized when control of the promised goods or
services is transferred to customers, in an amount that reflects
the consideration the Company expects to be entitled to in
exchange for those goods or services.
Current revenue is earned by the sale of small merchandise.
Advertising
The Company records advertising expenses in the year incurred.
Accrued Taxes Payable
During 2018 the company accrued $40,831 in payroll taxes
payable.
Rent
The company leases a storage space on a month-to-month basis.
Equity Based Compensation
The Company accounts for stock options issued to employees under
ASC 718 (Stock Compensation). Under ASC 718, share-based
compensation cost to employees is measured at the grant date,
based on the estimated fair value of the award, and is
recognized as an item of expense ratably over the employees
requisite vesting period. The Company has elected early adoption
of ASU 2018-07, which permits measurement of stock options at
their intrinsic value, instead of their fair value. An options
intrinsic value is defined as the amount by which the fair value
of the underlying stock exceeds the exercise price of an option.
In certain cases, this means that option compensation granted by
the Company may have an intrinsic value of $0.
The Company measures compensation expense for its non-employee
stock-based compensation under ASC 505 (Equity). The fair value
of the option issued or committed to be issued is used to
measure the transaction, as this is more reliable than the fair
value of the services received. The fair value is measured at
the value of the Companys common stock on the date that the
commitment for performance by the counterparty has been reached
or the counterpartys performance is complete. The fair value of
the equity instrument is charged directly to expense and
credited to additional paid-in capital.
Income Taxes
The Company applies ASC 740 Income Taxes (ASC 740). Deferred
income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and
liabilities and their financial statement reported amounts at
each period end, based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to
the amount expected to be realized. The provision for income
taxes represents the tax expense for the period, if any and the
change during the period in deferred tax assets and liabilities.
ASC 740 also provides criteria for the recognition, measurement,
presentation and disclosure of uncertain tax positions. A tax
benefit from an uncertain position is recognized only if it is
more likely than not that the position is sustainable upon
examination by the relevant taxing authority based on its
technical merit.
The Company is subject to tax filing requirements as a
corporation in the federal jurisdiction of the United States.
The Company sustained net operating losses during fiscal years
2019 and 2018. Net operating losses will be carried forward to
reduce taxable income in future years. Due to managements
uncertainty as to the timing and valuation of any benefits
associated with the net operating loss carryforwards, the
Company has elected to recognize an allowance to account for
them in the financial statements, but has fully reserved it.
Under current law, net operating losses may be carried forward
indefinitely.
The Company is subject to franchise and income tax filing
requirements in the State of Delaware and Arizona.
Recently Adopted Accounting Pronouncements
From time to time, new accounting pronouncements are issued by
the Financial Accounting Standards Board, or FASB, or other
standard setting bodies and adopted by the Company as of the
specified effective date. Unless otherwise discussed, the
Company believes that the impact of recently issued standards
that are not yet effective will not have a material impact on
its financial position or results of operations upon adoption.
In November 2015, the FASB issued ASU (Accounting Standards
Update) 2015-17, Balance Sheet Classification of Deferred Taxes,
or ASU 2015-17. The guidance requires that all deferred tax
assets and liabilities, along with any related valuation
allowance, be classified as noncurrent on the balance sheet. For
all entities other than public business entities, the guidance
becomes effective for financial statements issued for annual
periods beginning after December 15, 2017, and interim periods
within annual periods beginning after December 15, 2018. Early
adoption is permitted for all entities as of the beginning of an
interim or annual reporting period. The adoption of ASU 2015-17
had no material impact on the Companys financial statements and
related disclosures.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash
Flows (Topic 230), Restricted Cash, or ASU 2016-18. The
amendments of ASU 2016-18 were issued to address the diversity
in classification and presentation of changes in restricted cash
and restricted cash equivalents on the statement of cash flows
which is currently not addressed under Topic 230. ASU 2016-18
would require an entity to include amounts generally described
as restricted cash and restricted cash equivalents with cash and
cash equivalents when reconciling the beginning of period and
end of period total amounts on the statement of cash flows. This
guidance is effective for annual reporting periods, and interim
periods within those years, beginning after December 15, 2018
for non-public entities. Early adoption is permitted, and the
standard must be applied retrospectively. The adoption of ASU
2016-18 had no material impact on the Companys financial
statements and related disclosures.
In May 2014, the FASB issued ASU, 2014-09Revenue from Contracts
with Customers (Topic 606), or ASU 2014-09, and further updated
through ASU 2016-12, or ASU 2016-12, which amends the existing
accounting standards for revenue recognition. ASU 2014-09 is
based on principles that govern the recognition of revenue at an
amount to which an entity expects to be entitled to when
products are transferred to customers. This guidance is
effective for annual reporting periods, and interim periods
within those years, beginning December 15, 2018 for non-public
entities. The new revenue standard may be applied
retrospectively to each prior period presented or
retrospectively with the cumulative effect recognized as of the
date of adoption. The adoption of ASU 2014-09 had no material
impact on the Companys financial statements and related
disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic
842), or ASU 2016-02, which supersedes the guidance in ASC 840,
Leases. The new standard requires lessees to apply a dual
approach, classifying leases as either finance or operating
leases based on the principle of whether or not the lease is
effectively a financed purchase by the lessee. This
classification will determine whether lease expense is
recognized based on an effective interest method or on a
straight-line basis over the term of the lease. A lessee is also
required to record a right-of-use asset and a lease liability
for all leases with a term of greater than 12 months regardless
of their classification. Leases with a term of 12 months or less
will be accounted for similar to existing guidance for operating
leases today. This guidance is effective for annual reporting
periods beginning after December 15, 2019 for non-public
entities. The adoption of ASU 2016-02 had no material impact on
the Companys financial statements and related disclosures.
In March 2016, the FASB issued ASU 2016-09, Improvements to
Employee Share-based Payment Accounting, or ASU 2016-09. ASU
2016-09 simplifies several aspects of the accounting for share-
based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash flows.
Some of the areas of simplification apply only to non-public
companies. This guidance was effective on December 31, 2016 for
public entities. For entities other than public business
entities, the amendments are effective for annual periods
beginning after December 15, 2017, and interim periods within
annual periods beginning after December 15, 2018. Early adoption
is permitted for an entity in any interim or annual period for
which financial statements have not been issued or made
available for issuance. An entity that elects early adoption
must adopt all amendments in the same period. The adoption of
ASU 2016-09 had no material impact on the Companys financial
statements and related disclosures.
In May 2017, the FASB issued ASU 2017-09, CompensationStock
Compensation (Topic 718): Scope of Modification Accounting, or
ASU 2017-09, which clarifies when to account for a change to the
terms or conditions of a share-based payment award as a
modification. Under the new guidance, modification accounting is
required only if the fair value, the vesting conditions, or the
classification of the award (as equity or liability) changes as
a result of the change in terms or conditions. This guidance is
effective for annual reporting periods, and interim periods
within those years, beginning after December 15, 2017, for both
public entities and non-public entities. Early adoption is
permitted. The adoption of ASU 2017-09 had no material impact on
the Companys financial statements and related disclosures.
NOTE D- EQUITY
Under the Companys original articles of incorporation currently
in effect, the Company authorized 17,857,143 shares of $0.0001
par value Common Stock.
As of December 31, 2019, the number of common shares issued and
outstanding was 14,782,630.
NOTE E- DEBT
In 2017, the company issued a note to a related party in
exchange for cash for the purpose of funding continuing
operations (the Related Party Note Payable). The note does not
accrue interest and is payable at a future date to be determined
by management. During 2018 and 2017, the Company capitalized no
interest related to the note.
In 2018, the company issued a loan payable in exchange for cash
for the purpose of funding continuing operations (the Note
Payable). The note incurs an annual interest rate of 35.6% on
any remaining monthly balance. This interest is paid each month
on the remaining loan balance. Minimum monthly payments are
equal to $4,872.
NOTE F- FAIR VALUE MEASUREMENTS
Fair value is an exit price, representing the price that would
be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants based on the
highest and best use of the asset or liability. As such, fair
value is a market-based measurement that should be determined
based on assumptions that market participants would use in
pricing an asset or liability. The Company uses valuation
techniques to measure fair value that maximize the use of
observable inputs and minimize the use of unobservable inputs.
These inputs are prioritized as follows:
Level 1 - Observable inputs, such as quoted prices for identical
assets or liabilities in active markets;
Level 2 - Inputs, other than the quoted prices in active
markets, that are observable either directly or indirectly, such
as quoted prices for similar assets or liabilities, or market-
corroborated inputs; and
Level 3 - Unobservable inputs for which there is little or no
market data which require the reporting entity to develop its
own assumptions about how market participants would price the
assets or liabilities.
The valuation techniques that may be used to measure fair value
are as follows:
Market approach - Uses prices and other relevant information
generated by market transactions involving identical or
comparable assets or liabilities.
Income approach - Uses valuation techniques to convert future
amounts to a single present amount based on current market
expectations about those future amounts, including present value
techniques, option-pricing models, and excess earnings method.
