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Day to day company management
Day to day company management
Day to day company management
See It Buy It is changing forever the way fashion is discovered, especially on mobile devices. The See It Buy It mobile app dramatically accelerates product search by replacing text entry and point and click navigation with visual and voice search. Shoppers can now shop by photo, color, web images and voice search.
The See It Buy It marketplace is available to Shopify’s 350,000 merchants as an alternative sales channel. The market has 125,000 product now and expects to have several million by the end of 2017
For additional information, please see attached BusinessPlan.pdf
A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment.
In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document.
The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature.
These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.
If the Company is unable to raise additional capital on acceptable terms, it may be unable to complete planned user acquisition strategies necessary to achieve critical user mass and profitability.
Failure to satisfy our capital requirements will adversely affect the Company’s business, financial condition and results of operations because the Company would be left without the capital required to complete product development, acquire users, or establish sales, marketing and growth channels.
Because the Company has a history of operating losses, and expects to generate operating losses for the foreseeable future, it may not achieve profitability for some time, if at all. The Company is in an early stage of product development and deployment, therefore, has a limited history of operations.
The Company is faced with all of the risks associated with a company in the early stage of development. In addition, the Company’s business is subject to numerous risks associated with a new company engaged in the development of consumer-facing product. Such risks include, among other things, competition from well-established and well-capitalized companies and the risk of slow consumer adoption and product sales.
While the Company does not need its current partnerships to succeed in the market, a substantial amount of resource has been devoted to these relationships. If our partners were to change their marketing strategies in a way that would limit or exclude access by the Company to their merchant base, that action could have a negative effect on the Company’s ability to continue and sustain business.
The Company has incurred losses each year of its operations and expects to continue to incur losses for the foreseeable future.
The process of developing the Company’s products requires significant research and development, each of which is costly and does not result in revenues or profits. There can be no assurance that the Company will ever generate sufficient commercial sales or achieve profitability. Should this be the case, investors could lose their entire investment.
nFlate, Inc. (“Company”) is offering securities under both Regulation D, through Livingston Securities, LLC (“Livingston”) and Regulation CF, through NetCapital Funding Portal Inc. (“Portal”). Livingston is a registered broker-dealer, and member FINRA/SIPC. Livingston will receive cash compensation equal to 4.9% of the value of the securities sold through Regulation D. Portal is a FINRA/SEC registered funding portal and will receive cash compensation equal to 4.9% of the value of the securities sold through Regulation CF. Investments made under both Regulation D and Regulation CF involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest.
This offering is considered a side-by-side offering, meaning that the Company is raising capital under two offering types. The Company plans to raise between $10,000 and $99,999 through concurrent offerings under Regulation CF and Regulation D – Rule 506(c). In the event the Company fails to reach their combined offering target of $10,000, any investments made under either offering will be cancelled and the investment funds will be returned to the investor. Under Regulation CF, the Company can raise up to $99,999.
Accredited investors which have proved their accreditation status to Portal, will automatically invest under the Regulation D - Rule 506(c) offering type. All other investors will invest under the Regulation CF offering type. An accredited investor which proves their accreditation status with Portal prior to 48 hours of the offering closing, can authorize their investment to be withdrawn from the Regulation CF offering and automatically reinvested in the Regulation D offering. You must be an accredited investor to invest under Regulation D.
Proceeds will be used primarily to fund our iPhone development project, early user growth initiatives and in identifying best social growth platforms
Some proceeds will be used for daily operation costs
| If Target Offering Amount Sold | If Maximum Amount Sold | |
|---|---|---|
| Total Proceeds | $10,000 | $99,999 |
| Less: Offering Expenses | $490 | $4,900 |
| Net Proceeds | $9,510 | $95,099 |
| Working Capital | $9,510 | $95,099 |
| Total Use of Net Proceeds | $9,510 | $95,099 |
The securities being offered may not be transferred by any purchaser of such securities during the one-year period beginning when the securities were issued, unless such securities are transferred:
| Class of Security | Amount Authorized | Amount Outstanding | Voting Rights | Other Rights |
|---|---|---|---|---|
| Common | 20,000,000 | 4,000,000 | Yes |
| Type | Description | Reserved Securities |
|---|---|---|
| Stock options | Exercise price of $0.10, expire on 8/18/26; 279,167 vested at 3/1/17 | 375,000 |
| Stock options | Exercise price of $0.10, expire on 7/26/26; 100,000 vested at 3/1/17 | 100,000 |
| Stock options | Exercise price of $0.10, expire on 8/18/26; 25,000 vested at 3/1/17 | 75,000 |
| Stock Options | Exercise price of $0.10 with dilution protection, expire on 3/1/27; 0 vested at 3/1/17 | 100,000 |
| Convertible debt | Converts into common stock at a price per share equal to $5,000,000 divided by the fully diluted capital of the company. | 325,500 |
| Convertible debt | Converts into common stock at a price per share equal to $5,000,000 divided by the fully diluted capital of the company. | 46,500 |
| Convertible debt | Converts into common stock at a price per share equal to $2,000,000 divided by the fully diluted capital of the company. | 116,250 |
| Convertible debt | Converts into common stock at a price per share equal to $2,000,000 divided by the fully diluted capital of the company. | 46,550 |
| Convertible debt | Converts into common stock at a price per share equal to $3,000,000 divided by the fully diluted capital of the company. | 77,500 |
The existing convertible debt is subject to conversion into equity under certain circumstances, and if the debt holders convert their debt into shares of common stock, the shareholders who bought common stock in this offering will be diluted by that conversion.