Cost approach - Based on the amount that currently would be
required to replace the service capacity of an asset
(replacement cost).
NOTE G- CONCENTRATIONS OF RISK
Financial instruments that potentially subject the Company to
credit risk consist of cash and cash equivalents. The Company
places its cash and cash equivalents with a limited number of
high-quality financial institutions and at times may exceed the
amount of insurance provided on such deposits.
NOTE H- SUBSEQUENT EVENTS
Management considered events subsequent to the end of the period
but before April 21, 2021, the date that the financial
statements were available to be issued.
ATLIS MOTOR VEHICLES, INC EXHIBIT LIST INDEX - EX1A-15 UNDERWRITING AGREEMENT - EX1A-1 ARTICLES OF INCORPORATION - EX1A-2A BYLAWS - EX1A-2B AMENDMENTS TO BYLAWS - EX1A-3 BOARD RESOLUTION - EX1A-3 INDEPENDENT AUDITOR'S REPORT - EX1A-9 SIGNATURES - EX-96
BROKER-DEALER SERVICES AGREEMENT
This Broker-Dealer Service Agreement ("Agreement") is made and
entered into as of March 21 , 2020 by and between JumpStart
Securities, LLC ("Jumpstart", "us, "our", or "we") and Atlis Motor
Vehicles ("Issuer", "you" or "your").
Whereas, Jumpstart is a broker-dealer registered with the
Securities and Exchange Commission and a member of the Financial
Industry Regulatory Authority ("FINRA") providing capital markets
compliance and other services for market participants, including
issuers conducting offerings of securities pursuant to exemptions
from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act"), including Regulation A, as
amended. In servicing this market, Jumpstart has created and
maintains proprietary tools and technology, negotiated third-party
integrations, and has developed operational services, including
limited customer service and compliance, to provide certain
back-end tools and specific compliance services to issuers raising
capital, and,
Whereas, Issuer is undertaking a capital raising effort pursuant
to the exemption from registration (the "Offering"); and,
Whereas Issuer recognizes the benefit of having Jumpstart as a
regulated market participant, provide certain support services as
described herein for proposed investors in its Offering, and
therefore Issuer desires to retain Jumpstart and Jumpstart desires
to be retained by Issuer pursuant to the terms and conditions set
forth herein.
Now, therefore, in consideration of the mutual promises and
covenants contained herein and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
1. Retention:
a. Issuer hereby retains Jumpstart to provide the services set
forth in Section 2 below (the "Services") during the Offering period,
commencing on the date hereof and until the earlier of the
completion or cancellation of the Offering or the termination of
this Agreement as provided in Section 8 hereof.
b. Jumpstart shall serve as the back-office service provider for
all potential investors in the Offering as requested by the Issuer.
However, Jumpstart will not provide services for any investors who
are introduced to the Offering by a registered broker-dealer that
entered into a selling agreement with Issuer.
c. Issuer agrees to provide Jumpstart with due diligence information
and materials as it reasonably requests and undertakes to update
such information and materials throughout the Offering as may be
necessary for accuracy.
d. Jumpstart will not advise Issuer or any prospective investor
with respect to the Offering, or the terms and structure thereof,
which will be determined solely and exclusively by Issuer and its
advisers in meeting its capital needs, but will assist in advising
concerning marketing and distribution. Issuer will provide Jumpstart
with copies of the Offering materials and disclosures, including the
investor subscription agreement and the offering circular
(collectively, the "Offering Circular"). Under no circumstances shall
any communication, whether oral or written, be construed or relied
on by Issuer as advice from Jumpstart. Issuer acknowledges that
Jumpstart is not acting as a placement agent or underwriter for the
Offering and has not and will not at any time provide any securities,
financing, legal or accounting advice to Issuer. Issuer represents
that it will only rely on the advice of its securities counsel,
accountants and/or auditors, and any placement agent or underwriter.
Further, Issuer acknowledges and understands that Jumpstart will not
have any direct communication with investors other than unsolicited
contact that will be redirected to Issuer or Issuer's designees.
2. Services:
a. JumpStart Securities Responsibilities -
JumpStart agrees to:
i. Phase one:
A. Advisory services, covering in-depth analysis and assessment
activities on the offering, business feasibility, business
analysis, marketing approach, management experience with offerings,
and certain out-of-pocket expenses for other analysis
work/activities, such as legal work, diligence, etc.
ii. Phase two:
A. As part of a fee selection in Section 3c, JumpStart Securities
may Market the offering to its previous investors, potential
investors, and solicit interest from investors that meet the
suitability, sophistication, and purchase criteria for the Offering;
B. Accept investor data from Issuer, generally via any software
system used to capture investors, but also via other means
as may be established by mutual agreement of the Parties;
C. Review and process information from potential investors,
including but not limited to running reasonable background
checks for anti-money laundering ("AML."), IRS tax fraud
identification and USA PATRIOT Act purposes, and gather and review
responses to customer identification information;
D. Verification of accredited investor status of each investor,
as applicable in Regulation D, Rule 506c offerings;
E. Review subscription agreements received from prospective
investors to confirm they are complete;
F. Contact Issuer and/or Issuer's designees, if needed, to
gather additional information or clarification from
prospective investors;
G. Advise Issuer as to permitted investment limits for investors
pursuant to Regulation D, Rule 506(c);
H. Provide Issuer with prompt notice about inconsistent,
incorrect or otherwise flagged (e.g. for underage or AML reasons)
subscriptions;
I. Serve as registered agent where required for state blue sky
requirements, but in no circumstance will Jumpstart solicit a
securities transaction, recommend the Issuer's securities or provide
investment advice to any prospective investor;
J. Transmit data to transfer agent as book-entry data for
maintaining Issuer's responsibilities for managing investors
(investor relationship management, aka "CRM") and for maintaining
future good-delivery and recordkeeping;
K. Transmit any checks received from subscribers promptly upon
settlement.
b. Issuer Responsibilities - Issuer agrees to:
i. Refer investor data, at its sole and arbitrary discretion,
to Jumpstart Securities;
ii. Ensure investors understand they are making a "self-directed"
decision, and provide Jumpstart with all information and data
required to ascertain whether the investor is eligible to
invest in the Offering and the investment threshold, if applicable;
iii. Immediately, but not later than within 24 hours, notify
Jumpstart with details of any notices, requests, complaints or
actions of or by any regulators, law enforcement, investors, trade
associations or legal counsel regarding the Offering;
iv. Comply with state and federal laws and rules; and
v. Not compensate any unregistered person directly or indirectly
with any fees, commissions or other consideration based upon the
amount, sale of securities or success of an Offering.
c. Marketing of Offering - Issuer represents that it will ensure
the marketing and promotional activities it engages in, as related
to the Offering, are not materially misleading and in compliance
with all SEC rules and regulatory guidance, as well as industry best
practices. Issuer will not compensate any person for directly
selling securities unless such person is associated with a FINRA
member brokerdealer and is appropriately registered with both the
SEC and the state(s) in which the investors reside. Issuer may use
Jumpstart's name but only to extent set forth in Section 6 of this
Agreement.
3. Compensation: For services provided under this Agreement, the
terms and payments shall be:
a. Advisory Service Fee. We will pay Jumpstart Securities, LLC a
$10,000 advisory fee for providing initial analysis work in the
first phase of services.
b. Administrative Service Fees: During the second phase of
services, additionally, we will pay Jumpstart Securities, LLC the
following administrative service fee:
1) fee per AML check executed, below,
2) fee per AML exception, as described in the fees below, and
3) accredited investor verification fee.
Administrative service fees will be charged to Issuer at
the time of the subscription.
i. US Individual $2
ii. US Entity $5
iii. CA/UK Individual $5
iv. CA/UK Entity $75
v. International Individual $60
vi. International Entity $75
vii. AML Exceptions $15O/investor owed upon exception
viii. Investor verification $45/verification owed upon subscription
c. Broker-Dealer Close Fees: During the second phase of services,
a broker-dealer fee will be as selected below. Please select one.
Marketing fee, including broker of record service fee of 3.25%
(three and one quarter percent) of the aggregate amount of gross
Offering proceeds received, and that are accepted, by the Issuer
for use of Jumpstart's marketing services in state notice filings
required for the Offering and review of subscription information
for accuracy, completeness, and compliance with Regulation D
guidelines. Such fee shall not apply for any investor purchasing
directly through Issuer wherein such investor is a contact of
Issuer, and shall not apply to any investor referred by any other
broker-dealer to Issuer.
(selected} Broker of record fee of 1.50% (one and one half percent)
of the aggregate amount of gross Offering proceeds received, and
that are accepted by the Issuer.
Fees may be reduced on a case-by-case basis, or as required in
compliance with FINRA rules. For these purposes, an email from
Jumpstart to Issuer will constitute sufficient evidence of an
alteration of the fees contained in this Agreement. Any alteration
to the fees shall not be interpreted to be, or constitute an
amendment or general waiver of other terms of this Agreement unless
specifically set forth by Jumpstart in writing.
d. Expenses: Issuer will be responsible for and pay directly (i) fees
due to FINRA for filings made with respect to the Offering, if
necessary. Pre-approved Travel and Offering expense reimbursements
may also be paid to Jumpstart Securities for out-of-pocket
expenses (not to exceed $2,500). If expenses are expected to exceed
$2,500 they will be pre-approved. Receipts would be presented with
the requested reimbursements.
e. Payment Terms: Jumpstart will charge Administrative service fees
directly to Issuer via ACHdebit and Issuer hereby authorizes such
payment. Brokerage service fees are due upon the sale of securities
to investors and Issuer agrees and directs that they will be paid
from the flow of funds upon the acceptance by the Issuer of any
investor, with such acceptance being conditional on the terms of the
Offering. Once the Issuer countersigns the investor subscription
the investors are accepted. The parties shall have the reasonable
right to obtain documentation concerning the details of the payments
due.
4. Warranties and Representations: The Issuer and Jumpstart
represent and warrant that each has all requisite power and authority
to enter into and carry out the terms and provisions of this
Agreement and the execution, delivery and performance of this
Agreement does not breach or conflict with any agreement, document
or instrument to which it is a party or bound, and further:
a. Jumpstart warrants and represents to the Issuer that:
i. It is an SEC registered, FINRA member, SIPC insured firm in good
standing and licensed to conduct securities business;
ii. It is duly registered in states where investors reside;
iii. Its personnel who provide services to the Issuer are licensed
securities representatives and/or principals, as required by
regulations for the business being conducted;
iv. It will not compensate any unregistered person with any fees
based upon the amount or success of any investment in the
Offering;
v. It will not solicit or sell investors any other services or
investment products; and
vi. It will not provide any investment advice nor any investment
solicitation or recommendations to any investor.
b. Issuer warrants and represents to Jumpstart that:
i. The offering materials will be complete and correct in all
material respects and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
ii. It will duly comply with all applicable state and Federal
laws, rules and regulations and make all filings as required.
5. Non-Exclusivity, No Underwriting: This Agreement is
non-exclusive and shall not be construed to prevent either party
from engaging in any business activities.
6. Limited License of Trademarks. During the term of this
Agreement, Issuer may request to use Jumpstart's name, logo and
trademarks on its website and other marketing materials, but
Jumpstart must approve in advance the specific usesnintended by
Issuer. Generally, the use of Jumpstart's name, logo or trademarks
is not used in a manner that implies the Offering is endorsed,
recommended, or vetted by Jumpstart, or that Issuer or its
agents are authorized to act as a securities agent or a
representative of Jumpstart. Furthermore, it is agreed that
Jumpstart and Issuer each, in perpetuity, have the option to use
the name and logo of one another in disclosing the existence of
this business relationship.
7. Independent Contractor: It is agreed that Jumpstart and Issuer
are independent contractors for the business and services provided
hereunder. Under no circumstances shall this Agreement be deemed
to imply or infer that Issuer and Jumpstart have anything other
than an arm's length and independent relationship. Both Jumpstart
and Issuer shall be individually responsible and liable for their own
respective federal, state, local and other taxes or fees, as well
as all costs associated with their businesses. Jumpstart is not a
fiduciary of the Issuer or its management or board of directors in
regard to any of the Services provided under this Agreement.
8. Term and Termination: This Agreement is effective beginning
on the date set forth above through the completion or cancellation of
the Offering unless terminated by either Party pursuant to
this Section 8.
a. Either Party may terminate their participation in this Agreement
without cause by giving 10 days' notice via email to the other at any
time. Such termination shall only affect future business and not
apply to transactions or other business conducted prior to the
date of termination.
b. Either Party may terminate their participation in this Agreement
for a material breach of this Agreement immediately by giving notice
via email to the other at any time. Such termination shall only
affect future business and not apply to transactions or other
business conducted prior to the date of termination. The
non-breaching Party has the sole discretion to grant a period to cure
by giving notice via email of the time period for such cure.
However, the grant of a cure period does not waive any
indemnification or rights of the non-breaching Party to pursue all
remedies.
c. In the event of any termination, the responsibilities of each
party detailed in Section 2 shall cease.
d. If the agreement is terminated by Issuer, Issuer will reimburse
Jumpstart for its actual, documented out-of-pocket expenses up to an
aggregate cap of $10,000 (except if termination is for breach of the
Agreement by Jumpstart).
9. Mutual Indemnification: The Parties hereby agree as follows:
a. To the extent permitted by law, the Issuer will indemnify
Jumpstart and its affiliates, stockholders, directors, officers,
employees and controlling persons (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) against
all losses, claims, damages, expenses and liabilities, as the same
are incurred (including the reasonable fees and expenses of counsel),
relating to or arising out of its activities hereunder or pursuant
to this engagement letter, except to the extent that any losses,
claims, damages, expenses or liabilities (or actions in respect
thereof) are found in a final judgment (not subject to appeal) by a
court of law to have resulted primarily and directly from
Jumpstart's willful misconduct or gross negligence in performing
the services described herein.
b. Promptly after receipt by Jumpstart of notice of any claim or
the commencement of any action or proceeding with respect to which
Jumpstart is entitled to indemnity hereunder, Jumpstart will notify
the Issuer in writing of such claim or of the commencement of
such action or proceeding, and the Issuer will assume the defense
of such action or proceeding and will employ counsel reasonably
satisfactory to Jumpstart and will pay the fees and expenses of such
counsel. Notwithstanding the preceding sentence, Jumpstart will be
entitled to employ counsel separate from counsel for the Issuer and
from any other party in such action if counsel for Jumpstart
reasonably determines that it would be inappropriate under
the applicable rules of professional responsibility for the
same counsel to represent both the Issuer and Jumpstart. In such
event, the reasonable fees and disbursements of no more than one
such separate counsel will be paid by the Issuer, in addition to
local counsel. The Issuer will have the exclusive right to
settle the claim or proceeding provided that the Issuer will not
settle any such claim, action or proceeding without the prior written
consent of Jumpstart, which will not be unreasonably withheld.
c. The Issuer agrees to notify Jumpstart promptly of the
assertion against it or any other person of any claim or the
commencement of any action or proceeding relating to a transaction
contemplated by this engagement letter.
d. If for any reason the foregoing indemnity is unavailable to
Jumpstart or insufficient to hold Jumpstart harmless, then the Issuer
shall contribute to the amount paid or payable by Jumpstart as a
result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect not only the relative
benefits received by the Issuer on the one hand and Jumpstart on the
other, but also the relative fault of the Issuer on the one
hand and Jumpstart on the other that resulted in such losses,
claims, damages or liabilities, as well as any relevant
equitable considerations. The amounts paid or payable by a party in
respect of losses, claims, damages and liabilities referred to above
shall be deemed to include any legal or other fees and
expenses incurred in defending any litigation, proceeding or
other action or claim. Notwithstanding the provisions hereof,
Jumpstart's share of the liability hereunder shall not be in excess
of the amount of fees actually received, or to be received, by
Jumpstart under this engagement letter (excluding any amounts
received as reimbursement of expenses incurred by Jumpstart).
10. Certain Placement Procedures. On or prior to the date the
securities are made available for purchase by subscribers for the
purchase and sale of the securities to subscribers in the Offering
(the "Closing Date"), Jumpstart shall have obtained from the Company
the following:
a. Officers' Certificate signed by the Chairman of the Board
or the Chief Executive Officer and the Secretary of the Company (in
their capacities as such) to the effect that the Company has
performed all covenants and complied with all conditions required
by this Agreement to be performed or complied with by the Company,
that the representations and warranties of the Company set forth
herein and the disclosure provided in the offering materials are
true and correct.
b. Secretary's Certificate signed by the Secretary ornAssistant
Secretary of the Company, respectively, certifying
(i) that the Certificate of Incorporation and Bylaws, as amended
of the Company are true and complete, have not been modified and are
in full force and effect,
(ii) that the resolutions of the Company's
Board of Directors relating to the public offering contemplated by
this Agreement are in full force and effect and have not been
modified,
(iii) as to the accuracy and completeness of allcorrespondence
between the Company or its counsel and the Commission, and (iv) as
to the incumbency of the officers of the Company. The documents
referred to in such certificate shall be attached to such
certificate.
c. Legal Opinion of Company Counsel and negative assurance
statement with respect to offering customarily provided in public
offerings addressed to Jumpstart Securities in form and substance
satisfactory to Jumpstart Securities.
11. Confidentiality and Mutual Non-Disclosure: It is acknowledged
that in the performance of this Agreement each party may become
aware of and/or in possession of confidential, non-public
information of the other party. Except as necessary in this
Agreement's performance, or as authorized in writing by a Party or
by law, the Parties (and their affiliated persons) shall not disclose
or make use of such non-public information. Nothing contained herein
shall be construed to prohibit the SEC, FINRA, or other government
official or entities from obtaining, reviewing, and auditing any
information, records, or data. Issuer acknowledges that regulatory
record-keeping requirements, as well as securities industry best
practices, require Jumpstart to maintain copies of practically all
data, including communications and Offering materials, regardless
of any termination of this Agreement. Notwithstanding the
foregoing, information which is, or was, in the public domain
(including having been published on the internet) is not subject to
this section.