The Netcapital offering is an offer to purchase common stock. The options listed above may convert to common stock at the discretion of the option holders subject to provisions within the terms of their option agreements. The convertible debt is a hybrid equity/debt instrument that is substantially different than the common stock that will be offered. The convertible debt accrues interest at an annual rate of 3% and that interest may also be converted into common stock.
As the holder of a majority of the voting rights in the company, our Members may make decisions with which you disagree, or that negatively affect the value of your investment in the company, and you will have no recourse to change those decisions. Your interests may conflict with the interests of other investors, and there is no guarantee that the company will develop in a way that is advantageous to you. For example, the majority shareholder may decide to issue additional shares to new investors, sell convertible debt instruments with beneficial conversion features, or make decisions that affect the tax treatment of the company in ways that may be unfavorable to you. Based on the risks described above, you may lose all or part of your investment in the securities that you purchase, and you may never see positive returns.
As the holder of a majority of the voting rights in the company, our Investor Members may make decisions with which you disagree, or that negatively affect the value of your investment in the company, and you will have no recourse to change those decisions. Your interests may conflict with the interests of other investors, and there is no guarantee that the company will develop in a way that is advantageous to you. For example, the majority shareholder may decide to issue additional shares to new investors, sell convertible debt instruments with beneficial conversion features, or make decisions that affect the tax treatment of the company in ways that may be unfavorable to you. Based on the risks described above, you may lose all or part of your investment in the securities that you purchase, and you may never see positive returns.
The offering is priced at a $5 million pre-money valuation. It is based on the pricing of our recent convertible debt offering, which had a pre-money valuation cap of $5 million.
We’ve hit a number of major milestones since we first received funding in the middle of 2016. We have delivered the See It Buy It Android app to the market, populated with over 100,000 products from about 400 merchants. We also built out the complex infrastructure necessary for onboarding and maintaining real-time product updates. We’ve completed market and user acquisition testing, validated product market fit and have some early sales and revenue.
We have made significant strides on our product, strategy, and brand. Additionally, we have an experienced and proven CEO. Considering the depth of the technology base we have created and the increasing interest and acquisition of companies with artificial intelligence focus and revenue potential, we believe the $5 million pre-money valuation offers an attractive entry point for investors while ensuring enough upside for founders and management.
Our Operating Agreement can be amended by the holders of the Member Units. As minority owners, the crowdfunding investors are subject to the decisions made by the majority owners. The issued and outstanding membership interest units give management voting control of the company. As a minority owner, you may be outvoted on issues that impact your investment, such as the issuance of new units, or the sale of debt, convertible debt or assets of the company.
The issuance of additional shares of our common stock will dilute the ownership of the crowdfunding investors. As a result, if we achieve profitable operations in the future, our net income per share will be reduced because of dilution, and the market price of our common stock, if there is a market price, could decline as a result of the additional issuances of securities.
If we repurchase securities, so that the above risk is mitigated, and there are fewer shares of common stock outstanding, we may not have enough cash available for marketing expenses, growth, or operating expenses to reach our goals. If we do not have enough cash to operate and grow, we anticipate the market price of our membership units would decline.
A sale of our company or of the assets of our company may result in an entire loss of your investment. We cannot predict the market value of our company or our assets, and the proceeds of a sale may not be cash, but instead, unmarketable securities, or an assumption of liabilities. Our company currently has negative net worth (our liabilities exceed our assets) and it is unlikely that in the near term, a sale would result in a premium that is significant enough over book value to generate a return to our investors.