12. Notices: All notices given pursuant to this Agreement shall be
in writing and sent via email to:
Jumpstart Securities, LLC
jonathan@jumpstartsecurities.com
13. Binding Arbitration, Applicable Law and Venue, Attorneys Fees:
This Agreement is governed by, and will be interpreted and enforced
in accordance with the regulations of the SEC and FINRA, and
laws of the State of New York, without regard to principles of
conflict of laws. Any claim or dispute arising under this Agreement
may only be brought in arbitration, pursuant to the rules of the
Financial Industry Regulatory Authority ("FINRA"), with venue in
New York City, New York. Each of the parties hereby consents to
this method of dispute resolution, as well as jurisdiction, and
waives any right it may have to object to either the method, venue
or jurisdiction for such claim or dispute. Any award an
arbitrator makes will be final and binding on all parties
and judgment on it may be entered in any court having jurisdiction.
Furthermore, the prevailing party shall be entitled to recover
damages plus reasonable attorney's fees .
14. Entire Agreement, Amendment, Severability and Force Majeure:
This Agreement contains the entire agreement between Issuer and
Jumpstart regarding this Agreement. If any provision of this
Agreement is held invalid, the remainder of this Agreement shall
continue in full force and effect. Furthermore, no party shall be
responsible for any failure to perform due to acts beyond its
reasonable control, including acts of regulators, acts of God,
terrorism, shortage of supply, labor difficulties (including
strikes), war, civil unrest, fire, floods, electrical outages,
equipment or transmission failures, internet interruptions, vendor
failures (including information technology providers), or other
similar causes. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof.
This Agreement must be amended in writing.
15. Counterparts; Facsimile. This Agreement may be executed in
counterparts, each of which will be deemed an original and all of
which, taken together, will constitute one and the same instrument,
binding on each signatory thereto. This Agreement may be executed
by signatures, electronically or otherwise, delivered by facsimile
or email, and a copy hereof that is properly executed and delivered
by a party will be binding upon that party to the same extent as an
original executed version hereof.
IN WITNESS WHEREOF, the parties have entered into this Agreement as
of the date set forth above.
JumpStart Securities, LLC
State of Delaware Secretary of State Division of Corporations Delivered 12:24 PM ll092016 FILED 12:24 PM ll092016 SR 20166560368 -File Number 6208650 CERTIFICATE OF INCORPORATION OF Atlis Motor Vehicles Inc. FIRST: The name of the corporation is: Atlis Motor Vehicles Inc. SECOND: Its registered office in the State ofDelaware is located at 16192 Coastal Highway, Lewes, Delaware 19958, County of Sussex. The registered agent in charge thereof is Harvard Business Services, Inc. THIRD: The purpose of the corporation is to engage in any lawful activity for which corporations may be organized under the General Corporation Law ofDelaware. FOURTH: The total number of shares of stock which the corporation is authorized to issue is 10,000,000 shares having a par value of $0.000100 per share. FIFTH: The business and affairs of the corporation sball be managed by or under the direction of the board of directors, and the directors need not be elected by ballot unless required by the bylaws ofthe corporation. SIXTH: This corporation shall be perpetual unless otherwise decided by a majority of the Board of Directors. SEVENTH: In furtherance and not in limitation of the powers conferred by the laws of Delaware, the board ofdirectors is authorized to amend or repeal the bylaws. EIGHTH: The corporation reserves the right to amend or repeal any provision in this Certificate oflncorporation in the manner prescribed by the laws of Delaware. NINTH: The incorporator is Harvard Business Services, Inc., whose mailing address is 16192 Coastal Highway, Lewes, DE 19958. TENTH: To the fullest extent permitted by the Delaware General Corporation Law a director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach offiduciary duty as a director. I, the undersigned, for the purpose of forming a corporation under the laws of the State of Delaware do make and file this certificate, and do certify that the facts herein stated are true; and have accordingly signed below, this November 09, 2016. Signed and Attested to by: Harvard Business Services, Inc., lncorporator By: Richard H. Bell, II, President STATEMENT OF INCORPORATOR ************************* IN LIEU OF ORGANIZATIONAL MEETING FOR Atlis Motor Vehicles Inc. November 9, 2016 We, Harvard Business Services, Inc., the incorporator of Atlis Motor Vehicles Inc. --a Delaware Corporation--hereby adopt the following resolution pursuant to Section 108 of the General Corporation Law of Delaware: Resolved: That the certificate of incorporation of Atlis Motor Vehicles Inc. was filed with the Secretary of State ofDelaware on November 9, 2016. Resolved: That on November 9, 2016 tl1e following persons were appointed as the initial Directors of the Corporation until their successors are elected and qualify: Mark A Hanchett Resolved: That the bylaws included with tllis resolution are the initial bylaws approved by the incorporator. Resolved: That the Secretary of the Company is hereby authorized and directed to execute a certificate of adoption ofthe bylaws or repeal the initial bylaws and create a custom set of bylaws to be adopted and approved by the directors. Resolved: The powers of this incorporator are hereby terminated, and saidincorporator shall no longer be considered a pair of the body corporate of the above nained corporation. This resolution shall be filed in the minute book of the company. HARVARD BUSINESS SERVICES, INC., Incorporator By: Richard H. Bell, President *** This document is not part of the public record. Keep it in a safe place. ***
BY-LAWS OF Atlis Motor Vehicles Inc. A DELAWARE CORPORATION ARTICLE I -REGISTERED AGENT AND REGISTERED OFFICE Section 1. The registered office of the corporation in the State of Delaware shall be r6r92 Coastal Highway, in the city of Lewes, County of Sussex. The registered agent in charge thereof shall be Harvard Business Services, Inc. Section 2. The corporation may also have offices at such other places as the Board of Directors may from time to time designate, in any State or County around the world. ARTICLE II-SEAL Section 1. The corporate seal shall have inscribed thereon the name of the corporation, the year; of its organization and the words "Corporate Seal, Delaware" or "Seal Delaware". ARTICLE III -STOCKHOLDERS MEETINGS Section 1. Meetings of stockholders may be held at any place, either within or without the State of Delaware and the USA, as may be selected from time to time by the Board of Directors. Section 2. Regular Meetings: Regular meetings of the stockholders shall be held without notice according to the schedule of the regular meetings of the stockholders which shall be distributed to each stockholder at the first meeting each year. The regular meetings shall be held at such place as shall be determined by the Board. Regular meetings shall not be required if deemed necessary by the Board. Section 3. Election of Directors: Elections of the Directors of the corporation nee not be by written ballot, in accordance with the Delaware General Corporation Law (DGCL). Section 4. Special Meetings: Special meetings of the stockholders may be called at any time by the president, or the Board of Directors, or stockholders entitled to cast at least one-fifth of the votes which all stockholders are entitled to cast at the particular meeting. Upon written request of any person or persons who have duly called a special meeting, it shall be the duty of the secretary to fix the date, place and time of the meeting, to be held not more than thirty days after the receipt of the request, and to give due notice thereof to all the persons entitled to vote at the meeting. Business at all special meetings shall be confined to the objects stated in the call and the matters germane thereto, unless all stockholders entitled to vote are present and consent. Written notice of a special meeting of stockholders stating the time and place of the meeting, and the object thereof, shall be given to each stockholder entitled to vote at least 5 days prior, unless a greater period of notice is required by statute in a particular case. Section 5. Quorum: A majority of the outstanding shares of the corporation entitled to vote, represented in a person or by proxy, shall constitute a quorum at a meeting of stockholders. If less than a majority of the outstanding shares entitled to vote is represented at a meeting, a majority of the shares so represented, may adjourn the meeting at anytime without further notice. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 6. Proxies: Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after one year from its date, unless the proxy provides for a longer period, as allowable by law. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. All proxies shall be filed with the Secretary of the meeting before being voted upon. Section 7. Notice of Meetings: Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 8. Consent In Lieu of Meetings: Any action required to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Section 9. List of Stockholders: The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. No share of stock of which any installment is due and unpaid shall be voted at any meeting. The list shall not be open to the examination of any stockholder, for any purpose, except as required by Delaware law. The list shall be kept either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. ARTICLE IV - DIRECTORS Section 1. The business and affairs of this corporation shall be managed by its Board of Directors. Each director shall be elected for a term of one year, and until his successor shall qualify or until his earlier resignation or removal. Section 2. Regular Meetings: Regular meetings of the Board of Directors shall be held without notice according to the schedule of the regular meetings of the Board of Directors which shall be distributed to each Board member at the first meeting each year. The regular meetings shall be held at such place as shall be determined by the Board. Regular meetings, in excess of the one Annual meeting (Alt. III Sec. 2) shall not be required if deemed necessary by the Board. Section 3. Special Meetings: Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors on 5 days notice to all directors, either personally or by mail, courier service, E-Mail or telecopy; special meetings may be called by the President or Secretary in like manner and on like notice by written request to the Chairman of the Board of Directors. Section 4. Quorum: A majority of the total number of directors shall constitute a quorum of any regular or special meetings of the Directors for the transaction of business. Section 5. Consent In Lieu of Meeting: Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. The Board of Directors may hold its meetings, and have an office or offices anywhere in the world, within or outside of the state of Delaware. Section 6. Conference Telephone: Directors may participate in a meeting of the Board, of a committee of the Board or of the stockholders, by means of voice conference telephone or video conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in this manner shall constitute presence in person at such meeting. Section 7. Compensation: Directors as such shall not receive any stated salary for their services, but by resolution of the Board, a fixed sum per meeting and any expenses of attendance, may be allowed for attendance at each regular or special meeting of the Board. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefore. stockholder. The demand under oath shall be directed to the corporation at its registered office or at its principal place of business. ARTICLE VIII-STOCK CERTIFICATES, DIVIDENDS, ETC. Section 1. The stock certificates of the corporation shall be numbered and registered in the Stock Transfer Ledger and transfer books of the corporation as they are issued. They shall bear the corporate seal and shall be signed by the President and the Secretary. Section 2. Transfers: Transfers of the shares shall be made on the books of the corporation upon surrender of the certificates therefore, endorsed by the person named in the certificate or by attorney, lawfully constituted in writing. No transfer shall be made which is inconsistent with applicable law. Section 3. Lost Certificate: The corporation may issue a new stock certificate in place of any certificate theretofore signed by it, alleged to have been lost, stolen, or destroyed. Section 4. Record Date: In order that the corporation may determine stockholders entitled to notice of or to vote at any meeting of stockholders on any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty days prior to any other action. Info record date is fixed: (a)The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if the notice is waived, at the close of the business on the day next preceding the day on which the meeting is held. (b )The record date for which determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed. (c)The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. (d)A determination of stockholders of record entitled to notice of or vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the Board of Directors may fix a new record date for the adjoined meeting. Section 5. Dividends: The Board of Directors may declare and pay dividends upon the outstanding shares of the corporation from time to time and to such extent as they deem advisable, in the manner and upon the terms and conditions provided by statute and the Certificate of Incorporation. Section 6. Reserves: Before payment of any dividend there may be set aside out of the net profits of the corporation such sum or sums as the directors, from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining the property of the corporation, or for such other purpose as the directors shall think conducive to the interests of the corporation, and the directors may abolish any such reserve in the manner in which it was created. ARTICLE IX-MISCELLANEOUS PROVISIONS Section 1. Checks: All checks or demands for money and notes of the corporation shall be signed by such officer or officers as the Board of Directors may from time to time designate. Section 2. Fiscal Year: The fiscal year shall begin on the first day of January of every year, unless this section is amended according to Delaware Law. Section 3. Notice: Whenever written notice is required to be given to any person, it may be given to such a person, either personally or by sending a copy thereof through the mail, or by telecopy (FAX), or by telegram, charges prepaid, to his address appearing on the books of the corporation of the corporation, or supplied by him to the corporation to have been given to the person entitled thereto when deposited in the United States mail or with a telegraph office for transmission to such person. Such notice shall specify the place, day and time of meeting and, in the case of a special meeting of stockholders, the general nature of business to be transacted. Section 4. Waiver of Notice: Whenever any written notice is required by statue, or by Certificate or the by-laws of this corporation a waiver thereof in writing, signed by the person or persons entitled to such a notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Except in the case of a special meeting of stockholders, neither the business to be transacted nor the purpose of the meeting need be specified in the waiver of notice of such meeting. Attendance of a person either in person or by proxy at any meeting shall constitute a waiver of notice of such meeting, except where a person attends a meeting for the express purpose of objecting to the transaction of any business because the meeting was unlawfully convened. Section 5. Disallowed Compensation: Any payments made to an officer or employee of the corporation such as a salary, commission, bonus, interest, rent, travel or entertainment expense incurred by him, which shall be disallowed in whole or in part as a deductible expense by the Internal Revenue Service, shall be reimbursed by such officer or employee to the corporation to the full extent of such disallowance. It shall be the duty of the directors, as a Board, to enforce payment of each amount disallowed in lieu of payment by the officer or employee, subject to the determination of the directors, propionate amounts may be withheld from his future compensation payments until the amount owed to the corporation has been recovered. Section 6. Resignations: Any director or other officer may resign at any time, such resignation to be in writing, and to take effect from the time of its receipt by the corporation, unless some time to be fixed in the resignation and then from that date. The acceptance of a resignation shall not be required to make it effective. ARTICLE X -LIABILITY Section 1. Stockholder liability is limited to the stock held in the corporation. Section 2. No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law, (i) for breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director deirived an improper personal benefit. No amendment to or repeal of this Article Eigth shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment. ARTICLE XI -AMENDMENTS Section 1. These bylaws may be amended or repealed by the vote of stockholders entitled to cast at least a majority of the votes which all stockholders are entitled to cast thereon, at any regular or special meetinig of the stockholders, duly convened after notice to the stockholders of that purpose.
CERTIFICATE OF AMENDMENT OF THE BYLAWS OF Atlls Motor Vehicles
The undersigned, who is the [duly elected and/or acting]
Secretary of Atlis Motor Vehicles, a Delaware corporation (the
"Company"), does hereby certify, as follows:
1. Section 5.1 of Article V of the Bylaws of the Company was
amended, by unanimous written consent of the Board, on December
12, 2017, to read in its entirety, as follows:
"Section Certificate of Shares. Shares of the corporation's
stock may be certified or uncertified, as provided under
Delaware law, and shall be entered in the books of the
corporation and registered as they are issued. Certificates
representing shares of the corporation's stock shall be signed
in the name of the corporation by the chairman of the board or
vice chairman of the board or the chief executive officer or
president or vice president and by the chief financial officer
or an assistant treasurer or the secretary or any assistant
secretary, certifying the number of shares and the class or
series of shares owned by the shareholder Any or all of the
signatures on the certificate may be facsimile. In the event
that any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed on the certificate
shall have ceased to be that officer, transfer agent, or
registrar before that certificate is issued, it may be issued by
the corporation with the same effect as if that person were an
officer, transfer agent, or registrar at the date of Issue.
Within a reasonable time after the issuance or transfer of
uncertified shares, the corporation shall send to the registered
owner thereof a written notice that shall set forth the name of
the corporation, that the corporation is organized under the
laws of the State of Delaware, the name of the shareholder, the
number and class (and the designation of the series, if any) of
the shares represented, and any restrictions on the transfer or
registration of such shares imposed by the corporation's
certificate of incorporation, these by-laws, any agreement among
shareholders or any agreement between shareholders and the
corporation."
2. Section 5.1 of Article V of the Bylaws of the Company was
amended, by unanimous written consent of the Board, on DECEMBER
12, 2017, to read in its entirety, as follows:
"Section 5.2. Lost Certificates. Except as provided In this
Section 5.2, no new certificates for shares or uncertified
shares shall be issued to replace an old certificate unless the
latter Is surrendered to the corporation and cancelled at the
same time. The board of directors may, in case any share
certificate or certificate for any other security is lost,
stolen, or destroyed, authorize the issuance of a replacement
certificate of stock, or uncertified shares in place of a
certificate previously issued by it on such terms and conditions
as the board may require, including provision for
indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against
any claim that may be made against it, including any expense or
liability on account of the alleged loss, theft, or destruction
of the certificate or the issuance of the replacement
certificate or uncertified shares."
3. The foregoing amendments to the Bylaws of the corporation
have not been modified, amended, rescinded, or revoked and
remain in full force and effect on the date hereof
The undersigned has executed this Certificate as of December 12,
2017
~
Mark Hanchett Chief Executive Officer and Director
Name /Title
UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS
OF
Atlis Motor Vehicles a Delaware Corporation
The undersigned, being all of the directors of Atlis Motor
Vehicles a Delaware corporation (the "Company"), pursuant to
Del. Code Ann . Title 8 § 141 hereby consent, approve and
adopt the following resolutions as if duly adopted at a special
meeting of the Board of Directors held for this purpose
WHEREAS, it has been proposed that the Company sell and offer up
to $1,035,714 in Common Stock (the "Securities") through
[concurrent offerings under Regulation Crowdfunding and
Regulation D (the "Concurrent Offerings")] OR [an offering under
Regulation Crowdfunding (the "Offering")] under the Securities
Act of 1933, as amended (the "Securities Act");
Regulation Crowdfunding Offering
WHEREAS, it has been proposed that the Company sell and offer up
to $1,035,714 in Securities through an offering under Regulation
Crowdfunding under the Securities Act, (the "Crowdfunding
Offering"), pursuant to the terms of a subscription agreement by
and among the Company and the investors party thereto (the
"Subscription Agreement"), substantially in the form attached
hereto as Exhibit A; and an Offering Memorandum on Form C that
has been reviewed by the Board (the "Memorandum");
WHEREAS, the Board has been presented with and reviewed the
Memorandum, and deems it to be in the best interests of the
Company to authorize and approve the Memorandum and for the
Company to engage in the Crowdfunding Offering;
WHEREAS, to comply with Regulation Crowdfunding, the Company
must file a Form C with the Securities and Exchange Commission
(the "SEC"), use an online portal to communicate the
Crowdfunding Offering, have an independent certified public
accountant conduct a financial review and enter into agreements
with a transfer agent and an escrow agent;
NOW, THEREFORE BE IT RESOLVED, that the directors hereby
authorize and approve the Memorandum and the Crowdfunding
Offering, and the issuance of the Securities pursuant to the
terms thereof;
Regulation D Offering
WHEREAS, it has been proposed that the Company sell and offer up
to $1,03S,714 in Securities through an offering under Regulation
D under the Securities Act (the "Regulation D Offering"),
pursuant to the terms of a [subscription/purchase] agreement by
and among the Company and the investors party thereto {the
"Regulation D Agreement"), substantially in the form attached
hereto as Exhibit B;
NOW, THEREFORE BE IT RESOLVED, that the directors hereby
authorize and approve the Regulation D Offering, and the
issuance of Regulation D Securities;
RESOLVED, that the form, terms and provisions of the Regulation
D Agreement be, and they hereby are, in all respects, approved
and adopted, and that the transactions contemplated by the
Regulation D Agreement, including the issuance of the Regulation
D Securities, be, and they hereby are, in all respects approved,
and, further, that the Authorized Officers be, and each of them
hereby is, authorized and directed in the name and on behalf of
the Company, and under its corporate seal or otherwise, to
execute and deliver the Regulation D Agreement in substantially
such form, with such changes therein as the Authorized Officer
executing the same shall, by the execution thereof, approve, and
cause the Company to perform its obligations thereunder
Subscription Agreement
RESOLVED, that the form, terms and provisions of the
Subscription Agreement by and among the Company and the
investors party thereto, a copy of which has been submitted in
substantially final form to each director of the Company and is
attached hereto as Exhibit A, be, and they hereby are, in all
respects, approved and adopted, and that the transactions
contemplated by the Subscription Agreement, including the
issuance of the Securities for a price of $0.29 per Security
payable as set forth in the Subscription Agreement, be, and they
hereby are, in all respects approved, and, further, that the
officers of the Company (the "Authorized Officers") be, and each
of them hereby is, authorized and directed in the name and on
behalf of the Company, and under its corporate seal or
otherwise, to execute and deliver the Subscription Agreement in
substantially such form, with such changes therein as the
Authorized Officer executing the same shall, by the execution
thereof, approve, and cause the Company to perform its
obligations thereunder
Uncertificated Securities
RESOLVED, that the Securities shall be uncertificated and the
Authorized Officers shall record the investor name, address and
number of Securities held by each purchaser on the Company's
books and records (including books and records kept in digital
form oniine). In the event a holder requests a written record of
their investment within a reasonable time, the Authorized
Officers are authorized to prepare and deliver a written notice
setting forth the holder's name, the amount of Securities held
and any restrictions on the transfer or registration of said
Securities imposed by the Certificate of incorporation, the
Company's bylaws and the Subscription Agreement or by law or
regulation.
Amendments to the Company's Bylaws
WHEREAS, Section 5.1 of the Bylaws of the Company as adopted on
December 12 provide that shares of the Company shall be in
certificated form and the issuance of certificates Is not
contemplated in the [Offering] [Concurrent Offerings];
RESOLVED, that the amendments to the Company's Bylaws set out in
the Certificate of Amendment attached hereto as Exhibit C, be,
and hereby are, authorized and that the Authorized Officers are
authorized to effect such amendment.
Filing of the Form C
RESOLVED, that the Authorized Officers are, and each of them
acting singly is, authorized, in the name and on behalf of the
Company, to cause to be compiled and filed with the SEC such
Form C in the form required.
Online Portal
RESOLVED, that Start Engine Capital, LLC (" Start Engine") shall
be engaged to provide the online portal required for a
Crowdfunding Offering and that the Authorized Officers be, and
each of them hereby is, authorized and directed in the name and
on behalf of the Company, and under its corporate seal or
otherwise, to enter into an agreement with Start Engine in
connection with the Crowdfunding Offering and cause the Company
to perform its obligations thereunder
Due Diligence
RESOLVED, that CrowdCheck, Inc. shall be retained to assist in
the Form C preparation process and to conduct due diligence on
the Memorandum, campaign page and other disclosures required for
the Crowdfunding Offering and that the Authorized Officers be,
and each of them hereby is, authorized and directed In the name
and on behalf of the Company, and under its corporate seal or
otherwise, to enter into an agreement with CrowdCheck, Inc. in
connection with the Crowdfunding Offering and cause the Company
to perform Its obligations thereunder
Financial Review
RESOLVED, that Jason M Tyra CPA, PLLC ("CPA") shall be retained
to conduct the required financial review of the Company's 2016
and 2017 financial statements and that the Authorized Officers
be, and each of them hereby is, authorized and directed in the
name and on behalf of the Company, and under its corporate seal
or otherwise, to enter into an agreement with CPA in connection
with Crowdfunding Offering and cause the Company to perform its
obligations thereunder
Escrow Agent
RESOLVED, that [Prime Trust] shall be appointed escrow agent and
that the Authorized Officers be, and each of them hereby is,
authorized and directed in the name and on behalf of the
Company, and under its corporate seal or otherwise, to enter
into an agreement with said escrow agent in connection with the
Crowdfunding Offering and cause the Company to perform its
obligations thereunder
Transfer Agent
RESOLVED, that [Fund America Stock Transfer, LLC] shall be
appointed transfer agent and that the Authorized Officers be,
and each of them hereby is, authorized and directed in the name
and on behalf of the Company, and under Its corporate seal or
otherwise, to enter Into an agreement with said transfer agent
in connection with the Crowdfunding Offering and cause the
Company to perform its obligations thereunder
General Authorization
RESOLVED FURTHER, that the Authorized Officers of the Company
are hereby severally authorized and directed to take, or cause
to be taken, all actions in the name and on behalf of the
Company, that such officers determine are necessary or advisable
to consummate the transactions contemplated by, or otherwise to
effect the purposes of, the foregoing resolutions, including,
but not limited to, signing, certifying to, verifying,
acknowledging, delivering, accepting, filing and recording all
agreements, instruments and documents related to any of the
resolutions.
RESOLVED FURTHER that all acts of the officers of the Company
taken before the date hereof in connection with matters referred
to in these resolutions are hereby ratified, approved and
adopted as acts of the Company.
IN WITNESS WHEREOF, the undersigned have executed this unanimous
written consent effective as of December 12, 2017
-
Name: Mark Hanchett, Chief Executive Officer, Director
EXHIBIT B
REGULATION D AGREEMENT
EXHIBIT A SUBSCRIPTION AGREEMENT
EXHIBIT C
CERTIFICATE OF AMENDMENT OF THE BYLAWS OF Atlis Motor Vehicles
The undersigned, who is the [duly elected and/or acting]
Secretary of Atlis Motor Vehicles, a Delaware corporation (the
"Company"), does hereby certify, as follows:
1. Section 5.1 of Article V of the Bylaws of the Company was
amended, by unanimous written consent of the Board, on December
12, 2017, to read in its entirety, as follows:
"Section Certificate of Shares. Shares of the corporation's
stock may be certified or uncertified, as provided under
Delaware law, and shall be entered in the books of the
corporation and registered as they are issued. Certificates
representing shares of the corporation's stock shall be signed
in the name of the corporation by the chairman of the board or
vice chairman of the board or the chief executive officer or
president or vice president and by the chief financial officer
or an assistant treasurer or the secretary or any assistant
secretary, certifying the number of shares and the class or
series of shares owned by the shareholder Any or all of the
signatures on the certificate may be facsimile. In the event
that any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed on the certificate
shall have ceased to be that officer, transfer agent, or
registrar before that certificate is issued, it may be issued by
the corporation with the same effect as if that person were an
officer, transfer agent, or registrar at the date of issue.
Within a reasonable time after the issuance or transfer of
uncertified shares, the corporation
shall send to the registered owner thereof a written notice that
shall set forth the name of the
corporation, that the corporation is organized under the laws
ofthe State of Delaware, the
name of the shareholder, the number and class (and the
designation of the series, if any) of the
shares represented, and any restrictions on the transfer or
registration of such shares imposed
by the corporation's certificate of incorporation, these by-
laws, any agreement among shareholders or any agreement between
shareholders and the corporation."
2. Section 5.1 of Article V of the Bylaws of the Company was
amended, by unanimous written consent of the Board, on DECEMBER
12, 2017, to read in its entirety, as follows:
"Section 5.2. Lost Certificates. Except as provided in this
Section 5.2, no new certificates for shares or uncertified
shares shall be issued to replace an old certificate unless the
latter is surrendered to the corporation and cancelled at the
same time. The board of directors may, in case any share
certificate or certificate for any other security is lost,
stolen, or destroyed, authorize the issuance of a replacement
certificate of stock, or uncertified shares in place of a
certificate previously issued by it on such terms and conditions
as the board may require, including provision for
indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against
any claim that may be made against it, including any expense or
liability on account of the alleged loss, theft, or destruction
of the certificate or the issuance of the replacement
certificate or uncertified shares."
3. The foregoing amendments to the Bylaws of the Corporation
have not been modified, amended, rescinded, or revoked and
remain in full force and effect on the date hereof
The undersigned has executed as of December 12, 2017
Mark Hanchett Chief Executive Officer and Director
Name /Title
BOARD RESOLUTION Whereas Atlis Motor Vehicles, Inc shall continue to operate with its research and development of an electric motor vehicle; Whereas authority to create separate and distinct classes of common stock is necessary for Atlis Motor Vehicles, Inc to continue raising funds for further operations while maintaining voting control; NOW THEREFORE, BE IT RESOLVED that the Board of Directors of Atlis Motor Vehicles, Inc hereby authorize the creation of the following classes of common stock Class A Class A common stock has 1 vote per share. This Class A classification shall be applied to all issued common stock unless noted otherwise. Class B Class B common stock has no voting power. This Class B classification is reserved for future issues of common stock. Class C Class C common stock is Non-participating Preferred Common Stock. This Class C common stock has 1 vote per share. Class C stock receives non-participating preferred liquidation preference. Upon a sale or transfer of Class C stock, Class C stock shall be converted to Class A stock. Holder of Class C stock has the right to a board seat. Class D Class D classification of stock has 10 votes per share. This Class D classification may be used for future issues of common stock. Upon termination or resignation of employment all Class D stock vested to employee shall convert to Class A stock. Approved: Mark Hanchett / Date 3-6-2020 Chairman, Director CERTIFICATION I, the undersigned, do hereby certify: 1. That I am the duly elected and acting Secretary of Atlis Motor Vehicles, Inc; and 2. That the foregoing constitutes a Resolution of the Board of said corporation, as duly adopted at a meeting of the Bord of Directors thereof, held on the 6 day of March 2020. IN WHITNESS WHEREOF, I have hereunto subscribed by name and affixed the seal of said corporation, this 6 day of March, 2020. Corporate Secretary, Atlis Motor Vehicles, Inc
ATLIS MOTOR VEHICELS, INC.
Audited Financial Statements For The Years
Ended December 31, 2019 and 2018
Independent Auditor's Report
To Management
Atlis Motor Vehicles, Inc.
Mesa, AZ
We have audited the accompanying balance sheet of Atlis Motor
Vehicles, Inc. as of April 21, 2020, and the related statements
of income, retained earnings, and cash flows for the year 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 misstatement. 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 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.
Opinion
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Atlis
Motor Vehicles, Inc. as of April 21, 2020, and the results of its
operations and its cash flows for the year then ended in
accordance with accounting principles generally accepted in the
United States of America.
Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note B, certain conditions raise an uncertainty about the Company's
ability to continue as a going concern. Management's plans in regard
to these manners are also described in Note B. The accompanying
financial statements do not include any adjustments that might result
from the outcome of this uncertainty. Our conclusion is not modified
with respect to this manner.
Jason M. Tyra, CPA, PLLC
Dallas, TX
April 21, 2020
1700 Pacific Avenue, Suite 4710
Dallas, TX 75201
(P) 972-201-9008
(F) 972-201-9008
info@tyracpa.com
www.tyracpa.com
FINANCIAL STATEMENTS
ATLIS MOTOR VEHICLES, INC.
INCOME STATEMENT
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2019 2018
Operating Income
Sales $ 2,287 $ -
2,275
Gross Profit 12 -
Operating Expense
Salaries 182,176 209,595
Legal & Professional 89,159 77,806
General & Administrative 89,021 30,340
Research & Development 50,428 106,720
Advertising 34,141 147,355
Payroll Taxes 14,486 14,563
Depreciation 4,130 4,130
Rent 630 -
464,171 590,508
Net Income from Operations (464,159) (590,508)
Other Income (Expense)
Interest Expense (6,219) (5,354)
Net Income $ (470,378) $ (595,862)
ATLIS MOTOR VEHICLES, INC.
BALANCE SHEET 2018 and 2019
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2019 2018
ASSETS
CURRENT ASSETS
Cash $ 5,074 $ (1,500)
TOTAL CURRENT ASSETS 5,074 (1,500)
NON-CURRENT ASSETS
Fixed Assets 20,648 20,648
Accumulated Depreciation (8,260) (4,130)
TOTAL NON-CURRENT ASSETS 12,388 16,518
TOTAL ASSETS 17,462 15,018
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable - 2,988
Accrued Taxes Payable 32,545 41,531
TOTAL CURRENT LIABILITIES 32,545 44,519
NON-CURRENT LIABILITIES
Related Party Loan 10,483 24,124
Loans Payable 7,737 41,174
TOTAL LIABILITIES 50,765 109,817
SHAREHOLDERS' EQUITY
Common Stock (17,857,143
shares authorized;
14,782,630 issued; $0.0001
par value) 1,478 1,478
Additional Paid in Capital 1,082,041 550,165
Retained Earnings (1,116,821) (646,443)
TOTAL SHAREHOLDERS' EQUITY (33,302) (94,800)
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 17,462 $ 15,018
ATLIS MOTOR VEHICLES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2019 2018
Cash Flows From Operating Activities
Net Income (Loss) For The Period $ (470,378) $ (595,862)
Change in Accrued Payroll Tax Payable (8,987) 41,531
Change in Accounts Payable (2,988) 2,988
Change in Payroll Corrections 11 -
Depreciation 4,130 4,130
Net Cash Flows From Operating Activities (478,212) (547,214)
Cash Flows From Investing Activities
Purchase of Fixed Assets - (20,648)
Net Cash Flows From Investing Activities - (20,648)
Cash Flows From Financing Activities
Payment toward Related Party Loan (13,641) (27,956)
Payment toward Loan Payable (33,452) 41,174
Issuance of Common Stock - 1,478
Increase in Additional Paid In Capital 531,876 550,165
Net Cash Flows From Financing Activities 484,783 564,861
Cash at Beginning of Period (1,500) 1,500
Net Increase (Decrease) In Cash 6,571 (3,001)
Cash at End of Period $ 5,074 $ (1,500)
ATLIS MOTOR VEHICLES, INC.
Audit Notes for years ending 2018 and 2019
NOTE A- ORGANIZATION AND NATURE OF ACTIVITIES
Atlis Motor Vehicles, Inc. (the Company) is a corporation
organized under the laws of Delaware and domiciled in Arizona.
The Company intends to develop and manufacture electric vehicles
and other energy sustainable products.
NOTE B- GOING CONCERN MATTERS
The financial statements have been prepared on the going concern
basis, which assumes that the Company will continue in operation
for the foreseeable future. However, management has identified
the following conditions and events that created an uncertainty
about the ability of the Company to continue as a going concern.
The company sustained net losses of $470,378 in 2019 and
$595,862 in and had no cash available as of December 31, 2018.
The following describes management's plans that are intended to
mitigate the conditions and events that raise substantial doubt
about the Company's ability to continue as a going concern. The
Company plans to raise additional funds to meet obligations and
further operations through a Reg CF campaign. The Company's
ability to meet its obligations as they become due is dependent
upon the success of management's plans, as described above.
These conditions and events create an uncertainty about the
ability of the Company to continue as a going concern through
April 21, 2021 (one year after the date that the financial
statements are available to be issued). The financial statements
do not include any adjustments that might be necessary should
the Company be unable to continue as a going concern.
NOTE C- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America (US GAAP).
Significant Risks and Uncertainties
The Company is subject to customary risks and uncertainties
associated with development of new technology including, but not
limited to, the need for protection of proprietary technology,
dependence on key personnel, costs of services provided by third
parties, passing regulatory testing, meeting manufacturing and
environmental requirements, the need to obtain additional
financing, and limited operating history.
The Company currently has no developed products for
commercialization and there can be no assurance that the
Companys research and development will be successfully
commercialized. Developing and commercializing a product
requires significant capital, and based on the current operating
plan, the Company expects to continue to incur operating losses
as well as cash outflows from operations in the near term.
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
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances, and highly
liquid investments with maturities of three months or less when
purchased.
Stockholders Equity
During 2018, the company issued 14,782,630 shares of common
stock at Par Value $0.0001.
Fixed Assets
The Company capitalizes assets with an expected useful life of
one year or more, and an original purchase price of $1,000 or
more. Depreciation is calculated on a straight-line basis over
managements estimate of each assets useful life.
Revenue
Revenue is recognized when control of the promised goods or
services is transferred to customers, in an amount that reflects
the consideration the Company expects to be entitled to in
exchange for those goods or services.
Current revenue is earned by the sale of small merchandise.
Advertising
The Company records advertising expenses in the year incurred.
Accrued Taxes Payable
During 2018 the company accrued $40,831 in payroll taxes
payable.
Rent
The company leases a storage space on a month-to-month basis.
Equity Based Compensation
The Company accounts for stock options issued to employees under
ASC 718 (Stock Compensation). Under ASC 718, share-based
compensation cost to employees is measured at the grant date,
based on the estimated fair value of the award, and is
recognized as an item of expense ratably over the employees
requisite vesting period. The Company has elected early adoption
of ASU 2018-07, which permits measurement of stock options at
their intrinsic value, instead of their fair value. An options
intrinsic value is defined as the amount by which the fair value
of the underlying stock exceeds the exercise price of an option.
In certain cases, this means that option compensation granted by
the Company may have an intrinsic value of $0.
The Company measures compensation expense for its non-employee
stock-based compensation under ASC 505 (Equity). The fair value
of the option issued or committed to be issued is used to
measure the transaction, as this is more reliable than the fair
value of the services received. The fair value is measured at
the value of the Companys common stock on the date that the
commitment for performance by the counterparty has been reached
or the counterpartys performance is complete. The fair value of
the equity instrument is charged directly to expense and
credited to additional paid-in capital.
Income Taxes
The Company applies ASC 740 Income Taxes (ASC 740). Deferred
income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and
liabilities and their financial statement reported amounts at
each period end, based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to
the amount expected to be realized. The provision for income
taxes represents the tax expense for the period, if any and the
change during the period in deferred tax assets and liabilities.
ASC 740 also provides criteria for the recognition, measurement,
presentation and disclosure of uncertain tax positions. A tax
benefit from an uncertain position is recognized only if it is
more likely than not that the position is sustainable upon
examination by the relevant taxing authority based on its
technical merit.
The Company is subject to tax filing requirements as a
corporation in the federal jurisdiction of the United States.
The Company sustained net operating losses during fiscal years
2019 and 2018. Net operating losses will be carried forward to
reduce taxable income in future years. Due to managements
uncertainty as to the timing and valuation of any benefits
associated with the net operating loss carryforwards, the
Company has elected to recognize an allowance to account for
them in the financial statements, but has fully reserved it.
Under current law, net operating losses may be carried forward
indefinitely.
The Company is subject to franchise and income tax filing
requirements in the State of Delaware and Arizona.
Recently Adopted Accounting Pronouncements
From time to time, new accounting pronouncements are issued by
the Financial Accounting Standards Board, or FASB, or other
standard setting bodies and adopted by the Company as of the
specified effective date. Unless otherwise discussed, the
Company believes that the impact of recently issued standards
that are not yet effective will not have a material impact on
its financial position or results of operations upon adoption.
In November 2015, the FASB issued ASU (Accounting Standards
Update) 2015-17, Balance Sheet Classification of Deferred Taxes,
or ASU 2015-17. The guidance requires that all deferred tax
assets and liabilities, along with any related valuation
allowance, be classified as noncurrent on the balance sheet. For
all entities other than public business entities, the guidance
becomes effective for financial statements issued for annual
periods beginning after December 15, 2017, and interim periods
within annual periods beginning after December 15, 2018. Early
adoption is permitted for all entities as of the beginning of an
interim or annual reporting period. The adoption of ASU 2015-17
had no material impact on the Companys financial statements and
related disclosures.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash
Flows (Topic 230), Restricted Cash, or ASU 2016-18. The
amendments of ASU 2016-18 were issued to address the diversity
in classification and presentation of changes in restricted cash
and restricted cash equivalents on the statement of cash flows
which is currently not addressed under Topic 230. ASU 2016-18
would require an entity to include amounts generally described
as restricted cash and restricted cash equivalents with cash and
cash equivalents when reconciling the beginning of period and
end of period total amounts on the statement of cash flows. This
guidance is effective for annual reporting periods, and interim
periods within those years, beginning after December 15, 2018
for non-public entities. Early adoption is permitted, and the
standard must be applied retrospectively. The adoption of ASU
2016-18 had no material impact on the Companys financial
statements and related disclosures.
In May 2014, the FASB issued ASU, 2014-09Revenue from Contracts
with Customers (Topic 606), or ASU 2014-09, and further updated
through ASU 2016-12, or ASU 2016-12, which amends the existing
accounting standards for revenue recognition. ASU 2014-09 is
based on principles that govern the recognition of revenue at an
amount to which an entity expects to be entitled to when
products are transferred to customers. This guidance is
effective for annual reporting periods, and interim periods
within those years, beginning December 15, 2018 for non-public
entities. The new revenue standard may be applied
retrospectively to each prior period presented or
retrospectively with the cumulative effect recognized as of the
date of adoption. The adoption of ASU 2014-09 had no material
impact on the Companys financial statements and related
disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic
842), or ASU 2016-02, which supersedes the guidance in ASC 840,
Leases. The new standard requires lessees to apply a dual
approach, classifying leases as either finance or operating
leases based on the principle of whether or not the lease is
effectively a financed purchase by the lessee. This
classification will determine whether lease expense is
recognized based on an effective interest method or on a
straight-line basis over the term of the lease. A lessee is also
required to record a right-of-use asset and a lease liability
for all leases with a term of greater than 12 months regardless
of their classification. Leases with a term of 12 months or less
will be accounted for similar to existing guidance for operating
leases today. This guidance is effective for annual reporting
periods beginning after December 15, 2019 for non-public
entities. The adoption of ASU 2016-02 had no material impact on
the Companys financial statements and related disclosures.
In March 2016, the FASB issued ASU 2016-09, Improvements to
Employee Share-based Payment Accounting, or ASU 2016-09. ASU
2016-09 simplifies several aspects of the accounting for share-
based payment transactions, including the income tax
consequences, classification of awards as either equity or
liabilities, and classification on the statement of cash flows.
Some of the areas of simplification apply only to non-public
companies. This guidance was effective on December 31, 2016 for
public entities. For entities other than public business
entities, the amendments are effective for annual periods
beginning after December 15, 2017, and interim periods within
annual periods beginning after December 15, 2018. Early adoption
is permitted for an entity in any interim or annual period for
which financial statements have not been issued or made
available for issuance. An entity that elects early adoption
must adopt all amendments in the same period. The adoption of
ASU 2016-09 had no material impact on the Companys financial
statements and related disclosures.
In May 2017, the FASB issued ASU 2017-09, CompensationStock
Compensation (Topic 718): Scope of Modification Accounting, or
ASU 2017-09, which clarifies when to account for a change to the
terms or conditions of a share-based payment award as a
modification. Under the new guidance, modification accounting is
required only if the fair value, the vesting conditions, or the
classification of the award (as equity or liability) changes as
a result of the change in terms or conditions. This guidance is
effective for annual reporting periods, and interim periods
within those years, beginning after December 15, 2017, for both
public entities and non-public entities. Early adoption is
permitted. The adoption of ASU 2017-09 had no material impact on
the Companys financial statements and related disclosures.
NOTE D- EQUITY
Under the Companys original articles of incorporation currently
in effect, the Company authorized 17,857,143 shares of $0.0001
par value Common Stock.
As of December 31, 2019, the number of common shares issued and
outstanding was 14,782,630.
NOTE E- DEBT
In 2017, the company issued a note to a related party in
exchange for cash for the purpose of funding continuing
operations (the Related Party Note Payable). The note does not
accrue interest and is payable at a future date to be determined
by management. During 2018 and 2017, the Company capitalized no
interest related to the note.
In 2018, the company issued a loan payable in exchange for cash
for the purpose of funding continuing operations (the Note
Payable). The note incurs an annual interest rate of 35.6% on
any remaining monthly balance. This interest is paid each month
on the remaining loan balance. Minimum monthly payments are
equal to $4,872.
NOTE F- FAIR VALUE MEASUREMENTS
Fair value is an exit price, representing the price that would
be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants based on the
highest and best use of the asset or liability. As such, fair
value is a market-based measurement that should be determined
based on assumptions that market participants would use in
pricing an asset or liability. The Company uses valuation
techniques to measure fair value that maximize the use of
observable inputs and minimize the use of unobservable inputs.
These inputs are prioritized as follows:
Level 1 - Observable inputs, such as quoted prices for identical
assets or liabilities in active markets;
Level 2 - Inputs, other than the quoted prices in active
markets, that are observable either directly or indirectly, such
as quoted prices for similar assets or liabilities, or market-
corroborated inputs; and
Level 3 - Unobservable inputs for which there is little or no
market data which require the reporting entity to develop its
own assumptions about how market participants would price the
assets or liabilities.
The valuation techniques that may be used to measure fair value
are as follows:
Market approach - Uses prices and other relevant information
generated by market transactions involving identical or
comparable assets or liabilities.
Income approach - Uses valuation techniques to convert future
amounts to a single present amount based on current market
expectations about those future amounts, including present value
techniques, option-pricing models, and excess earnings method.
Cost approach - Based on the amount that currently would be
required to replace the service capacity of an asset
(replacement cost).
NOTE G- CONCENTRATIONS OF RISK
Financial instruments that potentially subject the Company to
credit risk consist of cash and cash equivalents. The Company
places its cash and cash equivalents with a limited number of
high-quality financial institutions and at times may exceed the
amount of insurance provided on such deposits.
NOTE H- SUBSEQUENT EVENTS
Management considered events subsequent to the end of the period
but before April 21, 2021, the date that the financial
statements were available to be issued.