We may need to renegotiate our related-party debt if our related-party lenders demand that we begin making principal or interest payments. Any renegotiation may be on less favorable terms or may require that we refinance the related-party debt. We may need to raise additional funds through public or private debt or sale of equity to pay the related-party debt. Such financing may not be available when needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if and when it is needed on terms we deem acceptable. If we are unable to obtain financing on reasonable terms, or, if our related-party lenders do not continue to cooperate with us, we could be forced to discontinue our operations. We anticipate that any transactions with related parties will be vetted and approved by manager(s) unaffiliated with the related parties.
Converts into common stock at a price per share equal to $5,000,000 divided by the fully diluted capital of the company.
Converts into common stock at a price per share equal to $5,000,000 divided by the fully diluted capital of the company.
Converts into common stock at a price per share equal to $2,000,000 divided by the fully diluted capital of the company.
Converts into common stock at a price per share equal to $2,000,000 divided by the fully diluted capital of the company, 45,500.
Term loan from related party
Converts into common stock at a price per share equal to $3,000,000 divided by the fully diluted capital of the company. The note includes dilution protection.
Funding History:
The company was funded for the first three years of its existence by the founder.
In the last to quarters of 2016, the Company raised $420,000 from individual investors.
The company launched See It Buy It in November of 2016. In the two months after launch the company has performed the necessary market tests to compare user acquisition channels (Facebook, Google, Twitter, paid vs. organic). Approximately 10,000 users downloaded the mobile app during this time frame.
This period was also used to test the product functionality in the real world and to correct any issues before attempting any larger scale growth.
In the second quarter of 2017 we plan to begin growth activities.
Revenue:
The company has generated a small amount of revenue during the above testing period, totaling a few thousand dollars. Revenues in 2016 amounted to $2,221, as compared to no revenues in 2015. The company expects to generate revenues of approximately $1 million in 2017 and $6.6 million in 2018.
Growth:
We plan to distribute See It Buy It initially in the United States and Canada only during for the first six months of 2017. After this period, the company plans to begin to roll-out the platform worldwide. The international launch delay will allow the company to prepare for the necessary localization and support infrastructure required for a larger international footprint.
Operating Expenses:
As a software company, the company has relatively low overhead. Cost of operations, infrastructure fees and human resources make up the largest components of the P&L. The company has 5 full time employees and uses various contractors on a monthly basis as necessary. Infrastructure costs include fees charged by companies like Amazon Web Services for cloud resources.
Total expenses in 2016 amounted to $382,297, as compared to total expenses of $10,793 in 2015. The primary increase in expenses in 2016 consisted of payroll of $151,524, subcontractors of $95,738 and promotional costs of $35,536, as compared to zero costs for these expense categories in 2015.
Capital:
The company is currently raising the 2nd half of its original target of $1 million. Use of funds for new investment will be split relatively evenly between operations and customer acquisition.
The company will require substantial capitalization over time to acquire and build the necessary user base to create the critical mass necessary to sustain growth and to achieve profitability.
Assets:
The company’s primary assets reside in our software source code and human resources. nFlate engineers have written hundreds of thousands of lines of code to deliver the extremely complex solution that is See It Buy It.
The company has code for artificial intelligence and deep learning, code for delivering the apparel-specific search engine, code for synchronizing hundreds of thousands of products from hundreds of merchants in real time and of course, the mobile app code for Android and iOS products.
The company’s assets could be valuable to numerous businesses from a number of industries including:
Management does not know the value of said assets until it is in a position to market them.
If Yes to any of the above, explain:
Video Transcript: See It Buy It - Mobile Visual Shopping. Fashion shopping on Mobile kinda sucks. Screens are too small. Discovery takes forever. And you have to hop from site to site, endlessly entering text. Top fashion sites have very limited mobile experiences. Shoppers today have very short attention spans and expect instant gratification. You can thank social media for this. Larger e-commerce markets have limited fashion selections. Enter See It Buy It. With See It Buy It, users can shop by photo, favorite colors, web images and even voice. With See It Buy It, shoppers will be able to select from thousands of merchants and millions of products. With shop by photo, you just snap a picture, submit it to the See It Buy It product catalog and you’ll get back dozens of similar items to choose from instantly. To Shop by Color, simply pick your favorites from the color selector and See It Buy delivers perfect color matches from the entire market. To match web images, just copy the URL from the web page with the item on it and paste it into See It Buy It. Pick the target image from the page and you’ll get dozens of matches See It Buy It. Revolutionizing mobile shopping
The following documents are being submitted as part of this offering:
Once posted, the annual report may be found on the issuer’s web site at: http://seeitbuy.it
The issuer must continue to comply with the ongoing reporting requirements until: